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TABLE OF CONTENTS
MANAGEMENT'S DISCUSSION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.
TABLE OF CONTENTS

Table of Contents

As filed with the Securities and Exchange Commission on September 10, 2018

Registration No. 333-226620


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



AMENDMENT NO. 1
TO
Form S-4
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933



SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.
(Exact name of registrant as specified in its charter)

Bermuda
(State or other jurisdiction of
incorporation or organization)
  6331
(Primary Standard Industrial
Classification Code Number)
  98-0529995
(I.R.S. Employer
Identification Number)

14 Wesley Street
Hamilton HM 11
(441) 278-3140

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)



CT Corporation System
111 8th Avenue
New York, NY 10011
(212) 894-8940
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

Gene Boxer
Group General Counsel
Sirius International Insurance Group, Ltd.
14 Wesley Street
Hamilton HM 11
(441) 278-3140

 

Sean M. Keyvan
Lindsey A. Smith
Sidley Austin LLP
One South Dearborn
Chicago, IL 60603
(312) 853-7000

 

Chris Garrod
Conyers Dill & Pearman Limited
Clarendon House
2 Church Street
Hamilton HM 11
(441) 295-1422

 

Eric Colandrea
General Counsel
Easterly Acquisition Corp.
205 Hudson Street, 7th Floor
New York, NY 10013
(646) 712-8300

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the transactions contemplated by the Agreement and Plan of Merger described in the enclosed proxy statement/prospectus have been satisfied or waived.

         If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.     o

         If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

         If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o   Accelerated filer  o   Non-accelerated filer  ý   Smaller reporting company  o

Emerging growth company  o

         If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  o

         If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

         Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)     o

         Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)     o



          The Registrant hereby amends this Registration Statement on such date as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.


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The information in this preliminary proxy statement/prospectus is not complete and may be changed. The registrant may not issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY, SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 2018

LOGO   LOGO

PROXY STATEMENT/PROSPECTUS
MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT



           The board of directors of Sirius International Insurance Group, Ltd. (" Sirius Group ") and Easterly Acquisition Corp. (" Easterly ") have each approved an Agreement and Plan of Merger, dated as of June 23, 2018 (as amended by the First Amendment to Agreement and Plan of Merger and Sponsor Letter, dated as of August 29, 2018, and as it may be further amended from time to time, the " Merger Agreement "), by and among Easterly, Sirius Group and Sirius Acquisitions Holding Company III, a wholly owned subsidiary of Sirius Group (" Merger Sub "), and the transactions contemplated by the Merger Agreement, including the merger of Merger Sub with and into Easterly with Easterly surviving the merger as a wholly owned subsidiary of Sirius Group (the " Merger ").

           On the terms and subject to the conditions set forth in the Merger Agreement, at the closing of the Merger, all outstanding shares of Easterly common stock (other than shares subject to a valid redemption election, shares owned by Easterly, Sirius Group or Merger Sub and certain shares held by Easterly Acquisition Sponsor, LLC (the " Sponsor ")) will be exchanged for newly issued common shares of Sirius Group at an exchange ratio (the " Exchange Ratio ") that will be determined prior to the closing of the Merger and will be equal to a fraction determined by dividing (i) the estimated amount of cash per public share of Easterly common stock in Easterly's trust account (the " Trust Account ") immediately prior to the closing of the Merger by (ii) (x) 1.05 multiplied by (y) Sirius Group's adjusted diluted book value per common share as of September 30, 2018 (" Sirius Group September 30 Adjusted DBVPS "). The Sirius Group September 30 Adjusted DBVPS will be calculated by dividing (i) the book value of Sirius Group, based on the unaudited GAAP consolidated financial statements of Sirius Group for the nine months ended September 30, 2018, decreased by the $7 million deferred underwriting fee payable by Easterly, and as adjusted by the GAAP accounting effect of the redemption of the Sirius Group Series A redeemable preference shares by (ii) the sum of (x) the fully diluted number of Sirius Group common shares issued and outstanding as of September 30, 2018 and (y) 593,000 Sirius Group common shares. If an estimate of the Sirius Group September 30 Adjusted DBVPS is used to determine the Exchange Ratio at the closing of the Merger, then the Merger Agreement provides for a post-closing adjustment if such estimate is different than the actual Sirius Group September 30 Adjusted DBVPS as finally determined after the closing of the Merger, as more fully described in the accompanying proxy statement/prospectus. Based on a preliminary estimate of Sirius Group's adjusted diluted book value per common share as of September 30, 2018 and funds in the Trust Account on August 31, 2018, the Exchange Ratio would be equal to 0.586. Investors are cautioned that 0.586 is only an estimate of the Exchange Ratio, has not been agreed as the final Exchange Ratio for purposes of the Merger Agreement, and is subject to change prior to the closing of the Merger.

           Additionally, each issued and outstanding public warrant to acquire shares of Easterly common stock will cease to represent a right to acquire shares of Easterly common stock and will be converted into a right to acquire Sirius Group common shares (a " converted warrant "), based upon the Exchange Ratio, as more fully described in the accompanying proxy statement/prospectus.

           Based on a per share value equal to (i) 1.05 multiplied by (ii) the Sirius Group September 30 Adjusted DBVPS, which is estimated as of August 31, 2018 to be $17.77, the aggregate value of the Merger consideration to be received by the Easterly stockholders (including the Sponsor) in respect of their shares of Easterly common stock pursuant to the Merger Agreement is estimated to be $165.2 million. Easterly has not obtained an opinion from an independent financial advisor in connection with the Merger and, consequently, there is no assurance from an independent source that the price Sirius Group is paying for Easterly is fair to Easterly's stockholders from a financial point of view.

           Based on the number of shares of Easterly common stock and Easterly warrants outstanding on August 31, 2018, Sirius Group expects to issue or reserve for issuance to Easterly public stockholders approximately 8.3 million common shares pursuant to the Merger Agreement (excluding the estimated 5.9 million Sirius Group common shares issuable upon exercise of the converted warrants). Sirius Group also expects to issue approximately 1.0 million common shares to the Sponsor, resulting in a total of approximately 9.3 million Sirius Group common shares issued in exchange for outstanding shares of Easterly common stock pursuant to the Merger Agreement. Upon the closing of the Merger, Easterly's public stockholders are expected to own approximately 6.6% of Sirius Group and CM Bermuda is expected to own approximately 83.7% of Sirius Group, and therefore CM Bermuda will continue to control Sirius Group following the Merger. The foregoing amounts assume, among other factors described in the accompanying proxy statement/prospectus, that the Exchange Ratio is equal to 0.586. If the facts differ from the assumptions, Easterly's stockholders may experience dilution of their ownership interest unless they elect to have their shares of Easterly common stock redeemed in connection with the Merger Proposal.

           Completion of the transactions contemplated by the Merger Agreement requires, among other things, the approval of Easterly's stockholders. To obtain this approval, Easterly will hold a special meeting of Easterly stockholders on [                        ], 2018, as more fully described in the accompanying notice of special meeting. The Sponsor and Easterly's original independent directors have agreed to vote in favor of the proposals presented at the special meeting. After such meeting, and prior to the consummation of the Merger, Easterly stockholders may exercise their redemption rights as provided for by Easterly's charter. There is no specified maximum redemption threshold under Easterly's charter. In no event, however, will Easterly redeem public shares in an amount that would cause its net tangible assets to be less than $5,000,001. For illustrative purposes, if Easterly stockholders exercise their redemption rights such that Easterly's net tangible assets are reduced to $5,000,001, Easterly's public stockholders would be expected to own approximately 0.7% of Sirius Group, and the funds held in the Trust Account available to Sirius Group following the Merger would be approximately $15.8 million.

           Easterly's common stock, units and warrants are currently listed on the Nasdaq Capital Market under the symbols "EACQ," "EACQU" and "EACQW," respectively. At the closing of the Merger, Easterly units will separate into their components of one share of Easterly common stock and one-half of a warrant to purchase one share of Easterly common stock. Sirius Group has applied to list the Sirius Group common shares and converted warrants on the Nasdaq Stock Market under the symbols "SG" and "SGW," respectively, effective as of the closing of the Merger. Completion of the transactions contemplated by the Merger Agreement requires that the Sirius Group common shares shall have been approved for listing on the Nasdaq Stock Market, subject to official notice of issuance. This listing condition may be waived by Sirius Group and Easterly.

            The accompanying proxy statement/prospectus contains detailed information about Sirius Group, Easterly, the Easterly special meeting, the Merger Agreement and the Merger. You are encouraged to read carefully the entire proxy statement/prospectus, including the section entitled "Risk Factors" beginning on page 41 of the enclosed proxy statement/prospectus, and all of its Annexes.

           We look forward to the successful combination of Sirius Group and Easterly.


 

Allan L. Waters
Chairman and Chief Executive Officer
Sirius International Insurance Group, Ltd.

 

  

Darrell W. Crate
Chairman
Easterly Acquisition Corp.

           The enclosed proxy statement/prospectus is dated [                ], 2018, and is first being mailed to stockholders of Easterly on or about [                ], 2018.

            NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.


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LOGO

EASTERLY ACQUISITION CORP.
205 Hudson Street, 7 th  Floor
New York, New York 10013

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held at 10:00 a.m. Eastern time on [                ], [                ], 2018

TO THE STOCKHOLDERS OF EASTERLY ACQUISITION CORP.:

        NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the " special meeting ") of Easterly Acquisition Corp., a Delaware corporation (" Easterly "), will be held at 10:00 a.m. Eastern time on [                        ], [                        ], 2018, at [                        ], or at such other time, on such other date and at such other place to which the meeting may be adjourned or postponed.

        You are cordially invited to attend the Easterly special meeting to vote on the following proposals:

        These proposals are described further in the accompanying proxy statement/prospectus. Only holders of record of Easterly common stock at the close of business on [                        ], 2018, the record date for the special meeting, are entitled to notice of the special meeting and to vote at the special meeting and any adjournments or postponements thereof. A complete list of Easterly stockholders of record entitled to vote at the special meeting will be available for ten days before the special meeting at Easterly's principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting.

        Easterly stockholders are being provided the accompanying proxy statement/prospectus and proxy card in connection with the solicitation of proxies to be voted at the special meeting and at any adjournments or postponements thereof. Whether or not you plan to attend the special meeting, you are urged to read the accompanying proxy statement/prospectus carefully and submit your proxy as directed herein. Please pay particular attention to the section entitled " Risk Factors " beginning on page 41.

         After careful consideration, Easterly's board of directors has approved and adopted the Merger Agreement and recommends that Easterly's stockholders vote "FOR" the Merger Proposal and the Adjournment Proposal. When you consider the board recommendation of these proposals, you should keep in mind that Easterly's directors and officers have interests in the Merger that may conflict with your interests as a stockholder. See the section entitled " Proposal No. 1—The Merger Proposal—Certain Interests of Easterly's Directors and Officers and Others in the Merger ."


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        If you have any questions or need assistance voting your shares, please call Easterly's proxy solicitor, Morrow Sodali LLC, at (800) 662-5200 (banks and brokers call collect at (203) 658-9400).

         Your vote is very important. If you are a registered stockholder, please submit your proxy to have your shares voted as soon as possible by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in "street name" through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the Easterly special meeting. The transactions contemplated by the Merger Agreement will be consummated only if the Merger Proposal is approved at the Easterly special meeting. The Merger Proposal is not conditioned on the approval of the Adjournment Proposal and the Adjournment Proposal is not conditioned on the approval of the Merger Proposal.

        If you fail to return your proxy card, and do not attend the special meeting in person, if you abstain from voting or if you hold your shares in "street name" and fail to instruct your bank, broker or other nominee how to vote, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the Easterly special meeting and, if a quorum is present, will have same effect as a vote "AGAINST" the Merger Proposal but no effect on the vote for the Adjournment Proposal. If you are a stockholder of record and you attend the Easterly special meeting and wish to vote in person, you may vote in person, which will have the effect of revoking your proxy.

         Pursuant to Easterly's amended and restated certificate of incorporation, as amended (" Easterly's charter "), Easterly public stockholders may redeem shares of Easterly common stock for cash upon the closing of the Merger. The redemption amount would equal the pro rata share of the aggregate amount on deposit (as of two business days prior to the closing of the Merger) in the trust account (the " Trust Account ") that holds the proceeds (less taxes payable and any interest that Easterly may withdraw to pay taxes) of Easterly's initial public offering (the " IPO ") that closed on August 4, 2015. For illustrative purposes, based on funds in the Trust Account of approximately $148.0 million on August 31, 2018, the estimated per share redemption price would have been $10.41 per share. There is no specified maximum redemption threshold under Easterly's charter. In no event, however, will Easterly redeem public shares in an amount that would cause its net tangible assets to be less than $5,000,001.

         EASTERLY PUBLIC STOCKHOLDERS MAY ELECT TO REDEEM THEIR SHARES EVEN IF THEY VOTE FOR THE MERGER PROPOSAL.

         TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST (I) IF YOU HOLD EASTERLY UNITS, ELECT TO SEPARATE YOUR EASTERLY UNITS INTO THE UNDERLYING PUBLIC SHARES AND PUBLIC WARRANTS PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES, (II) SUBMIT A WRITTEN REQUEST TO EASTERLY'S TRANSFER AGENT TO REDEEM YOUR EASTERLY PUBLIC SHARES FOR CASH, AND (III) DELIVER YOUR PUBLIC SHARES TO EASTERLY'S TRANSFER AGENT, PHYSICALLY OR ELECTRONICALLY USING DEPOSITORY TRUST COMPANY'S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE IN ACCORDANCE WITH THE PROCEDURES AND DEADLINES DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. IF THE MERGER IS NOT CONSUMMATED, THEN THE EASTERLY PUBLIC SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK, BROKER OR OTHER NOMINEE TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE " PROPOSAL NO. 1—THE MERGER PROPOSAL—REDEMPTION RIGHTS " IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS FOR MORE SPECIFIC INSTRUCTIONS.

        An Easterly public stockholder, together with any of his, her or its affiliates or any other person with whom he, she or it is acting in concert or as a "group" (as defined under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group's shares, in excess of 15% of public shares of Easterly common stock. Holders of Easterly outstanding public warrants and units do not have


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redemption rights in connection with the Merger. Holders of outstanding units must separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. The holders of shares of Easterly common stock issued prior to the IPO, which are referred to as " Founder Shares ," have agreed to waive their redemption rights with respect to any shares of Easterly capital stock they may hold in connection with the consummation of the Merger, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Currently, Easterly's stockholders, which includes Easterly Acquisition Sponsor, LLC (the " Sponsor "), and Easterly's original independent directors and their permitted transferees, collectively own 25.8% of Easterly's issued and outstanding shares of common stock, including all of the Founder Shares. The Sponsor and Easterly's original independent directors have agreed to vote in favor of the proposals presented at the special meeting.

        On behalf of the Easterly board of directors, we thank you for your support and look forward to the successful completion of the Merger.

    Sincerely,

 

 

Darrell W. Crate
Chairman of the Board
Easterly Acquisition Corp.

 

 

[                ], 2018

TABLE OF CONTENTS

ABOUT THIS PROXY STATEMENT/PROSPECTUS

  1

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 
1

FREQUENTLY USED TERMS

 
4

QUESTIONS AND ANSWERS ABOUT THE MERGER, THE SPECIAL MEETING AND RELATED MATTERS

 
7

About the Merger

 
7

About the Redemption Rights of Easterly Public Stockholders

  15

About the Easterly Special Meeting

  17

SUMMARY

 
22

Parties to the Merger

 
22

The Merger Agreement

  23

Agreements Related to the Merger Agreement

  24

Transactions Related to the Merger

  26

Beneficial Ownership of the Combined Company

  28

Corporate Structure of the Combined Company

  29

Directors and Executive Officers of the Combined Company

  30

Redemption Rights

  30

Accounting Treatment

  30

Appraisal Rights

  31

Easterly's Reasons for the Merger

  31

Sirius Group's Reasons for the Merger

  32

Risk Factors

  34

Quorum and Required Vote for Proposals for the Easterly Special Meeting of Stockholders

  34

Recommendation to Easterly Stockholders

  34

Regulatory Approval

  35

SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA OF SIRIUS GROUP

 
36

SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA OF EASTERLY

 
38

SUMMARY CONDENSED COMBINED UNAUDITED PRO FORMA FINANCIAL INFORMATION

 
39

RISK FACTORS

 
41

Risks Related to Sirius Group's Business and Industry

 
41

Risks Related to Tax Matters

  56

Risks Related to Sirius Group Common Shares

  62

Risks Related to Easterly and the Merger

  69

THE SPECIAL MEETING OF EASTERLY STOCKHOLDERS

 
81

General

 
81

Date, Time and Place of Special Meeting

  81

Voting Power; Record Date

  81

Vote of Easterly Founders and the Sponsor

  81

Quorum and Required Vote for Proposals for the Easterly Special Meeting of Stockholders

  81

i


Recommendation to Easterly Stockholders

  82

Broker Non-Votes and Abstentions

  83

Voting Your Shares

  83

Revoking Your Proxy

  83

No Additional Matters May Be Presented at the Easterly Special Meeting

  84

Who Can Answer Your Questions About Voting

  84

Redemption Rights

  84

Appraisal Rights

  85

Accounting Treatment

  85

Proxy Solicitation Costs

  85

PROPOSAL NO. 1—THE MERGER PROPOSAL

 
86

The Merger Agreement

 
86

Conditions to Closing of the Merger

  90

Covenants of the Parties

  92

Tax Treatment

  98

Agreements Related to the Merger Agreement

  99

Transactions Related to the Merger

  101

Background of the Merger

  103

Easterly's Board of Directors' Reasons for Approval of the Merger

  107

Sirius Group's Board of Directors' Reasons for Approval of the Merger

  109

Certain Interests of Easterly's Directors and Officers and Others in the Merger

  111

Certain Interests of Sirius Group's Directors and Officers and Others in the Merger

  112

Potential Purchases of Public Shares

  113

Total Sirius Group Common Shares to be Issued in the Merger

  113

Redemption Rights

  114

Appraisal Rights

  114

U.S. Federal Income Tax Considerations

  114

Approval of the Merger

  120

Vote Required for Approval

  121

Recommendation of the Board

  121

PROPOSAL NO. 2—THE ADJOURNMENT PROPOSAL

 
122

Consequences if the Adjournment Proposal is Not Approved

 
122

Vote Required for Approval

  122

Recommendation of the Board

  122

USE OF PROCEEDS

 
123

ACCOUNTING TREATMENT

 
123

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF SIRIUS GROUP

 
124

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF EASTERLY

 
127

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 
129

COMPARATIVE PER SHARE DATA

 
138

MATERIAL TAX CONSEQUENCES

 
139

ii


INFORMATION ABOUT SIRIUS GROUP

  152

Overview

 
152

Competitive Strengths

  154

Strategies

  155

Corporate Structure

  156

Insurance and Reinsurance Overview

  157

Sirius Group's Products and Services

  158

Marketing and Distribution

  161

Underwriting and Pricing

  162

Claims Management

  162

Competition and Peers

  163

Catastrophe Risk Management

  163

Reinsurance Protection

  165

Reinsurance Recoverables by Rating

  167

Loss and LAE Reserves

  168

Investments

  169

Ratings

  174

Employees

  175

Properties

  175

Legal Proceedings

  175

REGULATION OF SIRIUS GROUP

 
176

Bermuda Insurance Regulation

 
176

U.S. Insurance Regulation

  185

European Insurance Regulation

  190

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF SIRIUS GROUP

 
196

MANAGEMENT OF SIRIUS GROUP

 
274

COMPENSATION DISCUSSION AND ANALYSIS OF SIRIUS GROUP

 
280

Executive Compensation Tables and Narratives

 
295

DIRECTOR COMPENSATION OF SIRIUS GROUP

 
302

INFORMATION ABOUT EASTERLY

 
303

General

 
303

Significant Activities since Inception

  303

Potential Purchases of Public Shares

  305

Redemption of Public Shares and Liquidation if No Initial Acquisition

  306

Employees

  310

Properties

  310

Legal Proceedings

  310

iii


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF EASTERLY

  311

DESCRIPTION OF SIRIUS GROUP SHARE CAPITAL

 
316

COMPARISON OF RIGHTS OF SHAREHOLDERS OF EASTERLY AND SIRIUS GROUP

 
327

SHARES ELIGIBLE FOR FUTURE SALE

 
338

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 
341

RELATED PERSON TRANSACTIONS

 
344

PRICE RANGE OF SECURITIES AND DIVIDENDS

 
347

APPRAISAL RIGHTS

 
349

DELIVERY OF DOCUMENTS TO STOCKHOLDERS

 
349

LEGAL MATTERS

 
349

EXPERTS

 
349

TRANSFER AGENT AND REGISTRAR

 
350

SUBMISSION OF STOCKHOLDER PROPOSALS

 
350

FUTURE STOCKHOLDER PROPOSALS

 
350

WHERE YOU CAN FIND MORE INFORMATION

 
350

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 
F-1

 

Annexes

   

Merger Agreement

  Annex A

Sponsor Letter

  Annex B

First Amendment to Merger Agreement and Sponsor Letter

  Annex C

Promissory Note

  Annex D

Form of Registration Rights Agreement

  Annex E

Form of Lock-Up Agreement

  Annex F

Form of Warrant Amendment

  Annex G

iv


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ABOUT THIS PROXY STATEMENT/PROSPECTUS

        This document, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission by Sirius Group, constitutes a prospectus of Sirius Group under Section 5 of the U.S. Securities Act of 1933, as amended, with respect to the Sirius Group securities to be issued to Easterly security holders if the Merger is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended, with respect to the special meeting of Easterly stockholders, at which Easterly stockholders will be asked to consider and vote upon a proposal to approve and adopt the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, among other matters.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This proxy statement/prospectus contains a number of forward-looking statements, including statements about the financial conditions, results of operations, earnings outlook and prospects of Sirius Group, Easterly and the combined company following the consummation of the Merger. Forward-looking statements are typically identified by words such as "plan," "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project," "continue," "could," "may," "might," "possible," "potential," "predict," "should," "would" and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements are based on the current expectations of the management of Sirius Group and Easterly, as applicable, and are inherently subject to uncertainties and changes in circumstance and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in " Risk Factors ," those discussed and identified in public filings made with the SEC by Easterly and the following:

1


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2


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        Should one or more of these risks or uncertainties materialize, or should any of the assumptions made by the management of Sirius Group and Easterly prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

        All subsequent written and oral forward-looking statements concerning the Merger or other matters addressed in this proxy statement/prospectus and attributable to Sirius Group or Easterly or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements included or referred to above. Except to the extent required by applicable law or regulation, Sirius Group and Easterly undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.

3


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FREQUENTLY USED TERMS

         Unless otherwise stated or unless the context otherwise requires, the term " Sirius Group " refers to Sirius International Insurance Group, Ltd., a Bermuda exempted company, and, where the context requires, its consolidated subsidiaries, " Easterly " refers to Easterly Acquisition Corp., a Delaware corporation, and the term " combined company " refer to Sirius Group and Easterly together following the consummation of the Merger.

        In this document:

        " $ ," " USD " and " U.S. dollar " each refer to the United States dollar.

        " Adjournment Proposal " means a proposal to adjourn the special meeting of Easterly stockholders to a later date or dates, if necessary, to permit further solicitation of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to Easterly's stockholders for vote at such special meeting.

        " Amendment " means the First Amendment to Agreement and Plan of Merger and Sponsor Letter, dated as of August 29, 2018, by and among Sirius Group, Easterly, Merger Sub, CM Bermuda and Sponsor, a copy of which is attached to this proxy statement/prospectus as Annex C .

        " Closing " means the closing of the Merger.

        " CM Bermuda " means CM Bermuda Ltd., a Bermuda holding company, a wholly owned subsidiary of CMIG International and the sole holder of Sirius Group common shares prior to the Merger.

        " CMIG International " means CMIG International Holding Pte. Ltd., a Singapore holding company.

        " Code " means the Internal Revenue Code of 1986, as amended.

        " Common Shares Redemption Agreement " means the agreement to be entered into between Sirius Group and CM Bermuda pursuant to which, effective as of and subject to the closing of the Merger, Sirius Group will redeem Sirius Group common shares from CM Bermuda.

        " Companies Act " means the Companies Act 1981 (Bermuda), as amended.

        " Convertible Promissory Note " means the convertible promissory note, dated as of March 17, 2016, made by Easterly in favor of the Sponsor.

        " converted warrants " means the public warrants issued by Easterly to acquire shares of Easterly common stock that are outstanding immediately prior to the closing of the Merger, as converted in the Merger into warrants issued by Sirius Group to acquire Sirius Group common shares. The number of Sirius Group common shares subject to each converted warrant will be equal to the number of shares of Easterly common stock subject to each Easterly warrant immediately prior to the closing of the Merger multiplied by the Exchange Ratio, and such converted warrant will have an exercise price per Sirius Group common share equal to the exercise price per share of Easterly common stock subject to such Easterly warrant immediately prior to the closing of the Merger divided by the Exchange Ratio.

        " DGCL " means the Delaware General Corporation Law, as amended.

        " Easterly's charter " means Easterly's amended and restated certificate of incorporation, as amended.

        " Easterly common stock " means the common stock, par value $0.0001 per share, of Easterly.

        " Easterly special meeting " means the special meeting of stockholders of Easterly that is the subject of this proxy statement/prospectus.

        " Effective Time " means the time at which the Merger is consummated.

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

        " Exchange Ratio " is the ratio determined pursuant to the Merger Agreement at which Easterly common stock will be converted into Sirius Group common shares and the public warrants will be converted into warrants to purchase Sirius Group common shares.

        " Extension Amendments " mean the amendments to Easterly's charter and the agreement governing the Trust Account to extend the deadline by which Easterly has to complete its initial business combination from June 30, 2018 to November 30, 2018, which were approved at Easterly's special meeting of stockholders held on June 28, 2018.

        " Founder Shares " means the 5,000,000 shares of Easterly common stock (after giving effect to (i) a stock dividend of 0.2 shares for each outstanding share of Easterly common stock on July 29, 2015 and (ii) the forfeiture of 175,000 shares in August 2015) that were issued to the Sponsor prior to the IPO (of which 72,000 Founder Shares were subsequently transferred to Easterly's original independent directors).

         "GAAP " means generally accepted accounting principles in the United States.

        " initial stockholders " means the Sponsor, Easterly's original independent directors and their permitted transferees that hold Founder Shares and Private Placement Warrants.

        " IMGAH " means IMG Acquisition Holdings, LLC, a Delaware limited liability company and the sole holder of Sirius Group Series A redeemable preference shares prior to the Merger.

        " IPO " means Easterly's initial public offering, consummated on August 4, 2015 through the sale of 20,000,000 public units, comprised of one share of Easterly common stock and one-half of one public warrant, at a price of $10.00 per unit.

        " IRS " means the U.S. Internal Revenue Service.

        " Lock-Up Agreements " means the Lock-Up Agreements that the Sponsor and CM Bermuda will each deliver to Sirius Group at the closing of the Merger, the form of which is attached to this proxy statement/prospectus as Annex F .

         " Merger " means the transactions contemplated by the Merger Agreement whereby, among other things, on the terms and subject to the conditions set forth in the Merger Agreement, (i) Merger Sub, a wholly owned subsidiary of Sirius Group, will merge with and into Easterly, (ii) Easterly will become a wholly owned subsidiary of Sirius Group, (iii) Sirius Group will issue its common shares to Easterly's stockholders in exchange for their Easterly common stock, resulting in former Easterly stockholders becoming shareholders of Sirius Group, and (iv) Easterly's public warrants to acquire Easterly common stock will be converted into warrants to acquire Sirius Group common shares.

        " Merger Agreement " means that certain Agreement and Plan of Merger, dated as of June 23, 2018, by and among Sirius Group, Easterly and Merger Sub, a copy of which is attached to this proxy statement/prospectus as Annex A , as amended from time to time, including by the Amendment.

        " Merger Proposal " means the proposal to approve and adopt the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger.

        " Merger Sub " means Sirius Acquisitions Holding Company III, a Delaware corporation and a wholly owned subsidiary of Sirius Group.

        " Preference Shares Redemption Agreement " means that certain Redemption Agreement, dated as of July 14, 2018, among Sirius Group, IMGAH and Sirius Acquisitions Holding Company II.

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        " Private Placement Warrants " means the 6,750,000 private placement warrants issued to the Sponsor, at a price of $1.00 per warrant, in a private placement that occurred simultaneously with the completion of the IPO.

        " Promissory Note " means the promissory note, dated June 23, 2018, made by Easterly in favor of Sirius Group pursuant to which Sirius Group has agreed to loan Easterly $0.03 per month for every public share of Easterly common stock outstanding as of June 30, 2018, until the earlier of the consummation of the Merger and November 30, 2018, the form of which is attached to this proxy statement/prospectus as Annex D .

        " public shares " means shares of Easterly common stock issued in the IPO.

        " public warrants " means the warrants issued in the IPO, each of which is exercisable for one share of Easterly common stock, in accordance with its terms.

        " Registration Rights Agreement " means the Registration Rights Agreement that Sirius Group will enter into with the Sponsor and CM Bermuda at the closing of the Merger, the form of which is attached to this proxy statement/prospectus as Annex E .

        " SAP " means the statutory accounting principles prescribed or permitted by an applicable insurance regulator, including, if applicable, International Financial Reporting Standards.

        " SEC " means the U.S. Securities and Exchange Commission.

        " Securities Act " means the U.S. Securities Act of 1933, as amended.

        " Sirius Group common shares " means the common shares, par value $0.01 per share, of Sirius Group.

        " Sirius Group Private Placement " means the private placement of Sirius Group common shares, Sirius Group Series B preference shares and warrants to purchase Sirius Group common shares that Sirius Group expects to complete in connection with the closing of the Merger.

        " Sirius Group Private Placement Investors " means the investors purchasing Sirius Group securities in the Sirius Group Private Placement.

        " Sirius Group Series A redeemable preference shares " means the Series A redeemable preference shares, par value $0.01 per share, of Sirius Group.

        " Sirius Group Series B preference shares " means the Series B preference shares, par value $0.01 per share, of Sirius Group.

        " Sponsor " means Easterly Acquisition Sponsor, LLC, a Delaware limited liability company.

        " Sponsor Letter " means the letter agreement, dated as of June 23, 2018, among Easterly, the Sponsor and Sirius Group, a copy of which is attached to this proxy statement/prospectus as Annex B , as amended by the Amendment.

        " Transaction " means the transactions contemplated by the Merger Agreement.

        " Trust Account " means the segregated trust account located in the United States with Continental Stock Transfer & Trust Company acting as trustee into which the proceeds of the IPO and the sale of the Private Placement Warrants were placed at the closing of the IPO.

        " Warrant Amendment " means the Assignment, Assumption and Amendment Agreement that Sirius Group will enter into with Easterly and Continental Stock Transfer & Trust Company at the closing of the Merger, the form of which is attached to this proxy statement/prospectus as Annex G .

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QUESTIONS AND ANSWERS ABOUT THE MERGER, THE SPECIAL MEETING AND RELATED MATTERS

         The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the Easterly special meeting, including with respect to the proposed Merger. The following questions and answers do not include all the information that is important to Easterly stockholders. Stockholders are urged to read carefully this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein. See the section entitled "Where You Can Find More Information" beginning on page 350. The following questions and answers do not include all the information that may be important to you as an Easterly stockholder.

About the Merger

Q:
Why am I receiving this proxy statement/prospectus?

A:
Sirius Group, Easterly and Merger Sub entered into a Merger Agreement on June 23, 2018, providing for a Merger of Easterly and Sirius Group, whereby Merger Sub will be merged with and into Easterly, with Easterly surviving the merger as a wholly owned subsidiary of Sirius Group. Easterly common stock will be exchanged for Sirius Group common shares and the public warrants will become warrants to acquire Sirius Group common shares. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A . Easterly's stockholders are being asked to consider and vote upon a proposal to approve and adopt the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger.
Q:
What will happen in the Merger?

A:
Pursuant to the Merger, among other things:

Merger Sub will merge with and into Easterly, with Easterly surviving the Merger as a wholly owned subsidiary of Sirius Group.

Upon the effectiveness of the Merger, all shares of Easterly common stock (other than (i) shares of Easterly common stock with respect to which an Easterly stockholder has validly exercised its redemption rights, and that will be redeemed as provided for by Easterly's charter, (ii) shares of Easterly common stock held by Easterly as treasury stock or owned by Easterly, Sirius Group, Merger Sub, or any wholly owned subsidiary of Easterly or Sirius Group, which will be cancelled for no consideration and (iii) shares of Easterly common stock held by the Sponsor that will be cancelled pursuant to the Sponsor Letter) will be converted into Sirius Group common shares at the Exchange Ratio.

Each issued and outstanding public warrant to acquire shares of Easterly common stock will cease to represent a right to acquire shares of Easterly common stock and will be converted into a converted warrant. The number of Sirius Group common shares subject to each converted warrant will be equal to the number of shares of Easterly common stock subject to each Easterly warrant immediately prior to the closing of the Merger multiplied by the Exchange Ratio, and such converted warrant will have an exercise price per Sirius Group common share equal to the exercise price per share of Easterly common stock subject to such Easterly warrant immediately prior to the closing of the Merger divided by the Exchange Ratio.

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Q:
Following the Merger, will Easterly's securities continue to trade on a stock exchange?

A:
No, Easterly's units, common stock and warrants will no longer be listed on the Nasdaq Capital Market. Prior to the closing, Easterly's units, which currently are traded under the symbol "EACQU," will separate into their components of one share of Easterly common stock and one half of a warrant to purchase one share of Easterly common stock, which will be exchanged for Sirius Group common shares and become the converted warrants, respectively.

Q:
Following the Merger, will Sirius Group's securities trade on a stock exchange?

A:
Sirius Group has applied to list the Sirius Group common shares and converted warrants on the Nasdaq Stock Market under the symbols "SG" and "SGW," respectively, effective as of the closing of the Merger. The listing of the Sirius Group common shares on the Nasdaq Stock Market, subject to official notice of issuance, is a condition to the completion of the transactions contemplated by the Merger Agreement. This listing condition may be waived by Sirius Group and Easterly.

Q:
What happens to the capital stock of Easterly in the Merger?

A:
There currently are 19,208,407 shares of Easterly common stock issued and outstanding, consisting of:

14,208,407 shares held by public stockholders; and

5,000,000 Founder Shares held by the Sponsor and Easterly's original independent directors.

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Q:
What is the value of the Merger consideration to be received by Easterly stockholders?

A:
Based on a per share value equal to (i) 1.05 multiplied by (ii) the Sirius Group September 30 Adjusted DBVPS, which is estimated as of August 31, 2018 to be $17.77, the aggregate value of the Merger consideration to be received by the Easterly stockholders (including the Sponsor) in respect of their shares of Easterly common stock pursuant to the Merger Agreement is estimated to be $165.2 million. Easterly has not obtained an opinion from an independent financial advisor in connection with the Merger and, consequently, there is no assurance from an independent source that the price Sirius Group is paying for Easterly is fair to Easterly's stockholders from a financial point of view.

Q:
How will the Merger impact the Sirius Group shares issued and outstanding after the Merger?

A:
Based on the number of shares of Easterly common stock and Easterly warrants outstanding on August 31, 2018, Sirius Group expects to issue or reserve for issuance to Easterly public stockholders approximately 8.3 million common shares pursuant to the Merger Agreement (excluding 5.9 million Sirius Group common shares issuable upon exercise of the converted warrants). Sirius Group also expects to issue approximately 1.0 million common shares to the Sponsor, resulting in a total of approximately 9.3 million Sirius Group common shares issued in exchange for outstanding shares of Easterly common stock pursuant to the Merger Agreement. Upon the closing of the Merger, Sirius Group's existing controlling shareholder, CM Bermuda, is expected to own approximately 83.7% of Sirius Group, the Sirius Group Private Placement Investors are expected to own approximately 8.9% of Sirius Group, Easterly's public stockholders (excluding Warrant holders) are expected to own approximately 6.6% of Sirius Group and the Sponsor and Easterly's directors and executive officers are expected to own approximately 0.8% of Sirius Group. The foregoing amounts assume that (i) the Exchange Ratio is equal to 0.586, (ii) no Easterly stockholders exercise their redemption rights in connection with the Merger Proposal, (iii) the Sponsor and Easterly's original independent directors retain 1.0 million shares of Easterly common stock after giving effect to the transactions contemplated by the Sponsor Letter, (iv) Sirius Group issues 11.4 million common shares and Series B preference shares convertible into common shares in connection with the Sirius Group Private Placement, (v) Sirius Group redeems 14.1 million common shares from CM Bermuda for approximately $250 million pursuant to the redemption transaction described herein and (vi) all of the issued and outstanding Sirius Group Series A redeemable preference shares are redeemed for $95 million in cash prior to the closing of the Merger. Further, such percentages do not take into account (x) the issuance of any Sirius Group common shares upon the exercise of the converted warrants that may remain issued and outstanding following the Merger or that are issued pursuant to the Sirius Group Private Placement or (y) the issuance of up to 14.1 million Sirius Group common shares reserved for issuance pursuant to Sirius Group's Long Term Incentive Plan and 2018 Omnibus Incentive Plan. If the facts differ from these assumptions, Easterly's stockholders may experience dilution of their

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Q:
How has the announcement of the Merger affected the trading price of the Easterly common stock and the public warrants?

A:
On June 22, 2018, the last trading date immediately prior to the announcement of the Merger, the closing trading prices of a share of Easterly common stock and a public warrant on the Nasdaq Capital Market were $10.30 and $0.32, respectively. On [                    ], 2018, the date immediately prior to the date of this proxy statement/prospectus, the closing trading prices of a share of Easterly common stock and a public warrant on the Nasdaq Capital Market were $[            ] and $[            ], respectively.

Q:
What is the nature of Sirius Group's business and operations?

A:
Sirius Group is a Bermuda exempted company whose principal businesses are conducted through its insurance and reinsurance subsidiaries and other affiliates. Sirius Group's subsidiaries, including Sirius Bermuda Insurance Company Ltd. (" Sirius Bermuda "), Sirius International Insurance Corporation (" Sirius International "), Sirius America Insurance Company (" Sirius America ") and Lloyd's Syndicate 1945 (" Syndicate 1945 "), provide insurance, reinsurance and insurance services on a worldwide basis. Sirius Group writes treaty and facultative reinsurance, as well as primary insurance business. The majority of Sirius Group's treaty reinsurance premiums are derived from proportional and excess of loss reinsurance contracts, which in 2017 amounted to 44% and 30%, respectively, of its total net written premiums, while primary business represented 26% of total net written premiums. For more information about Sirius Group, see the sections entitled " Information About Sirius Group ," " Management's Discussion and Analysis of Financial Condition and Results of Operations of Sirius Group " and " Management of Sirius Group " beginning on pages 152, 196 and 274, respectively.

Q:
What revenue and net income has Sirius Group generated in 2017, 2016 and 2015?

A:
For the years ended December 31, 2017, 2016 and 2015, Sirius Group had total revenues approximately $1,134 million, $995 million and $1,107 million, respectively, with net (loss) income of $(156) million, $33 million and $291 million, respectively. Basic (loss) earnings per share for the years ended December 31, 2017, 2016 and 2015 was $(1.30), $0.27 and $2.43, respectively. See " Selected Consolidated Historical Financial Data of Sirius Group " beginning on page 124 and " Management's Discussion and Analysis of Financial Condition and Results of Operations of Sirius Group " beginning on page 196 for additional information.

Q:
Who will manage the combined company following the Merger?

A:
It is anticipated that the current executive officers of Sirius Group will manage the combined company upon the completion of the Merger. Additionally, it is anticipated that the board of directors of the combined company will be comprised of the current members of the board of directors of Sirius Group, and additional independent directors to be identified by Sirius Group. See the section entitled " Management of Sirius Group " beginning on page 274 for further information.

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Q:
Is the Merger the first step in a "going-private" transaction?

A:
Easterly does not intend for the Merger to be the first step in a "going-private" transaction. One of the primary purposes of the Merger is to provide a platform for Sirius Group to access the U.S. public markets.

Q:
What conditions must be satisfied to complete the Merger?

A:
There are a number of closing conditions in the Merger Agreement, including, but not limited to, the following:

holders of at least a majority of the outstanding shares of Easterly common stock must approve and adopt the Merger Agreement;

the Sirius Group common shares issuable pursuant to the Merger Agreement and upon exercise of the converted warrants must be approved for listing on the Nasdaq Stock Market, subject to official notice of issuance;

there must not be in effect any order by a governmental entity of competent jurisdiction which prohibits, restrains or makes illegal the consummation of the transactions contemplated by the Merger Agreement;

Sirius Group's Registration Statement on Form S-4, of which this proxy statement/prospectus forms a part, must have become effective under the Securities Act and not be the subject of any stop order, and no proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn; and

there must not have been any event or circumstance which resulted or that would reasonably be expected to result in a material adverse effect of Sirius Group or Easterly that is continuing.
Q:
What interests do Easterly's directors and executive officers have in the Merger that could conflict with a public stockholder?

A:
Easterly's directors and executive officers may have interests in the Merger that are different from, in addition to or in conflict with, yours. These interests include:

the 400,000 to 1.6 million total Founder Shares that the Sponsor (or its members) will hold immediately prior to the Merger, which will be exchanged for Sirius Group common shares at the Exchange Ratio in connection with the Merger;

the 24,000 Founder Shares that one of Easterly's independent directors holds as of August 31, 2018, which will be exchanged for Sirius Group common shares at the Exchange Ratio in connection with the Merger;

if Easterly is unable to complete a business combination within the required time period, the Convertible Promissory Note issued to the Sponsor, in the amount of $895,000 at August 31, 2018 plus accrued interest, will not be repaid and all amounts owed thereunder will be forgiven

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Q:
What interests do Sirius Group's directors and executive officers have in the Merger?

A:
Sirius Group's directors and executive officers may have interests in the Merger that are different from, in addition to or in conflict with, yours. These interests include:

the directors and executive officers of Sirius Group will continue to be the directors and executive officers of the combined company;

in connection with the Merger, each executive officer of Sirius Group will receive a performance share unit award granted under the 2018 Omnibus Incentive Plan, with the target number of performance share units equal to a specified dollar value divided by the per share value of Sirius Group common shares at the closing of the Merger. The performance share unit awards have been allocated to the executive officers as follows, based on the grant date value of the award at target levels of performance: Mr. Waters—$2,600,000; each of Mr. Boxer, Ms. Cramér Manhem and Mr. Oberting—$1,800,000; and Mr. Davis—$700,000. The performance share unit awards will be subject to vesting conditions and a commitment by the executive officer to purchase Sirius Group common shares having a value equal to the target award granted to the executive officer;

in connection with the Merger, Sirius Group has implemented an Employee Share Purchase Program, which provides all employees of Sirius Group with a one-time opportunity to purchase between 100 and 1,000 Sirius Group common shares at a price equal to 85% of market value for the first 100 shares and 100% of market value for the next 900 shares. For this purpose, the market value of the Sirius Group common shares will be equal to 1.05 times the Sirius Group September 30 Adjusted DBVPS. Employees have the option of paying for the shares upfront or, in the case of employees who are not executive officers, through a loan that is repaid over a two-year period through payroll deductions;

in connection with the Merger, the Compensation Committee amended the Sirius Group 2016 Long Term Incentive Plan (the " 2016 LTIP ") to provide for continued vesting of outstanding awards in the event of a termination of employment by Sirius Group without cause or by the executive officer due to good reason outside of the 24-month change in control period already provided for under the 2016 LTIP. In these qualifying terminations of employment events, each

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Q:
What happens to Easterly if the Merger is not consummated?

A:
There are certain circumstances under which the Merger Agreement may be terminated. See the section entitled " Proposal No. 1—The Merger Proposal—The Merger Agreement " beginning on page 86 for information regarding the parties' specific termination rights.

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Q:
What happens to the funds held in the Trust Account upon consummation of the Merger?

A:
If the Merger is consummated, the funds held in the Trust Account will be released to (i) the surviving company for general corporate purposes, including making loans or contributing cash to other affiliates for working capital, organic growth and future potential acquisitions, (ii) pay unpaid franchise and income taxes of Easterly, (iii) Easterly stockholders who properly exercise their redemption rights, and (iv) pay up to $2 million of Easterly's liabilities, fees, costs and expenses and the $7 million deferred underwriting fee. The deferred underwriting fee will not change as a result of the amount of redemptions of Easterly common stock, and will not reduce the per-share amount that Easterly will distribute to stockholders who properly redeem their shares. The deferred underwriting fee will not be paid in the event that the Merger is not completed. See the section entitled " Use of Proceeds " on page 123.
Q:
When is the Merger expected to be completed?

A:
It is currently anticipated that the Merger will be consummated promptly following the Easterly special meeting of stockholders, provided that all other conditions to the consummation of the Merger have been satisfied or waived. For a description of the conditions to the completion of the Merger, see the section entitled " The Merger Agreement—Conditions to Closing of the Merger " beginning on page 90.

Q:
Do Easterly stockholders have appraisal rights if they object to the proposed Merger?

A:
No. There are no appraisal rights available to holders of Easterly common stock in connection with the Merger.

About the Redemption Rights of Easterly Public Stockholders

Q:
Do I have redemption rights?

A:
If you are a holder of Easterly public shares, you may have your public shares redeemed for cash equal to your pro rata share of the aggregate amount on deposit in the Trust Account, which holds the proceeds of the IPO, as of two business days prior to the consummation of the Merger, including interest earned on the funds held in the Trust Account and not previously released to Easterly to pay its franchise and income taxes, upon the consummation of the Merger. For illustrative purposes, based on funds in the Trust Account of approximately $148.0 million on August 31, 2018, the estimated per share redemption price would have been approximately $10.41. This is slightly more than the $10.00 initial public offering price of Easterly's units. Additionally, shares properly tendered for redemption will only be redeemed if the Merger is consummated; otherwise, holders of such shares will only be entitled to a pro rata portion of the Trust Account including interest earned on the funds held in the Trust Account and not previously released to

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Q:
Can the Sponsor or the Easterly independent directors redeem their Easterly common stock?

A:
All of the holders of Founder Shares, which includes the Sponsor and Easterly's original independent directors, have agreed to waive their redemption rights with respect to their Founder Shares and have agreed to waive their redemption rights with respect to any public shares that they may have acquired during or after the IPO in connection with the completion of the Merger. The Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price.

Q:
Is there a limit on the number of shares I may redeem?

A:
A public stockholder, together with any of his, her or its affiliates or any other person with whom he, she or it is acting in concert or as a "group" (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to 15% or more of the public shares of Easterly common stock. Accordingly, all shares in excess of 15% owned by a holder will not be redeemed for cash. On the other hand, a public stockholder who holds less than 15% of the public shares of common stock may redeem all of the public shares held by him, her or it for cash.

Q:
How will the level of redemptions affect the Merger?

A:
The fraction of a Sirius Group common share issuable for each share of Easterly common stock will not be impacted by the level of redemptions.

Q:
How will the level of redemptions affect the combined company?

A:
The number of redemptions requested by Easterly stockholders would affect the amount of cash from the Trust Account available for general corporate purposes following the Merger. Each redemption of public shares by Easterly's public stockholders will decrease the amount in the Trust Account, which was approximately $148.0 million as of August 31, 2018. There is no specified maximum redemption threshold under Easterly's charter. In no event, however, will Easterly redeem public shares in an amount that would cause its net tangible assets to be less than $5,000,001. In addition, the number of redemptions requested by Easterly stockholders may result in a less liquid trading market for the combined company's common shares, fewer shareholders and the potential inability to meet Nasdaq's listing standards.

Q:
Will how I vote affect my ability to exercise redemption rights?

A:
No. You may exercise your redemption rights whether you vote your shares of Easterly common stock for or against the Merger Proposal. As a result, the Merger Proposal can be approved by stockholders who will redeem their shares and no longer remain stockholders.

Q:
How do I exercise my redemption rights?

A:
In order to exercise your redemption rights, you must, prior to 5:00 p.m. Eastern time on [                    ], 2018 (two business days before the Easterly special meeting), (i) if you hold Easterly units, elect to separate your Easterly units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to your public shares, (ii) submit a written request to Easterly's transfer agent that it redeem your public shares for cash, and (iii) deliver your stock to Easterly's transfer agent physically or electronically through The Depository Trust Company (" DTC "), in each case in accordance with the procedures described in this proxy

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Q:
What are the U.S. federal income tax consequences as a result of the Merger?

A:
Easterly and Sirius Group intend to report the Merger as a tax-deferred transaction for United States federal income tax purposes pursuant to Section 368 of the Code. Assuming such treatment is respected, holders of Easterly common stock generally will not recognize gain or loss for U.S. federal income tax purposes as a result of the exchange of their Easterly common stock for Sirius Group common shares (except with respect to cash received in lieu of fractional shares). Neither Easterly nor Sirius Group intends to request any ruling or other guidance from the IRS on the United States federal income tax treatment of the Merger, neither is receiving an opinion of counsel regarding such treatment, and no assurance can be given that the IRS would not challenge such treatment in light of the specific terms of the Merger, the post-closing adjustments with Sirius Group common shares to reflect the exchange ratio and related transactions. You are strongly urged to consult with your own tax advisor to determine the particular U.S. federal, state or local or foreign income or other tax consequences of the Merger to you. See the section entitled " Material Tax Consequences—Material U.S. Tax Consequences " beginning on page 139.

Q:
What are the U.S. federal income tax considerations of exercising my redemption rights?

A:
Easterly stockholders who exercise their redemption rights to receive cash from the Trust Account in exchange for their shares of Easterly common stock generally will be required to treat the transaction as either a sale of such shares or a distribution with respect to such holder's shares of Easterly common stock. See the section entitled " Proposal No. 1—The Merger Proposal—U.S. Federal Income Tax Considerations of Redeeming Easterly Common Stock " beginning on page 117.

Q:
If I am an Easterly warrant holder, can I exercise redemption rights with respect to my warrants?

A:
No. There are no redemption rights with respect to Easterly's warrants.

About the Easterly Special Meeting

Q:
What is being voted on at the Easterly special meeting?

A:
Below are the proposals on which Easterly's stockholders are being asked to consider and vote upon at the Easterly special meeting.

1.
Proposal No. 1—The Merger Proposal —To approve and adopt the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger; and

2.
Proposal No. 2—The Adjournment Proposal— To approve the adjournment of the Easterly special meeting to a later date or dates, if necessary, to permit further solicitation of proxies in the event that, based upon the tabulated vote at the time of the Easterly special meeting, there are not sufficient votes to approve one or more proposals presented to Easterly's stockholders for vote at such special meeting. This proposal will only be presented at the

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Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus and its Annexes.

Q:
Are the Merger Proposal and the Adjournment Proposal conditioned on each other?

A:
No. The Merger Proposal is not conditioned on the approval of the Adjournment Proposal and the Adjournment Proposal is not conditioned on the approval of the Merger Proposal.

Q:
What happens to Easterly if Easterly stockholders do not approve the Merger Proposal?

A:
If Easterly stockholders do not approve the Merger Proposal, then Easterly cannot consummate the Merger. If Easterly does not consummate the Merger and fails to complete an initial Merger by November 30, 2018, Easterly will be required to dissolve and liquidate the Trust Account.

Q:
Why is Easterly providing its stockholders with the opportunity to vote on the Merger Proposal?

A:
The Merger Proposal provides for the approval and adoption by Easterly stockholders of the Merger Agreement and the Merger. Easterly's charter requires that it provide all holders of its public shares with the opportunity to have their public shares redeemed upon the consummation of its initial business combination in conjunction with either a tender offer or a stockholder vote. For business and other reasons, Easterly has elected to provide Easterly stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote rather than pursuant to a tender offer. As a result, Easterly public stockholders will have the opportunity to redeem their public shares in connection with the closing of the Merger.

Q:
What happens if I sell my shares of Easterly common stock before the Easterly special meeting of stockholders?

A:
The record date for the Easterly special meeting of stockholders will be earlier than the date of the special meeting. If you transfer your shares of Easterly common stock after the record date, but before the Easterly special meeting of stockholders, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Easterly special meeting of stockholders.

Q:
What vote is required to approve the proposals presented at the Easterly special meeting of stockholders?

A:
The approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Easterly common stock. Accordingly, an Easterly stockholder's failure to vote by proxy or to vote in person at the Easterly special meeting of stockholders, an abstention from voting or a broker non-vote will have the same effect as a vote "AGAINST" the Merger Proposal. The approval of the Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of Easterly common stock that are voted on such proposal at the Easterly special meeting of stockholders. Accordingly, an Easterly stockholder's failure to vote by proxy or to vote in person at the Easterly special meeting of stockholders or an abstention from voting will have no effect on the outcome of any vote on the Adjournment Proposals. A broker non-vote will have no effect on the Adjournment Proposal.

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Q:
How many votes do I have at the Easterly special meeting of stockholders?

A:
For each proposal, Easterly's stockholders are entitled to one vote at the Easterly special meeting for each share of Easterly common stock held of record as of the record date. As of the close of business on the record date, there were 19,208,407 outstanding shares of Easterly common stock.

Q:
What constitutes a quorum at the Easterly special meeting of stockholders?

A:
Holders of a majority in voting power of Easterly's common stock issued and outstanding and entitled to vote at the Easterly special meeting, present in person or represented by proxy, constitute a quorum. In the absence of a quorum, a majority of Easterly stockholders, present in person or represented by proxy, will have power to adjourn the Easterly special meeting. As of the record date for the Easterly special meeting, the presence in person or by proxy of holders of at least 9,604,204 shares of Easterly common stock would be required to achieve a quorum.

Q:
How will the Sponsor and Easterly's directors and officers vote?

A:
In connection with the IPO, Easterly entered into agreements with the Sponsor and with Easterly's original independent directors, pursuant to which each agreed to vote their Founder Shares and any other shares acquired during and after the IPO in favor of the Merger Proposal. Additionally, the Sponsor Letter requires that Sponsor vote its shares of Easterly common stock in favor of the Merger. Neither the Sponsor nor Easterly's directors or officers have purchased any shares during or after the IPO and neither Easterly nor the Sponsor, its directors or its officers have entered into agreements, and are not currently in negotiations, to purchase shares. Currently, the Sponsor, Easterly's original independent directors and their permitted transferees own 25.8% of the issued and outstanding shares of Easterly common stock, consisting of 100% of the Founder Shares.

Q:
How do I vote?

A:
If you were a holder of record of Easterly common stock on [                    ], 2018, the record date for the Easterly special meeting, you may vote or have your shares voted with respect to the applicable proposals:

in person at the Easterly special meeting of stockholders; or

by submitting a proxy to vote by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.
Q:
What will happen if I sign and return my proxy card without indicating how I wish to vote?

A:
If you are a record holder, then signed and dated proxies received by Easterly without an indication of how the stockholder of record intends to vote on a proposal will be voted in favor of each proposal presented to the stockholders.

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Q:
If my shares are held in "street name," will my broker, bank or nominee automatically vote my shares for me?

A:
No, except with respect to the Adjournment Proposal. Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. Except for the Adjournment Proposal, we believe the proposals presented to the stockholders will be considered non-discretionary and therefore your broker, bank or nominee cannot vote your shares without your instruction. If you do not provide instructions with your proxy, your broker, bank or nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a broker, bank or nominee is not voting your shares is referred to as a "broker non-vote." Broker non-votes will not be counted for the purpose of determining the existence of a quorum or for purposes of determining the number of votes cast at the Easterly special meeting. Except with respect to the Adjournment Proposal, your broker, bank or nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

Q:
If I am not going to attend the Easterly special meeting of stockholders in person, should I return my proxy card instead?

A:
Yes. Whether you plan to attend the Easterly special meeting or not, please read this proxy statement/prospectus carefully, and submit your proxy to vote by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

Q:
May I change my vote after I have submitted my signed proxy card?

A:
Yes. You may change your vote by sending a later-dated, signed proxy card to Easterly's secretary at the address listed below so that it is received by its secretary prior to the Easterly special meeting of stockholders, or attending the Easterly special meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to Easterly's secretary, which must be received by Easterly's secretary prior to the Easterly special meeting.

Q:
What should I do if I receive more than one set of voting materials?

A:
You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

Q:
Who will solicit and pay the cost of soliciting proxies?

A:
Easterly will pay the cost of soliciting proxies for the Easterly special meeting. Easterly has engaged Morrow Sodali LLC (" Morrow Sodali ") to assist in the solicitation of proxies for the Easterly special meeting. Easterly has agreed to pay Morrow Sodali a fee of $[            ], plus disbursements. Easterly will reimburse Morrow Sodali for reasonable out-of-pocket expenses and will indemnify Morrow Sodali and its affiliates against certain claims, liabilities, losses, damages and expenses. Easterly also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Easterly's common stock for their expenses in forwarding soliciting materials to beneficial owners of Easterly's common stock and in obtaining

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Q:
What do I need to do now if I am an Easterly stockholder?

A:
You are urged to carefully read and consider the information contained in this proxy statement/prospectus, including the Annexes, and to consider how the Merger will affect you as an Easterly stockholder. You should then submit your proxy as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

Q:
Who can help answer my questions?

A:
If you have questions about the proposals or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card, you should contact:

Easterly Acquisition Corp.
205 Hudson Street, 7 th  Floor
New York, NY 10013
Telephone: (646) 712-8300
Email: info@easterlyacquisition.com

        You may also contact Easterly's proxy solicitor at:

Morrow Sodali LLC
470 West Avenue, 3 rd  Floor
Stamford, CT 06902
Stockholders, please call toll free: (800) 662-5200
Banks and Brokerage Firms, please call collect: (203) 658-9400
Email: Easterly.info@morrowsodali.com

        To obtain timely delivery, Easterly's stockholders must request the materials no later than five business days prior to the Easterly special meeting.

        You may also obtain additional information about Easterly from documents filed with the SEC by following the instructions in the section entitled " Where You Can Find More Information " on page 350.

        If you intend to seek redemption of your public shares, you will need to send a letter demanding redemption and deliver your stock (either physically or electronically) to Easterly's transfer agent prior to 5:00 p.m. Eastern time on [                    ], 2018 (two business days before the Easterly special meeting). If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company
1 State Street Plaza, 30 th  Floor
New York, NY 10004
Attn: Mark Zimkind
Email: mzimkind@continentalstock.com

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SUMMARY

         This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the Merger and the proposals to be considered at the Easterly special meeting, you should read this entire proxy statement/prospectus carefully, including the Annexes and the other documents referred to herein. See also the section entitled "Where You Can Find More Information" on page 350. Most items in this summary include a page reference directing you to a more complete description of those items.

Parties to the Merger

    Easterly (page 303)

        Easterly Acquisition Corp. (" Easterly ") is a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving Easterly and one or more businesses.

        Easterly is a Delaware corporation formed in 2015. Its securities are traded on the Nasdaq Capital Market under the ticker symbols "EACQ," "EACQW" and "EACQU."

        The mailing address of Easterly's principal executive office is 205 Hudson Street, 7 th  Floor, New York, New York 10013.

    Sirius Group (page 152)

        Sirius International Insurance Group, Ltd. (" Sirius Group ") is a Bermuda exempted company whose principal businesses are conducted through its insurance and reinsurance subsidiaries and other affiliates. Sirius Group's subsidiaries, including Sirius Bermuda Insurance Company Ltd. (" Sirius Bermuda "), Sirius International Insurance Corporation (" Sirius International "), Sirius America Insurance Company (" Sirius America ") and Lloyd's Syndicate 1945 (" Syndicate 1945 "), provide insurance, reinsurance and insurance services on a worldwide basis. Sirius Group writes treaty and facultative reinsurance, as well as primary insurance business. The majority of Sirius Group's treaty reinsurance premiums are derived from proportional and excess of loss reinsurance contracts, which in 2017 amounted to 44% and 30%, respectively, of its total net written premiums, while primary business represented 26% of total net written premiums. Sirius Group's primary business has historically been predominantly accident and health insurance.

        Sirius Group is, and will upon the consummation of the Merger be, considered a "foreign private issuer" under the rules and regulations of the SEC. In addition, Sirius Group will qualify as a "controlled company" within the meaning of Nasdaq rules. Sirius Group does not currently expect or intend to rely on the scaled disclosure practices permitted by the SEC or the alternate governance practices permitted by Nasdaq, and is voluntarily choosing to register and report using the SEC's domestic forms and comply with the Nasdaq governance practices applicable to domestic companies.

        Prior to the Merger, there is no public market for Sirius Group's securities. Sirius Group has applied to list the Sirius Group common shares and converted warrants on the Nasdaq Stock Market under the symbols "SG" and "SGW," respectively, effective as of the closing of the Merger.

        The mailing address of Sirius Group's principal executive office is 14 Wesley Street Hamilton HM 11, Bermuda.

    Merger Sub

        Sirius Acquisitions Holding Company III (" Merger Sub ") is a direct wholly owned subsidiary of Sirius Group and was incorporated in 2018 in the State of Delaware. Merger Sub has not engaged in any operations and exists solely to facilitate the Merger.

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The Merger Agreement (page 86)

        Pursuant to the Merger Agreement, Merger Sub will merge with and into Easterly, with Easterly surviving the Merger as a wholly owned subsidiary of Sirius Group.

        At the Effective Time, all shares of Easterly common stock (other than (i) shares of Easterly common stock with respect to which an Easterly stockholder has validly exercised its redemption rights, and that will be redeemed as provided for by Easterly's charter, (ii) shares of Easterly common stock held by Easterly as treasury stock or owned by Easterly, Sirius Group or Merger Sub or any wholly owned subsidiary of Easterly or Sirius Group, which will be canceled for no consideration, and (iii) shares of Easterly common stock held by the Sponsor that will be canceled pursuant to the Sponsor Letter) will be converted into Sirius Group common shares at the Exchange Ratio. The Exchange Ratio will be determined prior to the closing of the Merger and will be equal to a fraction determined by dividing (i) the estimated amount of cash per public share of Easterly common stock in the Trust Account immediately prior to the closing of the Merger by (ii) (x) 1.05 multiplied by (y) Sirius Group's adjusted diluted book value per common share as of September 30, 2018 (" Sirius Group September 30 Adjusted DBVPS "). The Sirius Group September 30 Adjusted DBVPS will be calculated by dividing (i) the book value of Sirius Group determined based on GAAP on a consolidated basis, based on the final, Sirius Group board of directors approved, unaudited GAAP consolidated financial statements of Sirius Group for the nine months ended September 30, 2018, decreased by the $7 million deferred underwriting fee payable by Easterly to Citigroup Global Markets Inc. as underwriter of Easterly's initial public offering, and as adjusted by the GAAP accounting effect of the redemption of the Sirius Group Series A redeemable preference shares by (ii) the sum of (x) the fully diluted number of Sirius Group common shares issued and outstanding as of September 30, 2018 and (y) 593,000 Sirius Group common shares. If an estimate of the Sirius Group September 30 Adjusted DBVPS is used to determine the Exchange Ratio at the closing of the Merger, then the Merger Agreement provides for a post-closing adjustment if such estimate is different than the actual Sirius Group September 30 Adjusted DBVPS as finally determined after the closing of the Merger. Such adjustment will result in either (x) the issuance of new Sirius Group common shares or a payment of cash by Sirius Group to CM Bermuda, if the Exchange Ratio is greater than it would have been using the actual Sirius Group September 30 Adjusted DBVPS or (y) the surrender to Sirius Group of Sirius Group common shares owned by CM Bermuda or a payment of cash to Sirius Group from CM Bermuda if the Exchange Ratio is less than it would have been using the actual Sirius Group September 30 Adjusted DBVPS.

        Based on a preliminary estimate of Sirius Group's adjusted diluted book value per common share as of September 30, 2018 and funds in the Trust Account on August 31, 2018, the Exchange Ratio would be equal to 0.586. Investors are cautioned that 0.586 is only an estimate of the Exchange Ratio, has not been agreed as the final Exchange Ratio for purposes of the Merger Agreement, and is subject to change prior to the closing of the Merger. The preliminary estimate of Sirius Group's adjusted diluted book value per common share as of September 30, 2018 included in this proxy statement/prospectus has been prepared by, and is the responsibility of, Sirius Group's management. PricewaterhouseCoopers LLP has not audited, reviewed, compiled, or applied agreed-upon procedures with respect to the preliminary financial data. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.

        Additionally, each issued and outstanding public warrant to acquire shares of Easterly common stock will cease to represent a right to acquire shares of Easterly common stock and will be converted into a converted warrant. The number of Sirius Group common shares subject to each converted warrant will be equal to the number of shares of Easterly common stock subject to each Easterly warrant immediately prior to the closing of the Merger multiplied by the Exchange Ratio, and such converted warrant will have an exercise price per Sirius Group common share equal to the exercise

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price per share of Easterly common stock subject to such Easterly warrant immediately prior to the closing of the Merger divided by the Exchange Ratio.

        Based on an estimated Exchange Ratio of 0.586, each converted warrant would be exercisable for 0.586 Sirius Group common shares at an exercise price of $19.62 per Sirius Group common share. Investors are cautioned that 0.586 is only an estimate of the Exchange Ratio, has not been agreed as the final Exchange Ratio for purposes of the Merger Agreement, and is subject to change prior to the closing of the Merger. Easterly has not obtained an opinion from an independent financial advisor in connection with the Merger and, consequently, there is no assurance from an independent source that the price Sirius Group is paying for Easterly is fair to Easterly's stockholders from a financial point of view.

Agreements Related to the Merger Agreement (page 99)

    Sponsor Letter

        Concurrently with the execution of the Merger Agreement, Easterly entered into the Sponsor Letter with the Sponsor and Sirius Group, pursuant to which, at the closing of the Merger, (i) the Sponsor will surrender and Easterly will cancel for no consideration between 3,328,000 and 4,528,000 (or such higher number of shares based on the adjustment described below) shares of Easterly common stock owned by the Sponsor, which amount will be determined at the Effective Time based on the amount of cash in the Trust Account at the closing of the Merger after giving effect to any redemptions of public shares of Easterly common stock and amounts raised in a private placement of Sirius Group common shares (or securities convertible into Sirius Group common shares) in connection with the Merger (as discussed in further detail below) and (ii) the Sponsor will surrender and Easterly will cancel for no consideration the 6,750,000 private placement warrants that were acquired by the Sponsor in a private placement concurrent with the closing of Easterly's initial public offering. The number of canceled shares will be determined as follows: The base number of 3,928,000 canceled shares will be (a) decreased by 0.50 of a share of Easterly common stock for every $100 that the sum of (I) cash in the Trust Account at the closing of the Merger plus (II) the proceeds of any private placement of Sirius Group common shares (or securities convertible into Sirius Group common shares) in connection with the Merger (the sum of (I) and (II), the " Amount Raised ") is greater than $120 million (provided, that if the Amount Raised is greater than or equal to $150 million, then, solely with respect to any portion of the Amount Raised that is funded from certain designated investors in such private placement, the number of canceled shares will be decreased by 0.25 (in lieu of 0.50) of a share of Easterly common stock for every $100 of the Reduced Rate Amount (as defined below)) or (b) increased by 0.50 of a share of Easterly common stock for every $100 that the Amount Raised is less than $120 million. Notwithstanding the foregoing, the minimum number of canceled shares will be 3,328,000 and the maximum number of canceled shares will be 4,528,000, except that the Sponsor also agreed to surrender additional shares (which could result in more than 4,528,000 shares surrendered) in certain circumstances if the amount per share equal to (x) 1.05 multiplied by (y) the Sirius Group September 30 Adjusted DBVPS used in the calculation of the Exchange Ratio, as adjusted for the value of the warrants issued in the Sirius Group Private Placement, is less than $17.39. If the proceeds raised from the Sirius Group Private Placement Investors is less than $213 million (other than as a result of an investor failing to fund its obligations in breach of its subscription agreement at a time when Sirius Group is not then in material breach of any of its representations, warranties, covenants or agreements set forth in such subscription agreement at the time of such investor's breach of such subscription agreement), the proceeds of the Sirius Group Private Placement will be deemed to be $213 million for purposes of calculating the Amount Raised. The " Reduced Rate Amount " means the lesser of (x) the Amount Raised minus $150 million and (y) the Amount Raised that is funded from certain designated investors in such private placement.

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        The Sponsor also agreed to (i) pay or reimburse all liabilities and obligations of Easterly due and owing or incurred at or prior to the closing of the Merger to the extent not repaid by Easterly using unrestricted cash and up to $2 million from the Trust Account, except for the $7 million deferred underwriting fee, which will be paid using cash released from the Trust Account, and (ii) contribute to Easterly for no consideration, as a contribution to the capital of Easterly, all amounts due and owing by Easterly to the Sponsor under the Convertible Promissory Note to the extent any such amount is not repaid at the closing of the Merger.

        For more information on the Sponsor Letter, please see the full text of the Sponsor Letter, which is attached as Annex B hereto.

    Promissory Note

        Concurrently with the execution of the Merger Agreement, Easterly issued Sirius Group the Promissory Note pursuant to which Sirius Group agreed to lend Easterly $0.03 per month for every public share of Easterly common stock outstanding as of June 30, 2018, until the earlier of the consummation of Easterly's initial business combination and November 30, 2018. The amounts will be lent to Easterly on the first business day of each month and will be deposited by Easterly into a special account within the Trust Account. The Promissory Note will bear interest in an amount equal to the income (if any) actually earned from investing the principal in the Trust Account and will be due upon the completion of Easterly's initial business combination, and will be canceled in case the Merger is not completed.

        For more information on the Promissory Note, please see the full text of the Promissory Note, which is attached as Annex D hereto.

    Registration Rights Agreement

        On the date of the closing of the Merger, Sirius Group will enter into the Registration Rights Agreement with the Sponsor and CM Bermuda substantially in the form attached as Annex E to this proxy statement/prospectus. Pursuant to the terms of the Registration Rights Agreement, CM Bermuda and the Sponsor will be entitled to certain registration rights described in the Registration Rights Agreement with respect to the Sirius Group common shares owned by CM Bermuda and the Sirius Group common shares receivable by the Sponsor upon the exchange of its Easterly common stock. Among other things, pursuant to the Registration Rights Agreement, CM Bermuda will be entitled to the right to initiate the filing of registrations statements, including for underwritten offerings, and unlimited piggyback registration rights. The Sponsor will be entitled to unlimited piggyback registration rights. The registration rights of CM Bermuda and the Sponsor are subject to customary black-out periods, cutback provisions and other limitations as set forth in the Registration Rights Agreement. Sirius Group will agree to pay certain fees and expenses relating to registrations under the Registration Rights Agreement.

        For more information on the Registration Rights Agreement, please see the full text of the form of Registration Rights Agreement which is attached as Annex E hereto.

    Lock-Up Agreements

        On the date of the closing of the Merger and as a condition precedent for the closing, the Sponsor and CM Bermuda will each deliver a Lock-Up Agreement to Sirius Group pursuant to which the Sponsor and CM Bermuda will agree not to sell any Sirius Group common shares for a period of 180 days from the Effective Time without the consent of Sirius Group, subject to specified exemptions.

        For more information on the Lock-Up Agreements, please see the full text of the form of the Lock-Up Agreement, which is attached as Annex F hereto.

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    Warrant Amendment

        On the date of the closing of the Merger and as a condition precedent for the closing, Sirius Group, Easterly and Continental Stock Transfer & Trust Company will enter into the Warrant Amendment with respect to the Warrant Agreement, pursuant to which Easterly will assign to Sirius Group, and Sirius Group will assume, all of Easterly's right, title and interest in the Warrant Agreement. The Warrant Agreement, as amended by the Warrant Amendment, will govern the terms of the converted warrants.

        For more information on the Warrant Amendment, please see the full text of the form of the Warrant Amendment, which is attached as Annex G hereto.

Transactions Related to the Merger (page 101)

    Sirius Group Private Placement

        In connection with the closing of the Merger, Sirius Group expects to complete a private placement of Sirius Group Series B preference shares and Sirius Group common shares at a price per share equal to (i) 1.05 multiplied by (ii) the Sirius Group September 30 Adjusted DBVPS, estimated as of August 31, 2018 to be $17.77 (the " Sirius Group Private Placement "). On August 29, 2018, Sirius Group received subscriptions from affiliated funds of Gallatin Point Capital, The Carlyle Group, Centerbridge Partners, L.P. and Bain Capital Credit (the " Preference Share Investors ") pursuant to which they have committed to purchase $205 million of Sirius Group Series B preference shares and $8 million of Sirius Group common shares in the private placement, which aggregate amount may be decreased to $111 million at Sirius Group's option. In addition, the Preference Share Investors will receive warrants that are exercisable for a period of five years after the issue date at a strike price equal to 125% of the per share purchase price, estimated as of August 31, 2018 to be $22.21. The form of subscription agreement, certificate of designation and warrant are filed as exhibits to the registration statement of which this proxy statement/prospectus forms a part.

        Sirius Group's Chief Executive Officer, Allan L. Waters, has indicated his intent to purchase 500,000 common shares in the Sirius Group Private Placement.

        Gross proceeds of the Sirius Group Private Placement, together with cash in the Trust Account upon the closing of the Merger (which was $148.0 million as of August 31, 2018, before taking into account any redemptions of Easterly common stock or other transactions related to or in connection with the Merger Proposal), are intended to aggregate to up to $350 million. Assuming a private placement of $202 million at a price per share of $17.77, Sirius Group would issue 11.4 million common shares and Series B preference shares convertible into common shares in connection with the Sirius Group Private Placement. Investors are cautioned that this is only an estimate based on the foregoing assumptions, and is subject to change prior to the closing of the Merger. The proceeds of the private placement will be used to redeem all outstanding Sirius Group Series A redeemable preference shares, and the remainder for general corporate purposes. The private placement is intended to be exempt from registration under U.S. securities laws pursuant to Section 4(a)(2) of the Securities Act and Regulation D and Regulation S thereunder.

        In connection with the closing of the Sirius Group Private Placement, Sirius Group, CM Bermuda and the Preference Share Investors will enter into a shareholders agreement (the " Shareholders Agreement "), which will govern certain matters with respect to the governance of Sirius Group, the voting of CM Bermuda's common shares, the repurchase of CM Bermuda's common shares and certain other matters. The form of Shareholders Agreement is filed as an exhibit to the registration statement of which this proxy statement/prospectus forms a part.

        Pursuant to the Shareholders Agreement, until the third anniversary of the date of the closing of the Sirius Group Private Placement: (i) CM Bermuda will vote in favor of the election of the number

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of Independent Directors (as such term is defined in the Shareholders Agreement) as is necessary to provide that at least a majority of the Board of Directors of Sirius Group is comprised of Independent Directors; and (ii) CM Bermuda will not vote in favor of the removal of any director (other than any director affiliated with CM Bermuda) other than for cause. After the third anniversary of the date of the closing of the Sirius Group Private Placement (or earlier in the event of an increase to the size of the Board of Directors), CM Bermuda will not vote in favor of the election of any director not then serving on the Board of Directors (including any election to fill a vacancy then existing on the Board of Directors as a result of death, resignation, removal, expansion of the Board of Directors or otherwise) who is not an Agreed Director. "Agreed Director" means an Independent Director mutually agreeable to CM Bermuda and Preference Share Investors representing a majority of the Sirius Group Series B preference shares; provided , that if CM Bermuda and the Preference Share Investors have not identified an Agreed Director after negotiating in good faith for a period of 60 days, then an Agreed Director means any Independent Director recommended for election by the Nominating and Governance Committee of the Sirius Group Board of Directors.

        Pursuant to the Shareholders Agreement, CM Bermuda will also agree to vote (i) in favor of a Qualified Sale Transaction (as such term is defined in the Shareholders Agreement) that is approved by a majority of Independent Directors and 80% of Sirius Group's voting shares after the first anniversary of the date of the closing of the Sirius Group Private Placement, and (ii) against any merger, amalgamation, consolidation or similar transaction or any sale or transfer of all or substantially all of Sirius Group's consolidated assets, in each case where the per share value of the consideration received by CM Bermuda in such transaction is greater than the per share value of the consideration received by any other holder of Sirius Group common shares.

        The Shareholders Agreement also grants the Preference Share Investors tag-along rights to the extent Sirius Group agrees to repurchase or redeem any common shares held by CM Bermuda.

        The Shareholders Agreement terminates on the date that fewer than 25% of the Sirius Group Series B preference shares issued in the Sirius Group Private Placement are outstanding, and earlier with respect to any Preference Share Investor at the time that it or its affiliates or permitted assigns ceases to own any Sirius Group Series B preference shares.

    Common Shares Redemption Agreement

        Prior to the closing of the Merger, Sirius Group and CM Bermuda will enter into a redemption agreement (the " Common Shares Redemption Agreement "), pursuant to which, effective as of and subject to the closing of the Merger, Sirius Group will redeem Sirius Group common shares from CM Bermuda, at a price per share equal to (i) 1.05 multiplied by (ii) the Sirius Group September 30 Adjusted DBVPS, estimated as of August 31, 2018 to be $17.77, for an aggregate amount of between $120 million and $250 million, as elected by CM Bermuda at least two business days in advance of the closing of the Merger. Assuming a redemption amount of approximately $250 million at a price per share of $17.77, Sirius Group would redeem 14.1 million common shares from CM Bermuda in connection with the Common Shares Redemption Agreement. Investors are cautioned that this is only an estimate based on the foregoing assumptions, and is subject to change. In addition, in the event that the gross proceeds of the Sirius Group Private Placement are less than $202 million, the amount of Sirius Group common shares redeemed from CM Bermuda may be less than $250 million.

    Preference Shares Redemption Agreement

        On July 14, 2018, Sirius Group, IMGAH and Sirius Acquisitions Holding Company II entered into that certain Redemption Agreement (the " Preference Shares Redemption Agreement ") pursuant to which, effective as of and subject to the closing of the Merger, Sirius Group has agreed to redeem all of the issued and outstanding Sirius Group Series A redeemable preference shares, which are held by

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IMGAH, for $95 million, payable in cash at the time of the redemption. Effective as of the completion of such redemption, the parties have agreed to terminate the registration rights agreement and the shareholder's agreement between Sirius Group and IMGAH. In addition, the parties agreed that any remaining contingent consideration in respect of the IMG acquisition, which may be in an amount of up to $50.0 million, will be paid in cash, not in Sirius Group Series A redeemable preference shares as previously contemplated in the agreement in respect of the IMG acquisition.

Beneficial Ownership of the Combined Company (page 341)

        It is anticipated that, upon completion of the Merger, and subject to the assumptions described below:

    Sirius Group's existing controlling shareholder, CM Bermuda, will own approximately 83.7% of Sirius Group;

    the Sirius Group Private Placement Investors will own approximately 8.9% of Sirius Group;

    Easterly's public stockholders will own approximately 6.6% of Sirius Group; and

    the Sponsor and Easterly's directors and executive officers will own approximately 0.8% of Sirius Group.

        These relative percentages assume that (i) the Exchange Ratio is equal to 0.586, (ii) no Easterly stockholders exercise their redemption rights in connection with the Merger Proposal, (iii) the Sponsor and Easterly's original independent directors retain 1.0 million shares of Easterly common stock after giving effect to the transactions contemplated by the Sponsor Letter, (iv) Sirius Group issues 11.4 million common shares and Series B preference shares convertible into common shares in connection with the Sirius Group Private Placement, (v) Sirius Group redeems 14.1 million common shares from CM Bermuda for approximately $250 million pursuant to the Common Shares Redemption Agreement and (vi) all of the issued and outstanding Sirius Group Series A redeemable preference shares are redeemed for $95 million in cash pursuant to the Preference Shares Redemption Agreement prior to the closing of the Merger. Further, such percentages do not take into account (x) the issuance of any Sirius Group common shares upon the exercise of the converted warrants that may remain issued and outstanding following the Merger (which would be 5.9 million Sirius Group common shares using the assumed Exchange Ratio) or that are issued pursuant to the Sirius Group Private Placement (which are estimated to be approximately 5.4 million Sirius Group common shares) or (y) the issuance of up to 14.1 million Sirius Group common shares reserved for issuance pursuant to Sirius Group's Long Term Incentive Plan and 2018 Omnibus Incentive Plan. If the facts differ from these assumptions, Easterly's stockholders may experience dilution of their ownership interest unless they elect to have their shares of Easterly common stock redeemed in connection with the Merger Proposal.

        Assuming (a) the issuance of 5.9 million Sirius Group common shares pursuant to the converted warrants and 5.4 million Sirius Group common shares pursuant to the Sirius Group Private Placement warrants, but excluding the Sirius Group common shares reserved for issuance pursuant to Sirius Group's Long Term Incentive Plan and 2018 Omnibus Plan, and (b) the other assumptions set forth in clauses (i) through (vi) of the preceding paragraph, then ownership of the issued and outstanding Sirius Group common shares would be anticipated to be as follows:

    Sirius Group's existing controlling shareholder, CM Bermuda, will own approximately 76.9% of Sirius Group;

    the Sirius Group Private Placement Investors will own approximately 12.1% of Sirius Group;

    Easterly's public stockholders will own approximately 10.3% of Sirius Group; and

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    the Sponsor and Easterly's directors and executive officers will own approximately 0.7% of Sirius Group.

Corporate Structure of the Combined Company (page 156)

        The following diagram illustrates the simplified corporate structure of the combined company immediately following the Merger.

GRAPHIC

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Directors and Executive Officers of the Combined Company (page 274)

        The directors and executive officers of the combined company upon consummation of the Merger are expected to be as follows:

Name
  Position
Allan L. Waters   Chairman of the Board and Chief Executive Officer (" CEO "), Sirius Group
Kernan (Kip) V. Oberting   President, Chief Financial Officer (" CFO ") and Director, Sirius Group and President, Sirius Capital Markets, Inc.
Monica Cramér Manhem   Chief Operating Officer (" COO ") and Director, Sirius Group and President and CEO, Sirius International
Jeffrey W. Davis   Executive Vice President, Chief Risk Officer (" CRO ") & Chief Actuary, Sirius Group
Gene Boxer   Executive Vice President, Chief Strategy Officer (" CSO ") & Group General Counsel, Sirius Group
Laurence Liao   Director
Robert L. Friedman   Director
Meyer (Sandy) Frucher   Director

        The board of directors of Sirius Group has designated a Management Committee comprised of Messrs. Waters, Oberting and Boxer and Ms. Cramér Manhem as the senior management and decision making body of Sirius Group responsible for the oversight of the day-to-day business operations of Sirius Group.

        Sirius Group is in the process of identifying additional individuals who are expected to serve on the Sirius Group board of directors, in order to satisfy independence standards set forth in Nasdaq listing standards and Rule 10A-3 under the Exchange Act, subject to the transition rules available to newly public companies under the Nasdaq listing rules. It is anticipated that, upon consummation of the Merger, a majority of the members of the Sirius Group board of directors will qualify as independent directors in accordance with the applicable rules of Nasdaq.

Redemption Rights (page 84)

        Pursuant to Easterly's charter, holders of public shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with Easterly's charter. As of August 31, 2018, this would have amounted to approximately $10.41 per share. If a holder exercises its redemption rights, then such holder will be exchanging its shares of Easterly common stock for cash and will no longer own shares of Easterly common stock. Such a holder will be entitled to receive cash for its public shares only if it properly demands redemption and delivers its shares (either physically or electronically) to Easterly's transfer agent in accordance with the procedures described herein. Easterly has no specified maximum redemption threshold under its charter. In no event, however, will Easterly redeem public shares in an amount that would cause its net tangible assets to be less than $5,000,001.

Accounting Treatment (page 85)

        The Merger is a capital transaction in substance whereby Easterly will be treated as the "acquired" company for financial reporting purposes. Accordingly, for accounting purposes, the Merger will be treated as the equivalent of Sirius Group issuing shares for the net assets of Easterly, which are comprised of cash and cash equivalents.

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Appraisal Rights (page 85)

        Appraisal rights are not available to Easterly's stockholders in connection with the Merger.

Easterly's Reasons for the Merger (page 107)

        Easterly was organized for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Easterly sought to capitalize on the contacts and sources of its management team to identify, acquire and operate a business in the financial services industry, although Easterly was not limited to a particular industry or sector.

        In considering the Merger, Easterly's board of directors considered the following positive factors, although not weighted or in any order of significance:

    Easterly management's experience with insurance and reinsurance companies;

    Sirius Group's historical track record, including strong operating results;

    Sirius Group's unique European franchise, its global accident and health platform and a diversifying suite of insurance and reinsurance growth lines;

    Sirius Group strong track record of shareholder returns, including the generation of over 13% annualized operating return to White Mountains Insurance Group during its ownership of Sirius Group from 2009 until the first quarter of 2016;

    Sirius Group's superior underwriting, with overall combined ratio averaging 5% outperformance over peers from 2009 through 2017;

    Sirius Group's strong customer relationships with 60% of its business from customer relationships of over 10 years and 30% of its business coming from customer relationships of over 20 years;

    Sirius Group's track record of successfully executing mergers and acquisitions, including the 2017 acquisitions of IMG and Armada; and

    Sirius Group's experienced and tenured management team. Sirius Group's management team has significant experience in the insurance and reinsurance industries. The executive management team averages over 30 years of insurance operations and mergers and acquisitions experience, with over 23 years at Sirius Group.

        In addition, Easterly's board of directors also considered the following risks and other potentially negative factors:

    the recent historical net losses and low net profit of Sirius Group. Easterly's board of directors noted that Sirius Group had a comprehensive (loss) income of approximately $(78) million, $(34) million and $196 million for 2017, 2016 and 2015 respectively;

    the potential for major catastrophes to have a negative impact on Sirius Group's results of operations and capital;

    the risk that some of the current public stockholders of Easterly would vote against the Merger Proposal, or exercise their redemption rights, thereby depleting the amount of cash available in the Trust Account and reducing the number of freely tradeable Sirius Group common shares after the closing;

    the risk that certain key employees and potential customers of Sirius Group might not choose to work at or with Sirius Group after the Merger;

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    the risks related to the fact that CM Bermuda will continue to control Sirius Group after the consummation of the Merger and such control may negatively impact minority shareholders;

    the risks associated with the insurance and reinsurance industries in general;

    the risks associated with macroeconomic uncertainty and the effects it could have on Sirius Group's revenues;

    the risks of unknown future regulation, which could provide burdensome on the insurance and reinsurance industry;

    the risks associated with obtaining additional financing for Sirius Group's operations in the future;

    the risk of competition in the industry;

    the risk that the Merger might not be consummated in a timely manner or that the closing of the Merger might not occur despite the parties' efforts, including by reason of a failure to obtain the approval of Easterly's stockholders and fulfill the other closing conditions;

    the risk that the transactions contemplated by the Merger Agreement would not be completed in accordance with the terms of the Merger Agreement or at all;

    the risk that Easterly's stockholders would not approve an extension request at the June 28, 2018 Easterly special meeting of stockholders, and that Easterly would not be unable to complete the Merger before its expiration without an extension;

    the risk of delisting of Easterly's securities prior to the Merger and being unable to list Sirius Group's securities on the Nasdaq Stock Market in connection with the Merger;

    the significant fees and expenses associated with completing the Merger and the substantial time and effort of management required to complete the Merger; and

    the fact that the Sponsor, and Easterly's officers and directors may have interests in the Merger that are different from, or are in addition to, the interests of Easterly's public stockholders, including the matters described under " Proposal No. 1—The Merger Proposal—Certain Interests of Easterly's Directors and Officers and Others in the Merger ," below.

Sirius Group's Reasons for the Merger (page 109)

        In considering the Merger, Sirius Group's board considered the following positive factors, although not weighted or in any order of significance:

    Sirius Group's business, financial condition, competitive position, business strategy, strategic options and prospects, as well as risks involved in achieving these prospects, the nature of Sirius Group's business and the industry in which it competes, and current industry, economic and global market conditions, both on a historical and on a prospective basis, all of which led Sirius Group's board of directors to conclude that the Merger presented an opportunity to realize greater value than the value likely to be realized in the event Sirius Group did not pursue the Merger;

    the review by Sirius Group's board of directors of possible alternatives to the Merger, including (i) pursuing an initial public offering of Sirius Group common shares and (ii) a merger or other business combination with a strategic buyer, (iii) issuance of additional preference shares or common shares of Sirius Group to one or more third party investors to diversify Sirius Group's shareholder base; the timing and likelihood of actually achieving additional value from these alternatives, as well as the risks and uncertainties associated with such alternatives, and the assessment of Sirius Group's board of directors that the Merger was in the long-term best

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      interest of Sirius Group and its shareholders, taking into account risks of execution as well as business, competitive, industry and market risk;

    the expected accelerated timeline and reduced cost for completion of the Merger as compared to possible alternatives to the Merger;

    the significant reduction in the dilution from the Merger since (i) the Sponsor will surrender and Easterly will cancel for no consideration between 3,328,000 and 4,528,000 shares of Easterly common stock owned by the Sponsor and (ii) the Sponsor will surrender and Easterly will cancel for no consideration the 6,750,000 private placement warrants that were acquired by the Sponsor in a private placement concurrent with the closing of Easterly's initial public offering;

    the totality of the terms of the Merger Agreement (including the representations, warranties, covenants and agreements of each party, the closing conditions, the lack of indemnification provisions, and the termination provisions) and the related agreements;

    the fact that the Merger Agreement and the transactions contemplated thereby were the product of extensive arms' length negotiations between representatives of Sirius Group and representatives of Easterly;

    the potential positive impact of the public announcement of the Merger on Sirius Group's rating agencies, regulators, customers and employees and Sirius Group's ability to attract and retain key management, underwriting, administrative and other personnel;

    the fact that Sirius Group expects to become a publicly listed company with associated benefits of a public currency; and

    the fact that no federal or state regulatory approvals are necessary in connection with the Merger.

        In addition, Sirius Group's board also considered the following risks and other potentially negative factors:

    the risk that the potential benefits sought in the Merger might not be fully realized;

    the risk that the financial results of Sirius Group will not meet expectations given the current economic climate;

    the risk of delisting of Easterly's securities prior to the Merger and being unable to list Sirius Group's securities on the Nasdaq Stock Market in connection with the Merger;

    the risk that the Merger might not be completed in a timely manner or at all, including the risk that Easterly's public stockholders do not vote in favor of the Merger;

    the risk that compliance with rules and requirements applicable to public companies will be expensive and time consuming;

    the risk that Easterly shareholders will redeem their shares for their pro rata portion of the funds available in the Trust Account and thereby reduce the amount of funds held in the Trust Account;

    the limitations imposed on the conduct of Sirius Group's business prior to the completion of the Merger;

    the risk that the Merger will result in the diversion of management and employee attention, or have an adverse effect on customers and business relationships;

    the substantial costs to be incurred in connection with the Merger, including equity dilution on account of the issuance of shares to Easterly's stockholders, banker's expenses, costs of

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      preparing and filing this proxy statement/prospectus and other transaction expenses arising from the Merger; and

    the other risks and uncertainties set forth in the section entitled " Risk Factors " beginning on page 41 of this proxy statement/prospectus.

Risk Factors (page 41)

        In evaluating the proposals set forth in this proxy statement/prospectus, you should carefully read this proxy statement/prospectus, including the Annexes, and especially consider the factors discussed in the section entitled " Risk Factors ."

Quorum and Required Vote for Proposals for the Easterly Special Meeting of Stockholders (page 81)

        A quorum of Easterly stockholders is necessary to hold a valid meeting. A quorum will be present at the Easterly special meeting of stockholders if a majority in voting power of Easterly's common stock issued and outstanding and entitled to vote at the Easterly special meeting is present in person or represented by proxy. Abstentions will count as present for the purposes of establishing a quorum.

        The approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Easterly common stock. Accordingly, an Easterly stockholder's failure to vote by proxy or to vote in person at the Easterly special meeting of stockholders or an abstention from voting, or the failure of an Easterly stockholder who holds his or her shares in "street name" through a broker or other nominee to give voting instructions to such broker or other nominee (any failure to give instructions, a " broker non-vote ") will have the same effect as a vote "AGAINST" the Merger Proposal. The approval of the Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of Easterly common stock that are voted on such proposal at the Easterly special meeting of stockholders. Accordingly, an Easterly stockholder's failure to vote by proxy or to vote in person at the Easterly special meeting of stockholders or an abstention from voting will have no effect on the outcome of the vote on the Adjournment Proposal. A broker non-vote will have no effect on the Adjournment Proposal.

        The transactions contemplated by the Merger Agreement will be consummated only if the Merger Proposal is approved at the Easterly special meeting. The Merger Proposal is not conditioned on the approval of the Adjournment Proposal and the Adjournment Proposal is not conditioned on the approval of the Merger Proposal.

Recommendation to Easterly Stockholders (page 82)

        Easterly's board of directors believes that each of the Merger Proposal and the Adjournment Proposal to be presented at the Easterly special meeting of stockholders is advisable and in the best interests of Easterly and its stockholders and unanimously recommends that Easterly's stockholders vote "FOR" each of the proposals.

        When you consider the recommendation of Easterly's board of directors in favor of approval of these proposals, you should keep in mind that Easterly's directors and executive officers have interests in the Merger that are different from, or in addition to, your interests as an Easterly stockholder. These interests include, among other things:

    the 400,000 to 1.6 million total Founder Shares that the Sponsor (or its members) will hold immediately prior to the Merger, which will be exchanged for Sirius Group common shares at the Exchange Ratio in connection with the Merger;

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    the 24,000 Founder Shares that one of Easterly's independent directors holds as of August 31, 2018, which will be exchanged for Sirius Group common shares at the Exchange Ratio in connection with the Merger;

    if Easterly is unable to complete a business combination within the required time period, the Convertible Promissory Note issued to the Sponsor (in the amount of $895,000 at August 31, 2018 plus accrued interest), will not be repaid and all amounts owed thereunder will be forgiven except to the extent that Easterly has funds available to it outside of the Trust Account to repay such amounts;

    if Easterly is unable to complete a business combination within the required time period, Easterly's Chairman, its Chief Executive Officer and David Cody will be personally liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Easterly for services rendered or contracted for or products sold to Easterly, but only if such a vendor or target business has not executed a waiver of claims against the Trust Account and except as to any claims under Easterly's indemnity of the underwriters; and

    the continued indemnification of current directors and officers of Easterly and the continuation of directors' and officers' liability insurance after the Merger.

        Further, each of Easterly's directors, directly or indirectly, holds Founder Shares that are not subject to redemption and certain of Easterly's directors indirectly hold Private Placement Warrants that would retire worthless if a business combination is not consummated; as a result, Easterly's directors have a financial incentive to see a business combination consummated rather than lose whatever value is attributable to the Founder Shares and Private Placement Warrants. These interests may influence Easterly's directors in making their recommendation that you vote in favor of the Merger Proposal, and the transactions contemplated thereby.

Regulatory Approval

        The parties are not currently aware of any federal or state regulatory approvals that must be applied for or obtained in connection with the Merger.

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SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA OF SIRIUS GROUP

        The following table sets forth summary consolidated historical financial information derived from Sirius Group's (i) audited financial statements included elsewhere in this proxy statement/prospectus as of December 31, 2017 and 2016 and for each of the three years ended December 31, 2017 and (ii) unaudited interim financial statements included elsewhere in this proxy statement/prospectus as of June 30, 2018 and for the six months ended June 30, 2018 and 2017. You should read the following summary financial information in conjunction with the section entitled " Management's Discussion and Analysis of Financial Condition and Results of Operations of Sirius Group " and Sirius Group's audited and unaudited interim financial statements appearing elsewhere in this proxy statement/prospectus.

 
  Six Months Ended June 30,   Years Ended December 31,  
 
  2018   2017   2017   2016   2015  
 
  (in millions, except for share and per share amounts)
 

Selected Statement of (Loss) Income Data

                               

Net earned insurance and reinsurance premiums

  $ 593.4   $ 467.8   $ 1,035.3   $ 890.1   $ 847.0  

Net investment income

    30.0     32.1     56.8     56.2     39.9  

Net realized investment (losses) gains

    4.1     (2.5 )   (27.2 )   288.3     138.5  

Net unrealized investment (losses) gains

    40.7     (22.5 )   (10.5 )   (238.2 )   102.5  

Other revenue

    79.0     2.3     21.7     9.1     (2.4 )

Loss and loss adjustment expenses

    292.4     255.4     811.2     519.3     422.7  

Insurance and reinsurance acquisition expenses

    129.8     94.0     197.2     210.3     189.8  

Other underwriting expenses

    81.4     57.9     106.1     107.3     107.9  

General and administrative expenses

    38.5     40.8     91.9     85.1     27.1  

Interest expense on debt

    15.5     9.6     22.4     34.6     26.6  

Net (loss) income attributable to common shareholder

    138.3     6.9     (156.1 )   32.5     291.2  

Comprehensive (loss) income attributable to common shareholder

    79.0     55.1     (78.3 )   (33.6 )   196.2  

Per Common Share Data:

   
 
   
 
   
 
   
 
   
 
 

Basic (loss) earnings per common share

  $ 1.11   $ 0.06   $ (1.30 ) $ 0.27   $ 2.43  

Diluted (loss) earnings per common share

  $ 1.11   $ 0.06   $ (1.30 ) $ 0.27   $ 2.43  

Cash dividends declared per common share

  $   $   $   $ 0.23   $  

Basic weighted average common shares outstanding(1)

    120,000,000     120,000,000     120,000,000     120,000,000     120,000,000  

Diluted weighted average common shares outstanding(2)

    120,000,000     120,000,000     120,000,000     120,000,000     120,000,000  

Operating Ratios:

   
 
   
 
   
 
   
 
   
 
 

Loss and loss adjustment expense ratio(3)

    49.3 %   54.6 %   78.4 %   58.3 %   49.9 %

Acquisition expense ratio(4)

    21.9 %   20.1 %   19.0 %   23.6 %   22.4 %

Other underwriting expense ratio(5)

    13.7 %   12.4 %   10.2 %   12.1 %   12.7 %

Combined ratio(6)

    84.9 %   87.1 %   107.6 %   94.0 %   85.0 %

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  As of June 30,
2018
  As of December 31,
2017
 
 
  (in millions, except for share and
per share amounts)

 

Selected Balance Sheet Data:

             

Total investments and cash

  $ 3,566.7   $ 3,604.3  

Reinsurance recoverable on unpaid losses

    358.3     319.7  

Total assets

    6,210.1     5,823.6  

Loss and loss adjustment expense reserves

    1,827.1     1,898.5  

Unearned insurance and reinsurance premiums

    800.5     506.8  

Debt

    695.9     723.2  

Total common shareholder's equity

    1,996.3     1,917.0  

Book value per common share

  $ 16.64   $ 15.98  

Diluted book value per common share

  $ 16.64   $ 15.98  

Common shares outstanding—basic(1)

    120,000,000     120,000,000  

Common shares outstanding—diluted(2)

    120,000,000     120,000,000  

(1)
As of June 30, 2018 and December 31, 2017, Sirius Group had 120,000,000 common shares outstanding. On April 27, 2016, Sirius Group split its 12,000 common shares by a multiple of 10,000 resulting in 120,000,000 common shares and changed the par value of the common shares from $1.00 per share to $0.01 per share. Sirius Group's basic and diluted earnings per share calculations have been retrospectively adjusted for all periods presented to reflect the change in capital structure.

(2)
As of June 30, 2018 and December 31, 2017, Sirius Group did not have any warrants outstanding, any employee stock plans issuing Sirius Group stock, or any other instruments that would give rise to additional Sirius Group shares outstanding. See Note 13 " Earnings per share " to Sirius Group's unaudited interim financial statements and Note 16 " Earnings per share " to Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus for additional information.

(3)
The loss and loss adjustment expense ratio is calculated by dividing loss and loss adjustment expenses by net earned insurance and reinsurance premiums.

(4)
The acquisition expense ratio is calculated by dividing insurance and reinsurance acquisition expenses by net earned insurance and reinsurance premiums.

(5)
The other underwriting expense ratio is calculated by dividing other underwriting expenses by net earned insurance and reinsurance premiums.

(6)
The combined ratio is calculated by combining the loss and loss adjustment ratio, the acquisition expense ratio, and the other underwriting expense ratio.

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SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA OF EASTERLY

        The following table sets forth summary consolidated historical financial information derived from Easterly's (i) audited financial statements included elsewhere in this proxy statement/prospectus as of December 31, 2017 and for the years ended December 31, 2017 and 2016 and the period from April 29, 2015 (inception) to December 31, 2015 and (ii) unaudited financial statements included elsewhere in this proxy statement/prospectus as of June 30, 2018 and for the six months ended June 30, 2018 and 2017. You should read the following summary financial information in conjunction with the section entitled " Management's Discussion and Analysis of Financial Condition and Results of Operations of Easterly " and Easterly's financial statements and the related notes appearing elsewhere in this proxy statement/prospectus.

 
  Six Months
Ended
June 30, 2018
  Six Months
Ended
June 30, 2017
  Year Ended
December 31,
2017
  Year Ended
December 31,
2016
  April 29, 2015
(Inception) to
December 31,
2015
 

Statement of Operations Data:

                               

Operating expenses:

                               

Operating costs

  $ (976,215 ) $ (768,940 ) $ (1,293,499 ) $ (1,812,645 ) $ (979,434 )

State franchise taxes

    (120,488 )   (91,118 )   (181,118 )   (182,685 )   (121,858 )

Formation costs

                      (2,910 )

Loss from operations

    (1,096,703 )   (860,058 ) $ (1,474,617 ) $ (1,995,330 ) $ (1,104,202 )

Other income—interest income

    1,067,787     489,030     1,232,227     308,879     9,918  

Income (loss) before income tax expense

    2,899,755     (371,028 )   (242,390 )   (1,686,451 )   (1,094,284 )

Income tax expense

                     

Net income (loss)

  $ 2,899,755   $ (371,028 ) $ (242,390 ) $ (1,686,451 ) $ (1,094,284 )

Loss per common share:

                               

Basic and diluted

  $ 0.31   $ (0.12 ) $ (0.19 ) $ (0.29 ) $ (0.20 )

Weighted average shares outstanding (excluding shares subject to possible redemption):

                               

Basic and diluted

    6,553,463     6,383,279     6,412,873     6,221,263     5,469,153  

Cash Flow Data:

                               

Net cash used in operating activities

    (673,971 )   (626,482 ) $ (817,250 ) $ (479,543 ) $ (985,189 )

Net cash provided by (used in) investing activities

    5,610,230     154,554     50,126,164     216,448     (200,000,000 )

Net cash provided by financing activities

    (4,948,244 )   453,510     (49,319,611 )   15,000     201,257,855  

 

 
  As of
June 30,
2018
  As of
December 31,
2017
 

Balance Sheet Data:

             

Cash

  $ 1,889   $ 13,874  

Cash held in Trust Account—restricted

    146,665,970     151,208,413  

Total assets

    146,696,697     151,229,634  

Common stock, subject to possible redemption or tender, 12,674,622 and 13,544,944 shares at redemption value at June 30, 2018 and December 31, 2017, respectively

    130,833,516     136,335,119  

Total stockholders' equity

    5,000,001     5,000,001  

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SUMMARY CONDENSED COMBINED UNAUDITED PRO FORMA FINANCIAL INFORMATION

        The following tables set forth summary condensed combined pro forma financial information as of and for the six months ended June 30, 2018 and for the year ended December 31, 2017 to provide you with information about how the Merger and related transactions might have affected the historical financial statements of Sirius Group. The following summary condensed combined unaudited pro forma statements of (loss) income do not purport to represent, and are not necessarily indicative of, what the actual results of operations of the combined company would have been had these transactions taken place on the date indicated, nor are they indicative of the consolidated results of operations of the combined company for any future period. The following summary condensed combined unaudited pro forma balance sheet does not purport to represent, and is not necessarily indicative of, what the actual financial condition of the combined company would have been had these transactions taken place on the date indicated, nor is it indicative of the consolidated financial condition of the combined company as of any future date. The pro forma adjustments and assumptions are discussed in the section entitled " Unaudited Pro Forma Condensed Combined Financial Information ".

 
  Pro forma
Six months ended
June 30, 2018
  Pro forma
Year ended
December 31, 2017
 
 
  (in millions, except for share and per share amounts)
 

Revenues

             

Net earned insurance and reinsurance premiums

  $ 593.4   $ 1,035.3  

Net investment income

    31.1     58.0  

Net realized and unrealized investment gains (losses)

    44.8     (37.7 )

Gain on forgiveness of debt

    2.9      

Other revenue

    101.1     79.7  

Total revenues

    773.3     1,135.3  

Expenses

             

Loss and loss adjustment expenses

    292.4     811.2  

Insurance and reinsurance acquisition expenses

    129.8     197.2  

Other underwriting expenses

    81.4     106.1  

General and administrative expenses

    40.9     98.4  

Intangible asset amortization expenses

    7.9     10.2  

Impairment of intangible assets

        5.0  

Accretion of fair value adjustment to loss and loss adjustment reserves

    0.1      

Interest expense on debt

    15.5     22.4  

Total expenses

    568.0     1,250.5  

Pre-tax income (loss)

    205.3     (115.2 )

Income tax expense

    (62.3 )   (26.4 )

Net income (loss)

    143.1     (141.6 )

Income attributable to non-controlling interests

    (0.6 )   (13.7 )

Accrued dividends on Series A redeemable preference shares

         

Net income (loss) attributable to common shareholders

  $ 142.5   $ (155.3 )

Per share data

             

Weighted average number of common shares outstanding—basic

    121,494,088     121,494,088  

Weighted average number of common shares outstanding—diluted

    122,348,097     121,494,088  

Basic earnings per share

  $ 1.04   $ (1.28 )

Diluted earnings per share

  $ 1.04   $ (1.28 )

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  As of June 30, 2018  
 
  (in millions)
 

Investments

  $ 3,436.7  

Cash

    115.5  

Total assets

  $ 6,211.5  

Loss and loss adjustment reserves

  $ 1,827.1  

Unearned insurance and reinsurance premiums

    800.5  

Debt

    695.9  

Total liabilities

    4,104.0  

Total equity

    1,988.6  

Total liabilities and shareholders' equity

  $ 6,211.5  

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RISK FACTORS

         You should carefully consider the following risk factors, in addition to the other information included in this proxy statement/prospectus, including matters addressed in the section entitled "Cautionary Statement Regarding Forward-Looking Statements" and the financial statements and notes to the financial statements included herein. Easterly and Sirius Group may face additional risks and uncertainties that are not presently known to them, or that Easterly and Sirius Group currently deem immaterial, which may also impair their businesses.

Risks Related to Sirius Group's Business and Industry

         The following risk factors apply to the business and operations of Sirius Group and will also apply to the business and operations of the combined company following the completion of the Merger.

Sirius Group is exposed to unpredictable catastrophic events that could adversely affect its results of operations and financial condition.

        Sirius Group writes reinsurance contracts and insurance policies that cover unpredictable catastrophic events. Covered unpredictable catastrophic events, predominantly in its property catastrophe excess line of business, include natural perils and other disasters, such as hurricanes, windstorms, earthquakes, floods, wildfires and severe winter weather. Catastrophes can also include terrorist attacks, explosions and infrastructure failures. Sirius Group has significant exposure to a potential major earthquake or series of earthquakes in California, the Midwestern United States, Canada, Japan and Latin America and to windstorm damage in Northern Europe, the Northeast United States, the United States Atlantic Coast (i.e., Massachusetts to Florida) and the United States Gulf Coast (i.e., Florida to Texas) regions and Japan.

        Similar exposures to losses caused by the same types of catastrophic events occur in other lines of business such as marine, aviation, contingency, casualty, trade credit and accident and health, including pandemic risk. Pandemic risk is the increase in mortality or morbidity over an annual period associated with a rapidly spreading virus (either within a highly populated geographic area or on a global basis) with a high mortality or morbidity rate. Sirius Group's catastrophe losses net of reinsurance and reinstatement premiums were $259 million, $109 million and $21 million for the years ended December 31, 2017, 2016 and 2015, respectively.

        The extent of catastrophe losses is a function of both the severity of the event and total amount of insured exposure affected by the event. Increases in the value and concentration of insured property or insured individuals, the effects of inflation, changes in weather patterns, such as climate change, and increased terrorism could increase the future frequency and/or severity of claims from catastrophic events. Claims from catastrophic events could materially adversely affect Sirius Group's results of operations and financial condition. Sirius Group's ability to write new reinsurance contracts and insurance policies could also be impacted as a result of corresponding reductions in Sirius Group's capital levels.

        Although Sirius Group attempts to manage its exposure to such events through a multitude of approaches, including geographic diversification, geographic limits, individual policy limits, exclusions or limitations from coverage, purchase of reinsurance and expansion of supportive collateralized capacity, the availability of these management tools may be dependent on market factors and, to the extent available, may not respond in the way that is expected. For instance, Sirius Group seeks to manage its exposure to catastrophe losses by limiting the aggregate insured value of policies in geographic areas with exposure to catastrophic events by estimating a probable maximum loss (" PML ") for many different catastrophe scenarios and by buying reinsurance, including retrocession coverage. To manage and analyze aggregate insured values and PML, Sirius Group uses a variety of tools, including external and internal catastrophe modeling software packages. Estimates of PMLs are dependent on many

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variables, including assumptions about demand surge and storm surge, loss adjustment expenses, insurance-to-value for the underlying properties, the relationship of the actual event parameters to the modelled event and the quality of portfolio data provided to Sirius Group by ceding companies (in the case of Sirius Group's reinsurance operations). Accordingly, if these assumptions about the variables are incorrect, the losses Sirius Group might incur from an actual catastrophe could be materially higher than its expectation of losses generated from modelled catastrophe scenarios which could materially adversely affect Sirius Group's financial condition, liquidity or results of operations.

Given the inherent uncertainty of models, the usefulness of such models as a tool to evaluate risk is subject to a high degree of uncertainty that could result in actual losses that are materially different than Sirius Group's estimates including PMLs, and Sirius Group's financial results may be adversely impacted, perhaps significantly.

        Sirius Group uses third-party vendor analytic and modeling capabilities, including global property catastrophe models from AIR Worldwide Company (" AIR ") and Risk Management Solutions Inc. (" RMS "), and Sirius Group's own proprietary models, including its property underwriting and pricing tool (" GPI "), which consolidates and reports on all its worldwide property exposures, to calculate expected PML from various property natural catastrophe scenarios. Sirius Group uses these models and software to help it control risk accumulation, inform management and other stakeholders of capital requirements and to improve the risk/return profile or minimize the amount of capital required to cover the risks in each reinsurance contract in Sirius Group's overall portfolio of reinsurance contracts. However, given the inherent uncertainty of modeling techniques and the application of such techniques, these models and databases may not accurately address a variety of matters impacting Sirius Group's coverages.

        For example, catastrophe modeling is dependent upon several broad economic and scientific assumptions, such as storm surge (the water that is pushed toward the shore by the force of a windstorm), demand surge (the localized increase in prices of goods and services that often follows a catastrophe) and zone density (the percentage of insured perils that would be affected in a region by a catastrophe). Third-party modeling software also does not provide information for all territories or perils (e.g., tsunami) for which Sirius Group writes business. Catastrophe modeling is inherently uncertain due to process risk (i.e., the probability and magnitude of the underlying event) and parameter risk (i.e., the probability of making inaccurate model assumptions).

        The inherent uncertainties underlying, or the incorrect usage or misunderstanding of these tools may lead to unanticipated exposure to risks relating to certain perils or geographic regions which could have a material adverse effect on Sirius Group's business, prospects, financial condition or results of operations.

Sirius Group's loss and LAE reserves may be inadequate to cover its ultimate liability for losses and as a result its financial results could be adversely affected.

        Sirius Group must maintain reserves adequate to cover its estimated ultimate liabilities for loss and loss adjustment expenses (" LAE "). Loss and LAE reserves are typically comprised of (i) case reserves for claims reported (" case reserves ") and (ii) incurred but not reported (" IBNR ") reserves for losses that have occurred but for which claims have not yet been reported and for expected future development on case reserves. These reserves are estimates of what the settlement and administration of claims will cost based on facts and circumstances then known to Sirius Group. These estimates involve actuarial and claims assessments, and requires Sirius Group to make a number of assumptions about future events that are subject to unexpected changes and are beyond its control, such as future trends in claim severity, frequency, inflation, legislative and judicial changes and other factors.

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        Because of uncertainties associated with estimating ultimate loss and LAE reserves, it is uncertain that Sirius Group's reserves are adequate. In the event that Sirius Group's reserves become insufficient to cover its actual losses and LAE, Sirius Group may need to add to its reserves, which could have a material adverse effect on Sirius Group's results of operations and financial condition.

        In addition, Sirius Group reserves for losses and LAE include an estimate of Sirius Group's ultimate liability for asbestos and environmental claims for which Sirius Group cannot estimate the ultimate value using traditional reserving techniques, and for which there are significant uncertainties in estimating the amount of Sirius Group's potential losses.

Sirius Group is reliant on financial strength and creditworthiness ratings, and any downgrade may have a material adverse effect on Sirius Group's business, prospects, financial condition, and results from operations.

        Third-party rating agencies assess and rate the financial strength, including claims-paying ability, of insurers and reinsurers. These ratings are based upon criteria established by the rating agencies and are subject to revision at any time at the sole discretion of the agencies. Some of the criteria relate to general economic conditions and other circumstances outside of the rated company's control. These financial strength ratings are used by policyholders, agents and brokers to assess the suitability of insurers and reinsurers as business counterparties and are an important factor in establishing the competitive position of insurance and reinsurance companies.

        The maintenance of an "A–" or better financial strength rating from A.M. Best Company Inc. (" A.M. Best ") and/or S&P Global Ratings (" Standard & Poor's ") is particularly important to the ability of Sirius Group's operating (re)insurance subsidiaries to bind property and casualty insurance and reinsurance business in most markets. General creditworthiness ratings are used by existing or potential investors to assess the likelihood of repayment on a particular debt issue. The maintenance of an investment grade creditworthiness rating (e.g., "BBB–" or better from Standard & Poor's or Fitch) is important to Sirius Group's ability to raise new debt with acceptable terms. Strong creditworthiness ratings are important factors that provide better financial flexibility when issuing new debt or restructuring existing debt.

        Rating agencies periodically evaluate Sirius Group to confirm that it continues to meet the criteria of the ratings previously assigned to Sirius Group.

        A downgrade, withdrawal or negative watch/outlook of the financial strength rating of Sirius Group's operating (re)insurance companies could severely limit or prevent Sirius Group from writing new policies or renewing existing policies, which could have a material adverse effect on Sirius Group's results of operations and financial condition. A downgrade, withdrawal or negative watch/outlook of Sirius Group's creditworthiness ratings could limit its ability to raise new debt or could make new debt more costly and/or have more restrictive conditions.

        Additionally, some of Sirius Group's assumed reinsurance contracts contain optional cancellation, commutation and/or funding provisions that would be triggered if A.M. Best and/or Standard & Poor's were to downgrade the financial strength ratings of Sirius Group's principal (re)insurance operating subsidiaries below "A-". A client may choose to exercise these rights depending on, among other things, the reasons for such a downgrade, the extent of the downgrade, the prevailing market conditions, the degree of unexpired coverage, and the pricing and availability of replacement reinsurance coverage. Sirius Group cannot predict in advance how many of its clients would actually exercise such rights in the event of such a downgrade, but widespread exercise of these options could be materially adverse.

        Following CMIG International's April 2016 acquisition of Sirius Group, A.M. Best issued a negative outlook in its rating of Sirius Group. The negative outlook reflected A.M. Best's concern over the credit profile of CMIG International, represented by CMIG International's high financial leverage. Fitch similarly lowered Sirius Group's rating by one notch due to its concern over CMIG International's short

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operating history, rapid business growth and high and increasing leverage. Sirius Group's credit ratings may continue to be impacted by actions taken by CMIG International.

Sirius Group's investment portfolio may suffer reduced returns or losses, which could adversely affect Sirius Group's results of operations and financial condition. Adverse changes in interest rates, foreign currency exchange rates, equity markets, debt markets or market volatility could result in significant losses to the fair value of Sirius Group's investment portfolio.

        Sirius Group's investment portfolio is overseen in accordance with the investment policy and guidelines approved by the Finance Committee of the Sirius Group board of directors. At June 30, 2018, Sirius Group's investment portfolio consisted of fixed-maturity investments (including U.S. and foreign government bonds, corporate debt, mortgage-backed, asset-backed and other fixed-maturity securities), short-term investments, equity securities, convertibles and other long-term investments, including hedge funds and private equity funds.

        Sirius Group invests to maximize long-term total returns (after-tax) while taking prudent levels of risk and maintaining a diversified portfolio subject to its investment guidelines, policy and various regulatory restrictions. However, investing entails substantial risks. Sirius Group may not achieve its investment objectives, and investment performance may vary substantially over time. Investment returns are an important part of Sirius Group's strategy to grow, and fluctuations in the fixed-income or equity markets could impair Sirius Group's results of operations and financial condition.

        Both Sirius Group's investment income and the fair market value of its investment portfolio are affected by general economic and market conditions, including fluctuations in interest rates, foreign currency exchange rates, debt market levels, equity market levels and market volatility.

        Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond Sirius Group's control. In particular, a significant increase in interest rates could result in significant losses in the fair value of Sirius Group's investment portfolio. In addition, certain fixed-income securities, such as mortgage-backed and asset backed securities, carry prepayment risk or, in a rising interest rate environment, may not pre-pay as quickly as expected. Conversely, in a low interest rate environment, Sirius Group may be forced to reinvest proceeds from investments that have matured or have been prepaid or sold at lower yields, which will reduce Sirius Group's investment returns. Additionally, a change in interest rates could adversely affect Sirius Group's results of operations and financial condition.

        The table below summarizes the estimated effects of hypothetical increases and decreases in market interest rates on Sirius Group's fixed-maturity investments. The size of interest rate decreases presented may be limited in order to floor interest rates at a de minimis level.

($ in millions)
  Fair Value at
June 30, 2018
  Assumed Change
in Relevant
Interest Rate
  Estimated Fair
Value After
Change
in Interest Rate
  Pre-Tax Increase
(Decrease) in
Carrying Value
 

Fixed maturity investments

  $ 1,885.4     300 bp decrease   $ 2,021.1   $ 135.7  

          200 bp decrease     1,978.7     93.3  

          100 bp decrease     1,933.6     48.2  

          50 bp decrease     1,910.3     24.9  

          50 bp increase     1,857.8     (27.6 )

          100 bp increase     1,830.6     (54.8 )

          200 bp increase     1,776.0     (109.4 )

          300 bp increase   $ 1,721.5   $ (163.9 )

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        Sirius Group's investment portfolio is also exposed to investment credit risk, which is the risk that the value of certain investments may decrease due to a deterioration in the financial condition, operating performance or business prospects of, or the liquidity available to, one or more issuers of those securities or, in the case of mortgaged-back and other asset-backed securities, due to the deterioration of the loans or other assets that underlie the securities. Mortgage-backed securities are particularly sensitive to changes in U.S. economic conditions, including deterioration of the U.S. housing market and unemployment, among other factors.

        Sirius Group is also exposed to changes in equity markets. A significant decline in the equity markets, such as that experienced from September 2008 to March 2009, could have a material adverse effect on Sirius Group's results of operations and financial condition. Assuming a hypothetical 10% and 30% increase or decrease in the value of Sirius Group's equity securities and other long-term investments as of June 30, 2018, the carrying value of Sirius Group's equity securities and other long-term investments would have increased or decreased by approximately $73 million and $220 million pre-tax, respectively.

        Since a portion of Sirius Group's investment portfolio is invested in securities denominated in currencies other than the U.S. dollar, the value of Sirius Group's portfolio is sensitive to changes in foreign currency rates. Sirius Group is also exposed to changes in the volatility levels of various investment markets. The underlying conditions prompting such changes are outside of Sirius Group's control and could adversely affect the value of Sirius Group's investments and results of operations and financial condition.

An unexpected accumulation of attritional losses may adversely affect Sirius Group's operating results.

        In addition to Sirius Group's exposures to natural catastrophe and other large losses as discussed above, Sirius Group's operating results may be adversely affected by unexpectedly large accumulations of smaller losses. Sirius Group seeks to manage this risk by using appropriate underwriting processes to guide the pricing, terms and acceptance of risks. These processes, which may include pricing models, are intended to ensure that premiums received are sufficient to cover the expected levels of attritional losses and a contribution to the cost of natural catastrophes and large losses where necessary. However, it is possible that these underwriting approaches and/or pricing models may not work as intended and that actual losses from a class of risks may be greater than expected. Sirius Group's pricing models are also subject to the same limitations as the models used to assess exposures to natural catastrophe losses noted above. Accordingly, these factors could adversely impact Sirius Group's financial condition and/or operating results.

A decrease in the fair value of IMG, Armada and/or Sirius Group's intangible assets may result in future impairments.

        As of June 30, 2018, goodwill and intangible assets represented approximately 31% of Sirius Group's consolidated shareholders' equity. Goodwill and intangible assets are assessed for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. These assessments require Sirius Group to use significant judgment in making various estimates and assumptions, such as the determination of expected future cash flows and/or earnings, and actual results may ultimately be materially different from such estimates and assumptions. For example, expected future cash flows and/or earnings may be materially and negatively impacted as a result of, among other things, a decrease in renewals and new business, loss of key personnel, lower-than-expected yields and/or cash flows from Sirius Group's investment portfolio, as applicable, or higher-than-expected claims activity and incurred losses as well as other general economic factors. As a result of these potential changes, the estimated fair value of Sirius Group's goodwill and intangible assets may decrease, causing the carrying value to exceed the fair value and the goodwill and/or intangible assets to be impaired. If an impairment is determined to exist, the carrying value of

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the goodwill and/or intangible asset is adjusted to its implied fair value with the corresponding expense recorded in Sirius Group's income statement, as applicable, in the period in which the impairment is determined. If Sirius Group is required to record goodwill impairments in the future, its financial condition and results of operations would be negatively affected.

Sirius Group is exposed to unpredictable casualty insurance risks that could adversely affect its results of operations and financial condition.

        Sirius Group writes insurance and reinsurance policies covering casualty risks. Casualty insurance generally covers the financial consequences of the legal liability of an individual or organization resulting from negligent acts causing bodily injury and/or property damage to a third party. Claims from such business can take years to develop and settle and can be subject to unanticipated claims and economic inflation. Accordingly, if Sirius Group's pricing assumptions are incorrect, higher than expected losses could materially adversely affect Sirius Group's financial condition, liquidity or results of operations.

The property and casualty insurance and reinsurance industries are highly competitive and cyclical and Sirius Group may not be able to compete effectively in the future.

        The property and casualty insurance and reinsurance industries are highly competitive and have historically been cyclical, experiencing periods of severe price competition and less selective underwriting standards (" soft markets ") followed by periods of relatively high prices and more selective underwriting standards (" hard markets "). Sirius Group competes with numerous reinsurance companies throughout the world and Lloyd's Syndicate 1945, the Lloyd's of London (" Lloyd's ") syndicate that Sirius Group sponsors and that is managed through Sirius International's Managing Agent (" Syndicate 1945 "), also competes with other Lloyd's syndicates and London market companies. Many of these competitors have greater financial, marketing and management resources available to them, including greater revenue and shareholders' equity, have established long-term and continuing business relationships throughout the insurance and reinsurance industries and may have higher financial strength ratings, which can be a significant competitive advantage for them.

        Soft primary insurance market conditions could lead to a significant reduction in reinsurance premium rates, less favorable contract terms and fewer submissions for Sirius Group's reinsurance underwriting capacity. The supply of reinsurance is also related to the level of reinsured losses and the level of industry capital which, in turn, may fluctuate in response to changes in rates of return earned in the reinsurance industry. As a result, the reinsurance business historically has been a cyclical industry characterized by periods of intense price competition due to excess underwriting capacity as well as periods when shortages of capacity permitted improvements in reinsurance rate levels and terms and conditions.

        In recent years, the persistent low interest rate environment and ease of entry into the reinsurance sector has led to increased competition from non-traditional sources of capital, such as insurance-linked funds or collateralized special purpose insurers, predominantly in the property catastrophe excess reinsurance market. This alternative capital provides collateralized property catastrophe protection in the form of catastrophe bonds, industry loss warranties and other risk-linked products that facilitate the ability of non-reinsurance entities, such as hedge funds and pension funds, to compete for property catastrophe excess reinsurance business outside of the traditional treaty market. This alternative capacity is also expanding into lines of business other than property catastrophe reinsurance.

        Consequently, the market is currently in a prolonged phase of the soft market cycle in many lines of business, particularly in certain property catastrophe excess reinsurance markets, and, as a result, many of Sirius Group's products are experiencing varying degrees of rate pressure. To the extent these

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trends continue or accelerate, Sirius Group's financial condition or operating results could be adversely affected.

Sirius Group may not successfully alleviate risk through reinsurance arrangements. Additionally, Sirius Group may not collect all amounts due from its reinsurers under its existing reinsurance arrangements.

        Sirius Group attempts to limit its risk of loss through the purchase of reinsurance, including retrocession coverage ( i.e. , the reinsurance of reinsurance). The availability and cost of reinsurance protection is subject to market conditions, which are outside of Sirius Group's control. In addition, the coverage provided by these reinsurance arrangements may be inadequate to cover Sirius Group's future liabilities. As a result, Sirius Group may not be able to successfully alleviate risk through these arrangements, which could have a material adverse effect on Sirius Group's results of operations and financial condition.

        Purchasing reinsurance does not relieve Sirius Group of the underlying obligations to policyholders or ceding companies, so any inability to collect amounts due from reinsurers could adversely affect Sirius Group's financial condition and results of operations. Inability to collect amounts due from reinsurers can result from a number of scenarios, including: (i) reinsurers choosing to withhold payment due to a dispute or other factors beyond Sirius Group's control; and (ii) reinsurers becoming unable to pay amounts owed to Sirius Group as a result of a deterioration in their financial condition. While Sirius Group regularly reviews the financial condition of its reinsurers and currently believes their financial condition is strong, it is possible that one or more of these reinsurers will be adversely affected by future significant losses or economic events, causing them to be unable or unwilling to pay amounts owed to Sirius Group.

        In addition, due to factors such as the price or availability of reinsurance coverage, Sirius Group sometimes decides to increase the amount of risk retained by purchasing less reinsurance. Such determinations have the effect of increasing Sirius Group's financial exposure to losses associated with such risks and, in the event of significant losses associated with a given risk, could have a material adverse effect on Sirius Group's financial condition and results of operations.

Sirius Group, or agents appointed by Sirius Group, may act based on inaccurate or incomplete information regarding the accounts Sirius Group underwrites, or such agents may exceed their authority or act fraudulently when binding policies on Sirius Group's behalf.

        Sirius Group, and its managing general underwriters (" MGUs ") and other agents who have the ability to bind policies on Sirius Group's behalf, rely on information provided by insureds or their representatives when underwriting insurance policies. While Sirius Group may make inquiries to validate or supplement the information provided, Sirius Group may make underwriting decisions based on incorrect or incomplete information. It is possible that Sirius Group will misunderstand the nature or extent of the activities and the corresponding extent of the risks that Sirius Group insures because of its reliance on inadequate or inaccurate information. If any such agents exceed their authority or engage in fraudulent activities, Sirius Group's financial condition and results of operations could be materially adversely affected.

Unexpected volatility or illiquidity associated with some of Sirius Group's investments could significantly and negatively affect Sirius Group's financial results, liquidity and ability to conduct business.

        Sirius Group holds, or may in the future purchase, certain investments that include, but are not limited to, publicly traded equities, hedge funds, private equity funds, bonds, bank loans, emerging market debt, nonagency residential mortgage-backed securities, asset-backed securities, commercial mortgage-backed securities, derivatives and other investment products. During the height of the financial crisis, both fixed-income and equity markets were more illiquid and volatile than expected. If

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Sirius Group requires significant amounts of cash on short notice in excess of normal cash requirements, it may have difficulty selling these investments in a timely manner and/or be forced to sell them for less than it otherwise would have been able to realize. If Sirius Group is forced to sell its assets in unfavorable market conditions, there can be no assurance that it will be able to sell them for the prices at which it has recorded them and may be forced to sell them at significantly lower prices. As a result, Sirius Group's business, financial condition, liquidity or results of operations could be adversely affected.

        A portion of Sirius Group's investment portfolio consists of hedge fund and private equity fund investments. The underlying investments in these funds are typically publicly traded and private equity securities and investments, and, as such, are subject to market risks that are similar to Sirius Group's equity securities. However, these investments entail substantial risks and are generally illiquid. Redemption of investments in certain of these funds is subject to restrictions including lock-up periods where no redemptions or withdrawals are allowed, restrictions on redemption frequency and advance notice periods for redemptions. Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period.

Global climate change may have a material adverse effect on Sirius Group's operating results and financial condition.

        There are concerns that the higher level of weather-related catastrophes and other losses incurred by the industry in prior years is indicative of changing weather patterns, including as a result of global climate change, which could cause such events to persist. This would lead to higher overall losses that Sirius Group may not be able to recoup, particularly in the current economic and competitive environment, and higher reinsurance costs. In addition, rising sea levels are expected to add to the risks associated with coastal flooding in many geographical areas. Large scale climate change could increase both the frequency and severity of Sirius Group's loss costs associated with property damage and business interruption due to storms, floods and other weather-related events. Over the long-term, global climate change could impair Sirius Group's ability to predict the costs associated with future weather events and could also give rise to new environmental liability claims in the energy, manufacturing and other industries Sirius Group serves.

        Given the scientific uncertainty of predicting the effect of climate cycles and global climate change on the frequency and severity of natural catastrophes and the lack of adequate predictive tools, Sirius Group may be unable to adequately model the associated exposures and potential losses in connection with such catastrophes that could have a material adverse effect on Sirius Group's business, financial condition or results of operations.

Sirius Group has significant foreign operations that expose it to certain additional risks, including foreign currency risks and political risk.

        Through its multinational reinsurance operations, Sirius Group conducts business in a variety of foreign (non-U.S.) currencies, the principal exposures being the Swedish Krona, British Pound Sterling, Euro and Canadian dollar. As a result, a significant portion of Sirius Group's assets, liabilities, revenues and expenses are denominated in currencies other than the U.S. dollar and are therefore subject to foreign currency risk. Significant changes in foreign exchange rates may adversely affect Sirius Group's results of operations and financial condition.

        Sirius Group's foreign operations are also subject to legal, political and operational risks that may be greater than those present in the United States. As a result, Sirius Group's operations at these foreign locations could be temporarily or permanently disrupted.

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Sirius Group may suffer losses from unfavorable outcomes from litigation and other legal proceedings.

        In the ordinary course of business, Sirius Group is subject to litigation and other legal proceedings as part of the claims process, the outcomes of which are uncertain. Sirius Group maintains reserves for claims-related legal proceedings as part of its loss and LAE reserves. Adverse outcomes are possible and could negatively impact Sirius Group's financial condition.

        Furthermore, as industry practices and legal, judicial, social and other conditions change, unexpected issues related to claims and coverage may emerge. These issues may adversely affect Sirius Group's results of operations and financial condition by either extending coverage beyond Sirius Group's underwriting intent or by increasing the number and size of claims. In some instances, these changes may not become apparent until sometime after Sirius Group has issued the affected insurance contracts. Examples of emerging claims and coverage issues include, but are not limited to:

        In addition, from time to time Sirius Group is subject to legal proceedings that are not related to the claims process. In the event of an unfavorable outcome in one or more non-claims legal matters, Sirius Group's ultimate liability may be in excess of amounts reserved and such additional amounts may be material to Sirius Group's results of operations and financial condition. Furthermore, it is possible that these non-claims legal proceedings could result in unexpected outcomes that may materially impact Sirius Group's business or operations.

The effects of, and uncertainty regarding, the U.K.'s withdrawal from the European Union could negatively impact Sirius Group's investment portfolio, business and results of operations.

        At a referendum in June 2016, the U.K. voted in favor of leaving the European Union, the process for which was commenced in March 2017 when the Prime Minister of the United Kingdom notified the European Council under Article 50 of the Treaty on the European Union of the United Kingdom's intention to leave. Since the referendum, there has been an increase in market volatility which has been further impacted by continuing uncertainty around the terms of the withdrawal. During withdrawal negotiations and beyond, the impact on the U.K. and European economies and the broader global economy could be significant, resulting in negative impacts, such as increased volatility and illiquidity, and potentially lower economic growth on markets in the U.K., Europe and globally, which may negatively impact the value of Sirius Group's investment portfolio, business and results of operations. The timing and terms of the U.K.'s withdrawal from the European Union could also have an adverse impact on the operation or prospects of Lloyd's. While Lloyd's has announced its intention to establish a European subsidiary company through which Lloyd's syndicates may be able to have access to the European Union single market, there can be no assurance that the Lloyd's European subsidiary will be authorized or that the arrangements envisaged will not result in increased costs for conducting business in the European Union's single market. In addition, Sirius International would lose its passporting rights to operate in the U.K. and its U.K. branch would be unable to operate should there be a withdrawal by the U.K. from the European Union without any agreement in place between the U.K. and the European Union, and without the U.K. government standing by its promise to allow financial institutions to operate under a temporary regime in the U.K.

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Sirius Group's reinsurance operations are largely dependent upon ceding companies' evaluation of risk.

        Sirius Group, like other reinsurance companies that write treaty reinsurance, generally does not evaluate separately each of the assumed individual insurance risks under Sirius Group's reinsurance contracts. As such, Sirius Group is largely dependent upon the cedents' original underwriting decisions. Sirius Group is subject to the risk that the cedents may not have adequately or accurately evaluated the risks that they have insured, and Sirius Group has reinsured, and that the premiums ceded may not adequately compensate Sirius Group for the risks it assumes. If Sirius Group's reserves are insufficient to cover the actual loss and LAE arising from Sirius Group's treaty reinsurance business, Sirius Group would have to strengthen its reserves and incur charges to its earnings. These charges could be significant and could have a material adverse effect on Sirius Group's results of operations and financial condition.

Consolidation in the insurance and reinsurance industries could adversely impact Sirius Group.

        The insurance and reinsurance industries have been consolidating over the past several years and the consolidation trend may continue and even accelerate in the near future. These consolidated client and competitor enterprises may try to use their enhanced market power to negotiate price reductions for Sirius Group's products and services and/or obtain a larger market share through increased line sizes. If competitive pressures reduce prices, Sirius Group would generally expect to reduce its future underwriting activities thus resulting in reduced premiums and a reduction in expected earnings. As the insurance industry consolidates, competition for customers will become more intense and the importance of sourcing and properly servicing each customer will become greater. Sirius Group could incur greater expenses relating to customer acquisition and retention, further reducing Sirius Group's operating margins. In addition, insurance companies that merge may be able to spread their risks across a consolidated, larger capital base so that they require less reinsurance. The number of companies offering retrocessional reinsurance may decline. Reinsurance intermediaries could also continue to consolidate, potentially adversely impacting Sirius Group's ability to access business and distribute its products. Sirius Group could also experience more robust competition from larger, better capitalized competitors. Any of the foregoing could adversely affect Sirius Group's business or its results of operations.

Since Sirius Group depends on a small number of brokers and MGUs for a large portion of its revenues, loss of business provided by any one of them could adversely affect Sirius Group.

        Sirius Group markets its reinsurance worldwide primarily through reinsurance brokers. The reinsurance brokerage industry generally, and Sirius Group's sources of business specifically, are concentrated. During 2017, 2016 and 2015, Sirius Group received 59%, 56% and 58%, respectively, of its reinsurance business from four major reinsurance brokers as follows: Aon Corporation and subsidiaries—22%, 22% and 24%, respectively; Guy Carpenter & Company and subsidiaries—18%, 18% and 18%, respectively; WT Butler and Co. Ltd.—10%, 8% and 7%, respectively; and Willis Group and subsidiaries—9%, 8% and 9%, respectively. A decision of one or more of these brokers to reduce substantially or eliminate its business with Sirius Group could adversely affect its business, results of operations or financial condition. In addition, numerous brokers and their affiliates have equity interests in reinsurance companies that compete with Sirius Group. These brokers may favor these reinsurers over other companies, including members of Sirius Group.

Sirius Group's reliance on intermediaries subjects it to the intermediaries' credit risk.

        In accordance with industry practice, Sirius Group frequently pays amounts owing in respect of claims under its contracts to reinsurance brokers and, to a lesser extent, MGUs that, in turn, make payments to the cedents. In the event that a broker or MGU fails to make such a payment, depending on the jurisdiction, Sirius Group may remain liable to the cedent for the deficiency. Conversely, when

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premiums for reinsurance contracts are paid to reinsurance brokers or MGUs for payment to Sirius Group, these premiums may be deemed to have been paid and the cedent may no longer be liable to Sirius Group for those amounts, whether or not actually received by Sirius Group. Intermediaries generally are less capitalized than the businesses Sirius Group reinsures and therefore may be unable to pay their debts when due. Consequently, Sirius Group faces credit risk associated with intermediaries during the payment process.

The regulatory framework under which Sirius Group operates and potential changes thereto could have a material adverse effect on its business.

        Sirius Group's activities are subject to extensive regulation under the laws and regulations of the U.S., the U.K., Bermuda, Sweden and the European Union and its member states and the other jurisdictions in which Sirius Group operates.

        Sirius Group's operations in each of these jurisdictions are subject to varying degrees of regulation and supervision. The laws and regulations of the jurisdictions in which Sirius Group's insurance and reinsurance subsidiaries are domiciled require, among other things, that these subsidiaries maintain minimum levels of statutory capital, surplus and liquidity, meet solvency standards, submit to periodic examinations of their financial condition and restrict payments of dividends, distributions and reductions of capital in certain circumstances. Statutes, regulations and policies to which Sirius Group's insurance and reinsurance subsidiaries are subject may also restrict the ability of these subsidiaries to write insurance and reinsurance policies, make certain investments and distribute funds.

        Sirius Group devotes a significant amount of time and resources to comply with various regulatory requirements imposed in Bermuda, Sweden, the U.S. and the U.K. There remains significant uncertainty as to the impact that these various regulations and legislation will have on Sirius Group. Such impacts could include constraints on Sirius Group's ability to move capital between subsidiaries or requirements that additional capital be provided to subsidiaries in certain jurisdictions, which may adversely impact Sirius Group's profitability. In addition, while Sirius Group currently has excess capital and surplus under applicable capital adequacy requirements, such requirements or similar regulations, in their current form or as they may be amended in the future, may have a material adverse effect on Sirius Group's business, financial condition or results of operations.

        Sirius Group's insurance and reinsurance operating subsidiaries may not be able to maintain necessary licenses, permits, authorizations or accreditations in territories where Sirius Group is currently engaged in business or obtain them in new territories, or may be able to do so only at significant cost. In addition, Sirius Group may not be able to comply fully with, or obtain appropriate exemptions from, the wide variety of laws and regulations applicable to insurance or reinsurance companies or holding companies. In addition to insurance and financial industry regulations, Sirius Group's activities are also subject to relevant economic and trade sanctions, money laundering regulations, and anti-corruption laws including the U.S. Foreign Corrupt Practices Act, U.K. Bribery Act 2010 and the Bermuda Bribery Act 2016, which may increase the costs of regulatory compliance, limit or restrict Sirius Group's ability to do business or engage in certain regulated activities, or subject Sirius Group to the possibility of regulatory actions or proceedings.

        There can be no assurance that Sirius Group, its employees, or its agents acting on Sirius Group's behalf are in full compliance with all applicable laws and regulations or their interpretation by the relevant authorities and, given the complex nature of the risks, it may not always be possible for Sirius Group to ascertain compliance with such laws and regulations. Failure to comply with or to obtain appropriate authorizations and/or exemptions under any applicable laws or regulations, including those referred to above, could subject Sirius Group to investigations, criminal sanctions or civil remedies, including fines, injunctions, loss of an operating license, reputational consequences, and other sanctions, all of which could have a material adverse effect on Sirius Group's business. Also, changes in the laws

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or regulations to which Sirius Group is subject could have a material adverse effect on its business. In addition, in most jurisdictions, government regulatory authorities have the power to interpret or amend applicable laws and regulations, and have discretion to grant, renew or revoke licenses and approvals Sirius Group needs to conduct its activities. Such governmental and regulatory authorities may require Sirius Group to incur substantial costs in order to comply with such laws and regulations.

Risks associated with changes in U.S. health care legislation could negatively affect Sirius Group's accident and health business.

        Sirius Group derives revenues from, among other things, the provision of accident and health premiums in the U.S., that is, providing insurance to institutions that participate in the U.S. healthcare delivery infrastructure. Changes in U.S. healthcare legislation, specifically the Patient Protection and Affordable Care Act of 2010 (the " Healthcare Act ") (and legislative reforms related thereto), have made significant changes to the regulation of health insurance including, but not limited to, the healthcare delivery system, the healthcare cost reimbursement structure in the U.S. and the rate of growth of health care costs in the U.S. and may negatively affect Sirius Group's accident and health business. In addition, Sirius Group may be subject to regulations, guidance or determinations emanating from the various regulatory authorities authorized under the Healthcare Act. It is difficult to predict the effect that the Healthcare Act, or any regulatory pronouncement made thereunder, will have on Sirius Group's results of operations or financial condition.

Sirius Group may be unable to adequately maintain its systems and safeguard the security of its data, which may adversely impact Sirius Group's ability to operate its business and cause reputational harm and financial loss.

        Because Sirius Group's business and operations rely on secure and efficient information technology systems, Sirius Group depends on its ability and the ability of certain third parties, including vendors and business partners, to access Sirius Group's computer systems to perform necessary functions such as providing quotes and product pricing, billing and processing premiums, administering claims, and reporting its financial results. The functioning of these systems may be impacted by any number of events, including power outages, natural and man-made catastrophes, and cyber-attacks. In the event Sirius Group is unable to access its systems, or any third-party system that it relies upon, Sirius Group's ability to operate its business effectively may be significantly impaired.

        Sirius Group's business also depends upon its ability to securely process, store, transmit and safeguard confidential and proprietary information that is in Sirius Group's possession. This information includes confidential information relating to Sirius Group's business, and personally identifiable information (" PII ") and protected health information (" PHI ") belonging to employees, customers, claimants and business partners. As Sirius Group's systems may be vulnerable to a variety of forms of unauthorized access that could result in a data breach, including hackers, computer viruses, and other cyber-attacks, as well as breaches that result from dishonest employees, errors by employees or lost or stolen computer devices, Sirius Group may not be able to protect the confidentiality of such information.

        Third parties present an additional risk of cyber-related events. Sirius Group outsources certain technological and business process functions to third-party providers. Sirius Group relies on these third parties to maintain and store PII and PHI and other confidential information on their systems. As needed, Sirius Group also transmits such information by e-mail and other electronic means. Sirius Group attempts to establish sufficient controls and secure capabilities to transmit such information and to prevent unauthorized disclosure, but these controls may not be sufficient. Furthermore, third-party providers may not have appropriate controls in place to protect such information.

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        Sirius Group's computer systems have been and will continue to be the target of cyber-attacks, although Sirius Group is not aware that it has experienced a material cybersecurity breach. Sirius Group is also not aware of any third-party vendor having experienced a material cybersecurity breach that impacted Sirius Group's data. The risk of cyber-attack may increase, and Sirius Group may experience more significant attacks in the future. The risks identified above could expose Sirius Group to data breaches, disruptions of service, financial losses and significant increases in compliance costs and reputational harm to Sirius Group, any of which could affect its business and results of operations.

        In addition, a data breach that involves the compromise of PII or PHI could subject Sirius Group to legal liability or regulatory action under data protection and privacy laws and regulations enacted by federal, state and foreign governments, or other regulatory bodies. In particular, the European Union has passed the General Data Protection Regulation (" GDPR "), which came into force in May 2018. The GDPR includes more stringent operational requirements on entities that receive or process personal data (as compared to previous European Union law), along with significant penalties for non-compliance. As a result, Sirius Group's ability to conduct its business and Sirius Group's results of operations might be materially and adversely affected.

Operational risks, including human or systems failures, are inherent in Sirius Group's business.

        Operational risks and losses can result from many sources including fraud, errors by employees, failure to document transactions properly or to obtain proper internal authorization, failure to comply with regulatory requirements or information technology failures.

        Sirius Group's modeling, underwriting and information technology and application systems are critical to its business and reputation. Moreover, Sirius Group's technology and applications have been an important part of its underwriting process and ability to compete successfully. Such technology is and will continue to be a very important part of the underwriting process. Sirius Group has also licensed certain systems and data from third parties. Sirius Group cannot be certain that it will have access to these, or comparable service providers, or that Sirius Group's technology or applications will continue to operate as intended. In addition, Sirius Group cannot be certain that these service providers or consultants could be replaced without slowing Sirius Group's underwriting response time. A major defect or failure in Sirius Group's internal controls or information technology and application systems could result in management distraction, harm to Sirius Group's reputation, a loss or delay of revenues or increased expense.

Sirius Group depends on key personnel to manage the business effectively and they may be difficult to replace.

        Sirius Group's performance substantially depends on the efforts and abilities of its management team and other executive officers and key employees. Furthermore, much of Sirius Group's competitive advantage is based on the expertise, experience and know-how of its key management personnel. Sirius Group does not have fixed-term employment agreements with many of its key employees or key-man life insurance and the loss of one or more of these key employees could adversely affect Sirius Group's business, results of operations and financial condition. Sirius Group's success also depends on the ability to hire and retain additional personnel. Difficulty in hiring or retaining personnel could adversely affect Sirius Group's results of operations and financial condition.

Sirius Group faces unforeseen liabilities arising from possible acquisitions and dispositions of businesses or difficulties integrating acquired businesses.

        Sirius Group has engaged in acquisitions of businesses in the past, including the acquisitions of ArmadaCorp Capital, LLC (" Armada ") and International Medical Group Acquisition, Inc. (" IMG ") in

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2017, and may continue to do so in the future. Any future acquisitions may expose it to operational challenges and risks, including:

        Sirius Group's ability to achieve the benefits anticipated from any business acquisition will depend in large part upon its ability to successfully integrate such businesses in an efficient and effective manner. Sirius Group may not be able to integrate such businesses successfully, or the process may take longer than expected. The integration of operations may require the dedication of significant management resources, which may distract management's attention from day-to-day business. If Sirius Group is unable to successfully integrate the operations of such acquired businesses, it may be unable to realize the full benefits it expects to achieve as a result of such acquisitions and Sirius Group's business and results of operations may be lower than expected.

Sirius Group may require additional capital in the future, which may not be available or may only be available on unfavorable terms.

        Sirius Group's future capital requirements depend on many factors, including regulatory requirements, the ability to write new business successfully, the frequency and severity of catastrophic events, and the ability to establish premium rates and reserves at levels sufficient to cover losses. Sirius Group may need to raise additional funds through financings or curtail its growth and reduce its assets. Any equity or debt financing, if available at all, may be on unfavorable terms. Disruption in the financial markets may limit Sirius Group's ability to access capital required to operate its business and Sirius Group may be forced to delay raising capital or bear a higher cost of capital, which could decrease Sirius Group's profitability and significantly reduce its financial flexibility. In addition, if Sirius Group experiences a credit rating downgrade, withdrawal or negative watch/outlook in the future, it could incur higher borrowing costs and may have more limited means to access capital. If Sirius Group cannot obtain adequate capital on favorable terms or at all, its business, results of operations and financial condition could be adversely affected.

Sirius Group has incurred losses in the past and may incur losses in the future.

        Sirius Group had a comprehensive (loss) income of approximately $(78) million, $(34) million and $196 million for 2017, 2016 and 2015, respectively. Sirius Group expects to incur increased operating expenses related to its growth initiatives, including the purchase of two MGUs, and primary insurance platform to support its business. If revenue fails to grow at anticipated rates, or if operating costs rise without a commensurate increase in revenue, then the imbalance between revenue and operating expenses will negatively impact Sirius Group's liquidity as well as its ability to achieve profitability in

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upcoming quarters. Sirius Group's lack of recent profitability may indicate that it needs to re-evaluate its plan of operations or change its strategies in order to generate a profit. A lack of profitability could adversely affect the price of its common shares and liquidity.

Sirius Group's results of operations may fluctuate significantly from period to period and may not be indicative of its long-term prospects.

        Sirius Group's results of operations may fluctuate significantly from period to period. These fluctuations result from a variety of factors, including the seasonality of the insurance and reinsurance business, the volume and mix of reinsurance and insurance products that Sirius Group writes, loss experience on Sirius Group's insurance and reinsurance liabilities, the performance of Sirius Group's investment portfolio and its ability to assess and integrate its risk management strategy effectively. In particular, Sirius Group seeks to underwrite products and make investments to achieve long-term results. As a result, at any given time, Sirius Group's short-term results of operations may not be indicative of its long-term prospects.

Sirius Group is a holding company with no direct operations, and its insurance and reinsurance subsidiaries' ability to pay dividends and other distributions to Sirius Group is restricted by law.

        Sirius Group is a holding company and carries out its business through its insurance and reinsurance subsidiaries. Accordingly, Sirius Group is dependent upon receipt of funds from other members of Sirius Group to fulfil its obligations. Sirius Group's subsidiaries may not be able to generate cash flow sufficient to pay a dividend or distribute funds to Sirius Group. In addition, under the insurance laws of certain jurisdictions in which Sirius Group's insurance and reinsurance subsidiaries are domiciled, an insurer or reinsurer is restricted with respect to the timing or the amount of dividends it may pay without prior approval by their relevant regulatory authorities.

        Sirius Group's top tier regulated insurance and reinsurance operating subsidiary, Sirius Bermuda Insurance Company Ltd. (" Sirius Bermuda "), has the ability to pay approximately $637 million of dividends to Sirius Group without prior approval of regulatory authorities during 2018, subject to meeting all appropriate liquidity and solvency requirements. Sirius Bermuda indirectly owns Sirius International Insurance Corporation, Sirius America Insurance Company and Sirius Group's other insurance and reinsurance operating companies, each of which are limited in their ability to pay dividends by the insurance laws of their relevant jurisdictions. See " Regulation of Sirius Group—Bermuda Insurance Regulation. "

        As of June 30, 2018, Sirius Group and its intermediate holding companies had $47 million of net unrestricted cash, short-term investments and fixed-maturity investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries. Management believes that Sirius Group's cash balances, cash flows from operations and cash flows from investments are adequate to meet expected cash requirements for the foreseeable future on both a holding company and operating subsidiary level. However, if Sirius Group's insurance and reinsurance subsidiaries cannot pay dividends in future periods, it may have difficulty servicing its debt and meeting its holding company expenses. Dividend payments and other distributions from Sirius Group's subsidiaries also may be subject to withholding taxes, which would reduce the amount available to service Sirius Group's debt.

The current state of the global economy and capital markets increases the possibility of adverse effects on Sirius Group's financial position and results of operations. Economic downturns could impair Sirius Group's investment portfolio and affect the primary insurance market, which could, in turn, harm Sirius Group's results of operations and reduce the volume of new business.

        Global capital markets in the U.S. and Europe, as well as other leading markets, continue to experience volatility. Although conditions may be improving, the longer this economic situation persists,

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the greater the probability that these risks could have an adverse effect on Sirius Group's financial results. This may be evidenced in several ways including, but not limited to, a potential reduction in Sirius Group's premium income, financial losses in Sirius Group's investment portfolio and decreases in revenue and net income.

        Unfavorable economic conditions also could increase Sirius Group's funding costs, limit its access to the capital markets or result in a decision by lenders not to extend credit to Sirius Group. These events could prevent Sirius Group from increasing its underwriting activities and negatively impact Sirius Group's results of operations. In addition, Sirius Group's cedents and other counterparties may be affected by such developments in the financial markets, which could adversely affect their ability to meet their obligations to Sirius Group.

Risks Related to Tax Matters

         The following risk factors apply to the business and operations of Sirius Group and ownership of Sirius Group common shares and will also apply to the business and operations of the combined company and ownership of the combined company's common shares following the completion of the Merger.

Sirius Group has significant deferred tax assets, which may become devalued if either Sirius Group does not generate sufficient future taxable income or applicable corporate tax rates are reduced.

        Sirius Group's total net deferred tax liability as of December 31, 2017 was $38 million. Of that amount, $18 million relates to net deferred tax assets in the U.S. subsidiaries, $190 million relates to net deferred tax assets in Luxembourg subsidiaries, $11 million relates to net deferred tax assets in the United Kingdom subsidiaries, $257 million relates to net deferred tax liabilities in Sweden subsidiaries. Net deferred tax assets and liabilities reflect carryforward tax attributes and temporary differences between the book basis and tax basis of various assets and liabilities. Utilization of most deferred tax assets is dependent on generating sufficient future taxable income in the appropriate jurisdiction and/or entity. If it is determined that it is more likely than not that sufficient future taxable income will not be generated, Sirius Group would be required to increase applicable valuation allowance(s). Most of Sirius Group's deferred tax assets are determined by reference to applicable corporate income tax rates, in particular in the U.S., Luxembourg and Sweden. Accordingly, in the event of new legislation that reduces any such corporate income tax rates, the carrying value of certain of Sirius Group's deferred tax assets would decrease. A material devaluation in Sirius Group's deferred tax assets due to either insufficient taxable income or lower corporate income tax rates would have an adverse effect on Sirius Group's results of operations and financial condition.

Two of Sirius Group's Swedish non-insurance subsidiaries are involved in tax disputes.

        The Swedish Tax Authority (" STA ") has denied deductions claimed by two of Sirius Group's Swedish subsidiaries in certain tax years for interest they paid on intra-group debt instruments. Sirius Group is currently challenging the STA's denial in court based on the technical merits. Sirius Group's reserve for uncertain tax positions has taken into account relevant developments in these tax disputes and in applicable Swedish tax law including recent case law. Sirius Group also has taken into account the Stock Purchase Agreement by which Sirius Group was sold to CMIG International in 2016. Pursuant to such agreement, the seller agreed to indemnify the buyer and Sirius Group for, among other things, (i) any additional tax liability in excess of Sirius Group's accounting for uncertain tax positions for tax periods prior to the sale of Sirius Group to CMIG International, and (ii) an impairment in Sirius Group's net deferred tax assets resulting from a final determination by a tax authority. While Sirius Group intends to continue challenging the STA's denial based on the technical merits, the ultimate resolution of these tax disputes is uncertain and no assurance can be given that there will be no material changes to Sirius Group's operating results or balance sheet in connection with these uncertain tax positions or the related indemnification.

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Sirius Group may be treated as a PFIC, in which case a U.S. holder of Sirius Group common shares would be subject to disadvantageous rules under U.S. federal income tax laws.

        If Sirius Group is considered a passive foreign investment company (" PFIC ") for U.S. federal income tax purposes, a U.S. shareholder will be subject to adverse tax consequences, including subjecting the U.S. shareholder to a greater tax liability than might otherwise apply and subjecting the U.S. shareholder to tax on amounts in advance of when tax would otherwise be imposed, in which case its investment in Sirius Group could be materially adversely affected. In addition, if Sirius Group were considered a PFIC, upon the death of any U.S. individual owning shares, such individual's heirs or estate would not be entitled to a "step-up" in the basis of the shares that might otherwise be available under U.S. federal income tax laws. A U.S. shareholder may avoid some of the adverse tax consequences of owning an equity interest in a PFIC by making a qualified electing fund election. If Sirius Group is a PFIC, an electing U.S. shareholder is likely to recognize income in a taxable year in amounts significantly greater than the distributions received from Sirius Group, if any, in such taxable year.

        Sirius Group will be treated as a PFIC for U.S. federal income tax purposes in any taxable year for which either (i) at least 75% of Sirius Group's gross income consists of certain types of "passive income" or (ii) at least 50% of the average value of Sirius Group's assets produce, or are held for the production of, "passive income." Unless an exception applies, "passive income" includes dividends, interest, rents and royalties. For these purposes, if Sirius Group owns (directly or indirectly) at least 25% (by value) of the stock of another corporation, for purposes of determining whether Sirius Group is a PFIC, Sirius Group is treated as if it held the proportionate share of the assets of such other corporation, and as if it received directly the proportionate share of the income of such other corporation. Under a specific exception, as amended by the 2017 tax reform known as the Tax Cuts and Jobs Act (Pub. L. 115-97) (" 2017 Tax Cuts and Jobs Act "), passive income does not include income derived in the active conduct of an insurance business by a qualifying insurance corporation. Whether an insurance company is a qualifying insurance corporation is determined based on an assets to liability test. The test requires the insurance company to have applicable insurance liabilities in excess of 25% of its total assets as reported on the company's financial statements.

        Based on Sirius Group's assets, income and activities, including those of its subsidiaries engaged in the active conduct of an insurance business, Sirius Group does not expect that it will be treated as a PFIC in 2018; however, this conclusion is not free from doubt and the IRS could take the position that Sirius Group is a PFIC. While Sirius Group expects its insurance subsidiaries will qualify for the active insurance income exception for qualified insurance corporations, absent regulations and other detailed guidance relating to the interpretations of the 2017 Tax Cuts and Jobs Act, there can be no assurance that Sirius Group's insurance subsidiaries will meet the requirements for this exception. Moreover, PFIC classification is a factual determination made annually, and even if Sirius Group is not a PFIC in 2018, it could become a PFIC in later years. Accordingly, Sirius Group cannot assure you that it will not be treated as a PFIC for 2018 or for any future year. Please see " Material Tax Consequences—Material U.S. Tax Consequences—Taxation of U.S. Holders—PFIC Provisions " for a more comprehensive discussion regarding Sirius Group's status as a PFIC and the tax consequences to U.S. holders of Sirius Group common shares if Sirius Group is treated as a PFIC.

Sirius Group may become subject to increased taxation in Bermuda and other countries as a result of the OECD's plan on "base erosion and profit shifting".

        The Organisation for Economic Cooperation and Development (" OECD "), with the support of the Group of Twenty (" G20 "), initiated the "base erosion and profit shifting" (" BEPS ") project in 2013 in response to concerns that international tax standards have not kept pace with changes in global business practices and that changes are needed to international tax laws to address situations where multinational enterprises may pay little or no tax in certain jurisdictions by shifting profits away from

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jurisdictions where the activities creating those profits may take place. In October 2015, the OECD issued "final reports" in connection with the BEPS project. The final reports were approved for adoption by the G20 finance ministers in November 2015 and provide the basis for international standards for corporate taxation, which are designed to prevent, among other things, treaty-shopping, the artificial shifting of income to tax havens and low-tax jurisdictions, the erosion of the tax base through interest deductions on intercompany debt and the artificial avoidance of permanent establishments (i.e., tax nexus with a jurisdiction). Action 6 (treaty abuse) led to the development of a global multilateral instrument to incorporate and facilitate changes to tax treaties, which was signed on June 7, 2017.

        Legislation to adopt these standards has been enacted or is currently under consideration in a number of jurisdictions, including country-by-country reporting. As a result, Sirius Group's earnings may be subject to income tax, or intercompany payments may be subject to withholding tax, in jurisdictions where they are not currently taxed or at higher rates of tax than currently taxed. The applicable tax authorities could also attempt to apply such taxes to past earnings and payments. Any such additional taxes could materially increase Sirius Group's effective tax rate. Also, the adoption of these standards may increase the complexity and costs associated with tax compliance and adversely affect Sirius Group's financial position and results of operations.

Sirius Group may become subject to income tax (or an increased amount of income tax) in one or more countries, including the United States, which could materially reduce Sirius Group's after-tax returns and the value of Sirius Group common shares.

        Due to their business operating models, a portion of the income of two of Sirius Group's foreign insurance companies is treated as effectively connected with a U.S. trade or business, and Sirius Group complies with the applicable U.S. income tax filing and payment requirements accordingly. Other than these deemed U.S. businesses, Sirius Group (including its foreign subsidiaries) currently intends to conduct substantially all of its businesses and operations in a manner such that it will not otherwise be engaged in a trade or business in the United States and will not be subject to more U.S. income tax than it currently incurs. However, the matter is not free from doubt in light of the applicable tax law and guidance regarding activities that constitute being engaged in a trade or business in the United States for U.S. federal income tax purposes. Accordingly, Sirius Group cannot assure you that the IRS will not contend, perhaps successfully, that a foreign entity in Sirius Group is engaged in a trade or business in the United States or is subject to more U.S. income tax than it currently incurs. A foreign corporation deemed to be so engaged would be subject to U.S. federal income tax, as well as branch profits tax, on its income that is treated as effectively connected with the conduct of that trade or business unless the corporation is entitled to relief under an applicable tax treaty.

        Sirius Group could become subject to income tax in one or more countries, including the United States, as a result of activities performed by it, adverse developments or changes in law, contrary conclusions by the relevant tax authorities or other causes. The imposition of any of these income taxes could materially reduce Sirius Group's post-tax returns available for distributions on, and consequently the value of, Sirius Group common shares.

The impact of Bermuda's letter of commitment to the OECD to eliminate harmful tax practices is uncertain and could adversely affect Sirius Group's tax status in Bermuda.

        The OECD has published reports and launched a global dialogue among member and non-member countries on measures to limit harmful tax competition. These measures are largely directed at counteracting the effects of tax havens and preferential tax regimes in countries around the world. According to the OECD, Bermuda is a jurisdiction that has substantially implemented the internationally agreed tax standard and as such is listed on the OECD 'white list'. However, Sirius

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Group is unable to predict whether any changes will be made to this classification or whether any such changes will subject Sirius Group or its Bermuda operations to additional taxes.

An "ownership change" could limit Sirius Group's ability to utilize tax loss and credit carryforwards in the United States to offset future taxable income.

        As of December 31, 2017, Sirius Group had a deferred tax asset (net of valuation allowance) in the United States of approximately $49 million representing tax attributes including net operating loss carryforwards and tax credit carryforwards. Sirius Group's ability to use the tax attributes underlying such deferred tax asset to offset future taxable income may be significantly limited if Sirius Group experiences an "ownership change" as defined in Section 382 of the Code. In general, an ownership change will occur when the percentage of ownership (by value) of one or more "5-percent shareholders" (as defined in the Code) in Sirius Group common shares has increased by more than 50% over the lowest percentage owned by such shareholders at any time during the prior three years (calculated on a rolling basis). An entity that experiences an ownership change generally will be subject to an annual limitation on its pre-ownership change tax loss and credit carryforwards equal to the equity value of the corporation immediately before the ownership change, multiplied by the long-term, tax-exempt rate posted monthly by the IRS (subject to certain adjustments). The limitation on Sirius Group's ability to utilize tax loss and credit carryforwards arising from an ownership change under Section 382 would depend on the value of Sirius Group's equity at the time of any ownership change. If Sirius Group were to experience an "ownership change", it is possible that a significant portion of Sirius Group's tax loss and credit carryforwards could expire before Sirius Group would be able to use them to offset future taxable income.

The ongoing effects of the 2017 Tax Cuts and Jobs Act and BEAT could make Sirius Group's results difficult to predict.

        Sirius Group's effective tax rate may fluctuate in the future as a result of the 2017 Tax Cuts and Jobs Act, which included significant enacted changes in U.S. income tax law that had a meaningful impact on Sirius Group's provision for income taxes and requires significant judgments and estimates in the interpretation and calculations. Sirius Group made reasonable estimates of the effects and recorded provisional amounts in its financial statements for the year ended December 31, 2017. However, Sirius Group cannot assure that the IRS will apply the new tax law in a way similar to Sirius Group's interpretation.

        The enacted tax legislation included, among other new provisions, a reduction in the corporate tax rate, new limitations on the deductibility of net interest, and the Base Erosion and Anti-Abuse Minimum Tax (" BEAT "). Subject to any regulations issued by the U.S. Department of the Treasury, the BEAT levies a significant tax on cross border payments to related group companies. This tax will subject intragroup reinsurance arrangements to a base erosion tax on premiums ceded. While Sirius Group intends to operate in a manner that limits its exposure to BEAT, at this time, absent regulations and other detailed guidance, uncertainty about the financial impact on Sirius Group of this new tax remains and Sirius Group cannot reassure you it will not be subject to material amounts of BEAT in the future. Accordingly, BEAT could materially impact Sirius Group's provision for taxes in the future.

Sirius Group may be subject to tax withholding under FATCA, which may reduce investment returns and distributions to shareholders.

        The Hiring Incentives to Restore Employment Act provides that a 30% withholding tax will be imposed on certain payments of U.S. source income and certain payments of proceeds from the sale of property that could give rise to U.S. source interest or dividends unless Sirius Group and the applicable foreign subsidiaries enter into an agreement with the IRS to disclose the name, address and taxpayer identification number of certain U.S. persons that own, directly or indirectly, an interest in Sirius

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Group as well as certain other information relating to any such interest (these rules are commonly known as the Foreign Account Tax Compliance Act, or " FATCA "). The IRS has released regulations and other guidance that provide for the phased implementation of the foregoing withholding and reporting requirements. On December 19, 2013, the United States Department of the Treasury signed a Model 2 non-reciprocal intergovernmental agreement (the " Model 2 IGA ") with Bermuda. The Model 2 IGA modifies the foregoing requirements but generally requires similar information to be disclosed to the IRS. Although Sirius Group will attempt to satisfy any obligations imposed on it to avoid the imposition of this withholding tax, no assurance can be given that it will be able to satisfy these obligations. If Sirius Group or its subsidiaries become subject to a withholding tax as a result of FATCA, the return of all shareholders may be materially adversely affected.

U.S. tax-exempt organizations who own Sirius Group common shares may recognize unrelated business taxable income.

        A U.S. tax-exempt organization may recognize unrelated business taxable income if Sirius Group is a "controlled foreign corporation" (which we also refer to as a " CFC ") as discussed below, and the organization is a 10% U.S. Shareholder, or if the related person insurance income (" RPII ") inclusion rules above apply. U.S. tax-exempt organizations should consult their own tax advisors regarding the risk of recognizing unrelated business taxable income as a result of the ownership of Sirius Group common shares. A " 10% U.S. Shareholder " is a U.S. person who owns (directly, indirectly through foreign entities or constructively) at least 10% of the total combined voting power of Sirius Group's voting shares, or at least 10% of the total value of shares of all classes of stock of such foreign corporation.

Changes in United States federal income tax law and other jurisdictions could materially adversely affect an investment in Sirius Group common shares.

        The U.S. federal income tax laws and interpretations regarding whether a company is engaged in a trade or business within the United States or whether a company is a CFC or PFIC or has RPII are subject to change, possibly on a retroactive basis. Treasury regulations were issued in proposed form regarding the application of the PFIC rules to an insurance company. Additionally, the 2017 Tax Cuts and Jobs Act changed in material ways the tests for whether a foreign insurance company is a PFIC, and no regulations have yet been issued with respect to these new rules. Additionally, the Treasury regulations regarding RPII are still in proposed form. New Treasury regulations or pronouncements interpreting or clarifying such rules may be forthcoming from the IRS. It is not possible to predict if, when or in what form such guidance will be provided and whether such guidance will be applied on a retroactive basis. Due to the absence of specific authority with respect to these issues, the amount, timing and character of income, gain or loss recognized with respect to a U.S. shareholder could be significantly different from that described herein. See " Material Tax Consequences—Material U.S. Tax Consequences. " Additionally changes in tax law in non-U.S. jurisdictions may also adversely affect Sirius Group's tax treatment and that of its subsidiaries. You are urged to consult your own tax advisor regarding the tax consequences of owning Sirius Group shares in your particular circumstances.

Reduced U.S. federal income tax rates for qualified dividend income may not be available in the future.

        As long as Sirius Group common shares are readily tradable on an established securities market in the United States and it is not a PFIC, then under current U.S. law, dividends paid on Sirius Group common shares to U.S. individual shareholders should qualify as "qualified dividend income" and be eligible for reduced U.S. federal income tax rates. The U.S. Congress has, in the past, considered legislation that would exclude shareholders of foreign corporations from this preferential U.S. federal income tax treatment unless either (i) the corporation is organized or created under the laws of a country that has entered into a "comprehensive income tax treaty" with the United States or (ii) the

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stock of such corporation is readily tradable on an established securities market in the United States and the corporation is organized or created under the laws of a country that has a "comprehensive income tax system" that the U.S. Secretary of the Treasury determines is satisfactory for this purpose. Sirius Group would likely not satisfy either of these tests and, accordingly, if this or similar legislation were to become law, individual U.S. shareholders would no longer qualify for reduced U.S. federal income tax rates on dividends paid by it.

Sirius Group may be treated as a CFC and might be subject to the rules for related person insurance income, and in either case this may subject a U.S. holder of Sirius Group common shares to disadvantageous rules under U.S. federal income tax laws.

        A CFC for U.S. federal income tax purposes is any foreign corporation if, on any day of the taxable year, 10% U.S. Shareholders own (directly, indirectly through foreign entities or by attribution by application of certain constructive ownership rules) more than 50% (25% in the case of certain insurance companies) of the total combined voting power of all classes of that corporation's voting shares, or more than 50% (25% in the case of certain insurance companies) of the total value of all the corporation's shares. If Sirius Group is a CFC, each 10% U.S. Shareholder must annually include in its income its pro rata share of Sirius Group's "subpart F income," and its "global intangible low-taxed income" even if no distributions are made. Given Sirius Group's current share ownership, it believes it is unlikely that any U.S. person who acquires Sirius Group common shares in the Merger will become a 10% U.S. Shareholder. However, because of the complexity of the attribution rules contained in the Code, Sirius Group cannot be certain that this will be the case.

        If, with respect to any of Sirius Group's non-U.S. insurance subsidiaries, (i) 20% or more of the gross income in any taxable year is attributable to insurance or reinsurance policies of which the direct or indirect insureds are direct or indirect U.S. shareholders of Sirius Group (regardless of the number of shares owned by those shareholders) or persons related to such U.S. shareholders and (ii) direct or indirect insureds, whether or not U.S. persons, and persons related to such insureds own directly or indirectly 20% or more of the voting power or value of Sirius Group's shares, any U.S. person who owns any shares directly or indirectly on the last day of the taxable year would most likely be required to include its allocable share of the RPII of the applicable subsidiary for the taxable year in its income, even if no distributions are made. Sirius Group believes it is not likely that these conditions will be satisfied. However, Sirius Group cannot assure you that this will be the case. Consequently, Sirius Group cannot assure you that a person who is a direct or indirect U.S. shareholder will not be required to include amounts in its income in respect of RPII in any taxable year.

        See " Material Tax Consequences—Material U.S. Tax Consequences—Taxation of U.S. Holders—CFC Provisions " for a more comprehensive discussion regarding our status as a CFC and the tax consequences to U.S. holders of Sirius Group common shares if Sirius Group is treated as a CFC or if the RPII inclusion rules apply.

Sirius Group may become subject to taxes in Bermuda after March 31, 2035, which may have a material adverse effect on its results of operations and your investment.

        The Bermuda Minister of Finance, under the Exempted Undertakings Tax Protection Act 1966 of Bermuda, as amended, has given Sirius Group and each of its Bermuda incorporated subsidiaries an assurance that if any legislation is enacted in Bermuda that would impose tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of any such tax will not be applicable to any such entity or any of its operations, shares, debentures or other obligations until March 31, 2035, except insofar as such tax applies to persons ordinarily resident in Bermuda or to any taxes payable by it in respect of real property owned or leased by it in Bermuda. See " Material Tax Consequences—Material Bermuda Tax

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Consequences ". Given the limited duration of the Bermuda Minister of Finance's assurance, there can be no assurance that Sirius Group will not be subject to any Bermuda tax after March 31, 2035.

U.S. Treasury Regulations may limit Sirius Group's ability to make acquisitions of U.S.-domiciled companies using corporate stock.

        On April 4, 2016 and July 12, 2018, the IRS and the Treasury Department issued final and temporary regulations on corporate inversions. Among other provisions, the regulations provide for a "cash box rule" that in general reduces a foreign corporation's value by the percentage of passive assets it holds for the purpose of applying the inversion ownership test. Failure of such test could result in the acquiring corporation being taxed as a U.S. corporation. As a result of these regulations, the size of any U.S. company that Sirius Group could acquire for stock may need to be dramatically reduced to avoid severe adverse tax consequences. Sirius Group would need to monitor its passive assets to avoid such adverse tax consequences.

The tax treatment of the Merger is not entirely clear. Neither Easterly nor Sirius Group have sought a ruling from the IRS, nor obtained any opinion from counsel, that the Merger will be treated as tax-deferred transaction for United States federal income tax purposes and neither Easterly nor Sirius Group are obligated by the terms of the Merger Agreement to ensure that the Merger will so qualify.

        Sirius Group and Easterly intend to report the Merger as a tax-deferred transaction for United States federal income tax purposes pursuant to Section 368 of the Code. Assuming such treatment is respected, holders of Easterly common stock generally will not recognize gain or loss for U.S. federal income tax purposes as a result of the exchange of their Easterly common stock for Sirius Group common shares (except with respect to cash received in lieu of fractional shares). Neither Sirius Group nor Easterly intends to request any ruling or other guidance from the IRS on the United States federal income tax treatment of the Merger, neither is receiving an opinion of counsel regarding such treatment, and no assurance can be given that the IRS would not challenge such treatment in light of the specific terms of the Merger, the post-closing adjustments with Sirius Group common shares to reflect the exchange ratio and related transactions. You are strongly urged to consult with your own tax advisor to determine the particular U.S. federal, state or local or foreign income or other tax consequences of the Merger to you. See the section entitled " Proposal No. 1—The Merger Proposal—U.S. Federal Income Tax Considerations of the Merger to Holders of Easterly Common Stock or Easterly Warrants ."

Risks Related to Sirius Group Common Shares

         The following risk factors apply to the common shares of Sirius Group and will also apply to the common shares of the combined company following the completion of the Merger.

There can be no assurance that Sirius Group common shares and the converted warrants will be approved for listing on Nasdaq in connection with the Merger, or if approved, that Sirius Group will be able to comply with the continued listing standards of Nasdaq.

        Easterly's common stock, units and warrants are currently listed on the Nasdaq Capital Market. In connection with the Merger, Sirius Group will be required to demonstrate compliance with Nasdaq's initial listing requirements, which are more rigorous than Nasdaq's continued listing requirements, in order to list its securities on Nasdaq. Sirius Group's eligibility for listing may depend on, among other factors, the number of shares of Easterly common stock that are redeemed in connection with the Merger Proposal. There can be no assurance that Sirius Group will be able to meet Nasdaq's initial listing requirements at the time of the Merger.

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        If Sirius Group common shares and the converted warrants are not approved for listing on Nasdaq in connection with the Merger or, after the Merger, Nasdaq delists Sirius Group common shares and the converted warrants from trading on its exchange for failure to meet the listing standards, Sirius Group and its shareholders could face significant material adverse consequences including:

        The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as "covered securities." If Sirius Group's securities are not approved for listing on Nasdaq, its securities would not be covered securities and Sirius Group would be subject to regulation in each state in which it offers its securities.

Fulfilling Sirius Group's obligations incident to being a public company, including with respect to the requirements of the Sarbanes-Oxley Act of 2002, will be expensive and time consuming, and any delays or difficulties in satisfying these obligations could have a material adverse effect on Sirius Group's future results of operations and share price.

        Prior to the completion of the Merger, Sirius Group has operated as a private company, and prior to April 2016 as a subsidiary of a public company, and has not been subject to the same financial and other reporting and corporate governance requirements as a public company. As a public company, Sirius Group will be required, among other things, to:

        The changes necessitated by becoming a public company will require a significant commitment of additional resources and management oversight, which will increase Sirius Group's operating costs and could divert attention away from the day-to-day management of the business. These changes will also place significant additional demands on Sirius Group's finance and accounting staff, as they adjust to working for a newly public company, and on Sirius Group's financial accounting and information systems. Other expenses associated with being a public company include, but are not limited to, increases in auditing, accounting and legal fees and expenses, investor relations expenses, increased directors' fees and director and officer liability insurance costs, registrar and transfer agent fees and listing fees.

        In particular, upon completion of the Merger, the Sarbanes-Oxley Act of 2002 will require Sirius Group to document and test the effectiveness of its internal control over financial reporting in accordance with an established internal control framework, and to report on management's conclusions as to the effectiveness of its internal controls. Likewise, Sirius Group's independent registered public accounting firm will be required to provide an attestation report on the effectiveness of Sirius Group's

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internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, starting with the filing of Sirius Group's annual report on Form 10-K for the year ended December 31, 2019. In addition, upon completion of the Merger, Sirius Group will be required under the Exchange Act to maintain disclosure controls and procedures and internal control over financial reporting. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm Sirius Group's operating results or cause it to fail to meet its reporting obligations. If management is unable to conclude that Sirius Group has effective internal control over financial reporting, investors could lose confidence in the reliability of its financial statements. This could result in a decrease in the value of Sirius Group common shares. Failure to comply with the Sarbanes-Oxley Act of 2002 could potentially subject Sirius Group to sanctions or investigations by the SEC, Nasdaq or other regulatory authorities.

There may be sales of a substantial amount of Sirius Group common shares after the Merger, and the sale or availability for sale of substantial amounts of Sirius Group common shares could adversely affect their market price.

        Upon completion of the Merger and based on the assumptions described in the next paragraph, there are expected to be 126.6 million Sirius Group common shares issued and outstanding. It is anticipated that (i) Sirius Group's existing controlling shareholder, CM Bermuda, will own approximately 83.7% of Sirius Group, (ii) the Sirius Group Private Placement Investors will own approximately 8.9% of Sirius Group, (iii) Easterly's public stockholders will own approximately 6.6% of Sirius Group and (iv) the Sponsor and Easterly's directors and executive officers will own approximately 0.8% of Sirius Group.

        These relative percentages assume that (i) the Exchange Ratio is equal to 0.586, (ii) no Easterly stockholders exercise their redemption rights in connection with the Merger Proposal, (iii) the Sponsor and Easterly's original independent directors retain 1.0 million shares of Easterly common stock after giving effect to the transactions contemplated by the Sponsor Letter, (iv) Sirius Group issues 11.4 million common shares and Series B preference shares convertible into common shares in connection with the Sirius Group Private Placement, (v) Sirius Group redeems 14.1 million common shares from CM Bermuda for approximately $250 million pursuant to the Common Shares Redemption Agreement and (vi) all of the issued and outstanding Sirius Group Series A redeemable preference shares are redeemed for $95 million in cash pursuant to the Preference Shares Redemption Agreement prior to the closing of the Merger. Further, such percentages do not take into account (x) the issuance of any Sirius Group common shares upon the exercise of the converted warrants that may remain issued and outstanding following the Merger (which would be 5.9 million Sirius Group common shares using the assumed Exchange Ratio) or that are issued pursuant to the Sirius Group Private Placement (which are estimated to be approximately 5.4 million Sirius Group Common Shares) or (y) the issuance of up to 14.1 million Sirius Group common shares reserved for issuance pursuant to Sirius Group's Long Term Incentive Plan and 2018 Omnibus Incentive Plan. If the facts differ from these assumptions, Easterly's stockholders may experience dilution of their ownership interest unless they elect to have their shares of Easterly common stock redeemed in connection with the Merger Proposal.

        Subject to applicable restrictions and limitations under Rule 144 of the Securities Act and, with respect to the Sponsor, the Lock-Up Agreements, all of the Sirius Group common shares issued in the Merger are expected to be eligible for sale in the public market. In addition, following the Merger, Sirius Group will be required to file one or more registration statements relating to the offer and sale of the approximately 106.0 million Sirius Group common shares held by CM Bermuda (subject to the Lock-Up Agreement) and the approximately 11.4 million Sirius Group common shares beneficially owned by the Sirius Group Private Placement Investors. Upon effectiveness of such registration statements, these parties may sell large amounts of Sirius Group common shares in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in Sirius

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Group common share price or putting significant downward pressure on the price of Sirius Group common shares.

        Sales of substantial amounts of Sirius Group common shares in the public market after the Merger, or the perception that such sales will occur, could adversely affect the market price of Sirius Group common shares and make it difficult for it to raise funds through securities offerings in the future.

Sirius Group's shareholders will be subject to significant dilution upon the occurrence of certain events, which could result in a decrease in the Sirius Group common share price.

        If the Merger is completed, the issued and outstanding public warrants to purchase an aggregate of 10.0 million shares of Easterly common stock will be converted into warrants to acquire 5.9 million Sirius Group common shares using the estimated Exchange Ratio of 0.586. The converted warrants will become exercisable in accordance with the terms of the warrant agreement governing those securities as amended by the Warrant Amendment. These converted warrants will become exercisable 30 days after the completion of the Merger. Based on the estimated Exchange Ratio of 0.586, the exercise price of these converted warrants will be $19.62 per Sirius Group common share.

        In addition, Sirius Group has 14.1 million common shares reserved or designated for future issuance pursuant to the Sirius Group Long Term Incentive Plan and 2018 Omnibus Incentive Plan. In connection with the Merger, the Compensation Committee has approved grants of performance share unit awards to members of management under the 2018 Omnibus Incentive Plan. The aggregate number of shares subject to these awards, determined at the target level of performance, is projected to have a grant date value of $15 million.

        Sales of substantial amounts of Sirius Group common shares into the public markets by the holders of these warrants, performance share unit awards and other grants following their exercise or vesting will be dilutive to Sirius Group's existing shareholders and could result in a decrease in the Sirius Group common share price.

Future issuances of any equity securities may dilute the interests of Sirius Group's shareholders and decrease the trading price of Sirius Group common shares.

        Any future issuance of equity securities could dilute the interests of Sirius Group's shareholders and could substantially decrease the trading price of Sirius Group common shares. Sirius Group may issue equity or equity-linked securities in the future for a number of reasons, including to finance Sirius Group's operations and business strategy (including in connection with acquisitions and other transactions), to adjust Sirius Group's ratio of debt to equity, to satisfy its obligations upon the exercise of then-outstanding options or other equity-linked securities, if any, or for other reasons.

The valuation ascribed to the Sirius Group common shares in the Merger may not be indicative of the price that will prevail in the trading market following the closing.

        Prior to the closing, there has not been a public market for Sirius Group's securities. Accordingly, the valuation ascribed to the Sirius Group common shares in the Merger may not be indicative of the price that will prevail in the trading market following the closing. If an active market for Sirius Group's securities develops and continues, the trading price of Sirius Group's securities following the closing could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond Sirius Group's control. Any of the factors listed below could have a material adverse effect on your investment in Sirius Group's securities and Sirius Group's securities may trade at prices significantly below the value ascribed to them in the Merger. In such circumstances, the trading price of Sirius Group's securities may not recover and may experience a further decline.

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        Factors affecting the trading price of Sirius Group's securities may include:

        Broad market and industry factors may materially harm the market price of Sirius Group's securities irrespective of its operating performance. The stock market in general, and Nasdaq in particular, has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of Sirius Group's securities, may not be predictable. A loss of investor confidence in the market for insurance securities or the stocks of other companies which investors perceive to be similar to Sirius Group could depress Sirius Group's share price regardless of Sirius Group's business, prospects, financial conditions or results of operations. A decline in the market price of Sirius Group's securities also could adversely affect Sirius Group's ability to issue additional securities and its ability to obtain additional financing in the future.

Sirius Group's controlling shareholder, CM Bermuda, will have significant influence over Sirius Group after the Merger, which could limit your ability to influence the outcome of key transactions, including a change of control. CM Bermuda's interests may not be aligned with your interests on any matter requiring shareholder approval, and actions taken by CMIG International, CM Bermuda's controlling shareholder, could be adverse to Sirius Group and its other stockholders.

        In April 2016, CMIG International, through its Bermuda holding company CM Bermuda, acquired 100% of Sirius Group from our former parent company. Immediately following the completion of the Merger, it is expected that CM Bermuda will beneficially own, and be entitled to vote, approximately 83.7% of Sirius Group's issued and outstanding common shares. As a result, subject to the terms of the Shareholders Agreement, CM Bermuda will have the ability to elect all the members of Sirius Group's board of directors and thereby control its business and affairs, including any determinations with

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respect to mergers or other business combinations, the acquisition or disposition of assets, the incurrence of indebtedness, the issuance of any additional common shares or other equity securities, the repurchase or redemption of common shares and the payment of dividends. In addition, CM Bermuda will be able to determine the outcome of all matters requiring shareholder approval and, subject to the terms of the Shareholders Agreement, will be able to cause or prevent a change of control of Sirius Group and could preclude any unsolicited acquisition of Sirius Group. CM Bermuda's interests may not be aligned with your interests on any matter requiring shareholder approval. In addition, the concentration of ownership could deprive you of an opportunity to receive a premium for your common shares as part of a sale of Sirius Group, and may ultimately affect the market price of Sirius Group common shares.

        Under Bermuda law, CM Bermuda may be able to acquire compulsorily the common shares of minority holders by a procedure under the Companies Act known as a "scheme of arrangement." A scheme of arrangement could be effected by obtaining the agreement of Sirius Group and of holders of common shares, representing in the aggregate a majority in number and at least 75% in value of the common shareholders present and voting at a court ordered meeting held to consider the scheme of arrangement. The scheme of arrangement must then be sanctioned by the Bermuda Supreme Court. If a scheme of arrangement receives all necessary agreements and sanctions, upon the filing of the court order with the Registrar of Companies in Bermuda, all holders of common shares could be compelled to sell their shares under the terms of the scheme of arrangement. Upon consummation of the Merger, CM Bermuda is expected to own in excess of 75% of Sirius Group's common shares and, therefore, CM Bermuda could choose to implement a scheme of arrangement.

        In addition, in connection with CMIG International's acquisition of Sirius Group, CMIG International initially recognized most of the acquired assets and liabilities at fair value for its own reporting but chose not to elect "push down" accounting for Sirius Group. The application of "push down accounting" by CMIG International would be material to the financial statements of Sirius Group.

As a "controlled company" within the meaning of Nasdaq rules, Sirius Group qualifies for exemptions from certain corporate governance requirements. Sirius Group has the opportunity to elect any of the exemptions afforded a controlled company, but does not expect to do so.

        Because CM Bermuda will control more than a majority of the total voting power of Sirius Group common shares following the completion of the Merger, Sirius Group will be a "controlled company" within the meaning of Nasdaq rules. Under these rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a "controlled company" and may elect not to comply with certain stock exchange rules regarding corporate governance, including:

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        Sirius Group does not currently expect or intend to rely on any of these exemptions, but there is no assurance that it will not rely on these exemptions in the future. If Sirius Group were to utilize some or all of these exemptions, you may not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq rules regarding corporate governance, and the trading price of Sirius Group common shares may be materially adversely affected.

As a "foreign private issuer" under the rules and regulations of the SEC, Sirius Group is permitted to file less or different information with the SEC than a company incorporated in the United States or otherwise subject to these rules, and to follow certain home country corporate governance practices in lieu of certain Nasdaq requirements applicable to U.S. issuers. Sirius Group has the opportunity to elect any of these exemptions afforded a foreign private issuer, but does not expect to do so.

        Sirius Group is, and will upon the consummation of the Merger be, considered a "foreign private issuer" under the rules and regulations of the SEC. Accordingly, Sirius Group will not be required to file periodic reports and financial statements with the SEC as frequently or within the same time frames as U.S. companies with securities registered under the Exchange Act. In addition, Sirius Group is not required to comply with other regulations applicable to U.S. companies, including Regulation FD, which imposes restrictions on the selective disclosure of material information to shareholders. Furthermore, as a "foreign private issuer" whose common shares will be listed on Nasdaq, Sirius Group is permitted to follow certain home country corporate governance practices in lieu of certain Nasdaq requirements.

        Sirius Group does not currently expect or intend to rely on the scaled disclosure practices permitted by the SEC or the alternate governance practices permitted by Nasdaq, but there is no assurance that it will not rely on these exemptions in the future. If Sirius Group were to utilize some or all of these exemptions, you may not be provided with the same disclosures or have the same protections afforded to shareholders of companies that are subject to all of the SEC's disclosure requirements and Nasdaq rules regarding corporate governance, and the trading price of Sirius Group common shares may be materially adversely affected.

Sirius Group will have to rely principally on dividends and other distributions on equity paid by Sirius Group's operating subsidiaries and limitations on their ability to pay dividends to Sirius Group could adversely impact shareholders' ability to receive dividends on Sirius Group common shares.

        Dividends and other distributions on equity paid by Sirius Group's operating subsidiaries will be Sirius Group's principal source for cash in order for Sirius Group to be able to pay any dividends and other cash distributions to its shareholders. If Sirius Group's operating subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to Sirius Group.

You will have limited ability to bring an action against Sirius Group or against Sirius Group's directors and officers, or to enforce a judgment against Sirius Group or them, because Sirius Group is incorporated in Bermuda and because certain of Sirius Group's directors and officers reside outside the United States.

        Sirius Group is incorporated in Bermuda and conducts much of its operations outside the United States. Certain of Sirius Group's officers and directors reside outside the United States and a substantial portion of the assets of those persons are located outside of the United States. As a result, it could be difficult or impossible for you to bring an action against Sirius Group or against these individuals in Bermuda in the event that you believe that your rights have been infringed under the applicable securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of Bermuda could render you unable to enforce a judgment against Sirius Group's assets or the assets of Sirius Group's directors and officers.

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        In addition, class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company's memorandum of association or bye-laws, including any breach of fiduciary duty claims in cases where the actions from which such claims arise have not been ratified by a majority of the shareholders.

        As a result of the above, Sirius Group shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company.

Sirius Group common shares to be received by Easterly stockholders as a result of the Merger will have different rights from Easterly common stock.

        Following the completion of the Merger, Easterly stockholders will no longer be stockholders of Easterly, but will instead be shareholders of Sirius Group. There will be differences between the current rights of an Easterly stockholder and the rights to which an Easterly stockholder will be entitled as a Sirius Group shareholder following the completion of the Merger. See the section of this proxy statement/prospectus entitled " Comparison of Rights of Shareholders of Easterly and Sirius Group " for additional information about the different rights associated with Sirius Group common shares.

If, following the Merger, securities or industry analysts do not publish or cease publishing research or reports about Sirius Group, its business or its industry, or if they change their recommendations regarding Sirius Group common shares adversely, the price and trading volume of the common shares could decline.

        The trading market for Sirius Group common shares will be influenced by the research and reports that industry or securities analysts may publish about Sirius Group, its business, its industry or its competitors. Securities and industry analysts do not currently, and may never, publish research on Sirius Group. If no securities or industry analysts commence coverage of Sirius Group, its share price and trading volume would likely be negatively impacted. If any of the analysts who may cover Sirius Group change their recommendation regarding Sirius Group common shares adversely, or provide more favorable relative recommendations about Sirius Group's competitors, the price of Sirius Group common shares would likely decline. If any analyst who may cover Sirius Group were to cease coverage of Sirius Group or fail to regularly publish reports on it, Sirius Group could lose visibility in the financial markets, which in turn could cause its share price or trading volume to decline.

Risks Related to Easterly and the Merger

         The following risk factors apply to the business and operations of Easterly and to the Merger.

Nasdaq may delist Easterly's securities from trading on its exchange prior to the Merger, which could limit investors' ability to make transactions in Easterly's securities and subject it to additional trading restrictions.

        Easterly cannot assure you that Easterly's securities will continue to be listed on Nasdaq in the future and prior to the Merger. In order to continue listing Easterly's securities on Nasdaq prior to the Merger, Easterly must maintain certain financial, distribution and stock price levels. Generally, Easterly must maintain a minimum amount in stockholders' equity (generally $2,500,000) and a minimum number of holders of its securities (generally 300 round-lot holders). Additionally, Nasdaq listing rules require that a special purpose acquisition company like Easterly complete its initial business combination within 36 months of the effectiveness of its IPO registration statement. Easterly's IPO registration statement was declared effective on July 29, 2015 and, therefore, Easterly is subject to delisting as a result of the failure to complete an initial business combination prior to July 29, 2018. On

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August 7, 2018, Easterly received formal notification from the Listing Qualifications Department of the Nasdaq Stock Market regarding the failure to meet such requirement and that Nasdaq has initiated procedures to delist Easterly's securities from the Nasdaq Stock Market.

        In addition, on April 2, 2018, Easterly received a notification letter from the staff of the Listing Qualifications Department of The Nasdaq Stock Market notifying it that it no longer complies with Nasdaq Listing Rule 5550(a)(3) for continued listing due to its failure to maintain a minimum of 300 public holders of Easterly common stock. On May 21, 2018, Easterly submitted to Nasdaq a plan to regain compliance. On May 31, 2018, Nasdaq granted Easterly an extension until July 29, 2018 to regain compliance. As of July 29, 2018, Easterly had not regained compliance with such requirement. On August 7, 2018, Easterly received formal notification from the Listing Qualifications Department regarding the failure to meet such requirement by the extended deadline and that Nasdaq has initiated procedures to delist Easterly's securities from the Nasdaq Stock Market.

        Easterly has appealed Nasdaq's decision to a Nasdaq Listing Qualifications Panel. While the appeal is pending, Easterly's securities will remain listed pending the decision of a Nasdaq Listing Qualifications Panel. However, there can be no assurance that such appeal will be successful.

        If Nasdaq delists Easterly's securities from trading on its exchange and Easterly is not able to list its securities on another national securities exchange, Easterly expects its securities could be quoted on an over-the-counter market. If this were to occur, Easterly could face significant material adverse consequences, including:

        The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as "covered securities." Because Easterly's units, common stock and warrants are currently listed on Nasdaq, its units, common stock and warrants are covered securities. Although the states are preempted from regulating the sale of Easterly's securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While Easterly is not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the state of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if Easterly were no longer listed on Nasdaq, its securities would not be covered securities and Easterly would be subject to regulation in each state in which it offers its securities.

Sirius Group may apply the net proceeds released from the Trust Account in a manner that does not increase the value of your investment.

        If the Merger is consummated, the funds held in the Trust Account will be released to (i) the surviving company for general corporate purposes, including making loans or contributing cash to other affiliates for working capital, organic growth and future potential acquisitions, (ii) pay unpaid franchise and income taxes of Easterly, (iii) Easterly stockholders who properly exercise their redemption rights,

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and (iv) pay up to $2 million of Easterly's liabilities, fees, costs and expenses and the $7 million deferred underwriting fee. Following the consummation of the Merger, the combined company will be entitled to use the funds in the Trust Account. Other than the foregoing uses, the combined company does not have specific plans for any funds remaining from the Trust Account and will have broad discretion regarding how to use the funds that remain. These funds could be used in a manner with which you may not agree or applied in ways that do not improve the combined company's results of operations or increase the value of your investment.

The proceeds available to the combined company after the Merger will be reduced to the extent Easterly's stockholders exercise their redemption rights in connection with the Merger and will also be reduced to the extent of transaction expenses of each of Easterly and Sirius Group, which will be payable by the combined company. This may adversely affect the combined company's business and future operations.

        The amount of proceeds available to the combined company after the Merger will depend in part on the extent to which Easterly stockholders exercise their right to redeem their shares into cash in connection with the Merger. As of August 31, 2018, Easterly has approximately $148.0 million in the Trust Account that will be available for general corporate purposes after the Merger prior to the payment of $2 million of fees and expenses and the $7 million deferred underwriting fee. This amount could be reduced to as low as zero. Easterly has no specified maximum redemption threshold under its charter. In no event, however, will Easterly redeem public shares in an amount that would cause its net tangible assets to be less than $5,000,001. The proceeds available to the combined company will be reduced in proportion to such redemptions, and will also be reduced to the extent of all transaction expenses, which will be payable by the combined company. Reduced proceeds may adversely affect the combined company's business and future operations.

Upon the closing of the Merger, Sirius Group will be obligated to pay certain transaction expenses and fees as well as other expenses required to complete the Merger, and the combined company may not have sufficient funds at closing to repay these amounts.

        The combined company will also be obligated to pay closing fees and expenses related to the Merger at the closing of the Merger, some of which cannot be determined at this time. If sufficient funds are not in the Trust Account at closing to pay for such obligations, costs and expenses, the combined company will be required to raise additional funds on terms that may not be favorable or renegotiate such obligations, which may result in additional costs and expenses to the combined company. If the combined company cannot satisfy such obligations via additional financings or through renegotiation, it may be in default on such obligations and will not have sufficient capital to fund the operations of the business, and its business, financial condition and results of operations could be adversely affected.

If Easterly is unable to effect a business combination by November 30, 2018, Easterly will be forced to liquidate and the public warrants will expire worthless.

        If Easterly does not complete a business combination by November 30, 2018 or extend such deadline to a later date by obtaining the approval of Easterly's stockholders at a special meeting of Easterly's stockholders, Easterly's charter provides that it will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible, subject to lawfully available funds therefor, redeem 100% of the public shares in consideration of a per-share price, payable in cash, equal to the quotient obtained by dividing (a) the aggregate amount then on deposit in the Trust Account, including interest but net of franchise and income taxes payable (which interest will be net of taxes payable and reduced by up to $100,000 to pay dissolution expenses), by (b) the total number of then issued and outstanding public shares, which redemption will completely extinguish rights of the public stockholders (including the right to receive further liquidation distributions, if any), subject to

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applicable law, and (iii) as promptly as reasonably possible following such redemptions, subject to the approval of the remaining stockholders and the board of directors in accordance with applicable law, dissolve and liquidate, subject in each case to Easterly's obligations under the DGCL to provide for claims of creditors and other requirements of applicable law. In the event of liquidation, there will be no distribution with respect to Easterly's outstanding warrants. Accordingly, the public warrants will expire worthless.

        For illustrative purposes, based on funds in the Trust Account of approximately $148.0 million on August 31, 2018, the estimated per share redemption price would have been approximately $10.41. This is slightly more than the $10.00 IPO price of Easterly's units.

If Easterly is forced to liquidate, its stockholders may be held liable for claims by third parties against Easterly to the extent of distributions received by them.

        Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of the Trust Account distributed to the public stockholders upon the redemption of 100% of the public shares in the event Easterly does not consummate an initial business combination by November 30, 2018 may be considered a liquidation distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder's pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, Easterly intends to redeem its public shares as soon as reasonably possible following November 30, 2018 in the event Easterly does not consummate an initial business combination and, therefore, Easterly does not intend to comply with those procedures.

        Because Easterly will not be complying with Section 280, Section 281(b) of the DGCL requires Easterly to adopt a plan, based on facts known to it at such time that will provide for the payment of all existing and pending claims or claims that may be potentially brought against Easterly within the 10 years following dissolution. If Easterly's plan of distribution complies with Section 281(b) of the DGCL, any liability of its stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder's pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. There can be no assurance that Easterly will properly assess all claims that may be potentially brought against it. As such, Easterly's stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of its stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of the Trust Account distributed to Easterly's public stockholders upon the redemption of 100% of the public shares in the event its does not consummate an initial business combination within the required timeframe is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution.

        If Easterly is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a "preferential transfer" or a "fraudulent conveyance." As a result, a bankruptcy court could seek to recover all amounts received by Easterly's stockholders. Furthermore, because Easterly intends to distribute the proceeds held in the Trust Account to its public

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stockholders promptly after November 30, 2018 in the event it does not consummate an initial business combination, this may be viewed or interpreted as giving preference to Easterly's stockholders over any potential creditors with respect to access to or distributions from Easterly's assets. Furthermore, Easterly's board of directors may be viewed as having breached its fiduciary duties to Easterly's creditors and/or may have acted in bad faith, thereby exposing itself and Easterly to claims of punitive damages, by paying Easterly's stockholders from the Trust Account prior to addressing the claims of creditors. There can be no assurance that claims will not be brought against Easterly for these reasons.

If Easterly is unable to complete the Merger by November 30, 2018, Easterly's charter provides that it shall cease operations and promptly dissolve and wind up. In such event, third parties may bring claims against Easterly and, as a result, the proceeds held in the Trust Account could be reduced and the per share liquidation price received by stockholders could be less than $10.00 per share.

        Easterly must complete a business combination by November 30, 2018 or extend such deadline to a later date by obtaining the approval of Easterly's stockholders at a special meeting of Easterly's stockholders, when, pursuant to Easterly's charter, it will cease all operations except for the purpose of winding up and it will be required to dissolve and liquidate. In such event, third parties may bring claims against it. Although Easterly has obtained waiver agreements from many of the vendors and service providers it has engaged and prospective target businesses with which it has negotiated, whereby such parties have waived any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of Easterly's public stockholders, there is no guarantee that such parties will not bring claims seeking recourse against the Trust Account including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as other claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against Easterly's assets, including the funds held in the Trust Account. Further, Easterly could be subject to claims from parties not in contract with it or who have not executed a waiver. Darrell Crate, Easterly's Chairman, Avshalom Kalichstein, its Chief Executive Officer and director, and David Cody have agreed that they will be jointly and severally liable to Easterly if and to the extent any claims by a vendor for services rendered or products sold to it, or a prospective target business with which it has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account or to any claims under Easterly's indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then they will not be responsible to the extent of any liability for such third-party claims. Easterly has not independently verified whether they have sufficient funds to satisfy their indemnity obligations, and Easterly has not asked Messrs. Crate, Kalichstein or Cody to reserve for such indemnification obligations. Therefore, Easterly cannot assure you that they would be able to satisfy those obligations. If they assert that they are unable to satisfy their obligations or that they have no indemnification obligations related to a particular claim, Easterly's independent directors would determine whether to take legal action against them to enforce their indemnification obligations. While Easterly currently expects that its independent directors would take legal action on Easterly's behalf against them to enforce their indemnification obligations to it, it is possible that Easterly's independent directors, in exercising their business judgment, may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable, or if the independent directors determine that a favorable outcome is not likely. If Easterly's independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to Easterly's public stockholders may be reduced below $10.00 per share.

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If the Adjournment Proposal is not approved, and an insufficient number of votes have been obtained to authorize the consummation of the Merger, Easterly's directors will not have the ability to adjourn the Easterly special meeting to a later date in order to solicit further votes, and, therefore, the Merger will not be approved.

        If approved by the stockholders, the Adjournment Proposal will provide Easterly's directors with additional time, if needed, to solicit proxies in favor of the proposals. If the Adjournment Proposal is not approved, and the remaining proposals fail to pass such that the Merger cannot be consummated, the Merger will not be completed. Because Easterly must consummate a business combination by the termination date of November 30, 2018 or extend such deadline to a later date by obtaining the approval of Easterly's stockholders at a special meeting of Easterly's stockholders, if the Merger is not approved, Easterly may not be able to consummate another transaction within the remaining time period, and as a result, it is likely that Easterly will have to redeem all of its public shares for their pro rata portions of the Trust Account and, promptly following such redemption, dissolve and liquidate.

The Sponsor and Easterly's original independent directors have agreed to vote in favor of the Merger, regardless of how Easterly's public stockholders vote.

        Unlike blank check companies in which the founders agree to vote their founder shares in accordance with the majority of the votes cast by the public stockholders in connection with an initial business combination, the Sponsor and Easterly's independent directors have agreed to vote any shares of Easterly common stock owned by them in favor of Easterly's initial business combination. As of the date hereof, the Sponsor and Easterly's original independent directors and their permitted transferees own 25.8% of Easterly's issued and outstanding shares of common stock. Accordingly, it is more likely that the necessary stockholder approval will be received for the Merger than would be the case if the Sponsor and Easterly's independent directors agreed to vote any shares of Easterly common stock owned by them in accordance with the majority of the votes cast by Easterly's public stockholders.

Because the market price of Sirius Group common shares and the converted warrants will fluctuate and because there is currently no trading market for the Sirius Group common shares or the converted warrants, Easterly securityholders cannot be sure of the value of the consideration they will receive when the Merger is completed, and the value may be less than what respective securityholders originally paid for their shares of Easterly common stock or public warrants.

        If the Merger is completed, Easterly stockholders will receive a fraction of a Sirius Group common share equal to the Exchange Ratio for each share of Easterly common stock for which the stockholder did not validly exercise redemption rights, and each issued and outstanding public warrant to purchase shares of Easterly common stock will be converted into a warrant to purchase the same fraction of a Sirius Group common share. The value of Sirius Group common shares and the converted warrants may vary significantly from the closing price of the Easterly common stock and the public warrants on the date the Merger was announced, on the date the parties entered into the Merger Agreement, on the date that this proxy statement/prospectus was mailed to Easterly's stockholders or on the date of the special meeting of Easterly's stockholders, or thereafter. No trading market for Sirius Group common shares or the converted warrants currently exists and, therefore, Easterly's securityholders cannot be sure of the price at which the Sirius Group common shares or converted warrants will trade if the Merger is completed. Therefore, the value of the Sirius Group common shares and/or the converted warrants that Easterly's securityholders receive in the Merger may be lower than what Easterly's securityholders originally paid for their corresponding securities of Easterly prior to the Merger.

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Easterly has not obtained an opinion from an independent financial advisor, and consequently, there is no assurance from an independent source that the price Sirius Group is paying for Easterly is fair to Easterly's stockholders from a financial point of view.

        Easterly is not required to and has not obtained an opinion from an independent financial advisor that the price Sirius Group is paying for Easterly is fair to Easterly's stockholders from a financial point of view. The Easterly board of directors has determined that the Merger consideration is fair from a financial point of view. The determination has been made by Easterly's board of directors based upon standards generally accepted by the financial community, such as potential sales, earnings and cash flow, and the price for which comparable businesses or assets have been valued. Easterly's stockholders will be relying on the judgment of Easterly's board of directors with respect to such matters, and the conclusion of the board of directors may differ from the conclusion that an independent financial advisor would have reached when valuing Sirius Group's business. In addition, the absence of an opinion from an independent financial advisor may lead a larger number of stockholders to vote against the Merger Proposal or demand redemption of their shares in connection therewith, which could impact the parties' ability to complete the Merger and, if such redemptions decrease the public "float" and number of beneficial owners of Easterly's common stock, Sirius Group's ability to list its common shares on Nasdaq in connection therewith.

Easterly will not have any right to make damage claims against Sirius Group for the breach of any representation or warranty made by Sirius Group in the Merger Agreement.

        The Merger Agreement provides that all representations and warranties of the parties contained therein shall not survive the closing of the Merger. Accordingly, there are no remedies available to the parties with respect to any breach of representations and warranties of the parties to the Merger Agreement after the closing. As a result, Easterly will have no remedy available to it if the Merger is consummated and it is later revealed that there was a breach of any of the representations and warranties made by Sirius Group at the time of the Merger.

If Easterly's stockholders fail to comply with the redemption requirements specified in this proxy statement/prospectus, they will not be entitled to redeem their shares of Easterly common stock for a pro rata portion of the Trust Account.

        Holders of public shares are not required to affirmatively vote against the Merger Proposal in order to exercise their rights to redeem their shares for a pro rata portion of the Trust Account. In order to exercise their redemption rights, they are required to submit a request in writing and deliver their stock (either physically or electronically) to Easterly's transfer agent at least two business days prior to the Easterly special meeting of the Stockholders. Stockholders electing to redeem their shares will receive their pro rata portion of the Trust Account less franchise and income taxes payable, calculated as of two business days prior to the anticipated consummation of the Merger. See the section entitled " The Special Meeting of Easterly Stockholders " for additional information on how to exercise your redemption rights.

Stockholders of Easterly who wish to have their shares redeemed for a pro rata portion of the Trust Account must comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising redemption rights.

        Public stockholders who wish to redeem their shares for a pro rata portion of the Trust Account must, among other things, tender their certificates to Easterly's transfer agent or deliver their shares to the transfer agent electronically through DTC prior to 5:00 p.m. New York time, on the second business day prior to the Easterly special meeting. In order to obtain a physical stock certificate, a stockholder's broker and/or clearing broker, DTC and Easterly's transfer agent will need to act to facilitate this request. It is Easterly's understanding that stockholders should generally allot at least two

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weeks to obtain physical certificates from the transfer agent. However, because Easterly does not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. If it takes longer than anticipated to obtain a physical certificate, stockholders who wish to redeem their shares may be unable to obtain physical certificates by the deadline for exercising their redemption rights and thus will be unable to redeem their shares.

Public stockholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a "group," will be restricted from seeking redemption rights with respect to more than 15% of the public shares.

        A public stockholder, together with any of his, her or its affiliates or any other person with whom he, she or it is acting in concert or as a "group," will be restricted from seeking redemption rights with respect to more than 15% of the public shares. Accordingly, if you hold more than 15% of the public shares and the Merger Proposal is approved, you will not be able to seek redemption rights with respect to the full amount of your shares and may be forced to hold the shares in excess of 15% or sell them in the open market. Easterly cannot assure you that the value of such excess shares will appreciate over time following the Merger or that the market price of Easterly common stock will exceed the per-share redemption price.

Since the Sponsor, Easterly's officers, directors and their affiliates will lose their entire investment in Easterly if the Merger is not completed, they may have had a conflict of interest in identifying and selecting Sirius Group for Easterly's initial business combination.

        After giving effect to the July 3, 2015 stock dividend, expiration of Easterly's overallotment that was partially exercised and the transfer of 24,000 shares to Easterly's original independent directors, the Sponsor currently owns an aggregate of 4,928,000 Founder Shares for an aggregate purchase price of $25,000. All of such Founder Shares will be worthless if an initial business combination is not consummated. The personal and financial interests of the Sponsor, Easterly's officers, directors and their affiliates may have influenced their motivation in identifying and selecting Sirius Group for its target business combination and consummating the Merger.

Directors of Easterly have potential conflicts of interest in recommending that stockholders vote in favor of approval of the Merger Proposal and the Adjournment Proposal.

        When considering Easterly's board of directors' recommendation that Easterly's stockholders vote in favor of the approval of the Merger Proposal and the Adjournment Proposal, Easterly's stockholders should be aware that directors and executive officers of Easterly have interests in the Merger that may be different from, or in addition to, the interests of its stockholders. These interests include:

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        Further, each of Easterly's directors, directly or indirectly, holds Founder Shares that are not subject to redemption; as a result, Easterly's directors have a financial incentive to see a Merger consummated rather than lose whatever value is attributable to the Founder Shares and Private Placement Warrants. These interests may influence Easterly's directors in making their recommendation that you vote in favor of the Merger Proposal, and the transactions contemplated thereby.

The exercise of discretion by Easterly's directors and officers and Sirius Group in agreeing to changes to the terms of or waivers of closing conditions in the Merger Agreement may result in a conflict of interest when determining whether such changes to the terms of the Merger Agreement or waivers of conditions are appropriate and in the best interests of Easterly's stockholders.

        In the period leading up to the closing of the Merger, other events may occur that, pursuant to the Merger Agreement, would require Easterly or Sirius Group to agree to amend the Merger Agreement, to consent to certain actions or to waive rights that it is entitled to under those agreements. Such events could arise because of changes in the course of Sirius Group's or Easterly's business, a request by such party to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement or the occurrence of other events that would have a material adverse effect on Sirius Group's or Easterly's business and would entitle the other party to terminate the Merger Agreement. In any of such circumstances, it would be in the discretion of the other party, acting through its board of directors, to grant its consent or waive its rights. The existence of the financial and personal interests of the directors described elsewhere in this proxy statement/prospectus may result in a conflict of interest on the part of one or more of the directors between what he may believe is best for Easterly and its stockholders and what he may believe is best for himself or his affiliates in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, neither Easterly nor Sirius Group believe there will be any changes or waivers that its directors and officers would be likely to make after stockholder approval of the Merger has been obtained. While certain changes could be made without further stockholder approval, if there is a change to the terms of the transaction that would have a material impact on the Easterly stockholders, Easterly will be required to circulate a new or amended proxy statement/prospectus or supplement thereto and resolicit the vote of Easterly's stockholders with respect to the Merger Proposal.

Easterly or Sirius Group may waive one or more of the conditions to the Merger.

        Easterly or Sirius Group may agree to waive, in whole or in part, some of the conditions to its respective obligations to complete the Merger, to the extent permitted by Easterly's charter and applicable laws. For example, it is a condition to Easterly's obligations to close the Merger that the representations and warranties of Sirius Group are true and correct in all respects as of the date of the Merger Agreement and as of the date of the closing of the Merger (or an earlier date to the extent that an earlier date is referenced in the representation and warranty), except for certain of the representations and warranties, for such inaccuracies that, individually or in the aggregate, would not result in a Material Adverse Effect (as defined in the Merger Agreement) on Sirius Group and its subsidiaries taken as a whole. It is also a condition to the Merger that the Sirius Group common shares

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issuable pursuant to the Merger Agreement and upon exercise of the converted warrants shall have been approved for listing on the Nasdaq Stock Market, subject to official notice of issuance. This listing condition may be waived by Sirius Group and Easterly. Under applicable law and Easterly's charter, neither Sirius Group nor Easterly is able to waive the condition that Easterly's stockholders approve the Merger.

Easterly's financial statements included in this proxy statement/prospectus do not take into account the consequences to Easterly of a failure to complete a business combination by November 30, 2018.

        If the proceeds held outside the Trust Account and any loans under the Convertible Promissory Note are insufficient to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination, Easterly may need to raise additional capital through additional loans or additional investments from the Sponsor, an affiliate of the Sponsor or certain of Easterly's officers and directors. None of the Sponsor, any affiliate of the Sponsor, or Easterly's officers and directors are under any obligation to loan Easterly funds. The uncertainty regarding the lack of resources to pay the above noted expenses raises substantial doubt about Easterly's ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should Easterly be unable to continue operations.

Easterly and Sirius Group will be subject to business uncertainties and contractual restrictions while the Merger is pending.

        Uncertainty about the effect of the Merger on employees and third parties may have an adverse effect on Easterly and Sirius Group. These uncertainties may impair Easterly's or Sirius Group's ability to retain and motivate key personnel and could cause third parties that deal with any of them to defer entering into contracts or making other decisions or seek to change existing business relationships. If key employees depart because of uncertainty about their future roles and the potential complexities of the Merger, Easterly's or Sirius Group's business could be harmed.

Easterly will incur significant transaction and transition costs in connection with the Merger.

        Easterly expects to incur significant, non-recurring costs in connection with consummating the Merger. Easterly may incur additional costs to maintain employee morale and to retain key employees. Easterly will also incur significant fees and expenses relating to financing arrangements and legal, accounting and other transaction fees and costs associated with the Merger. Some of these costs are payable regardless of whether the Merger is completed. The Sponsor has agreed to pay or reimburse Easterly for a portion of such costs only if the Merger is consummated.

In connection with the stockholder vote to approve the Merger Proposal, the Sponsor, Easterly's directors, officers or advisors, or their respective affiliates may elect to purchase shares from public stockholders, which may influence the vote on the Merger Proposal and reduce the public "float" of Sirius Group common shares upon completion of the Merger.

        In connection with the stockholder vote to approve the proposed Merger, the Sponsor, Easterly's directors, officers or advisors, or their respective affiliates may privately negotiate transactions to purchase shares from stockholders who would have otherwise elected to have their shares redeemed for a per-share pro rata portion of the Trust Account in conjunction with their consideration of a proposal to approve the Merger, although they are under no obligation to do so. The purpose of any such purchases would be to increase the likelihood of obtaining stockholder approval of the Merger. This may result in the approval of the Merger Proposal, which may not otherwise have been possible. In

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addition, if such purchases are made, the public "float" of Easterly's common stock and the number of beneficial holders of Easterly's securities, and thus the public "float" of Sirius Group's common shares and the number of beneficial holders of Sirius Group's securities immediately after the Merger, may be reduced, possibly making it difficult for Sirius Group to obtain or maintain the listing of its common shares on Nasdaq.

The unaudited pro forma financial information included in this document may not be indicative of what the combined company's actual financial position or results of operations would have been.

        The unaudited pro forma financial information in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what the combined company's actual financial position or results of operations would have been had the Merger been completed on the dates indicated. See the section entitled " Unaudited Pro Forma Condensed Combined Financial Information " for more information.

Easterly's ability to consummate the Merger successfully and Sirius Group's ability to operate the business successfully thereafter will be largely dependent upon the efforts of certain key personnel of Sirius Group. The loss of such key personnel could negatively impact the operations and profitability of the post-combination business.

        Easterly's ability to successfully effect the Merger and Sirius Group's ability to successfully operate the business following the Merger is dependent upon the efforts of certain key personnel, including the key personnel of Sirius Group. It is possible that Sirius Group will lose some key personnel as a result of the Merger, which could negatively impact the operations and profitability of Sirius Group's post-combination business. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause it to have to expend time and resources helping them become familiar with such requirements.

Unlike some other blank check companies, Easterly does not have a specified maximum redemption threshold. The absence of such a redemption threshold will make it easier for Easterly to consummate the Merger even if a substantial number of Easterly stockholders redeem.

        Since Easterly has no specified maximum redemption threshold, its structure is different in this respect from the structure that has been used by some blank check companies. Previously, some blank check companies would not be able to consummate a business combination if the holders of such companies' public shares elected to redeem or convert more than a specified percentage of the shares sold in such companies' initial public offerings, which percentage threshold was typically between 19.99% and 39.99%.

        As a result, Easterly may be able to consummate the Merger even though a substantial number of Easterly public stockholders have redeemed their shares. In no event, however, will Easterly redeem public shares in an amount that would cause its net tangible assets to be less than $5,000,001. Redemptions of Easterly public shares by Easterly public stockholders will decrease the amount of cash available to the combined company following the closing of the Merger.

Easterly public stockholders do not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. Therefore, in order to liquidate your investment, holders may be forced to sell their public shares or warrants, potentially at a loss.

        Easterly's public stockholders are entitled to receive funds from the Trust Account only upon the earlier to occur of: (i) the consummation of its initial business combination; (ii) the expiration or termination of any tender offer conducted by it in connection with a proposed business combination not otherwise withdrawn; (iii) the redemption of its public shares if it is unable to consummate a

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business combination by November 30, 2018, subject to applicable law; or (iv) otherwise upon its liquidation or in the event its board of directors resolves to liquidate the Trust Account and ceases to pursue the consummation of a business combination prior to November 30, 2018 (Easterly's board of directors may determine to liquidate the Trust Account prior to such expiration if it determines, in its business judgment, that it is improbable within the remaining time to identify an attractive business combination or satisfy regulatory and other business and legal requirements to consummate a business combination). In addition, if Easterly is unable to consummate an initial business combination by November 30, 2018 or extend such deadline to a later date by obtaining the approval of Easterly's stockholders at a special meeting of Easterly's stockholders, for any reason, compliance with Delaware law may require that Easterly submit a plan of dissolution to its then-existing stockholders for approval prior to the distribution of the proceeds held in the Trust Account. In that case, public stockholders may be forced to wait beyond November 30, 2018 before they receive funds from the Trust Account. In no other circumstances will a public stockholder have any right or interest of any kind in the Trust Account. Accordingly, to liquidate your investment, holders may be forced to sell their public shares or warrants, potentially at a loss.

The Exchange Ratio may be determined prior to the Merger using an estimate of Sirius Group's September 30 Adjusted DBVPS.

        If the closing of the Merger occurs prior to Sirius Group filing with the SEC its financial statements for the quarter ended September 30, 2018, then the Exchange Ratio may be calculated using an estimate of the Sirius Group September 30 Adjusted DBVPS, and such estimate may not be the same as the actual Sirius Group September 30 Adjusted DBVPS, as determined in accordance with the Merger Agreement. In such instance, the amount of the Exchange Ratio may not be the same as it would be if the actual Sirius Group September 30 Adjusted DBVPS was used in the calculation. If an estimated Sirius Group September 30 Adjusted DBVPS is used, and this estimate is different than the actual Sirius Group September 30 Adjusted DBVPS, Easterly stockholders will not receive any different or additional consideration.

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THE SPECIAL MEETING OF EASTERLY STOCKHOLDERS

General

        Easterly is furnishing this proxy statement/prospectus to its stockholders as part of the solicitation of proxies by its board of directors for use at the Easterly special meeting of stockholders to be held on [        ], [            ], 2018, and at any adjournment or postponement thereof. This proxy statement/prospectus is first being furnished to Easterly's stockholders on or about [                ], 2018. This proxy statement/prospectus provides you with information you need to know to be able to vote or instruct your vote to be cast at the Easterly special meeting of stockholders.

Date, Time and Place of Special Meeting

        The Easterly special meeting of stockholders will be held at 10:00 a.m. Eastern time, on [        ], [            ], 2018, at [            ], or such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals.

Voting Power; Record Date

        You will be entitled to vote or direct votes to be cast at the Easterly special meeting of stockholders if you owned shares of Easterly common stock at the close of business on [      ], 2018, which is the record date for the Easterly special meeting of stockholders. You are entitled to one vote for each share of Easterly common stock that you owned as of the close of business on the record date. If your shares are held in "street name" or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there were 19,208,407 shares of Easterly common stock outstanding, of which 14,208,407 are public shares and 5,000,000 are Founder Shares held by the Sponsor and Easterly's original independent directors.

Vote of Easterly Founders and the Sponsor

        In connection with the IPO, Easterly entered into an agreement with its initial stockholders pursuant to which the initial stockholders agreed to vote the Founder Shares and any other shares acquired during and after the IPO in favor of the Merger Proposal. This agreement also applies to the Sponsor and Easterly's original independent directors as it relates to the Founder Shares and the requirement to vote their Founder Shares in favor of the Merger Proposal. Additionally, the Sponsor Letter requires that Sponsor vote its shares of Easterly common stock in favor of the Merger.

        All of the holders of Founder Shares, including the Sponsor and Easterly's original independent directors, have agreed to waive their redemption rights with respect to their Founder Shares and Easterly's initial stockholders have agreed to waive their redemption rights with respect to any public shares that they may have acquired during or after the IPO in connection with the completion of Merger. The Founder Shares held by Easterly's initial stockholders have no redemption rights upon Easterly's liquidation and will be worthless if no business combination is effected by Easterly prior to November 30, 2018. However, the initial stockholders are entitled to redemption rights upon Easterly's liquidation with respect to any public shares they may own.

Quorum and Required Vote for Proposals for the Easterly Special Meeting of Stockholders

        A quorum of Easterly's stockholders is necessary to hold a valid meeting. A quorum will be present at the Easterly special meeting of stockholders if a majority of the Easterly common stock outstanding and entitled to vote at the Easterly special meeting of stockholders is represented in person or by proxy. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum.

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        The approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Easterly common stock. Accordingly, an Easterly stockholder's failure to vote by proxy or to vote in person at the Easterly special meeting of stockholders or an abstention from voting, or he failure of an Easterly stockholder who holds his or her shares in "street name" through a broker or other nominee to give voting instructions to such broker or other nominee (any failure to give instructions, a " broker non-vote ") will have the same effect as a vote "AGAINST" the Merger Proposal. The approval of the Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of Easterly common stock that are voted on such proposal at the Easterly special meeting of stockholders. Accordingly, an Easterly stockholder's failure to vote by proxy or to vote in person at the Easterly special meeting of stockholders or an abstention from voting will have no effect on the outcome of any vote on the Adjournment Proposals. A broker non-vote will have no effect on the Adjournment Proposal.

        The transactions contemplated by the Merger Agreement will be consummated only if the Merger Proposal is approved at the Easterly special meeting. The Merger Proposal is not conditioned on the approval of the Adjournment Proposal and the Adjournment Proposal is not conditioned on the approval of the Merger Proposal.

Recommendation to Easterly Stockholders

        Easterly's board of directors believes that each of the Merger Proposal and the Adjournment Proposal to be presented at the Easterly special meeting of stockholders is in the best interests of Easterly and its stockholders and unanimously recommends that its stockholders vote "FOR" each of the proposals.

        When you consider the recommendation of Easterly's board of directors in favor of approval of the Merger Proposal, you should keep in mind that Easterly's directors and officers have interests in the Merger that are different from, or in addition to, your interests as a stockholder. These interests include, among other things:

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        Further, each of Easterly's directors, directly or indirectly, holds Founder Shares that are not subject to redemption; as a result, Easterly's directors have a financial incentive to see a Merger consummated rather than lose whatever value is attributable to the Founder Shares. These interests may influence Easterly's directors in making their recommendation that you vote in favor of the Merger Proposal, and the transactions contemplated thereby.

Broker Non-Votes and Abstentions

        Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. Except with respect to the Adjournment Proposal, Easterly believes the proposals presented to Easterly's stockholders will be considered non-discretionary and therefore your broker, bank or nominee cannot vote your shares without your instruction. If you do not provide voting instructions to your bank, broker or other nominee Easterly will receive a proxy card from your bank, broker or other nominee indicating that it is NOT voting your shares; this indication that a bank, broker or nominee is not voting your shares is referred to as a "broker non-vote."

        With respect to the Easterly special meeting of stockholders, abstentions are considered present for the purposes of establishing a quorum but will have the same effect as a vote "AGAINST" the Merger Proposal but will have no effect on the outcome of any vote on the Adjournment Proposal. Broker non-votes will have the effect of a vote "AGAINST" the Merger Proposal and will have no effect on the Adjournment Proposal.

Voting Your Shares

        Each share of Easterly common stock that you own in your name entitles you to one vote on each of the proposals for the Easterly special meeting of stockholders. Your one or more proxy cards show the number of shares of Easterly common stock that you own.

        There are several ways to vote your shares or submit your proxy:

Revoking Your Proxy

        If you give a proxy, you may revoke it at any time before the Easterly special meeting, or at such meeting by doing any one of the following:

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No Additional Matters May Be Presented at the Easterly Special Meeting

        The Easterly special meeting of stockholders has been called only to consider the approval of the Merger Proposal and the Adjournment Proposal. Under Easterly's bylaws, other than procedural matters incident to the conduct of the Easterly special meeting, no other matters may be considered at the Easterly special meeting if they are not included in the notice of the Easterly special meeting.

Who Can Answer Your Questions About Voting

        If you have any questions about how to vote or direct a vote in respect of your shares of Easterly common stock, you may call Morrow Sodali, Easterly's proxy solicitor, at (800) 662-5200 (toll free) or Banks and Brokerage Firms, please call collect: (203) 658-9400.

Redemption Rights

        Pursuant to Easterly's charter, any holders of its public shares may demand that such shares be redeemed in exchange for a pro rata share of the aggregate amount on deposit in the Trust Account, less franchise and income taxes payable, calculated as of two business days prior to the consummation of the Merger. If demand is properly made and the Merger is consummated, these shares, immediately prior to the Merger, will cease to be issued and outstanding and will represent only the right to receive a pro rata share of the aggregate amount on deposit in the Trust Account which holds the proceeds of the IPO as of two business days prior to the consummation of the Merger, less franchise and income taxes payable, upon the consummation of the Merger. For illustrative purposes, based on funds in the Trust Account of approximately $148.0 million on August 31, 2018, the estimated per share redemption price would have been approximately $10.41.

        Redemption rights are not available to holders of warrants in connection with the Merger.

        In order to exercise your redemption rights, you must, prior to 5:00 p.m. Eastern time on [        ], 2018 (two business days before the Easterly special meeting):

Continental Stock Transfer & Trust Company
1 State Street Plaza, 30 th  Floor
New York, New York 10004
Attn: Mark Zimkind
Email: mzimkind@continentalstock.com

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        Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with Easterly's consent, until the vote is taken with respect to the Merger. If you delivered your shares for redemption to Easterly's transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that its transfer agent return the shares (physically or electronically). You may make such request by contacting Easterly's transfer agent at the phone number or address listed above.

        Prior to exercising redemption rights, stockholders should verify the market price of Easterly common stock as they may receive higher proceeds from the sale of their common stock in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. Easterly cannot assure you that you will be able to sell your shares of Easterly common stock in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in Easterly common stock when you wish to sell your shares.

        If you exercise your redemption rights, your shares of Easterly common stock will cease to be outstanding immediately prior to the Merger and will only represent the right to receive a pro rata share of the aggregate amount on deposit in the Trust Account. You will no longer own those shares. You will be entitled to receive cash for these shares only if you properly demand redemption.

        If the Merger is not approved and Easterly does not consummate an initial business combination by November 30, 2018 or extend such deadline to a later date by obtaining the approval of Easterly's stockholders at a special meeting of Easterly's stockholders, Easterly will be required to dissolve and liquidate and its warrants will expire worthless.

Appraisal Rights

        Appraisal rights are not available to holders of shares of Easterly common stock or warrants in connection with the Merger.

Accounting Treatment

        The Merger is a capital transaction in substance whereby Easterly will be treated as the "acquired" company for financial reporting purposes. This determination was primarily based on the following: Sirius Group will own the majority of the outstanding common shares of the combined company, the current executive officers of Sirius Group will manage the combined company, the board of directors of the combined company will be comprised of the current members of the board of directors of Sirius Group, and Sirius Group's operations will be the operations of the combined company. Accordingly, for accounting purposes, the Merger will be treated as the equivalent of Sirius Group issuing shares for the net assets of Easterly, which are comprised of cash and cash equivalents. The net assets of Easterly will be stated at historical cost, with no goodwill or other intangible assets recorded. All the expenses incurred by Sirius Group related to the Merger will be charged to Additional paid-in surplus.

Proxy Solicitation Costs

        Easterly will pay the cost of soliciting proxies for the Easterly special meeting. Easterly has engaged Morrow Sodali to assist in the solicitation of proxies for the Easterly special meeting. Easterly has agreed to pay Morrow Sodali a fee of $[            ], plus disbursements. Easterly will reimburse Morrow Sodali for reasonable out-of-pocket expenses and will indemnify Morrow Sodali and its affiliates against certain claims, liabilities, losses, damages and expenses. Easterly also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Easterly common stock for their expenses in forwarding soliciting materials to beneficial owners of Easterly common stock and in obtaining voting instructions from those owners. Easterly's directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

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PROPOSALS TO BE CONSIDERED BY EASTERLY'S STOCKHOLDERS

PROPOSAL NO. 1—THE MERGER PROPOSAL

        Easterly is asking its stockholders to approve and adopt the Merger Agreement and the Merger. For a summary of and detailed information regarding this proposal, see the information about the Merger Agreement throughout this proxy statement/prospectus, including the information set forth in the section entitled " The Merger Agreement " below. You are urged to read this proxy statement/prospectus in its entirety for more detailed information concerning the Merger, including the Merger Agreement, which is attached as Annex A to this proxy statement/prospectus, as amended by the Amendment, which is attached as Annex C to this proxy statement/prospectus.

The Merger Agreement

         This section of the proxy statement/prospectus describes the material provisions of the Merger Agreement, but does not purport to describe all of the terms of the Merger Agreement. The following summary is qualified in its entirety by reference to the complete text of the Merger Agreement, which is attached as Annex A to this proxy statement/prospectus, and the Amendment, which is attached as Annex C to this proxy statement/prospectus. You are urged to read the Merger Agreement in its entirety because it is the primary legal document that governs the Merger.

         The Merger Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Merger Agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Merger Agreement. In particular, in reviewing the representations and warranties contained in the Merger Agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the circumstances in which a party to the Merger Agreement may have the right not to close the Merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the Merger Agreement. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to investors and reports and documents filed with the SEC, and in some cases were qualified by the disclosure letter delivered by the party making the representations and warranties, which such disclosures are not reflected in the text of the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the Merger Agreement and subsequent developments or new information qualifying a representation or warranty may or may not have been included in this proxy statement/prospectus.

        Subject to the terms and conditions of the Merger Agreement, the Merger Agreement provides for the merger of Merger Sub with and into Easterly, with Easterly surviving the Merger as a wholly owned subsidiary of Sirius Group. In addition, the Merger Agreement provides that, if elected by Sirius Group, the Merger will be restructured as a direct merger of Easterly with and into Sirius Group, with Sirius Group surviving the Merger. Sirius Group does not plan on making such election at this time.

        Pursuant to the Merger Agreement, upon the effectiveness of the Merger (the " Effective Time "), all shares of Easterly common stock (other than (i) shares of Easterly common stock with respect to which an Easterly stockholder has validly exercised its redemption rights, and that will be redeemed as provided for by Easterly's charter, or any wholly owned subsidiary of Easterly or Sirius Group, which

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will be canceled for no consideration, (ii) shares of Easterly common stock held by Easterly as treasury stock or owned by Easterly, Sirius Group or Merger Sub and (iii) shares of Easterly common stock held by the Sponsor that will be canceled pursuant to the Sponsor Letter) will be converted into Sirius Group common shares at the Exchange Ratio (together with cash in lieu of fractional shares of Sirius Group common shares, as described below, the " merger consideration "). The Exchange Ratio will be determined prior to the closing of the Merger and will be equal to a fraction determined by dividing (a) the estimated amount of cash per public share of Easterly common stock in the Trust Account at the Effective Time by (b) (I) 1.05 multiplied by (II) the Sirius Group September 30 Adjusted DBVPS. The Sirius Group September 30 Adjusted DBVPS is calculated by dividing (A) the book value of Sirius Group determined based on GAAP on a consolidated basis, as set forth in the final, Sirius Group board of directors approved, unaudited GAAP consolidated financial statements of Sirius Group for the nine months ended September 30, 2018 (the " September 30 Book Value "), decreased by the $7 million deferred underwriting fee payable by Easterly to Citigroup Global Markets Inc. as underwriter of the IPO, and as adjusted by the GAAP accounting effect of the redemption of the Sirius Group Series A redeemable preference shares by (B) the sum of (x) the fully diluted number of Sirius Group common shares issued and outstanding as of September 30, 2018 and (y) 593,000 Sirius Group common shares. Sirius Group is required to deliver to Easterly its proposed calculation of September 30 Book Value and the Sirius Group September 30 Adjusted DBVPS no later than five business days after the the date that this Registration Statement is declared effective (but if the Registration Statement is declared effective on or after September 30, 2018, then no earlier than October 5, 2018) (such estimates being the "Estimated September 30 Book Value" and the "Estimated Sirius Group September 30 Adjusted DBVPS" ). Easterly has five business days to review and agree to or dispute the accuracy of such calculation. If a dispute notice is delivered by Easterly within such time period, Sirius Group and Easterly will jointly request that a mutually agreed upon nationally recognized independent accounting firm (the " Accounting Firm "), make a binding determination only as to the items set forth in the dispute notice. At least two business days prior to the date of the closing of the Merger (or such other time as may be mutually agreed between Sirius Group and Easterly), Easterly will notify Sirius Group in writing of its good faith calculation of the number of shares of Easterly common stock outstanding as of the closing of the Merger and the estimated amount of cash per public share of Easterly common stock in the Trust Account at the Effective Time. Using such amounts and the Estimated Sirius Group September 30 Adjusted DBVPS as finally determined pursuant to the Merger Agreement, Sirius Group will then calculate the final Exchange Ratio, unless such calculation is done after Sirius Group files with the SEC its financial statements for the quarter ended September 30, 2018, in which case Sirius Group shall prepare its good faith calculation of the September 30 Book Value and the Sirius Group September 30 Adjusted DBVPS, which shall be submitted for the review and approval by Sirius Group's Audit & Risk Management Committee (such calculations, the "Final September 30 Book Value" and "Final Sirius Group September 30 Adjusted DBVPS" ), and Sirius Group shall calculate the Exchange Ratio using the Final Sirius Group September 30 Adjusted DBVPS and not the Estimated Sirius Group September 30 Adjusted DBVPS.

        If the Estimated Sirius Group September 30 Adjusted DBVPS is used to determine the Exchange Ratio at the closing of the Merger, then the Merger Agreement provides for a post-closing adjustment if such estimate is different than the Final Sirius Group September 30 Adjusted DBVPS as finally determined after the closing of the Merger. Such adjustment will result in either (x) the issuance of new Sirius Group common shares or a payment of cash by Sirius Group to CM Bermuda if the Exchange Ratio is greater than it would have been using the Final Sirius Group September 30 Adjusted DBVPS or (y) the surrender to Sirius Group of Sirius Group common shares owned by CM Bermuda or a payment of cash to Sirius Group from CM Bermuda if the Exchange Ratio is less than it would have been using the Final Sirius Group September 30 Adjusted DBVPS.

        Additionally, each issued and outstanding public warrant to acquire shares of Easterly common stock will cease to represent a right to acquire shares of Easterly common stock and will be converted

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into a converted warrant. The number of Sirius Group common shares subject to each converted warrant will be equal to the number of shares of Easterly common stock subject to each Easterly warrant immediately prior to the closing of the Merger multiplied by the Exchange Ratio, and such converted warrant will have an exercise price per Sirius Group common share equal to the exercise price per share of Easterly common stock subject to such Easterly warrant immediately prior to the closing of the Merger divided by the Exchange Ratio.

        Notwithstanding any other provision of the Merger Agreement, no fractional shares of Sirius Group common shares will be issued upon the conversion of Easterly common stock in the Merger, but in lieu thereof each holder of shares of Easterly common stock otherwise entitled to a fractional Sirius Group common share will be entitled to receive, from the exchange agent (as defined below), a cash payment, without interest, in lieu of such fractional Sirius Group common share representing such holder's proportionate interest, if any, in the net proceeds from the sale by the exchange agent in one or more transactions of Sirius Group common shares equal to the excess of (i) the aggregate number of Sirius Group common shares to be delivered to the exchange agent by Sirius Group pursuant to the Merger Agreement over (ii) the aggregate number of whole Sirius Group common shares to be distributed to the holders of Easterly common stock pursuant to the Merger Agreement (such excess, the " Excess Shares "). As soon as reasonably practicable after the Effective Time, the exchange agent, as agent for the former holders of Easterly common stock that would otherwise receive fractional Sirius Group common shares, will sell the Excess Shares at then-prevailing prices on the Nasdaq.

        The sale of the Excess Shares by the exchange agent, as agent for the former holders of Easterly common stock that would otherwise receive fractional Sirius Group common shares, will be executed on the Nasdaq through one or more member firms of the Nasdaq and will be executed in round lots to the extent practicable. The net proceeds of any such sale or sales of Excess Shares to be distributed to the former holders of Easterly common stock will be reduced by any and all commissions, transfer taxes and other out-of-pocket transaction costs, as well as any expenses, of the exchange agent incurred in connection with such sale or sales. Until the net proceeds of such sale or sales have been distributed to the former holders of Easterly common stock, the exchange agent will hold such net proceeds in trust for such holders that would otherwise receive fractional Sirius Group common shares (the " Common Shares Trust "). The exchange agent will determine the portion of the Common Shares Trust to which each former holder of Easterly common stock will be entitled, if any, by multiplying the amount of the aggregate proceeds comprising the Common Shares Trust by a fraction, the numerator of which is the amount of the fractional share interest to which such former holder of Easterly common stock would otherwise be entitled and the denominator of which is the aggregate amount of fractional share interests to which all former holders of Easterly common stock would otherwise be entitled.

        As soon as reasonably practicable after the determination of the amount of cash, if any, to be paid to former holders of Easterly common stock in lieu of any fractional Sirius Group common shares, the exchange agent will make available such amounts to such holders of Easterly Common Stock without interest, subject to and in accordance with the exchange procedures described below.

        Prior to the Effective Time, Sirius Group will designate a nationally recognized financial institution reasonably acceptable to Sirius Group to act as exchange agent (the " exchange agent "), and will deposit with the exchange agent the full number of Sirius Group common shares issuable in exchange for outstanding Easterly shares under the Merger Agreement.

        As soon as reasonably practicable after the Effective Time, Sirius Group will cause the exchange agent to mail to each record holder of a certificate representing any shares of Easterly common stock

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whose shares were converted into a right to receive the merger consideration a customary letter of transmittal and instructions for surrendering the certificate in exchange for payment of the merger consideration. Upon surrender of a certificate (or an affidavit of loss in lieu thereof) and upon delivery of a duly executed letter of transmittal in proper form and such other documentation as may be reasonably required by exchange agent, the holder of such certificate will be entitled to receive the portion of the aggregate merger consideration payable to such holder pursuant to the Merger. The surrendered certificates representing shares of Easterly common stock will be canceled. Payment of the merger consideration with respect to shares of Easterly common stock represented by book-entry will be made as promptly as practicable following the Effective Time without any action on the part of the person in whose name such book-entry shares are registered. No interest will be paid or will accrue on the cash payable upon surrender of any certificate representing any shares of Easterly common stock.

         You should not return your stock certificates with the enclosed proxy card, and you should not send in your stock certificates to the exchange agent until you receive a letter of transmittal from the exchange agent with instructions for the surrender of your stock certificates.

        If an Easterly stock certificate is lost, stolen or destroyed, the holder of such certificate must deliver an affidavit of that fact prior to receiving any merger consideration and, if required by Sirius Group, may also be required to provide a bond (in a customary amount) prior to receiving any merger consideration.

        At the Effective Time, all issued and outstanding common stock of Merger Sub will be converted into and become 1,000 fully paid and nonassessable shares of common stock, par value $0.01 per share, of the surviving company. These shares will constitute the only outstanding share of capital stock of the surviving company as of the Effective Time and will be owned by Sirius Group.

        The Merger may be consummated no later than three business days following the satisfaction or waiver of the conditions described below under the subsection entitled " Conditions to Closing of the Merger ."

        Under the Merger Agreement, a " Material Adverse Effect " with respect to any party is any event, change, effect, development, state of facts, condition, circumstance or occurrence that individually or in the aggregate (i) has or would be reasonably expected to have a material adverse effect on the business, results of operations, assets, liabilities or financial condition of such party and its subsidiaries, taken as a whole, except to the extent such material adverse effect results from (a) any changes in regional or global economic conditions, including changes affecting credit, financial or capital markets or changes in interest rates or exchange rates, (b) any changes in conditions generally affecting any of the industries in which such party and its subsidiaries operate, (c) any decline in market price or trading volume or the credit rating of such party or the securities of such party (it being understood that the facts or occurrences giving rise to or contributing to such decline may be taken into account in determining whether there has been or would be a Material Adverse Effect), (d) any regulatory, legislative or political conditions, in each case in the United States or any other jurisdiction, (e) any failure, in and of itself, by such party to meet any internal or external projections, forecasts, estimates or predictions in respect of revenues, earnings, or other financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be

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taken into account in determining whether there has been or would be a Material Adverse Effect, (f) the execution and delivery of the Merger Agreement or the public announcement, performance, pendency or consummation of the Merger or any of the other transactions contemplated by the Merger Agreement, including the impact thereof on the relationships, contractual or otherwise, of such party or any of its subsidiaries with customers, employees, suppliers or other parties or any litigation arising from the Merger Agreement or the transactions contemplated by the Merger Agreement, (g) any change or prospective change in applicable laws, regulation or GAAP or SAP (or authoritative interpretations thereof), (h) any geopolitical conditions, the outbreak or escalation of hostilities, any acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism, (i) any action permitted or required to be taken pursuant to or in accordance with the Merger Agreement or taken at the request of the other party or with the other party's express written consent, or (j) volcanoes, tsunamis, pandemics, earthquakes, floods, storms, hurricanes, tornados or other natural disasters; provided, however, that clauses (a), (b), d), (h) and (j) may be taken into account to the extent that such changes in conditions have a greater adverse materially disproportionate effect on such party and its subsidiaries, taken as a whole, relative to the adverse effect such changes have on others operating in the industries in which such party and any of its subsidiaries operate or (ii) would prevent or materially delay the consummation by Easterly or Sirius Group, as applicable, of the Merger and the other transactions contemplated by the Merger Agreement on a timely basis.

Conditions to Closing of the Merger

        The obligations of Easterly, Sirius Group and Merger Sub to consummate the Merger are subject to the satisfaction, at or prior to the closing date, of each of the following conditions (which may be waived, in whole or in part, to the extent permitted by law, by Sirius Group and Easterly):

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        The obligations of Sirius Group and Merger Sub to consummate the Merger are subject to the satisfaction, on or prior to the closing date, of each of the following conditions (which may be waived in whole or in part by Sirius Group):

        The obligations of Easterly to consummate the Merger are subject to the satisfaction, at or prior to the closing date, of each of the following conditions (which may be waived in whole or in part by Easterly):

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        Under the Merger Agreement, Easterly made customary representations and warranties, including those relating to: organization and good standing; capitalization; authorization of agreement; consents and approvals of third parties; conflicts; subsidiaries; filings with the SEC and financial statements; no undisclosed liabilities; absence of certain developments; information supplied for this proxy statement/prospectus; litigation; compliance with laws; employee matters; properties; taxes; material contracts; intellectual property; indebtedness; brokers' fees; status under the Investment Company Act; stockholder approvals; transactions with affiliates; and the Trust Account.

        Under the Merger Agreement, Sirius Group made customary representations and warranties, including those relating to: organization and good standing; capitalization; subsidiaries; authorization of agreement; consents and approvals of third parties; conflicts; financial statements; no undisclosed liabilities; absence of certain developments; information supplied for this proxy statement/prospectus; litigation; compliance with laws; regulatory reports; employee matters; environmental matters; properties; material contracts; taxes; risk-based capital; insurance regulatory matters and agreements with regulators; reinsurance contracts; actuarial reports; ratings; intellectual property; insurance; brokers' fees; transactions with affiliates; and agreements with regulatory agencies.

Covenants of the Parties

        Easterly made certain covenants under the Merger Agreement, including, among others, the following:

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Covenants of Sirius Group

        Sirius Group made certain covenants under the Merger Agreement, including, among others, the following:

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        The representations and warranties of the parties contained in the Merger Agreement will not survive the closing of the Merger.

        The Merger Agreement may be terminated and the transactions contemplated by the Merger Agreement may be abandoned any time prior to the closing as follows:

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        In the event of termination of the Merger Agreement, the Merger Agreement will become void and there will be no liability or obligation on the part of any party thereto, provided that a party will still be liable for a willful breach of the Merger Agreement. Certain provisions of the Merger Agreement and the provisions of the confidentiality agreement between Sirius Group and Easterly will survive any termination of the Merger Agreement.

        Sirius Group is responsible for all expenses related to (i) the filing or similar fees in connection with obtaining any required approvals of governmental entities, (ii) the filing of Sirius Group's Registration Statement on Form S-4, of which this proxy statement/prospectus forms a part, and (iii) all SEC filing fees related to the Merger. All other fees and expenses incurred by Easterly or Sirius Group will be borne solely by the party that incurred such fees and expenses.

        The Merger Agreement can be amended, supplemented or changed, and any provision of the Merger Agreement can be waived, only by a written instrument signed by Easterly, Sirius Group and Merger Sub; provided, that no amendment of the Merger Agreement may be made following the adoption of the Merger Agreement by the Easterly stockholders unless, to the extent required, such amendment is approved by such stockholders.

        The parties are entitled under the Merger Agreement to an injunction or injunctions to prevent breaches of the Merger Agreement or to enforce specifically the performance of the terms and provisions of the Merger Agreement (including the parties' obligation to consummate the Merger) without proof of actual damages, in addition to any other remedy to which they are entitled at law or in equity. Each of the parties also waived (i) any defense in any action for specific performance that a remedy at law would be adequate and (ii) any requirement under any law to post security or a bond as a prerequisite to obtaining equitable relief.

        The Merger Agreement is governed by the laws of the State of Delaware, without giving effect to principles of conflicts of law thereof.

Tax Treatment

        Easterly and Sirius Group intend to report the Merger as a tax-deferred transaction for United States federal income tax purposes pursuant to Section 368 of the Code. Assuming such treatment is respected, holders of Easterly common stock generally will not recognize gain or loss for U.S. federal income tax purposes as a result of the exchange of their Easterly common stock for Sirius Group common shares (except with respect to cash received in lieu of fractional shares). Neither Easterly nor

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Sirius Group intends to request any ruling or other guidance from the IRS on the United States federal income tax treatment of the Merger, neither is receiving an opinion of counsel regarding such treatment, and no assurance can be given that the IRS would not challenge such treatment in light of the specific terms of the Merger, the post-closing adjustments with Sirius Group common shares to reflect the exchange ratio and related transactions. You are strongly urged to consult with your own tax advisor to determine the particular U.S. federal, state or local or foreign income or other tax consequences of the Merger to you. See the section entitled " Proposal No. 1—The Merger Proposal—U.S. Federal Income Tax Considerations of the Merger to Holders of Easterly Common Stock or Easterly Warrants ."

Agreements Related to the Merger Agreement

         This section describes the material provisions of certain additional agreements entered into or to be entered into in connection with the Merger, but does not purport to describe all of the terms thereof. A copy of the Sponsor Letter, which was entered into concurrently with the Merger Agreement, is attached as Annex B . A copy of the Promissory Note, which was entered into concurrently with the Merger Agreement, is attached as Annex D . The form of the Registration Rights Agreement is attached as Annex E . The form of the Lock-Up Agreement is attached as Annex F . The form of the Warrant Amendment is attached as Annex G . Stockholders and other interested parties are urged to read such agreements in their entirety.

        Concurrently with the execution of the Merger Agreement, Easterly entered into the Sponsor Letter with the Sponsor and Sirius Group, pursuant to which, at the closing of the Merger, the Sponsor will surrender and Easterly will cancel for no consideration between 3,328,000 and 4,528,000 (or such higher number of shares based on the adjustment described below) shares of Easterly common stock owned by the Sponsor, which amount will be determined at the Effective Time as follows: The base number of 3,928,000 canceled shares will be (i) decreased by 0.50 of a share of Easterly common stock for every $100 that the sum of (x) cash in the Trust Account at the closing of the Merger plus (y) the proceeds of any private placement of Sirius Group common shares (or securities convertible into Sirius Group common shares) in connection with the Merger (the sum of (x) and (y), the " Amount Raised ") is greater than $120 million (provided, that if the Amount Raised is greater than or equal to $150 million, then, solely with respect to any portion of the Amount Raised that is funded from certain designated investors in such private placement, the number of canceled shares will be decreased by 0.25 (in lieu of 0.50) of a share of Easterly common stock for every $100 of the Reduced Rate Amount (as defined below)) or (ii) increased by 0.50 of a share of Easterly common stock for every $100 that the Amount Raised is less than $120 million. Notwithstanding the foregoing, the minimum number of canceled shares will be 3,328,000 and the maximum number of canceled shares will be 4,528,000, except that the Sponsor also agreed to surrender additional shares (which could result in more than 4,528,000 shares surrendered) in certain circumstances if the amount per share equal to (x) 1.05 multiplied by (y) the Sirius Group September 30 Adjusted DBVPS used in the calculation of the Exchange Ratio, as adjusted for the value of the warrants issued in the Sirius Group Private Placement, is less than $17.39. If the proceeds raised from the Sirius Group Private Placement Investors is less than $213 million (other than as a result of an investor failing to fund its obligations in breach of its subscription agreement at a time when Sirius Group is not then in material breach of any of its representations, warranties, covenants or agreements set forth in such subscription agreement at the time of such investor's breach of such subscription agreement), the proceeds of the Sirius Group Private Placement will be deemed to be $213 million for purposes of calculating the Amount Raised. The " Reduced Rate Amount " means the lesser of (a) the Amount Raised minus $150 million and (b) the Amount Raised that is funded from certain designated investors in such private placement.

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        The Sponsor also agreed to (i) pay or reimburse all liabilities and obligations of Easterly due and owing or incurred at or prior to the Effective Time to the extent not repaid by Easterly using unrestricted cash and up to $2 million from the Trust Account, except for the $7 million deferred underwriting fee, which will be paid using cash released from the Trust Account, and (ii) contribute to Easterly for no consideration, as a contribution to the capital of Easterly, all amounts due and owing by Easterly to the Sponsor under the Convertible Promissory Note to the extent any such amount is not repaid at the closing of the Merger.

        For more information on the Sponsor Letter, please see the full text of the Sponsor Letter, which is attached as Annex B hereto.

        Concurrent with the execution of the Merger Agreement, Easterly issued Sirius Group the Promissory Note pursuant to which Sirius Group agreed to lend Easterly $0.03 per month for every public share of Easterly common stock outstanding as of June 30, 2018, until the earlier of the consummation of Easterly's initial business combination and November 30, 2018. The amounts will be lent to Easterly on the first business day of each month and will be deposited by Easterly into a special account within the Trust Account. The Promissory Note will bear interest in an amount equal to the income (if any) actually earned from investing the principal in the Trust Account and will be due upon the completion of Easterly's initial business combination, and will be cancelled in case the Merger is not completed.

        For more information on the Promissory Note, please see the full text of the Promissory Note, which is attached as Annex D hereto.

        On the date of the closing of the Merger and as a condition precedent for the closing, Sirius Group, the Sponsor and CM Bermuda will enter into the Registration Rights Agreement, which will govern certain rights and obligations of Sirius Group, the Sponsor and CM Bermuda with respect to the registration of the Sirius Group common shares issuable to the Sponsor upon the exchange of Easterly common stock in pursuant to the Merger and the Sirius Group common shares owned by CM Bermuda.

        CM Bermuda will be entitled to demand that Sirius Group register all or part of its Sirius Group common shares, including for underwritten offerings, twice in any consecutive 12-month period.

        Additionally, the Sponsor and CM Bermuda are entitled to "piggy-back" registration rights with respect to any underwritten offering proposed by Sirius Group on its own behalf or on behalf of others, other than such offerings (i) under any employee stock plan or other employee benefit plan arrangement, (ii) of debt convertible into equity securities, (iii) for a dividend reinvestment plan or (iv) for an exchange offer or offering of securities solely to Sirius Group's existing shareholders.

        The registration rights of the Sponsor and CM Bermuda are subject to customary black-out periods, cutback provisions and other limitations as set forth in the Registration Rights Agreement. Sirius Group will agree to pay certain fees and expenses relating to registrations under the Registration Rights Agreement.

        For more information on the Registration Rights Agreement, please see the full text of the form of Registration Rights Agreement, which is attached as Annex E hereto.

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        On the date of the closing of the Merger and as a condition precedent for the closing, the Sponsor and CM Bermuda will each deliver a Lock-Up Agreement to Sirius Group pursuant to which the Sponsor and CM Bermuda will agree not to sell any Sirius Group common shares for a period of 180 days from the Effective Time without the consent of Sirius Group, subject to specified exemptions. Sirius Group may consent to such a sale at any time without prior notice.

        For more information on the Lock-Up Agreements, please see the full text of the form of the Lock-Up Agreement, which is attached as Annex F hereto.

        On the date of the closing of the Merger and as a condition precedent for the closing, Sirius Group, Easterly and Continental Stock Transfer & Trust Company, will enter into the Warrant Amendment with respect to the Warrant Agreement, dated as of July 29, 2015 (the " Warrant Agreement "), between Easterly and Continental Stock Transfer & Trust Company, pursuant to which Easterly will assign to Sirius Group, and Sirius Group will assume, all of Easterly's right, title and interest in the Warrant Agreement. The Warrant Agreement, as amended by the Warrant Amendment, will govern the terms of the converted warrants.

        For more information on the Warrant Amendment, please see the full text of the form of the Warrant Amendment, which is attached as Annex G hereto.

Transactions Related to the Merger

    Sirius Group Private Placement

        In connection with the closing of the Merger, Sirius Group expects to complete the Sirius Group Private Placement. On August 29, 2018, Sirius Group received subscriptions from affiliated funds of Gallatin Point Capital, The Carlyle Group, Centerbridge Partners, L.P. and Bain Capital Credit (the " Preference Share Investors ") pursuant to which they have committed to purchase $205 million of Sirius Group Series B preference shares and $8 million of Sirius Group common shares in the private placement, which aggregate amount may be decreased to $111 million at Sirius Group's option. In addition, the Preference Share Investors will receive warrants that are exercisable for a period of five years after the issue date at a strike price equal to 125% of the per share purchase price, estimated as of August 31, 2018 to be $22.21. The form of subscription agreement, certificate of designation and warrant are filed as exhibits to the registration statement of which this proxy statement/prospectus forms a part.

        Sirius Group's Chief Executive Officer, Allan L. Waters, has indicated his intent to purchase 500,000 common shares in the Sirius Group Private Placement.

        Gross proceeds of the Sirius Group Private Placement, together with cash in the Trust Account upon the closing of the Merger (which was $148.0 million as of August 31, 2018, before taking into account any redemptions of Easterly common stock or other transactions related to or in connection with the Merger Proposal), are intended to aggregate to up to $350 million. Assuming a private placement of $202 million at a price per share of $17.77, Sirius Group would issue 11.4 million common shares and Series B preference shares convertible into common shares in connection with the Sirius Group Private Placement. Investors are cautioned that this is only an estimate based on the foregoing assumptions, and is subject to change prior to the closing of the Merger. The proceeds of the private placement will be used to redeem all outstanding Sirius Group Series A redeemable preference shares, and the remainder for general corporate purposes. The private placement will be exempt from registration under U.S. securities laws pursuant to Section 4(a)(2) of the Securities Act and Regulation D and Regulation S thereunder.

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        In connection with the closing of the Sirius Group Private Placement, Sirius Group, CM Bermuda and the Preference Share Investors will enter into a shareholders agreement (the " Shareholders Agreement "), which will govern certain matters with respect to the governance of Sirius Group, the voting of CM Bermuda's common shares, the repurchase of CM Bermuda's common shares and certain other matters. The form of Shareholders Agreement is filed as an exhibit to the registration statement of which this proxy statement/prospectus forms a part.

        Pursuant to the Shareholders Agreement, until the third anniversary of the date of the closing of the Sirius Group Private Placement: (i) CM Bermuda will vote in favor of the election of the number of Independent Directors (as such term is defined in the Shareholders Agreement) as is necessary to provide that at least a majority of the Board of Directors of Sirius Group is comprised of Independent Directors; and (ii) CM Bermuda will not vote in favor of the removal of any director (other than any director affiliated with CM Bermuda) other than for cause. After the third anniversary of the date of the closing of the Sirius Group Private Placement (or earlier in the event of an increase to the size of the Board of Directors), CM Bermuda will not vote in favor of the election of any director not then serving on the Board of Directors (including any election to fill a vacancy then existing on the Board of Directors as a result of death, resignation, removal, expansion of the Board of Directors or otherwise) who is not an Agreed Director. "Agreed Director" means an Independent Director mutually agreeable to CM Bermuda and Preference Share Investors representing a majority of the Sirius Group Series B preference shares; provided , that if CM Bermuda and the Preference Share Investors have not identified an Agreed Director after negotiating in good faith for a period of 60 days, then an Agreed Director means any Independent Director recommended for election by the Nominating and Governance Committee of the Sirius Group Board of Directors.

        Pursuant to the Shareholders Agreement, CM Bermuda will also agree to vote (i) in favor of a Qualified Sale Transaction (as such term is defined in the Shareholders Agreement) that is approved by a majority of Independent Directors and 80% of Sirius Group's voting shares after the first anniversary of the date of the closing of the Sirius Group Private Placement, and (ii) against any merger, amalgamation, consolidation or similar transaction or any sale or transfer of all or substantially all of Sirius Group's consolidated assets, in each case where the per share value of the consideration received by CM Bermuda in such transaction is greater than the per share value of the consideration received by any other holder of Sirius Group common shares.

        The Shareholders Agreement also grants the Preference Share Investors tag-along rights to the extent Sirius Group agrees to repurchase or redeem any common shares held by CM Bermuda.

        The Shareholders Agreement terminates on the date that fewer than 25% of the Sirius Group Series B preference shares issued in the Sirius Group Private Placement are outstanding, and earlier with respect to any Preference Share Investor at the time that it or its affiliates or permitted assigns ceases to own any Sirius Group Series B preference shares.

    Common Shares Redemption Agreement

        Prior to the closing of the Merger, Sirius Group and CM Bermuda will enter into the Common Shares Redemption Agreement, pursuant to which, effective as of and subject to the closing of the Merger, Sirius Group will redeem Sirius Group common shares from CM Bermuda, at a price per share equal to (i) 1.05 multiplied by (ii) the Sirius Group September 30 Adjusted DBVPS, estimated as of August 31, 2018 to be $17.77, for an aggregate amount of between $120 million and $250 million, as elected by CM Bermuda at least two business days in advance of the closing of the Merger. Assuming a redemption amount of approximately $250 million at a price per share of $17.77, Sirius Group would redeem 14.1 million common shares from CM Bermuda in connection with the Common Shares Redemption Agreement. Investors are cautioned that this is only an estimate based on the foregoing assumptions, and is subject to change. In addition, in the event that the gross proceeds of the Sirius

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Group Private Placement are less than $202 million, the amount of Sirius Group common shares redeemed from CM Bermuda may be less than $250 million.

    Preference Shares Redemption Agreement

        On July 14, 2018, Sirius Group, IMGAH and Sirius Acquisitions Holding Company II entered into the Preference Shares Redemption Agreement, pursuant to which, effective as of and subject to the closing of the Merger, Sirius Group has agreed to redeem all of the issued and outstanding Sirius Group Series A redeemable preference shares, which are held by IMGAH, for $95 million payable in cash at the time of the redemption. Effective as of the completion of such redemption, the parties have agreed to terminate the registration rights agreement and the shareholder's agreement between Sirius Group and IMGAH. In addition, the parties agreed that any remaining contingent consideration in respect of the IMG acquisition, which may be in an amount of up to $50.0 million, will be paid in cash, not in Sirius Group Series A redeemable preference shares, as previously contemplated in the agreement in respect of the IMG acquisition.

Background of the Merger

        On August 4, 2015, Easterly consummated the IPO of 20,000,000 units, with each unit consisting of one share of Easterly common stock and one half of one public warrant. Each whole public warrant entitles the holder thereof to purchase one share of Easterly common stock at an exercise price of $11.50 per share. The units in the IPO were sold at an offering price of $10.00 per unit, generating total gross proceeds of $200,000,000. Prior to the consummation of the IPO, on May 4, 2015, the Sponsor purchased 4,312,500 Founder Shares, for an aggregate purchase price of $25,000 or approximately $0.006 per share. Prior to the IPO, the Sponsor transferred 60,000 Founder Shares (not including the forfeited overallotment Founder Shares) to each of the three original independent directors, who agreed to serve on Easterly's board of directors upon the closing of the IPO. On July 29, 2015, Easterly effected a stock dividend of 0.2 shares for each outstanding share of Easterly common stock, resulting in the Sponsor and officers and directors holding an aggregate of 5,175,000 Founder Shares. As a result of the underwriters partially utilizing their over-allotment option, the Sponsor forfeited 175,000 shares, which Easterly canceled.

        Simultaneously with the IPO, Easterly consummated the private sale of 6,750,000 Private Placement Warrants to the Sponsor at a price of $1.00 per warrant, generating gross proceeds of $6,750,000. After deducting underwriting discounts and commissions and offering expenses, approximately $200,000,000 (or approximately $10.00 per unit sold in the IPO), including approximately $195,000,000 of the net proceeds of the IPO and $5,000,000 from the sale of the Private Placement Warrants, was placed in the Trust Account with Continental Stock Transfer & Trust Company as trustee. The trust proceeds are invested in U.S. government treasury bills with a maturity of 180 days or less or money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, which invest only in direct U.S. government treasury obligations.

        Except for a portion of the interest income that may be released to Easterly to pay any income or franchise taxes, none of the funds held in the Trust Account will be released until the earlier of (i) the completion of its initial business combination and (ii) the redemption of 100% of its public shares if Easterly is unable to consummate a business combination by November 30, 2018, subject to the requirements of law. After the payment of approximately $750,000 in expenses relating to the IPO, approximately $1,000,000 of the net proceeds of the IPO and private placement of the Private Placement Warrants was not deposited into the Trust Account and was retained by Easterly for working capital purposes. The net proceeds deposited into the Trust Account remain on deposit in the Trust Account earning interest. As of August 31, 2018, there was approximately $148.0 million held in the Trust Account and $32,338 held outside the Trust Account available for working capital purposes. For the six-month period ended June 30, 2018 and the twelve-month periods ended December 31, 2017 and

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December 31, 2016, Easterly withdrew $137,543, $226,553 and $216,448, respectively of interest earned to pay for franchise taxes.

        Prior to the consummation of the IPO, neither Easterly, nor anyone on its behalf, contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to a transaction with Easterly.

        After Easterly's IPO, Easterly's officers and directors commenced an active search for prospective businesses and assets to acquire in Easterly's initial business combination. During this search process, Easterly contacted more than 200 companies, including JH Capital Group Holdings, LLC (" JH Capital ") and Sungevity, Inc. (" Sungevity "), had conversations with 73 companies or their representatives, and entered into detailed discussions with at least 11 possible target businesses (or their representatives). The majority of the possible target businesses with which Easterly had detailed discussions were financial services companies.

        Following a series of meeting and due diligence on JH Capital between February 10, 2016 and April 18, 2016, Easterly determined that JH Capital's business was not suitable to be a public company at the time primary due to the nascence of certain business lines and therefore did not make a proposal of terms for a business combination at that time. Specifically, JH Capital's advocacy and lending segments were newly acquired or newly formed and had not achieved scale to be meaningful to the overall earnings of JH Capital.

        On June 28, 2016, Easterly entered into a definitive agreement with respect to a business combination with Sungevity. Following the execution of such definitive agreement, Easterly ceased formal discussions with potential business combination partners, including JH Capital. Easterly was unable to consummate the business combination with Sungevity because there was not sufficient support from Easterly's stockholders and Easterly and Sungevity would not have had access to sufficient cash in the trust account to adequately provide for Sungevity's cash needs. On December 31, 2016, Easterly terminated the definitive agreement with Sungevity.

        Following the termination of the definitive agreement with Sungevity, Easterly commenced again an active search process for prospective businesses and assets to acquire in Easterly's initial business combination. During this new search process, Easterly had conversations with 90 companies or their representatives, and entered into detailed discussions with at least 32 possible target businesses (or their representatives). The majority of the possible target businesses with which Easterly had detailed discussions were financial services companies. Easterly engaged in negotiations with two of these possible target businesses and began drafting and negotiating transaction documents. One target company was a servicer of a sub-prime credit card lender and the other was a real estate services company. However, Easterly came to the conclusion that, based on the sizes of these two businesses and non-recurring nature of their business models, they were not suitable business combination candidates.

        On April 25, 2017, Easterly reinitiated conversations with JH Capital. Between April 25, 2017 and June 27, 2017, Easterly and JH Capital performed due diligence on each other and negotiated a definitive agreement for a business combination between Easterly and JH Capital. On June 28, 2017, Easterly, JH Capital and the other parties thereto executed a definitive agreement for a business combination between Easterly and JH Capital. On May 31, 2018, Easterly and JH Capital terminated the definitive agreement by mutual agreement because they mutually agreed that it was not in the best interests of Easterly's stockholders and JH Capital's equityholders to proceed with the business combination and for JH Capital to become a public company at that time.

        Following termination of the definitive agreement for the business combination between Easterly and JH Capital, on May 31, 2018, Citigroup Global Markets Inc. contacted Easterly and presented Easterly with the opportunity to explore a business combination with Sirius Group.

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        On May 31, 2018, Sirius Group sent Easterly a non-disclosure letter agreement for the purposes of exchanging confidential information with Easterly, which was executed that day.

        On June 1, 2018, Easterly's management team and its advisers were given access to Sirius Group's online data room and Easterly began its due diligence of Sirius Group and its operations.

        On June 2, 2018, Messrs. Waters, Oberting, Salamone, Papamichael and Boxer, members of Sirius Group's management, and Mr. Kalichstein, Easterly's Chief Exective Officer, participated in a conference call in which Easterly was given an introduction to Sirius Group's business and an overview of Sirius Group's business lines, its history under the ownership of White Mountains Insurance Group and subsequent ownership by CM Bermuda, the Sirius Group ownership structure, its business structure, its investment portfolio and its insurance ratings.

        On June 6, 2018, Messrs. Oberting, Davis, Salamone, Papamichael and Boxer met Mr. Kalichstein to continue diligence and discussions of transaction terms at Sirius Group's offices in New York, New York. Sirius Group and Easterly reviewed topics including, but not limited to, (i) Sirius Group's actuarial and risk management policies and procedures, including a review of Sirius Group's risk policy guidelines, its largest risk exposures and stress testing, its capital management and its loss reserving process, (ii) accounting and finance, including group structure and organization, a line by line review of the historical income statement, balance sheet, and cash flow statement, accounting policies, processes to prepare for public company accounting, tax planning, and internal controls, and (iii) strategic planning, including Sirius Group's 2018 budget and three year financial plan. During this meeting, the terms for the exchange of Sirius Group common shares for shares of Easterly common stock were discussed in principle.

        On June 8, 2018, the parties proposed, and agreed to, the exchange of a fraction of a Sirius Group common share for each share of Easterly common stock based on 1.05x Sirius Group's June 30, 2018 diluted book value per common share, which exchange ratio when determined at the closing of the Merger will determine the relative ownership of the combined company. On June 8, 2018, Sirius Group sent Easterly a non-binding draft term sheet that contemplated the terms of Merger, including the exchange of a fraction of a Sirius Group common share for each share of Easterly common stock based on 1.05x Sirius Group's June 30, 2018 diluted book value per common share. On June 8, 2018 and June 10, 2018, Easterly sent Sirius Group a revised draft of the non-binding term sheet reflecting discussions between the parties on terms related to the conditions to closing, the cancellation of the Sponsor's Easterly common stock and Private Placement Warrants, and payment of expenses.

        On June 10, 2018, Easterly sent Sirius Group a draft merger agreement with respect to the proposed business combination that included terms providing for the exchange of a fraction of a Sirius Group common share for each share of Easterly common stock based on 1.05x Sirius Group's June 30, 2018 diluted book value per common share.

        On June 12 and June 13, 2018, Sirius Group sent Easterly a revised draft of the non-binding term sheet reflecting discussions between the parties on terms related to the number of shares of the Sponsor's Easterly common stock that would be canceled. On June 13, 2018, Sirius Group and Easterly agreed on the final terms of the non-binding term sheet.

        On June 13, 2018, members of Easterly's and Sirius Group's management teams participated in follow-up due diligence conference call in which Easterly and Sirius Group further discussed Sirius Group's underwriting and outward reinsurance strategy.

        On June 14, 2018, Easterly sent Sirius Group drafts of the Sponsor Letter and the Promissory Note.

        On June 16, 2018, Sirius Group sent Easterly revised drafts of the Merger Agreement, the Sponsor Letter and the Promissory Note.

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        On June 18, 2018, Easterly sent Sirius Group revised drafts of the Merger Agreement, the Sponsor Letter and the Promissory Note and initial drafts of the Warrant Amendment and Easterly's disclosure letter.

        On June 19, 2018, Sirius Group sent Easterly revised drafts of the Merger Agreement, the Sponsor Letter and the Promissory Note, and initial drafts of the Registration Rights Agreement and the Lock-Up Agreements.

        On June 20, 2018, Sirius Group sent Easterly a draft of Sirius Group's disclosure letter and comments on Easterly's disclosure letter and the Warrant Amendment. On June 20, 2018, Easterly provided comments on Sirius Group's disclosure letter.

        On June 21 and 22, 2018, Sirius Group and Easterly finalized the Merger Agreement, the Sponsor Letter, the Promissory Note, the disclosure letters, the Registration Rights Agreement and Lock-Up Agreements.

        On June 22, 2018, the Easterly board of directors conducted a meeting to consider the draft Merger Agreement, the related agreements, the proposed Merger and the related transactions. Mr. Kalichstein gave the Easterly board of directors an overview of the Merger Agreement and related documents and informed them that the Merger Agreement was complete. Following a review of the Merger Agreement and discussion among the members of the board and Easterly's management about Sirius Group and its business and operations, the Easterly board of directors unanimously approved and adopted the Merger Agreement, the Merger, the Sponsor Letter, the Promissory Note and the related transactions, and authorized management to execute the Merger Agreement, the Sponsor Letter and the Promissory Note.

        On June 22, 2018, the Sirius Group board of directors conducted a meeting, at which a quorum was present in Bermuda or participating telephonically from outside of the United States, to consider the draft Merger Agreement, the related agreements, the proposed Merger and the related transactions. Mr. Boxer gave the Sirius Group board of directors an overview of the Merger Agreement and related documents and discussed certain implications as a result of the Merger on Sirius Group's existing shareholders. Following a review of the Merger Agreement and discussion among the members of the board and Sirius Group's management, the Sirius Group board of directors participating in the meeting unanimously approved and adopted the Merger Agreement, the Merger, the Sponsor Letter, the Promissory Note and the related transactions, and authorized management to execute the Merger Agreement, the Sponsor Letter and the Promissory Note.

        On June 23, 2018, representatives of Easterly and Sirius Group and members of their respective legal teams exchanged and released their signatures to the Merger Agreement, the Sponsor Letter and the Promissory Note.

        On June 25, 2018, a press release was issued announcing the Merger and shortly thereafter Easterly filed a Current Report on Form 8-K attaching the press release and the investor presentation to be used in meetings later in the day as well as the Merger Agreement and its exhibits. That day, Easterly's and Sirius Group's management teams held a pre-recorded conference call to describe Sirius Group and the transaction for Easterly's stockholders and the investment community.

        On June 28, 2018, Easterly held a special meeting of stockholders and 18,704,279 of the 20,015,577 outstanding shares of Easterly common stock were voted in favor of the proposal to amend Easterly's charter to extend the date by which Easterly had to consummate a business combination until November 30, 2018, and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until November 30, 2018. The holders of 807,170 public shares of Easterly common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.32 per share. In connection with the approval of this extension, pursuant to the Promissory Note, Sirius Group agreed to lend Easterly $0.03 per month for every public share of

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Easterly common stock outstanding as of June 30, 2018, until the earlier of the consummation of Easterly's initial business combination and November 30, 2018. The amounts will be lent to Easterly on the first business day of each month and will be deposited by Easterly into a special account within the Trust Account.

        On August 29, 2018, Sirius Group, Merger Sub, Easterly, the Sponsor and CM Bermuda entered into the Amendment, wherein, among other things, the parties amended the date as of which the Exchange Ratio would be calculated to be September 30, 2018 rather than June 30, 2018 (as the later calculation date was closer to the expected closing date of the transaction), provided for a post-closing adjustment if an estimated Sirius Group September 30 Adjusted DBVPS is used to calculate the Exchange Ratio and amended the calculation of the number of shares of Easterly common stock surrendered by the Sponsor upon closing of the Merger in connection with the Sirius Group Private Placement.

Easterly's Board of Directors' Reasons for Approval of the Merger

        Before reaching its decision to approve the Merger Agreement and the Merger, Easterly's board of directors reviewed the results of Easterly management's due diligence and spoke with the entire management team of Easterly and discussed the diligence findings of third party advisors and consultants. Such discussions included:

    An overview of the public markets in general and the insurance and reinsurance sector, in particular.

    A summary and review of the transaction structure presented by Easterly management and counsel.

    A review of Sirius Group's existing and historical litigation and major contracts by Easterly management and counsel.

    A summary of the financial and accounting, actuarial, insurance, tax and employee diligence by Easterly management and counsel.

        Easterly's board considered a wide variety of factors in connection with its evaluation of the Merger. In light of the complexity of those factors, its board of directors, as a whole, did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it took into account in reaching its decision. Individual directors may have given different weight to different factors. In Easterly's prospectus for its IPO, Easterly identified the following general criteria and guidelines that it believed would be important in evaluating prospective target businesses:

    Financial services sector targets. Easterly would seek to acquire businesses in the financial services sectors.

    Long-term global demographic and macroeconomic trends, which will influence the direction of the retirement, asset management and insurance sectors. Easterly would seek to acquire businesses that have the opportunity to take advantage of demographic and macroeconomic trends that are effecting the financial services sectors.

    Convergence of technological solutions with financial products, distribution and user access. Easterly would seek to acquire one or more businesses that it believed will utilize technology to enhance its business, utilize customer data and provide services more efficiently.

    Ongoing global regulatory regime changes and reforms create a changing landscape for current market participants. Easterly would seek to acquire a business that can take advantage of changing regulations and reforms.

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        In considering the Merger, Easterly's board of directors concluded that Sirius Group substantially met the above criteria. In particular, the board of directors considered the following positive factors:

    Easterly management's experience with insurance and reinsurance companies;

    Sirius Group's historical track record, including strong operating results;

    Sirius Group's unique European franchise, its global accident and health platform and a diversifying suite of insurance and reinsurance growth lines;

    Sirius Group strong track record of shareholder returns, including the generation of over 13% annualized operating return to White Mountains Insurance Group during its ownership of Sirius Group from 2009 until the first quarter of 2016;

    Sirius Group's superior underwriting, with overall combined ratio averaging 5% outperformance over peers from 2009 through 2017;

    Sirius Group's strong customer relationships with 60% of its business from customer relationships of over 10 years and 30% of its business coming from customer relationships of over 20 years;

    Sirius Group's track record of successfully executing mergers and acquisitions, including the 2017 acquisitions of IMG and Armada; and

    Sirius Group's experienced and tenured management team. Sirius Group's management team has significant experience in the insurance and reinsurance industries. The executive management team averages over 30 years' of insurance operations and mergers and acquisitions experience, with over 23 years at Sirius Group.

        In addition, Easterly's board of directors also considered the following risks and other potentially negative factors:

    the recent historical net losses and low net profit of Sirius Group. Easterly's board of directors noted that Sirius Group had a comprehensive (loss) income of approximately $(78) million, $(34) million and $196 million for 2017, 2016 and 2015 respectively;

    the potential for major catastrophes to have a negative impact on Sirius Group's results of operations and capital;

    the risk that some of the current public stockholders of Easterly would vote against the Merger Proposal, or exercise their redemption rights, thereby depleting the amount of cash available in the Trust Account and reducing the number of freely tradeable Sirius Group common shares after the closing;

    the risk that certain key employees and potential customers of Sirius Group might not choose to work at or with Sirius Group after the Merger;

    the risks related to the fact that CM Bermuda will continue to control Sirius Group after the consummation of the Merger and such control may negatively impact minority shareholders;

    the risks associated with the insurance and reinsurance industries in general;

    the risks associated with macroeconomic uncertainty and the effects it could have on Sirius Group's revenues;

    the risks of unknown future regulation, which could provide burdensome on the insurance and reinsurance industry;

    the risks associated with obtaining additional financing for Sirius Group's operations in the future;

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    the risk of competition in the industry;

    the risk that the Merger might not be consummated in a timely manner or that the closing of the Merger might not occur despite the parties' efforts, including by reason of a failure to obtain the approval of Easterly's stockholders and fulfill the other closing conditions;

    the risk that the transactions contemplated by the Merger Agreement would not be completed in accordance with the terms of the Merger Agreement or at all;

    the risk that Easterly's stockholders would not approve an extension request at the June 28, 2018 Easterly special meeting of stockholders, and that Easterly would not be unable to complete the Merger before its expiration without an extension;

    the risk of delisting of Easterly's securities prior to the Merger and being unable to list Sirius Group's securities on the Nasdaq Stock Market in connection with the Merger;

    the significant fees and expenses associated with completing the Merger and the substantial time and effort of management required to complete the Merger; and

    the fact that the Sponsor, and Easterly's officers and directors may have interests in the Merger that are different from, or are in addition to, the interests of Easterly's public stockholders, including the matters described under " Proposal No. 1—The Merger Proposal—Certain Interests of Easterly's Directors and Officers and Others in the Merger ," below.

        After consideration of these factors, the Easterly board of directors determined that these risks could be mitigated or managed by the combined company following the Merger, were reasonably acceptable under the circumstances, and that, overall, these risks were significantly outweighed by the potential benefits of the Merger.

Sirius Group's Board of Directors' Reasons for Approval of the Merger

        In reaching its decision to approve the Merger Agreement and the Merger, the Sirius Group board of directors consulted with Sirius Group's management and reviewed various financial data and evaluation materials. The summary set forth below briefly describes the primary reasons, factors and information taken into account by the Sirius Group board of directors in reaching its conclusion. The Sirius Group board of directors did not assign any relative or specific weights to the factors considered in reaching such determination, and individual directors may have given differing weights to different factors. The explanation of Sirius Group's reasons for approving the Merger and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under " Cautionary Statement Regarding Forward-Looking Statements ."

        The Sirius Group board of directors considered the following potentially positive factors, among others, in connection with its review and analysis of the Merger, including:

    Sirius Group's business, financial condition, competitive position, business strategy, strategic options and prospects, as well as risks involved in achieving these prospects, the nature of Sirius Group's business and the industry in which it competes, and current industry, economic and global market conditions, both on a historical and on a prospective basis, all of which led Sirius Group's board of directors to conclude that the Merger presented an opportunity to realize greater value than the value likely to be realized in the event Sirius Group did not pursue the Merger;

    the review by Sirius Group's board of directors of possible alternatives to the Merger, including (i) pursuing an initial public offering of Sirius Group common shares, (ii) a merger or other business combination with a strategic buyer, and (iii) issuance of additional preference shares or common shares of Sirius Group to one or more third party investors to diversify Sirius Group's

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      shareholder base; the timing and likelihood of actually achieving additional value from these alternatives, as well as the risks and uncertainties associated with such alternatives, and the assessment of Sirius Group's board of directors that the Merger was in the long-term best interest of Sirius Group and its shareholders, taking into account risks of execution as well as business, competitive, industry and market risk;

    the expected accelerated timeline and reduced cost for completion of the Merger as compared to possible alternatives to the Merger;

    the significant reduction in the dilution from the Merger since (i) the Sponsor will surrender and Easterly will cancel for no consideration between 3,328,000 and 4,528,000 shares of Easterly common stock owned by the Sponsor and (ii) the Sponsor will surrender and Easterly will cancel for no consideration the 6,750,000 private placement warrants that were acquired by the Sponsor in a private placement concurrent with the closing of Easterly's initial public offering;

    the totality of the terms of the Merger Agreement (including the representations, warranties, covenants and agreements of each party, the closing conditions, the lack of indemnification provisions, and the termination provisions) and the related agreements;

    the fact that the Merger Agreement and the transactions contemplated thereby were the product of extensive arms' length negotiations between representatives of Sirius Group and representatives of Easterly;

    the potential positive impact of the public announcement of the Merger on Sirius Group's rating agencies, regulators, customers and employees and Sirius Group's ability to attract and retain key management, underwriting, administrative and other personnel;

    the fact that Sirius Group expects to become a publicly listed company with associated benefits of a public currency; and

    the fact that no federal or state regulatory approvals are necessary in connection with the Merger.

        The Sirius Group board of directors also considered a number of potentially negative factors in its deliberations concerning the Transaction, including:

    the risk that the potential benefits sought in the Merger might not be fully realized;

    the risk that the financial results of Sirius Group will not meet expectations given the current economic climate;

    the risk of delisting of Easterly's securities prior to the Merger and being unable to list Sirius Group's securities on the Nasdaq Stock Market in connection with the Merger;

    the risk that the Merger might not be completed in a timely manner or at all, including the risk that Easterly's public stockholders do not vote in favor of the Merger;

    the risk that compliance with rules and requirements applicable to public companies will be expensive and time consuming;

    the risk that Easterly shareholders will redeem their shares for their pro rata portion of the funds available in the Trust Account and thereby reduce the amount of funds held in the Trust Account;

    the limitations imposed on the conduct of Sirius Group's business prior to the completion of the Merger;

    the risk that the Merger will result in the diversion of management and employee attention, or have an adverse effect on customers and business relationships;

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    the substantial costs to be incurred in connection with the Merger, including equity dilution on account of the issuance of shares to Easterly's stockholders, banker's expenses, costs of preparing and filing this proxy statement/prospectus and other transaction expenses arising from the Merger; and

    the other risks and uncertainties set forth in the section entitled " Risk Factors " beginning on page 41 of this proxy statement/prospectus.

        The foregoing information and factors considered by the Sirius Group board of directors are not intended to be exhaustive but are believed to include all of the material factors considered by the Sirius Group board of directors.

        In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, Sirius Group's board of directors did not find it useful, and did not attempt, to quantify or rank these factors. In considering the factors described above, individual members of Sirius Group's board of directors may have given different weight to different factors. Sirius Group's board of directors considered all of the factors as a whole and considered the factors in their totality to be favorable and to support the decision to approve the Merger Agreement and the Merger.

        Achieving Sirius Group's objectives from the Merger is subject to risks, some of which are discussed in the section entitled " Risk Factors " beginning on page 41 of this proxy statement/prospectus.

Certain Interests of Easterly's Directors and Officers and Others in the Merger

        When you consider the recommendation of Easterly's board of directors in favor of approval of the Merger, you should keep in mind that its board of directors and officers have interests in the Merger that are different from, or in addition to, your interests as a stockholder. These interests include, among other things:

    the 400,000 to 1.6 million total Founder Shares that the Sponsor (or its members) will hold immediately prior to the Merger, which will be exchanged for Sirius Group common shares at the Exchange Ratio in connection with the Merger;

    the 24,000 Founder Shares that one of Easterly's independent directors holds as of August 31, 2018, which will be exchanged for Sirius Group common shares at the Exchange Ratio in connection with the Merger;

    if Easterly is unable to complete a business combination within the required time period, the Convertible Promissory Note issued to the Sponsor, in the amount of $895,000 at August 31, 2018 plus accrued interest, will not be repaid and all amounts owed thereunder will be forgiven except to the extent that Easterly has funds available to it outside of the Trust Account to repay such amounts;

    if Easterly is unable to complete a business combination within the required time period, Easterly's Chairman, its Chief Executive Officer and David Cody will be personally liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Easterly for services rendered or contracted for or products sold to Easterly, but only if such a vendor or target business has not executed a waiver of claims against the Trust Account and except as to any claims under Easterly's indemnity of the underwriters; and

    the continued indemnification of current directors and officers of Easterly and the continuation of directors' and officers' liability insurance after the Merger.

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        Further, each of Easterly's directors, directly or indirectly, holds Founder Shares that are not subject to redemption and certain of Easterly's directors indirectly hold Private Placement Warrants that would retire worthless if a business combination is not consummated; as a result, Easterly's directors have a financial incentive to see a business combination consummated rather than lose whatever value is attributable to the Founder Shares and Private Placement Warrants. These interests may influence Easterly's directors in making their recommendation that you vote in favor of the Merger Proposal, and the transactions contemplated thereby.

Certain Interests of Sirius Group's Directors and Officers and Others in the Merger

        Sirius Group's board of directors and officers have interests in the Merger that are different from, or in addition to, your interests as a stockholder. These interests include, among other things:

    The directors and executive officers of Sirius Group will continue to be the directors and executive officers of the combined company;

    In connection with the Merger, each executive officer of Sirius Group will receive a performance share unit award granted under the 2018 Omnibus Incentive Plan, with the target number of performance share units equal to a specified dollar value divided by the per share value of Sirius Group common shares at the closing of the Merger. The performance share unit awards have been allocated to the executive officers as follows, based on the grant date value of the award at target levels of performance: Mr. Waters—$2,600,000; each of Mr. Boxer, Ms. Cramér Manhem and Mr. Oberting—$1,800,000; and Mr. Davis—$700,000. The performance share unit awards will be subject to vesting conditions and a commitment by the executive officer to purchase Sirius Group common shares having a value equal to the target award granted to the executive officer;

    in connection with the Merger, Sirius Group has implemented an Employee Share Purchase Program, which provides all employees of Sirius Group with a one-time opportunity to purchase between 100 and 1,000 Sirius Group common shares at a price equal to 85% of market value for the first 100 shares and 100% of market value for the next 900 shares. For this purpose, the market value of the Sirius Group common shares will be equal to 1.05 times the Sirius Group September 30 Adjusted DBVPS. Employees have the option of paying for the shares upfront or, in the case of employees who are not executive officers, through a loan that is repaid over a two-year period through payroll deductions;

    in connection with the Merger, the Compensation Committee amended the Sirius Group 2016 Long Term Incentive Plan (the " 2016 LTIP ") to provide for continued vesting of outstanding awards in the event of a termination of employment by Sirius Group without cause or by the executive officer due to good reason outside of the 24-month change in control period already provided for under the 2016 LTIP. In these qualifying terminations of employment events, each of our other named executive officers will continue to vest in outstanding awards for 12 months following a termination of employment. The ability to receive payments during these vesting continuation periods will be subject to actual performance; and

    in connection with the Merger, Sirius Group adopted the Sirius Group Severance and Change in Control Plan (the " Executive Severance Plan "), which provides executive officers with severance and post-employment benefits in the event of (i) an involuntary termination without cause or (ii) a resignation by the executive officer for good reason. For these qualifying terminations of employment prior to a change in control, our named executive officers will receive severance benefits equal to one times base salary, any earned but unpaid bonus for the year prior to termination, a pro-rata bonus for the year of termination, based on actual performance, and medical continuation benefits for 12 months. In the event of a qualifying termination of employment following a change in control, the severance benefits are the same, except the

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      severance pay is increased to two times base salary for the named executive officers, the medical continuation period is increased to two years for the named executive officers, and the prorated bonus for the year of the termination will be paid at the target level of performance. Additionally, the Executive Severance Plan provides that in the event of a qualifying termination within 24 months following a change in control, all outstanding equity compensation awards will become fully vested, with the attainment or deemed attainment of any applicable performance conditions determined under the terms of the applicable equity compensation plan or award agreements. In order to be eligible to receive severance payments, pursuant to the Executive Severance Plan, the executive officer must execute a release in Sirius Group's favor. The Executive Severance Plan provides that, to the extent that Mr. Waters' or Ms. Cramér Manhem's employment agreements provide additional severance protections, they will continue to receive the employment agreement severance protections, to the extent they do not result in duplicative benefits under the Executive Severance Plan.

Potential Purchases of Public Shares

        In connection with the stockholder vote to approve the proposed Merger, the Sponsor, Easterly's directors, officers or advisors, or their respective affiliates may privately negotiate transactions to purchase shares from stockholders who would have otherwise elected to have their shares redeemed for a per-share pro rata portion of the Trust Account in conjunction with their consideration of a proposal to approve the Merger. None of the Sponsor, Easterly's directors, officers or advisors, or their respective affiliates will make any such purchases when they are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. It is expected that such a purchase would include a contractual acknowledgement that such stockholder, although still the record holder of Easterly's shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. To the extent required to comply with applicable securities laws, Easterly expects that any purchase by the Sponsor would be reported promptly on an amendment to the Sponsor's Schedule 13D. In the event that the Sponsor, Easterly's directors, officers or advisors, or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are in excess of the per-share pro rata portion of the Trust Account. There is no limit to the number of public shares that the Sponsor, Easterly's directors, officers or advisors, or their respective affiliates could purchase. The purpose of any such purchases would be to increase the likelihood of obtaining stockholder approval of the Merger.

        The purpose of any such purchases would be to increase the likelihood of obtaining stockholder approval of the Merger or, where the purchases are made by the Sponsor, Easterly's directors, officers or advisors, or their respective affiliates, to satisfy a closing condition in an agreement related to the Merger.

Total Sirius Group Common Shares to be Issued in the Merger

        Based on the number of shares of Easterly common stock and Easterly warrants outstanding on August 31, 2018, Sirius Group expects to issue or reserve for issuance to Easterly public stockholders approximately 8.3 million common shares pursuant to the Merger Agreement (excluding the estimated 5.9 million Sirius Group common shares issuable upon exercise of the converted warrants). Sirius Group also expects to issue approximately 1.0 million common shares to the Sponsor, resulting in a total of approximately 9.3 million Sirius Group common shares issued in exchange for outstanding shares of Easterly common stock pursuant to the Merger Agreement. Upon the closing of the Merger, Easterly's public stockholders are expected to own approximately 6.6% of Sirius Group. The foregoing

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amounts assume that (i) the Exchange Ratio is equal to 0.586, (ii) no Easterly stockholders exercise their redemption rights in connection with the Merger Proposal, (iii) Sirius Group issues 11.4 million common shares and Series B preference shares convertible into common shares in connection with the Sirius Group Private Placement, (iv) Sirius Group redeems 14.1 million common shares from CM Bermuda for approximately $250 million pursuant to the Common Shares Redemption Agreement and (v) all of the issued and outstanding Sirius Group Series A redeemable preference shares are redeemed for $95 million in cash pursuant to the Preference Shares Redemption Agreement prior to the closing of the Merger. Further, such percentages do not take into account (x) the issuance of any Sirius Group common shares upon the exercise of the converted warrants that may remain issued and outstanding following the Merger or that are issued pursuant to the Sirius Group Private Placement or (y) the issuance of Sirius Group common shares reserved for issuance pursuant to Sirius Group's Long Term Incentive Plan and 2018 Omnibus Incentive Plan. If the facts differ from these assumptions, Easterly's stockholders may experience dilution of their ownership interest unless they elect to have their shares of Easterly common stock redeemed in connection with the Merger Proposal.

Redemption Rights

        Pursuant to Easterly's charter, holders of public shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with Easterly's charter. As of August 31, 2018, this would have amounted to approximately $10.41 per share. If a holder exercises its redemption rights, then such holder will be exchanging its shares of Easterly common stock for cash and will no longer own shares of Easterly. Such a holder will be entitled to receive cash for its public shares only if it properly demands redemption and delivers its shares (either physically or electronically) to Easterly's transfer agent in accordance with the procedures described herein. Each redemption of public shares by Easterly's public stockholders will decrease the amount in the Trust Account, which is approximately $148.0 million as of August 31, 2018. Easterly has no specified maximum redemption threshold under its charter. In no event, however, will Easterly redeem public shares in an amount that would cause Easterly's net tangible assets to be less than $5,000,001. See the section entitled " Special Meeting of Easterly Stockholders—Redemption Rights " for the procedures to be followed if you wish to redeem your shares for cash.

Appraisal Rights

        There are no appraisal rights available to Easterly's stockholders in connection with the Merger.

U.S. Federal Income Tax Considerations

        The following is a general discussion of the material U.S. federal income tax considerations of the Merger and the pre-Merger redemption to holders of Easterly common stock or Easterly warrants. The discussion is based on the Code, U.S. Treasury regulations, judicial decisions and administrative pronouncements, all as currently in effect. Such authorities are subject to change, possibly with retroactive effect. Any such change could result in U.S. federal income tax consequences that are materially different from those described below. Moreover, any subsequent change in any of the factual matters set forth in this proxy statement/prospectus may affect the considerations discussed below.

        This discussion does not address all aspects of U.S. federal income taxation that may be relevant to all holders of Easterly common stock or Easterly warrants, some of which may be subject to special rules, such as dealers in securities, traders in securities that elect mark-to-market treatment, banks, thrifts or other financial institutions, insurance companies, regulated investment companies, real estate investment trusts, S corporations, accrual basis taxpayers subject to special tax accounting rules as a result of their use of financial statements, tax-exempt organizations, qualified plans (such as 401(k) plans, individual retirement accounts, etc.), persons subject to the qualified small business stock rules, U.S. expatriates, non-U.S. persons who are engaged in a trade or business in the United States, persons

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that hold Easterly common stock or Easterly warrants as part of a straddle, conversion transaction or hedge, persons deemed to sell Easterly common stock or Easterly warrants under the constructive sale provisions of the Code, holders that are subject to the alternative minimum tax, holders whose functional currency is not the U.S. dollar, holders that are treated as partnerships for U.S. federal income tax purposes, holders that are not the beneficial owners of Easterly common stock or Easterly warrants, and holders that own, actually or under applicable constructive ownership rules, 10% or more of Easterly common stock. This discussion deals only with holders that hold Easterly common stock or Easterly warrants as a capital asset (within the meaning of Section 1221 of the Code). If an entity treated as a partnership for U.S. federal income tax purposes holds Easterly common stock or Easterly warrants, the U.S. federal income tax treatment of a partner of the partnership will depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding Easterly common stock or Easterly warrants, you are urged to consult your own tax adviser regarding the consequences to you of the Merger and the pre-Merger redemption.

        This discussion does not address any U.S. federal tax laws other than U.S. federal income tax laws, any U.S. state or local tax laws or any non-U.S. tax laws. You are encouraged to consult your own tax advisers concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local and non-U.S. laws from the Merger and the pre-Merger redemption.

U.S. Federal Income Tax Considerations of the Merger to Holders of Easterly Common Stock or Easterly Warrants

        The following is a discussion of the U.S. federal income tax considerations to holders of Easterly common stock or Easterly warrants that receive their Sirius Group common shares or Sirius Group converted warrants in the Merger. The following does not discuss the U.S. federal income tax considerations relating to the pre-Merger redemption.

    Treatment of the Merger

        Easterly and Sirius Group intend to report the Merger as a "reorganization" pursuant to Section 368(a) of the Code. Neither Easterly nor Sirius Group intends to request any ruling or other guidance from the IRS on the U.S. federal income tax treatment of the Merger, and neither is receiving an opinion of counsel regarding such treatment. Furthermore, because of the absence of direct authorities, no assurance can be given that the IRS would not challenge such treatment in light of the specific terms of the Merger and related transactions, including the fact that Easterly, as a target company, is a blank check company, the possible redemptions by Easterly's shareholders before the Merger, the redemption of Sirius Group shares held by CM Bermuda, and the post-closing adjustment with respect to the Sirius Group common stock held by CM Bermuda. Regarding the last-mentioned related transaction, under the Amendment to the Merger Agreement, in order to ensure that the former shareholders of Easterly receive the correct number of Sirius Group common shares based on the September 30 Book Value of Sirius Group, which may not be known as of the closing of the Merger and therefore may be based on an estimate, after the closing of the Merger, (A) if the September 30 Book Value of Sirius Group was lower than the estimate, CM Bermuda may be required to either surrender Sirius Group common shares to Sirius Group for no consideration or make a capital contribution to Sirius Group of the difference, or (B) if the value was greater than the estimate, Sirius Group may be required to issue to CM Bermuda additional Sirius Group common shares for not consideration or pay to CM Bermuda the difference. None of these related transactions result in any former shareholder of Easterly receiving any cash or other property in the Merger in return for their shares in Easterly.

         You are strongly urged to consult with your own tax advisor to determine the particular U.S. federal, state or local or foreign income or other tax consequences of the Merger to you.

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Tax Consequences of the Merger Generally to Holders of Easterly Common Stock or Easterly Warrants

        For purposes of this discussion, you are a "U.S. holder" if, for U.S. federal income tax purposes, you are treated as a beneficial owner of Easterly common stock or Easterly warrants and you are:

    a citizen or resident of the United States;

    a corporation created or organized in or under the law of the United States or any state thereof (including the District of Columbia);

    an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

    a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) the trust has in effect a valid election under applicable U.S. Treasury regulations to be treated as a U.S. person.

        For purposes of this discussion, you are a "Non-U.S. holder" if you are a beneficial owner of Easterly common stock or Easterly warrants, you are not a U.S. holder and you are not treated as a partnership for U.S. federal income tax purposes.

        Assuming the Merger is treated as a "reorganization" within the meaning of Section 368(a) of the Code, the tax consequences for holders of Easterly common stock and Easterly warrants who receive Sirius Group common shares or Sirius Group warrants in exchange for shares of Easterly common stock or Easterly warrants pursuant to the Merger are as follows:

    no gain or loss will be recognized (except with respect to cash received instead of fractional Sirius Group common shares);

    the aggregate basis of the Sirius Group common shares received in the Merger (including any fractional Sirius Group common shares deemed received and sold for cash as described below) will be the same as the aggregate basis of the shares of Easterly common stock for which they are exchanged;

    the aggregate basis of the Sirius Group converted warrants received in the Merger will be the same as the aggregate basis of the Easterly warrants for which they are exchanged; and

    the holding period of the Sirius Group common shares and warrants received in the Merger (including any fractional Sirius Group common shares deemed received and sold for cash as described below) will be the same as the holding period of the shares of Easterly common stock and warrants for which they are exchanged.

Cash Received Instead of a Fractional Sirius Group Common Share

        A holder of Easterly common stock who receives cash instead of a fractional Sirius Group common share will generally be treated as having received the fractional share pursuant to the Merger and then as having sold that fractional Sirius Group common share for cash. As a result, a U.S. holder of Easterly common stock will generally recognize gain or loss equal to the difference between the amount of cash received and the basis in his or her fractional share interest as set forth above. This gain or loss will generally be capital gain or loss, and will be long-term capital gain or loss if, as of the effective date of the Merger, the holding period for such shares is greater than one year. The deductibility of capital losses is subject to limitations. For the tax consequences to Non-U.S. holders, see the section entitled " Material Tax Consequences—Material U.S. Tax Consequences—Taxation of Non-U.S. Holders " beginning on page 149.

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Information Reporting and Gain Recognition Agreement

        A U.S. holder of Easterly common stock or Easterly warrants who receives Sirius Group common shares or converted warrants as a result of the Merger will be required to retain records pertaining to the Merger. Each U.S. holder of Easterly common stock or Easterly warrants who is required to file a U.S. federal income tax return and who is a "significant holder" that receives Sirius Group common shares or converted warrants in the Merger will be required to file a statement with such U.S. federal income tax return in accordance with U.S. Treasury regulations Section 1.368-3 setting forth such holder's basis (determined immediately prior to the exchange) in the Easterly common stock or Easterly warrants surrendered and the fair market value (determined immediately prior to the exchange) of the Sirius Group common shares or converted warrants that are exchanged by such significant holder. A "significant holder" is a holder of Easterly common stock who, immediately before the Merger, owned at least 5% of the outstanding stock of Easterly or securities of Easterly with a basis for federal income taxes of at least $1 million.

        A U.S. Holder who is a five-percent transferee shareholder is generally required to enter into a gain recognition agreement with the IRS with respect to the Sirius Group common shares and Sirius Group converted warrants received in the Merger as a condition to obtaining the tax deferred treatment described above with respect to the Merger. For this purpose, a five-percent transferee shareholder is a person that owns at least 5% of the total voting power or value of the Sirius Group common shares immediately after the Merger.

         You are strongly urged to consult with your own tax advisor to determine the particular U.S. federal, state or local or foreign income or other tax consequences of the Merger to you.

U.S. Federal Income Tax Considerations of Redeeming Easterly Common Stock

        The following is a discussion of the U.S. federal income tax considerations to holders of Easterly common stock that elect to have their Easterly common stock redeemed for cash upon the closing of the Merger. The following does not discuss the U.S. federal income tax considerations relating to the ownership and disposition of Sirius Group common shares following the Merger. No advance ruling has been or will be sought from the IRS regarding the pre-Merger redemption nor will any opinion be sought.

U.S. Holders

        This subsection is addressed to U.S. holders of Easterly common stock that elect to have their Easterly common stock redeemed for cash as described in the section entitled " The Special Meeting of Easterly Stockholders—Redemption Rights ." For purposes of this discussion, a "Redeeming U.S. Holder" is a U.S. holder that so redeems its Easterly common stock.

        The U.S. federal income tax treatment of a Redeeming U.S. Holder will depend upon whether the redemption is treated as a sale or distribution for U.S. federal income tax purposes. The redemption of Easterly common stock generally will be treated as a sale or exchange (rather than a corporate distribution) if the receipt of cash pursuant to the redemption (i) is "substantially disproportionate" with respect to the holder, (ii) results in a "complete termination" of the holder's interest in Easterly, or (iii) is "not essentially equivalent to a dividend" with respect to the holder. In order to meet the substantially disproportionate test, the percentage of Easterly voting stock actually and constructively owned by the Redeeming U.S. Holder immediately following the redemption must, among other requirements, be less than 80 percent of the percentage of Easterly outstanding voting stock actually and constructively owned by such holder immediately before the redemption. There will be a complete termination of a Redeeming U.S. Holder's interest if either (a) all of the shares of Easterly stock actually and constructively owned by the Redeeming U.S. Holder are redeemed or (b) all of the shares of Easterly stock actually owned by the Redeeming U.S. Holder are redeemed and such holder is

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eligible to waive, and effectively waives in accordance with specific rules, the attribution of stock owned by certain family members and such holder does not constructively own any other shares of Easterly stock. The redemption of Easterly common stock will not be "essentially equivalent to a dividend" if the redemption results in a "meaningful reduction" of the Redeeming U.S. Holder's proportionate interest in Easterly. Whether the redemption will result in a meaningful reduction in a Redeeming U.S. Holder's proportionate interest will depend on the particular facts and circumstances. However, if a Redeeming U.S. Holder has a relatively minimal stock interest and, such percentage interest is reduced by any amount as a result of the redemption, the Redeeming U.S. Holder should generally be regarded as having incurred a meaningful reduction in interest. For example, the IRS has ruled that any reduction in a stockholder's proportionate interest is a "meaningful reduction" if the stockholder's relative interest in the corporation was minimal and the stockholder did not have management control over the corporation.

        In determining whether any of the foregoing tests are satisfied, a Redeeming U.S. Holder will take into account not only shares of Easterly stock actually owned by such holder, but also shares of Easterly stock that are constructively owned by it. A Redeeming U.S. Holder may constructively own, in addition to shares of Easterly stock owned directly, shares of Easterly stock owned by certain related individuals and entities in which such holder has an interest or that have an interest in such holder, as well as any shares of Easterly stock the holder has a right to acquire by exercise of an option, which would generally include Easterly common stock which could be acquired pursuant to the exercise of the warrants.

        If the redemption qualifies as a sale of Easterly common stock by the U.S. holder under Section 302 of the Code, the Redeeming U.S. Holder will generally recognize capital gain or loss equal to the difference between the amount realized on the redemption and such holder's adjusted tax basis in the Easterly common stock exchanged therefor. Such gain or loss will be long-term capital gain or loss if the holding period of such stock is more than one year at the time of the exchange. The deductibility of capital losses is subject to limitations. U.S. holders who hold different blocks of Easterly common stock (generally, shares of Easterly common stock purchased or acquired on different dates or at different prices) should consult their own tax advisors to determine how the above rules apply to them.

        If the redemption does not qualify as a sale of Easterly common stock by the Redeeming U.S. Holder under Section 302, the Redeeming U.S. Holder will be treated as receiving a corporate distribution. Any such distribution will be treated as dividend income for U.S. federal income tax purposes to the extent of Easterly's current or accumulated earnings and profits. However, for the purposes of the dividends-received deduction and "qualified dividend" treatment, due to the redemption right, a Redeeming U.S. Holder may be unable to include the time period prior to the redemption in such holder's "holding period." Any distribution in excess of Easterly's current and accumulated earnings and profits will reduce the Redeeming U.S. Holder's basis in the Easterly common stock (but not below zero), and any remaining excess will be treated as gain realized on the sale or other disposition of the Easterly common stock.

         U.S. holders of Easterly common stock considering exercising their redemption rights should consult their own tax advisors as to whether the redemption will be treated as a sale or as a distribution under the Code.

        Redeeming U.S. Holders of Easterly common stock who are individuals, estates or trusts may be required to pay a 3.8% tax on all or a portion of their "net investment income" or "undistributed net investment income" (as applicable), which may include all or a portion of their capital gain or dividend income from their redemption of Easterly's common stock. Non-corporate Redeeming U.S. Holders of Easterly common stock should consult their own tax advisors regarding the effect, if any, of the net investment income tax.

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    Backup Withholding

        In general, proceeds received from the exercise of redemption rights will be subject to backup withholding at a rate of 24% for a non-corporate U.S. holder that:

    fails to provide an accurate taxpayer identification number;

    is notified by the IRS regarding a failure to report all interest or dividends required to be shown on his or her federal income tax returns; or

    in certain circumstances, fails to comply with applicable certification requirements.

        Any amount withheld under these rules will be creditable against such holder's U.S. federal income tax liability or refundable to the extent that it exceeds this liability, provided that the required information is timely furnished to the IRS and other applicable requirements are met.

Non-U.S. Holders

        This subsection is addressed to non-U.S. holders of Easterly common stock that elect to have their Easterly common stock redeemed for cash as described in the section entitled " The Special Meeting of Easterly Stockholders—Redemption Rights ." For purposes of this discussion, a "Redeeming Non-U.S. Holder" is a non-U.S. holder that so redeems its Easterly common stock.

        Except as discussed in the following paragraph, a Redeeming Non-U.S. Holder who elects to have its Easterly common stock redeemed will generally be treated in the same manner as a Redeeming U.S. Holder for U.S. federal income tax purposes. See the discussion above under " Proposal No. 1—The Merger Proposal—U.S. Federal Income Tax Considerations of Redeeming Easterly Common Stock—U.S. Holders."

        Any Redeeming Non-U.S. Holder will not be subject to U.S. federal income tax on any capital gain recognized as a result of the exchange unless (i) such holder is an individual who is present in the United States for 183 days or more during the taxable year in which the redemption takes place and has a "tax home" in the United States (in which case such holder will be subject to a 30% tax on his or her net capital gain for the year) or (ii) such holder is engaged in a trade or business within the United States and any gain recognized in the exchange is treated as effectively connected with such trade or business (in which case such holder will generally be subject to the same treatment as a Redeeming U.S. Holder with respect to the exchange). In addition, with respect to any redemption treated as a distribution rather than a sale, any amount treated as dividend income to a Redeeming Non-U.S. Holder will generally be subject to U.S. withholding tax at a rate of 30%, unless the Redeeming Non-U.S. Holder is entitled to a reduced rate of withholding under an applicable income tax treaty.

         Non-U.S. holders of Easterly common stock considering exercising their redemption rights should consult their own tax advisors as to whether the redemption of their Easterly common stock will be treated as a sale or as a distribution under the Code.

        Under the Foreign Account Tax Compliance Act ("FATCA") and U.S. Treasury regulations and administrative guidance thereunder, a 30% United States federal withholding tax may apply to any dividends paid to (i) a "foreign financial institution" (as specifically defined in FATCA), whether such foreign financial institution is the beneficial owner or an intermediary, unless such foreign financial institution agrees to verify, report and disclose its United States "account" holders (as specifically defined in FATCA) and meets certain other specified requirements or (ii) a non-financial foreign entity, whether such non-financial foreign entity is the beneficial owner or an intermediary, unless such entity provides a certification that the beneficial owner of the payment does not have any substantial United States owners or provides the name, address and taxpayer identification number of each such substantial United States owner and certain other specified requirements are met. In certain cases, the relevant foreign financial institution or non-financial foreign entity may qualify for an exemption from,

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or be deemed to be in compliance with, these rules. Non-U.S. holders of Easterly common stock should consult their own tax advisors regarding this legislation and whether it may be relevant to the redemption of their Easterly common stock.

Approval of the Merger

        Pursuant to the Merger, among other things:

    Merger Sub will merge with and into Easterly, with Easterly surviving the Merger as a wholly owned subsidiary of Sirius Group.

    Upon the effectiveness of the Merger, all shares of Easterly common stock (other than (i) shares of Easterly common stock with respect to which an Easterly stockholder has validly exercised its redemption rights, and that will be redeemed as provided for by Easterly's charter, (ii) shares of Easterly common stock held by Easterly as treasury stock or owned by Easterly, Sirius Group or Merger Sub and (iii) shares of Easterly common stock held by the Sponsor that will be cancelled pursuant to the Sponsor Letter) will be converted into Sirius Group common shares at the Exchange Ratio.

    The Exchange Ratio will be determined prior to the closing of the Merger and will be equal to a fraction determined by dividing (i) the estimated amount of cash per public share of Easterly common stock in the Trust Account immediately prior to the closing of the Merger by (ii) (x) 1.05 multiplied by (y) the Sirius Group September 30 Adjusted DBVPS. The Sirius Group September 30 Adjusted DBVPS is calculated by dividing (a) the book value of Sirius Group determined based on GAAP on a consolidated basis, based on the final, Sirius Group board of directors approved, unaudited GAAP consolidated financial statements of Sirius Group for the nine months ended September 30, 2018, decreased by the $7 million deferred underwriting fee payable by Easterly to Citigroup Global Markets Inc. as underwriter of the IPO, and as adjusted by the GAAP accounting effect of the redemption of the Sirius Group Series A redeemable preference shares by (b) the sum of (x) the fully diluted number of Sirius Group common shares issued and outstanding as of September 30, 2018 and (y) 593,000 Sirius Group common shares. If an estimate of the Sirius Group September 30 Adjusted DBVPS is used to determine the Exchange Ratio at the closing of the Merger, then the Merger Agreement provides for a post-closing adjustment if such estimate is different than the actual Sirius Group September 30 Adjusted DBVPS as finally determined after the closing of the Merger. Such adjustment will result in either (x) the issuance of new Sirius Group common shares or a payment of cash by Sirius Group to CM Bermuda, if the Exchange Ratio is greater than it would have been using the actual Sirius Group September 30 Adjusted DBVPS or (y) the surrender to Sirius Group of Sirius Group common shares owned by CM Bermuda or a payment of cash to Sirius Group from CM Bermuda if the Exchange Ratio is less than it would have been using the actual Sirius Group September 30 Adjusted DBVPS.

    Each issued and outstanding public warrant to acquire shares of Easterly common stock will cease to represent a right to acquire shares of Easterly common stock and will be converted into a converted warrant. The number of Sirius Group common shares subject to each converted warrant will be equal to the number of shares of Easterly common stock subject to each Easterly warrant immediately prior to the closing of the Merger multiplied by the Exchange Ratio, and such converted warrant will have an exercise price per Sirius Group common share equal to the exercise price per share of Easterly common stock subject to such Easterly warrant immediately prior to the closing of the Merger divided by the Exchange Ratio.

        By approving the Merger Agreement and the Merger, you will be approving, among other transactions contemplated by the Merger Agreement, each of the transactions set forth above.

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        Easterly's charter requires that it provide all holders of its public shares with the opportunity to have their public shares redeemed upon the consummation of Easterly's initial business combination in conjunction with either a tender offer or a stockholder vote. For business and other reasons, Easterly has elected to provide Easterly stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote rather than pursuant to a tender offer. Therefore, Easterly is seeking to obtain approval of Easterly's stockholders of the Merger Proposal in order to provide its public stockholders with the opportunity to redeem their public shares in connection with the closing of the Merger. Because Easterly is holding a stockholder vote on the Merger, Easterly's charter provides that it may consummate the Merger only if it is approved by the affirmative vote of the holders of a majority of the shares of Easterly common stock that are voted at the Easterly special meeting of stockholders.

Vote Required for Approval

        Approval of this proposal is a condition to the completion of the Merger. If this proposal is not approved, the Merger will not occur.

        The Merger Agreement and the Merger will be approved if the holders of at least a majority of the outstanding shares of Easterly common stock vote "FOR" the Merger Proposal. Broker non-votes, abstentions or the failure to vote on this Merger Proposal will have the same effect as a vote "AGAINST" the approval of this proposal.

        As of the record date, Easterly's founders have agreed to vote the Founder Shares and any other shares held by them in favor of the Merger. The founders have not purchased any public shares.

Recommendation of the Board

         EASTERLY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EASTERLY'S STOCKHOLDERS VOTE "FOR" THE MERGER PROPOSAL.

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PROPOSAL NO. 2—THE ADJOURNMENT PROPOSAL

        The Adjournment Proposal, if adopted, will allow Easterly's board of directors to adjourn the Easterly special meeting of stockholders to a later date or dates to permit further solicitation of proxies. The Adjournment Proposal will only be presented to Easterly's stockholders in the event that, based on the tabulated votes, there are not sufficient votes at the time of the Easterly special meeting of stockholders to approve the Merger Proposal presented at the Easterly special meeting. In no event will Easterly's board of directors adjourn the Easterly special meeting of stockholders or consummate the Merger beyond the date by which it may properly do so under Easterly's charter and Delaware law.

Consequences if the Adjournment Proposal is Not Approved

        If the Adjournment Proposal is not approved by Easterly's stockholders, Easterly's board of directors may not be able to adjourn the Easterly special meeting of stockholders to a later date in the event that, based on the tabulated votes, there are not sufficient votes at the time of the Easterly special meeting of stockholders to approve the Merger Proposal.

Vote Required for Approval

        The affirmative vote of the holders of a majority of the shares of Easterly common stock cast on this proposal is required to approve the Adjournment Proposal. Broker "non-votes", abstentions or the failure to vote on this Proposal No. 2 will have no effect on the approval of this proposal.

Recommendation of the Board

EASTERLY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE APPROVAL OF THE ADJOURNMENT PROPOSAL.

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USE OF PROCEEDS

        As of August 31, 2018, funds held in the Trust Account aggregated to approximately $148.0 million. If the Merger is consummated, the funds held in the Trust Account will be released to (i) the surviving company for general corporate purposes, including making loans or contributing cash to other affiliates for working capital, organic growth and future potential acquisitions, (ii) pay unpaid franchise and income taxes of Easterly, (iii) Easterly stockholders who properly exercise their redemption rights, and (iv) pay up to $2 million of Easterly's liabilities, fees, costs and expenses and the $7 million deferred underwriting fee. The total amount of cash to be made available to Sirius Group as a result of the consummation of the Merger will depend on, among other things, the total number of public shares of Easterly to be redeemed by its stockholders.

        Following the consummation of the Merger, the combined company will be entitled to use the funds in the Trust Account. Other than the foregoing uses, the combined company does not have specific plans for any funds remaining from the Trust Account and will have broad discretion regarding how to use the funds that remain. These funds could be used in a manner with which you may not agree or applied in ways that do not improve the combined company's results of operations or increase the value of your investment.


ACCOUNTING TREATMENT

        The Merger is a capital transaction in substance whereby Easterly will be treated as the "acquired" company for financial reporting purposes. This determination was primarily based on the following: Sirius Group will own the majority of the outstanding common shares of the combined company, the current executive officers of Sirius Group will manage the combined company, the board of directors of the combined company will be comprised of the current members of the board of directors of Sirius Group, and Sirius Group's operations will be the operations of the combined company. Accordingly, for accounting purposes, the Merger will be treated as the equivalent of Sirius Group issuing shares for the net assets of Easterly, which are comprised of cash and cash equivalents. The net assets of Easterly will be stated at historical cost, with no goodwill or other intangible assets recorded. All the expenses incurred by Sirius Group related to the Merger will be charged to Additional paid-in surplus.

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF SIRIUS GROUP

        The following table sets forth selected consolidated historical financial information derived from Sirius Group's (i) audited financial statements included elsewhere in this proxy statement/prospectus as of December 31, 2017 and 2016 and for each of the three years ended December 31, 2017, (ii) unaudited financial statements not included elsewhere in this proxy statement/prospectus as of December 31, 2015, 2014 and 2013 and for the years ended December 31, 2014 and 2013 and (iii) unaudited interim financial statements included elsewhere in this proxy statement/prospectus as of June 30, 2018 and 2017 and for the six months ended June 30, 2018 and 2017. You should read the following selected financial information in conjunction with the section entitled " Management's Discussion and Analysis of Financial Condition and Results of Operations of Sirius Group " and Sirius Group's audited and unaudited interim financial statements appearing elsewhere in this proxy statement/prospectus.

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  Six Months Ended
June 30,
  Years Ended December 31,  
 
  2018   2017   2017   2016   2015   2014   2013  
 
  (in millions, except for share and per share amounts)
 

Selected Statement of (Loss) Income Data

                                           

Net earned insurance and reinsurance premiums

  $ 593.4   $ 467.8   $ 1,035.3   $ 890.1   $ 847.0   $ 873.9   $ 866.4  

Net investment income

    30.0     32.1     56.8     56.2     39.9     41.1     48.8  

Net realized investment (losses) gains

    4.1     (2.5 )   (27.2 )   288.3     138.5     65.0     14.3  

Net unrealized investment (losses) gains

    40.7     (22.5 )   (10.5 )   (238.2 )   102.5     144.2     12.4  

Other revenue

    79.0     2.3     21.7     9.1     (2.4 )   (5.8 )   17.9  

Loss and loss adjustment expenses

    292.4     255.4     811.2     519.3     422.7     345.3     418.4  

Insurance and reinsurance acquisition expenses

    129.8     94.0     197.2     210.3     189.8     193.6     166.5  

Other underwriting expenses

    81.4     57.9     106.1     107.3     107.9     129.7     126.1  

General and administrative expenses

    38.5     40.8     91.9     85.1     27.1     30.5     32.1  

Interest expense on debt

    15.5     9.6     22.4     34.6     26.6     26.3     26.3  

Net (loss) income attributable to common shareholder

    138.3     6.9     (156.1 )   32.5     291.2     288.8     175.9  

Comprehensive (loss) income attributable to common shareholder

    79.0     55.1     (78.3 )   (33.6 )   196.2     185.5     88.0  

Per Common Share Data:

                                           

Basic (loss) earnings per common share

  $ 1.11   $ 0.06   $ (1.30 ) $ 0.27   $ 2.43   $ 2.41   $ 1.47  

Diluted (loss) earnings per common share

  $ 1.11   $ 0.06   $ (1.30 ) $ 0.27   $ 2.43   $ 2.41   $ 1.47  

Cash dividends declared per common share

  $   $   $   $ 0.23   $   $ 0.42   $ 1.46  

Basic weighted average common shares outstanding(1)

    120,000,000     120,000,000     120,000,000     120,000,000     120,000,000     120,000,000     120,000,000  

Diluted weighted average common shares outstanding(2)

    120,000,000     120,000,000     120,000,000     120,000,000     120,000,000     120,000,000     120,000,000  

Operating Ratios:

                                           

Loss and loss adjustment expense ratio(3)

    49.3 %   54.6 %   78.4 %   58.3 %   49.9 %   39.5 %   48.3 %

Acquisition expense ratio(4)

    21.9 %   20.1 %   19.0 %   23.6 %   22.4 %   22.2 %   19.2 %

Other underwriting expense ratio(5)

    13.7 %   12.4 %   10.2 %   12.1 %   12.7 %   14.8 %   14.6 %

Combined ratio(6)

    84.9 %   87.1 %   107.6 %   94.0 %   85.0 %   76.5 %   82.1 %

 

 
  As of June 30,   As of December 31,  
 
  2018   2017   2017   2016   2015   2014   2013  
 
  (in millions, except for share and per share amounts)
 

Selected Balance Sheet Data:

                                           

Total investments and cash

  $ 3,566.7   $ 3,533.2   $ 3,604.3   $ 3,814.5   $ 3,678.2   $ 3,289.9   $ 3,344.5  

Reinsurance recoverable on unpaid losses

    358.3     304.7     319.7     291.5     283.1     322.2     347.9  

Total assets

    6,210.1     5,786.9     5,823.6     5,166.5     5,091.9     5,192.3     5,289.8  

Loss and loss adjustment expense reserves

    1,827.1     1,659.3     1,898.5     1,620.1     1,644.4     1,809.8     2,025.0  

Unearned insurance and reinsurance premiums

    800.5     576.9     506.8     398.0     342.2     338.6     343.3  

Debt

    695.9     392.2     723.2     396.2     403.0     402.6     400.4  

Total common shareholder's equity

    1,996.3     2,051.8     1,917.0     1,988.1     1,959.1     1,762.6     1,626.6  

Book value per common share

  $ 16.64   $ 17.10   $ 15.98   $ 16.57   $ 16.33   $ 14.69   $ 13.56  

Diluted book value per common share

  $ 16.64   $ 17.10   $ 15.98   $ 16.57   $ 16.33   $ 14.69   $ 13.56  

Common shares outstanding—basic(1)

    120,000,000     120,000,000     120,000,000     120,000,000     120,000,000     120,000,000     120,000,000  

Common shares outstanding—diluted(2)

    120,000,000     120,000,000     120,000,000     120,000,000     120,000,000     120,000,000     120,000,000  

(1)
As of June 30, 2018 and December 31, 2017, Sirius Group had 120,000,000 common shares outstanding. On April 27, 2016, Sirius Group split its 12,000 common shares by a multiple of 10,000 resulting in 120,000,000 common shares and changed the par value of the common shares from $1.00 per share to $0.01

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    per share. Sirius Group's basic and diluted earnings per share calculations have been retrospectively adjusted for all periods presented to reflect the change in capital structure.

(2)
As of June 30, 2018 and December 31, 2017, Sirius Group did not have any warrants outstanding, any employee stock plans issuing Sirius Group stock, or any other instruments that would give rise to additional Sirius Group shares outstanding. See Note 13 " Earnings per share " to Sirius Group's unaudited interim financial statements and Note 16 " Earnings per share " to Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus for additional information.

(3)
The loss and loss adjustment expense ratio is calculated by dividing loss and loss adjustment expenses by net earned insurance and reinsurance premiums.

(4)
The acquisition expense ratio is calculated by dividing insurance and reinsurance acquisition expenses by net earned insurance and reinsurance premiums.

(5)
The other underwriting expense ratio is calculated by dividing other underwriting expenses by net earned insurance and reinsurance premiums.

(6)
The combined ratio is calculated by combining the loss and loss adjustment ratio, the acquisition expense ratio, and the other underwriting expense ratio.

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF EASTERLY

        The following table sets forth selected consolidated historical financial information derived from Easterly's (i) audited financial statements included elsewhere in this proxy statement/prospectus as of December 31, 2017 and 2016 and for the years ended December 31, 2017 and 2016 and the period from April 29, 2015 (inception) to December 31, 2015 and (ii) unaudited financial statements included elsewhere in this proxy statement/prospectus as of June 30, 2018 and 2017 and for the six months ended June 30, 2018 and 2017. You should read the following selected financial information in conjunction with the section entitled " Management's Discussion and Analysis of Financial Condition and Results of Operations of Easterly " and Easterly's financial statements and the related notes appearing elsewhere in this proxy statement/prospectus.

 
 
Six Months
Ended
June 30, 2018
  Six Months
Ended
June 30, 2017
  Year Ended
December 31,
2017
  Year Ended
December 31,
2016
  April 29, 2015
(Inception) to
December 31,
2015
 

Statement of Operations Data:

                               

Operating expenses:

                               

Operating costs

  $ (976,215 ) $ (768,940 ) $ (1,293,499 ) $ (1,812,645 ) $ (979,434 )

State franchise taxes

    (120,488 )   (91,118 )   (181,118 )   (182,685 )   (121,858 )

Formation costs

                      (2,910 )

Loss from operations

    (1,096,703 )   (860,058 ) $ (1,474,617 ) $ (1,995,330 ) $ (1,104,202 )

Other income—interest income

    1,067,787     489,030     1,232,227     308,879     9,918  

Income (loss) before income tax expense

    2,899,755     (371,028 )   (242,390 )   (1,686,451 )   (1,094,284 )

Income tax expense

                     

Net income (loss)

  $ 2,899,755   $ (371,028 ) $ (242,390 ) $ (1,686,451 ) $ (1,094,284 )

Loss per common share:

                               

Basic and diluted

  $ 0.31   $ (0.12 ) $ (0.19 ) $ (0.29 ) $ (0.20 )

Weighted average shares outstanding (excluding shares subject to possible redemption):

                               

Basic and diluted

    6,553,463     6,383,279     6,412,873     6,221,263     5,469,153  

Cash Flow Data:

                               

Net cash used in operating activities

    (673,971 )   (626,482 ) $ (817,250 ) $ (479,543 ) $ (985,189 )

Net cash provided by (used in) investing activities

    5,610,230     154,554     50,126,164     216,448     (200,000,000 )

Net cash provided by financing activities

    (4,948,244 )   453,510     (49,319,611 )   15,000     201,257,855  

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  As of
June 30,
2018
  As of
June 30,
2017
  As of
December 31,
2017
  As of
December 31,
2016
  As of
December 31,
2015
 

Balance Sheet Data:

                               

Cash

  $ 1,889   $ 6,153   $ 13,874   $ 24,571   $ 272,666  

Cash held in Trust Account—restricted

    146,665,970     200,436,826     151,208,413     200,102,350     200,009,918  

Total assets

    146,696,697     200,487,156     151,229,634     200,424,658     200,448,554  

Common stock, subject to possible redemption or tender, 12,674,622, 18,570,049, 13,544,944, 18,638,173 and 18,816,357 shares at redemption value at June 30, 2018, June 30, 2017, December 31, 2017, December 31, 2016 and December 31, 2015, respectively

    130,833,516     186,106,092     136,335,119     186,477,120     188,163,570  

Total stockholders' equity

    5,000,001     5,000,001     5,000,001     5,000,001     5,000,001  

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Basis of Presentation

        The following unaudited pro forma condensed combined balance sheet as of June 30, 2018 and the unaudited pro forma condensed combined statements of (loss) income for the six months ended June 30, 2018 and for the year ended December 31, 2017 are based on the historical financial statements of Easterly and Sirius Group after giving effect to the Merger and certain other related transactions as outlined below. The following unaudited pro forma condensed combined balance sheet as of June 30, 2018 gives pro forma effect to these transactions as if they had been completed on June 30, 2018. The unaudited pro forma condensed combined statements of (loss) income for the six months ended June 30, 2018 and the year ended December 31, 2017 give pro forma effect to these transactions as if they had been completed on January 1, 2017.

        The pro forma adjustments are based on information currently available. The unaudited pro forma condensed combined statements of (loss) income do not purport to represent, and are not necessarily indicative of, what the actual results of operations of the combined company would have been had these transactions taken place on the date indicated, nor are they indicative of the consolidated results of operations of the combined company for any future period. The unaudited pro forma condensed combined balance sheet does not purport to represent, and is not necessarily indicative of, what the actual financial condition of the combined company would have been had these transactions taken place on the date indicated, nor is it indicative of the consolidated financial condition of the combined company as of any future date. The unaudited pro forma condensed combined financial information should be read in conjunction with the sections entitled " Management's Discussion and Analysis of Financial Condition and Results of Operations of Easterly ", " Management's Discussion and Analysis of Financial Condition and Results of Operations of Sirius Group ", " Proposal No. 1—The Merger Proposal—The Merger Agreement ", " Proposal No. 1—The Merger Proposal—Transactions Related to the Merger " and the historical financial statements and notes thereto of Sirius Group and Easterly included herein.

        The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Merger and certain other related transactions. It has been prepared for informational purposes only and is subject to a number of uncertainties and assumptions. The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give effect to pro forma events that are (1) directly attributable to these transactions, (2) factually supportable and (3) with respect to the statement of operations, expected to have a continuing impact on the results of the combined company. No impact has been presented for any tax effects of the transactions as they are deemed to be immaterial.

        The unaudited pro forma condensed combined financial information has been prepared by Sirius in accordance with Article 11 of Regulation S-X promulgated by the SEC. The pro forma adjustments are based on estimates using information available at this time and therefore are preliminary and subject to change.

Description of the Merger and Related Transactions

        Subject to the terms and conditions of the Merger Agreement, the Merger Agreement provides for the merger of Merger Sub with and into Easterly, with Easterly surviving the Merger as a wholly owned subsidiary of Sirius Group.

        Public stockholders of Easterly's common stock have a right to redeem their shares prior to the Merger. No redemptions have been reflected in the pro forma condensed combined financial information and as of the date of this proxy statement/prospectus, there have been no redemptions subsequent to June 30, 2018.

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        Prior to the closing of the Merger, Sirius Group will enter into the Common Shares Redemption Agreement with CM Bermuda whereby Sirius Group will redeem Sirius Group common shares from CM Bermuda for an aggregate redemption amount of between $120 million and $250 million as elected by CM Bermuda. The redemption price per share will be equal to (x) 1.05 multiplied by (y) the Sirius Group September 30 Adjusted DBVPS, estimated as of August 31, 2018 to be $17.77. This transaction is contingent on the closing of the Merger.

        On July 14, 2018, Sirius Group, Sirius Acquisitions Holding Company II and IMGAH entered into the Preference Shares Redemption Agreement whereby, upon the closing of the Merger, Sirius Group will redeem all of the issued and outstanding Sirius Group Series A redeemable preference shares for an aggregate redemption amount of $95 million, payable in cash at the time of the redemption. Sirius intends to recognize a gain for the difference between the redemption amount and the carrying amount.

        In connection with the closing of the Merger, Sirius Group expects to complete a private placement of Sirius Group Series B preference shares and Sirius Group common shares at a price per share equal to (x) 1.05 multiplied by (y) the Sirius Group September 30 Adjusted DBVPS, estimated as of August 31, 2018 to be $17.77. In addition, the Preference Share Investors will receive warrants that are exercisable for a period of five years after the issue date at a strike price equal to 125% of the per share purchase price. Gross proceeds of the Sirius Group Private Placement, together with cash in the Trust Account upon the closing of the Merger, are intended to aggregate to up to $350 million. The pro forma condensed combined financial information assumes gross proceeds of $202 million from the Sirius Group Private Placement based on $148 million in the Trust Account as of August 31, 2018. In the event that the gross proceeds of the Sirius Group Private Placement are less than $202 million, the amount of Sirius Group common shares redeemed from CM Bermuda may be less than $250 million.

        As contemplated in the Merger Agreement, a Sponsor Letter was entered into between Easterly, the Sponsor and Sirius Group. The Sponsor agreed to pay or reimburse all liabilities of Easterly, excluding the $7 million underwriting fee payable to Citigroup Global Markets Inc., to the extent not repaid by Easterly using unrestricted cash and up to $2 million from the Trust Account. The Sponsor Letter also details the surrender and cancellation of certain Sponsor shares and warrants.

        In connection with the Merger, certain executive officers of Sirius Group will receive a performance share unit award granted under the 2018 Omnibus Incentive Plan, with the target number of performance share units equal to a specified dollar value divided by the per share value of Sirius Group common shares at the closing of the Merger. The performance share unit awards will be subject to vesting conditions over three years and a commitment by the executive officers to purchase Sirius Group common shares having a value equal to the target award granted to the executive officer either up-front or over a three year period. The awards have been reflected in the pro forma condensed combined statements of income (loss) and share tables at the target award level.

        In connection with the Merger, Sirius Group has implemented an Employee Share Purchase Program, which provides all employees of Sirius Group with a one-time opportunity to purchase between 100 and 1,000 Sirius Group common shares at a price equal to 85% of market value for the first 100 shares and 100% of market value for the next 900 shares. For this purpose, the market value of the Sirius Group common shares will be equal to 1.05 times the Sirius Group September 30 Adjusted DBVPS. Employees have the option of paying for the shares upfront or, in the case of employees who are not executive officers, through a loan that is repaid over a two-year period through payroll deductions.

Accounting for the Merger

        The Merger is a capital transaction in substance whereby Easterly will be treated as the "acquired" company for financial reporting purposes. This determination was primarily based on the following: the

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Sirius Group will own the majority of the issued and outstanding common shares of the combined company, the current executive officers of Sirius Group will manage the combined company, the board of directors of the combined company will be comprised of the current members of the board of directors of Sirius Group, and Sirius Group's operations will be the operations of the combined company. Accordingly, for accounting purposes, the Merger will be treated as the equivalent of Sirius issuing shares for the net assets of Easterly, which are comprised of cash and cash equivalents. The net assets of Easterly will be stated at historical cost, with no goodwill or other intangible assets recorded. All the expenses incurred by Sirius related to the Merger will be charged to Additional paid-in surplus.

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Proforma Condensed Combined Balance Sheet as of June 30, 2018
(Unaudited)
(in millions, except for share and per share amounts)

 
  (A)
Sirius
Group
  (B)
Easterly
  (C)
Pro forma
Adjustments
  (D)
Private
Placement
Adjustments
  Pro forma
Balance Sheet
 

Assets:

                               

Investments

  $ 3,436.7   $   $   $   $ 3,436.7  

Cash

    114.1     0.0     137.7 (2)   202.0     115.5  

                (250.0) (3)   (4.0 )      

                (95.0) (4)            

                (5.0) (9)            

                15.0 (10)            

                0.7 (11)            

Restricted cash

    15.9     146.7     (9.0) (1)       15.9  

                (137.7) (2)            

Reinsurance recoverable

    376.1                 376.1  

Insurance and reinsurance premiums receivable

    807.4                 807.4  

Funds held by ceding companies

    157.4                 157.4  

Deferred tax asset

    197.9                 197.9  

Deferred acquisition cost

    151.4                 151.4  

Ceded unearned premium

    207.3                 207.3  

Goodwill and other intangible assets

    609.2                 609.2  

Other assets

    136.7     0.0             136.7  

Total assets

  $ 6,210.1   $ 146.7   $ (343.3 ) $ 198.0   $ 6,211.5  

Liabilities:

                               

Loss and loss adjustment expense reserves

  $ 1,827.1   $   $   $   $ 1,827.1  

Unearned insurance and reinsurance premiums

    800.5                 800.5  

Debt

    695.9     0.9     (0.9) (5)       695.9  

Deferred tax liability

    255.7                 255.7  

Investment related payables

    6.2                 6.2  

Other liabilities

    518.6     9.9     (9.0) (1)       518.6  

                (0.9) (5)            

Total liabilities

    4,104.0     10.9     (10.9 )       4,104.0  

Mezzanine equity

    108.8     130.8     (108.8) (4)   97.7     118.9  

                (130.8) (7)   21.2        

Common shares

    1.2     0.0     (0.1) (3)   0.1     1.2  

                0.0 (6)            

                0.1 (7)            

                0.0 (10)            

                0.0 (11)            

Additional paid-in surplus

    1,199.3     5.1     (249.9) (3)   95.1     1,198.1  

                1.8 (5)   9.2        

                130.8 (7)   (4.0 )      

                (0.1) (8)            

                (0.0) (6)            

                (5.0) (9)            

                15.0 (10)            

                0.9 (11)            

Retained earnings

    998.2     (0.1 )   0.1 (8)   (21.2 )   990.7  

                13.8 (4)            

                (0.1) (11)            

Accumulated other comprehensive loss

    (202.4 )               (202.4 )

Non-controlling interests

    1.0                 1.0  

Total equity

    1,997.3     5.0     (90.9 )   79.1     1,988.6  

Total liabilities and shareholders' equity

  $ 6,210.1   $ 146.7   $ (343.3 ) $ 198.0   $ 6,211.5  

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(A)
Derived from the unaudited consolidated balance sheet of Sirius Group as of June 30, 2018.

(B)
Derived from the unaudited condensed consolidated balance sheet of Easterly as of June 30, 2018.

(C)
Pro forma Adjustments:

(1)
To reflect the payment in cash of $9.0 million of Easterly liabilities, including $7.0 million of underwriting fees due to Citigroup Global Markets Inc. and $2.0 million of legal and other fees accrued, by Easterly.

(2)
To reflect the release of cash and cash equivalents held in the Easterly Trust Account and reclassification from restricted cash to cash.

(3)
To reflect the redemption by Sirius Group of 14,069,311 common shares held by CM Bermuda at an estimated share price of $17.77 per share.

(4)
To reflect the redemption of the Series A redeemable preference shares and accrued dividends for a payment of $95.0 million in cash in accordance with the Preference Shares Redemption Agreement.

(5)
To reflect the payment or contribution to the capital of Easterly of Easterly liabilities of $1.8 million by Sponsor, as required by the Sponsor Letter.

(6)
To reflect the issuance of 966,131 Sirius Group common shares to Sponsor, as required by the Sponsor Letter, which are treated for financial reporting purposes as consideration for the net assets of Easterly comprised of Cash and cash equivalents.

(7)
To reflect the reclassification of Easterly mezzanine equity to permanent equity upon completion of the Merger and the exchange of 14,208,407 Easterly shares for 8,327,745 Sirius Group shares which are treated for financial reporting purposes as consideration for the net assets of Easterly comprised of Cash and cash equivalents.

(8)
To eliminate the historical accumulated deficit of Easterly.

(9)
To reflect the payment in cash by Sirius Group of estimated legal, financial advisory and other professional fees related to the transactions.

(10)
To reflect the purchase of 844,159 Sirius Group common shares by eligible executives of Sirius Group in connection with the 2018 Omnibus Incentive Plan, assuming all eligible executives opt in at full participation, purchasing shares upfront. If all such executives opted to purchase over the three year period, there would have instead been no impact to Cash and cash equivalents or Additional paid in surplus reflected above.

(11)
To reflect the purchase of 49,600 Sirius Group common shares by employees of Sirius Group in connection with the Employee Share Purchase Plan, assuming 50% of eligible employees opt in, purchasing shares upfront. If they all opt to purchase over the two year period through payroll deductions there would have been no impact to Cash and cash equivalents reflected above but instead a Receivable from employees.

(D)
To reflect the issuance in the Sirius Group Private Placement of 5,375,764 Sirius Group common shares, 5,993,526 Sirius Group Series B preference shares and 5,368,413 Sirius Group warrants for proceeds of $202.0 million at an estimated share price of $17.77, net of $4.0 million of expenses. The preference shares are reflected as mezzanine equity at $97.7 million, along with an amount to approximate the redemption cost (based on June 30, 2018 book value) and a corresponding charge to Retained earnings. The common shares and warrants are reflected in equity at $95.2 million and $9.2 million, respectively. Fair value has been allocated to the warrants based on their anticipated relative fair values in proportion to the preference and common shares with which they were issued.

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Proforma Condensed Combined Statement of Income
Six Months Ended June 30, 2018
(Unaudited)
(in millions, except for share and per share amounts)

 
  (A)
Sirius Group
  (B)
Easterly
  (C)
Pro forma
Adjustment
  Pro forma
Statement of
Operations
 

Net earned insurance and reinsurance premium

  $ 593.4   $   $   $ 593.4  

Net investment income

    30.0     1.1         31.1  

Net realized and unrealized investment gains

    44.8             44.8  

Gain on forgiveness of debt

        2.9         2.9  

Other revenue

    101.1             101.1  

Total revenues

    769.3     4.0         773.3  

Loss and loss adjustment expenses

    292.4             292.4  

Insurance and reinsurance acquisition expenses

    129.8             129.8  

Other underwriting expenses

    81.4             81.4  

General and administrative expenses

    38.5     1.1     1.3 (2)   40.9  

Intangible asset amortization expenses

    7.9             7.9  

Interest expense on debt

    15.5             15.5  

Total expenses

    565.5     1.1     1.3     567.9  

Pre-tax income

    203.8     2.9     (1.3 )   205.4  

Income tax expense

    (62.3 )               (62.3 )

Net income

    141.5     2.9     (1.3 )   143.1  

Equity in earnings

                     

Income attributable to non-controlling interests

    (0.6 )           (0.6 )

Accrued dividends on Series A redeemable preference shares

    (2.6 )       2.6 (1)    

Net income attributable to common shareholders

  $ 138.3   $ 2.9   $ 1.3   $ 142.5  

Weighted average number of common shares outstanding—basic

    120,000,000     6,553,463     (5,059,375 )   121,494,088 (3)

Weighted average number of common shares outstanding—diluted

    120,000,000     6,553,463     (4,205,366 )   122,348,097 (3)

Basic earnings per share

  $ 1.11   $ 0.31         $ 1.04  

Diluted earnings per share

  $ 1.11   $ 0.31         $ 1.04  

(A)
Derived from the unaudited consolidated statement of income of Sirius Group for the six months ended June 30, 2018.

(B)
Derived from the unaudited condensed consolidated statement of operations of Easterly for the six months ended June 30, 2018.

(C)
Pro forma Adjustments:

(1)
To eliminate the $2.6 million dividend expense recorded in relation to the Sirius Group Series A redeemable preference shares during the period.

(2)
To reflect the annual compensation expense related to the vesting of awards to certain eligible executives of Sirius Group in connection with the 2018 Omnibus Incentive Plan, assuming all eligible executives opt in at full participation and target levels of performance are achieved. If target levels of performance are exceeded by 50%, the impact to pre-tax income would be $0.6 million.

(3)
See detailed share information in the table below.

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Proforma Condensed Combined Statement of (Loss)
Year Ended December 31, 2017
(Unaudited)
(in millions, except for share and per share amounts)

 
  (A)
Sirius Group
  (B)
Easterly
  (C)
Pro forma
Adjustments
  Pro forma
Statement of
Operations
 

Net earned insurance and reinsurance premiums

  $ 1,035.3   $   $   $ 1,035.3  

Net investment income

    56.8     1.2         58.0  

Net realized and unrealized investment (losses)

    (37.7 )           (37.7 )

Other revenue

    79.7             79.7  

Total revenues

    1,134.1     1.2         1,135.3  

Loss and loss adjustment expenses

    811.2             811.2  

Insurance and reinsurance acquisition expenses

    197.2             197.2  

Other underwriting expenses

    106.1             106.1  

General and administrative expenses

    91.9     1.5     5.0 (2)   98.4  

Intangible asset amortization expenses

    10.2             10.2  

Impairment of intangible assets

    5.0             5.0  

Interest expense on debt

    22.4             22.4  

Total expenses

    1,244.0     1.5     5.0     1,250.5  

Pre- tax (loss)

    (109.9 )   (0.3 )   (5.0 )   (115.2 )

Income tax expense

    (26.4 )           (26.4 )

Net (loss)

    (136.3 )   (0.3 )   (5.0 )   (141.6 )

Income attributable to non-controlling interests

    (13.7 )           (13.7 )

Accrued dividends on Series A redeemable preference shares

    (6.1 )       6.1 (1)   0.0  

Net loss attributable to common shareholders

  $ (156.1 ) $ (0.3 ) $ 1.1   $ (155.3 )

Weighted average number of common shares outstanding—basic

    120,000,000     6,412,873     (4,918,785 )   121,494,088 (3)

Weighted average number of common shares outstanding—diluted

    120,000,000     6,412,873     (4,918,785 )   121,494,088 (3)

Basic earnings per share

  $ (1.30 ) $ (0.19 )       $ (1.28 )

Diluted earnings per share

  $ (1.30 ) $ (0.19 )       $ (1.28 )

(A)
Derived from the unaudited consolidated statement of (loss) income of Sirius Group for the year ended December 31, 2017.

(B)
Derived from the audited consolidated statement of operations of Easterly for the year ended December 31, 2017.

(C)
Pro forma Adjustments:

(1)
To eliminate the $6.1 million dividend expense recorded in relation to the Sirius Group Series A redeemable preference shares during the period.

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      (2)
      To reflect the annual compensation expense related to the vesting of awards to certain eligible executives of Sirius Group in connection with the 2018 Omnibus Incentive Plan, assuming all eligible executives opt in at full participation and target levels of performance are achieved. If target levels of performance are exceeded by 50%, the impact to pre-tax income would be $2.5 million.

      (3)
      See detailed share information in the table below.

        The following table presents the share activity taking place as part of the Merger and related transactions, which are described above.

 
  Pro forma
Six months ended
June 30, 2018
  Pro forma
Year ended
December 31, 2017
 

CM Bermuda shares

    105,930,689     105,930,689  

Sirius Group Private Placement shares

    5,375,764     5,375,764  

Easterly shares

    8,327,745     8,327,745  

Sponsor shares

    966,131     966,131  

Employee Share Purchase Plan(E)

    49,600     49,600  

2018 Omnibus Incentive Plan executive purchase(B)

    844,159     844,159  

Basic shares

    121,494,088     121,494,088  

2018 Omnibus Incentive Plan company issued(C)

    351,733      

2016 LTIP(D)

    502,277      

Warrants outstanding

         

Diluted shares(A)

    122,348,097     121,494,088  

(A)
Diluted shares for both periods do not include 5,861,139 Sirius Group common shares that could be issued upon conversion of the converted warrants and 5,368,413 Sirius Group common shares that could be issued upon conversion of the new Sirius Group warrants as under the Treasury stock method they would be anti-dilutive. The diluted shares for the year ended December 31, 2017 do not include 140,693 potential shares that could be issued under the 2018 Omnibus Incentive Plan and 218,091 shares that could be issued under the Sirius Group Long Term Incentive Plan (the " 2016 LTIP ") because they would be anti-dilutive.

(B)
The shares for the executive purchase component of the 2018 Omnibus Incentive Plan assume that all the executives will purchase the shares upfront. Eligible executives have the option to purchase the shares over a three year period. Should all eligible executives choose to pay over time, only 281,386 shares would be issued in the first year of the program.

(C)
Assumes that 100% of the eligible executives will choose to participate in the 2018 Omnibus Incentive Plan whereby they will be awarded performance share units that are subject to vesting conditions. Based on actual performance achieved, the shares issued could ultimately increase 50% or not be awarded at all. This table assumes targets are achieved at the 100% level. These performance share units granted will become earned and vested based on ROE performance goals that have been approved by the Compensation Committee with respect to 2019-2021. The vesting of the awards will also be subject to the participant's continued employment with Sirius Group. Refer to " Compensation Discussion and Analysis of Sirius Group—Compensation Program Enhancements Commensurate with Public Listing " for more details.

(D)
The 2016 LTIP provides for the settlement of performance awards in Sirius Group common shares at Sirius Group's option, once Sirius Group common shares are publicly traded. While the compensation cost associated with this plan has already been reflected

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    in Sirius Group's historical financial statements, Sirius Group is now reflecting the potentially issuable shares under this plan in the calculation of diluted shares.

(E)
Assumes that 50% of the eligible employees will choose to participate in the Employee Share Purchase Plan whereby they may purchase 100 Sirius Group common shares at 85% of the estimated transaction share price of $17.77. Should 100% of eligible employees choose to participate, then 99,200 shares would have been issued.

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COMPARATIVE PER SHARE DATA

        The following table sets forth historical comparative share information for Sirius Group and Easterly and unaudited pro forma combined and pro forma combined per share information after giving effect to the Merger and certain other related transactions as outlined below, assuming that no holders of public shares exercise their redemption rights. The historical information should be read in conjunction with " Selected Consolidated Historical Financial Data of Sirius Group " and " Selected Consolidated Historical Financial Data of Easterly " included elsewhere in this proxy statement/prospectus and the historical financial statements of Sirius Group and Easterly included elsewhere in this proxy statement/prospectus. The unaudited pro forma combined share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information and related notes included elsewhere in this proxy statement/prospectus.

        The unaudited pro forma combined share information does not purport to represent what the actual results of operations of Sirius Group and Easterly would have been had the Merger and certain other related transactions outlined below been completed or to project the combined company's results of operations that may be achieved after the Merger. The unaudited pro forma book value per common share information below does not purport to represent what the value of Sirius Group and Easterly would have been had the Merger and certain other related transactions outlined below been completed nor the book value per common share for any future date or period.

 
  Historical
Sirius Group
  Historical
Easterly(b)
  Pro forma
Combined
  Equivalent Per
Easterly
Common Share(d)
 

As of and for the Six Months Ended June 30, 2018

                         

Book value per common share(a)

  $ 16.64   $ 0.76   $ 16.37   $ 9.59  

Diluted book value per common share

  $ 16.64   $ 0.76   $ 16.25   $ 9.53  

Basic earnings (loss) per share

  $ 1.11   $ 0.31   $ 1.04   $ 0.62  

Diluted earnings (loss) per share

  $ 1.11   $ 0.31   $ 1.04   $ 0.61  

As of and for the Year Ended December 31, 2017

   
 
   
 
   
 
   
 
 

Book value per common share(a)

  $ 15.98   $ 0.78     N/A (c)   N/A (c)

Diluted book value per common share

  $ 15.98   $ 0.78     N/A (c)   N/A (c)

Basic earnings (loss) per share

  $ (1.30 ) $ (0.19 ) $ (1.22 ) $ (0.71 )

Diluted earnings (loss) per share

  $ (1.30 ) $ (0.19 ) $ (1.22 ) $ (0.71 )

(a)
Book value per common share is calculated using the following formula: Total Stockholder's Equity / Common Shares Outstanding

(b)
The basic and diluted earnings (loss) per share calculation for Easterly excludes shares subject to possible redemption.

(c)
Not applicable as the unaudited condensed combined balance sheet is presented as of June 30, 2018.

(d)
The equivalent per share Easterly amounts are calculated by multiplying the pro forma per share amounts by the estimated Exchange Ratio of 0.586.

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MATERIAL TAX CONSEQUENCES

Material U.S. Tax Consequences

        The following is a general discussion of the material U.S. federal income tax considerations relating to the ownership and disposition of Sirius Group common shares. The discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the " Code "), U.S. Treasury regulations, judicial decisions, administrative pronouncements and applicable tax treaties, all as currently in effect. Such authorities are subject to change, possibly with retroactive effect. Any such change could result in U.S. federal income tax consequences that are materially different from those described below. Moreover, any subsequent change in any of the factual matters set forth in this proxy statement/prospectus or in the conduct, practices or activities of Sirius Group may affect the considerations discussed below. Sirius Group is under no obligation to update the discussion to reflect future changes in law or changes in any of the foregoing factual matters that may later come to Sirius Group's attention.

        This discussion does not address all aspects of U.S. federal income taxation that may be relevant to all holders of Sirius Group common shares, some of which, such as dealers in securities, banks, thrifts or other financial institutions, insurance companies, regulated investment companies, accrual basis taxpayers subject to special tax accounting rules as a result of their use of financial statements, tax-exempt organizations, U.S. expatriates, non-U.S. persons who are engaged in a trade or business in the United States, persons that hold Sirius Group common shares as part of a straddle, conversion transaction or hedge, persons deemed to sell Sirius Group common shares under the constructive sale provisions of the Code, holders that are subject to the alternative minimum tax, holders whose functional currency is not the U.S. dollar, holders that are treated as partnerships for U.S. federal income tax purposes, holders that are not the beneficial owners of Sirius Group common shares, and holders that own, actually or under applicable constructive ownership rules, 10% or more of Sirius Group shares, may be subject to special rules. This discussion deals only with holders that acquire the Sirius Group common shares in the Merger and in the Sirius Group Private Placement and hold the Sirius Group common shares as a capital asset (within the meaning of Section 1221 of the Code). If an entity treated as a partnership for U.S. federal income tax purposes holds Sirius Group common shares, the U.S. federal income tax treatment of a partner of the partnership will depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding common shares, you are urged to consult your own tax adviser regarding the consequences to you of the partnership's ownership and disposition of Sirius Group common shares.

        This discussion does not address any U.S. federal tax laws other than U.S. federal income tax laws, any U.S. state or local tax laws or any non-U.S. tax laws. You are encouraged to consult your own tax advisers concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local and non-U.S. laws from the ownership and disposition of Sirius Group common shares. The conclusions expressed in the discussion below are not binding on the Internal Revenue Service (the " IRS ") or any court, and there is no assurance that the IRS or a court would not reach a contrary conclusion. No ruling has been or will be sought from the IRS regarding any matter discussed in this proxy statement/prospectus.

U.S. Taxation of Sirius Group and its non-U.S. subsidiaries

        In general, a non-U.S. corporation is subject to federal income tax in the United States on a net basis on its taxable income which is effectively connected with the conduct of a trade or business in the United States. A non-U.S. corporation that has income effectively connected with a trade or business in the United States may also be subject to a branch profits tax based upon its after-tax effectively connected earnings and profits, with certain adjustments. A non-U.S. corporation not engaged in a trade or business in the United States is generally subject to tax in the United States only on its income from United States sources. A non-U.S. corporation eligible for the benefits of an income tax treaty is

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generally subject to tax in the United States on a net basis only with respect to business income that is attributable to a permanent establishment it has (if any) in the United States, and is subject to reduced rates of tax on United States sourced income. Except with respect to certain subsidiaries that have a portion of their income that is treated as effectively connected with a trade or business in the United States and subject to net taxation in the United States, Sirius Group and its other foreign subsidiaries currently intend to limit their U.S. activities so that they are either not considered to be engaged in a U.S. trade or business or otherwise not subject to tax in the United States on a net basis under an applicable income tax treaty. However, no definitive standards are provided by the Code, U.S. Treasury regulations or court decisions regarding when a foreign corporation is engaged in the conduct of a U.S. trade or business. Because the law is unclear, and the determination is highly factual and must be made annually, there is no assurance that the IRS will not contend that a non-U.S. entity in Sirius Group is engaged in a trade or business in the United States or is subject to more U.S. income tax than it currently incurs. If Sirius Group or more of its non-U.S. subsidiaries were considered to be engaged in a trade or business in the United States, such entity may be subject to U.S. federal corporate income and branch profits taxes on the portion of its earnings effectively connected to such U.S. business. A non-U.S. corporation is generally entitled to deductions and credits only if it timely files a U.S. federal income tax return. Sirius Group and its non-U.S. subsidiaries may file such returns on a protective basis for each tax year. Taxation of income which is effectively connected with the conduct of a trade or business in the United States is generally analogous to that applied to the income of a U.S. corporation.

Treaty Benefits

        If one of Sirius Group's non-U.S. subsidiaries is entitled to the benefits of a tax treaty for a given taxable year, it will generally not be subject to U.S. federal income tax on certain of its business profits for that year unless those business profits are attributable to a permanent establishment in the United States. Because the determination of whether a person has a permanent establishment in the United States is highly factual, and must be made annually, there can be no assurances that any Sirius Group's non-U.S. subsidiary that claims that it does not have a permanent establishment in the United States will be successful.

Net Investment Income

        Non-U.S. insurance companies carrying on an insurance business within the United States are treated under the Code as having a certain minimum amount of effectively connected net investment income, determined in accordance with a formula that depends, in part, on the amount of U.S. risk insured or reinsured by such companies. If, contrary to the company's intention, one of Sirius Group's non-U.S. subsidiaries is considered to be engaged in the conduct of an insurance business in the United States and is not entitled to the benefits of a tax treaty, a significant portion of its investment income could be subject to U.S. federal income tax.

Withholding Tax

        Unless reduced by an applicable income tax treaty, non-U.S. corporations not engaged in a trade or business in the United States generally are subject to a 30% (or lower rate under an applicable income tax treaty) U.S. federal income tax (imposed on a gross basis and generally collected by withholding) on certain "fixed or determinable annual or periodical gains, profits and income" from sources within the United States. Such income includes certain distributions from U.S. corporations and certain interest on investments. If any of Sirius Group's U.S. subsidiaries makes a distribution to any Sirius Group non-U.S. subsidiary, the distribution may be treated as a dividend to which the withholding tax will apply to the extent the distribution is paid out of the subsidiary's current or accumulated earning and profits, as determined for U.S. federal income tax purposes.

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Excise Tax

        The United States imposes an excise tax on insurance and reinsurance premiums paid to non-U.S. insurers or reinsurers with respect to risks located in the United States. The applicable tax rates are 4% for casualty insurance and indemnity bonds, 1% for life insurance and annuity contract premiums and 1% for reinsurance premiums. Relief from this excise tax may be found in tax treaties. The person who pays the premium to the non-U.S. insurer or reinsurer is customarily responsible for the excise tax. If, however, the tax is not paid by the purchaser of the insurance or reinsurance, the non-U.S. insurer may be held liable for the tax. Accordingly, if one of Sirius Group's non-U.S. subsidiaries reinsure U.S. risks written by third-party insurance companies, and such insurance companies were not to pay this excise tax, such subsidiary could be held liable for it.

Base Erosion and Anti-Abuse Tax

        The 2017 Tax Cuts and Jobs Act introduced new tax legislation in the U.S. The 2017 Tax Cuts and Jobs Act makes significant changes to the tax treatment of non-U.S. companies and their U.S. and non-U.S. insurance subsidiaries, including the imposition of the Base Erosion and Anti-Abuse Tax (the " BEAT "). The BEAT operates as a minimum tax and is generally calculated as a percentage (5% in 2018, 10% in 2019-2025, and 12.5% in 2026 and thereafter) of the "modified taxable income" of an "applicable taxpayer." Modified taxable income is calculated by adding back to a taxpayer's regular taxable income the amount of certain "base erosion tax benefits" with respect to certain payments made to foreign affiliates, as well as the "base erosion percentage" of any net operating loss deductions. The BEAT applies only to the extent it exceeds a taxpayer's regular corporate income tax liability (determined without regard to certain tax credits). This tax will subject intragroup reinsurance arrangements to a base erosion tax on premiums ceded. While Sirius Group intends to operate in a manner that limits its exposure to BEAT, at this time, absent regulations and other detailed guidance, uncertainty about the financial impact on Sirius Group of this new tax remains. Accordingly, Sirius Group cannot reassure you it will not be subject to material amounts of BEAT in the future.

Taxation of U.S. Holders

        For purposes of this discussion, you are a " U.S. holder " if, for U.S. federal income tax purposes, you are treated as a beneficial owner of Sirius Group common shares and you are:

    a citizen or resident of the United States;

    a corporation created or organized in or under the law of the United States or any state thereof (including the District of Columbia);

    an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

    a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) the trust has in effect a valid election under applicable U.S. Treasury regulations to be treated as a U.S. person.

Distributions on Sirius Group Common Shares

        Subject to the discussions below relating to the potential application of the controlled foreign corporation (" CFC ") and passive foreign investment company (" PFIC ") provisions, distributions on Sirius Group common shares will constitute dividends for U.S. federal income tax purposes to the extent paid out of Sirius Group's current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. To the extent that distributions on Sirius Group common shares exceed Sirius Group's earnings and profits, the distributions will be treated as a tax-free return of capital that

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will reduce, but not below zero, your tax basis in the common shares and thereafter as capital gain from the sale or exchange of the common shares (discussed below). Sirius Group's earnings and profits generally will not include the earnings and profits of its subsidiaries until such amounts are distributed to Sirius Group.

        Dividends paid with respect to Sirius Group common shares will generally be treated as "passive category income" for purposes of computing allowable foreign tax credits for U.S. foreign tax credit purposes. Further, any such dividends generally will not be eligible for the dividends received deduction for corporate shareholders. Under a newly-enacted provision of the 2017 Tax Cuts and Jobs Act, the "foreign source" portion of such dividends may be allowed as a deduction if received by a domestic corporation which is a 10% U.S. Shareholder (as defined below) of Sirius Group.

        Dividends paid with respect to the Sirius Group common shares to a U.S. holder that is treated for U.S. federal income tax purposes as an individual, a trust or an estate (a " non-corporate U.S. holder ") will be treated as "qualified dividend income" taxed at the preferential rates applicable to long-term capital gain if (i) the Sirius Group common shares are readily tradable on an established securities market in the United States (such as Nasdaq,), (ii) Sirius Group is not a PFIC for the taxable year during which the dividend is paid and Sirius Group was not a PFIC for the immediately preceding taxable year (see discussion below), (iii) the U.S. holder owns the Sirius Group common shares for more than 60 days in the 121-day period beginning 60 days before the date on which the Sirius Group common shares become ex-dividend (and does not enter into certain risk-limiting transactions with respect to the Sirius Group common shares), (iv) the U.S. holder is not under an obligation to make related payments with respect to positions in substantially similar or related property, and (v) the U.S. holder does not take the dividends into account as investment income for purposes of deducting investment interest. Dividends you receive from Sirius Group that are not treated as "qualified dividend income" will be taxed at ordinary income rates.

        Special rules may apply to any "extraordinary dividend." Generally, a dividend with respect to a Sirius Group common share will be an extraordinary dividend if the amount of such dividend equals or exceeds 10% of your adjusted tax basis (or fair market value in certain circumstances) in such Sirius Group common share (subject to certain aggregation rules). In addition, extraordinary dividends include dividends received within a one-year period that, in the aggregate, equal or exceed 20% of your adjusted tax basis (or fair market value). If you receive an extraordinary dividend on a Sirius Group common share that is treated as qualified dividend income and you are a non-corporate U.S. holder, then any loss recognized by you from a subsequent sale or exchange of such Sirius Group common share will be treated as a long-term capital loss to the extent of such dividend.

        Dividends paid with respect to Sirius Group common shares to a non-corporate U.S. holder may also be subject to an additional 3.8% tax on net investment income, described below.

CFC Provisions

        Each of Sirius Group and its non-U.S. subsidiaries will be considered a CFC if, on any day of its taxable year, "10% U.S. Shareholders" (as defined below) own (directly, indirectly through non-U.S. entities or constructively through the application of certain constructive ownership rules (" constructively ")) more than 50% of the total combined voting power of all classes of its voting stock or more than 50% of the total value of all of its stock. For purposes of taking into account certain insurance income, however, each of Sirius Group's non-U.S. subsidiaries will be a CFC if more than 25% of the total combined voting power of all classes of its voting shares or more than 25% of the total value of all of its shares are owned by 10% U.S. Shareholders. As a result of changes to certain constructive ownership rules made by the 2017 Tax Cuts and Jobs Act, certain subsidiaries of Sirius Group may be treated as constructively owned by certain domestic subsidiaries of Sirius Group and therefore treated as CFCs.

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        For tax years beginning on or after January 1, 2018, a " 10% U.S. Shareholder " of an entity treated as a foreign corporation for U.S. federal income tax purposes is a U.S. person who owns (directly, indirectly through non-U.S. entities or constructively) 10% or more of the total value of all classes of shares of the corporation or 10% or more of the total combined voting power of all classes of voting shares of the corporation. Any U.S. person that owns (or is treated as owning) 10% or more of the value of Sirius Group, including a U.S. person that is treated as a partnership for U.S. federal income tax purposes and a U.S. person that owns any interest in such a partnership, must consult its own tax advisor regarding its investment in Sirius Group.

        Except as discussed below with respect to RPII, a U.S. holder that is not a 10% U.S. Shareholder is not expected to experience adverse U.S. federal income tax consequences under the CFC provisions regardless of whether Sirius Group or one of its non-U.S. subsidiaries is treated as a CFC. However, because the attribution rules contained in the Code are complex there can be no assurance that this will be the case.

        If Sirius Group or one of its non-U.S. subsidiaries is a CFC, any 10% U.S. Shareholder of Sirius Group or one of its non-U.S. subsidiaries who owns Sirius Group common shares directly, or indirectly through non-U.S. entities, on the last day in such company's taxable year on which it is a CFC must include in its gross income for U.S. federal income tax purposes its pro rata share (based on direct or indirect ownership of value) of such company's "subpart F income" (even if the subpart F income is not distributed) as well as certain earnings and profits of such company that are invested in U.S. property. "Subpart F income" of a CFC typically includes, among other items, passive income such as interest and dividends as well as certain insurance and reinsurance income (including underwriting and investment income). The subpart F income of a CFC for any taxable year is limited to the CFC's earnings and profits for the taxable year.

        In addition, each person who is a 10% U.S. Shareholder of any CFC for a taxable year must include in gross income for U.S. federal income tax purposes such 10% U.S. Shareholder's global intangible low-taxed income (" GILTI ") for the taxable year. In general, the GILTI with respect to a 10% U.S. Shareholder is the excess (if any) of its "net CFC tested income" (see below) over its "net deemed tangible income" (generally representing a 10% deemed return on tangible business assets). A 10% U.S. Shareholder's "net CFC tested income" is generally equal to the excess of its aggregate pro rata share of the "tested income" of each CFC with respect to which it is a 10% U.S. Shareholder over its aggregate pro rata share of the "tested loss" of each such CFC. The "tested income" or "tested loss" of a CFC is generally determined by subtracting from the CFC's gross income (excluding any subpart F income and certain other amounts) the amount of any deductions properly allocable to such gross income. If Sirius Group or one of its non-U.S. subsidiaries is a CFC, any 10% U.S. Shareholder of Sirius Group who owns Sirius Group common shares directly, or indirectly through non-U.S. entities, on the last day in such company's taxable year on which it is a CFC must take into account its pro rata share (based on direct or indirect ownership of value) of such company's "tested income" or "tested loss" for purposes of determining the amount of GILTI that such 10% U.S. Shareholder must include in gross income.

        The earnings and profits of a foreign corporation attributable to amounts which are, or have been, included in the gross income of a 10% U.S. Shareholder pursuant to the CFC provisions will not, when subsequently distributed to such 10% U.S. Shareholder (or, if certain requirements are met, other U.S. persons) directly or indirectly through a chain of non-U.S. entities be again included in the gross income of such 10% U.S. Shareholder (or other U.S. person).

        If Sirius Group or one of its non-U.S. subsidiaries is a CFC, the rules relating to PFICs generally would not apply to a 10% U.S. Shareholder of such company.

        Given Sirius Group's current share ownership, it believes it is unlikely that any U.S. person who acquires Sirius Group common shares in the Merger will become a 10% U.S. Shareholder. However,

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because of the complexity of the attribution rules contained in the Code, Sirius Group cannot be certain that this will be the case.

        Related Person Insurance Income —Special rules apply with respect to a CFC that earns related party insurance income (" RPII "). For purposes of taking into account RPII, an entity treated as a foreign corporation for U.S. federal income tax purposes will be considered a CFC (a " RPII CFC ") if, on any day of its taxable year, U.S. persons who own (directly or indirectly through non-U.S. entities) any of its stock (each such person, a " RPII Shareholder ") own (directly, indirectly through non-U.S. entities or constructively) 25% or more of the total combined voting power of all classes of its voting stock or 25% or more of the total value of all of its stock.

        The RPII of a RPII CFC is certain insurance and reinsurance income (including underwriting and investment income) attributable to a policy of insurance or reinsurance with respect to which the person (directly or indirectly) insured is a "RPII Shareholder" or a "related person" to a RPII Shareholder. Generally, a person is a related person to a RPII Shareholder if the person controls or is controlled by the RPII Shareholder, or if the person is controlled by the same person or persons who control the RPII Shareholder. Control is defined for these purposes as direct or indirect ownership of more than 50% of the value or voting power of the stock of a person treated as a corporation for U.S. federal income tax purposes or more than 50% of the value of the beneficial interests in a person treated as a partnership, trust, or estate for U.S. federal income tax purposes. Certain attribution rules apply for purposes of determining control.

        RPII Exceptions —The RPII rules will not apply with respect to each of Sirius Group's non-U.S. subsidiaries for a taxable year if (1) at all times during its taxable year less than 20% of the total combined voting power of all classes of such subsidiaries' voting stock and less than 20% of the total value of all of its stock is owned (directly or indirectly) by persons who are (directly or indirectly) insured under any policy of insurance or reinsurance issued by such subsidiary or who are related persons to any such person or (2) its RPII (determined on a gross basis) is less than 20% of its insurance income (as so determined) for the taxable year, determined with certain adjustments. Sirius Group believes that it is likely that one or both of these conditions will be satisfied with respect to Sirius Group and its subsidiaries. However, there can be no assurance this will be the case. Consequently, there can be no assurance that a person who is a RPII Shareholder will not be required to include amounts in its income in respect of RPII in any taxable year.

        Apportionment of RPII to RPII Shareholders —If one of Sirius Group's non-U.S. subsidiaries does not qualify for either of the exceptions described above for a taxable year and such subsidiary was a RPII CFC during that taxable year, then a RPII Shareholder that owns, directly or indirectly through non-U.S. entities, any of the Sirius Group common shares on the last day of that taxable year will be required to include in gross income the RPII Shareholder's pro rata share of such subsidiary's RPII for the entire taxable year, whether or not distributed, even if that RPII Shareholder did not own the Sirius Group common shares throughout the period. The RPII Shareholder's share of the RPII for the taxable year will be determined as if all RPII were distributed proportionately only to RPII Shareholders at that date, but limited by each such RPII Shareholder's share of such subsidiary's current year earnings and profits as reduced by the RPII Shareholder's share, if any, of certain prior-year deficits in earnings and profits. The RPII Shareholder may exclude from income the amount of any distributions by Sirius Group of earnings and profits attributable to amounts which are, or have been, included in the gross income of the RPII Shareholder. A RPII Shareholder will not be able to exclude from income the amount of any distributions by Sirius Group of earnings and profits attributable to RPII amounts which have been included in the gross income of any previous RPII Shareholders of the Sirius Group common shares owned, directly or indirectly through non-U.S. entities, by such RPII Shareholder if the RPII Shareholder is unable to identify the previous RPII

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Shareholders and demonstrate the amount of RPII that had previously been included in the gross income of the previous RPII Shareholders.

        A RPII Shareholder who owns (directly or indirectly) Sirius Group common shares during such subsidiary's taxable year but not on the last day of the taxable year is not required to include in gross income any part of such subsidiary's RPII for that taxable year solely by reason of such ownership.

        Computation of RPII —For any year in which the RPII rules apply with respect to one of Sirius Group's non-U.S. subsidiaries, Sirius Group may seek information from its shareholders as to whether direct or indirect owners of Sirius Group shares at the end of the year are RPII Shareholders so that the RPII may be determined and apportioned among such persons. Sirius Group is not under any obligation to do so or to report any RPII to its RPII Shareholders. To the extent Sirius Group is unable to determine whether a direct or indirect owner of Sirius Group shares is a RPII Shareholder, Sirius Group may assume that such owner is not a RPII Shareholder, thereby increasing the per-share RPII amount for all known RPII Shareholders. Calculating the amount of RPII Sirius Group may receive, and determining whether Sirius Group is eligible for the RPII exceptions, requires information about its shareholders and insureds that Sirius Group may not have. Therefore, there can be no assurance that Sirius Group will be able to determine the availability of the RPII exceptions and the amount of insurance income that is RPII.

        Uncertainty as to the Application of the RPII Provisions —The meaning of various RPII provisions and the application of those provisions to Sirius Group and its non-U.S. subsidiary is uncertain. Regulations interpreting the RPII provisions exist only in proposed form, and it is uncertain whether those regulations will be adopted in their proposed form (or at all) or whether changes or clarifications might be made to them. It is also uncertain whether any such changes or any interpretation or application of the RPII provisions by the IRS or the courts might have retroactive effect. In addition, there can be no assurance that the amount of RPII or the amounts of the RPII inclusions for any particular RPII Shareholder, if any, will not be subject to adjustment based upon subsequent IRS examination. Prospective investors are urged to consult their own tax advisers regarding the effects of these uncertainties and the application of the RPII provisions to them.

        Basis Adjustments —A U.S. holder's tax basis in the Sirius Group common shares will be increased by the amount of any of Sirius Group's or its non-U.S. subsidiaries' subpart F income (including any RPII), earnings and profits invested in U.S. property and GILTI that such U.S. holder includes in income under the CFC rules by reason of its ownership of such shares. A U.S. holder's tax basis in the Sirius Group common shares will be reduced by the amount of any distributions on the Sirius Group common shares of previously taxed income that is excluded from the U.S. holder's gross income. If such distributions exceed the U.S. holder's tax basis in the Sirius Group common shares, the excess will be treated as gain from the sale or exchange of Sirius Group common shares (see discussion below).

        Tax-Exempt U.S. Holders —If a U.S. holder that is a tax-exempt organization is required to include any of Sirius Group's non-U.S. subsidiaries' insurance income (including RPII) in its gross income under the CFC rules, such income will be unrelated business taxable income, which is subject to tax. Prospective investors that are tax-exempt organizations are urged to consult their own tax advisers as to the potential impact of the unrelated business taxable income provisions of the Code on an investment in Sirius Group common shares. A tax-exempt organization that is treated as a 10% U.S. Shareholder or a RPII Shareholder also must file IRS Form 5471, as described below.

Dispositions of Sirius Group Common Shares

        Subject to the discussions below relating to the potential application of Section 1248 of the Code and the PFIC rules, U.S. holders will recognize capital gain or loss on the sale or other taxable disposition of Sirius Group common shares. If the holding period for the Sirius Group common shares

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sold or otherwise disposed of exceeds one year, any gain recognized by a non-corporate U.S. holder will be subject to tax at a maximum U.S. federal income tax rate of 20% and may also be subject to an additional 3.8% tax imposed on certain net investment income, as discussed below. With certain exceptions, any gain will be U.S. source gain and generally will be passive category income for foreign tax credit limitation purposes. The deductibility of capital losses is subject to limitations.

        Under Section 1248 of the Code, if a U.S. holder sells or exchanges Sirius Group common shares and the U.S. holder owned (directly, indirectly through non-U.S. entities or constructively) 10% or more of the total combined voting power of the voting shares of Sirius Group when Sirius Group was a CFC at any time during the 5-year period ending on the date of the sale or exchange, then any gain recognized on the sale or exchange of the shares will be treated as a dividend to the extent of Sirius Group's earnings and profits (determined under U.S. federal income tax principles) attributable to the shares accumulated during the period that the U.S. holder held shares of Sirius Group while Sirius Group was a CFC (with certain adjustments). Given Sirius Group's current share ownership, we believe it is unlikely that any U.S. person who acquires Sirius Group common shares in the Merger or Sirius Group Private Placement will own 10% of more of the total combined voting power of the voting shares of Sirius Group. However, because of the complexity of the attribution rules contained in the Code, we cannot assure you that this will be the case.

        Section 953(c)(7) of the Code provides that the rules of Section 1248 of the Code will also apply to the sale or exchange of shares in a non-U.S. corporation by a U.S. person (regardless of whether the person is a 10% U.S. Shareholder) if the non-U.S. corporation would be taxed under the provisions of the Code applicable to U.S. insurance companies if it were a U.S. corporation and the non-U.S. corporation is (or would be but for certain exceptions) treated as a RPII CFC. If Section 1248 applies under such circumstances, gain on the disposition of shares in the non-U.S. corporation may be recharacterized as a dividend to the extent of the U.S. person's share of the corporation's undistributed earnings and profits that were accumulated during the period that the U.S. person owned the shares (possibly whether or not those earnings and profits are attributable to RPII).

        Sirius Group does not directly engage in an insurance or reinsurance business, but its non-U.S. subsidiaries do. Existing proposed regulations do not address whether the provisions of Section 953(c)(7) of the Code may apply with respect to the sale of stock in a non-U.S. corporation that is not a RPII CFC but has a non-U.S. subsidiary that is a RPII CFC and that would be taxed under the provisions of the Code applicable to U.S. insurance companies if it were a U.S. corporation. In the absence of legal authority to the contrary, there is a strong argument that this specific rule should not apply to a disposition of Sirius Group common shares because Sirius Group is not itself directly engaged in the insurance business. However, there is no assurance that the IRS will not successfully assert that Section 953(c)(7) applies in such circumstances and thus may apply to the sale or exchange by a U.S. holder of Sirius Group common shares. Prospective investors are urged to consult their own tax advisers regarding the effects of these rules on a disposition of Sirius Group common shares.

PFIC Provisions

        In general, a non-U.S. corporation will be a PFIC during a taxable year if (1) at least 75% of its gross income consists of certain types of "passive income" or (2) at least 50% of the average value of its assets produce, or are held for the production of, "passive income." Unless an exception applies, "passive income" includes dividends, interest, rents and royalties. For these purposes, a non-U.S. corporation that owns at least 25% of the value of the stock of another corporation generally is treated as if it received directly its proportionate share of the income, and held its proportionate share of the assets, of the other corporation (the "look through" rule). Under the 2017 Tax Cuts and Jobs Act, for taxable years beginning on or after January 1, 2018, income is not treated as passive for these purposes if it is derived in the active conduct of an insurance business by a "qualifying insurance corporation." A

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"qualifying insurance corporation" is a foreign corporation (A) which would be subject to tax under subchapter L (i.e., the provisions generally applicable to a domestic insurance company under the Code) if such corporation were a domestic corporation, and (B) the applicable insurance liabilities of which constitute more than 25% of its total assets.

        Based on the assets, income and activities of Sirius Group and its subsidiaries, including those of its subsidiaries engaged in the active conduct of an insurance business, Sirius Group does not expect that it will be treated as a PFIC in 2018, however, this is not entirely clear and the IRS could take the position that Sirius Group or any of its subsidiaries is a PFIC. Moreover, PFIC classification is a factual determination made annually, and even if Sirius Group and its subsidiaries are not PFICs in 2018, they could become PFICs in later years. Accordingly, no assurance can be given that Sirius Group and its subsidiaries will not be treated as PFICs for 2018 or for any future year. If Sirius Group is considered a PFIC for U.S. federal income tax purposes, a U.S. holder that receives an "excess distribution" on Sirius Group common shares or recognizes a gain on the disposition of Sirius Group common shares generally will determine its U.S. federal income tax on such amounts by (1) allocating the excess distribution or gain ratably to each day in the U.S. holder's holding period for the Sirius Group common shares, (2) including in gross income as ordinary income for the current year the amounts allocated to the current year or two years before Sirius Group became a PFIC, and (3) increasing the current year's tax by the "deferred tax amount," which is determined by multiplying the amounts allocated to each of the other taxable years by the highest rate of tax in effect for such taxable year (for the applicable class of taxpayers) to calculate the increases in taxes for each prior year, calculating an interest charge (at the rate applicable to underpayments of U.S. federal income tax for the relevant period) for the deemed deferral of such taxes from each prior year to the current year, and combining such increases in taxes and interest charges. In addition, a U.S. holder would be treated as owning a proportionate amount of any shares that Sirius Group owns, directly or indirectly by application of certain attribution rules, in other PFICs and would be subject to the PFIC rules on a separate basis with respect to its indirect interests in any such PFICs. In general, a U.S. person that owns shares in a PFIC is treated as receiving an "excess distribution" from the PFIC if the distributions received by the U.S. person with respect to such shares in a taxable year exceed 125% of the average annual distributions received by the U.S. person in the three preceding taxable years (or, if shorter, the U.S. person's holding period for the shares).

        If Sirius Group is characterized as a PFIC, a U.S. holder may be able to mitigate the negative tax consequences described above if the U.S. holder makes a "qualified electing fund" election or "mark-to-market" election with respect to the Sirius Group common shares. However, such an election may itself have negative tax consequences to a U.S. holder. Further, Sirius Group does not expect to provide the information necessary for U.S. holders to make "qualified electing fund" elections, and a "mark-to-market" election may not mitigate any negative tax consequences with respect to PFICs directly or indirectly owned by Sirius Group. U.S. holders should consult with their tax advisers regarding the availability and advisability of such elections (including a retroactive qualified electing fund election). As described above, if Sirius Group were a PFIC for any taxable year and any of its non-U.S. subsidiaries were also a PFIC, a U.S. holder of Sirius Group common shares would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. A U.S. holder would not be able to make a mark-to-market election with respect to stock of any lower-tier PFIC. In addition, a U.S. holder may be required to comply with other reporting requirements, regardless of the number of shares held, and whether or not a "qualified electing fund" or "mark-to-market" election is made.

        U.S. holders are urged to consult their own tax advisers about the application of the PFIC rules, the advisability and availability of any elections (including a retroactive qualified electing fund election), and the additional reporting requirements described above.

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Foreign Tax Credits

        In the event that U.S. persons own (directly, indirectly through non-U.S. entities or constructively) 50% or more of the total combined voting power of all classes of Sirius Group voting shares or 50% or more of the total value of Sirius Group shares, only a portion of the current income inclusions, if any, under the CFC and PFIC provisions and of any dividends paid by Sirius Group (including any gain from the sale or other taxable disposition of common shares that is treated as a dividend under Code Section 1248) will be treated as non-U.S. source income for purposes of computing a U.S. holder's U.S. foreign tax credit limitation. Generally, the ability of a U.S. Holder to use foreign tax credits against its U.S. federal income tax liability is subject to limitation, which limitations are applied separately with respect to each of four categories of income, consisting of GILTI, foreign branch income, passive category income, and general category income. Thus, shareholders might not be able to utilize any excess foreign tax credits from certain types of income to reduce U.S. tax on other types of income.

Net Investment Income Tax

        A 3.8% tax is imposed on all or a portion of the net investment income of certain individuals with modified adjusted gross income of over $200,000 ($250,000 in the case of joint filers) and the undistributed net investment income of certain estates and trusts. For these purposes, "net investment income" will include a U.S. holder's share of dividends and gain on the sale or other taxable disposition of Sirius Group common shares. Unless a U.S. holder elects otherwise or holds Sirius Group common shares in connection with certain trades or businesses, the CFC and PFIC provisions generally will not apply for purposes of determining a U.S. holder's net investment income.

Reporting Requirements for U.S. Holders

        Form 926 —A U.S. holder who transfers cash to Sirius Group in exchange for Sirius Group common shares may be required to file Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) with the IRS if (1) immediately after the transfer, such U.S. holder holds, directly or indirectly, at least 10% of the total voting power or the total value of Sirius Group, or (2) the amount of cash transferred by such U.S. holder (or certain related persons) during the 12-month period ending on the date of the transfer exceeds $100,000.

        Form 5471 —A U.S. holder who is a 10% U.S. Shareholder or RPII Shareholder of Sirius Group or one of its non-U.S. subsidiaries will be required to file Form 5471 (Information Return of U.S. Persons with Respect to Certain Foreign Corporations) with the IRS for one or more taxable years with respect to such company. This information return requires certain disclosures concerning the filing shareholder, other 10% U.S. Shareholders and Sirius Group or such non-U.S. subsidiaries.

        Form 8621 —A U.S. person that is a shareholder of a PFIC is required to file Form 8621 (Information Return by a Shareholder of a PFIC or Qualified Electing Fund) with the IRS. If Sirius Group is a PFIC in any year, U.S. holders may be required to file Forms 8621 with the IRS with respect to Sirius Group and any PFICs owned by Sirius Group, directly or indirectly by application of certain attribution rules.

        Form 8938 —U.S. holders who are individuals may be required to file Form 8938 (Statement of Specified Foreign Financial Assets) with the IRS. A U.S. holder that is formed or availed of for purposes of holding, directly or indirectly, specified foreign financial assets may also be required to file this form.

        Potential investors are urged to consult their own tax advisers for advice regarding reporting on Forms 926, 5471, 8621 and 8938 and any other reporting requirements that may apply to their acquisition, ownership or disposition of Sirius Group common shares. Sirius Group is not obligated to provide U.S. holders with the information necessary to satisfy such reporting requirements. Failure to

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properly file such forms, if required, may result in the imposition of substantial penalties and an extension of the statute of limitations for the assessment of any U.S. federal income tax with respect to any tax return, event or period to which the information required to be reported on such forms relates.

Taxation of Non-U.S. Holders

        For purposes of this discussion, you are a " Non-U.S. holder " if you are a beneficial owner of Sirius Group common shares, you are not a U.S. holder and you are not treated as a partnership for U.S. federal income tax purposes.

Distributions on Sirius Group Common Shares

        If Sirius Group makes distributions on the Sirius Group common shares, the distributions will be dividends for U.S. federal income tax purposes to the extent paid out of Sirius Group's current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. Subject to the discussion below regarding FATCA, dividends on Sirius Group common shares will not be subject to U.S. federal income tax unless the dividends are effectively connected with the Non-U.S. holder's conduct of a U.S. trade or business (and, if an income tax treaty applies, the dividends are attributable to a U.S. permanent establishment or fixed base maintained by such Non-U.S. holder in the United States).

        To the extent distributions exceed Sirius Group's current and accumulated earnings and profits, they will constitute a return of capital that will first reduce a Non-U.S. holder's basis in the Sirius Group common shares, but not below zero, and then will be treated as gain from the sale or exchange of the Sirius Group common shares (discussed below).

Dispositions of Sirius Group Common Shares

        A Non-U.S. holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other taxable disposition of Sirius Group common shares unless (1) such gain is effectively connected with the Non-U.S. holder's conduct of a U.S. trade or business (and, if an income tax treaty applies, the gain is attributable to a U.S. permanent establishment or fixed base maintained by such Non-U.S. holder in the United States) or (2) the Non-U.S. holder is an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which such sale or other taxable disposition occurs and certain other conditions are met.

        Gain described in clause (1) immediately above will be subject to U.S. federal income tax in the manner described below under " Effectively Connected Income ." During each taxable year, a Non-U.S. holder described in clause (2) immediately above will be subject to tax at a 30% rate (or such lower rate specified by an applicable income tax treaty) on the net gain derived from the sale or other taxable disposition, which may be offset by capital losses of the Non-U.S. holder during the taxable year allocated to U.S. sources.

Effectively Connected Income

        Any dividend with respect to, or gain recognized upon the sale or other taxable disposition of, Sirius Group common shares that is effectively connected with a trade or business carried on by a Non-U.S. holder within the United States (and, if an income tax treaty applies, is attributable to a permanent establishment or fixed base maintained by such Non-U.S. holder in the United States) will be subject to U.S. federal income tax, based on the Non-U.S. holder's net effectively connected income, generally in the same manner as if the Non-U.S. holder were a U.S. person for U.S. federal income tax purposes. If a dividend or gain is effectively connected with a U.S. trade or business of a Non-U.S. holder that is a corporation for U.S. federal income tax purposes, such corporate Non-U.S. holder may also be subject to a "branch profits tax" at a 30% rate (or such lower rate as may be specified by an

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applicable income tax treaty), subject to certain adjustments. Non-U.S. holders should consult their own tax advisers regarding any applicable tax treaties that may provide for different rules.

Information Reporting and Backup Withholding

        Information returns may be filed with the IRS in connection with distributions on Sirius Group common shares and the proceeds from a sale or other disposition of Sirius Group common shares unless a shareholder establishes an exemption. A U.S. holder that does not establish such an exemption may be subject to U.S. backup withholding tax on such payments if the shareholder fails to provide its taxpayer identification number on IRS Form W-9 or otherwise comply with the backup withholding rules. A Non-U.S. holder may be required to provide a certification on an applicable IRS Form W-8 to establish an exemption from such information reporting and backup withholding. The amount of any backup withholding from a payment to a U.S. holder or Non-U.S. holder will be allowed as a credit against the U.S. holder's or Non-U.S. holder's U.S. federal income tax liability and may entitle the U.S. holder or Non-U.S. holder to a refund provided that the required information is timely furnished to the IRS.

Changes in U.S. Tax Law

        The tax treatment of non-U.S. companies and their U.S. and non-U.S. insurance subsidiaries has been significantly altered by the enactment of the 2017 Tax Cuts and Jobs Act. There is significant uncertainty regarding how the provisions of the 2017 Tax Cuts and Jobs Act will be interpreted, and guidance may not be forthcoming. In addition, it is possible that a "technical corrections" bill may be enacted that could alter or clarify the 2017 Tax Cuts and Jobs Act, and any such alterations or clarifications may have retroactive effect. The effect of any changes to, clarifications of, or guidance under the 2017 Tax Cuts and Jobs Act could add significant expense and have a material adverse effect on Sirius Group's results of operations or your investment in Sirius Group common shares.

        The U.S. federal income tax laws and interpretations regarding whether a company is engaged in a trade or business within the United States or whether a company is a controlled foreign corporation or passive foreign investment company or has related person insurance income are subject to change, possibly on a retroactive basis. Treasury regulations were issued in proposed form regarding the application of the passive foreign insurance company rules to an insurance company. Additionally, the 2017 Tax Cuts and Jobs Act changed in material ways the tests for whether a foreign insurance company is a PFIC, and no regulations have yet been issued with respect to these new rules. Additionally, the Treasury regulations regarding related person insurance income are still in proposed form. New Treasury regulations or pronouncements interpreting or clarifying such rules may be forthcoming from the United States Internal Revenue Service. It is not possible to predict if, when or in what form such guidance will be provided and whether such guidance will be applied on a retroactive basis. Due to the absence of specific authority with respect to these issues, the amount, timing and character of income, gain or loss recognized with respect to a U.S. shareholder could be significantly different from that described herein.

        Finally, the tax treatment of non-U.S. companies and their U.S. and non-U.S. insurance subsidiaries may be the subject of further legislation. No prediction can be made as to whether any particular proposed legislation will be enacted or, if enacted, what the specific provisions or the effective date of any such legislation would be, or whether it would have any effect on us. As such, Sirius Group cannot assure you that future legislative, administrative or judicial developments will not result in an increase in the amount of U.S. tax payable by Sirius Group or by an investor in Sirius Group common shares or reduce the attractiveness of Sirius Group's products. If any such developments occur, Sirius Group's business, financial condition and results of operation could be materially and adversely affected and could have a material and adverse effect on your investment in Sirius Group common shares.

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FATCA Withholding

        The U.S. tax provisions commonly known as FATCA impose a 30% withholding tax on certain payments of U.S. source income and certain payments of proceeds from the sale or other disposition after December 31, 2018 of property of a type which can produce U.S. source interest or dividends, in each case to (1) a "foreign financial institution" (as defined in Section 1471(d)(4) of the Code and the U.S. Treasury regulations promulgated thereunder), unless the foreign financial institution enters into an agreement with the IRS to, among other things, collect and disclose to the IRS certain information regarding its U.S. accounts or meets an applicable exception, and (2) a "non-financial foreign entity" (as defined in Section 1472(d) of the Code and the U.S. Treasury regulations promulgated thereunder), unless the entity provides the payor with certain information regarding certain direct and indirect U.S. owners of the entity, certifies that it has no such U.S. owners or meets an applicable exception. The withholding tax also applies to certain foreign "passthru payments" made by foreign financial institutions after December 31, 2018. The IRS has issued regulations that provide for the phased implementation of the FATCA withholding requirements.

        The U.S. government has signed an intergovernmental agreement to facilitate the implementation of FATCA with the government of Bermuda (the " Bermuda IGA "). Under the Bermuda IGA, Bermuda financial institutions (other than certain non-reporting financial institutions) are required to register with the IRS and comply with certain due diligence, reporting, withholding and other requirements in order to avoid the imposition of withholding under FATCA on payments made to them. Sirius Group intends to comply with the obligations imposed on it under FATCA and the Bermuda IGA to avoid withholding under FATCA on payments made to it. However, no assurance can be provided in this regard. Sirius Group may become subject to withholding tax or penalties if it is unable to comply with FATCA.

Material Bermuda Tax Consequences

        At the present time, there is no tax imposed by Bermuda on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax payable by Sirius Group or by its shareholders in respect of Sirius Group common shares. The Bermuda Minister of Finance, under the Exempted Undertakings Tax Protection Act 1966 of Bermuda, as amended, has given Sirius Group and each of its Bermuda incorporated subsidiaries an assurance that if any legislation is enacted in Bermuda that would impose tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of any such tax will not be applicable to any such entity or any of its operations, shares, debentures or other obligations until March 31, 2035, except insofar as such tax applies to persons ordinarily resident in Bermuda or to any taxes payable by it in respect of real property owned or leased by it in Bermuda.

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INFORMATION ABOUT SIRIUS GROUP

Overview

        Sirius Group is a Bermuda exempted company whose principal businesses are conducted through its subsidiaries and other affiliates, which provide insurance, reinsurance and insurance services on a worldwide basis. Sirius Group writes predominantly treaty reinsurance and some facultative reinsurance, as well as primary insurance business. See " Insurance and Reinsurance Overview. " The majority of Sirius Group's treaty reinsurance premiums are derived from proportional and excess of loss reinsurance contracts, which in 2017 amounted to 44% and 30%, respectively, of its total net written premiums, while primary business represented 26% of total net written premiums. Sirius Group's primary business has been predominantly accident and health insurance. In recent years, Sirius Group expanded its accident and health primary business capabilities in the U.S. via the acquisitions of IMG and Armada described below. In addition to growing in accident and health, Sirius Group further expanded its primary insurance platform by launching primary Surety and Environmental insurance platforms in the U.S. in late 2017, and prior to that re-entering the U.S. casualty reinsurance market in early 2017.

        On April 18, 2016, CMIG International, through its Bermuda holding company CM Bermuda, purchased Sirius Group and its subsidiaries from White Mountains Insurance Group, Ltd. (" White Mountains " or " former parent ") for approximately $2.6 billion at the time of close. As of December 31, 2017, Sirius Group had $5.8 billion of total assets and $1.9 billion of shareholder's equity. Sirius Group wrote $1.4 billion and $1.3 billion in gross written premiums and $1.1 billion and $0.9 billion in net written premiums in 2017 and 2016, respectively.

        Sirius Group's principal operating subsidiaries include the following:

    Sirius Bermuda Insurance Company Ltd. (" Sirius Bermuda "), a Class 4 licensed Bermuda-based reinsurance company, was established to facilitate the long-term growth of Sirius Group's capital base and business and is licensed to assume all classes of property and casualty business. Sirius Bermuda is the top operating company in Sirius Group and is classified as the designated insurer of Sirius Group by the Bermuda Monetary Authority (" BMA ") for group solvency purposes. Sirius Bermuda had $2.5 billion of consolidated shareholder's equity as of December 31, 2017.

    Sirius International Insurance Corporation (" Sirius International ") is an insurance and reinsurance company domiciled in Sweden with its home office in Stockholm, Sweden and branch offices or subsidiaries in London, United Kingdom; Zurich, Switzerland; Singapore; Labuan, Malaysia; Liege, Belgium; Hamburg, Germany; Shanghai, China; and Hamilton, Bermuda. Sirius International, which is the largest reinsurance company domiciled in Scandinavia based on gross written premiums, was established in 1945 and owns Sirius America and sponsors Syndicate 1945. Sirius International wrote $848 million and $845 million in gross written premiums and $600 million and $623 million in net written premiums in 2017 and 2016, respectively.

    Sirius America Insurance Company (" Sirius America ") is an insurance and reinsurance company domiciled in the state of New York with offices in New York, New York; Norwalk, Connecticut; Miami, Florida; San Francisco, California; Berwyn, Pennsylvania; Glastonbury, Connecticut; and Toronto, Ontario. Sirius America wrote $303 million and $405 million in gross written premiums and $101 million and $217 million in net written premiums in 2017 and 2016, respectively.

    Sirius International Corporate Member Limited is a Lloyd's of London (" Lloyd's ") Corporate Member that participates in the Lloyd's market, which in turn provides underwriting capacity to Lloyd's Syndicate 1945 (" Syndicate 1945 "). The Lloyd's market is known for its ability to provide innovative, tailored coverage and capacity for unique, complex, large and hard-to-place global risks. Syndicate 1945 began writing business on July 1, 2011. Initially, Syndicate 1945 was

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      authorized by Lloyd's to write accident and health and contingency business. In 2013, this was extended to include other core lines of property and marine business. On July 1, 2014, Sirius Group established its own Lloyd's managing agent, Sirius International Managing Agency, to manage Syndicate 1945. In 2015, Syndicate 1945 was authorized by Lloyd's to write bloodstock (which principally covers the value of an animal if it dies as a result of accident, disease or illness), terrorism, and marine energy and cargo lines. Lloyd's approved stamp capacity for Syndicate 1945 in 2018 is £102 million or approximately $132 million (based on the December 31, 2017 GBP to USD exchange rate).

    International Medical Group Acquisition, Inc. (" IMG ") is a full service managing general underwriter (" MGU ") that has been an award-winning provider of global health and travel insurance benefits and assistance service for over 25 years and a business partner of Sirius Group since 1997. IMG has been Sirius Group's largest insurance producer over the past several years and was purchased by Sirius Group on May 26, 2017. IMG offers a full, innovative line of international medical insurance products, trip cancellation programs, medical management services and 24 / 7 emergency medical and travel assistance. IMG is based in Indianapolis, Indiana and also has offices in the United Kingdom and Hong Kong. For the full year 2017, IMG produced $165 million of gross written premiums, the vast majority of which are written on Sirius Group paper. The acquisition of IMG offers Sirius Group additional access to accident and health products that are complementary to its global product offerings, as well as growth opportunities in Europe and Asia.

    ArmadaCorp Capital, LLC (" Armada ") is a specialty health services business based in Hunt Valley, Maryland that strengthens health care coverage through ArmadaCare and ArmadaHealth. Armada was purchased by Sirius Group on April 3, 2017. ArmadaCare is a supplemental medical insurance MGU that markets and underwrites its signature UltimateHealth supplemental health product designed for C-Suite executives, as well as PlenaHealth and ComplaMed, which are targeted towards broader segments of the workforce. These products make the health care process easier and more efficient for employees and affinity constituent groups, and differentiate themselves with "white glove" service. The ArmadaCare products are written on both Transamerica and Sirius America paper, with the majority of business transitioning to Sirius Group commensurate with Sirius America's policy filing and a transition agreement between Transamerica and Sirius Group. ArmadaHealth is a health care data science business that focuses on addressing one of the biggest problems, and opportunities, of the United States health care system, the physician referral process. This transformation of access to specialty care improves patient satisfaction and health outcomes, while at the same time reducing costs. The ArmadaHealth product is one of the services embedded in the aforementioned ArmadaCare products. For the full year 2017, Armada produced $107 million of gross written premiums.

    Sirius Global Solutions Holding Company (" Sirius Global Solutions ") is a Connecticut-based division of Sirius Group specializing in the acquisition and management of runoff liabilities for insurance and reinsurance companies both in the United States and internationally. The Sirius Global Solutions team is comprised of a dedicated group of financial, actuarial and claims professionals experienced in the management and resolution of complex insurance liabilities as well as the structuring of transactions designed to enable owners to exit an insurance business and extract trapped capital. Acquisitions typically involve transactions at a significant discount to book value and/or retrospective reinsurance agreements, including loss portfolio transfers, and undergo an extensive due diligence process. Sirius Group can derive value from these transactions not only from the discounted purchase price, but also from the investment income on insurance float, the potential settlement of claims below the carried level of reserves and the harvesting of other embedded assets, including the value of shell companies and licenses.

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      Since its formation in 2000, Sirius Global Solutions has executed 13 transactions, involving 18 companies, which have resulted in approximately $185 million of cumulative after-tax income through December 31, 2017. Most recently, in 2016, Sirius Global Solutions completed the sale of Ashmere Insurance Company to White Mountains in connection with Sirius Group's acquisition by CMIG International and received $19 million as consideration. In addition, Sirius Global Solutions and Florida Specialty Insurance Company partnered to form Florida Specialty Acquisition LLC (" FSA "). Sirius Global Solutions owns 100% of FSA's common shares. FSA acquired Mount Beacon Holdings, LLC and its subsidiaries, including Mount Beacon Insurance Company, for $17 million in 2016.

Competitive Strengths

        Sirius Group's management believes that the following competitive strengths position Sirius Group to capitalize on the opportunities presented in the insurance and reinsurance marketplace:

Global Multi-Line Reinsurer with Proven Track Record and Diversified Book of Business

        Sirius Group is a global multi-line insurance and reinsurance company with a long operating history. Sirius Group writes a diversified book of insurance and reinsurance business across different risk types and geographic locations. As of December 31, 2017, Sirius Group had over 1,800 clients in over 140 countries with over 6,600 different reinsurance treaties. The majority of Sirius Group's business is relatively short-tailed as Sirius Group generally does not focus on the longer-tailed casualty lines. Sirius Group's management believes diversification is a competitive advantage, which increases return per unit of risk, provides access to risk worldwide and reduces the overall volatility of results. Diversification is also the cornerstone of managing the cyclicality of insurance and reinsurance markets.

History of Long-Term Customer Relationships

        Sirius Group's global branch network, managed by a long-tenured and experienced team, has allowed Sirius Group to develop long-standing, local customer relationships. These strong relationships have allowed Sirius Group's operating team to profitably navigate through both favorable and unfavorable market conditions. Sirius Group's profit center managers have an average of 18 years of employment with Sirius Group and 29 years in the insurance industry.

        Over the years, Sirius Group has developed into a leading reinsurer primarily in Europe but also in the United States and in other parts of the world. Of Sirius Group's 2017 underwriting year written premiums, 31% are from clients of 20 or more years and 60% are from clients of 10 or more years. Sirius Group's long-standing relationships have contributed to Sirius Group's having a position in its markets that enables it to lead or co-lead over 54% of its business (as measured on December 31, 2017), which influences price, terms and conditions.

Prudent, Disciplined Approach to Risk Management

        Sirius Group is guided by its core operating principles and believes that a long-term commitment to disciplined underwriting and prudent pricing is firmly ingrained in its corporate culture. Sirius Group focuses risk management efforts on ensuring that exposure to potential loss in any business area remains at an acceptable level. Although these efforts include extensive modelling, Sirius Group also evaluates its total limit loss in a particular region to ensure that not only is the probable maximum loss (" PML ") within its tolerance, but the maximum foreseeable loss is as well.

Efficient Capital Deployment and Financial Strength

        Sirius Group's management believes that its long-standing presence in multiple markets, including North America and Europe, has allowed Sirius Group to deploy its capital in an efficient manner

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throughout the world. Sirius Group seeks to maintain capital and leverage at levels that support its ratings, and deploys its capital opportunistically across the entire organization. Another important benefit of Sirius Group's capital structure is the $287 million deferred tax liability on retained earnings in Sirius Group's Swedish "safety reserve" position as of December 31, 2017. Pursuant to Swedish regulations, all the retained earnings in the safety reserve, including the deferred tax liability, are available to pay claims and deemed to be capital supporting underwriting. See " Regulation of Sirius Group—European Insurance Regulation—Sweden Insurance Regulation—Safety Reserve ".

Management's Extensive Experience

        Sirius Group's executive management team has extensive experience in the insurance industry across operations, strategy and mergers and acquisitions. On average, each team member has been with Sirius Group for 23 years. Sirius Group strives to continue to attract and retain exceptional talent by encouraging individual personal development of all its employees and rewarding them for outstanding performance.

Strategies

        Sirius Group's corporate objective is to grow intrinsic value per share by maximizing underwriting profits through market cycles while preserving and achieving long-term growth. Sirius Group intends to pursue this objective with the following strategies:

Maintain Broad Geographic Coverage Across Multiple Lines

        Sirius Group intends to leverage its multi-line offerings across a broad geographic scope to grow its business when appropriate. Sirius Group has had a long-standing presence in multiple markets and across multiple product categories and has developed long-term relationships with brokers and ceding companies. Sirius Group seeks to use management's expertise, experience and market relationships to identify and underwrite well-priced risks while delivering innovative risk transfer solutions to customers. Sirius Group believes that its flexibility and expertise in diverse insurance and reinsurance markets will allow it to create a well-balanced and profitable portfolio of risks across market cycles.

Manage Capital Prudently

        Sirius Group actively manages its capital and business profile. Sirius Group strives to underwrite business only when the price and other terms and conditions are attractive. If Sirius Group needs to reduce its business volumes due to overly aggressive competition, it intends to do so, as it has done in the past. The "Segments" table under " Sirius Group's Products and Services" later in this section demonstrates Sirius Group's opportunistic underwriting approach, whereby Sirius Group has increased and decreased writings in various lines of business commensurate with prevailing market conditions. When appropriate, Sirius Group will consider dedicated pools of outside capital and use of retrocessional coverage.

Continue to Identify Opportunistic Acquisitions

        Sirius Group has the in-house mergers and acquisitions capability and experience to source and successfully execute upon attractive opportunities. Sirius Group will continue to evaluate acquisition opportunities and pursue those that meet its strict criteria to generate attractive financial returns. Acquisitions can be in the form of active operations, such as the recent acquisitions of IMG and Armada, or in the form of run-off opportunities, which are led by the dedicated team at Sirius Global Solutions. While Sirius Group has an active and ongoing effort to pursue acquisitions, management believes that Sirius Group's opportunistic and disciplined approach and experience ensures that it will be selective in pursuing transactions. In a given year, Sirius Group may complete several transactions or

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may not complete any, depending on the quality of opportunities that become available. Sirius Group is optimistic that there will continue to be attractive opportunities in the future.

Maintain a Disciplined Investment Approach

        Sirius Group's investment philosophy is to maximize long-term total returns (after-tax) while taking prudent levels of risk and maintaining a diversified portfolio, subject to its investment guidelines and various regulatory restrictions. Under this total return investment approach, gains in market prices of securities are valued equally with yield income.

Corporate Structure

        The chart below displays Sirius Group's corporate structure as it pertains to its holding company and principal operating companies, including Sirius Bermuda, Sirius International, Sirius America, Syndicate 1945, IMG, Armada and Sirius Global Solutions, after giving effect to the Merger.

GRAPHIC


Note: Ownership of each subsidiary displayed above is 100%, except Syndicate 1945 due to the structure of a Lloyd's Integrated Vehicle. Sirius Group owns 100% of Sirius International Corporate Member Limited, a Lloyd's Corporate Member, which in turn provides underwriting capacity to Syndicate 1945. Syndicate 1945 is managed by Sirius International Managing Agency.

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Insurance and Reinsurance Overview

        Sirius Group writes primary insurance and reinsurance business. Sirius Group's primary insurance business is written predominantly by several MGUs in the accident and health space. Sirius Group employs a detailed selection process for these MGU partners, and has narrowly defined underwriting standards in place that are closely monitored by Sirius Group staff. In addition to the day-to-day interactions that Sirius Group has with the MGUs, audits are performed on a regular basis.

        Reinsurance is an arrangement in which a reinsurance company (the " reinsurer ") agrees to indemnify an insurance company (the " ceding company ") for insurance risks underwritten by the ceding company. Reinsurance can benefit a ceding company in a number of ways, including reducing exposure on individual risks, providing catastrophe protections from large or multiple losses, and assisting in maintaining acceptable capital levels as well as financial and operating leverage ratios. Reinsurance can also provide a ceding company with additional underwriting capacity by permitting it to accept larger risks and underwrite a greater number of risks without a corresponding increase in its capital. Reinsurers may also purchase reinsurance, known as retrocessional reinsurance, to cover risks assumed from ceding companies. Reinsurance companies often enter into retrocessional agreements for many of the same reasons that ceding companies enter into reinsurance agreements.

        Reinsurance is generally written on a treaty or facultative basis. Treaty reinsurance is an agreement whereby the reinsurer assumes a specified portion or category of risk under all qualifying policies issued by the ceding company during the term of the agreement, usually one year. When underwriting treaty reinsurance, the reinsurer does not evaluate each individual risk and generally accepts the original underwriting decisions made by the ceding company. Facultative reinsurance, on the other hand, is underwritten on a risk-by-risk basis, which allows the reinsurer to determine pricing for each exposure.

        Treaty reinsurance is typically written on either a proportional or excess of loss basis. A proportional reinsurance treaty is an arrangement whereby a reinsurer assumes a predetermined proportional share of the premiums and losses generated on specified business. An excess of loss treaty is an arrangement whereby a reinsurer assumes losses that exceed a specific retention of loss by the ceding company.

        A significant period of time normally elapses between the receipt of insurance premiums for MGUs and reinsurance premiums from ceding companies and the payment of the claims. While premiums are generally paid to the insurer or reinsurer following inception of the underlying coverage, the claims process is delayed and generally begins upon the occurrence of an event causing an insured loss followed by: (i) the reporting of the loss by the insured to its broker or agent; (ii) the reporting by the broker or agent to the MGU or ceding company; (iii) the reporting by the ceding company to its reinsurance intermediary or agent; (iv) the reporting by the reinsurance intermediary or agent to the reinsurer; (v) the MGUs or ceding company's adjustment and payment of the loss; and (vi) the payment to the MGU or ceding company by the reinsurer. During this time, the insurer or reinsurer invests the premiums, earns investment income and generates net realized and unrealized investment gains and losses on investments.

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Sirius Group's Products and Services

Reportable Segments

        Sirius Group has four reportable segments: Global Property, Global A&H, Specialty & Casualty and Runoff & Other. The following discussion summarizes the business written by each of Sirius Group's segments.

Global Property

        Global Property consists of Sirius Group's underwriting lines of business which offer other property insurance and reinsurance, property catastrophe excess reinsurance, and agriculture reinsurance on a worldwide basis. The following provides details of Global Property by product line:

        Other Property —Sirius Group participates in the broker market for property reinsurance treaties written on a proportional and excess of loss basis. For Sirius Group's international business, the book consists of treaty, written on both a proportional and excess of loss basis, facultative, and primary business, primarily in Europe, Asia and Latin America. In the United States, the book predominantly centers on significant participations on proportional and excess of loss treaties mostly in the excess and surplus lines of the market.

        Property Catastrophe Excess —covers losses from catastrophic events. Sirius Group writes a worldwide book with the largest concentration of exposure in Europe and the United States. The U.S. book written in Bermuda has a national account focus supporting principally the lower and/or middle layers of large capacity programs. Additionally, the Stockholm branch writes a U.S. book mainly consisting of select small regional and standard lines carriers. The exposures written in the international book are diversified across many countries, regions, perils and layers.

        Agriculture —Sirius Group provides stop-loss reinsurance coverage to companies writing U.S. government-sponsored multi-peril crop insurance (" MPCI "). Sirius Group's participation is net of the government's stop-loss reinsurance protection. Sirius Group also provides coverage for crop-hail and certain named perils when bundled with MPCI business. Sirius Group also writes agriculture business outside of the United States.

Global A&H

        Global A&H consists of Sirius Group's Global A&H insurance and reinsurance underwriting unit along with two MGUs (IMG and Armada). The following provides details of the Global A&H segment:

        Accident and Health insurance and reinsurance —Sirius Group is an insurer of accident and health insurance business in the United States, either on an admitted or surplus lines basis, as well as international business written through IMG. Sirius Group also writes proportional and excess treaties covering employer medical stop-loss for per person (specific) and per employer (aggregate) exposures. In addition, Sirius Group writes some medical, health, travel and personal accident coverages written on a treaty, facultative and primary basis.

         IMG is a full service MGU that has been an award-winning provider of global health and travel insurance benefits and assistance service for over 25 years and a business partner of Sirius Group since 1997. IMG has been Sirius Group's largest insurance producer over the past several years and was purchased by Sirius Group in 2017. IMG offers various international medical insurance products, trip cancellation programs, medical management services and 24 / 7 emergency medical and travel assistance.

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         Armada is a specialty health services business that strengthens health care coverage through ArmadaCare and ArmadaHealth. ArmadaCare is a supplemental medical insurance MGU that markets and underwrites its signature UltimateHealth supplemental health product designed for C-Suite executives, as well as PlenaHealth and ComplaMed, which are targeted towards broader segments of the workforce. ArmadaHealth is a health care data science business that focuses on addressing one of the biggest problems, and opportunities, of the United States health care system—the physician referral process—and whose service is embedded within the aforementioned ArmadaCare products.

Specialty & Casualty

        Specialty & Casualty consists of Sirius Group's insurance and reinsurance underwriting units which offer specialty & casualty product lines on a worldwide basis. Specialty lines represent unique risks where the more difficult and unusual risks are underwritten. Because specialty lines tend to be the more unusual or high risks, much of the market is characterized by a high degree of specialization. The following provides details of Specialty & Casualty by product line:

         Aviation & Space provides aviation insurance that covers loss of or damage to an aircraft and the aircraft operations' liability to passengers, cargo and hull as well as to third parties. Additionally, liability arising out of non-aircraft operations such as hangars, airports and aircraft products can be covered. Space insurance primarily covers loss of or damage to a satellite during launch and in orbit. The book consists of treaty, written on both a proportional and excess of loss basis, facultative and primary business.

         Marine provides marine reinsurance, primarily written on an excess of loss and proportional basis. Coverage offered includes damage to ships and goods in transit, marine liability lines, and offshore energy industry insurance. Sirius Group also writes yacht business, both on reinsurance and a primary basis. The marine portfolio is diversified across many countries and regions.

         Trade credit writes credit and bond reinsurance worldwide. The bulk of the business is traditional short-term commercial credit insurance, covering pre-agreed domestic and export sales of goods and services with typical coverage periods of 60 to 120 days. Losses under these policies are correlated to adverse changes in a respective country's gross national product.

        Contingency —Sirius Group underwrites contingency insurance for event cancellation and non-appearance, primarily on a primary policy and facultative reinsurance basis. Additionally, coverage for liabilities arising from contractual bonus, prize redemption and over-redemption is also offered. The contingency portfolio is diversified across many countries and regions.

        Casualty —Sirius Group underwrites a cross section of all casualty lines, including general liability, umbrella, auto, workers compensation, professional liability and other specialty classes. Sirius Group re-entered the broker market for U.S. casualty reinsurance treaties written on a proportional and excess of loss basis in 2017.

        Surety —Sirius Group underwrites commercial surety bonds, including non-construction contract bonds, in a broad range of business segments in the United States.

        Environmental —Sirius Group underwrites a pure environmental insurance book in the United States consisting of four core products that revolve around pollution coverage, which are premises pollution liability, contractor's pollution liability, contractor's pollution and professional liability.

Runoff & Other

        Runoff & Other consists of asbestos risks, environmental risks and other latent liability exposures, and results from Sirius Global Solutions. Sirius Global Solutions is a Connecticut-based division of

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Sirius Group specializing in the acquisition and management of runoff liabilities for insurance and reinsurance companies, both in the United States and internationally.

        The following table sets forth Sirius Group's gross written premiums for the years ended December 31, 2017, 2016 and 2015:

 
  Year Ended December 31,  
($ in millions)
  2017   2016   2015  

Other Property

  $ 405.2   $ 364.4   $ 314.8  

Property Catastrophe Excess

    255.3     233.2     244.2  

Agriculture

    71.6     37.3     15.7  

Global Property

    732.1     634.9     574.7  

Global Accident & Health

    494.6     436.1     385.9  

Aviation & Space

    65.7     61.6     66.6  

Marine

    56.1     57.7     52.7  

Trade Credit

    39.7     31.6     48.1  

Casualty

    38.2     0.6     1.0  

Contingency

    18.4     19.2     14.0  

Specialty & Casualty(1)

    218.1     170.7     182.4  

Runoff and Other

    (5.5 )   27.3     17.5  

Total

  $ 1,439.3   $ 1,269.0   $ 1,160.5  

(1)
Does not include Surety and Environmental as amounts are insignificant.

        The following table sets forth Sirius Group's net written premiums for the years ended December 31, 2017, 2016 and 2015:

 
  Year Ended December 31,  
($ in millions)
  2017   2016   2015(1)  

Other Property

  $ 323.2   $ 337.9   $ 282.7  

Property Catastrophe Excess

    163.9     139.8     143.0  

Agriculture

    69.1     36.5     15.0  

Global Property

    556.2     514.2     440.7  

Global Accident & Health

    341.5     277.6     262.3  

Aviation & Space

    55.0     45.9     51.8  

Marine

    47.9     49.6     46.5  

Casualty

    38.2     0.6     1.0  

Trade Credit

    37.3     26.1     37.6  

Contingency

    14.6     15.2     10.6  

Specialty & Casualty

    193.0     137.4     147.5  

Runoff and Other(1)

    (0.5 )   8.9     (2.9 )

Total

  $ 1,090.2   $ 938.1   $ 847.6  

(1)
2015 includes industry loss warranty coverage that White Mountains required Sirius Group to purchase to mitigate the potential impact of major natural catastrophe events on Sirius Group's balance sheet pending the close of the sale to CMIG International (referred to as the " WTM Covers ").

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        For each of the years ended December 31, 2017, 2016 and 2015, 74%, 79% and 80%, respectively, of Sirius Group's net written premiums were for reinsurance products, with the remainder being insurance products. Sirius Group expanded its primary business capabilities in the United States for Global A&H, which has resulted in increased primary insurance business.

Seasonality

        Sirius Group's segments experience some seasonality with regard to quarterly recognition of premiums written, which are generally highest in the first quarter and lowest during the fourth quarter.

Geographic Concentration

        The following table shows Sirius Group's net written premiums by geographic region based on the location of the ceding company or reinsurer for the years ended December 31, 2017, 2016 and 2015:

 
  Year Ended December 31,  
Net written premiums by geographic region
($ in millions)
  2017   2016   2015  

United States

  $ 563.1   $ 463.0   $ 397.5  

Europe

    262.3     258.9     241.9  

Canada, the Caribbean, Bermuda and Latin America

    111.4     88.3     101.2  

Asia and Other. 

    153.4     127.9     107.0  

Total

  $ 1,090.2   $ 938.1   $ 847.6  

Marketing and Distribution

        For reinsurance business, Sirius Group obtains most of its submissions from reinsurance intermediaries that represent the ceding company. The process of placing an intermediary reinsurance program typically begins when a ceding company enlists the aid of a reinsurance intermediary in structuring a reinsurance program. The ceding company and the reinsurance intermediary will often consult with one or more lead reinsurers as to the pricing and contract terms for the reinsurance protection being sought. Once the ceding company has approved the terms quoted by the lead reinsurer, the reinsurance intermediary will offer participation to qualified reinsurers until the program is fully subscribed. Sirius Group considers both the reinsurance intermediary and the ceding company to be its clients. Sirius Group believes it has developed strong business relationships over a long period of time with the management of many of its ceding companies and reinsurance intermediaries.

        Sirius Group pays ceding companies a ceding commission under most proportional reinsurance treaties and some excess of loss reinsurance treaties. The ceding commission is generally based on the ceding company's cost of acquiring and administering the business being reinsured (e.g., agent commissions, premium taxes and certain miscellaneous expenses). The ceding commissions paid to ceding companies constitute the majority of Sirius Group's total acquisition costs. Additionally, Sirius Group pays reinsurance intermediaries commissions based on negotiated percentages of the premium they produce on a per treaty or certificate basis.

        For primary insurance business, mostly Global A&H, Sirius Group enters into agreements with select MGUs, who then market Sirius Group's insurance products to the general public and have underwriting authority on its behalf. Sirius Group has narrowly defined underwriting standards in place for these MGUs that are closely monitored by Sirius Group staff. Sirius Group pays certain MGUs profit commissions based upon the underwriting profit business produced. In addition to the day-to-day interactions that Sirius Group has with its MGUs, audits are performed on a regular basis. These high-retention, long-term partnerships generate significant premium, and create alignment with the

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MGUs as they retain a share of underwriting results. Sirius Group has also acquired two MGUs, IMG and Armada, in recent years.

        During the years ended December 31, 2017, 2016 and 2015, Sirius Group received a majority of its gross reinsurance premiums written from four major, third-party reinsurance intermediaries as detailed in the following table:

 
  Year Ended
December 31,
 
Gross written premiums by intermediary
  2017   2016   2015  

AON Corporation and subsidiaries

    22 %   22 %   24 %

Guy Carpenter & Company and subsidiaries

    18 %   18 %   18 %

WT Butler and Co. Ltd. 

    10 %   8 %   7 %

Willis Group and subsidiaries

    9 %   8 %   9 %

Total

    59 %   56 %   58 %

Underwriting and Pricing

        Sirius Group seeks to maintain a disciplined underwriting strategy which, while considering overall exposure, focuses on writing more business when market terms and conditions are favorable and reducing business volume during soft markets when terms and conditions become less favorable. Sirius Group offers clients a wide range of insurance and reinsurance products across multiple lines of business to satisfy risk management needs.

        Sirius Group derives its reinsurance business from a broad spectrum of ceding companies, including national, regional, specialty, and excess and surplus lines writers, both internationally and in the United States. Sirius Group derives its primary insurance business mostly for Global A&H through several MGUs, which source business internationally and in the United States. Sirius Group prices its products by assessing the desired return on the expected capital needed to write a given contract and on the expected underwriting results of the contract. Sirius Group's pricing indications are based on a number of underwriting factors including historical results, analysis of exposure and estimates of future loss costs, a review of other programs displaying similar exposure characteristics and the MGUs or ceding company's underwriting and claims experience. Additionally, in the United States, Sirius Group's underwriters, actuaries and claims personnel perform audits of all MGUs and certain ceding companies. Generally, ceding company audits are not customary outside the United States.

        Reinsurers do not have the stringent regulations with respect to contract terms and policy exclusions that are generally imposed on primary insurers. For example, the Terrorism Risk Insurance Act in the United States is not applicable to reinsurers. As a result, terrorism exclusions on reinsurance contracts are dictated by the marketplace. Sirius Group evaluates terrorism exposure from its ceding companies and applies exclusions as it deems appropriate and as permitted by market conditions. Reinsurance on U.S. commercial risks written by Sirius Group subsequent to the terrorist acts of September 11, 2001 generally contains clauses that exclude acts of terrorism certified under the Terrorism Risk Insurance Act. Reinsurance on personal risks written by Sirius Group subsequent to the terrorist acts of September 11, 2001 generally contains exclusions related to nuclear, biological, radiological and chemical attacks.

Claims Management

        Sirius Group maintains a staff of experienced insurance and reinsurance claim specialists. Sirius Group's claims specialists work closely with reinsurance intermediaries, MGUs and insureds to obtain specific claims information on reported matters to properly adjust and resolve each matter. Where customary or appropriate, Sirius Group's claims staff performs selective on-site claim reviews to assess

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an MGUs claim handling abilities and, where customary or appropriate, a ceding company's claim handling abilities and reserve techniques. In addition, Sirius Group's claims specialists review loss information provided by ceding companies and MGUs for adequacy and accuracy. The results of these claim reviews are shared with the underwriters and actuaries to assist them in pricing products and establishing loss reserves.

        Sirius Group also uses third-party administrators (" TPAs ") for certain claims, including claims arising from certain Runoff & Other claims related to certain acquired companies. Sirius Group's claims staff performs on-site claim audits of certain TPAs to ensure the propriety of the controls and processes over claims serviced by the TPAs.

Competition and Peers

        The worldwide insurance and reinsurance markets are highly competitive. Competition is influenced by a variety of factors, including price charged and other terms and conditions offered, financial strength ratings, prior history and relationships, as well as expertise and the speed at which the company has historically paid claims.

        Sirius Group competes for business in Europe, Bermuda, the United States and other international markets with numerous global competitors. Its competitors include other insurance and reinsurance companies and underwriting syndicates at Lloyd's of London, as well as London Market Companies. Some of the companies that Sirius Group competes with directly include Alleghany Corporation, Arch Capital Group Ltd., Aspen Insurance Holdings Ltd., Axis Capital Holdings Ltd., Everest Re Group, Ltd., Greenlight Capital Re, Ltd., General Reinsurance Corporation, Hannover Ruckversicherung AG, Munich Re Group, Odyssey Re Holdings Corp., PartnerRe Ltd., RenaissanceRe Holdings Ltd., Scor Global P&C, Swiss Re Group and Third Point Reinsurance Ltd. While some of these competitors have greater revenue and shareholders' equity than Sirius Group, management believes that Sirius Group is well-suited to compete against its peers due to its competitive advantages discussed above.

        In addition, in recent years the persistent low interest rate environment and ease of entry into the reinsurance sector has led to increased competition from non-traditional sources of capital, such as insurance-linked funds or collateralized special purpose insurers, predominantly in the property catastrophe excess reinsurance market. This alternative capital provides collateralized property catastrophe protection in the form of catastrophe bonds, industry loss warranties and other risk-linked products that facilitate the ability for non-reinsurance entities, such as hedge funds and pension funds, to compete for property catastrophe excess reinsurance business outside of the traditional treaty market. This alternative capacity is also expanding into lines of business other than property catastrophe excess reinsurance. As a result, Sirius Group has observed reduced pricing and/or reduced shares in certain property catastrophe excess markets, as well as certain other markets.

Catastrophe Risk Management

        Sirius Group has exposure to catastrophe losses, mostly for Global Property, caused by hurricanes, earthquakes, tornadoes, winter storms, windstorms, floods, tsunamis, terrorist acts and other catastrophic events. In the normal course of business, Sirius Group regularly manages its concentration of exposures to catastrophic events, primarily by limiting concentrations of exposure to what it deems acceptable levels and, if necessary, purchasing reinsurance. In addition, Sirius Group seeks to limit losses that might arise from acts of terrorism in its insurance and reinsurance contracts by exclusionary provisions where available. Sirius Group has significant exposure to European weather-related events and U.S. windstorms and earthquakes.

        Sirius Group licenses third-party global property catastrophe models from AIR Worldwide Company (" AIR ") and Risk Management Solutions Inc. (" RMS "), which are two of the leading vendors

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of industry-standard catastrophe modelling software, and also utilizes its own proprietary models to calculate expected probable maximum loss estimates from various property natural catastrophe scenarios. Sirius Group prices its property catastrophe contracts using the aforementioned third-party software and internal models and other methods. Sirius Group also uses a proprietary property underwriting and pricing tool, referred to as " GPI ," which consolidates and reports on all its worldwide property exposures. GPI is used to calculate individual and aggregate PMLs by statistically merging multiple third-party and proprietary models for different perils. For business that Sirius Group determines to have exposure to natural catastrophic perils, it models and assesses the exposure to quantify the appropriate premium for the exposure as part of its underwriting process. This includes property, accident and health, and marine exposures.

        The following table provides an estimate of Sirius Group's three largest PML zones on a per occurrence basis for 1-in-100 and 1-in-250 year events at January 1, 2018 as measured by net after-tax exposure.

 
   
   
   
  Sirius Group Net After-Tax Loss  
($ in Millions)
  Modelled
Industry Loss
  Sirius Group
Gross Loss
  Net After
Reinsurance
and
Reinstatements
  Net
After-Tax
  Net After-Tax
as % of
Capital(1)
  Net After-Tax
as % of
Shareholder's
Equity(1)
 
 
  1-in-100 year event
 

Southeast

 
$

114,590.5
 
$

365.7
 
$

305.7
 
$

272.1
   
9.9

%
 
14.2

%

West Coast

  $ 48,428.7   $ 345.0   $ 286.8   $ 255.0     9.3 %   13.3 %

Europe

  $ 30,677.7   $ 453.1   $ 198.8   $ 172.6     6.3 %   9.0 %

                                     
 
  1-in-250 year event
 

West Coast

 
$

75,448.7
 
$

594.2
 
$

481.8
 
$

428.4
   
15.6

%
 
22.4

%

Southeast

  $ 198,043.3   $ 568.4   $ 473.3   $ 421.2     15.3 %   22.0 %

Europe

  $ 40,237.8   $ 596.6   $ 248.5   $ 218.4     8.0 %   11.4 %

(1)
Total Capital and Shareholder's Equity as of December 31, 2017

        In addition to the above, Sirius Group also has significant exposure to United States Gulf Coast windstorms (i.e., Florida to Texas), California earthquakes, New Madrid earthquakes, and, to a lesser extent, European, Asia/Pacific, Latin American and Canadian windstorms and earthquakes.

        The proprietary GPI platform allows Sirius Group to choose AIR, RMS or an internally developed model for PML reporting within each area and peril. The choice is based on a scientific, actuarial and underwriting assessment of the quality of the model by territory. If a third-party model is deemed to be qualitative overall but less strong in certain regards, Sirius Group may impose modifications on the model to mitigate any weaknesses. AIR and RMS provide new versions of their models on a periodic basis, usually annually for peak exposure zones. Sirius Group may implement these new versions for use in the underwriting and risk management process after having engaged in appropriate testing and achieving comfort with the model enhancements.

        With GPI, the view of risk for each treaty can be further adjusted based on underwriting judgment regarding the specific exposures underlying each cedent's portfolio. This yields a final view of risk for each cedent. This view of risk is aggregated across Sirius Group's portfolio to an aggregated, simulated dataset from which PML estimates and any other portfolio metrics can be extracted.

        Catastrophe modelling is dependent upon several broad scientific and economic assumptions. This includes fundamental assumptions on hazard frequency and intensity, assumptions on the vulnerability of different risks depending on their occupancy and building characteristics, assumptions on replacement values as well as assumptions on economic factors such as demand surge (the localized increase in prices of goods and services that often follows a catastrophe). Catastrophe modelling is

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inherently uncertain due to the significant uncertainties involved in estimating and quantifying these assumptions. Third-party modelling software does not provide information for all territories or perils for which Sirius Group writes business. Sirius Group uses its own proprietary models in these situations.

        Sirius Group does not believe that it can rely solely upon catastrophe modelling to measure its exposure to natural catastrophe risk. For example, the losses arising from Hurricane Katrina for both Sirius Group and the industry were substantially in excess of losses previously predicted by third-party models from such an event. This was due to issues such as inadequate storm surge and demand surge assumptions in the models, as well as flooding from levees breaking, which was not fully contemplated in these models. Sirius Group monitors gross and net property catastrophe occurrence limits by country and region globally. Occurrence limits for peak zones in Europe, Japan, and the United States are assessed versus modelled catastrophe risk as another measure in understanding total property catastrophe exposure to large events.

Reinsurance Protection

        In the normal course of business, Sirius Group seeks to protect its business from losses due to concentration of risk and loss arising from catastrophic events by reinsuring with third-party reinsurers. Sirius Group remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts. The effects of reinsurance on Sirius Group's subsidiaries' written and earned premiums and on losses and LAE were as follows:

($ in Millions)
  2017   2016   2015  

Written premiums:

                   

Direct

  $ 450.2   $ 368.5   $ 293.7  

Assumed

    989.1     900.5     866.8  

Gross written premiums

    1,439.3     1,269.0     1,160.5  

Ceded

    (349.1 )   (330.9 )   (312.9 )

Net written premiums

  $ 1,090.2   $ 938.1   $ 847.6  

Earned premiums:

                   

Direct

  $ 405.7   $ 351.6   $ 277.8  

Assumed

    942.2     877.7     868.3  

Gross earned premiums

    1,347.9     1,229.3     1,146.1  

Ceded

    (312.6 )   (339.2 )   (299.1 )

Net earned premiums

  $ 1,035.3   $ 890.1   $ 847.0  

Losses and LAE:

                   

Direct

  $ 294.9   $ 216.9   $ 151.3  

Assumed

    701.3     463.8     391.9  

Gross losses and LAE

    996.2     680.7     543.2  

Ceded

    (185.0 )   (161.4 )   (120.5 )

Net losses and LAE

  $ 811.2   $ 519.3   $ 422.7  

        Sirius Group's reinsurance protection primarily consists of pro-rata and excess of loss protections that protects all of its reportable segments. Attachment points and coverage limits vary by region around the world.

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Global Property

        Sirius Group's core proportional property reinsurance programs provide protection for parts of the non-proportional treaty accounts written in Europe, the Americas, Caribbean, Asia, the Middle East and Australia. These reinsurance protections are designed to increase underwriting capacity where appropriate, and to reduce exposure both to large catastrophe losses and to a frequency of smaller loss events.

        Sirius Group has in place excess of loss retrocessional coverage for its worldwide earthquake-related exposures. This coverage was renewed for one year at May 1, 2018, providing $40.0 million of reinsurance protection in excess of Sirius Group's retention of $35.0 million and a further $35.0 million of coverage in excess of $75.0 million.

        Sirius Group periodically purchases industry loss warranties (" ILW ") contracts to augment its overall retrocessional program. The following ILW contracts are currently in force:

Scope
  Limit   Trigger   Expiration Date

European all natural perils

  $15.0 million   $15.0 billion   December 31, 2018(1)

United States all natural perils, excluding North East

  $5.0 million   $40.0 billion   July 5, 2019

United States, European, Japan wind & earthquake

  $18.0 million   $5.0-$10.0 billion   December 31, 2018(2)

(1)
Second event aggregate excess cover

(2)
Multiple layer covers

        Sirius Group purchases excess of loss reinsurance protection for its facultative and primary insurance property books. The protection was renewed at January 1, 2018 for business written in Stockholm, Hamburg and Singapore, providing $32.5 million of protection in excess of $2.5 million. For the business written by Syndicate 1945, an excess of loss reinsurance protection of $10.0 million in excess of retention of $5.0 million on a per risk basis was placed for 12 months at June 30, 2018. For the Syndicate 1945 business, Sirius Group also has 50% of a $10.0 million of protection in excess of retention of $10.0 million for the catastrophe exposed business, which was placed for 12 months at January 1, 2018.

        In addition, for the Syndicate 1945 business, at January 1, 2018, 66.7% of a $15 million worldwide protection for catastrophe losses was placed for their property business combined in excess of the underlying business specific reinsurances.

        Almost all of Sirius Group's excess of loss reinsurance protections, excluding ILWs which tend to only cover one loss event, include provisions that reinstate coverage at a cost of 100% or more of the original reinsurance premium.

Global A&H

        For Global A&H, Sirius Group has excess of loss protection covering personal accident and life of €10.0 million or approximately $12 million (based on the December 31, 2017 EUR to USD exchange rate) of protection in excess of a €5.0 million or approximately $6 million (based on the December 31, 2017 EUR to USD exchange rate) retention for the Stockholm, Hamburg, Liege and Singapore branches. Only 50% of this protection was placed at January 1, 2017 and the same level applies at January 1, 2018.

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        In addition, for Global A&H primary insurance that is written predominantly in New York, there are account-specific quota share and stop-loss reinsurance protections in place of various percentages for the medical benefits and student health business with periods aligned with the business written. There is also some account specific excess of loss reinsurances in place for the medical benefits business written.

Specialty & Casualty

        The Aviation & Space reinsurance program is intended to reduce exposure to a frequency of small losses, a single large loss, or a combination of both. For the proportional and facultative aviation books, reinsurance protection purchased is geared to cover losses from events that cause a market loss in excess of $150.0 million up to a full policy limit of $2.0 billion. This program is in place through October 2018. For the non-proportional aviation book, reinsurance protection includes a 15% quota share treaty. In addition, the non-proportional book is protected by ILWs totaling limits of $25.5 million. The ILWs attach at industry loss levels between $400.0 million and $1.0 billion.

        For 2018, the marine cargo and yacht book written by Syndicate 1945, runoff reinsurance coverage was placed for $6.5 million in excess of retention of $1.0 million. Also, an energy excess of loss coverage for Syndicate 1945 was placed for $13.3 million in excess of retention of $1.8 million protecting partly risk and partly catastrophe losses. Furthermore, 66.7% of a whole account protection was placed for 2018 with a limit of $15 million in excess of the underlying protections covering property, energy and the runoff of the cargo and yacht business combined.

        For 2017, for part of the Trade Credit book, Sirius Group ceded 16.6% of its business through quota share cession. As of January 1, 2018, the same quota share cession at the same cession percentage was renewed.

        For 2017, Sirius Group ceded 30% of the Contingency account written in the London branch and Syndicate 1945 on a proportional basis. The treaty was renewed at January 1, 2018 with a capacity of 30% (or $3 million). At the same time, a new proportional Automatic Facultative capacity of 20% (or $2 million) was placed.

        At December 1, 2017, Sirius Group has a proportional protection by 50% quota share for Environmental business for 12 months.

        For the Surety book, an excess of loss reinsurance was placed for risks attaching business during 18 months from December 1, 2017 for $45.0 million in excess of retention $5.0 million.

Reinsurance Recoverables by Rating

        At December 31, 2017, Sirius Group had reinsurance recoverables on paid losses of $18 million and reinsurance recoverables of $320 million on unpaid losses. At December 31, 2016, Sirius Group had reinsurance recoverables on paid losses of $17 million and reinsurance recoverables of $292 million on paid unpaid losses. Because retrocessional reinsurance contracts do not relieve Sirius Group of its obligation to its insureds, the collectability of balances due from Sirius Group's reinsurers is important to its financial strength. Sirius Group monitors the financial strength and ratings of retrocessionaires on an ongoing basis. Uncollectible amounts historically have not been significant.

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        The following table provides a listing of Sirius Group's gross and net recoverable amounts by the reinsurer's Standard & Poor's Financial Services LLC (" Standard & Poor's ") rating and the percentage of total recoverables at December 31, 2017:

Rating(1)
($ in millions)
  Gross   Collateral   Net   % of
Net Total
 

AA

  $ 116.9   $ 1.0   $ 115.9     43 %

A

    153.9     27.9     126.0     46 %

BBB or lower

    13.4     12.5     0.9     1 %

Not rated

    53.0     23.9     29.1     10 %

Total

  $ 337.2   $ 65.3   $ 271.9     100 %

(1)
Standard & Poor's ratings as detailed above are: "AA" (Very strong), "A" (Strong), and "BBB+" and "BBB" (Adequate).

Loss and LAE Reserves

        Sirius Group establishes loss and LAE reserves that are estimates of future amounts needed to pay claims and related expenses for events that have already occurred. The process of estimating reserves involves a considerable degree of judgment by management and, as of any given date, is inherently uncertain. See Note 2 " Summary of Significant Accounting Policies—Significant Accounting Policies " in Sirius Group's audited financial statements and "Summary of Critical Accounting Estimates" in " Management's Discussion and Analysis of Financial Condition and Results of Operations of Sirius Group " included elsewhere in this proxy statement/prospectus for a further discussion of loss and LAE reserves.

        Sirius Group's net incurred losses from asbestos and environmental (" A&E ") claims have totaled $197 million over the past ten years. Sirius Group's A&E exposure is primarily from reinsurance contracts written between 1974 through 1985 by acquired companies. The exposures are mostly higher layer excess of loss treaty and facultative coverages with relatively low limits exposed for each claim. The acquisition of companies having modest portfolios of A&E exposure has been typical of several prior Sirius Global Solutions transactions and is likely to be an element of at least some future acquisitions. However, the acquisition of new A&E liabilities is undertaken only after careful due diligence and utilizing conservative reserving assumptions in relation to industry benchmarks. In the case of portfolios acquired previously, the exposures arise almost entirely from old assumed reinsurance contracts having small limits of liability. See Note 5 " Reserves for Unpaid Losses and Loss Adjustment Expenses—Asbestos and Environmental Loss and Loss Adjustment Expense Reserve Activity " in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus.

        The following table reconciles loss and LAE reserves determined on a regulatory basis to loss and LAE reserves determined in accordance with GAAP as of December 31, 2017, and 2016 as follows:

 
  As of December 31,  
($ in millions)
  2017   2016  

Regulatory reserves

  $ 1,576.0   $ 1,326.4  

Reinsurance recoverable on unpaid losses and

             

LAE(1)

    323.5     292.6  

Other

    (1.0 )   1.1  

GAAP reserves

  $ 1,898.5   $ 1,620.1  

(1)
Represents adjustments made to add back reinsurance recoverables included with the presentation of reserves under regulatory accounting.

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Investments

        Sirius Group's investment objective is to maximize the total return, including yield income and gains and losses, over the long term, without assuming risk to a degree which could jeopardize the vitality of Sirius Group's insurance franchise. Protecting the franchise means striving to position the investment portfolio in such a way as to demonstrate to external constituents (rating agencies, regulators, clients, banks and other counterparties) that Sirius Group's insurance subsidiaries are well positioned to pay insurance claims during, and after, periods of extreme volatility to its enterprise—whether such volatility arises from within its insurance business operations or investment portfolio. Additionally, regulated insurance subsidiaries must comply with a range of statutory guidelines in applicable jurisdictions. Further, Sirius Group endeavors to position the portfolio within shareholder volatility and return expectations. Lastly, Sirius Group views its investment portfolio as a source of capital for strategic investments and acquisitions.

        In support of these considerations, the Board of Directors of Sirius Group established an investment policy (the " Investment Policy ") to provide a cohesive framework to mitigate investment risk across the organization. The Investment Policy sets forth governance and operating procedures for the group. It establishes long-term thresholds for the portfolio and procedures when thresholds are breached.

        Further, the Finance Committee of the Board of Directors maintains an investment risk management statement (the " Investment Risk Management Statement " ), approved no less frequently than annually, which further guides the portfolio, taking into account Sirius Group's risk tolerance, potential strategic endeavors, and the Finance Committee's near-term view of market risks.

        Together, the Investment Policy and Investment Management Risk Statement set forth a number of thresholds under which the consolidated portfolio is intended to operate. These thresholds address a range of aspects of the portfolio. These include, but are not limited to, overall asset allocation as well as sector, single issue and individual security limitations.

        A key asset allocation principal in the Investment Policy establishes a group wide threshold to hold cash and fixed income instruments in an amount no less than 100% of property and casualty policyholder liabilities. Investments in excess of this amount may be invested across other classes, including common equity securities, mutual funds, exchange-traded funds (" ETFs "), hedge funds, private equity funds and direct investments in privately held common securities investments, with the goal of maximizing long-term total returns (after tax).

        The Investment Management Risk Statement provides a more constrained limit on investment into equities and other long term investments. This is expressed through an explicit limitation on allocations as well as indirect constraints tied to modelled portfolio loss scenarios.

        On a quarterly basis, management provides to the Finance Committee a compliance report which tracks positioning relative to thresholds and parameters set forth in the Investment Policy and Investment Risk Management Statement.

        Sirius Group operates subsidiaries and branches located throughout the world. Its global footprint requires Sirius Group to transact in numerous currencies. Where practical, Sirius Group aims to generally match material liabilities with assets and in many cases investable assets. Further, due to regulatory requirements, its portfolio includes short term, fixed income and equity securities held in non-US denominated currencies (mainly Swedish Krona (" SEK "), Euro (" EUR ") and Canadian dollar (" CAD ")) that may result in net long or short non-U.S. denominated balances (" Unmatched Currency "). From time to time, Sirius Group may utilize third party tools such as currency forwards or swaps to mitigate unmatched exposure or may choose to leave such exposure unmatched. In making this assessment, it considers foreign exchange markets, the interest rate environment including forward

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rates, counterparty risk and expenses. Sirius Group does not apply hedge accounting to currency swaps or forwards.

        Sirius International's functional currency is the SEK. Sirius Group's portfolio of fixed-maturity investments and equity securities held for general investment purposes are classified as trading and are reported at fair value. Foreign exchange gains and losses on non-SEK investments are recorded as a component of net realized and unrealized investment gains (losses). For U.S. dollar investments held by Sirius International, Sirius Group would generally experience gains or losses of a similar nature going in the opposite direction as a component of comprehensive income.

        Prior to the acquisition by CMIG International, an affiliate of White Mountains managed the investment assets of Sirius Group to fit within the tolerances of White Mountains' consolidated investment and strategic objectives. Sirius Group had established separate accounts with third-party registered investment advisors to manage its publicly-traded equity securities and convertible fixed-maturity securities. In addition, Sirius Group held meaningful investments in unconsolidated affiliates as well as select passive-equity-indexed exchange-traded funds. During 2016, in connection with the CMIG International acquisition, Sirius Group sold all of its holdings in unconsolidated affiliates, separate accounts and ETFs and redeployed proceeds mainly into fixed-income securities. However, Sirius Group believes that prudent levels of investments in equity securities and other long-term investments are likely to enhance total returns over the long-term. Subsequent to the CMIG International acquisition, Sirius Group has deployed into these asset classes at a measured pace with a focus on value oriented strategies.

        The following table presents the composition and fair value of Sirius Group's investment portfolio as of December 31, 2017 and 2016:

 
  As of December 31,
2017
  As of December 31,
2016
 
(S in millions)
  Fair
Value
  % of total   Fair
Value
  % of total  

Fixed-maturity investments

  $ 2,180.0     64.6 % $ 2,891.6     78.7 %

Short-term investments

    625.0     18.5 %   538.0     14.6 %

Equity securities

    299.2     8.9 %   123.0     3.3 %

Other long-term investments

    269.5     8.0 %   124.8     3.4 %

Total investments

  $ 3,373.7     100 % $ 3,677.4     100 %

        As of December 31, 2017, Sirius Group's invested assets consisted of securities and other investments held for general investment purposes. Sirius Group's portfolio of fixed-maturity investments and equity securities held for general investment purposes are classified as trading and are reported at fair value as of the balance sheet date. Changes in unrealized gains and losses are reported pre-tax in revenues. Realized investment gains and losses are accounted for using the specific identification method and are reported pre-tax in revenues. Premiums and discounts on all fixed-maturity investments are amortized and accreted to net investment income over the anticipated life of the investment.

        Sirius Group's invested assets that are measured at fair value include fixed-maturity investments, common and preferred equity securities, convertible fixed-maturity and preferred investments, and other long-term investments, such as interests in hedge funds and private equities. In determining its fair value estimates, Sirius Group uses a variety of valuation approaches and inputs. Sirius Group estimates fair value using valuation methods that maximize the use of quoted prices and other observable inputs.

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Net Investment Income

        Sirius Group's pre-tax net investment income for December 31, 2017 and 2016 was as follows:

 
  Year Ended
December 31,
 
($ in millions)
  2017   2016  

Investment income:

             

Fixed-maturity investments

  $ 51.5   $ 58.0  

Short-term investments

    1.5     0.9  

Equity securities

    5.1     4.1  

Other long-term investments

    8.5     4.4  

Total investment income

    66.6     67.4  

Investment expenses

    (9.8 )   (11.2 )

Net investment income, pre-tax

  $ 56.8   $ 56.2  

Net Realized and Unrealized Investment Gains and Losses

        Sirius Group's net realized investment gains and losses for December 31, 2017 and 2016 were as follows:

 
  Year Ended December 31, 2017  
($ in millions)
  Net realized
(losses) gains
  Net
foreign currency
(losses) gains
  Total Net
realized (losses)
gains
reflected in
earnings
 

Fixed-maturity investments

  $ (8.1 ) $ (11.0 ) $ (19.1 )

Equity securities

    0.1         0.1  

Other long-term investments

    (0.1 )   (8.1 )   (8.2 )

Net realized investment (losses), pre-tax

  $ (8.1 ) $ (19.1 ) $ (27.2 )

 

 
  Year Ended December 31, 2016  
($ in millions)
  Net realized
(losses) gains
  Net
foreign currency
(losses) gains
  Total Net
realized (losses)
gains
reflected in
earnings
 

Fixed-maturity investments

  $ 12.7   $ 44.7   $ 57.4  

Equity securities

    227.3     4.6     231.9  

Other long-term investments

    (1.7 )   0.7     (1.0 )

Net realized investment gains, pre-tax

  $ 238.3   $ 50.0   $ 288.3  

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        Sirius Group's net unrealized investment gains and losses for December 31, 2017 and 2016 were as follows:

 
  Year Ended December 31, 2017  
($ in millions)
  Net
unrealized
(losses) gains
  Net
foreign currency
(losses) gains
  Total Net
unrealized (losses)
gains
reflected in
earnings
 

Fixed-maturity investments

  $ 6.6   $ (47.9 ) $ (41.3 )

Equity securities

    26.7     (1.5 )   25.2  

Other long-term investments

    7.9     (2.3 )   5.6  

Net unrealized investment gains (losses), pre-tax

  $ 41.2   $ (51.7 ) $ (10.5 )

 

 
  Year Ended December 31, 2016  
($ in millions)
  Net
unrealized
(losses) gains
  Net
foreign currency
(losses) gains
  Total Net
unrealized (losses)
gains
reflected in
earnings
 

Fixed-maturity investments

  $ (14.4 ) $ (10.6 ) $ (25.0 )

Equity securities

    (215.0 )   0.5     (214.5 )

Other long-term investments

    (1.1 )   2.4     1.3  

Net unrealized investment (losses), pre-tax

  $ (230.5 ) $ (7.7 ) $ (238.2 )

        Foreign currency gains and losses on Sirius Group's investments from foreign currency translation recognized through other comprehensive income, after tax, were $84 million and $(83) million during 2017 and 2016, respectively.

        The cost or amortized cost, gross unrealized investment gains and losses, net foreign currency gains and losses, and carrying values of Sirius Group's fixed-maturity investments as of December 31, 2017 and 2016, were as follows:

 
  December 31, 2017  
($ in millions)
  Cost or
amortized
cost
  Gross
unrealized
gains
  Gross
unrealized
losses
  Net foreign
currency gains
(losses)
  Fair value  

Fixed-Maturity Investments:

                               

Debt securities issued by corporations

  $ 1,017.0   $ 3.1   $ (4.8 ) $ (0.8 ) $ 1,014.5  

Mortgage-backed and asset-backed securities

    972.6     1.3     (9.8 )   (4.2 )   959.9  

Foreign government, agency and provincial obligations

    106.8     0.1     (0.9 )   1.2     107.2  

U.S. Government and agency obligations

    85.8         (0.8 )   (0.2 )   84.8  

Preferred stocks

    9.3     0.3         0.2     9.8  

Municipal obligations

    3.8                 3.8  

Total fixed-maturity investments

  $ 2,195.3   $ 4.8   $ (16.3 ) $ (3.8 ) $ 2,180.0  

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  December 31, 2016  
($ in millions)
  Cost or
amortized
cost
  Gross
unrealized
gains
  Gross
unrealized
losses
  Net foreign
currency gains
(losses)
  Fair value  

Fixed-Maturity Investments:

                               

Debt securities issued by corporations

  $ 1,462.1   $ 8.7   $ (12.9 ) $ 20.1   $ 1478.0  

Mortgage-backed and asset-backed securities

    1,164.4     1.6     (13.9 )   13.8     1,165.9  

Foreign government, agency and provincial obligations

    148.7     0.3     (1.7 )   (0.8 )   146.5  

U.S. Government and agency obligations

    84.8         (0.6 )   5.2     89.4  

Preferred stocks

    10.2     0.3         0.3     10.8  

Municipal obligations

    1.0                 1.0  

Total fixed-maturity investments

  $ 2,871.2   $ 10.9   $ (29.1 ) $ 38.6   $ 2,891.6  

        At December 31, 2017 and 2016, the weighted average credit quality of Sirius Group's fixed-maturity investments was between A+ and AA– and 95% and 96% was rated investment grade at December 31, 2017 and 2016, respectively. The following table summarizes the ratings of the fixed-maturity investments held in Sirius Group's investment portfolio as of December 31, 2017 and 2016:

 
  Fair Value at  
($ in millions)
  December 31,
2017
  December 31,
2016
 

AAA

  $ 689.4   $ 636.5  

AA

    635.2     964.9  

A

    416.4     543.3  

BBB

    333.8     640.5  

Other

    105.2     106.4  

Fixed-maturity investments, at fair value(1)

  $ 2,180.0   $ 2,891.6  

(1)
Credit ratings are assigned based on the following hierarchy 1) Standard & Poor's and 2) Moody's Investor Service

        The weighted average duration of Sirius Group's fixed income portfolio as of December 31, 2017 was approximately 2.0 years, including short-term investments, and approximately 2.4 years excluding short-term investments.

        The cost or amortized cost and carrying value of Sirius Group's fixed-maturity investments as of December 31, 2017 is presented below by contractual maturity. Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.

 
  December 31, 2017  
($ in millions)
  Cost or
amortized cost
  Fair Value  

Due in one year or less

  $ 106.3   $ 106.5  

Due after one year through five years

    1,009.0     1,006.4  

Due after five years through ten years

    71.2     70.8  

Due after ten years

    26.9     26.6  

Mortgage-backed and asset-backed securities

    972.6     959.9  

Preferred stocks

    9.3     9.8  

Total

  $ 2,195.3   $ 2,180.0  

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Equity Securities

        The cost or amortized cost, gross unrealized investment gains and losses, net foreign currency gains and losses, and carrying values of Sirius Group's equity securities and other long-term investments as of December 31, 2017 and 2016, were as follows:

 
  December 31, 2017  
($ in millions)
  Cost or
amortized
cost
  Gross
unrealized
gains
  Gross
unrealized
losses
  Net foreign
currency gains
(losses)
  Carrying
value
 

Equity securities

  $ 275.1   $ 29.3   $ (5.1 ) $ (0.1 ) $ 299.2  

Other long-term investments

  $ 255.5   $ 14.2   $ (4.1 ) $ 3.9   $ 269.5  

 

 
  December 31, 2016  
($ in millions)
  Cost or
amortized
cost
  Gross
unrealized
gains
  Gross
unrealized
losses
  Net foreign
currency gains
(losses)
  Carrying
value
 

Equity securities

  $ 125.7   $ 0.1   $ (2.7 ) $ (0.1 ) $ 123.0  

Other long-term investments

  $ 115.8   $ 4.2   $ (2.1 ) $ 6.9   $ 124.8  

Ratings

        Ratings by independent agencies are an important factor in establishing the competitive position of insurance and reinsurance companies and are important to Sirius Group's ability to market and sell its products and services. Rating organizations continually review the financial positions of reinsurers and insurers, including Sirius Group. As of June 30, 2018, Sirius Group's insurance and reinsurance operating subsidiaries were rated as follows:

 
  A.M. Best(1)   Fitch(2)   Standard & Poor's(3)

Rating

  "A u" (Excellent)   "A–" (Strong)   "A–" (Strong)

Outlook/ Watch

  Negative   Stable   Stable

(1)
"A" is the third highest of 16 financial strength ratings assigned by A.M. Best. "u" denotes rating is under review.

(2)
"A–" is the seventh highest of nineteen financial strength ratings assigned by Fitch.

(3)
"A–" is the seventh highest of 21 financial strength ratings assigned by Standard & Poor's.

        These ratings reflect A.M. Best's, Fitch's and Standard & Poor's respective opinions of the ability of Sirius Group to pay claims and are not evaluations directed to security holders. A.M. Best maintains a letter-scale rating system ranging from "A++" (Superior) to "F" (in liquidation). Fitch maintains a letter-scale rating system ranging from "AAA" (Exceptionally Strong) to "C" (Distressed). Standard & Poor's maintains a letter-scale rating system ranging from "AAA" (Extremely Strong) to "D" (Default). None of A.M. Best, Fitch or Standard & Poor's is established in the European Economic Area and none of these entities has applied for registration under the CRA Regulation.

        These ratings are subject to periodic review by, and may be revised downward or revoked at the sole discretion of, A.M. Best, Fitch and Standard & Poor's, respectively.

        On June 21, 2018, Standard & Poor's affirmed Sirius Group's and its main subsidiaries' financial strength rating at "A–" (Strong) with a stable outlook.

        On June 27, 2018, Fitch removed Sirius Group and its main subsidiaries from negative watch and affirmed the financial strength rating at "A–" (Strong) with a stable outlook.

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Employees

        As of December 31, 2017, Sirius Group had 992 employees. Sirius Group believes its relationships with employees are satisfactory.

Properties

        Sirius Group maintains a professional office in Hamilton, Bermuda, which serves as its headquarters and its registered office. Sirius Group and Sirius Bermuda are headquartered in Hamilton, Bermuda. Sirius International is headquartered in Stockholm, Sweden with various branch offices in Europe, Asia and Bermuda. Sirius America is headquartered in New York, New York with various offices in the United States and in Toronto, Canada. IMG is headquartered in Indianapolis, Indiana with various offices in the United Kingdom and Hong Kong. Armada is headquartered in Hunt Valley, Maryland. Sirius Group's home offices and all of its branch offices are leased.

Legal Proceedings

        Sirius Group, and the insurance and reinsurance industry in general, are routinely subject to claims-related litigation and arbitration in the normal course of business, as well as litigation and arbitration that do not arise from, or are directly related to, claims activity. Sirius Group's estimates of the costs of settling matters routinely encountered in claims activity are reflected in the reserves for unpaid loss and LAE.

        Although the ultimate outcome of claims and non-claims-related litigation and arbitration, and the amount or range of potential loss at any particular time, is often inherently uncertain, management does not believe that the ultimate outcome of such claims and non-claims-related litigation and arbitration will have a material adverse effect on Sirius Group's financial condition, results of operations or cash flows. See Note 23 " Commitments and Contingencies—Legal Proceedings " in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus.

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REGULATION OF SIRIUS GROUP

         Set forth below is a summary of certain material information concerning the regulatory and supervisory environment of the insurance business conducted by subsidiaries of the Sirius Group. This description is a summary of certain legal issues and does not purport to be complete.

        The business of insurance and reinsurance is regulated in all countries in which Sirius Group operates, although the degree and type of regulation varies from one jurisdiction to another. As a holding company, Sirius Group is generally not directly subject to such regulations, but its various insurance and reinsurance operating subsidiaries are subject to regulation, as summarized below.

Bermuda Insurance Regulation

        Insurance Regulation Generally.     The Insurance Act 1978 of Bermuda and related regulations, as amended (the " Insurance Act "), regulates the insurance businesses of Sirius Bermuda, and other Bermuda operating companies, including Alstead Reinsurance Ltd. and the Bermuda branch of Sirius International (together, the " Bermuda Operating Companies "), and provides that no person may carry on any insurance business in or from within Bermuda unless registered as an insurer under the Insurance Act by the Bermuda Monetary Authority (" BMA ").

        The BMA, in deciding whether to grant registration, has broad discretion to act as it thinks fit in the public interest. The BMA is required by the Insurance Act to determine whether the applicant is a fit and proper body to be engaged in the insurance business and, in particular, whether it has, or has available to it, adequate knowledge and expertise to operate an insurance business.

        The Insurance Act does not distinguish between insurers and reinsurers: companies are registered under the Insurance Act as "insurers." The Insurance Act uses the defined term "insurance business" to include reinsurance business.

        The continued registration of an applicant as an insurer is subject to the applicant complying with the terms of its registration and such other conditions as the BMA may impose from time to time. The Insurance Act also grants to the BMA powers to supervise, investigate and intervene in the affairs of insurance companies.

        Each of the Bermuda Operating Companies has the ability to declare or pay dividends or make capital distributions during any 12-month period without the prior approval of Bermuda regulatory authorities on the condition that any such declaration or payment of dividends or capital distributions does not cause a breach of any of its regulatory solvency and liquidity requirements.

        The Insurance Act imposes solvency and liquidity standards on Bermuda insurance companies, as well as auditing and reporting requirements. In addition, the BMA confirmed in March 2016 that it will act as the group supervisor for Sirius Group and has designated Sirius Bermuda as the designated insurer for group supervisory purposes (" Designated Insurer "). Therefore, Sirius Group is subject to the BMA's group supervision and solvency rules which cover assessing the financial situation and solvency position of Sirius Group and/or its members and regulating intra-Group transactions, risk concentration, governance procedures, risk management and regulatory reporting and disclosure. See " Regulation of Sirius Group—Bermuda Insurance Regulation—Group Supervision " below for further discussion.

        Certain significant aspects of the Bermuda insurance regulatory framework are set forth below, focusing only on Sirius Group's primary Class 4 insurer, Sirius Bermuda, which is subject to the strictest regulation out of the Bermuda Operating Companies.

        Classification of Insurers.     The Insurance Act distinguishes between insurers carrying on long-term business, insurers carrying on general business and insurers carrying on special purpose business. There

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are six general business classifications (Classes 1, 2, 3, 3A, 3B and 4), five long-term business classifications (Classes A, B, C, D and E) and one classification of special purpose insurer.

        Classification as a Class 4 Insurer; Minimum Paid Up Share Capital.     A body corporate is registrable as a Class 4 insurer where (i) it has at the time of its application for registration, or will have before it carries on insurance business, a total statutory capital and surplus of not less than $100,000,000; and (ii) it intends to carry on general insurance business including excess liability business or property catastrophe reinsurance business.

        Sirius Bermuda is required to maintain fully paid-up share capital of at least $1 million.

        Principal Representative and Principal Office.     As a Class 4 insurer, Sirius Bermuda is required to maintain a principal office and to appoint and maintain a principal representative in Bermuda. For the purposes of the Insurance Act, the principal office of Sirius Bermuda is located at 14 Wesley Street, Hamilton HM 11, Bermuda and Sheila E. Nicoll serves as its principal representative.

        Without a reason acceptable to the BMA, an insurer may not terminate the appointment of its principal representative, and the principal representative may not cease to act as such, unless 30 days notice in writing to the BMA is given of the intention to do so.

        It is the duty of the principal representative to forthwith notify the BMA where the principal representative reaches the view that there is a likelihood of the insurer becoming insolvent, or upon becoming aware that a reportable "event" has occurred, or is believed to have occurred. Examples of a reportable "event" include a failure by the insurer to comply substantially with a condition imposed upon it by the BMA relating to a solvency margin or a liquidity or other ratio, a significant loss reasonably likely to cause the insurer to fail to comply with its enhanced capital requirement (discussed below) and the occurrence of a "material change" (as such term is defined under the Insurance Act) in its business operations.

        Where there has been a significant loss which is reasonably likely to cause the insurer to fail to comply with its enhanced capital requirement, the principal representative must also furnish the BMA with a capital and solvency return reflecting an enhanced capital requirement prepared using post-loss data.

        Furthermore, where a notification has been made to the BMA regarding a material change, the principal representative must furnish the BMA with unaudited interim statutory financial statements in relation to such period as the BMA may require.

        Loss Reserve Specialist.     As a Class 4 insurer, Sirius Bermuda is required to appoint an individual approved by the BMA to be its loss reserve specialist. In order to qualify as an approved loss reserve specialist, the applicant must be an individual qualified to provide an opinion in accordance with the requirements of the Insurance Act and the BMA must be satisfied that the individual is fit and proper to hold such an appointment.

        Sirius Bermuda is required to submit annually an opinion of its approved loss reserve specialist with its capital and solvency return in respect of its total general business insurance technical provisions (i.e. the aggregate of its net premium provisions, net loss and loss expense provisions and risk margin, as each is reported in the insurer's statutory economic balance sheet). The loss reserve specialist's opinion must state, among other things, whether or not the aggregate amount of technical provisions shown in the statutory economic balance sheet as at the end of the relevant financial year (i) meets the requirements of the Insurance Act and (ii) makes reasonable provision for the total technical provisions of the insurer under the terms of its insurance contracts and agreements.

        Annual Financial Statements.     Sirius Bermuda prepares and submits, on an annual basis, audited GAAP financial statements and audited statutory financial statements.

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        The Insurance Act prescribes rules for the preparation and substance of statutory financial statements (which include, in statutory form, a balance sheet, an income statement, a statement of capital and surplus and notes thereto). The statutory financial statements include detailed information and analysis regarding premiums, claims, reinsurance and investments of the insurer.

        Sirius Bermuda is also required to prepare and submit to the BMA financial statements which have been prepared under generally accepted accounting principles in the United States or international financial reporting standards (" GAAP or IFRS financial statements "). The insurer's annual GAAP or IFRS financial statements and the auditor's report thereon, and the statutory financial statements are required to be filed with the BMA within four months from the end of the relevant financial year (unless specifically extended with the approval of the BMA).

        The statutory financial statements do not form a part of the public records maintained by the BMA but the GAAP or IFRS financial statements are available for public inspection.

        Annual Statutory Financial Return and Annual Capital and Solvency Return.     As a Class 4 insurer, Sirius Bermuda is required to file with the BMA a statutory financial return no later than four months after its financial year end. The statutory financial return includes, among other matters, the statutory financial statements and the calculations for the Class 4 insurer's minimum solvency margin and liquidity ratio.

        In addition, each year Sirius Bermuda is required to file with the BMA a capital and solvency return along with its annual statutory financial return. Sirius Group has published its financial condition report as of December 31, 2017 which contains the minimum solvency margin and enhanced capital requirement of Sirius Group together with those of its Bermudian subsidiaries including Sirius Bermuda.

        Declaration of Compliance.     At the time of filing its statutory financial statements, a Class 4 insurer is also required to deliver to the BMA a declaration of compliance, in such form and with such content as may be prescribed by the BMA, declaring whether or not the Class 4 insurer has, with respect to the preceding financial year (i) complied with all requirements of the minimum criteria applicable to it; (ii) complied with the minimum margin of solvency as at its financial year end; (iii) complied with the applicable enhanced capital requirements as at its financial year end; and (iv) observed any limitations, restrictions or conditions imposed upon issuance of its license, if applicable.

        Public Disclosures.     Pursuant to the Insurance Act, all commercial insurers and insurance groups are required to prepare and file with the BMA, and also publish on their website, a financial condition report.

        The BMA has discretion to approve modifications and exemptions to the public disclosure rules, on application by the insurer if, among other things, the BMA is satisfied that the disclosure of certain information will result in a competitive disadvantage or compromise confidentiality obligations of the insurer.

        Non-insurance Business.     No Class 4 insurer may engage in non-insurance business, unless that non-insurance business is ancillary to its core business. Non-insurance business means any business other than insurance business and includes carrying on investment business, managing an investment fund as operator, carrying on business as a fund administrator, carrying on banking business, underwriting debt or securities or otherwise engaging in investment banking, engaging in commercial or industrial activities and carrying on the business of management, sales or leasing of real property.

        Minimum Liquidity Ratio.     The Insurance Act provides a minimum liquidity ratio for general business insurers. A Class 4 insurer engaged in general business is required to maintain the value of its relevant assets at not less than 75% of the amount of its relevant liabilities. Relevant assets include

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cash and time deposits, quoted investments, unquoted bonds and debentures, first liens on real estate, investment income due and accrued, accounts and premiums receivable, reinsurance balances receivable, funds held by ceding reinsurers and any other assets which the BMA, on application in any particular case made to it with reasons, accepts in that case.

        The relevant liabilities are total general business insurance reserves and total other liabilities less deferred income taxes and letters of credit, guarantees and other instruments.

        Minimum Solvency Margin and Enhanced Capital Requirements.     Sirius Bermuda is required to maintain available statutory economic capital and surplus at a level equal to or in excess of its enhanced capital requirement (" ECR "), which is established by reference to either a model based on the BMA's prescribed form of capital and solvency return (known as the Bermuda Solvency Capital Requirement or " BSCR ") or an approved internal capital model.

        The BSCR model is a risk-based capital model which provides a method for determining a Class 4 insurer's capital requirements (statutory economic capital and surplus) by taking into account the risk characteristics of different aspects of the Class 4 insurer's business. The BSCR formula establishes capital requirements for ten categories of risk: fixed-income investment risk, equity investment risk, interest rate/liquidity risk, currency risk, concentration risk, premium risk, reserve risk, credit risk, catastrophe risk and operational risk. For each category, the capital requirement is determined by applying factors to asset, premium, reserve, creditor, probable maximum loss and operation items, with higher factors applied to items with greater underlying risk and lower factors for less risky items.

        While not specifically referred to in the Insurance Act, the BMA has also established a target capital level (" TCL ") for each Class 4 insurer equal to 120% of its ECR. The TCL serves as an early warning tool for the BMA, and failure to maintain statutory capital at least equal to the TCL will likely result in increased regulatory oversight.

        If Sirius Bermuda at any time fails to meet its applicable enhanced capital requirement, it shall, upon becoming aware of that failure, immediately notify the BMA and promptly file with the BMA a written report containing particulars of the circumstances leading to the failure and a plan detailing the manner in which the Class 4 insurer intends to rectify the failure and furnish the BMA with (i) unaudited statutory economic balance sheets and unaudited interim statutory financial statements prepared in accordance with GAAP covering such period as the BMA may require; (ii) the opinion of a loss reserve specialist in relation to total general business insurance technical provisions as set out in the economic balance sheet, where applicable; (iii) a general business solvency certificate in respect of the financial statements; and (iv) a capital and solvency return reflecting an enhanced capital requirement prepared using post failure data where applicable.

        A Class 4 insurer is required to have general business assets that exceed the value of its general business liabilities by an amount prescribed by the Insurance Act, as its Minimum Solvency Margin (" MSM "). The MSM that a Class 4 insurer is required to maintain with respect to its general business is the greater of (i) U.S. $100 million, or (ii) 50% of net premiums written (with a credit for reinsurance ceded not exceeding 25% of gross premiums), or (iii) 15% of the aggregate of net loss and loss expense provisions and other reinsurance reserves, or (iv) 25% of the ECR as reported at the end of the relevant year.

        If at any time a Class 4 insurer fails to meet its MSM requirements, it must, upon becoming aware of such failure, immediately notify the BMA and promptly file a written report with the BMA containing particulars of the circumstances that gave rise to the failure and setting out its plan detailing the manner in which the Class 4 insurer intends to rectify the failure.

        Eligible Capital.     A Class 4 insurer is required to disclose the makeup of its capital in accordance with the "3-tiered eligible capital system". Under this system, all of the Class 4 insurer's capital instruments will be classified as either basic or ancillary capital which in turn will be classified into one

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of three tiers based on their "loss absorbency" characteristics. Highest quality capital will be classified as Tier 1 Capital, and lesser quality capital will be classified as either Tier 2 Capital or Tier 3 Capital. Under this regime, up to certain specified percentages of Tier 1, Tier 2 and Tier 3 Capital may be used to support the Class 4 insurer's MSM, ECR and TCL.

        Code of Conduct.     The Insurance Code of Conduct (the " Code of Conduct ") prescribes the duties, standards, procedures and sound business principles that must be complied with by all insurers registered under the Insurance Act. The BMA will assess an insurer's compliance with the Code of Conduct in a proportional manner relative to the nature, scale and complexity of its business.

        Cancellation of Insurer's Registration.     An insurer's registration may be cancelled by the BMA at the request of the insurer or on certain grounds specified in the Insurance Act. For example, such grounds include a failure by the insurer to comply with its obligations under the Insurance Act or where the BMA believes that the insurer has not been carrying on business in accordance with sound insurance principles.

        Restrictions on Dividends and Distributions.     A Class 4 insurer is prohibited from declaring or paying a dividend if it is in breach of its MSM, ECR or minimum liquidity ratio, or if the declaration or payment of such dividend would cause such a breach. Where an insurer fails to meet its MSM or minimum liquidity ratio on the last day of any financial year, it will be prohibited from declaring or paying any dividends during the next financial year without the approval of the BMA.

        In addition, a Class 4 insurer is prohibited from declaring or paying in any financial year dividends of more than 25% of its total statutory capital and surplus (as shown on its previous financial year's statutory balance sheet) unless it files with the BMA an affidavit signed by at least two directors and the principal representative stating that it will continue to meet its solvency margin and minimum liquidity ratio.

        Reduction of Capital.     No Class 4 insurer may reduce its total statutory capital by 15% or more, as set out in its previous year's financial statements, unless it has received the prior approval of the BMA. Total statutory capital consists of the insurer's paid in share capital, its contributed surplus and any other fixed capital designated by the BMA as statutory capital.

        A Class 4 insurer seeking to reduce its statutory capital by 15% or more, as set out in its previous year's financial statements, is also required to submit an affidavit signed by at least 2 directors and the principal representative stating that the proposed reduction will not cause the insurer to fail its relevant margins and such other information as the BMA may require.

        Supervision, Investigation, Intervention and Disclosure.     The BMA may, by notice in writing served on a registered person or a designated insurer, require the registered person or designated insurer to provide such information and/or documentation as the BMA may reasonably require with respect to matters that are likely to be material to the performance of its supervisory functions under the Insurance Act. In addition, it may require such person's auditor, underwriter, accountant or any other person with relevant professional skill of such registered person or designated insurer to prepare a report on any aspect pertaining thereto. In the case of a report, the person so appointed shall immediately give the BMA written notice of any fact or matter of which he becomes aware or which indicates to him that any condition attaching to his registration under the Insurance Act is not or has not or may not be or may not have been fulfilled and that such matters are likely to be material to the performance of its functions under the Insurance Act. If it appears to the BMA to be desirable in the interests of the clients of a registered person or relevant insurance group, the BMA may also exercise these powers in relation to subsidiaries, parent companies and other affiliates of the registered person or designated insurer.

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        Where the BMA suspects that a person has failed to properly register under the Insurance Act or that a registered person or designated insurer has failed to comply with a requirement of the Insurance Act or that a person is not, or is no longer, a fit and proper person to perform functions in relation to a regulated activity, it may, by notice in writing, carry out an investigation into such person (or any other person connected thereto). In connection therewith, the BMA may require every person who is or was a controller, officer, employee, agent, banker, auditor, accountant, barrister and attorney or insurance manager to make a report and produce such documents in his care, custody and control and to attend before the BMA to answer questions relevant to the BMA's investigation and to take such actions as the BMA may direct.

        If it appears to the BMA that the business of the registered insurer is being conducted in a way that there is a significant risk of the insurer becoming insolvent or being unable to meet its obligations to policyholders, or that the insurer is in breach of the Insurance Act or any conditions imposed upon its registration, or the minimum criteria stipulated in the Insurance Act is not or has not been fulfilled in respect of a registered insurer, or that a person has become a controller without providing the BMA with the appropriate notice or in contravention of a notice of objection, or the registered insurer is in breach of its ECR, or that a designated insurer is in breach of any provision of the Insurance Act or the regulations or rules applicable to it, the BMA may issue such directions as it deems desirable for safeguarding the interests of policyholders or potential policyholders of the insurer or the insurance group, including but not limited to, restricting business activities, investments and dividends.

        Fit and Proper Controllers.     The BMA maintains supervision over the controllers of all registered insurers in Bermuda.

        A controller includes (i) the managing director of the registered insurer or its parent company; (ii) the chief executive of the registered insurer or of its parent company; (iii) a shareholder controller; and, (iv) any person in accordance with whose directions or instructions the directors of the registered insurer or of its parent company are accustomed to act.

        The definition of shareholder controller is set out in the Insurance Act but generally refers to (i) a person who holds 10% or more of the shares carrying rights to vote at a shareholders' meeting of the registered insurer or its parent company, or (ii) a person who is entitled to exercise 10% or more of the voting power at any shareholders' meeting of such registered insurer or its parent company, or (iii) a person who is able to exercise significant influence over the management of the registered insurer or its parent company by virtue of its shareholding or its entitlement to exercise, or control the exercise of, the voting power at any shareholders' meeting.

        The BMA may file a notice of objection to any person who has become a controller of any description where it appears that such person is not, or is no longer, a fit and proper person to be a controller of the registered insurer. Before issuing a notice of objection, the BMA is required to serve upon the person concerned a preliminary written notice stating the BMA's intention to issue formal notice of objection. Upon receipt of the preliminary written notice, the person served may, within 28 days, file written representations with the BMA which shall be taken into account by the BMA in making its final determination. Any person who continues to be a controller of any description after having received a notice of objection shall be guilty of an offence and/or subject to fine.

        All registered insurers are required to give written notice to the BMA of a change in controller(s).

        Notification of Material Changes.     Registered insurers are required to give notice to the BMA of their intention to effect a material change within the meaning of the Insurance Act. Material changes include: the transfer or acquisition of insurance business; merger with or acquisition of another firm; acquisition of a controlling interest in an undertaking that is engaged in non-insurance business; outsourcing all or substantially all of the company's actuarial, risk management, compliance,

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underwriting or internal audit functions;; transfer or expansion into line of business and the outsourcing of an officer role.

        Group Supervision.     The BMA acts as group supervisor of the Regulatory Group and has designated Sirius Bermuda as the Designated Insurer.

        As group supervisor, the BMA performs a number of supervisory functions including (i) coordinating the gathering and dissemination of information which is of importance for the supervisory task of other competent authorities; (ii) carrying out a supervisory review and assessment of the Regulatory Group; (iii) carrying out an assessment of the Regulatory Group's compliance with the rules on solvency, risk concentration, intra-group transactions and good governance procedures; (iv) planning and coordinating, with other competent authorities, supervisory activities in respect of the Regulatory Group, both as a going concern and in emergency situations; (v) coordinating any enforcement action that may need to be taken against the Regulatory Group or any of its members; and (vi) planning and coordinating meetings of colleges of supervisors (consisting of insurance regulators) in order to facilitate the carrying out of the functions described above.

        Group Solvency and Group Supervision.     The current supervision and solvency rules (together, " Group Rules ") apply to the Regulatory Group so long as the BMA remains Sirius Group's group supervisor. Through the Group Rules, the BMA may take action which affects Sirius Group. A summary of the Group Rules is set forth below.

        Approved Group Actuary.     Sirius Bermuda, as Designated Insurer, is responsible for ensuring that the Regulatory Group appoints an individual approved by the BMA to be the group actuary. The group actuary must provide an opinion on the Regulatory Group's technical provisions as recorded in the group statutory economic balance sheet.

        Annual Group Financial Statements.     The Regulatory Group is required to prepare and submit, on an annual basis, financial statements prepared in accordance with either IFRS or GAAP, together with statutory financial statements. The financial statements must be audited annually by the Regulatory Group's approved auditor who is required to prepare an auditor's report thereon in accordance with generally accepted auditing standards. In addition, the Regulatory Group must prepare statutory financial statements (which include, in statutory form, a group balance sheet, a group income statement, a group statement of capital and surplus, and notes thereto) in respect of the parent company of the Regulatory Group. The Designated Insurer is required to file with the BMA the group statutory financial statements and the audited group GAAP or IFRS financial statements for the Regulatory Group with the BMA within five months from the end of the relevant financial year (unless specifically extended).

        Annual Insurance Group Statutory Financial Return and Annual Insurance Group Capital and Solvency Return.     The Regulatory Group is required to prepare an annual group statutory financial return and an insurance group capital and solvency return. The group statutory financial return must consist of (i) an insurance group business solvency certificate; (ii) particulars of ceded reinsurance listing the top-ten unaffiliated reinsurers; (iii) any adjustments to the group financial statements in the form of a reconciliation of amounts reported as total assets, total liabilities, net income and total statutory capital and surplus; (iv) a list of non-insurance financial regulated entities owned by the Regulatory Group; and (v) particulars of qualifying members of the Regulatory Group. The group capital and solvency return shall include an annual opinion of the group actuary. Both the annual insurance group statutory financial return and the insurance group capital and solvency return must be submitted to the BMA by the Designated Insurer within five months after its financial year end (unless specifically extended).

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        Quarterly Group Financial Statements.     The Designated Insurer is required to file quarterly financial returns for the Regulatory Group with the BMA on or before the last day of the months May, August and November of each year. The quarterly Regulatory Group financial returns consist of (i) quarterly unaudited (consolidated) financial statements for each financial quarter (which must minimally include a balance sheet and income statement and must also be recent and not reflect a financial position that exceeds two months) and (ii) a list and details of material intra-group transactions and risk concentrations, details surrounding all intra-group reinsurance and retrocession arrangements and details of the top-ten counterparties and any other counterparty exposures exceeding 10% of Regulatory Group's statutory capital and surplus.

        Public Disclosures.     Pursuant to recent amendments to the Insurance Act all insurance groups are required to prepare and file with the BMA, and also publish on their website, a financial condition report.

        Group Solvency Self-Assessment (" GSSA ").    The Group Rules require the board of directors of the parent company of the insurance group (the " Parent Board ") to establish solvency self-assessment procedures for the group that factors in all the foreseeable reasonably material risks. Such procedures should be carried out at least annually and assess the quality and quantity of the capital required to adequately cover the risks to which the insurance group is exposed. Such procedures must also be an integral part of the group's risk management framework and be reviewed and evaluated on a regular basis by the Parent Board. In particular, the GSSA should, among other things, demonstrate consideration of the relationship between risk management, the quality and quantity of capital resources, the impact of risk mitigation techniques and diversification and correlation effects between material risks; a description of the group's risk appetite; be forward-looking; include appropriate stress and scenario testing and appropriately reflect all assets and liabilities, material off-balance sheet arrangements, material intra group transactions, relevant managerial practices, systems and controls and a valuation basis that is aligned with the risk characteristics and business model of the group.

        Group Minimum Solvency Margin (" Group MSM ") and Group Enhanced Capital Requirement (" Group ECR ").    An insurance group must ensure that the value of its total statutory group economic capital and surplus exceeds the aggregate of (i) the amount of the aggregate minimum margins of solvency of each qualifying member of the Regulatory Group controlled by the parent company, and (ii) the parent company's percentage shareholding in each member where it exercises significant influence over such member but does not control it. A member is a qualifying member of the Regulatory Group if it is subject to solvency requirements in the jurisdiction in which it is registered. The Regulatory Group is required to maintain available group capital and surplus at a level equal to 50% of the Regulatory Group ECR and this requirement will increase by increments of 10% in each of the following five years until 100% is required in 2018.

        Group Eligible Capital.     The Designated Insurer is required to disclose the makeup of the Regulatory Group's capital in accordance with a 3-tiered eligible capital system. Under the eligible capital requirements, all of the Regulatory Group's capital instruments will be classified as either basic or ancillary capital which in turn will be classified into one of three tiers based on their "loss absorbency" characteristics. Highest quality capital will be classified Tier 1 Capital, lesser quality capital will be classified as either Tier 2 Capital or Tier 3 Capital. A minimum threshold of Tier 1 and maximum thresholds of Tier 2 and Tier 3 Capital used to satisfy the Regulatory Group MSM and Regulatory Group ECR requirements are specified under the rules.

        Group Governance.     The Group Rules require the Parent Board to establish and effectively implement corporate governance policies and procedures, which it must be periodically review to

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ensure they continue to support the overall organizational strategy of the group. In particular, the Parent Board must:

    ensure that operational and oversight responsibilities of the group are clearly defined and documented and that the reporting of material deficiencies and fraudulent activities are transparent and devoid of conflicts of interest;

    establish systems for identifying on a risk-sensitive basis those policies and procedures that must be reviewed annually and those policies and procedures that must be reviewed at other regular intervals;

    establish a risk management and internal controls framework and ensure that it is assessed regularly and such assessment is reported to the Parent Board and the chief and senior executives;

    establish and maintain sound accounting and financial reporting procedures and practices for the group; and

    establish and keep under review group functions relating to actuarial, compliance, internal audit and risk management functions which must address certain specific requirements as set out in the Group Rules.

        Designated Insurer Notification Obligations.     The Designated Insurer must notify the BMA upon reaching a view that there is a likelihood of the Regulatory Group or any member of the Regulatory Group becoming insolvent or that a reportable "event" is believed to have occurred. Examples of a reportable "event" include a failure by the Regulatory Group or any member of the Regulatory Group to comply substantially with a requirement imposed upon it under the Group Rules relating to its solvency position, governance and risk management or supervisory reporting and disclosures; failure by the Designated Insurer to comply with a direction given to it under the Insurance Act in respect of the group or any of its members; a criminal conviction imposed upon any member of the Regulatory Group whether in Bermuda or abroad; material breaches of any statutory requirements by any member of the Regulatory Group located outside of Bermuda that could lead to supervisory or enforcement action by a competent authority; or a significant loss that is reasonably likely to cause the Regulatory Group to be unable to comply with its Group ECR. The Designated Insurer must promptly furnish the BMA with a written report setting out the particulars of the case and furnish a Regulatory Group capital and solvency return that reflects the Group ECR that has been prepared using post-loss data and unaudited financial statements for such period as the BMA requires.

        Certain Other Bermuda Law Considerations.     Sirius Group is a Bermuda exempted company incorporated under the Companies Act. As a result, Sirius Group is required to comply with the provisions of the Companies Act regulating the payment of dividends and making of distributions from contributed surplus. A company is prohibited from declaring or paying a dividend, or making a distribution out of contributed surplus, if there are reasonable grounds for believing that:

    The company is, or would after the payment be, unable to pay its liabilities as they become due; or

    The realizable value of the company's assets would be less than its liabilities.

        Under Sirius Group's bye-laws, each common share is entitled to dividends if, and when, dividends are declared by its board of directors, subject to any preferred dividend rights which may be held by the holders any preferred shares. Issued share capital is the aggregate par value of the company's issued shares, and the share premium account is the aggregate amount paid for issued shares over and above their par value. Share premium accounts may be reduced in certain limited circumstances. In addition, the Companies Act regulates return of capital, reduction of capital and any purchase or redemption of shares by Sirius Group.

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        Although Sirius Group is incorporated in Bermuda, it has been designated as a nonresident of Bermuda for exchange control purposes by the BMA. Pursuant to its nonresident status, Sirius Group may hold any currency other than Bermuda dollars and convert that currency into any other currency, other than Bermuda dollars, without restriction.

        Under Bermuda law, exempted companies are companies formed for the purpose of conducting business outside Bermuda from a principal place in Bermuda. All Bermuda exempted companies are exempt from certain Bermuda laws restricting the percentage of share capital that may be held by non-Bermudians. However, exempted companies may not participate in certain business transactions, including: (i) the acquisition or holding of land in Bermuda except that required for their business held by way of lease or tenancy for a term not exceeding 50 years or, with the consent of the Minister of Finance granted in his discretion, land by way of lease or tenancy for a term not exceeding 21 years in order to provide accommodation or recreational facilities for its officers and employees; (ii) the taking of mortgages on land in Bermuda to secure an amount in excess of BD$50,000 without the consent of the relevant Ministers; (iii) the acquisition of any bonds or debentures secured by any land in Bermuda, other than bonds or debentures issued by the Bermuda government or a public authority; or (iv) the carrying on of business of any kind in Bermuda, except in furtherance of their business carried on outside Bermuda or under license granted by the Minister of Finance. Generally, it is not permitted without a special license granted by the Minister to insure Bermuda domestic risks or risks of persons of, in or based in Bermuda.

        Under Bermuda law, only persons who are Bermudians, spouses of Bermudians, holders of a permanent resident's certificate, holders of a working resident's certificate or persons who are exempt pursuant to the Incentives for Job Makers Act 2011, as amended (" exempted persons ") may engage in gainful occupation in Bermuda without an appropriate governmental work permit. Work permits may be granted or extended by the Bermuda government upon showing that, after proper public advertisement in most cases, no Bermudian (or otherwise exempted person) is available who meets the minimum standard requirements for the advertised position. A waiver from advertising is automatically granted in respect of any chief executive officer position and other chief officer positions.

U.S. Insurance Regulation

State-Based Regulation

        Sirius Group's U.S.-based insurance and reinsurance operating subsidiaries are subject to regulation and supervision in each of the states where they are domiciled and where they are licensed to conduct business. Generally, state regulatory authorities have broad supervisory and administrative powers over such matters as licenses, standards of solvency, premium rates, policy forms, investments, statutory deposits, methods of accounting, form and content of financial statements, reserves for unpaid loss and loss adjustment expenses, reinsurance, minimum capital and surplus requirements, dividends and other distributions to shareholders, annual and other report filings and market conduct.

        Sirius Group's U.S.-based insurance and reinsurance subsidiaries, and their respective domiciliary state regulators (the " Domiciliary States ") are as follows:

    Sirius America Insurance Company (New York State Department of Financial Services);

    Empire Insurance Company (New York State Department of Financial Services); and

    Oakwood Insurance Company (Tennessee Department of Commerce and Insurance).

State Accreditation and Monitoring

        All state insurance regulatory bodies with jurisdiction over Sirius Group's U.S.-based insurance and reinsurance subsidiaries are accredited by the NAIC. Accredited states generally follow the model laws

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developed by the NAIC. However, there are jurisdictional differences that require reference to each state's insurance laws. States have laws establishing the standards that an insurer must meet to maintain its license to write business. In addition, all states, including the Domiciliary States, have enacted laws substantially similar to the NAIC's risk-based capital (" RBC ") standards for property and casualty companies, which are designed to determine minimum capital requirements and to raise the level of protection that statutory surplus provides for policyholder obligations. The RBC formula for property and casualty insurance companies measures three major areas of risk: 1) underwriting, which encompasses the risk of adverse loss developments and inadequate pricing; 2) declines in asset values arising from market and/or credit risk; and 3) off-balance sheet risk arising from adverse experience from non-controlled assets, guarantees for affiliates or other contingent liabilities and excessive premium growth. RBC reports are provided annually to state regulators as part of an insurer's financial reporting requirements. Insurers having less total adjusted capital than that required by the RBC calculation will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. At December 31, 2017, Sirius Group's U.S. domiciled subsidiaries exceeded all required RBC regulatory thresholds. The calculation of RBC requires certain judgments to be made, and, accordingly, the current RBC of Sirius Group's U.S. domiciled subsidiaries may be greater or less than the RBC calculated as of any date of determination.

        The NAIC has a set of financial relationship tests known as the Insurance Regulatory Information System to assist state insurance regulators in monitoring the financial condition of insurance companies and identifying companies that require special regulatory attention operating in their respective states. Insurance companies generally submit data annually to their domiciliary state regulator, which in turn analyses the data using prescribed financial data ratios (" IRIS ratios "), each with defined "usual ranges". Generally, regulators will begin to investigate or monitor an insurance company if its IRIS ratios fall outside the usual ranges for four or more of the ratios. If an insurance company has insufficient capital, regulators may act to reduce the amount of insurance it can issue or, in severe situations, assume control of the company. None of Sirius Group's U.S.-based (re)insurance subsidiaries is currently subject to regulatory scrutiny based on their respective IRIS ratios.

        Many states have laws and regulations that limit an insurer's ability to exit a market. Some states also limit cancelling or non-renewing certain policies for specific reasons. State insurance laws and regulations include numerous provisions governing marketplace activities of insurers, including provisions governing marketing and sales practices, policyholder services, claims management and complaint handling. State regulatory authorities generally test and enforce these provisions through periodic market conduct examinations. These laws are applicable to certain types of primary insurance policies, but not applicable to reinsurance.

        The NAIC's Annual Financial Reporting Model Regulation, or the Model Audit Rule, which includes provisions that are similar to certain Sarbanes-Oxley requirements for public companies, requires certain insurance companies to appoint audit committees to oversee accounting and financial reporting processes as well as oversee the audit of the insurer's statutory financial statements. Audit committees also are required to appoint independent auditors, among other things. The appointed audit committee receives reports regarding significant deficiencies, material weaknesses and solvency concerns at the insurance company level.

        States are adopting laws to strengthen the ability of regulators to understand and regulate the risk-management practices of insurers and insurance groups. For example, many states have adopted measures related to the NAIC's Solvency Modernization Initiative (" SMI "), pursuant to which the NAIC reviewed the U.S. financial regulatory system and all aspects of financial regulation affecting insurance companies. Among other things, the SMI resulted in the NAIC's adoption of the Risk Management and Own Risk Solvency Model Act (" ORSA Model Act "), which requires insurers meeting premium thresholds to: 1) maintain a risk-management framework; and 2) annually submit a comprehensive report (" ORSA Report ") designed to assess the adequacy of an insurer's

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risk-management practices, including risks related to the insurer's future solvency position. The ORSA Report is required to be filed with the lead state regulator and made available to other domiciliary regulators within the holding company system. Each of the Domiciliary States has substantially adopted the ORSA Model Act, and Sirius Group's U.S.-based (re)insurance subsidiaries are in compliance with the ORSA Model Act as adopted by the Domiciliary States.

Holding Company Regulation

        As a holding company, Sirius Group is subject to the state insurance holding company statutes as well as certain other laws of each of the Domiciliary States. The insurance holding company statutes generally require an insurance holding company and insurers that are members of such holding company system to register with their domestic insurance regulators and to file certain reports with those authorities, including information concerning their capital structure, ownership, financial condition, certain intercompany transactions and general business operations.

        In December 2010 the NAIC adopted amendments to the Insurance Holding Company System Regulatory Model Act (the " Amended Holding Company Model Act ") which introduced the concept of "enterprise risk" within an insurance holding company system and provided enhanced authority for states to regulate insurers as well as their affiliated entities and imposed more extensive informational requirements on parents and other affiliates of licensed insurers or reinsurers with the purpose of protecting licensed companies from enterprise risk. The Amended Holding Company Model Act requires the ultimate controlling person in an insurer's holding company structure to identify and annually report to state insurance regulators material risks within the structure that could pose enterprise risk to the insurer. Each of the Domiciliary States has substantially adopted the Amended Holding Company Model Act.

Acquisition of Control

        Insurance holding company laws generally provide that no person or entity may acquire control of an insurance company, or a controlling interest in any parent company of an insurance company, without the prior approval of such insurance company's domiciliary state insurance regulator. Control is generally presumed to exist if any person acquires, directly or indirectly, 10% or more of the voting securities of an insurance company. This statutory presumption of control may be rebutted by showing that control does not exist in fact. Control may also be deemed to exist upon the possession of the power to direct or cause the direction of the management and policies of any person, whether through ownership of voting securities, by contract or otherwise.

        To obtain approval of any acquisition of control, the proposed acquirer must file with the applicable insurance regulator an application disclosing, among other information, its background, financial condition, the financial condition of its affiliates, the source and amount of funds by which it will affect the acquisition, the criteria used in determining the nature and amount of consideration to be paid for the acquisition, proposed changes in the management and operations of the insurance company and other related matters. In considering an application to acquire control of an insurer, an insurance commissioner generally will consider such factors as the experience, competence and financial strength of the applicant, the integrity of the applicant's board of directors and executive officers, the acquirer's plans for the management and operation of the insurer, and any anti-competitive results that may arise from the acquisition. These regulations pertaining to an acquisition of control of an insurance company may impact a person or entity's ability to acquire Sirius Group, as well as Sirius Group's ability to acquire an insurance company.

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Guaranty Funds and Mandatory Shared Market Mechanisms

        All states within the U.S. and the District of Columbia have insurance guaranty fund laws requiring insurance companies doing business within those jurisdictions to participate in guaranty associations. Sirius Group's U.S.-based insurance and reinsurance subsidiaries may be required to participate in guaranty associations to help pay the obligations of impaired, insolvent or failed insurance companies to their policyholders and claimants. Such participation generally includes an assessment based on the premiums written by the insurer in such state applicable to particular lines of business.

Pricing, Investments and Dividends

        Nearly all states have insurance laws requiring licensed property and casualty insurance companies to file their rates, rules and policy or coverage forms with the state's regulatory authority. In most cases, such rates, rules and forms must be approved prior to use. While pricing laws vary from state to state, their objectives are generally to ensure that rates are not excessive, unfairly discriminatory or used to engage in unfair price competition. The ability and timing of Sirius Group's U.S.-based (re)insurance subsidiaries to increase rates are dependent upon the regulatory requirements in each state where policies are sold.

        Sirius Group's U.S.-based (re)insurance subsidiaries are subject to state laws and regulations that require investment portfolio diversification and that dictate the quality, quantity and general types of investments they may hold. Non-compliance may cause non-conforming investments to be non-admitted when measuring statutory surplus and, in some instances, may require divestiture. Sirius Group's investment/finance units continually monitor portfolio composition to ensure compliance with the investment rules applicable to each (re)insurance subsidiary.

        Under the insurance laws of the Domiciliary States, an insurer is restricted with respect to the timing and the amount of dividends it may pay without prior approval by regulatory authorities. Under the current law of the State of Tennessee, where Oakwood Insurance Company is domiciled, an insurer has the ability, without the prior approval of the regulatory authority and subject to the availability of earned surplus, to pay dividends or make distributions which, together with dividends or distributions paid during the preceding twelve months, do not exceed the greater of (i) 10% of the insurer's surplus as regards policyholders as of the immediately preceding year end or (ii) the net income of the insurer (excluding realized capital gains) for the preceding twelve-month period ending as of the immediately preceding year end. Under the current law of the State of New York, where Sirius America Insurance Company and Empire Insurance Company are domiciled, an insurer has the ability to pay dividends during any 12-month period without the prior approval of the regulatory authority in an amount set by a formula based on the lesser of adjusted net investment income, as defined by statute, or 10% of statutory surplus, in both cases as most recently reported to the regulatory authority, subject to the availability of earned surplus and subject to dividends paid in prior periods. The insurance laws and regulations of the Domiciliary States also require that an insurer's surplus as regards policyholders following any dividend or distribution be reasonable in relation to such insurer's outstanding liabilities and adequate to meet its financial needs.

        Based upon these formulas, Sirius Group's U.S.-based (re)insurance subsidiaries do not have dividend capacity at this time without prior approval of the applicable regulatory authorities.

U.S. Federal Regulation Affecting the Insurance Industry

        Sirius Group's U.S.-based insurance and reinsurance subsidiaries are not federally regulated, but they are impacted by other federal regulations targeted at the insurance and other industries. From time to time, federal measures are proposed that may significantly affect the insurance business. For example, the Terrorism Risk Insurance Act of 2002, as subsequently amended and extended (as so

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amended and renewed, the " Terrorism Risk Insurance Act "). The Terrorism Risk Insurance Act provides a federal backstop to all U.S.-based property and casualty insurers for insurance-related losses resulting from any act of terrorism on U.S. soil or against certain U.S. air carriers, vessels or foreign mission.

        The federal government also has issued certain orders and regulations that require Sirius Group's U.S.-based (re)insurance subsidiaries to establish certain internal controls. Most significant of these regulations is the U.S. Treasury Department Office of Foreign Asset Control (" OFAC "). OFAC proscribes transactions with specially designated nationals (" SDNs ") and blocked countries due to ties with matters such as terrorism, drugs and money laundering. Insurance and reinsurance transactions with SDNs and blocked countries are prohibited and violation can result in significant fines.

        While the federal government does not directly regulate the insurance business, the Dodd-Frank Act made sweeping changes to the regulation of financial services entities, products and markets. Numerous provisions of the Dodd-Frank Act require the adoption or implementation of rules or regulations. The process of adopting such implementing rules and/or regulations has, in some instances, been delayed beyond the timeframes initially imposed by the Dodd-Frank Act. Further, changes in general political, economic or market conditions, including as a result of the most recent U.S. presidential and congressional elections, could affect the scope, timing and final implementation of the Dodd-Frank Act. For example, in May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act was signed into law, making significant changes to some provisions of the Dodd-Frank Act. The full impact of the regulations adopted under the Dodd-Frank Act on Sirius Group's U.S.-based (re)insurance subsidiaries remains unclear.

        The Dodd-Frank Act established the FIO within the Treasury Department to monitor the insurance industry and certain lines of business. The FIO is designed principally to exercise a monitoring and information-gathering role, rather than a regulatory role. The Director of the FIO has submitted reports to Congress regarding (i) how to modernize and improve the system of insurance regulation in the U.S., (ii) the impact of Part II of the Nonadmitted and Reinsurance Reform Act of 2010 and (iii) the global reinsurance market and the regulation of reinsurance. These activities could ultimately lead to changes in the regulation of certain insurers and reinsurers in the United States.

        The Dodd-Frank Act also authorizes the FIO to assist the Secretary of the Treasury Department in negotiating covered agreements. A covered agreement is an agreement between the U.S. and one or more foreign governments, authorities or regulatory entities, regarding prudential measures with respect to insurance or reinsurance. The FIO is further charged with determining, in accordance with the procedures and standards established under the Dodd-Frank Act, whether state laws are preempted by a covered agreement. Pursuant to this authority, in September 2017, the U.S. and the European Union signed a covered agreement (the " Covered Agreement ") to address, among other things, reinsurance collateral requirements. U.S. state regulators have 60 months, or five years, to adopt reinsurance reforms removing reinsurance collateral requirements for European Union reinsurers that meet the Covered Agreement's prescribed minimum conditions or else state laws imposing such reinsurance collateral requirements may be subject to federal preemption. The NAIC is currently working to adopt amendments to the Credit for Reinsurance Model Law and Regulation to conform to the requirements of the Covered Agreement. The reinsurance collateral provisions of the Covered Agreement may increase competition, in particular with respect to pricing for reinsurance transactions, by lowering the cost at which competitors are able to provide reinsurance to U.S. insurers.

Consumer Protection Laws and Privacy and Data Security Regulation

        Federal and state laws and regulations require financial institutions, including insurers, to protect the security and confidentiality of nonpublic personal information, including certain health-related and customer information, and to notify customers and other individuals about their policies and practices relating to their collection and disclosure of health-related and customer information and their

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practices relating to protecting the security and confidentiality of that information. State laws regulate use and disclosure of Social Security numbers and federal and state laws require notice to affected individuals, law enforcement, regulators and others if there is a breach of the security of certain nonpublic personal information, including Social Security numbers. Federal and state laws and regulations regulate the ability of financial institutions to make telemarketing calls and to send unsolicited email or fax messages to consumers and customers.

        Federal and state lawmakers and regulatory bodies may be expected to consider additional or more detailed regulation regarding these subjects and the privacy and security of nonpublic personal information. Furthermore, the issues surrounding data security and the safeguarding of consumers' protected information are under increasing regulatory scrutiny by state and federal regulators, particularly in light of the number and severity of recent U.S. companies' data breaches. The Federal Trade Commission, the Federal Bureau of Investigation, the Federal Communications Commission, the New York State Department of Financial Services, and the NAIC have undertaken various studies, reports and actions regarding data security for entities under their respective supervision. Some states have recently enacted new insurance laws that require certain regulated entities to implement and maintain comprehensive information security programs to safeguard the personal information of insureds and enrollees. The New York State Department of Financial Services recently published a new cybersecurity regulation, which became effective on March 1, 2017, with ongoing compliance deadlines over a 24 month period, and which requires financial institutions regulated by the New York State Department of Financial Services, including Sirius Group's U.S.-based (re)insurance subsidiaries, to establish a cybersecurity program. The regulation includes specific technical safeguards as well as requirements regarding governance, incident planning, data management, system testing and regulator notification. Sirius Group is taking steps to comply with the regulation.

        Sirius Group expects cybersecurity risk management, prioritization and reporting to continue to be an area of significant regulatory focus by such regulatory bodies and self-regulatory organizations. Sirius Group cannot predict the effect or the compliance costs if state and federal regulators pursue investigations and increase the regulatory requirements for the security of protected information.

European Insurance Regulation

        Businesses that carry out insurance activities in Europe are subject to extensive insurance laws and regulations, including prudential requirements and requirements relating to the manner in which insurance activities are conducted. These laws and regulations are generally designed to protect the interests of policyholders, consumers and claimants, rather than investors.

        Prudential regulation and supervision focuses on authorization, ownership and control, resourcing and capital adequacy, risk identification and management, and sound governance. Conduct regulation focuses on the manner in which an insurer or insurance intermediary conducts itself in relation to its interactions with customers. Businesses carrying out insurance activities are primarily regulated and supervised by government entities within their home jurisdictions.

        The European Solvency II regulatory framework for insurance business provides a single set of key prudential requirements that apply to insurance and reinsurance businesses operating within the EEA. It imposes economic risk-based solvency requirements across all EU Member States. The aim of the Solvency II framework is to ensure that insurance and reinsurance undertakings are financially sound and can withstand adverse events in order to protect policyholders and the stability of the financial system as a whole. It also aims at the creation of a single market for insurance in the EEA with consistent regulatory requirements and harmonized supervision. The Solvency II regulatory framework is categorized into three 'pillars', covering quantitative requirements, such as capital requirements designed to ensure that sufficient and appropriate assets are held to cover insurance liabilities and risk exposure (Pillar 1), qualitative requirements relating to governance and risk-management (Pillar 2), and transparency obligations requiring disclosure of extensive information to supervisors and to the public (Pillar 3).

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        The Solvency II framework is set out in a set of regulations headed by an EU Directive. It also includes Delegated Acts and Implementing Technical Standards adopted by the EU Commission and Guidelines issued by the European Insurance and Occupational Pensions Authority (EIOPA). These address issues that are more technical in nature and contain details on the valuation of assets and liabilities, eligibility of capital, risk transfer, equivalence, internal model, and rules relating to insurance groups. The Solvency II Directive is implemented into local laws and complemented by local regulations and guidelines.

        The Solvency II requirements in respect of insurance groups include group solvency and capital requirements, group disclosure and supervisory reporting, and undertaking a group own risk and solvency assessment. The Bermuda commercial insurance regulatory regime has been approved by the European Commission as being Solvency II equivalent. Therefore, the Solvency II group requirements are capped at the highest European entity, Sirius International UK Holdings Ltd. (" SIUK "). Accordingly, the SFSA is the group supervisor for the SIUK group and the BMA, has been designated as the group supervisor Sirius Group-level and below.

        In addition to the Solvency II regime, there are a number of pan-European rules and regulations in relation to the distribution of insurance in the EEA. The Insurance Distribution Directive (EU/2016/97) (" IDD ") will be implemented in all EEA states no later than October 1, 2018.

        The General Data Protection Regulation (EU 2016/679) (" GDPR ") became effective on May 25, 2018. The GDPR is intended to harmonize data protection procedures and enforcement across the EU and achieve consistency with the system for ensuring privacy online and it is directly applicable to data controllers and data processors in all member states. Many of the provisions of the GDPR will have a significant impact on data controllers and processors who are active within the EEA, and those who are located outside it. The penalties for breach of the new data protection regime and the insurance distribution directive are substantial.

Sweden Insurance Regulation

        Sirius International is subject to regulation and supervision by the Swedish Financial Supervisory Authority (the " SFSA "). As Sweden is a member of the EU, the SFSA supervision of branches is recognized across all locations within the EU (apart from customer conduct that is regulated and supervised locally across the EU). The SFSA has broad supervisory and administrative powers over such matters as licenses, governance and internal control, standards of solvency, investments, methods of accounting, form and content of financial statements, minimum capital and surplus requirements, and annual and other report filings. Non-compliance can be sanctioned by warnings, fees or withdrawal of license.

        The Solvency II Directive is implemented in Sweden primary through the Swedish Insurance Business Act (Sw. försäkringsrörelselag (2010:2043) ) (the " IBA "). The "level two" implementation measures set out in the Commission Delegated Regulation (EU) 2015/35 (the " Solvency II Regulation ") have direct effect in Sweden. The IBA and the Solvency II Regulation constitute the main legal framework applicable to insurance business in Sweden. Supplementary company law for most insurance companies is provided in the Swedish Companies Act (Sw. aktiebolagslagen (2005:551) ). In addition, the SFSA issues regulations and general guidelines.

        Insurance companies are obliged to provide, on an on-going basis, information about their financial status, and the SFSA may conduct on-site inspections and review the operations at any time. In addition to what is required under the Solvency II Regulation, Swedish insurance companies must conduct the business in accordance with "generally accepted insurance practices". A Swedish insurance company may not engage in business other than insurance business and activities that are connected with insurance business (such as claims handling, investment management, etc.). Sweden has implemented robust rules regarding the policies required and rules pertaining to conflicts of interest.

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Safety Reserve

        Subject to certain limitations under Swedish law, Sirius International is permitted to transfer pre-tax income amounts into an untaxed reserve referred to as a " safety reserve ". As of December 31, 2017, Sirius International's safety reserve amounted to SEK 10.7 billion, or $1.3 billion (based on the December 31, 2017 SEK to USD exchange rate). For the 12 months ended December 31, 2017, Sirius International did not transfer to the safety reserve. Under GAAP, an amount equal to the safety reserve, net of a related deferred tax liability established at the Swedish tax rate of 22%, is classified as shareholders' equity. Generally, this deferred tax liability is only required to be paid by Sirius International if it fails to maintain prescribed levels of premium writings and loss reserves in future years. As a result of the indefinite deferral of these taxes, Swedish regulatory authorities apply no taxes to the safety reserve when calculating solvency capital under Swedish insurance regulations. Accordingly, under local statutory requirements, an amount equal to the deferred tax liability on Sirius International's safety reserve ($287 million as of December 31, 2017) is included in Sirius International's solvency capital. Access to the safety reserve is restricted to coverage of insurance and reinsurance losses and to a breach of the solvency capital requirement. Access for any other purpose requires the approval of Swedish regulatory authorities. Similar to the approach taken by Swedish regulatory authorities, most major rating agencies generally include the balance of the safety reserve, without any provision for deferred taxes, in Sirius International's regulatory capital when assessing Sirius International's financial strength.

Change of Control

        The acquisition of a "qualifying holding" directly or indirectly in Sirius International requires approval from the SFSA prior to completion. " Qualifying holding " means:

    a direct or indirect ownership in an undertaking, where the holding represents 10 percent or more of the equity capital or of all voting participating interests; or

    the ability to exercise a significant influence over the management of the undertaking (e.g. possible shareholder agreements which might have an impact on the influence over the undertaking)

        In addition, approval from the SFSA must be obtained when the holding is increased so that the holding represents or exceeds 20, 30 or 50 percent of the equity capital or of all voting participating interests, or when the company becomes a subsidiary. The same is valid if there is a decrease. When certain persons or companies act in concert, their holdings are aggregated to determine whether such persons or companies acquire a qualifying holding or cross any relevant threshold.

        The SFSA assesses the suitability of the acquirer and will generally grant authorization inter alia if the acquisition is found to be financially sound. The SFSA will also assess the acquirer's reputation, financial standing and possible links to money laundering and financing of terrorism. The ownership assessment also encompasses a suitability assessment of the management of all legal persons' acquiring a qualifying holding in Sirius International. The term management includes the board of directors, deputy board of directors, the managing director and deputy managing director of the acquirer.

United Kingdom Insurance Regulation

        The financial services industry in the United Kingdom is currently dual-regulated by the Financial Conduct Authority (the " FCA ") and the Prudential Regulation Authority (the " PRA ") (collectively, the " U.K. Regulators "). Prudential regulation and supervision of insurance undertakings is carried out by the PRA and the regulation and supervision of conduct matters is carried out by the FCA. All insurers and Lloyd's managing agents are regulated by both the PRA and the FCA, whilst businesses that only carry on insurance intermediary activities are solely regulated by the FCA for both prudential and conduct

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matters. The Financial Policy Committee (which is within the Bank of England) is responsible for the overall prudential regulation of the financial services industry.

        There remains some considerable uncertainty as to the legal and regulatory landscape that will exist in respect of the U.K. insurance regulatory regime and the future approach U.K. legislation and regulation may take following the U.K.'s anticipated exit from the EU on 29 March 2019 and as to the terms of any transitional agreement that may be entered into between the U.K. and EU.

        Sirius Group's U.K.-based authorized insurance subsidiaries are as follows:

    Sirius International Managing Agency Limited, a Lloyd's managing agent that is dual-regulated by the PRA and FCA and supervised by Lloyd's; and

    A La Carte Healthcare Limited and IMG Europe Limited, both insurance intermediaries regulated by the FCA.

        Sirius International Insurance Corporation also operates in the U.K. under an EEA branch passporting license and one company within the Sirius Group, Sirius International Corporate Member Limited, is a corporate member of Lloyd's.

    PRA and FCA regulation

        The primary statutory objectives of the PRA in relation to its supervision of insurers are (i) to promote their safety and soundness; and (ii) to contribute to the securing of an appropriate degree of protection for policyholders or those who may become policyholders. As conduct regulator, the FCA also acts to protect policyholders but the FCA's focus is to ensure that consumers are treated fairly when dealing with insurers and insurance intermediaries whilst the PRA's focus is to ensure that policyholders have appropriate protection in respect of the cover for the risks that they are insured against.

        The U.K. Regulators have extensive powers to intervene in the affairs of the insurance businesses that they regulate and to monitor compliance with their objectives, including amending (including by imposing limitations on) or withdrawing a firm's authorization, prohibiting individuals from carrying on regulated activities, suspending firms or individuals from undertaking regulated activities and fining or requiring compensation from firms and individuals who breach their rules.

        Businesses carrying out insurance activities in the U.K. must not only comply with the PRA's requirements (as set out in the PRA Rulebook) and the FCA's requirements (as set out in the FCA Handbook) but also a wide range of U.K. insurance legislation. The most notable of such legislation is the Financial Services and Markets Act 2000 (" FSMA "), which includes the requirements for becoming authorized to carry out regulated insurance activities, regulated and prohibited activities of an insurance company, the approval process for the acquisition or disposal of control of insurance companies, rules on financial promotions, transfers of insurance portfolios, market abuse provisions, etc. This is complemented by a range of statutory instruments on certain subjects, for example the authorization or exemption process. In addition, U.K. companies carrying out insurance activities must comply with general legislation, such as the U.K. Companies Act 2006 and the data protection regime.

    Lloyd's regulation

        As well as regulating insurers and insurance intermediaries, the U.K. Regulators also regulate Lloyd's. The U.K. Regulators and Lloyd's have common objectives in ensuring that the Lloyd's market is appropriately regulated. Lloyd's is required to implement certain rules prescribed by the U.K. Regulators by the powers it has under the Lloyd's Act of 1982 (" Lloyd's Act ") relating to the operation of the Lloyd's market. In addition, each year the U.K. Regulators require Lloyd's to satisfy an annual solvency test that measures whether Lloyd's has sufficient assets in the aggregate to meet all

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the outstanding liabilities of its members. The PRA and the FCA can give directions to Lloyd's in order to advance their statutory objectives.

        The governing body of the Lloyd's market is the Council of Lloyd's (the " Council "). The Council is responsible for the supervision and management of the Lloyd's market and it has the power to regulate and direct the business of the market. The Lloyd's Acts, byelaws, requirements made under byelaws, minimum standards, guidance, codes of conduct and bulletins issued by or under the authority of the Council together contain the powers and requirements that apply in respect of businesses operating in the Lloyd's market.

        Lloyd's does not itself carry on insurance underwriting but it regulates and supervises its members who do so. Lloyd's permits its corporate and individual members (" Members ") to underwrite insurance risks through Lloyd's syndicates. Members of Lloyd's may participate in a syndicate for one or more underwriting years by providing capital to support the syndicate's underwriting, alone or together with other Members. Members are not required to be authorized by the PRA or the FCA under FSMA but they are supervised by Lloyd's and must comply with applicable Lloyd's rules. All syndicates are managed by Lloyd's-approved managing agents, who are also authorized by the PRA and dual-regulated by the PRA and the FCA. Managing agents receive fees and profit commissions in respect of the underwriting and administrative services they provide to the syndicates they manage. Lloyd's prescribes, in respect of its managing agents and Members, certain minimum standards relating to their management and control, financial resources and various other requirements. In addition, as dual-regulated firms, managing agents must comply with the relevant parts of the PRA Rulebook and the FCA Handbook (including FCA capital resources requirements).

        Lloyd's operates internationally through a number of trading licenses and local arrangements, and such activities are subject to local regulation and the specific requirements of those licenses or local arrangements.

        Sirius Group participates in the Lloyd's market through the 100% ownership of Sirius International Corporate Member Limited, a Lloyd's Corporate Member, which is the sole member of Syndicate 1945. Syndicate 1945 commenced underwriting on 1 July 2011and is managed by another wholly-owned subsidiary with the Sirius Group, Sirius International Managing Agency. Lloyd's approved stamp capacity for Syndicate 1945 in 2018 is £102 million, or approximately $132 million (based on the December 31, 2017 GBP to USD exchange rate). Stamp capacity is a measure of the amount of net premium (gross premiums written less acquisition costs) that a syndicate is authorized by Lloyd's to write.

        A corporate member of Lloyd's is bound by the rules of the Society of Lloyd's which are prescribed by the byelaws and requirements of the Council of Lloyd's under powers conferred by the Lloyd's Acts. These rules govern Sirius Group's corporate member and its participation in Syndicate 1945 and among other things prescribe its Lloyd's membership subscription fees and contributions to the Lloyd's Central Fund (" Central Fund "). If a Member is unable to pay its obligations to policyholders, such obligations may be payable by the Central Fund. If Lloyd's determines that the Central Fund needs to be increased, it may levy premiums on current Members. The Council of Lloyd's has discretion to call upon up to 3% of a Member's underwriting capacity in any one year as a Central Fund contribution.

        The underwriting capacity of a Member must be supported by providing a deposit in the form of cash, securities, letters of credit or guarantees (" Funds at Lloyd's ") in an amount to be determined pursuant to the Members' capital requirements set by Lloyd's. The amount of such deposit is calculated for each Member through the completion of a twice-yearly capital adequacy exercise. Pursuant to requirements of the U.K. Regulators applicable to the Members of Lloyd's as a whole, Lloyd's must demonstrate that each Member has sufficient assets to meet its underwriting liabilities plus a required solvency margin. The requirement to maintain such solvency margin can have the effect of reducing the

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amount of funds available to distribute as profits to the Member or result in the Member having to deposit additional Funds at Lloyd's to cover its solvency margin.

        The amounts of capital required by Lloyd's to be maintained in the form of Funds at Lloyd's to support the activities of the Members of a syndicate is determined by a combination of the managing agent's assessment of capital requirements for the syndicate, and review and challenge by Lloyd's. The managing agent's assessment of capital requirements for the syndicate determines its view of the Solvency Capital Requirement (" SCR "); this represents the capital needed to support the syndicate, based on modelling individual syndicate robustness against the risk environment in which the syndicate operates. Lloyd's may or may not approve the level of SCR as submitted by the managing agent and has the authority to require the SCR to be increased. The approved or amended SCR is then uplifted by an economic capital margin (currently a flat 35% for all syndicates) to produce an amount of syndicate capital known as the economic capital assessment (" ECA "). The level of the ECA is set to ensure that Lloyd's overall aggregate capital is maintained at a level necessary to retain its desired rating, as well as to meet the requirements of the U.K. Regulators. Any failure to comply with these requirements may affect the amount of business which the syndicate may underwrite and/or could result in sanctions being imposed by Lloyd's and/or the U.K. Regulators. The process and the method by which the required capital is calculated may alter from year to year and may affect the level of participation of Members in a particular syndicate.

        In addition to a Member's Funds at Lloyd's, at a syndicate level insurance premiums are held in a premium trust fund for the benefit of policyholders whose contracts are underwritten by the syndicate and these funds are the first resources used to pay claims made by policyholders of that syndicate.

        Lloyd's has wide discretionary powers to regulate a Member's underwriting. For example, Lloyd's may change the way that syndicate expenses are allocated or vary the Funds at Lloyd's investment criteria. Any such change may affect the Member's return on investment. All syndicates at Lloyd's must also submit their business plans to Lloyd's for approval and amendments or restrictions may be applied to proposed business plans or, in extreme circumstances, approval may be refused which would lead to that syndicate ceasing to underwrite for the following year of account.

    Change of Control

        The change of control requirements in the U.K. are similar to the Swedish regulatory requirements. Prior regulatory consent is required before a person (alone or together with any associates) can acquire direct or indirect control over a U.K. authorized firm.

        Prior approval is also required where a person (together with any associates) increases its holding of shares or voting power from (i) less than 20% to 20% or more, (ii) less than 30% to 30% or more, and (iii) less than 50% to 50% or more. The change of control requirements apply whether such change of control results from an external acquisition or an internal restructuring resulting in a new controller.

        For U.K. authorized insurance intermediaries, the control threshold percentages are amended such that there is a single 20% threshold where prior regulatory consent is required.

        In relation to the acquisition or increase of direct or indirect control over a Lloyd's managing agent or Lloyd's corporate member, such as Sirius International Managing Agency Limited and Sirius International Corporate Member Limited respectively, prior approval is also required from Lloyd's.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF SIRIUS GROUP

         You should read the following discussion and analysis in conjunction with the audited consolidated financial statements of Sirius Group as of December 31, 2017 and 2016, and the related consolidated statements of (loss) income and comprehensive (loss) income for each of the three years ended December 31, 2017, 2016 and 2015, and the unaudited interim consolidated financial statements of Sirius Group as of June 30, 2018, and the related consolidated statements of (loss) income and comprehensive income for the six months ended June 30, 2018 and 2017 included elsewhere in this proxy statement/prospectus. These consolidated financial statements have been prepared in accordance with GAAP.

         The following Management's Discussion and Analysis of Financial Condition and Results of Operations (" MD&A ") includes forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this proxy statement/prospectus. See "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors."

         As used in this MD&A, "we," "our," and "us" refer to Sirius Group.

Index to MD&A

Overview

    196  

Executive Summary—Three and Six Months Ended June 30, 2018 and 2017

    199  

Consolidated Results of Operations—Three and Six Months Ended June 30, 2018 and 2017

    201  

Executive Summary—Years Ended December 31, 2017 and 2016 and Years Ended December 31, 2016 and 2015

    205  

Consolidated Results of Operations—Years Ended December 31, 2017, 2016 and 2015

    206  

Summary of Investment Results

    209  

Foreign Currency Translation

    214  

Results of Reportable Segments

    217  

Global Property

    221  

Global A&H

    226  

Specialty & Casualty

    229  

Runoff & Other

    235  

Liquidity and Capital Resources

    237  

Off Balance Sheet Arrangements

    244  

Contractual Obligations and Commitments

    244  

Cash Flows

    246  

Summary of Critical Accounting Estimates

    250  

Loss and LAE Reserves

    250  

Fair Value Measurements

    257  

Goodwill and Intangible Assets

    265  

Premiums

    266  

Earnout Obligations

    268  

Income Taxes

    269  

Recent Accounting Pronouncements

    270  

Quantitative and Qualitative Disclosures about Market Risk

    271  

Overview

        Sirius Group is a Bermuda exempted company whose principal businesses are conducted through its insurance and reinsurance subsidiaries and other affiliates. Sirius Group's subsidiaries, including

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Sirius Bermuda Insurance Company Ltd. (" Sirius Bermuda "), Sirius International Insurance Corporation (" Sirius International "), Sirius America Insurance Company (" Sirius America ") and Lloyd's Syndicate 1945 (" Syndicate 1945 "), provide insurance, reinsurance and insurance services on a worldwide basis. Sirius Group writes treaty and facultative reinsurance, as well as primary insurance business. The majority of Sirius Group's treaty reinsurance premiums are derived from proportional and excess of loss reinsurance contracts, which in 2017 amounted to 44% and 30%, respectively, of its total net written premiums, while primary business represented 26% of total net written premiums. Sirius Group's primary business has historically been predominantly accident and health insurance. In recent years, Sirius Group expanded its accident and health primary business capabilities in the United States via the acquisitions of International Medical Group Acquisition, Inc. (" IMG ") and ArmadaCorp Capital, LLC (" Armada ") in 2017. In addition to growing in accident and health, Sirius Group further expanded its primary insurance platform launching its primary Surety and Environmental insurance platforms in the United States in late 2017, and prior to that re-entering the U.S. casualty reinsurance market in early 2017.

Background and Recent Developments

        On April 18, 2016, CMIG International, through its Bermuda holding company CM Bermuda, purchased Sirius Group and its subsidiaries from White Mountains Insurance Group, Ltd. (" White Mountains " or " former parent "). The purchase price paid at the closing was approximately $2.6 billion.

        Sirius Group had a commitment to purchase approximately 46.24% of the shares of The Phoenix Holdings Ltd. (" The Phoenix ") from Delek Group for a sum of New Israeli Shekel (" NIS ") 2.3 billion in cash (or $663 million using the December 31, 2017 NIS to USD conversion rate), subject to certain adjustments for interest and earnings. The agreement for Sirius Group to acquire a controlling interest in The Phoenix terminated on July 2, 2018.

        On July 14, 2018, Sirius Group, IMGAH and Sirius Acquisitions Holding Company II entered into that certain Redemption Agreement (the " Preference Shares Redemption Agreement ") pursuant to which, effective as of and subject to the closing of the Merger, Sirius Group has agreed to redeem all of the issued and outstanding Sirius Group Series A redeemable preference shares, which are held by IMGAH, for $95 million, payable in cash at the time of the redemption. Effective as of the completion of such redemption, the parties have agreed to terminate the registration rights agreement and the shareholder's agreement between Sirius Group and IMGAH. In addition, the parties agreed that any remaining contingent consideration in respect of the IMG acquisition, which may be in an amount up to $50.0 million, will be paid in cash, not in Sirius Group Series A redeemable preference shares as previously contemplated in the agreement in respect of the IMG acquisition.

        On August 16, 2018, Sirius Group acquired WRM America Indemnity Company, Inc. from WRM America Indemnity Holding Company, LLC for $17 million.

Reportable Segments

        Sirius Group provides insurance and reinsurance products for property lines and agriculture (" Global Property "), accident and health (" Global A&H ") and specialty lines including aviation & space, marine, trade credit, contingency, casualty, surety, and environmental (" Specialty & Casualty "), which together with Runoff & Other, constitute its four reportable segments.

    Global Property—The Global Property segment consists of Sirius Group's underwriting lines of business which offer other property insurance and reinsurance, property catastrophe excess reinsurance and agriculture reinsurance on a worldwide basis.

    Global A&H—The Global A&H segment consists of Sirius Group's Global A&H insurance, reinsurance underwriting unit along with two MGUs (Armada and IMG). As part of Global A&H, Sirius Group provides supplemental healthcare and medical travel insurance products as well as related administration services through its MGU subsidiaries.

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    Specialty & Casualty—The Specialty & Casualty segment offers insurance and reinsurance specialty & casualty product lines on a worldwide basis. Specialty lines represent unique risks where the more difficult and unusual risks are underwritten. Because specialty lines tend to be the more unusual or high risks, much of the market is characterized by a higher degree of specialization. Specialty & Casualty consists of Aviation & Space, Marine, Trade Credit, Contingency, Casualty, Surety, and Environmental specialty lines.

    Runoff & Other—The Runoff & Other segment consists of asbestos risks, environmental risks and other latent liability exposures, in addition to results from Sirius Global Solutions, which specializes in the acquisition and management of runoff liabilities for insurance and reinsurance companies, both in the United States and internationally.

Marketplace Trends

        The global insurance and reinsurance marketplace is highly competitive and cyclical, which vary by product and market. The overall marketplace has been very competitive in recent years, particularly in property catastrophe excess, which is especially competitive due to an influx of capital. This has been in large part due to the persistently low global interest rate environment, with alternative sources of capital making its way into the industry through insurance linked financial instruments, which provides attractive yields and diversification relative to its existing portfolios. Related, there has been a trend towards increased ceding commissions on assumed proportional reinsurance. These trends have led to consistently decreasing underwriting margins for several years, with the impact varying by product and market.

        There was significant natural catastrophe activity in 2017, namely Hurricanes Harvey, Irma and Maria and the Mexico City Earthquake in the third quarter of 2017, and other events such as wildfires in California during the fourth quarter of 2017. Third party modeling firms and industry peers estimated that insured losses from these events will exceed $130 billion, which would make 2017 one of, if not the, most costly to the industry on record. This significant 2017 natural catastrophe activity has led to some improved pricing across most lines of business, in particular risks with catastrophe exposed property lines, during the January and April 2018 renewal seasons. However, these rate improvements are still lagging relative to improved price, terms, and conditions following similar heavy loss years in prior years.

        These overall market conditions could continue to improve, or could deteriorate based upon further low interest rates and other factors. We do note that certain markets, by geography and line of business, have better pricing than others. In recent years we have diversified our revenue streams and pushed towards growth in favorable market niches accordingly. For example, we have expanded our primary insurance platform in accident & health, environmental, and surety markets. We have also acquired two MGUs, IMG and Armada, that have strategically scaled up our Global A&H platform and diversified our earnings base. We also recently re-entered the U.S. casualty reinsurance market.

        We believe that we have a strong reputation in the insurance industry, with a management team that knows the market and will opportunistically react as it evolves, including adding underwriting teams who like our underwriting-comes-first culture during a time of market consolidation. We have many different resources to provide insurance and reinsurance solutions to a variety of customers. Further, it is our commitment to our long-term and local relationships and customer service focus that differentiates Sirius Group. We believe that Sirius is well positioned to compete and maintain profitability throughout underwriting cycles over the long term.

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Executive Summary

Three Months Ended June 30, 2018 and 2017

        Sirius Group ended the second quarter of 2018 with net income attributable to common shareholder of $98 million and basic earnings per common share of $0.78. This compares to a net loss attributable to common shareholder of $1 million and basic earnings per common share of $(0.01) for the second quarter of 2017. The increase was primarily due to higher net unrealized investment gains as a result of favorable foreign currency gains, net service fee income from IMG, and improved underwriting results. In the second quarter of 2018, Sirius Group recorded catastrophe losses of $1 million and net favorable prior year loss reserve development of $10 million. In the second quarter of 2017, Sirius Group recorded catastrophe losses of $1 million and less than $1 million of net prior year loss reserve development. During the second quarter of 2017, Sirius Group recorded net unfavorable prior year loss reserve development of $21 million in the Runoff & Other segment as asbestos loss reserves of $58 million were partially offset by reductions of other runoff claims reserves of $37 million. The asbestos incurred losses were primarily a result of an in-depth analysis of Sirius Group's loss reserves in the second quarter of 2017. The asbestos study was initiated in response to increased estimates of industry asbestos losses promulgated by leading financial analysts. In addition, Sirius Group recorded favorable prior year loss reserve development in Global Property ($14 million), Specialty & Casualty ($5 million), and Global A&H ($2 million). The favorable development in Global Property primarily relates to a reduction in ultimate net loss estimates for prior year catastrophe losses in response to better than expected claims emergence.

        Sirius Group's combined ratio was 83% for the second quarter of 2018 compared to 85% for the second quarter of 2017. The improvement in the combined ratio was driven by net favorable prior year loss reserve development as Sirius Group's combined ratio included less than 1 point of catastrophe losses and 3 points of net favorable prior year loss reserve development in the second quarter of 2018 compared to less than 1 point each of catastrophe losses and net unfavorable prior year loss reserve development, respectively, in the second quarter of 2017. The decrease in the loss and LAE ratio was partially offset by higher acquisition expenses.

        Gross written premiums increased 66% to $505 million for the second quarter of 2018 from $304 million for the second quarter of 2017 due to increases in Global Property ($157 million), Global A&H ($16 million), and Specialty & Casualty ($11 million). See " Results of Reportable Segments " below.

Six Months Ended June 30, 2018 and 2017

        Sirius Group ended the first six months of 2018 with net income attributable to common shareholder of $138 million and basic earnings per common share of $1.11. This compares to net income attributable to common shareholder of $7 million and basic earnings per common share of $0.06 for the six months ended June 30, 2017. The increase was primarily due to higher net unrealized investment gains as a result of favorable foreign currency gains, net service fee income from IMG and Armada, and improved underwriting results. For the six months ended June 30, 2018, Sirius Group recorded catastrophe losses of $3 million and net favorable prior year loss reserve development of $13 million. For the six months ended June 30, 2017, Sirius Group recorded catastrophe losses of $9 million and net unfavorable prior year loss reserve development of $8 million.

        Sirius Group's combined ratio was 85% for the six months ended June 30, 2018 compared to 87% for the six months ended June 30, 2017. The improvement in the combined ratio was driven by net favorable prior year loss reserve development and lower catastrophe losses as Sirius Group's combined ratio included 1 point of catastrophe losses and 2 points of net favorable prior year loss reserve development for the six months ended June 30, 2018 compared to 2 points each of catastrophe losses and net unfavorable prior year loss reserve development, respectively, for the six months ended

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June 30, 2017. The decrease in the loss and LAE ratio was partially offset by higher acquisition expenses.

        Gross written premiums increased 38% to $1,120 million for the six months ended June 30, 2018 from $810 million for the six months ended June 30, 2017 due to increases in Global Property ($220 million), Specialty & Casualty ($46 million), and Global A&H ($26 million). See " Results of Reportable Segments " below.

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Consolidated Results of Operations—Three and Six Months Ended June 30, 2018 and 2017

(Expressed in millions of U.S. dollars, except ratio and share information)

 
  Three months
ended
June 30
  Six months
ended
June 30,
 
 
  2018   2017   2018   2017  

Revenues

                         

Gross written insurance and reinsurance premiums

  $ 505.0   $ 303.4   $ 1,120.2   $ 809.7  

Net written insurance and reinsurance premiums

  $ 320.3   $ 241.4   $ 789.7   $ 597.1  

Net earned insurance and reinsurance premiums

    308.9     243.9     593.4     467.8  

Net investment income

    19.2     16.6     30.0     32.1  

Net realized investment gains (losses)

    7.8     2.1     4.1     (2.5 )

Net unrealized investment gains (losses)

    24.7     (16.3 )   40.7     (22.5 )

Net foreign exchange gains

    25.6     3.5     22.1     1.3  

Other revenue

    55.6     2.8     79.0     2.3  

Total revenues

    441.8     252.6     769.3     478.5  

Expenses

                         

Loss and loss adjustment expenses

    151.4     133.1     292.4     255.4  

Insurance and reinsurance acquisition expenses

    66.8     44.5     129.8     94.0  

Other underwriting expenses

    38.2     30.8     81.4     57.9  

General and administrative expenses

    24.2     24.6     38.5     40.8  

Intangible asset amortization expenses

    4.0     2.4     7.9     2.4  

Interest expense on debt

    7.8     4.8     15.5     9.6  

Total expenses

    292.4     240.2     565.5     460.1  

Pre-tax income

    149.4     12.4     203.8     18.4  

Income tax (expense)

    (51.2 )   (2.6 )   (62.3 )   (1.5 )

Net income

    98.2     9.8     141.5     16.9  

Income attributable to non-controlling interests

    (0.4 )   (9.6 )   (0.6 )   (9.0 )

Income before accrued dividends on Series A redeemable preference shares

    97.8     0.2     140.9     7.9  

Accrued dividends on Series A redeemable preference shares

        (1.0 )   (2.6 )   (1.0 )

Net income (loss)

  $ 97.8   $ (0.8 ) $ 138.3   $ 6.9  

Comprehensive income

                         

Net income

  $ 98.2   $ 9.8   $ 141.5   $ 16.9  

Other comprehensive (loss) income, net of tax

                         

Change in foreign currency translation, net of tax

    (48.5 )   33.5     (61.9 )   47.2  

Other comprehensive (loss) income

    (48.5 )   33.5     (61.9 )   47.2  

Comprehensive income

    49.7     43.3     79.6     64.1  

Net (loss) attributable to non-controlling interests

    (0.4 )   (9.6 )   (0.6 )   (9.0 )

Comprehensive income attributable to Sirius Group's common shareholder

  $ 49.3   $ 33.7   $ 79.0   $ 55.1  

Ratios:

                         

Loss and LAE ratio(1)

    49.0 %   54.6 %   49.3 %   54.6 %

Acquisition expense ratio(2)

    21.6 %   18.2 %   21.9 %   20.1 %

Other underwriting expense ratio(3)

    12.4 %   12.6 %   13.7 %   12.4 %

Combined ratio(4)

    83.0 %   85.4 %   84.9 %   87.1 %

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  As of June 30,
2018
  As of December 31,
2017
  As of June 30,
2017
 

Per Common Share Data:

                   

Basic earnings per common share

  $ 1.11   $ (1.30 ) $ 0.06  

Common shares outstanding

    120,000,000     120,000,000     120,000,000  

Selected Balance Sheet Data:

   
 
   
 
   
 
 

Book value per common share

  $ 16.64   $ 15.98   $ 17.10  

Common shares outstanding

    120,000,000     120,000,000     120,000,000  

(1)
The loss and LAE ratio is calculated by dividing loss and LAE expenses by net earned insurance and reinsurance premiums.

(2)
The acquisition expense ratio is calculated by dividing insurance and reinsurance acquisition expenses by net earned insurance and reinsurance premiums.

(3)
The other underwriting expense ratio is calculated by dividing other underwriting expenses by net earned insurance and reinsurance premiums.

(4)
The combined ratio is calculated by combining the loss and loss adjustment ratio, the acquisition expense ratio, and the other underwriting expense ratio.

Book Value per Common Share

        Book value per common share increased 4% to $16.64 as of June 30, 2018 from $15.98 as of December 31, 2017, due to higher comprehensive income recognized.

Net Earned Insurance and Reinsurance Premiums

        Net earned insurance and reinsurance premiums for the three months ended June 30, 2018 was $309 million, an increase of $65 million or 27% compared to net earned insurance and reinsurance premiums of $244 million for the three months ended June 30, 2017, with Specialty & Casualty up 37%, Global Property up 28%, and Global A&H up 10%. See further analysis in " Results of Reportable Segments " below.

        Net earned insurance and reinsurance premiums for the six months ended June 30, 2018 was $593 million, an increase of $125 million or 27% compared to net earned insurance and reinsurance premiums of $468 million for the six months ended June 30, 2017, with Specialty & Casualty up 40%, Global A&H up 22%, and Global Property up 21%. See further analysis in " Results of Reportable Segments " below.

        Net Investment Income, Net realized investment gains (losses), Net unrealized investment gains (losses) and Net foreign exchange gains —Net investment income increased 12% to $19 million for the three months ended June 30, 2018 from $17 million for the three months ended June 30, 2017 due to a higher interest rate environment which was partially offset by lower fixed income holdings in 2018 versus 2017. Sirius Group reported net realized investment gains of $8 million for the three months ended June 30, 2018, which included $7 million of net realized foreign currency gains, compared to net realized investment gains of $2 million for the three months ended June 30, 2017, which included $3 million of net realized foreign currency gains. Net unrealized investment gains were $25 million for the three months ended June 30, 2018, which included $30 million of net unrealized foreign currency gains, compared to net unrealized investment losses of $16 million for the three months ended June 30, 2017, which included $32 million of net unrealized foreign currency losses. See " Summary of Investment Results " below. Additionally, Sirius Group recorded $26 million of non-investment related foreign exchange gains for the three months ended June 30, 2018 compared to $4 million of non-investment related foreign exchange gains for the three months ended June 30, 2017. Included in the second

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quarter 2018 amount is $28 million of favorable currency movement on the SEK Subordinated Notes, which were issued in September 2017. See " Foreign Currency Translation " below.

        Net investment income decreased 6% to $30 million for the six months ended June 30, 2018 from $32 million for the six months ended June 30, 2017 due to the lower fixed income holdings. Sirius Group reported net realized investment gains of $4 million for the six months ended June 30, 2018, which included $6 million of net realized foreign currency gains, compared to net realized investment losses of $3 million for six months ended June 30, 2017, which included $1 million of net realized foreign currency gains. Net unrealized investment gains were $41 million for the six months ended June 30, 2018, which included $49 million of net unrealized foreign currency gains, compared to net unrealized investment losses of $23 million for the six months ended June 30, 2017, which included $45 million of net unrealized foreign currency losses. See " Summary of Investment Results " below. Additionally, Sirius Group recorded $22 million of non-investment related foreign exchange gains for the six months ended June 30, 2018 compared to $1 million of non-investment related foreign exchange gains for the six months ended June 30, 2017. Included in the six months ended June 30, 2018 amount is $28 million of favorable currency movement on the SEK Subordinated Notes, which were issued in September 2017. See " Foreign Currency Translation " below.

        Other Revenue —Other revenue increased to $56 million for the three months ended June 30, 2018 from $3 million for the three months ended June 30, 2017. The increase in other revenue was primarily attributable to management's estimate of a right of indemnification against a third party in connection with an uncertain tax position and an increase of $10 million in service fee revenue in Global A&H recognized by IMG.

        Other revenue increased to $79 million for the six months ended June 30, 2018 from $2 million for the six months ended June 30, 2017. The increase in other revenue was primarily attributable to management's estimate of a right of indemnification against a third party in connection with an uncertain tax position and an increase of $33 million in service fee revenue in Global A&H recognized by IMG and Armada, which were acquired in the second quarter of 2017.

        Loss and Loss Adjustment Expenses —Loss and loss adjustment expenses increased 14% to $151 million for the three months ended June 30, 2018 from $133 million for the three months ended June 30, 2017, primarily due to an increase in net earned insurance and reinsurance premiums partially offset by net favorable prior year loss reserve development of $10 million for the second quarter 2018.

        Loss and loss adjustment expenses increased 15% to $292 million for the six months ended June 30, 2018 from $255 million for the six months ended June 30, 2017, primarily due to an increase in net earned insurance and reinsurance premiums in addition to net favorable prior year loss reserve development of $13 million for the six months ended June 30, 2018.

        Insurance and Reinsurance Acquisition Expenses —Insurance and reinsurance acquisition expenses increased 49% to $67 million for the three months ended June 30, 2018 from $45 million for the three months ended June 30, 2017, primarily due to an increase in net earned insurance and reinsurance premiums and higher acquisition expenses for Global Property, Global A&H, and Specialty & Casualty, primarily due to business mix.

        Insurance and reinsurance acquisition expenses increased 38% to $130 million for the six months ended June 30, 2018 from $94 million for the six months ended June 30, 2017, primarily due to an increase in net earned insurance and reinsurance premiums and higher acquisition expenses for Global Property, Global A&H, and Specialty & Casualty, primarily due to business mix.

        Other Underwriting Expenses —Other underwriting expenses increased 23% to $38 million for the three months ended June 30, 2018 from $31 million for the three months ended June 30, 2017, primarily due to a $3 million increase in operating expenses for Specialty & Casualty, due to the new

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initiatives in Casualty, Surety, and Environmental, and in Global A&H, where $4 million of operating expenses for IMG and Armada are included in other underwriting expenses following their integration into the Accident and Health insurance and reinsurance underwriting unit.

        Other underwriting expenses increased 40% to $81 million for the six months ended June 30, 2018 from $58 million for the six months ended June 30, 2017, primarily due to a $7 million increase in operating expenses for Specialty & Casualty, due to the new initiatives in Casualty, Surety and Environmental, and in Global A&H, where $12 million of operating expense for IMG and Armada are included in other underwriting expenses following their integration into the Accident and Health insurance and reinsurance underwriting unit.

        General and Administrative Expenses —General and administrative expenses decreased 4% to $24 million for the three months ended June 30, 2018 from $25 million for the three months ended June 30, 2017. The decrease was due to $2 million of retention bonus expenses recorded during the three months ended June 30, 2017 relating to our acquisition by CMIG International. The retention bonus expense was reimbursed by White Mountains to Sirius Group on an after-tax basis (recorded as Additional paid-in surplus) as stipulated in the stock purchase agreement between CMIG International and White Mountains. Sirius Group did not incur retention bonus expenses for the three months ended June 30, 2018 related to the CMIG International acquisition.

        General and administrative expenses decreased 5% to $39 million for the six months ended June 30, 2018 from $41 million for the six months ended June 30, 2017. This decrease was primarily due to $9 million of retention bonus expenses recorded during the six months ended June 30, 2017 relating to our acquisition by CMIG International. The retention bonus expense was reimbursed by White Mountains to Sirius Group on an after-tax basis (recorded as Additional paid-in surplus) as stipulated in the stock purchase agreement between CMIG International and White Mountains. Sirius Group did not incur retention bonus expenses for the six months ended June 30, 2018 related to the CMIG International acquisition. Additionally, the decrease in general and administrative expenses was partially offset by an increase in expenses related to IMG and Armada.

        Intangible Asset Amortization Expenses —Intangible asset amortization expenses increased to $4 million for the three months ended June 30, 2018 from $2 million for the three months ended June 30, 2017 due to the amortization of the intangible assets related to the IMG and Armada acquisitions, which were both acquired during the second quarter of 2017.

        Intangible asset amortization expenses increased to $8 million for the six months ended June 30, 2018 from $2 million for the six months ended June 30, 2017 due to the amortization of the intangible assets related to the IMG and Armada acquisitions, which were both acquired during the second quarter of 2017.

        Interest Expense on Debt —Interest expense on debt increased 60% to $8 million for the three months ended June 30, 2018 from $5 million for the three months ended June 30, 2017 due to interest expense of $3 million related to the 2017 SEK Subordinated Notes, which were issued in September 2017. See " Financing " below for a discussion of the 2017 SEK Subordinated Notes.

        Interest expense on debt increased 60% to $16 million for the six months ended June 30, 2018 from $10 million for the six months ended June 30, 2017 due to interest expense of $6 million related to the 2017 SEK Subordinated Notes, which were issued in September 2017. See " Financing " below for a discussion of the 2017 SEK Subordinated Notes.

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Executive Summary

Years Ended December 31, 2017 and 2016

        Sirius Group ended 2017 with a net loss attributable to common shareholder of $156 million and a loss per common share of $1.30. This compares to net income attributable to common shareholder of $33 million and earnings per common share of $0.27 in 2016. The decreases were due to higher catastrophe losses and lower net favorable prior year loss reserve development, which was partially offset by net service fee income from IMG and Armada and a gain on revaluation of contingent consideration related to the IMG and Armada Earnouts of $49 million. See Note 3 " Significant transactions " in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus. In 2017, Sirius Group had catastrophe losses of $259 million and net favorable prior year loss reserve development of $1 million. In 2016, Sirius Group had catastrophe losses of $109 million and net favorable prior year loss reserve development of $64 million.

        Sirius Group ended 2017 with book value per common share of $15.98 compared to a book value per common share of $16.57 at December 31, 2016, a decrease of 3.6% during 2017, primarily due to the comprehensive loss recognized. This compares to an increase of 1.5% during 2016.

        Sirius Group's combined ratio was 108% compared to 94% in 2016. The increase in the combined ratio was driven by higher catastrophe losses and lower net favorable prior year loss reserve development. Sirius Group's combined ratio included 25 points of catastrophe losses in 2017 compared to 12 points in 2016 and included no combined ratio benefits from net favorable prior year loss reserve development in 2017 compared to 7 points in 2016.

        Gross written premiums increased to $1,439 million or 13% for 2017 from $1,269 million in 2016 due to increases in the Global Property ($97 million), Global A&H ($59 million), and Specialty & Casualty ($47 million). See " Results of Reportable Segments " below.

Years Ended December 31, 2016 and 2015

        Sirius Group ended 2016 with net income attributable to common shareholder of $33 million and earnings per common share of $0.27. This compares to net income attributable to common shareholder of $291 million and earnings per common share of $2.43 for 2015. These decreases were primarily due to higher catastrophe losses in 2016 and a lower return on invested assets, primarily due to an unrealized gain on the investment in Symetra in 2015. In 2016, Sirius Group had catastrophe losses of $109 million and net favorable prior year loss reserve development of $64 million. In 2015, Sirius Group had catastrophe losses of $21 million and net favorable prior year loss reserve development of $51 million.

        Sirius Group's book value per common share increased 1.5% to $16.57 in 2016 from $16.33 in 2015. This compares to an increase of 11.2% during 2015, which includes the unrealized gain on the investment in Symetra.

        Sirius Group's combined ratio was 94% in 2016 compared to 85% in 2015. The increase in the combined ratio was primarily driven by higher catastrophe losses in 2016 as compared to 2015. Sirius Group's combined ratio included 12 points of catastrophe losses in 2016 compared to 2 points in 2015. The year ended December 31, 2016 also included 7 points of net favorable prior year loss reserve development compared to 6 points in 2015.

        Gross written premiums increased to $1,269 million or 9% for 2016 from $1,161 million in 2015 as increases in Global Property ($60 million) and Global A&H ($50 million) were partially offset by a decrease in Specialty & Casualty ($12 million). See Results of Reportable Segments below.

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Consolidated Results of Operations—Years Ended December 31, 2017, 2016 and 2015

(Expressed in millions of U.S. dollars, except ratio and share information)

Year ended December 31,
  2017   2016   2015  

Revenues

                   

Gross written insurance and reinsurance premiums

  $ 1,439.3   $ 1,269.0   $ 1,160.5  

Net written insurance and reinsurance premiums

  $ 1,090.2   $ 938.1   $ 847.6  

Net earned insurance and reinsurance premiums

  $ 1,035.3   $ 890.1   $ 847.0  

Net investment income

    56.8     56.2     39.9  

Net realized investment (losses) gains

    (27.2 )   288.3     138.5  

Net unrealized investment (losses) gains

    (10.5 )   (238.2 )   102.5  

Net foreign exchange gains (losses)

    9.2     (11.0 )   (18.2 )

Gain on revaluation of contingent consideration

    48.8          

Other revenue

    21.7     9.1     (2.4 )

Total revenues

    1,134.1     994.5     1,107.3  

Expenses

                   

Loss and loss adjustment expenses

    811.2     519.3     422.7  

Insurance and reinsurance acquisition expenses

    197.2     210.3     189.8  

Other underwriting expenses

    106.1     107.3     107.9  

General and administrative expenses

    91.9     85.1     27.1  

Intangible asset amortization

    10.2          

Impairment of intangible assets

    5.0          

Interest expense on debt

    22.4     34.6     26.6  

Total expenses

    1,244.0     956.6     774.1  

Pre-tax (loss) income

    (109.9 )   37.9     333.2  

Income tax (expense) benefit

    (26.4 )   7.3     (47.1 )

Net (loss) income

    (136.3 )   45.2     286.1  

Equity in earnings of unconsolidated affiliates, net of tax

        6.6     23.9  

(Loss) income before income attributable to non-controlling interests

    (136.3 )   51.8     310.0  

Income attributable to non-controlling interests

    (13.7 )   (19.3 )   (18.8 )

(Loss) income before accrued dividends on Series A redeemable preference shares

    (150.0 )   32.5     291.2  

Accrued dividends on Series A redeemable preference shares

    (6.1 )        

Net (loss) income attributable to Sirius Group's common shareholder

    (156.1 )   32.5     291.2  

Comprehensive income

                   

Net (loss) income

    (136.3 )   51.8     310.0  

Other comprehensive (loss) income, net of tax

                   

Change in equity in net unrealized (losses) gains from investments, net of tax

            (29.8 )

Change in foreign currency translation, net of tax

    71.7     (67.3 )   (65.4 )

Net change in other, net of tax

        1.2     0.2  

Other comprehensive (loss) income

    71.7     (66.1 )   (95.0 )

Comprehensive (loss) income

    (64.6 )   (14.3 )   215.0  

Net (income) attributable to non-controlling interests

    (13.7 )   (19.3 )   (18.8 )

Comprehensive (loss) income attributable to Sirius Group's common shareholder

  $ (78.3 ) $ (33.6 ) $ 196.2  

Ratios:

                   

Loss and LAE ratio(1)

    78.4 %   58.3 %   49.9 %

Acquisition expense ratio(2)

    19.0 %   23.6 %   22.4 %

Other underwriting expense ratio(3)

    10.2 %   12.1 %   12.7 %

Combined ratio(4)

    107.6 %   94.0 %   85.0 %

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  2017   2016   2015  

Per Common Share Data:

                   

Basic (loss) earnings per common share

  $ (1.30 ) $ 0.27   $ 2.43  

Common shares outstanding

    120,000,000     120,000,000     120,000,000  

Selected Balance Sheet Data:

   
 
   
 
   
 
 

Book value per common share

  $ 15.98   $ 16.57   $ 16.33  

Common shares outstanding

    120,000,000     120,000,000     120,000,000  

(1)
The loss and LAE ratio is calculated by dividing loss and LAE expenses by net earned insurance and reinsurance premiums.

(2)
The acquisition expense ratio is calculated by dividing insurance and reinsurance acquisition expenses by net earned insurance and reinsurance premiums.

(3)
The other underwriting expense ratio is calculated by dividing other underwriting expenses by net earned insurance and reinsurance premiums.

(4)
The combined ratio is calculated by combining the loss and loss adjustment ratio, the acquisition expense ratio, and the other underwriting expense ratio.

Years Ended December 31, 2017 and 2016

        Sirius Group's total revenues increased 14% to $1,134 million in 2017 from $995 million in 2016, which was driven by higher net earned insurance and reinsurance premiums and other revenue from IMG and Armada, partially offset by net realized and unrealized investment losses. Net earned insurance and reinsurance premiums increased 16% to $1,035 million from $890 million in 2016, with Specialty & Casualty up 21%, Global Property up 17%, and Global A&H up 13%.

        Net investment income increased 1% to $57 million in 2017 from $56 million in 2016. Sirius Group reported net realized investment losses of $27 million in 2017, which included $19 million of net realized foreign currency losses, compared to net realized investment gains of $288 million in 2016, which included $50 million of net realized foreign currency gains. Net unrealized investment losses were $11 million in 2017, which included $52 million of net unrealized foreign currency losses, compared to net unrealized investment losses of $238 million in 2016, which included $8 million of net unrealized foreign currency losses. During the first quarter of 2016, Sirius Group sold its investment in Symetra, which generated a net realized investment gain of $223 million and a net unrealized investment loss of $219 million, for a total net impact of $4 million. In 2017, net realized and net unrealized investment losses were primarily related to foreign currency losses. Additionally, Sirius Group recorded $9 million of non-investment related foreign exchange gains in 2017 compared to $11 million of non-investment related foreign exchange losses in 2016. See " Foreign Currency Translation " below.

        2017 results include a $49 million gain on revaluation of contingent consideration related to the IMG and Armada Earnouts, mainly due to the settlement and remeasurement of the Armada earnout. See Note 3 "Significant transactions" in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus.

        Other revenue in 2017 of $22 million consists primarily of service fee revenue from IMG and Armada. Other revenue in 2016 included a $5 million gain on the change in fair value of weather derivatives, a $2 million bargain gain on the acquisition of Mount Beacon Holdings, LLC (" Mount Beacon ") and a $2 million gain on the sale of Ashmere Insurance Company (" Ashmere "). See Note 3 " Significant transactions " in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus.

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        Sirius Group's total expenses increased 30% to $1,244 million in 2017 from $957 million in 2016. Loss and LAE increased 56% in 2017. The increase in loss and LAE included $259 million of catastrophe losses, after applicable reinsurance and reinstatement premiums, from Hurricane Irma ($83 million), Hurricane Maria ($79 million), Hurricane Harvey ($45 million), California Wildfires ($22 million), Mexico Earthquakes ($13 million) and other catastrophe events versus $109 million of catastrophe losses in 2016 primarily related to the Ecuador Earthquake ($25 million), Alberta Wildfires ($24 million) and Hurricane Matthew ($23 million). Insurance and reinsurance acquisition expenses decreased 6% in 2017, primarily due to lower commissions in Global A&H, partially offset by an increase in net earned insurance and reinsurance premiums. Other underwriting expenses decreased 1% due to lower variable incentive expense accruals.

        General and administrative expenses increased 8% to $92 million in 2017 from $85 million in 2016. General and administrative expenses in 2017 included $45 million of expenses related to IMG and Armada and $13 million of retention bonus expenses for management and employees as a result of our acquisition by CMIG International. The retention bonus expenses were reimbursed by White Mountains to Sirius Group on an after-tax basis (recorded as Additional paid-in surplus) as stipulated in the stock purchase agreement between CMIG International and White Mountains. General and administrative expenses in 2016 included $37 million of transaction bonus expenses and $18 million of retention bonus expenses, both of which were reimbursed by White Mountains to Sirius Group on an after-tax basis (recorded as Additional paid-in surplus).

        Intangible asset amortization of $10 million in 2017 related to the amortization of intangible assets as a result of Sirius Group's acquisitions of IMG and Armada in the second quarter of 2017. Additionally, Sirius Group recognized an impairment of $5 million related to trade names acquired as part of the acquisition of IMG. See Note 3 " Significant transactions " in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus.

        Interest expense on debt in 2017 was $22 million compared to $35 million in 2016. The decrease was due to a lower interest rate on the 2016 SIG Senior Notes versus the 2007 SIG Senior Notes, which was retired in 2016. The retirement of the 2007 SIG Senior Notes in 2016 resulted in a $6 million prepayment penalty, which was recorded as a component of interest expense.

Years Ended December 31, 2016 and 2015

        Sirius Group's total revenues decreased 10% to $995 million in 2016 from $1,107 million in 2015, which was driven primarily by lower net realized and unrealized investment gains. Net earned insurance and reinsurance premiums increased 5% to $890 million in 2016 from $847 million in 2015, with Global Property and Global A&H up 8% and 5%, respectively, and Specialty & Casualty down 2%. Additionally, net earned insurance and reinsurance premiums in 2016 and 2015, reflected in Runoff & Other, included the cost of industry loss warranty covers of $9 million and $11 million, respectively, which White Mountains required Sirius Group to purchase to mitigate the potential impact of major natural catastrophe events on Sirius Group's balance sheet pending the close of the sale to CMIG International.

        Net investment income increased 40% to $56 million in 2016 from $40 million in 2015 due to a larger fixed income portfolio and higher investment yields, driven by a longer duration portfolio. Sirius Group reported net realized investment gains of $288 million in 2016, which included $50 million of net realized foreign currency gains, compared to net realized investment gains of $139 million in 2015, which included $70 million of net realized foreign currency gains. Net unrealized investment losses were $238 million in 2016, which included $8 million of net unrealized foreign currency losses, compared to net unrealized investment gains of $103 million in 2015, which included $15 million of net unrealized foreign currency losses. During the first quarter of 2016, Sirius Group sold its investment in Symetra, which generated a net realized investment gain of $223 million and a net unrealized

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investment loss of $219 million, for a total net impact of $4 million. Net unrealized investment gains in 2015 included a $219 million net unrealized investment gain recognized in the fourth quarter of 2015 relating to Symetra, as a result of a change from equity affiliate accounting to fair value based upon quoted market price. See Note 20 "Investments in unconsolidated entities" in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus. Additionally, Sirius Group recorded $11 million of non-investment related foreign exchange losses in 2016 compared to $18 million of non-investment related foreign exchange losses in 2015. See "Foreign Currency Translation" below.

        Other revenue in 2016 included a $5 million gain on the change in fair value of weather derivatives, a $2 million bargain gain on acquisition of Mount Beacon and a $2 million gain on the sale of Ashmere. Other revenue in 2015 of $(2) million included a $2 million mark-to-market loss on the interest rate cap and a $3 million loss due to the final settlement from the sale of a former affiliate in 2012 which was partially offset by $2 million of gains on the change in fair value of weather derivatives. See Note 3 " Significant transactions " and Note 13 " Derivatives " in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus.

        Sirius Group's total expenses increased 23% to $957 million in 2016 from $774 million in 2015. Loss and LAE increased 23% in 2016. The increase in loss and LAE included $109 million of catastrophe losses, after applicable reinsurance and reinstatement premiums, from the Ecuador Earthquake ($25 million), Alberta Wildfires ($24 million), Hurricane Matthew ($23 million) and other catastrophe events versus $21 million of catastrophe losses in 2015. Partially offsetting the catastrophe losses was $64 million of net favorable prior year loss reserve development, primarily in Global Property ($27 million) and Specialty & Casualty ($25 million). Insurance and reinsurance acquisition expenses increased 11% in 2016, primarily due to higher commissions for Global Property. Other underwriting expenses decreased 1% due to lower variable incentive expense accruals.

        General and administrative expenses in 2016 included $37 million of transaction bonus expenses and $18 million of retention bonus expenses, both of which were reimbursed by White Mountains to Sirius Group on an after-tax basis (recorded as Additional paid-in surplus) as stipulated in the stock purchase agreement between CMIG International and White Mountains.

        Interest expense on debt in 2016 was $35 million compared to $27 million in 2015. This was primarily due to a $6 million prepayment penalty on the retirement of the 2007 SIG Senior Notes in 2016. The prepayment penalty was reflected as a component of interest expense.

Summary of Investment Results

Pre-Tax Return on Investments

        Total return on investments includes investment income, net realized gains and losses and the change in unrealized gains and losses generated by the investment portfolio including equity method investments for which we have made fair value election and net income or loss in investments in unconsolidated affiliates. Total return is calculated on a pre-tax basis and includes the impact of investment related foreign exchange gains or losses whether reflected in pre-tax income or other comprehensive income, unless otherwise noted. Returns are calculated on average investments for the period displayed and presented gross of separately managed account fees as well as internal expenses in order to produce a better comparison to benchmark returns which exclude an expense load.

        Percentage fixed income return figures include performance of fixed income mutual funds that are classified as equity securities on the balance sheet and exclude the impact of third-party currency forwards and/or swaps.

        Sirius Group maintains an equity portfolio that consists of equity securities, and other long-term investments, including hedge funds, private equity funds and direct investments in privately held

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common securities investments. From time to time, Sirius may also invest in exchange-traded funds (" ETFs ") and mutual funds. For return purposes, investments in fixed-income ETFs and mutual funds are included in the fixed income results and excluded from equity portfolio results.

        A summary of Sirius Group's total pre-tax net investment results and performance metrics for the three and six months ended June 30 2018 and 2017, respectively, was as follows:

 
  Three Months
Ended June 30,
  Six Months
Ended June 30,
 
($ in millions)
Pre-tax investment results
  2018   2017   2018   2017  

Net investment income

  $ 19.2   $ 16.6   $ 30.0   $ 32.1  

Net realized and unrealized investment gains (losses)(1)

    43.8     (14.2 )   58.5     (25.0 )

Change in foreign currency translation on investments recognized through other comprehensive income(2)

    (78.1 )   45.3     (99.0 )   59.9  

Total pre-tax investment (losses) gains

  $ (15.1 ) $ 47.7   $ (10.5 ) $ 67.0  

(1)
Includes foreign exchange gains / (losses) for the three months ended June 30, 2018 and 2017 of $48.2 million and $(28.5) million, respectively, and for the six months ended June 30, 2018 and 2017 of $68.3 million and $(43.7) million, respectively.

(2)
Excludes non-investment related foreign exchange gains / (losses) for the three months ended June 30, 2018 and 2017 of $29.6 million and $(11.8) million, respectively, and for the six months ended June 30, 2018 and 2017 of $37.1 million and $(12.7) million, respectively.
 
  Three Months
Ended
June 30,
  Six Months
Ended
June 30,
 
Performance Metrics
  2018   2017   2018   2017  

Total fixed income investment returns:

                         

In U.S. dollars

    –0.4 %   1.4 %   –0.5 %   2.0 %

In local currencies

    0.4 %   0.7 %   0.4 %   1.2 %

Bloomberg Barclays US Agg 1-3 Year Total Return Value Unhedged USD

    0.3 %   0.3 %   0.1 %   0.7 %

OMX Stockholm OMRX Total Bond Index

    0.6 %   0.1 %   1.1 %   0.1 %

Total equity securities and other long-term investments returns:

                         

In U.S. dollars

    –0.5 %   5.3 %   1.6 %   7.5 %

In local currencies

    1.0 %   4.2 %   2.7 %   6.2 %

S&P 500 Index (total return)

    3.4 %   3.1 %   2.6 %   9.3 %

Total consolidated portfolio:

                         

In U.S. dollars

    –0.4 %   1.7 %   –0.2 %   2.4 %

In local currencies

    0.5 %   0.9 %   0.7 %   1.5 %

Three and Six Months Ended June 30, 2018 and 2017

        Sirius Group's pre-tax total gross return on invested assets was (0.4)% for the second quarter of 2018 compared to 1.7% for the second quarter of 2017. The 2018 result included foreign currency losses on investments, which reduced the total pre-tax return by (0.9)%. The quarterly currency losses were generated mainly from SEK, EUR and NIS holdings as these currencies weakened 7.2%, 5.7% and 4.3%, respectively, versus the U.S. dollar. The 2017 result benefited 0.8% from foreign currency gains predominantly driven by the SEK and EUR holdings as these currencies strengthened 5.6% and 6.4%, respectively, versus the U.S. dollar.

        For the six months ended June 30, 2018, Sirius Group's pre-tax total gross return on invested assets was (0.2)% versus 2.4% for the same period in 2017. The investment result for the six months

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ended June 30, 2018 was adversely impacted by the aforementioned strengthening of the U.S. dollar which reduced our return by (0.9)%. The investment result for the six months ended June 30, 2017, however, benefited by 0.9% due to the impact of a weakening U.S. dollar on our non-U.S. dollar holdings.

        Net investment income was $3 million higher in the second quarter of 2018 versus the second quarter of 2017 due to a higher interest rate environment which was partially offset by lower fixed income holdings. However, for the six months ended June 30, 2018, net investment income was lower than the prior period by $2 million due to lower fixed income holdings partially offset by a higher interest rate environment.

        Net realized and unrealized investment (losses) gains on investments, excluding foreign currency, were $(4) million for the three months ended June 2018 compared to $14 million for the three months ended June 30, 2017. For the six months ended June 30, 2018, net realized and unrealized losses on investments, excluding foreign currency, were $10 million and $29 million lower than the prior period, respectively. The main driver for these variances was the impact of rising interest rates on our fixed income portfolio which generated losses in the first half of 2018. In addition, our non-USD fixed income portfolio performed strongly during the first half of 2017.

Fixed income results (including short term investments)

        As of June 30, 2018, the fixed income portfolio duration was approximately 2.1 years compared to 2.2 years as of June 30, 2017. The average credit quality of the fixed income portfolio, including short term, was AA at June 30, 2018 and AA- at June 30, 2017. At June 30, 2018 and 2017, Sirius Group held $382 million and $381 million, respectively, of non-U.S. denominated fixed income securities.

        The fixed income portfolio lost (0.4)% on a U.S. dollar basis and returned 0.4% in local currencies for the second quarter of 2018. Our U.S. portfolio returned 0.3% versus the Barclays 1-3 Year Aggregate (" BarcAg1-3 ") of 0.3%. Our non-U.S. portfolio returned 0.6% in original currencies which compares to the OMX Stockholm OMRX Total Return Bond Index (" OMRX ") of 0.6%.

        The return for the six months ended June 30, 2018 was (0.5)% on a U.S. dollar basis and 0.4% in original currency. Our U.S. portfolio returned 0.3% versus the BarcAg1-3 of 0.1%. The outperformance was due to a lower concentration in treasuries in our portfolio compared to the BarcAg1-3. Our non-U.S. portfolio returned 0.8% in original currencies which compares to the OMRX of 1.1% due to a market driven negative return in our euro denominated fixed income investments.

        The fixed income portfolio returned 1.4% on a U.S. dollar basis and 0.7% in local currencies for the second quarter of 2017. Our U.S. portfolio returned 0.8% versus the BarcAg1-3 of 0.3% due to a higher concentration of corporates and MBS in our portfolio compared to the BarcAg1-3. Our non-U.S. portfolio returned 0.1% in original currencies which compares to the OMRX of 0.1%. The return for the six months ended June 30, 2017 was 2.0% on a U.S. dollar basis and 1.2% in original currencies. Our U.S. portfolio returned 1.3% versus the BarcAg1-3 of 0.7% due to a lower concentration in treasuries in our portfolio compared to the BarcAg1-3. Our non-U.S. portfolio returned 0.4% in original currencies which compares to the OMRX of 0.1% due to a market driven strong performance of our Canadian dollar denominated fixed income holdings.

Equity securities and other long-term investments results

        At June 30, 2018, the equity and other long-term investments portfolio included $371 million of U.S. dollar and $181 million of non-U.S. dollar denominated securities.

        For the second quarter of 2018, the equity portfolio lost (0.5)% on a U.S. dollar basis but gained 1.0% in local currencies. The S&P 500 gained 3.4% for the same period. For the six months ended June 30, 2018, the equity portfolio returned 1.6% on a U.S. dollar basis and 2.7% in original currencies

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versus the S&P 500 of 2.6%. Performance lagged the S&P 500 in the second quarter of 2018 but was in line with the return for the six months ended June 30, 2018. Our equity results will generally differ from the S&P 500 given our non-U.S. dollar exposure and our private equity and hedge fund portfolios that tend to be less correlated to the S&P 500.

        At June 30, 2017, the equity and other long-term investments portfolio included $207 million of U.S. dollar and $95 million of non-U.S. dollar denominated securities, respectively.

        For the second quarter of 2017, the equity portfolio returned 5.3% on a U.S. dollar basis and 4.2% in local currencies. The S&P 500 returned 3.1% for the same period. For the six months ended June 30, 2017, the equity portfolio returned 7.5% in U.S. dollars and 6.2% in local currencies versus the S&P 500 of 9.3%.

        A summary of Sirius Group's total pre-tax net investment results for the years ended 2017, 2016, and 2015 was as follows:

 
  Year Ended December 31,  
($ in millions)
  2017   2016   2015  
Pre-tax investment results
 

Net investment income

  $ 56.8   $ 56.2   $ 39.9  

Net realized and unrealized investment gains(1)

    (37.7 )   50.1     241.0  

Equity in earnings of unconsolidated affiliates(2)

        6.6     23.9  

Change in foreign currency translation on investments recognized through other comprehensive income(3)

    83.9     (83.1 )   (110.7 )

Total pre-tax investment gains

  $ 103.0   $ 29.8   $ 194.1  

(1)
Includes foreign exchange gains (losses) for the years ended December 31, 2017, 2016 and 2015 of $(70.8) million, $42.3 million and $55.2 million, respectively.

(2)
Relates primarily to our equity method investment in OneBeacon Insurance Group, Ltd. Refer to Note 20 "Investments in unconsolidated entities" in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus

(3)
Excludes non-investment related foreign exchange gains / (losses) for the years ended December 31, 2017, 2016 and 2015 of $9.2 million, $(11.0) million and $(18.2) million, respectively.
 
  Year Ended
December 31,
 
Performance Metrics
  2017   2016   2015  

Total fixed income investment returns:

                   

In U.S. dollars

    2.9 %   0.4 %   –1.3 %

In local currencies

    1.8 %   1.8 %   1.0 %

Bloomberg Barclays US Agg 1-3 Year Total Return Value Unhedged USD

    0.9 %   1.3 %   0.7 %

OMX Stockholm OMRX Total Bond Index

    0.3 %   2.6 %   0.5 %

Total equity securities, investments in unconsolidated affiliates, and other long-term investments returns:

                   

In U.S. dollars

    16.8 %   11.5 %   31.6 %

In local currencies

    13.8 %   11.7 %   31.6 %

S&P 500 Index (total return)

    21.8 %   12.0 %   1.4 %

Total consolidated portfolio

                   

In U.S. dollars

    4.1 %   0.9 %   5.7 %

In local currencies

    2.9 %   2.2 %   7.7 %

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Years Ended December 31, 2017 and 2016

        Sirius Group's pre-tax total return on invested assets was 4.1% for 2017 compared to 0.9% for 2016. The 2017 result included foreign currency gains on investments, which contributed 1.2% to the total pre-tax return. The currency gains were mainly generated from SEK and EUR holdings as both currencies strengthened in excess of 10% against the U.S. dollar. Foreign currency losses on investments reduced the 2016 return by 1.3% as SEK, EUR and GBP holdings weakened against the U.S. dollar.

Fixed income results (including short term investments)

        As of December 31, 2017, the fixed income portfolio duration was approximately 2.0 years compared to 3.0 years as of December 31, 2016. The reduction of duration was made to better position the portfolio against market losses arising from a rising rate environment. The average credit quality of the fixed income portfolio was AA at December 31, 2017 and AA- at December 31, 2016. The one-notch credit reduction was a result of incidental shifts in the portfolio mix rather than a change in investment strategy.

        At December 31, 2017, Sirius Group held $399 million of non-U.S. denominated fixed income securities. Given the low, and in many cases negative, interest rate environment throughout Europe, Sirius Group redeployed $249 million of EUR and GBP fixed income into USD fixed income and EUR equities during 2017.

        The fixed income portfolio returned 2.9% for 2017 on a U.S. dollar basis and 1.8% in local currencies for the same period. The U.S. fixed income portfolio returned 1.9% versus BarcAg1-3 of 0.9%. Our non-U.S. fixed income portfolio returned 0.8% in original currencies which compared to the OMRX of 0.3%.

Equity securities and other long-term investments results

        The company benefited in 2017 versus 2016 from its continued, albeit modest, deployment into equity and alternative investment strategies. For 2017, the equity portfolio returned 16.8% on a U.S. dollar basis and 13.8% in local currencies. The S&P 500 returned 21.8% for the same period. At December 31, 2017, the equity and other long-term investments portfolio included $290 million of U.S. dollar and $176 million of non-U.S. dollar denominated securities. For 2016, the Sirius Group equity portfolio returned 11.5% on a U.S. dollar basis and 11.7% in local currencies for the same period. The S&P 500 returned 12.0% for the same period.

Years Ended December 31, 2016 and 2015

        Sirius Group's pre-tax total return on invested assets was 0.9% for 2016 compared to 5.7% for 2015. The 2016 result included foreign currency losses on investments which reduced the total pre-tax return by 1.3%. The 2015 result reflects foreign currency investment losses of 2.0%. Both 2016 and 2015 foreign exchange losses resulted from weakening currencies versus the U.S. dollar in our SEK, GBP and EUR holdings.

        Due to the sale of Sirius Group to CMIG International on April 18, 2016, and the related disposition of certain assets, including unconsolidated affiliates, for cash, the investment portfolio was predominantly comprised of fixed income and short-term investments during 2016.

        The 2015 results were primarily driven by $219 million in pre-tax unrealized investment gains recognized in the fourth quarter of 2015 relating to the holding in Symetra. The gain on Symetra was a result of a change from equity affiliate accounting to fair value based upon quoted market price.

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Fixed income results (including short term investments)

        As of December 31, 2016, the fixed income portfolio duration was approximately 3.0 years compared to 2.1 years as of December 31, 2015. The average credit quality of the fixed income portfolio was AA- at December 31, 2016 and A+ at December 31, 2015. The one notch credit increase was a result of incidental shifts in the portfolio mix rather than a change in investment strategy.

        At December 31, 2016 and 2015, Sirius Group held $608 million and $639 million, respectively, of non-U.S. denominated fixed income securities.

        The fixed income portfolio returned 0.4% for 2016 on a U.S. dollar basis and 1.8% in local currencies for the same period. The U.S. fixed income portfolio returned 1.5% versus BarcAg1-3 of 1.3%. Our non-U.S. portfolio returned 3.4% in original currencies which compares to the OMRX of 2.6%. The 2015 fixed income portfolio returned –1.3% on a U.S. dollar basis and 1.0% in local currencies for the same period.

Equity securities and other long-term investments results

        For 2016, the Sirius Group equity portfolio returned 11.5% on a U.S. dollar basis and 11.7% in local currencies for the same period. The S&P 500 returned 12.0% for the same period.

        For 2015, the Sirius Group equity portfolio returned 31.6% U.S. dollar basis with minimal impact from currency. The S&P 500 returned 1.4% for the same period. At December 31, 2015, our investment in Symetra represented approximately 26% of total invested assets and accounted for a $219 million gain as explained above.

Foreign Currency Translation

Impact of Foreign Currency Translation

        The U.S. dollar is the functional currency for Sirius Group's businesses except for Sirius International, Syndicate 1945, several subsidiaries of IMG, and the Canadian reinsurance operations of Sirius America. Sirius Group also invests in securities denominated in foreign currencies. Assets and liabilities recorded in these foreign currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date, and revenues and expenses are converted using the average exchange rates for the period. Net foreign exchange gains and losses arising from the translation of functional currencies into U.S. dollars are reported in shareholder's equity and in Accumulated other comprehensive income. As of December 31, 2017 and 2016, Sirius Group had net unrealized foreign currency translation losses of $141 million and $212 million, respectively, recorded in Accumulated other comprehensive income (loss), after-tax on its Consolidated Balance Sheet.

        Assets and liabilities relating to foreign operations are converted into the functional currency using current exchange rates; revenues and expenses are translated into the functional currency using the weighted average exchange rate for the period.

        As of December 31, 2017, the following currencies represented the largest exposure to foreign currency risk as a percentage of Sirius Group's shareholder's equity: the Swedish Krona 9% (short) and the Israeli Shekel 4% (long).

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        The following rates of exchange for the U.S. dollar have been used for translation of investments whose functional currency is not the U.S. dollar at June 30, 2018 and 2017:

Currency
  Closing Rate
June 30, 2018
  Closing Rate
June 30, 2017
 

Swedish Krona

    8.9539     8.4337  

British Pound Sterling

    0.7604     0.7707  

Euro

    0.8584     0.8757  

Canadian Dollar

    1.3226     1.2960  

        The following rates of exchange for the U.S. dollar have been used for translation of investments whose functional currency is not the U.S. dollar at December 31, 2017 and 2016:

Currency
  Closing
Rate 2017
  Closing
Rate 2016
 

Swedish Krona

    8.2051     9.0549  

British Pound Sterling

    0.7398     0.8074  

Euro

    0.8339     0.9479  

Canadian Dollar

    1.2556     1.3432  

        A summary of the impact of foreign currency translation on Sirius Group's consolidated financial results for the six months ended June 30, 2018 and 2017 follows:

 
  Six months
ended June 30,
 
($ in millions)
  2018   2017  

Net realized investment (losses) gains—foreign currency(1)

  $ 6.0   $ 0.9  

Net unrealized investment (losses) gains—foreign currency(2)

    48.6     (44.5 )

Net realized and unrealized investment gains—foreign currency

    54.6     (43.6 )

Net foreign exchange gains (losses)—foreign currency translation (losses) gains(3)

    19.4     8.4  

Net foreign exchange gains (losses)—currency swaps(3)

    3.0     (6.8 )

Net foreign exchange gains (losses)—other(3)

    (0.2 )   (0.3 )

Income tax expense

    (0.5 )   1.9  

Total foreign currency remeasurement gains (losses) recognized through net income, after tax

    76.3     (40.4 )

Change in foreign currency translation on investments recognized through other comprehensive income, after tax

    (99.0 )   59.9  

Change in foreign currency translation on non-investment net liabilities recognized through other comprehensive income, after tax

    37.1     (12.7 )

Total foreign currency translation (losses) gains recognized through other comprehensive income, after tax

    (61.9 )   47.2  

Total foreign currency gains recognized in comprehensive income, after tax

  $ 14.4   $ 6.8  

(1)
Component of Net realized investment gains (losses) on the Consolidated Statements of Income.

(2)
Component of Net unrealized investment gains (losses) on the Consolidated Statements of Income.

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(3)
Component of Net foreign exchange gains on the Consolidated Statements of Income.

        A summary of the impact of foreign currency translation on Sirius Group's consolidated financial results for the years ended December 31, 2017, 2016 and 2015 follows:

($ in millions)
  2017   2016   2015  

Net realized investment (losses) gains—foreign currency(1)

  $ (19.1 ) $ 50.0   $ 70.6  

Net unrealized investment (losses) gains—foreign currency(2)

    (51.7 )   (7.7 )   (15.4 )

Net realized and unrealized investment gains—foreign currency

    (70.8 )   42.3     55.2  

Net foreign exchange gains (losses)—foreign currency translation (losses) gains(3)

    20.7     (17.5 )   (18.1 )

Net foreign exchange gains (losses)—currency swaps(3)

    (11.3 )   6.5     (0.1 )

Net foreign exchange gains (losses)—other(3)

    (0.2 )        

Income tax expense

    3.3     2.4     (0.2 )

Total foreign currency remeasurement gains (losses) recognized through net income, after tax

    (58.3 )   33.7     36.8  

Change in foreign currency translation on investments recognized through other comprehensive income, after tax

    83.9     (83.1 )   (110.7 )

Change in foreign currency translation on non-investment net liabilities recognized through other comprehensive income, after tax

    (12.2 )   15.8     45.3  

Total foreign currency translation (losses) gains recognized through other comprehensive income, after tax

    71.7     (67.3 )   (65.4 )

Total foreign currency gains (losses) recognized in comprehensive (loss) income, after tax

  $ 13.4   $ (33.6 ) $ (28.6 )

(1)
Component of Net realized investment (losses) gains on the Consolidated Statements of (Loss) Income

(2)
Component of Net unrealized investment (losses) gains on the Consolidated Statements of (Loss) Income

(3)
Component of Net foreign gains (losses) on the Consolidated Statements of (Loss) Income

Investment Portfolio Composition by Currency

        Set forth below is the carrying value of our cash and investment holdings in U.S. dollars and foreign currencies as of December 31, 2017 and 2016:

        As of December 31, 2017, Sirius Group's investment portfolio included approximately $575 million in non-U.S. dollar denominated investments, most of which denominated in SEK, EUR, GBP, CAD

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and NIS. The value of the investments in this portfolio is impacted by changes in the exchange rate between the U.S. dollar and those currencies.

 
  Carrying Value at
December 31, 2017
  Carrying Value at
December 31, 2016
 
($ in millions)
Currency
  Local
Currency
  USD   Local
Currency
  USD  

U.S. Dollar

    2,798.9   $ 2,798.9     3,036.8   $ 3,036.8  

Swedish Krona

    1,765.7     215.4     1,888.6     208.6  

Euro

    141.2     169.5     171.2     180.6  

British Pound Sterling

    9.1     12.3     119.9     148.5  

Canadian Dollar

    78.0     62.0     85.8     63.9  

Israeli Shekel

    233.6     67.3     0.0     0.0  

Other

        48.3         39.0  

Total Investments

        $ 3,373.7         $ 3,677.4  

        During 2017, the U.S. dollar weakened 9% against the SEK, 8% against the GBP and 12% against the EUR. These foreign currency movements resulted in approximately $16 million of foreign currency investment gains, which are recorded as a component of net realized and unrealized investment gains or losses recognized in pre-tax income and change in foreign currency translation on investments recognized in other comprehensive income. During 2016, the U.S. dollar strengthened 7% against the SEK, 19% against the GBP and 3% against the EUR, which resulted in $36 million of foreign currency investment losses. During 2015, the U.S. dollar strengthened 8% against the SEK, 5% against the GBP and 11% against the EUR, which resulted in $23 million of foreign currency investment losses.

        Sirius International holds a large portfolio of investments that are denominated in U.S. dollar, but its functional currency is the SEK. When Sirius International prepares its stand-alone GAAP financial statements, it converts its U.S. dollar denominated investments to SEK and recognizes the related foreign currency translation gains or losses through pre-tax income. When Sirius Group consolidates Sirius International, it translates Sirius International's stand-alone GAAP financial statements to U.S. dollars and recognizes the related foreign currency translation gains or losses through other comprehensive income (loss). Since Sirius Group reports its financial statements in U.S. dollar, there is no net effect to book value per common share or to investment returns from foreign currency translation on its U.S. dollar denominated investments at Sirius International. However, net realized and unrealized investment gains, other revenues, net income (loss), earnings per share and other comprehensive income (loss) can be significantly affected during periods of high volatility in the foreign exchange rate between the U.S. dollar and other currencies, especially the SEK.

Results of Reportable Segments

        The following table displays Sirius Group's underwriting ratios prior to cessions to reinsurers (" Gross "), cessions to reinsurers (" Ceded ") and after cessions to reinsurers (" Net ") basis. See "Reinsurance Protection" in " Information About Sirius Group" for further information.

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Three and Six Months Ended June 30, 2018 and 2017

Gross, Ceded and Net Combined Ratios
Three months ended June 30, 2018
  Global
Property
  Global A&H   Specialty &
Casualty
  Total  

Gross ratios:

                         

Loss and LAE ratio

    45.5 %   52.5 %   56.6 %   49.9 %

Acquisition expense ratio

    25.7 %   29.0 %   24.3 %   24.3 %

Other underwriting expense ratio

    6.5 %   5.7 %   12.6 %   10.2 %

Gross Combined ratio

    77.7 %   87.2 %   93.5 %   84.4 %

Ceded ratios:

                         

Loss and LAE ratio

    50.5 %   54.4 %   23.5 %   51.6 %

Acquisition expense ratio

    33.7 %   18.5 %   16.3 %   30.3 %

Ceded Combined ratio

    84.2 %   72.9 %   39.8 %   81.9 %

Net ratios:

                         

Loss and LAE ratio

    42.2 %   51.9 %   60.2 %   49.0 %

Acquisition expense ratio

    20.4 %   32.7 %   26.3 %   21.6 %

Other underwriting expense ratio

    10.8 %   7.8 %   14.2 %   12.4 %

Net Combined ratio

    73.4 %   92.4 %   100.7 %   83.0 %

 

Gross, Ceded and Net Combined Ratios
Three months ended June 30, 2017
  Global
Property
  Global A&H   Specialty &
Casualty
  Total  

Gross ratios:

                         

Loss and LAE ratio

    30.8 %   56.7 %   68.9 %   58.4 %

Acquisition expense ratio

    19.0 %   29.3 %   21.8 %   21.5 %

Other underwriting expense ratio

    11.6 %   5.2 %   10.2 %   9.2 %

Gross Combined ratio

    61.4 %   91.2 %   100.9 %   89.1 %

Ceded ratios:

                         

Loss and LAE ratio

    14.2 %   52.5 %   123.9 %   67.5 %

Acquisition expense ratio

    24.4 %   29.7 %   16.2 %   30.0 %

Ceded Combined ratio

    38.6 %   82.2 %   140.1 %   97.5 %

Net ratios:

                         

Loss and LAE ratio

    35.1 %   57.2 %   58.9 %   54.6 %

Acquisition expense ratio

    17.6 %   29.2 %   22.7 %   18.2 %

Other underwriting expense ratio

    14.6 %   7.6 %   11.8 %   12.6 %

Net Combined ratio

    67.3 %   94.0 %   93.4 %   85.4 %

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Gross, Ceded and Net Combined Ratios
Six months ended June 30, 2018
  Global
Property
  Global A&H   Specialty &
Casualty
  Total  

Gross ratios:

                         

Loss and LAE ratio

    47.5 %   53.8 %   49.3 %   49.7 %

Acquisition expense ratio

    23.8 %   29.9 %   24.2 %   23.0 %

Other underwriting expense ratio

    7.7 %   6.4 %   12.8 %   10.0 %

Gross Combined ratio

    79.0 %   90.1 %   86.3 %   82.7 %

Ceded ratios:

                         

Loss and LAE ratio

    48.4 %   56.7 %   35.0 %   50.9 %

Acquisition expense ratio

    29.5 %   20.2 %   9.9 %   26.0 %

Ceded Combined ratio

    77.9 %   76.9 %   44.9 %   76.9 %

Net ratios:

                         

Loss and LAE ratio

    47.1 %   52.9 %   51.1 %   49.3 %

Acquisition expense ratio

    20.9 %   32.9 %   26.1 %   21.9 %

Other underwriting expense ratio

    11.7 %   8.5 %   14.5 %   13.7 %

Net Combined ratio

    79.7 %   94.3 %   91.7 %   84.9 %

 

Gross, Ceded and Net Combined Ratios
Six months ended June 30, 2017
  Global
Property
  Global A&H   Specialty &
Casualty
  Total  

Gross ratios:

                         

Loss and LAE ratio

    37.9 %   59.6 %   62.1 %   55.2 %

Acquisition expense ratio

    20.1 %   27.5 %   22.0 %   22.2 %

Other underwriting expense ratio

    10.7 %   5.4 %   9.5 %   8.8 %

Gross Combined ratio

    68.7 %   92.5 %   93.6 %   86.2 %

Ceded ratios:

                         

Loss and LAE ratio

    17.4 %   58.7 %   102.6 %   56.8 %

Acquisition expense ratio

    23.5 %   28.3 %   16.9 %   27.4 %

Ceded Combined ratio

    40.9 %   87.0 %   119.5 %   84.2 %

Net ratios:

                         

Loss and LAE ratio

    43.5 %   60.3 %   54.4 %   54.6 %

Acquisition expense ratio

    19.2 %   27.1 %   23.1 %   20.1 %

Other underwriting expense ratio

    13.6 %   8.9 %   11.3 %   12.4 %

Net Combined ratio

    76.3 %   96.3 %   88.8 %   87.1 %

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Years Ended December 31, 2017, 2016 and 2015

Gross, Ceded and Net Combined Ratios
Year ended December 31, 2017
  Global
Property
  Global A&H   Specialty &
Casualty
  Total  

Gross ratios:

                         

Loss and LAE ratio

    80.0 %   60.1 %   68.9 %   74.6 %

Acquisition expense ratio

    20.0 %   28.5 %   23.4 %   20.1 %

Other underwriting expense ratio

    8.8 %   5.5 %   8.7 %   7.9 %

Gross Combined ratio

    108.8 %   94.1 %   101.0 %   102.6 %

Ceded ratios:

                         

Loss and LAE ratio

    40.9 %   64.0 %   94.3 %   61.5 %

Acquisition expense ratio

    20.1 %   26.6 %   13.4 %   23.6 %

Ceded Combined ratio

    61.0 %   90.6 %   107.7 %   85.1 %

Net ratios:

                         

Loss and LAE ratio

    90.8 %   58.6 %   64.3 %   78.4 %

Acquisition expense ratio

    20.0 %   29.2 %   25.2 %   19.0 %

Other underwriting expense ratio

    11.2 %   7.6 %   10.1 %   10.2 %

Net Combined ratio

    122.0 %   95.4 %   99.6 %   107.6 %

 

Gross, Ceded and Net Combined Ratios
Year ended December 31, 2016
  Global
Property
  Global A&H   Specialty &
Casualty
  Total  

Gross ratios:

                         

Loss and LAE ratio

    50.0 %   62.1 %   54.7 %   55.1 %

Acquisition expense ratio

    20.7 %   28.1 %   25.5 %   23.7 %

Other underwriting expense ratio

    10.8 %   5.4 %   8.9 %   8.7 %

Gross Combined ratio

    81.5 %   95.6 %   89.1 %   87.5 %

Ceded ratios:

                         

Loss and LAE ratio

    27.0 %   60.3 %   50.1 %   46.3 %

Acquisition expense ratio

    20.1 %   31.3 %   16.0 %   23.7 %

Ceded Combined ratio

    47.1 %   91.6 %   66.1 %   70.0 %

Net ratios:

                         

Loss and LAE ratio

    55.7 %   63.0 %   55.9 %   58.3 %

Acquisition expense ratio

    20.8 %   26.3 %   27.9 %   23.6 %

Other underwriting expense ratio

    13.5 %   8.6 %   11.2 %   12.1 %

Net Combined ratio

    90.0 %   97.9 %   95.0 %   94.0 %

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Gross, Ceded and Net Combined Ratios
Year ended December 31, 2015
  Global
Property
  Global A&H   Specialty &
Casualty
  Total  

Gross ratios:

                         

Loss and LAE ratio

    36.2 %   58.9 %   64.8 %   47.5 %

Acquisition expense ratio

    18.7 %   29.0 %   22.6 %   22.7 %

Other underwriting expense ratio

    11.5 %   6.4 %   8.8 %   9.4 %

Gross Combined ratio

    66.4 %   94.3 %   96.2 %   79.6 %

Ceded ratios:

                         

Loss and LAE ratio

    31.8 %   53.7 %   44.1 %   40.8 %

Acquisition expense ratio

    18.5 %   32.3 %   20.0 %   23.4 %

Ceded Combined ratio

    50.3 %   86.0 %   64.1 %   64.2 %

Net ratios:

                         

Loss and LAE ratio

    37.5 %   61.3 %   70.8 %   49.9 %

Acquisition expense ratio

    18.8 %   27.5 %   23.4 %   22.4 %

Other underwriting expense ratio

    14.8 %   9.4 %   11.3 %   12.7 %

Net Combined ratio

    71.1 %   98.2 %   105.5 %   85.0 %

Global Property

        Global Property consists of Sirius Group's underwriting lines of business which offer other property insurance and reinsurance, property catastrophe excess reinsurance, and agriculture reinsurance on a worldwide basis.

Three and Six Months Ended June 30, 2018 and 2017

 
  Three months
ended June 30,
  Six months
ended June 30,
 
Global Property ($ in millions)
  2018   2017   2018   2017  

Gross written premiums

  $ 325.4   $ 168.1   $ 672.0   $ 452.0  

Net written premiums

    177.0     130.0     424.2     329.4  

Net earned insurance and reinsurance premiums

    167.5     130.6     303.6     250.1  

Loss and allocated LAE

    (68.2 )   (43.4 )   (138.6 )   (104.2 )

Insurance and reinsurance acquisition expenses

    (34.1 )   (23.0 )   (63.4 )   (47.9 )

Technical profit

  $ 65.2   $ 64.2   $ 101.6   $ 98.0  

Unallocated LAE

    (2.5 )   (2.5 )   (4.4 )   (4.5 )

Other underwriting expenses

    (18.1 )   (19.1 )   (35.5 )   (33.9 )

Underwriting income

  $ 44.6   $ 42.6   $ 61.7   $ 59.6  

Ratios:

                         

Loss and LAE Ratio(1)

    42.2 %   35.1 %   47.1 %   43.5 %

Acquisition expense ratio(2)

    20.4 %   17.6 %   20.9 %   19.2 %

Other underwriting expense ratio(3)

    10.8 %   14.6 %   11.7 %   13.6 %

Combined ratio(4)

    73.4 %   67.3 %   79.7 %   76.3 %

(1)
The loss and LAE ratio is calculated by dividing loss and LAE expenses by net earned insurance and reinsurance premiums.

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(2)
The acquisition expense ratio is calculated by dividing insurance and reinsurance acquisition expenses by net earned insurance and reinsurance premiums.

(3)
The other underwriting expense ratio is calculated by dividing other underwriting expenses by net earned insurance and reinsurance premiums.

(4)
The combined ratio is calculated by combining the loss and loss adjustment ratio, the acquisition expense ratio, and the other underwriting expense ratio.

Three months ended June 30, 2018 and 2017:

        Global Property produced a net combined ratio of 73% for the three months ended June 30, 2018 compared to 67% for the three months ended June 30, 2017. The increase in the combined ratio was driven by unfavorable prior year loss reserve development.

        Global Property recorded underwriting income of $45 million and $43 million for the three month periods ended June 30, 2018 and 2017, respectively. The three month periods ended June 30, 2018 and 2017 both included $1 million (less than 1 point) of catastrophe losses. Net unfavorable prior year loss reserve development was $1 million (less than 1 point) for the three months ended June 30, 2018 compared to $14 million (11 points) of net favorable prior year loss reserve development for the three months ended June 30, 2017. For the three months ended June 30, 2017, the net favorable prior year loss reserve development primarily related to Property Catastrophe Excess ($13 million).

        Reinsurance protection:     The Global Property net combined ratio was 4 points lower than the gross combined ratio for the three months ended June 30, 2018 and 6 points higher than the gross combined ratio for the three months ended June 30, 2017. The second quarter 2018 net combined ratio was lower than the gross combined ratio due primarily to an Other Property fronting treaty, which records offsetting gross and ceded loss and commission results, less a margin to Sirius Group. This fronting treaty involves two separate quota share agreements whereby assumed risk from a third party is ceded in their entirely to another third party.

Six months ended June 30, 2018 and 2017:

        Global Property produced a net combined ratio of 80% for the six months ended June 30, 2018 compared to 76% for the six months ended June 30, 2017. The increase in the combined ratio was driven by net unfavorable prior year loss reserve development partially offset by lower catastrophe losses.

        Global Property recorded underwriting income of $62 million and $60 million for the six month periods ended June 30, 2018 and 2017, respectively. The six months ended June 30, 2018 included catastrophe losses of $3 million (1 point) and net unfavorable prior year loss reserve development of $18 million (6 points). The six months ended June 30, 2017 included catastrophe losses of $9 million (4 points) and net favorable prior year loss reserve development of $2 million (1 point). For the six months ended June 30, 2018, net unfavorable prior year loss reserve development was recorded in Other Property ($13 million) and Property Catastrophe Excess ($7 million). For the six months ended June 30, 2017, catastrophe losses were recorded in Other Property ($6 million) and Property Catastrophe Excess ($3 million).

        Reinsurance protection:     The Global Property net combined ratio was 1 point higher than the gross combined ratio for the six months ended June 30, 2018 and 7 points higher than the gross combined ratio for the six months ended June 30, 2017. The Other Property fronting treaty referenced in the three months June 30, 2018 results also impacted the six months ended June 30, 2018 gross and ceded loss and commission ratios.

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Global Property Gross Written Premiums

 
  Three months
ended June 30,
  Six months
ended June 30,
 
Global Property ($ in millions)
  2018   2017   2018   2017  

Other Property

  $ 232.5   $ 95.5   $ 405.2   $ 231.7  

Property Catastrophe Excess

    45.6     45.4     212.2     186.6  

Agriculture

    47.3     27.2     54.6     33.7  

Total

  $ 325.4   $ 168.1   $ 672.0   $ 452.0  

        Global Property's gross written premiums increased 93% to $325 million for the three months ended June 30, 2018 from $168 million for the three months ended June 30, 2017, due to the Other Property fronting treaty, which represents $109 million of the total increase. The remaining increase in Other Property was driven by favorable rate changes and new opportunities. In addition, Agriculture increased by $20 million due to new opportunities in the second quarter of 2018.

        Global Property's gross written premiums increased 49% to $672 million for the six months ended June 30, 2018 from $452 million for the six months ended June 30, 2017, due to the Other Property fronting treaty, which was $122 million of the total increase. The remaining increases in Other Property and Property Catastrophe Excess were driven by favorable rate changes and new opportunities.

Global Property Net Earned Insurance and Reinsurance Premiums

 
  Three months
ended June 30,
  Six months
ended June 30,
 
Global Property ($ in millions)
  2018   2017   2018   2017  

Other Property

  $ 103.1   $ 80.6   $ 196.4   $ 163.5  

Property Catastrophe Excess

    42.0     36.2     84.4     71.7  

Agriculture

    22.4     13.8     22.8     14.9  

Total

  $ 167.5   $ 130.6   $ 303.6   $ 250.1  

        Global Property's net earned insurance and reinsurance premiums increased 28% to $168 million for the three months ended June 30, 2018 from $131 million for the three months ended June 30, 2017. Primary drivers were Other Property ($23 million) and Agriculture ($9 million). The Other Property fronting treaty did not significantly impact Global Property's net earned insurance and reinsurance premiums for either the 2018 or 2017 periods.

        Global Property's net earned insurance and reinsurance premiums increased 21% to $304 million for the six months ended June 30, 2018 from $250 million for the six months ended June 30, 2017. Primary drivers were Other Property ($33 million) and Property Catastrophe Excess ($13 million). The Other Property fronting treaty did not significantly impact Global Property's net earned insurance and reinsurance premiums for either the 2018 or 2017 periods.

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Years Ended December 31, 2017, 2016, and 2015

Global Property ($ in millions)
Year ended December 31,
  2017   2016   2015  

Gross written premiums

  $ 732.1   $ 634.9   $ 574.7  

Net written premiums

    556.2     514.2     440.7  

Net earned insurance and reinsurance premiums

    564.4     481.8     446.0  

Loss and allocated LAE

    (499.5 )   (256.6 )   (156.8 )

Insurance and reinsurance acquisition expenses

    (112.9 )   (100.3 )   (84.0 )

Technical (loss) profit

    (48.0 )   124.9     205.2  

Unallocated LAE

    (12.9 )   (11.9 )   (10.3 )

Other underwriting expenses

    (63.3 )   (65.1 )   (65.8 )

Underwriting (loss) income

  $ (124.2 ) $ 47.9   $ 129.1  

Ratios:

                   

Loss and LAE Ratio(1)

    90.8 %   55.7 %   37.5 %

Acquisition expense ratio(2)

    20.0 %   20.8 %   18.8 %

Other underwriting expense ratio(3)

    11.2 %   13.5 %   14.8 %

Combined ratio(4)

    122.0 %   90.0 %   71.1 %

(1)
The loss and LAE ratio is calculated by dividing loss and LAE expenses by net earned insurance and reinsurance premiums.

(2)
The acquisition expense ratio is calculated by dividing insurance and reinsurance acquisition expenses by net earned insurance and reinsurance premiums.

(3)
The other underwriting expense ratio is calculated by dividing other underwriting expenses by net earned insurance and reinsurance premiums.

(4)
The combined ratio is calculated by combining the loss and loss adjustment ratio, the acquisition expense ratio, and the other underwriting expense ratio.

2017 vs. 2016:

        Global Property produced a combined ratio of 122% for 2017 compared to 90% in 2016. The increase in the combined ratio was driven by higher catastrophe losses and a higher frequency of non-catastrophe property losses.

        Global Property recorded an underwriting loss of $124 million in 2017 compared to $48 million of underwriting income for 2016. The 2017 results included $245 million (43 points) of catastrophe losses, after applicable reinsurance and reinstatement premiums, from Hurricane Irma ($75 million), Hurricane Maria ($76 million), Hurricane Harvey ($42 million), California Wildfires ($21 million), Mexico Earthquakes ($13 million) and other catastrophe events. This was an increase of $139 million from 2016. Net unfavorable prior year loss reserve development was $2 million (less than 1 point) in 2017 compared to $27 million of net favorable prior year loss reserve development (6 points) in 2016. Unfavorable prior year loss reserve development in Other Property ($18 million) was partially offset by $14 million of favorable prior year loss reserve development for Property Catastrophe Excess in 2017.

2016 vs. 2015:

        Global Property produced a combined ratio of 90% for 2016 compared to 71% in 2015. The increase in the combined ratio in 2016 was driven by higher catastrophe losses and a higher frequency of non-catastrophe property losses.

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        Global Property recorded underwriting income of $48 million in 2016 compared to $129 million of underwriting income for 2015. The 2016 results included $106 million (22 points) of catastrophe losses, after applicable reinsurance and reinstatement premiums, from the Ecuador Earthquake ($25 million), Alberta Wildfires ($24 million), Hurricane Matthew ($23 million) and other catastrophe events. This was an increase in catastrophe losses of $85 million from 2015 of $21 million (5 points). Favorable prior year loss reserve development was $27 million (6 points) in 2016 compared to $27 million (6 points) in 2015. The favorable prior year loss development was primarily due to loss reserve reductions for Other Property ($17 million) and Property Catastrophe Excess ($9 million) in 2015.

        Reinsurance protection:     Global Property net combined ratio was 13 points higher than the gross combined ratio for 2017, 9 points higher than the gross combined ratio for 2016, and 5 points higher for 2015. For 2017, 2016 and 2015, the higher net combined ratio was primarily due to an increase in property retrocessional protections with limited ceded loss recoveries.

Global Property Gross Written Premiums

Global Property ($ in millions)
Year ended December 31,
  2017   2016   2015  

Other Property

  $ 405.2   $ 364.4   $ 314.8  

Property Catastrophe Excess

    255.3     233.2     244.2  

Agriculture

    71.6     37.3     15.7  

Total

  $ 732.1   $ 634.9   $ 574.7  

2017 vs. 2016:

        Global Property's gross written premiums increased 15% to $732 million in 2017 from $635 million in 2016, due to increased treaty participations.

2016 vs. 2015:

        Global Property's gross written premiums increased 10% to $635 million in 2016 from $575 million in 2015, driven primarily by increases for Other Property and Agriculture partially offset by a decrease in Property Catastrophe Excess. The increase in gross written premiums for Agriculture was due to an increased share in U.S. agricultural insurance programs.

Global Property Net Earned Insurance and Reinsurance Premiums

Global Property ($ in millions)
Year ended December 31,
  2017   2016   2015  

Other Property

  $ 337.5   $ 305.7   $ 286.6  

Property Catastrophe Excess

    159.6     140.4     145.4  

Agriculture

    67.3     35.7     14.0  

Total

  $ 564.4   $ 481.8   $ 446.0  

2017 vs. 2016:

        Global Property's net earned insurance and reinsurance premiums increased 17% to $564 million in 2017 from $482 million in 2016. The primary driver was Agriculture, which increased by $32 million, or 89%, due to an increased share in U.S. agricultural insurance programs.

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2016 vs. 2015:

        Global Property's net earned insurance and reinsurance premiums increased 8% to $482 million in 2016 from $446 million in 2015. Increases for Agriculture and Other Property were partially offset by a decline in Property Catastrophe Excess.

Global A&H

        Global A&H consists of Sirius Group's Global A&H insurance and reinsurance underwriting unit along with two MGUs (IMG and Armada).

Three and Six Months Ended June 30, 2018 and 2017

 
  Three months
ended June 30,
  Six months ended
June 30,
 
Global A&H ($ in millions)
  2018   2017   2018   2017  

Gross written premiums

  $ 112.3   $ 96.2   $ 257.9   $ 231.8  

Net written premiums

    82.8     66.2     198.3     152.5  

Net earned insurance and reinsurance premiums

    80.8     73.3     168.8     138.9  

Losses and allocated LAE

    (40.9 )   (40.8 )   (86.7 )   (80.6 )

Insurance and reinsurance acquisition expenses

    (26.4 )   (21.4 )   (55.6 )   (37.6 )

Technical profit

    13.5     11.1     26.5     20.7  

Unallocated LAE

    (1.0 )   (1.1 )   (2.6 )   (3.1 )

Other underwriting expenses

    (6.3 )   (5.6 )   (14.3 )   (12.4 )

Underwriting income

    6.2     4.4     9.6     5.2  

Service fee revenue

    27.4     14.6     60.2     14.6  

MGU unallocated LAE

    (5.1 )       (5.1 )    

MGU other underwriting expenses

    (3.5 )       (11.9 )    

General and administrative expenses, MGU + Runoff/Other

    (14.2 )   (11.4 )   (23.7 )   (11.4 )

Underwriting income, including net service fee income

  $ 10.8   $ 7.6   $ 29.1   $ 8.4  

Ratios:

                         

Loss and LAE Ratio(1)

    51.9 %   57.2 %   52.9 %   60.3 %

Acquisition expense ratio(2)

    32.7 %   29.2 %   32.9 %   27.1 %

Other underwriting expense ratio(3)

    7.8 %   7.6 %   8.5 %   8.9 %

Combined ratio(4)

    92.4 %   94.0 %   94.3 %   96.3 %

(1)
The loss and LAE ratio is calculated by dividing loss and LAE expenses by net earned insurance and reinsurance premiums.

(2)
The acquisition expense ratio is calculated by dividing insurance and reinsurance acquisition expenses by net earned insurance and reinsurance premiums.

(3)
The other underwriting expense ratio is calculated by dividing other underwriting expenses by net earned insurance and reinsurance premiums.

(4)
The combined ratio is calculated by combining the loss and loss adjustment ratio, the acquisition expense ratio, and the other underwriting expense ratio.

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Three months ended June 30, 2018 and 2017:

        Gross written premiums increased 17% to $112 million for three months ended June 30, 2018 from $96 million for the three months ended June 30, 2017, due to increased primary insurance writings. Net written premiums increased 26% to $83 million for the three months ended June 30, 2018 from $66 million for the three months ended June 30, 2017 due to retaining A&H business previously ceded to a subsidiary of IMG, which was acquired by Sirius Group in May 2017.

        Underwriting income, including net service fee income, for Global A&H was $11 million for the three months ended June 30, 2018, compared to $8 million for the three months ended June 30, 2017. The increase of $3 million was driven by higher underwriting income and net service fee income generated by IMG. Starting in 2018, certain of IMG and Armada's operating expenses are reflected in unallocated LAE and other underwriting expense, representing costs associated with the support of the Global A&H underwriting team.

        Global A&H produced a net combined ratio of 92% for the three months ended June 30, 2018 compared to 94% for the three months ended June 30, 2017. The decrease in the net combined ratio was due to net favorable prior year loss reserve development of $5 million (6 points) for the three months ended June 30, 2018 compared to $3 million (4 points) for the three months ended June 30, 2017. The increase in the net commission ratio from the prior period was due to retaining A&H business previously ceded to a subsidiary of IMG, which was acquired by Sirius Group in May 2017. Additionally, net earned insurance and reinsurance premiums increased 11% to $81 million for the three months ended June 30, 2018 from $73 million for the three months ended June 30, 2017.

         Reinsurance protection:     The Global A&H net combined ratio was 5 points higher than the gross combined ratio for the three months ended June 30, 2018 and 3 points higher than the gross combined ratio for the three months ended June 30, 2017. This was due to a higher other underwriting expense ratio for net underwriting results than gross underwriting results, as Sirius Group does not cede any other underwriting expenses. In addition, for the three months ended June 30, 2018, Sirius Group retained A&H business previously ceded to a subsidiary of IMG which increases the net combined ratio of IMG.

Six months ended June 30, 2018 and 2017:

        Gross written premiums increased 11% to $258 million for six months ended June 30, 2018 from $232 million for the six months ended June 30, 2017, due to increased primary insurance writings. Net written premiums increased 29% to $198 million for the six months ended June 30, 2018 from $153 million for the six months ended June 30, 2017 due to retaining A&H business previously ceded to a subsidiary of IMG, which was acquired by Sirius Group in May 2017.

        Underwriting income, including net service fee income, for Global A&H was $29 million for the six months ended June 30, 2018, compared to $8 million for the six months ended June 30, 2017. The increase of $21 million was driven by net service fee income generated by IMG and Armada. Starting in 2018, certain of IMG and Armada's operating expenses are reflected in unallocated LAE and other underwriting expense, representing costs associated with the support of the Global A&H underwriting team.

        Global A&H produced a net combined ratio of 94% for the six months ended June 30, 2018 compared to 96% for the six months ended June 30, 2017. The decrease in the combined ratio was due to net favorable prior year loss reserve development of $8 million (5 points) for the six months ended June 30, 2018 compared to $5 million (4 points) for the six months ended June 30, 2017. The increase in the net commission ratio from the prior period was due to retaining A&H business previously ceded to a subsidiary of IMG and increased primary insurance writings. Additionally, net earned insurance

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and reinsurance premiums increased 22% to $169 million for the six months ended June 30, 2018 from $139 million for the six months ended June 30, 2017.

        Reinsurance protection:     The Global A&H net combined ratio was 4 points higher than the gross combined ratio for six months ended June 30, 2018 and 4 points higher than the gross combined ratio for the six months ended June 30, 2017. This was due to a higher other underwriting expense ratio for net underwriting results than gross underwriting results, as Sirius Group does not cede any other underwriting expenses.

Years Ended December 31, 2017, 2016 and 2015

Global A&H ($ in millions)
Year ended December 31,
  2017   2016   2015  

Gross written premiums

  $ 494.6   $ 436.1   $ 385.9  

Net written premiums

    341.5     277.6     262.3  

Net earned insurance and reinsurance premiums

    306.8     272.2     258.1  

Losses and allocated LAE

    (175.0 )   (164.8 )   (151.6 )

Insurance and reinsurance acquisition expenses

    (89.6 )   (71.7 )   (70.9 )

Technical profit

    42.2     35.7     35.6  

Unallocated LAE

    (4.8 )   (6.8 )   (6.5 )

Other underwriting expenses

    (23.4 )   (23.3 )   (24.2 )

Underwriting income

    14.0     5.6     4.9  

Service fee revenue

    65.9          

General and administrative expenses, MGU + Runoff & Other

    (44.8 )        

Underwriting income, including net service fee income

  $ 35.1   $ 5.6   $ 4.9  

Ratios:

                   

Loss and LAE Ratio(1)

    58.6 %   63.0 %   61.3 %

Acquisition expense ratio(2)

    29.2 %   26.3 %   27.5 %

Other underwriting expense ratio(3)

    7.6 %   8.6 %   9.4 %

Combined ratio(4)

    95.4 %   97.9 %   98.2 %

(1)
The loss and LAE ratio is calculated by dividing loss and LAE expenses by net earned insurance and reinsurance premiums.

(2)
The acquisition expense ratio is calculated by dividing insurance and reinsurance acquisition expenses by net earned insurance and reinsurance premiums.

(3)
The other underwriting expense ratio is calculated by dividing other underwriting expenses by net earned insurance and reinsurance premiums.

(4)
The combined ratio is calculated by combining the loss and loss adjustment ratio, the acquisition expense ratio, and the other underwriting expense ratio.

2017 vs. 2016:

        2017 underwriting income, which includes net service fee income, for Global A&H was $35 million, an increase of $30 million over 2016, driven by increased net earned insurance and reinsurance premiums, improved underwriting results, and the acquisition of IMG and Armada, which

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contributed additional net service fee income. IMG and Armada produced $21 million of net service fee income, which included service fee revenue of $66 million, net of $45 million of general and administrative expenses.

        Global A&H produced a combined ratio of 95% for 2017 compared to 98% in 2016. The decrease in the combined ratio was driven by lower current accident year loss ratios due to the non-renewal of certain underperforming accounts.

        Gross written premiums increased 13% to $495 million in 2017 from $436 million in 2016, while net written premiums increased 23% to $342 million in 2017 from $278 million in 2016, due to increased primary insurance writings. Increased net earned insurance and reinsurance premiums (13%) and an improved combined ratio (driven by lower incurred losses) resulted in an underwriting income of $14 million in 2017 compared to $6 million in 2016.

2016 vs. 2015:

        2016 underwriting income was $6 million, an increase of $1 million over 2015, driven mainly by increased net earned insurance and reinsurance premiums.

        Global A&H produced a combined ratio of 98% for 2016 compared to 98% in 2015. The 2016 results included higher loss and LAE ratio offset by a lower acquisition expense ratio.

        Gross written premiums increased 13%, while net written premiums and net earned insurance and reinsurance premiums increased 6% and 5%, respectively, over 2015, primarily due to increased primary insurance writings.

        Reinsurance protection:     The Global A&H net combined ratio was 1 point higher than the gross combined ratio for 2017, 2 points higher than the gross combined ratio for 2016, and 4 points higher in 2015. This was due to a higher other underwriting expense ratio for net underwriting results than gross underwriting results for each of these years, as Sirius Group does not cede any other underwriting expenses.

Specialty & Casualty

        Specialty & Casualty consists of Sirius Group's insurance and reinsurance underwriting units which offer specialty & casualty product lines on a worldwide basis. Specialty lines represent unique risks where the more difficult and unusual risks are underwritten. Because specialty lines tend to be the more unusual or high risks, much of the market is characterized by a high degree of specialization. Specialty & Casualty consists of Aviation & Space, Marine, Trade Credit, Contingency, Casualty, Surety and Environmental.

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Three and Six Months Ended June 30, 2018 and 2017

 
  Three months
ended
June 30,
  Six months ended
June 30,
 
Specialty & Casualty ($ in millions)
  2018   2017   2018   2017  

Gross written premiums

  $ 60.9   $ 49.6   $ 176.4   $ 130.8  

Net written premiums

    55.1     46.7     155.7     116.1  

Net earned insurance and reinsurance premiums

    55.5     40.6     109.9     78.5  

Loss and allocated LAE

    (31.7 )   (21.7 )   (53.3 )   (39.5 )

Insurance and reinsurance acquisition expenses

    (14.6 )   (9.2 )   (28.7 )   (18.1 )

Technical profit

    9.2     9.7     27.9     20.9  

Unallocated LAE

    (1.7 )   (2.2 )   (2.9 )   (3.2 )

Other underwriting expenses

    (7.9 )   (4.8 )   (15.9 )   (8.9 )

Underwriting (loss) income

  $ (0.4 ) $ 2.7   $ 9.1   $ 8.8  

Ratios:

                         

Loss and LAE Ratio(1)

    60.2 %   58.9 %   51.1 %   54.4 %

Acquisition expense ratio(2)

    26.3 %   22.7 %   26.1 %   23.1 %

Other underwriting expense ratio(3)

    14.2 %   11.8 %   14.5 %   11.3 %

Combined ratio(4)

    100.7 %   93.4 %   91.7 %   88.8 %

(1)
The loss and LAE ratio is calculated by dividing loss and LAE expenses by net earned insurance and reinsurance premiums.

(2)
The acquisition expense ratio is calculated by dividing insurance and reinsurance acquisition expenses by net earned insurance and reinsurance premiums.

(3)
The other underwriting expense ratio is calculated by dividing other underwriting expenses by net earned insurance and reinsurance premiums.

(4)
The combined ratio is calculated by combining the loss and loss adjustment ratio, the acquisition expense ratio, and the other underwriting expense ratio.

Three months ended June 30, 2018 and 2017:

        Gross written premiums increased 22% to $61 million for the three months ended June 30, 2018 from $50 million for the three months ended June 30, 2017, due to new Casualty business written ($22 million) offset by decreases in Aviation & Space ($6 million) and Marine ($4 million). Net written premiums increased 17% to $55 million for the three months ended June 30, 2018 from $47 million for the three months ended June 30, 2017, due to the same lines of business as the gross written premiums increase. The decrease in Marine was due to the decision not to renew the book written in Sirius International's London office due to underwriting performance.

        Specialty & Casualty recorded a less than $1 million underwriting loss for the three months ended June 30, 2018 compared to underwriting income of $3 million for the three months ended June 30, 2017. Specialty & Casualty had $3 million (5 points) of favorable prior year loss reserve development for the three months ended June 30, 2018, primarily driven by Aviation & Space ($1 million) compared to $5 million (12 points) of favorable prior year loss reserve development for the three months ended June 30, 2017, primarily driven by Aviation & Space ($8 million).

        Other underwriting expenses increased 60% to $8 million for the three months ended June 30, 2018 from $5 million for the three months ended June 30, 2017. The increase in other underwriting

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expenses was primarily driven by expenses related to the Surety and Environmental specialty lines, which were newly launched in late 2017.

        Specialty & Casualty produced a net combined ratio of 101% for the three months ended June 30, 2018 compared to 93% for the three months ended June 30, 2017. The higher net combined ratio was due to a higher other underwriting expense ratio caused by the Surety and Environmental specialty lines, which were newly launched in late 2017.

        Reinsurance protection:     The Specialty & Casualty net combined ratio was 7 points higher than the gross combined ratio for the three months ended June 30, 2018 and 8 points lower than the gross combined ratio for the three months ended June 30, 2017. The higher net combined ratio for the three months ended June 30, 2018 was primarily due to low ceded loss recoveries for Trade Credit, and the lower net combined ratio for three months ended June 30, 2017 was primarily due to ceded loss recoveries in Aviation & Space and Trade Credit.

Six months ended June 30, 2018 and 2017:

        Gross written premiums increased 34% to $176 million for the six months ended June 30, 2018 from $131 million for the six months ended June 30, 2017, due to new initiatives in Casualty ($45 million), Environmental ($3 million) and Surety ($3 million), offset by decreases in Marine ($8 million) and Aviation & Space ($7 million). Net written premiums increased 34% to $156 million for the six months ended June 30, 2018 from $116 million for the six months ended June 30, 2017, due to the same lines of business as the gross written premiums increase. The decrease in Marine was due to the decision not to renew the book written in Sirius International's London office due to underwriting performance.

        Specialty & Casualty recorded $9 million of underwriting income for both the six month periods ended June 30, 2018 and 2017. Specialty & Casualty had $10 million (9 points) of favorable prior year loss reserve development for the six months ended June 30, 2018, primarily driven by Aviation & Space ($11 million) compared to $6 million (8 points) of favorable prior year loss reserve development for the six months ended June 30, 2017, primarily driven by Aviation & Space ($7 million).

        Other underwriting expenses increased 78% to $16 million for the six months ended June 30, 2018 from $9 million for the six months ended June 30, 2017. The increase in other underwriting expenses was primarily driven by Casualty, as well as the Surety and Environmental lines of business, which were newly launched in late 2017.

        Specialty & Casualty produced a net combined ratio of 92% for the six months ended June 30, 2018 compared to 89% for the six months ended June 30, 2017. The higher net combined ratio was due to a higher other underwriting expense ratio caused by the Surety and Environmental specialty lines, which were newly launched in late 2017.

        Reinsurance protection:     The Specialty & Casualty net combined ratio was 6 points higher than the gross combined ratio for the six months ended June 30, 2018 and 5 points lower than the gross combined ratio for the six months ended June 30, 2017. The higher net combined ratio for the six months ended June 30, 2018 was primarily due to low ceded loss recoveries for Trade Credit, and the lower net combined ratio for six months ended June 30, 2017 was primarily due to ceded loss recoveries in Aviation & Space and Trade Credit.

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Specialty & Casualty Gross Written Premiums

 
  Three months
ended June 30,
  Six months ended
June 30,
 
Specialty & Casualty ($ in millions)
  2018   2017   2018   2017  

Casualty

  $ 28.1   $ 6.1   $ 55.2   $ 9.9  

Aviation & Space

    10.8     16.6     31.9     38.7  

Marine

    8.5     12.5     26.1     34.2  

Trade Credit

    6.2     9.8     47.2     36.1  

Contingency

    3.5     4.6     10.4     11.9  

Environmental

    2.4         2.8      

Surety

    1.4         2.8      

Total

  $ 60.9   $ 49.6   $ 176.4   $ 130.8  

        Gross written premiums increased 22% to $61 million for the three months ended June 30, 2018 from $50 million for the three months ended June 30, 2017. Increases in gross written premiums were primarily driven be new initiatives in Casualty ($22 million) partially offset by declines in Aviation & Space ($6 million), Trade Credit ($4 million) and Marine ($4 million). Additionally, gross written premiums include amounts related to Environmental ($2 million) and Surety ($1 million) specialty lines, which were newly launched in late 2017.

        Gross written premiums increased 34% to $176 million for the six months ended June 30, 2018 from $131 million for the six months ended June 30, 2017. Increases in gross written premiums were primarily driven be new initiatives in Casualty ($45 million) partially offset by declines in Marine ($8 million) and Aviation & Space ($7 million). Additionally, gross written premiums include amounts related to the Surety ($3 million) and Environmental ($3 million) specialty lines, which were newly launched in late 2017.

Specialty & Casualty Net Earned Insurance and Reinsurance Premiums

 
  Three months
ended June 30,
  Six months
ended June 30,
 
Specialty & Casualty ($ in millions)
  2018   2017   2018   2017  

Casualty

  $ 16.8   $ 1.8   $ 27.5   $ 2.7  

Aviation & Space

    15.3     14.8     30.1     29.5  

Marine

    9.6     11.4     23.0     22.5  

Trade Credit

    9.5     8.4     20.6     15.6  

Contingency

    3.7     4.2     8.2     8.2  

Surety

    0.5         0.4      

Environmental

    0.1         0.1      

Total

  $ 55.5   $ 40.6   $ 109.9   $ 78.5  

        Net earned insurance and reinsurance premiums increased 37% to $56 million for the three months ended June 30, 2018 from $41 million for the three months ended June 30, 2017. Casualty ($15 million) was the main driver for the increase from the prior period.

        Net earned insurance and reinsurance premiums increased 39% to $110 million for the six months ended June 30, 2018 from $79 million for the six months ended June 30, 2017. Casualty ($25 million) and Trade Credit ($5 million) were the main drivers of the increase from the prior period.

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Years Ended December 31, 2017, 2016, and 2015

Specialty & Casualty ($ in millions)
Year ended December 31,
  2017   2016   2015  

Gross written premiums

  $ 218.1   $ 170.7   $ 182.4  

Net written premiums

    193.0     137.4     147.5  

Net earned insurance and reinsurance premiums

    163.2     135.2     138.2  

Loss and allocated LAE

    (99.6 )   (71.2 )   (91.0 )

Insurance and reinsurance acquisition expenses

    (41.1 )   (37.7 )   (32.3 )

Technical profit

    22.5     26.3     14.9  

Unallocated LAE

    (5.3 )   (4.4 )   (6.8 )

Other underwriting expenses

    (16.5 )   (15.1 )   (15.6 )

Underwriting income (loss)

  $ 0.7   $ 6.8   $ (7.5 )

Ratios:

                   

Loss and LAE Ratio(1)

    64.3 %   55.9 %   70.8 %

Acquisition expense ratio(2)

    25.2 %   27.9 %   23.4 %

Other underwriting expense ratio(3)

    10.1 %   11.2 %   11.3 %

Combined ratio(4)

    99.6 %   95.0 %   105.5 %

(1)
The loss and LAE ratio is calculated by dividing loss and LAE expenses by net earned insurance and reinsurance premiums.

(2)
The acquisition expense ratio is calculated by dividing insurance and reinsurance acquisition expenses by net earned insurance and reinsurance premiums.

(3)
The other underwriting expense ratio is calculated by dividing other underwriting expenses by net earned insurance and reinsurance premiums.

(4)
The combined ratio is calculated by combining the loss and loss adjustment ratio, the acquisition expense ratio, and the other underwriting expense ratio.

2017 vs. 2016:

        Specialty & Casualty produced a combined ratio of 100% for 2017 compared to 95% in 2016. The increase in the combined ratio was driven by higher loss and LAE ratios in Aviation & Space, Trade Credit, and Marine.

        Specialty & Casualty recorded underwriting income of $1 million in 2017 compared to underwriting income of $7 million in 2016. 2017 results included $14 million (9 points) of catastrophe losses, after applicable reinsurance and reinstatement premiums, mainly due to Hurricanes Irma, Maria and Harvey (primarily in Marine) as compared to $3 million (2 points) of catastrophe losses in 2016, after applicable reinsurance and reinstatement premiums. Specialty & Casualty recorded $12 million (7 points) of favorable prior year loss reserve development in 2017, primarily in Marine ($5 million) and Trade Credit ($4 million) compared to $25 million (18 points) of favorable prior year loss reserve development in 2016, primarily from Aviation & Space ($12 million) and Marine ($7 million).

2016 vs. 2015:

        Specialty & Casualty produced a combined ratio of 95% for 2016 compared to 106% in 2015. The decrease in the combined ratio was driven by lower loss and LAE ratios in Aviation & Space, Trade Credit and Marine.

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        Specialty & Casualty recorded underwriting income of $7 million in 2016 compared to an underwriting loss of $8 million in 2015. The 2016 result was driven by $25 million (18 points) of favorable prior year loss reserve development primarily from Aviation & Space ($12 million) and Marine ($7 million). This compares to $8 million (6 points) of favorable prior year loss reserve development in 2015, primarily in Aviation & Space ($6 million). Catastrophe losses were $3 million, after applicable reinsurance and reinstatement premiums, in 2016 primarily for Marine while there were no catastrophe losses recorded in 2015.

        Reinsurance protection:     The Specialty & Casualty net combined ratio was 1 point lower than the gross combined ratio for 2017, 6 points higher than the gross combined ratio for 2016, and 9 points higher than the gross combined ratio for 2015. The lower combined ratio in 2017 was primarily due to ceded loss recoveries in Marine and Trade Credit, whereas the higher net combined ratio for 2016 was primarily due to low ceded loss recoveries for Aviation & Space, and the higher net combined ratio in 2015 was primarily due to low ceded loss recoveries in Aviation & Space and Marine.

Specialty & Casualty Gross Written Premiums

Specialty & Casualty ($ in millions)
Year ended December 31,
  2017   2016   2015  

Aviation & Space

  $ 65.7   $ 61.6   $ 66.6  

Marine

    56.1     57.7     52.7  

Trade Credit

    39.7     31.6     48.1  

Casualty

    38.2     0.6     1.0  

Contingency

    18.4     19.2     14.0  

Total

  $ 218.1   $ 170.7   $ 182.4  

2017 vs. 2016:

        Specialty & Casualty gross written premiums increased 27% to $218 million in 2017 from $171 million in 2016, primarily a result of re-entering the U.S. casualty reinsurance market in 2017.

2016 vs. 2015:

        Gross written premiums decreased 6% to $171 million in 2016 from $182 million in 2015. Decreases for Aviation & Space and Trade Credit were partially offset by increases in Marine and Contingency.

Specialty & Casualty Net Earned Insurance and Reinsurance Premiums

Specialty & Casualty ($ in millions)
Year ended December 31,
  2017   2016   2015  

Aviation & Space

  $ 53.8   $ 45.1   $ 48.3  

Marine

    46.6     43.4     42.3  

Trade Credit

    32.6     32.1     36.8  

Contingency

    15.2     14.1     10.1  

Casualty

    15.0     0.5     0.7  

Total

  $ 163.2   $ 135.2   $ 138.2  

2017 vs. 2016:

        Net earned insurance and reinsurance premiums increased 21% to $163 million in 2017 from $135 million in 2016. Net earned insurance and reinsurance premiums increased for all Specialty &

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Casualty lines, with the largest increases in Casualty and Aviation & Space. The increase in Casualty was due to the re-entry in the U.S. casualty reinsurance market in 2017.

2016 vs. 2015:

        Net earned insurance and reinsurance premiums decreased 2% to $135 million in 2016 from $138 million in 2015. Increases for Marine and Contingency were offset by decreases for Aviation & Space and Trade Credit.

Runoff & Other

        Runoff & Other consists of business related to asbestos and environmental risks and other latent liability exposures, in addition to results from Sirius Global Solutions, which specializes in the acquisition and management of runoff liabilities for insurance and reinsurance companies both in the United States and internationally.

Three and Six Months Ended June 30, 2018 and 2017

 
  Three months
ended June 30,
  Six months
ended June 30,
 
Runoff & Other ($ in millions)
  2018   2017   2018   2017  

Gross written premiums

  $ 6.4   $ (10.5 ) $ 13.9   $ (4.9 )

Net written premiums

    5.4     (1.5 )   11.5     (0.9 )

Net earned insurance and reinsurance premiums

    5.1     (0.6 )   11.1     0.3  

Loss and allocated loss adjustment expenses

    (0.3 )   (19.8 )   2.1     (18.5 )

Insurance and reinsurance acquisition expenses

    (1.5 )   1.8     (2.2 )   2.3  

Technical profit (loss)

    3.3     (18.6 )   11.0     (15.9 )

Unallocated loss adjustment expenses

        (1.6 )   (0.9 )   (1.8 )

Other underwriting expenses

    (2.4 )   (1.3 )   (3.8 )   (2.7 )

Underwriting income (loss)

  $ 0.9   $ (21.5 ) $ 6.3   $ (20.4 )

Three months ended June 30, 2018 and 2017:

        Runoff & Other recorded $6 million of gross written premiums for three months ended June 30, 2018 compared to $(11) million of gross written premiums for the three months ended June 30, 2017. Gross written premiums for three months ended June 30, 2018 relate primarily to premiums from a quota share with Florida Specialty Insurance Company (" Florida Specialty "). The negative gross written premiums in Runoff & Other for the three months ended June 30, 2017 relates to the cancellation of Mount Beacon's inforce business per a consent order approved by the Florida Office of Insurance Regulation. Mount Beacon recognized $12 million of negative gross written premiums and a corresponding change in gross unearned insurance and reinsurance premiums with a decrease in ceded written premiums and ceded unearned insurance and reinsurance premiums (100% of which were ceded to Florida Specialty). This cancellation did not impact net earned insurance and reinsurance premiums.

        Runoff & Other recorded $3 million of net favorable prior year loss reserve development for the three months ended June 30, 2018 compared to $21 million of net unfavorable prior year loss reserve development for the prior period. The net unfavorable prior year loss reserve development for three months ended June 30, 2017 was due to an increase in asbestos loss reserves of $58 million, which were partially offset by reductions of other runoff claims reserves of $37 million. The asbestos incurred losses were primarily a result of an in-depth analysis of Sirius Group's loss reserves in the second quarter of

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2017. The asbestos study was initiated in response to increased estimates of industry asbestos losses promulgated by leading financial analysts.

Six months ended June 30, 2018 and 2017:

        Runoff & Other recorded $14 million of gross written premiums for the six months ended June 30, 2018 compared to $(5) million of gross written premiums for the six months ended June 30, 2017. Gross written premiums for the six months ended June 30, 2018 relate primarily to premiums from an assumed loss portfolio transfer and quota share with Florida Specialty. The negative gross written premiums for the six months ended June 30, 2017 relates to the cancellation of Mount Beacon's inforce business per a consent order approved by the Florida Office of Insurance Regulation mentioned above.

        Runoff & Other recorded $12 million of net favorable prior year loss reserve development for the six months ended June 30, 2018 compared to $20 million of net unfavorable prior year loss reserve development for the prior period. For the six months ended June 30, 2018, the net favorable prior year loss reserve development for Runoff & Other included reductions in World Trade Center claims in response to revised information received by Sirius Group and runoff casualty reserves. For the six months ended June 30, 2017, Sirius Group increased its asbestos reserves by $59 million, which were offset by reductions of other runoff claims reserves of $39 million. The increase in asbestos reserves was due to the second quarter 2017 asbestos study mentioned above.

Years Ended December 31, 2017, 2016, and 2015

Runoff & Other ($ in millions)
Year ended December 31,
  2017   2016   2015  

Gross written premiums

  $ (5.5 ) $ 27.3   $ 17.5  

Net written premiums

    (0.5 )   8.9     (2.9 )

Net earned insurance and reinsurance premiums

    0.9     0.9     4.7  

Loss and allocated LAE

    (11.0 )   (2.6 )   4.6  

Insurance and reinsurance acquisition expenses

    3.5     (0.6 )   (2.6 )

Technical (loss) profit

    (6.6 )   (2.3 )   6.7  

Unallocated LAE

    (3.1 )   (1.0 )   (4.3 )

Other underwriting expenses

    (2.9 )   (3.8 )   (2.3 )

Underwriting (loss) income

  $ (12.6 ) $ (7.1 ) $ 0.1  

2017 vs. 2016:

        The negative gross written premiums in Runoff & Other relates to the cancellation of Mount Beacon's inforce business per a consent order approved by the Florida Office of Insurance Regulation. Mount Beacon recognized $12 million of negative gross written premiums and a corresponding change in gross unearned insurance and reinsurance premiums with a decrease in ceded written premiums and ceded unearned insurance and reinsurance premiums (100% of which were ceded to Florida Specialty). This cancellation did not impact net earned insurance and reinsurance premiums.

        Runoff & Other recorded $13 million of net unfavorable prior year loss reserve development in 2017. During 2017, Sirius Group strengthened its asbestos loss reserves by $59 million, which was offset by reductions of other runoff loss reserves of $46 million. The 2017 asbestos incurred losses were primarily a result of an in-depth analysis of Sirius Group's loss reserves in 2017. The asbestos study was initiated in response to increased estimates of industry asbestos losses promulgated by leading financial analysts. External asbestos experts were engaged by Sirius Group to assist with the actuarial and claims review of asbestos exposures within Sirius Group. Management booked the highest central estimate of

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the internal and external indications resulting from the in-depth study. See "Summary of Critical Accounting Estimates" below.

2016 vs. 2015:

        Gross written premiums in Runoff & Other were $27 million in 2016 compared to $18 million in 2015. Gross written premiums in 2016 consisted primarily of premiums from Mount Beacon (100% of which were ceded to Florida Specialty) and assumed casualty premiums from a previous White Mountains affiliate. Gross written premiums in 2015 consisted primarily of premiums from a former White Mountains affiliate and Aviation & Space premiums from Sirius International's Copenhagen Branch, which was placed in runoff in 2015.

        In 2015, White Mountains required Sirius Group to purchase industry loss warranty covers to mitigate the potential impact of major natural catastrophe events on Sirius Group's balance sheet pending the close of the sale to CMIG International (the " WTM Covers "). The net written premiums impact of the WTM Covers was $20 million in 2015, which is reflected as negative net written premiums. Additionally, the net earned insurance and reinsurance premiums impact of the WTM Covers was $9 million and $11 million in 2016 and 2015, respectively, which is reflected as negative net earned insurance and reinsurance premiums.

        Runoff & Other recorded $4 million of net favorable prior year loss reserve development in 2016 compared to $14 million of net favorable prior year loss reserve development in 2015. In 2016, Sirius Group strengthened its asbestos loss reserves by $14 million, which was more than offset by favorable loss reserve development in runoff casualty reserves. The 2016 increase in asbestos incurred losses was primarily the result of management's monitoring of a variety of metrics, including actual paid and reported claims activity. In 2015, the favorable prior year loss reserve development was due primarily to favorable development in runoff casualty reserves partially offset by development in environmental loss reserves. The development in environmental loss reserves was a result of management's monitoring of a variety of metrics including actual paid and reported claims activity.

Liquidity and Capital Resources

        Liquidity is a measure of a company's ability to generate cash flows sufficient to meet short-term and long-term cash requirements of its business operations. Sirius Group's insurance and reinsurance operations are subject to regulation and supervision in each of the jurisdictions where they are domiciled and licensed to conduct business. Generally, regulatory authorities have broad supervisory and administrative powers over such matters as licenses, standards of solvency, premium rates, policy forms, investments, security deposits, methods of accounting, form and content of financial statements, reserves for unpaid loss and LAE, reinsurance, minimum capital and surplus requirements, dividends and other distributions to shareholders, periodic examinations and annual and other report filings. In general, such regulation is for the protection of policyholders rather than shareholders. Sirius Group manages its liquidity needs primarily through the maintenance of a short duration and high quality fixed income portfolio.

Dividend Capacity

        Sirius Bermuda has the ability to declare or pay dividends or make capital distributions during any 12-month period without the prior approval of Bermuda regulatory authorities on the condition that any such declaration or payment of dividends or capital distributions does not cause a breach of any of its regulatory solvency and liquidity requirements. During 2018, Sirius Bermuda has the ability to pay dividends or make capital distributions without the prior approval of regulatory authorities, subject to meeting all appropriate liquidity and solvency requirements, of $637 million, which is equal to 25% of its December 31, 2017 regulatory capital available for distribution. The amount of dividends available to be paid by Sirius Bermuda in any given year is also subject to cash flow and earnings generated by Sirius Bermuda's business, as well as to dividends received from its subsidiaries, including Sirius International. During 2017, Sirius Bermuda paid $120 million of dividends to its immediate parent.

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        Sirius International has the ability to pay dividends to Sirius Bermuda subject to the availability of unrestricted equity, calculated in accordance with the Swedish Act on Annual Accounts in Insurance Companies and the FSA. Unrestricted equity is calculated on a consolidated group account basis and on a parent account basis. Differences between the two include but are not limited to accounting for goodwill, subsidiaries (with parent accounts stated at original foreign exchange rates), taxes and pensions. Sirius International's ability to pay dividends is limited to the "lower of" unrestricted equity as calculated within the group and parent accounts. As of December 31, 2017, Sirius International had $392 million (based on the December 31, 2017 SEK to USD exchange rate) of unrestricted equity on a parent account basis (the lower of the two approaches) available to pay dividends in 2018. The amount of dividends available to be paid by Sirius International in any given year is also subject to cash flow and earnings generated by Sirius International's business, the maintenance of adequate solvency capital ratios for Sirius International and the consolidated Sirius International UK Holdings Ltd. (" SIUK ") group, as well as dividends received from its subsidiaries, including Sirius America. Earnings generated by Sirius International's business that are allocated to the Safety Reserve are not available to pay dividends (see " Safety Reserve " below). During 2017, Sirius International declared $103 million and paid $20 million of dividends.

        Under normal course of business, Sirius America has the ability to pay dividends up to its immediate parent during any twelve-month period without the prior approval of regulatory authorities in an amount set by formula based on the lesser of net investment income, as defined by statute, or 10% of statutory surplus, in both cases as most recently reported to regulatory authorities, subject to the availability of earned surplus and subject to dividends paid in prior periods. Based upon an agreement with its regulator during 2016, Sirius America was required to refrain from taking steps to pay any dividends for a period of two years from the date of the sale of Sirius Group from its former parent to CMIG International. As of December 31, 2017, Sirius America had $522 million of statutory surplus and $121 million of earned surplus. During 2017, Sirius America did not pay any dividends to its immediate parent.

        During 2017, Sirius Group did not pay any dividends to its parent. Sirius Group paid $27 million in dividends to its former parent on April 18, 2016. As of December 31, 2017, Sirius Group had $68 million of net unrestricted cash, short-term investments, and fixed-maturity investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries.

        For the six months ended June 30, 2018, Sirius Group did not pay any dividends to its parent. As of June 30, 2018, Sirius Group had $47 million of net unrestricted cash, short-term investments, and fixed-maturity investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries.

Capital Maintenance

        There is a capital maintenance agreement between Sirius International and Sirius America which obligates Sirius International to make contributions to Sirius America's surplus in order for Sirius America to maintain surplus equal to at least 125% of the company action level risk-based capital as defined in the National Association of Insurance Commissioners' Property/Casualty Risk-Based Capital Report. The agreement provides for a maximum contribution to Sirius America of $200 million. During 2017, Sirius International did not make any contributions to the surplus of Sirius America. In 2017, Sirius International provided Sirius America with an accident year stop-loss cover, with an attachment point in excess of 83% and a limit of $27.0 million. This accident year stop-loss reinsurance was not renewed in 2018. In addition, at November 1, 2016, Sirius America and Sirius International entered into a quota share agreement whereby Sirius America ceded Sirius International 75% of its reinsurance business on an accident year basis. This quota share agreement was in force through March 31, 2018. During 2017 and 2016, Sirius America ceded $115 million and $33 million of premiums earned to Sirius International under this quota share agreement. For the six months ended June 30, 2018 and 2017,

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Sirius America ceded $9 million and $70 million of premiums earned to Sirius International under this quota share agreement, respectively.

Safety Reserve

        Subject to certain limitations under Swedish law, Sirius International is permitted to transfer pre-tax income amounts into an untaxed reserve referred to as a "Safety Reserve." As of December 31, 2017, Sirius International's Safety Reserve amounted to SEK 10.7 billion, or $1.3 billion (based on the December 31, 2017 SEK to USD exchange rate). Under GAAP, an amount equal to the Safety Reserve, net of a related deferred tax liability established at the Swedish tax rate of 22%, is classified as shareholder's equity. Generally, this deferred tax liability is only required to be paid by Sirius International if it fails to maintain prescribed levels of premium writings and loss reserves in future years. As a result of the indefinite deferral of these taxes, Swedish regulatory authorities apply no taxes to the Safety Reserve when calculating solvency capital under Swedish insurance regulations. Accordingly, under local statutory requirements, an amount equal to the deferred tax liability on Sirius International's Safety Reserve ($287 million as of December 31, 2017) is included in solvency capital. Access to the Safety Reserve is restricted to coverage of insurance and reinsurance losses and to coverage of a breach of the Solvency Capital Requirement. Access for any other purpose requires the approval of Swedish regulatory authorities. Similar to the approach taken by Swedish regulatory authorities, most major rating agencies generally include the $1.3 billion balance of the Safety Reserve, without any provision for deferred taxes, in Sirius International's regulatory capital when assessing Sirius International and Sirius Group's financial strength. Subject to certain limitations under Swedish law, Sirius International is permitted to transfer certain portions of its pre-tax income to its Swedish parent companies to minimize taxes (referred to as a group contribution). During 2017, Sirius International did not transfer any of its 2016 pre-tax income via group contributions to its Swedish parent companies.

        Pursuant to new tax legislation enacted in Sweden in June 2018, the tax rate applicable to Swedish corporations will be reduced from 22.0% to 21.4% starting in 2019 and then to 20.6% starting in 2020. Accordingly, for the six months ended June 30, 2018, the deferred tax liability on Sirius International's Safety Reserve decreased to $261 million. The enacted legislation also included a new provision treating an amount equal to 6% of the Safety Reserve balance as of January 1, 2021 as taxable income subject to tax at the applicable 20.6% rate. Based on this new provision, Sirius International recorded an additional deferred tax liability in the amount of $17 million as of June 30, 2018.

Insurance Float

        Insurance float is an important aspect of Sirius Group's insurance and reinsurance operations. Insurance float represents funds that an insurance or reinsurance company holds for a limited time. In an insurance or reinsurance operation, float arises because premiums are collected before losses are paid. This interval can extend over many years. During that time, the insurer or reinsurer invests the funds. When the premiums that an insurer or reinsurer collects do not cover the losses and expenses it eventually must pay, the result is an underwriting loss, which can be considered as the cost of insurance float.

        Insurance float can increase in a number of ways, including through acquisitions of insurance and reinsurance operations, organic growth in existing insurance and reinsurance operations and recognition of losses that do not immediately cause a corresponding reduction in investment assets. Conversely, insurance float can decrease in a number of other ways, including sales of insurance and reinsurance operations, shrinking or runoff of existing insurance and reinsurance operations, the acquisition of operations that do not have substantial investment assets (e.g., an agency) and the recognition of gains that do not cause a corresponding increase in investment assets. It is Sirius Group's intention to

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generate low-cost float over time through a combination of acquisitions and organic growth in its existing insurance and reinsurance operations.

        Certain operational leverage metrics can be measured with ratios that are calculated using insurance float. There are many activities that do not change the amount of insurance float at an insurance or reinsurance company but can have a significant impact on Sirius Group's operational leverage metrics. For example, investment gains and losses, foreign currency translation gains and losses, debt issuances and repurchases/repayments, common and preferred share issuances and repurchases and dividends paid to shareholders are all activities that do not change insurance float but can meaningfully impact operational leverage metrics that are calculated using insurance float.

        During 2017, insurance float increased by $98 million primarily due to major catastrophe losses recorded in 2017, primarily from Hurricanes Irma, Maria and Harvey. These catastrophe losses increase Sirius Group's insurance float when they are first recorded but will decrease insurance float as the catastrophe losses are paid or reserves reduced.

        The following table illustrates Sirius Group's consolidated insurance float position as of June 30, 2018 and December 31, 2017 and 2016:

 
   
  December 31,  
 
  June 30,
2018
 
($ in millions)
  2017   2016  

Loss and LAE reserves

  $ 1,827.1   $ 1,898.5   $ 1,620.1  

Unearned insurance and reinsurance premiums

    800.5     506.8     398.0  

Ceded reinsurance payable

    254.2     139.1     99.6  

Funds held under reinsurance treaties

    72.6     73.4     63.4  

Deferred tax liability on safety reserve

    260.7     286.6     259.7  

Float liabilities

    3,215.1     2,904.4     2,440.8  

Cash

   
114.1
   
215.8
   
137.1
 

Reinsurance recoverable on paid and unpaid losses

    376.1     337.2     308.6  

Insurance and reinsurance premiums receivable

    807.4     543.6     394.6  

Funds held by ceding entities

    157.4     153.2     100.0  

Deferred acquisition costs

    151.4     120.9     84.7  

Ceded unearned insurance and reinsurance premiums

    207.3     106.6     101.1  

Float assets

    1,813.7     1,477.3     1,126.1  

Insurance float

 
$

1,401.4
 
$

1,427.1
 
$

1,314.7
 

Insurance float as a multiple of total capital(1)

    0.5x     0.5x     0.5x  

Insurance float as a multiple of Sirius Group shareholder's equity

    0.7x     0.7x     0.7x  

(1)
See calculation of total capital below in the "Financing" table.

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Financing

        The following table summarizes Sirius Group's capital structure as of June 30, 2018 and December 31, 2017 and 2016:

 
   
  December 31,  
 
  June 30,
2018
 
($ in millions)
  2017   2016  

2017 SEK Subordinated Notes

  $ 303.0   $ 330.7   $  

2016 SIG Senior Notes

    392.9     392.5     392.5  

Old Lyme Note

            3.7  

Total debt

    695.9     723.2     396.2  

Sirius Group Series A redeemable preference shares

    108.8     106.1      

SIG Preference Shares

            250.0  

Common Shareholder's Equity

    1,996.3     1,917.0     1,988.1  

Total capital

  $ 2,801.0   $ 2,746.3   $ 2,634.3  

Total debt to total capital

    25 %   26 %   15 %

Total debt, Sirius Group Series A redeemable preference shares and SIG Preference Shares to total capital

    29 %   30 %   25 %

        Management believes that Sirius Group has the flexibility and capacity to obtain funds externally as needed through debt or equity financing on both a short-term and long-term basis. However, Sirius Group can provide no assurance that, if needed, it would be able to obtain additional debt or equity financing on satisfactory terms, if at all.

2017 SEK Subordinated Notes

        On September 22, 2017, Sirius Group issued floating rate callable subordinated notes denominated in SEK in the amount of SEK 2,750.0 million (or $346.1 million on date of issuance) at a 100% issue price (" 2017 SEK Subordinated Notes "). The 2017 SEK Subordinated Notes were issued in an offering that was exempt from the registration requirements of the Securities Act of 1933. The 2017 SEK Subordinated Notes bear interest on their principal amount at a floating rate equal to the applicable Stockholm Interbank Offered Rate (" STIBOR ") for the relevant interest period plus an applicable margin, payable quarterly in arrears on March 22, June 22, September 22, and December 22 in each year commencing on December 22, 2017, until maturity in September 2047.

        Sirius Group incurred $5 million in expenses related to the issuance of the 2017 SEK Subordinated Notes (including SEK 28 million, or $4 million, in underwriting fees), which have been deferred and are being recognized into interest expense over the life of the 2017 SEK Subordinated Notes.

        A portion of the proceeds were used to fully redeem the outstanding $250.0 million SIG Preference Shares. Taking into effect the amortization of all underwriting and issuance expenses, and applicable STIBOR, the 2017 SEK Subordinated Notes yield an effective rate of approximately 3.5% per annum. Sirius Group recorded $3 million of interest expense, inclusive of amortization of issuance costs on the 2017 SEK Subordinated Notes for the year ended December 31, 2017.

2016 SIG Senior Notes

        On November 1, 2016, Sirius Group issued $400.0 million face value of senior unsecured notes (" 2016 SIG Senior Notes ") at an issue price of 99.209% for net proceeds of $392.4 million after taking into effect both deferrable and non-deferrable issuance costs. The 2016 SIG Senior Notes were issued in an offering that was exempt from the registration requirements of the Securities Act of 1933. The 2016 SIG Senior Notes bear an annual interest rate of 4.6%, payable semi-annually in arrears on May 1 and November 1, in each year commencing on May 1, 2017, until maturity in November 2026.

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        Sirius Group incurred $5 million in expenses related to the issuance of the 2016 SIG Senior Notes (including $3 million in underwriting fees), which have been deferred and are being recognized into interest expense over the life of the 2016 SIG Senior Notes.

        Taking into effect the amortization of the original issue discount and all underwriting and issuance expenses, the 2016 SIG Senior Notes yield an effective rate of approximately 4.7% per annum. Sirius Group recorded $19 and $3 million of interest expense, inclusive of amortization of issuance costs on the 2016 SIG Senior Notes for the years ended December 31, 2017 and 2016, respectively.

2007 SIG Senior Notes

        During 2016, using the funds received from the issuance of the 2016 SIG Senior Notes, Sirius Group retired the $400.0 million face value of senior unsecured notes that were issued in 2007 (" 2007 SIG Senior Notes "). The retirement of the 2007 SIG Senior Notes resulted in a $6 million loss recorded in interest expense, which includes the write-off of the remaining $0.1 million in unamortized deferred costs and original issue discount at the time of retirement.

        In anticipation of the issuance of the 2007 SIG Senior Notes, Sirius Group entered into an interest rate lock agreement to hedge its interest rate exposure from the date of the agreement until the pricing of the 2007 SIG Senior Notes. The agreement was terminated on March 15, 2007 with a loss of $2 million, which was recorded in other comprehensive income. The loss was reclassified from accumulated other comprehensive income over the life of the 2007 SIG Senior Notes using the interest method and was included in interest expense until it was retired in 2016. When the 2007 SIG Senior Notes were retired, the $0.1 million loss remaining in accumulated other comprehensive income was reclassified to interest expense.

        Prior to retirement, taking into effect the amortization of the original issue discount and all underwriting and issuance expenses, including the interest rate lock agreement, the 2007 SIG Senior Notes yielded an effective rate of approximately 6.5% per annum. Sirius Group recorded $31 million and $26 million of interest expense, inclusive of loss on repurchase, amortization of issuance costs and the interest rate lock agreement, on the 2007 SIG Senior Notes for each of the years ended December 31, 2016 and 2015, respectively.

Old Lyme Note

        On April 25, 2017, Sirius Group made a payment of $4 million to retire the Old Lyme Note that was originally issued as part of the acquisition of the runoff loss reserve portfolio of Old Lyme Insurance Company Ltd. As part of the acquisition in 2011, Sirius Group entered into a five-year $2.1 million note that was subject to upward adjustments for favorable loss reserve development (up to 50% of $6.0 million) and downward adjustments for any adverse loss reserve development. From inception, Sirius Group had favorable loss reserve development of $3 million on the Old Lyme loss reserve position that resulted in an increase of $2 million on the Old Lyme Note.

SIG Preference Shares

        In May 2007, Sirius Group's indirect wholly-owned subsidiary, Sirius International Group, Ltd. (" SIG "), issued $250.0 million non-cumulative perpetual preference shares, with a $1,000 per share liquidation preference (the " SIG Preference Shares "), and received $246 million of proceeds, net of $4 million of issuance costs and commissions. These shares were issued in an offering that was exempt from the registration requirements of the Securities Act of 1933. Holders of the SIG Preference Shares receive dividends on a non-cumulative basis when and if declared by Sirius Group. Sirius Group may not declare or pay dividends on its common shares (other than stock dividends and dividends paid for purposes of any employee benefit plans of Sirius Group and its subsidiaries) unless it is current on its most recent dividend period. The dividend rate was fixed at an annual rate of 7.506% until June 30,

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2017, and dividends are paid on a semi-annual basis. After June 30, 2017, the dividend rate was paid at a floating annual rate, equal to the greater of (i) the 3-month LIBOR plus 320 bps or (ii) 7.506% and dividends will be paid on a quarterly basis. The SIG Preference Shares were redeemable solely at the discretion of Sirius Group on or after June 30, 2017 at their liquidation preference of $1,000 per share, plus any declared but unpaid dividends.

        On October 25, 2017, SIG redeemed all of the issued and outstanding SIG Preference Shares. The redemption price equaled the $1,000 liquidation preference per preference share. Sirius Group accounted for the SIG Preference Shares as a conditionally redeemable instrument within Non-controlling interests.

Sirius Group Series A Redeemable Preference Shares

        In May 2017, Sirius Group issued Series A redeemable preference shares, with 150,000 shares authorized and 100,000 issued at the issuance date, with liquidation preference of $1,000 per preference share. The Sirius Group Series A redeemable preference shares participate in dividends on an as-converted basis with common shares. On July 14, 2018, Sirius Group and IMGAH entered into the Sirius Group Series A redeemable preference shares Redemption Agreement, pursuant to which, effective as of and subject to the closing of the Merger, Sirius Group has agreed to redeem all of the issued and outstanding Sirius Group Series A redeemable preference shares, which are held by IMGAH, for $95 million, payable in cash at the time of the redemption. Effective as of the completion of such redemption, there will be no such shares outstanding.

Standby Letter of Credit Facilities

        On November 8, 2017, Sirius International entered into four standby letter of credit facility agreements totaling $215 million to provide capital support for Syndicate 1945. The first letter of credit is a renewal of a $125 million facility with Nordea Bank Finland plc, $100 million of which is issued on an unsecured basis. The second letter of credit is a $25 million secured facility with Lloyd's Bank plc. Lloyd's Bank plc had previously participated in this program but in a different capacity. The third letter of credit is a $30 million unsecured facility with Barclays Bank plc. The fourth letter of credit is a $35 million facility with DNB Bank ASA London Branch, $25 million of which is issued on an unsecured basis. Each facility is renewable annually. The above referenced facilities are subject to various affirmative, negative and financial covenants that Sirius Group considers to be customary for such borrowings, including certain minimum net worth and maximum debt to capitalization standards.

        Sirius International has other secured letter of credit and trust arrangements with various financial institutions to support its insurance and reinsurance operations. As of December 31, 2017 and December 31, 2016, these secured letter of credit and trust arrangements were collateralized by pledged assets and assets in trust of SEK 2.1 billion and SEK 1.8 billion, or $261 million and $203 million, respectively (based on the December 31, 2017 and December 31, 2016 SEK to USD exchange rates). As of December 31, 2017 and December 31, 2016, Sirius America's trust arrangements were collateralized by pledged assets and assets in trust of $56 million and $19 million, respectively. As of December 31, 2017, Sirius Bermuda's trust arrangements were collateralized by pledged assets and assets in trust of $123 million. At December 31, 2016, Sirius Bermuda did not have any trust arrangements that were collateralized by pledged assets and assets in trust.

Revolving Credit Facility

        In February 2018, Sirius Group, through its indirectly wholly-owned subsidiary SIG, entered into a three-year, $300 million senior unsecured revolving credit facility (the " Facility "). The Facility provides access to loans for working capital and general corporate purposes, and letters of credit to support obligations under insurance and reinsurance agreements and retrocessional agreements. The Facility is

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subject to various affirmative, negative and financial covenants that Sirius Group considers to be customary for such borrowings, including certain minimum net worth, maximum debt to capitalization and financial strength rating standards. As of June 30, 2018, there were no outstanding borrowings under the Facility. In July 2018, the Facility was amended to allow the redemptions contemplated by the Preference Shares Redemption Agreement and Common Shares Redemption Agreement in connection with the Merger.

Debt and Standby Letter of Credit Facility Covenants

        As of June 30, 2018 and December 31, 2017, Sirius Group was in compliance with all of the covenants under the 2016 SIG Senior Notes, the 2017 SEK Subordinated Notes, the Nordea Bank facility, the Lloyd's Bank facility, the Barclays Bank facility, and the DNB Bank ASA London Branch facility.

Off Balance Sheet Arrangements

        Sirius Group is not party to any off-balance sheet transaction, agreement or other contractual arrangement as defined by Item 303(a)(4) of Regulation S-K to which an entity unconsolidated with Sirius Group is a party that management believes is reasonably likely to have a current or future effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that Sirius Group believes is material to investors.

Contractual Obligations and Commitments

        Below is a schedule of Sirius Group's material contractual obligations and commitments as of December 31, 2017:

($ in millions)
  Due in One Year
or Less
  Due in Two to
Three Years
  Due in Four to
Five Years
  Due After Five
Years
  Total  

Debt (including interest payments)(1)

  $ 30.5   $ 61.0   $ 61.0   $ 1,084.5   $ 1,237.0  

Loss and LAE reserves(2)

    671.7     446.1     217.1     563.6     1,898.5  

Long-term incentive compensation(3)

    14.4     10.6     1.4         26.4  

Projected pension benefit obligation(4)

    0.4     0.8     0.9     15.3     17.4  

Operating leases(5)

    10.3     14.1     7.3     4.8     36.5  

Total contractual obligations(6)(7)

  $ 727.3   $ 532.6   $ 287.7   $ 1,668.2   $ 3,215.8  

(1)
The amounts in the table above reflect Sirius Group's contractual obligations with respect to the principal and interest payments on Sirius Group's outstanding debt. Refer to Note 11 " Debt and Standby Letters of Credit Facilities " in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus for further details and discussion on the debt and financing arrangements of Sirius Group.

(2)
We are obligated to pay claims for specified loss events covered by the insurance and reinsurance contracts we write. Such loss payments represent our most significant future payment obligation. The total amount in the table above reflects our best estimate of our loss and LAE reserves refer to " Summary of Critical Accounting Estimates—Loss and LAE Reserves" for further details. The timing of claim payments is subject to significant uncertainty. Sirius Group maintains a portfolio of marketable investments with varying maturities and a substantial amount of short-term investments to provide adequate liquidity for the payment of claims.

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    We have not taken into account corresponding reinsurance recoverable amounts that would be due to us.

(3)
Sirius Group grants incentive awards to certain key employees of Sirius Group and its subsidiaries. This includes awards that primarily consist of performance units. Awards earned are subject to the attainment of pre-specified performance goals at the end of a three-year period or as otherwise determined. Refer to Note 14 " Employee benefit plans and compensation plans " in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus for further details and discussion on the incentive plan obligation.

(4)
Swedish and German employees of Sirius International can participate in defined benefit plans which are based on the employees' pension entitlements and length of employment. Refer to Note 14 " Employment benefit plans and compensation plans " in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus for further details describing the projected pension benefit obligation.

(5)
In the ordinary course of business, we renew and enter into new leases for office space which expire at various dates. There are no provisions within Sirius Group's operating leasing agreements that would trigger acceleration of future lease payments. Sirius Group does not finance its operations through the securitization of its trade receivables, through special purpose entities or through synthetic leases. Further, Sirius Group has not entered into any material arrangements requiring it to guarantee payment of third-party debt or lease payments or to fund losses of an unconsolidated special purpose entity.

(6)
Letters of credit outstanding, the Armada Earnout, the IMG Earnout and the Phoenix commitment are excluded from this presentation. Refer to discussion below for details on these items.

(7)
Sirius Group has future binding commitments to fund certain other long-term investments. These commitments total $92 million at December 31, 2017. These commitments do not have fixed funding dates. Therefore they are excluded from the table above.

        Included in the consideration for the Armada acquisition was a three year contingent earn-out mechanism that could result in an additional payment of up to $125 million (" Armada Earnout ") to the seller. The contingent consideration is payable if earnings before interest expense, taxes, depreciation and amortization (" EBITDA ") of Armada exceeds amounts defined in the redemption agreement. The Armada Earnout can be settled in Sirius Group common shares, subject to certain criteria. At acquisition, the Armada Earnout had a fair value of $79 million. In December 2017, Sirius Group settled approximately 82% of the Armada Earnout with Armada Enterprise for $31 million. The remaining Armada Earnout liability was remeasured at a fair value of $13 million. This commitment is excluded from the table above.

        Included in the consideration for the IMG acquisition was up to up to $50 million of contingent consideration (" IMG Earnout "), payable in Sirius Group Series A redeemable preference shares to the seller, which was stated as $43 million at fair value at acquisition date. The IMG Earnout is payable if EBITDA of IMG exceed amounts defined in the purchase agreement. At December 31, 2017, the IMG Earnout liability was remeasured at a fair value of $30 million. This commitment is excluded from the table above.

        At December 31, 2017, Sirius Group had a commitment to purchase approximately 46.24% of shares in The Phoenix from Delek Group for an additional sum of NIS 2.3 billion in cash (or $663 million using the December 31, 2017 NIS to USD conversion rate), subject to certain adjustments for interest and earnings. The agreement for Sirius Group to acquire a controlling interest in The Phoenix terminated on July 2, 2018. This commitment is excluded from the table above.

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        On July 14, 2018, Sirius Group and IMGAH entered into the Preference Shares Redemption Agreement, pursuant to which, effective as of and subject to the closing of the Merger, Sirius Group has agreed to redeem all of the issued and outstanding Sirius Group Series A redeemable preference shares, which are held by IMGAH, for $95 million, payable in cash at the time of the redemption. Effective as of the completion of such redemption, there will be no Sirius Group Series A redeemable preference shares outstanding and the parties have agreed to terminate the registration rights agreement and the shareholder's agreement, each dated May 26, 2017, between Sirius Group and IMGAH. This commitment is excluded from the table above.

Cash Flows

        Sirius Group primarily derives cash from the net inflow of premiums less claim payments related to underwriting activities and from net investment income. The insurance and reinsurance business inherently provides liquidity, as premiums are received in advance of the time claims are paid. However, the amount of cash required to fund claim payments can fluctuate significantly from period to period, due to the low frequency and high severity nature of certain types of business we write. Sirius Group's remaining cash flows are generally reinvested in our investment portfolio.

        In February 2018, Sirius Group, through its indirectly wholly-owned subsidiary SIG, entered into a three-year, $300 million senior unsecured revolving credit facility (" Facility "). The facility provides access to loans for working capital and general corporate purposes, and letters of credit to support obligations under insurance and reinsurance agreements and retrocessional agreements.

        The following table summarizes our consolidated cash flows from operating, investing and financing activities for 2017, 2016 and 2015 and for the six months ended June 30, 2018 and 2017.

 
  For the years ended
December 31,
  For the six
months ended
June 30,
 
($ in millions)
  2017   2016   2015   2018   2017  

Net cash (used for) provided from(1)

                               

Operations

  $ (36.0 ) $ (46.8 ) $ 9.5   $ 35.0   $ (25.4 )

Investing activities

    66.0     18.5     48.6     (126.7 )   25.9  

Financing activities

    53.6     30.9     (21.2 )   1.4     (5.2 )

Effect of exchange rate changes on cash

    9.9     (9.4 )   (4.5 )   (10.3 )   6.8  

Increase (decrease) in cash during year

  $ 93.5   $ (6.8 ) $ 32.4   $ (100.6 ) $ 2.1  

(1)
Refer to the Consolidated Statements of Cash Flows included in Sirius Group's audited and unaudited interim financial statements included elsewhere in this proxy statement/prospectus.

Cash flows from operations for the six months ended June 30, 2018 and 2017

        Net cash flows provided from (used for) operations was $35 million and $(25) million for the six months ended June 30, 2018 and 2017, respectively. Cash flows from operations increased $60 million for the six months ended June 30, 2018 compared to the six months ended June 30, 2017 primarily due to higher amounts of net premiums collected and no retention bonus payments related to the CMIG International acquisition, partially offset by higher net paid losses and acquisition expenses.

Long-term compensation items affecting cash flows from operations

        During the six months ended June 30, 2018 and 2017, Sirius Group made long-term incentive payments totaling $6 million and $16 million, respectively.

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        During the six months ended June 30, 2017, Sirius Group made retention bonus payments totaling $16 million to management and employees as a result of our acquisition by CMIG International. The retention bonus payment was reimbursed by White Mountains to Sirius Group as stipulated in the stock purchase agreement between CMIG International and White Mountains. There was no retention bonus payments made during the six months ended June 30, 2018 relating to the CMIG International acquisition.

Cash flows from operations for the years ended December 31, 2017, 2016 and 2015

        Net cash flows (used for) provided from operations were $(36) million, $(47) million and $10 million for the years ended 2017, 2016 and 2015, respectively. Cash flows from operations increased $11 million in 2017 compared to 2016 due to higher amounts of net premiums collected, partially offset by higher net paid losses. Cash flows from operations decreased $57 million in 2016 compared to 2015 primarily due to transaction related bonus payments paid to management and employees as a result of our acquisition by CMIG International. Sirius Group does not believe the trends in 2017 and 2016 will have a meaningful impact on its future liquidity or its ability to meet its future cash requirements.

Long-term compensation items affecting cash flows from operations

        During 2017, 2016 and 2015, Sirius Group made long-term incentive payments totaling $16 million, $23 million and $21 million, respectively.

        During 2017, Sirius Group made retention related bonus payments totaling $31 million to management and employees as a result of our acquisition by CMIG International. During 2016, Sirius Group made transaction related bonus payments totaling $37 million primarily to management and employees as a result of the CMIG International acquisition. The transaction and retention related bonus payments were reimbursed by White Mountains to Sirius Group in 2017 and 2016, respectively, as stipulated in the stock purchase agreement between CMIG International and White Mountains.

Cash flows from investing and financing activities for the six months ended June 30, 2018 and 2017

        Cash flows (used for) provided from investing activities were $(127) million and $26 million for the six months ended June 30, 2018 and 2017, respectively. Cash flows provided from investing decreased $153 million as result of the Sirius Group's reduction in fixed-maturity duration securities to better position the portfolio for a rising interest rate environment.

Financing and Other Capital Activities

        During the six months ended June 30, 2018, Sirius Group paid $9 million of interest on the 2016 Senior Notes and $6 million of interest on the 2017 SEK Subordinated Notes.

        During the six months ended June 30, 2018, as stipulated in the stock purchase agreement between CMIG International and White Mountains, White Mountains paid Sirius Group $1 million for certain long-term incentive payments that Sirius Group paid to its employees.

        During the six months ended June 30, 2017, Sirius Group paid $9 million of dividends on the SIG Preference Shares, $9 million of interest on the 2016 Senior Notes, and $1 million of interest on the Old Lyme Note.

        During the six months ended June 30, 2017, as stipulated in the stock purchase agreement between CMIG International and White Mountains, White Mountains paid Sirius Group $3 million for certain long-term incentive payments that Sirius Group paid to its employees.

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        On April 25, 2017, Sirius Group made a payment of $4 million to retire the Old Lyme Note that was issued as part of the acquisition of the runoff loss reserve portfolio of Old Lyme Insurance Company Ltd.

Acquisitions and Dispositions

        On April 3, 2017, Sirius Group purchased 100% of Armada and its subsidiaries. Included in the total consideration was $123 million of cash.

        On May 26, 2017, Sirius Group acquired 100% ownership of IMG and its subsidiaries. Included in the total consideration was $251 million of cash.

        See Note 3 " Significant Transactions " in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus.

Cash flows from investing and financing activities for the year ended December 31, 2017, 2016, and 2015

        Cash flows provided from investing activities were $66 million, $19 million and $48 million for the years ended December 31, 2017, 2016 and 2015, respectively. From 2016 to 2017, cash flows from investing activities increased by $47 million, as a result of Sirius Group's reduction in fixed-maturity duration securities to better position the portfolio for a rising interest rate environment. From 2015 to 2016, the decrease of $30 million was a result of the repositioning of certain assets in 2016, as a result of the sale to CMIG International.

Cash flows from investing and financing activities for the year ended December 31, 2017

Financing and Other Capital Activities

        On April 25, 2017, Sirius Group made a payment of $4 million to retire the Old Lyme Note that was issued as part of the acquisition of the runoff loss reserve portfolio of Old Lyme Insurance Company Ltd.

        On September 22, 2017, Sirius Group issued SEK 2,750.0 million (or $346.1 million on date of issuance) of 2017 SEK Subordinated Notes at a 100% issue price. Net proceeds were $341 million, after taking into effect issuance costs.

        On October 25, 2017, Sirius Group's indirect wholly-owned subsidiary SIG, redeemed all of the SIG Preference Shares. The redemption price equaled the $1,000 liquidation preference per preference share. Sirius Group accounted for the SIG Preference Shares as a conditionally redeemable instrument within Non-controlling interests.

        In December 2017, Sirius Group settled approximately 82% of the Armada Earnout with Armada Enterprise for $31 million.

        During 2017, as stipulated in the stock purchase agreement between CMIG International and White Mountains, White Mountains paid Sirius Group $3 million for certain long-term incentive payments that Sirius Group paid to its employees.

        During 2017, Sirius Group paid $14 million of dividends on the SIG Preference Shares and $18 million of interest on the 2016 Senior Notes, $3 million of interest on the 2017 SEK Subordinated Notes, and $1 million of interest on the Old Lyme Note.

Acquisitions and Dispositions

        On April 3, 2017, Sirius Group purchased 100% of Armada and its subsidiaries. Included in the total consideration was $123 million of cash.

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        On May 26, 2017, Sirius Group acquired 100% ownership of IMG and its subsidiaries. Included in the total consideration was $251 million of cash.

        See Note 3 " Significant Transactions " in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus.

Cash flows from investing and financing activities for the year ended December 31, 2016

Financing and Other Capital Activities

        On November 1, 2016, Sirius Group issued $400.0 million face value of 2016 SIG Senior Notes at an issue price of 99.209% for net proceeds of $392.4 million after taking into effect issuance costs.

        During 2016, Sirius Group retired the $400.0 million face value of 2007 SIG Senior Notes using the funds received from the issuance of the 2016 SIG Senior Notes and paid a prepayment penalty of $6 million since the 2007 SIG Senior Notes were due on March 20, 2017.

        During 2016, Sirius Group paid $27 million of dividends to its immediate parent.

        During 2016, as stipulated in the stock purchase agreement between CMIG International and White Mountains, White Mountains paid Sirius Group $5 million for certain long-term incentive payments that Sirius Group paid to its employees.

        During 2016, as stipulated in the stock purchase agreement between CMIG International and White Mountains, White Mountains paid Sirius Group $17 million, representing the after-tax cost of industry loss warrants that White Mountains required Sirius Group to purchase to mitigate the potential impact of major natural catastrophe events on Sirius Group's balance sheet pending the close of the sale to CMIG International.

        During 2016, Sirius Group paid $19 million of dividends on the SIG Preference Shares and $32 million of interest on the 2007 Senior Notes.

Acquisitions and Dispositions

        During 2016, Sirius Global Solutions completed the sale of Ashmere in connection with the sale of Sirius Group to CMIG International and received $19 million as consideration.

        During 2016, Sirius Global Solutions partnered with another company to form FSA. Sirius Global Solutions paid $16 million to acquire 100% of FSA's common shares. FSA acquired Mount Beacon and its subsidiaries, including Mount Beacon Insurance Company for $17 million during 2016.

        On April 18, 2016, in conjunction with the acquisition by CMIG International, Sirius Group sold its investment in OneBeacon Insurance Group, Ltd. in connection with the sale of Sirius Group to CMIG International and received proceeds of $178 million.

        On February 1, 2016, in conjunction with the sale of Symetra from White Mountains to Sumitomo Life Insurance Company, Sirius Group sold its investment in Symetra and received proceeds of $560 million or $32.00 per share.

Cash flows from investing and financing activities for the year ended December 31, 2015

Financing and Other Capital Activities

        During 2015, Sirius Group paid $19 million of dividends on the SIG Preference Shares and $26 million of interest on the 2007 Senior Notes.

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Acquisitions and Dispositions

        During 2015, Sirius Global Solutions completed the sale of Woodridge Insurance Company and received $14 million as consideration.

Summary of Critical Accounting Estimates

Loss and LAE Reserves

General Description

        Sirius Group establishes loss and LAE reserves that are estimates of future amounts needed to pay claims and related expenses for events that have already occurred. Sirius Group also obtains reinsurance whereby another reinsurer contractually agrees to indemnify Sirius Group for all or a portion of the insurance and reinsurance risks underwritten by Sirius Group. Such arrangements, where one reinsurer provides reinsurance to another reinsurer, are usually referred to as "retrocessional reinsurance" arrangements. Sirius Group establishes estimates of amounts recoverable from retrocessional reinsurance in a manner consistent with the loss and LAE liability associated with reinsurance contracts offered to its customers (the " ceding companies "), net of an allowance for uncollectible amounts. Net reinsurance loss reserves represent loss and LAE reserves reduced by retrocessional reinsurance recoverable on unpaid losses.

        In addition to those risk factors which give rise to inherent uncertainties in establishing insurance loss and LAE reserves, the inherent uncertainties of estimating such reserves are even greater for the reinsurer, due primarily to: (1) the claim-tail for reinsurers and insurers working through MGUs being further extended because claims are first reported to either the original primary insurance company or the MGU and then through one or more intermediaries or reinsurers, (2) the diversity of loss development patterns among different types of reinsurance treaties, facultative contracts or primary insurance contracts, (3) the necessary reliance on the ceding companies, intermediaries and MGUs for information regarding reported claims and (4) the differing reserving practices among ceding companies and MGUs.

        As part of its risk management process, management periodically engages external actuarial and claims consultants to independently evaluate the adequacy of the net carried loss and LAE reserves. These analyses generally include assessments of special liabilities such as asbestos and environmental claims. Management considers the results of the independent analysis as a supplement to internal recommendations when determining carried loss and LAE reserve amounts.

Loss and LAE Reserves by Reportable Segment

        The following table summarizes the net loss and LAE reserves, separated between (i) case reserves for claims reported (" Case ") and (ii) incurred but not reported (" IBNR ") reserves for losses that have occurred but for which claims have not yet been reported and for expected future development on case reserves.

 
  December 31, 2017  
Net loss and LAE reserves by class of business
($ in millions)
  Case   IBNR   Total  

Global Property

  $ 382.3   $ 273.3   $ 655.6  

Global A&H

    70.2     90.4     160.6  

Specialty & Casualty

    168.2     79.4     247.6  

Runoff & Other

    213.1     301.9     515.0  

Total

  $ 833.8   $ 745.0   $ 1,578.8  

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  December 31, 2016  
Net loss and LAE reserves by class of business
($ in millions)
  Case   IBNR   Total  

Global Property

  $ 273.6   $ 142.0   $ 415.6  

Global A&H

    35.1     73.1     108.2  

Specialty & Casualty

    192.3     75.3     267.6  

Runoff & Other

    237.3     299.9     537.2  

Total

  $ 738.3   $ 590.3   $ 1,328.6  

        Additionally, net unpaid losses and loss expenses totaled $1,469 million as of June 30, 2018. See Note 5, "Reserves for unpaid loss and loss adjustment expenses," to Sirius Group's unaudited interim financial statements included elsewhere in this proxy statement/prospectus for a reconciliation of our unpaid losses and loss expenses for the three and six months ended June 30, 2018.

        In order to reduce the potential uncertainty of loss reserve estimation, Sirius Group obtains information from numerous sources to assist in the reserving process. Sirius Group's underwriters and pricing actuaries devote considerable effort to understanding and analyzing a ceding company's operations and loss history during the underwriting of the business, using a combination of client and industry statistics. Such statistics normally include historical premium and loss data by class of business, individual claim information for larger claims, distributions of insurance limits provided and the risk characteristics of the underlying insureds, loss reporting and payment patterns and rate change history. This analysis is used to project expected loss ratios for each treaty or contract during the upcoming contract period. These expected ultimate loss ratios are aggregated across all treaties and are input directly into the loss reserving process. For primary business, a similar portfolio analysis is performed for each MGU program that takes into account expected changes in the aggregated risk profile of the policyholders within each program. The aggregation of risks yields a more stable indication of expected losses that is used to estimate ultimate losses and thus IBNR for recently written business.

        Sirius Group's expected annual loss reporting assumptions are updated at least once a year. Expected loss ratios underlying the recent underwriting years are updated quarterly.

        Sirius Group relies heavily on information reported by MGUs and ceding companies, as discussed above. In order to determine the accuracy and completeness of such information, Sirius Group underwriters, actuaries, and claims personnel perform audits of certain MGUs and ceding companies, where customary. Generally, ceding company audits are not customary outside the United States. In such cases, Sirius Group reviews information from ceding companies for unusual or unexpected results. Any material findings are discussed with the ceding companies. Sirius Group sometimes encounters situations where it is determined that a claim presentation from a ceding company is not in accordance with contract terms. Most situations are resolved without the need for litigation or arbitration. However, in the infrequent situations where a resolution is not possible, Sirius Group vigorously defends its position in such arbitration or litigation.

        To reduce volatility in underwriting income and protect capital, Sirius Group generally obtains reinsurance whereby another reinsurer contractually agrees to indemnify Sirius Group for all or a portion of the risks underwritten by Sirius Group. Sirius Group establishes estimates of amounts recoverable from reinsurers on its primary business and retrocessional reinsurance on its reinsurance business in a manner consistent with the loss and LAE liability associated with reinsurance contracts offered to its customers, net of an allowance for uncollectible amounts, if any. Net reinsurance loss reserves represent loss and LAE reserves reduced by ceded reinsurance recoverable on unpaid losses.

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        The following table details our prior year loss reserve development of liability for net unpaid claims and claim expenses.

 
  Year ended December 31,  
 
  2017   2016   2015  
Development by reportable segment
($ in millions)
  (Favorable)
unfavorable
development
  (Favorable)
unfavorable
development
  (Favorable)
unfavorable
development
 

Global Property

  $ 2.2   $ (26.8 ) $ (27.0 )

Global A&H

    (4.0 )   (7.8 )   (2.7 )

Specialty & Casualty

    (12.1 )   (24.8 )   (7.9 )

Runoff & Other

    13.3     (4.3 )   (13.6 )

Total net favorable development

  $ (0.6 ) $ (63.7 ) $ (51.2 )

Loss and LAE development—2017

        During the year ended December 31, 2017, Sirius Group had net favorable prior year loss reserve development of $1 million. During 2017, Sirius Group strengthened its asbestos loss reserves by $59 million, which was offset by reductions of other runoff claims reserves of $46 million, which is reflected in Runoff & Other. Specialty & Casualty had net favorable prior year loss reserve development of $12 million, which is comprised of Marine ($5 million), Trade Credit ($4 million), Aviation & Space ($2 million), and Contingency ($1 million).

Loss and LAE development—2016

        During the year ended December 31, 2016, Sirius Group had net favorable prior year loss reserve development of $64 million. The major reductions in loss reserve estimates were recognized in Global Property ($27 million) and Specialty & Casualty ($25 million). The decrease in Global Property was driven by Other Property ($23 million) due primarily to reductions in the ultimate loss estimates for natural catastrophes that occurred between 2010 and 2015 due to lower than expected claims activity. The decrease in Specialty & Casualty was mainly due to Aviation & Space and Marine with decreases of $12 million and $7 million, respectively. Asbestos losses of $14 million in 2016 were offset by other long tail favorable loss reserve development in Runoff & Other.

Loss and LAE development—2015

        During the year ended December 31, 2015, Sirius Group had net favorable prior year loss reserve development of $51 million. The major reductions in loss reserve estimates were recognized in Global Property ($27 million) and Specialty & Casualty ($8 million). The decrease in Global Property was driven primarily by reductions in the ultimate loss estimates for natural catastrophes that occurred between 2010 and 2014 due to less than expected claims activity for Other Property ($17 million) and Property Catastrophe Excess ($9 million). The decrease in Specialty & Casualty was mainly due to Aviation & Space ($6 million).

Global Property

Actual Results vs. Initial Estimates

        Generally, initial actuarial estimates of IBNR reserves not related to a specific large event are based on the loss ratio method applied to each class of business. Sirius Group regularly reviews the adequacy of its recorded reserves by using a variety of generally accepted actuarial methods, including historical incurred and paid loss development methods. Estimates of the initial expected ultimate losses involve management judgment and are based on historical information for that class of business, which

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includes loss ratios, market conditions, changes in pricing and conditions, underwriting changes, changes in claims emergence, and other factors that may influence expected ultimate losses. If actual loss activity differs substantially from expectations, an adjustment to recorded reserves may be warranted. As time passes, loss reserve estimates for a given year will rely more on actual loss activity and historical patterns than on initial assumptions.

        For major events, particularly natural catastrophe, Sirius Group develops assessments of the ultimate losses associated with each individual event. Estimates are based on information from ceding companies, third party and internal catastrophe models, and by applying overall estimates of insured industry losses to Sirius Group's exposure information.

        Changes in all estimates will be recorded in the period in which the changes occur. In accident years where the updated estimates are lower than our initial estimates, we experience favorable development. Conversely, in accident years where the revised estimates are higher than our original estimates, there is adverse development on prior accident year reserves.

Potential Variability in Loss Reserve Estimates

        There are possible variations from current estimates of loss reserves due to changes in a few of the many key assumptions. In order to quantify the potential volatility in the loss reserve estimates for Global Property, Sirius Group employs a stochastic simulation approach to produce a range of results around the central estimate and estimated probabilities of possible outcomes. Both the probabilities and the related modeling are subject to inherent uncertainties. The simulation relies on a significant number of assumptions, such as variation in industry losses for major events, historical loss reserve development volatility, and unanticipated inflation.

Global A&H

Actual Results vs. Initial Estimates

        Generally, initial actuarial estimates of IBNR reserves not related to a specific event are based on the loss ratio method applied to each class of business. Sirius Group regularly reviews the adequacy of its recorded reserves by using a variety of generally accepted actuarial methods, including historical incurred and paid loss development methods. Estimates of the initial expected ultimate losses involve management judgment and are based on historical information for that class of business, which includes loss ratios, market conditions, changes in pricing and conditions, underwriting changes, changes in claims emergence, and other factors that may influence expected ultimate losses. If actual loss activity differs substantially from expectations, an adjustment to recorded reserves may be warranted. As time passes, loss reserve estimates for a given year will rely more on actual loss activity and historical patterns than on initial assumptions.

        Changes in all estimates will be recorded in the period in which the changes occur. In accident years where the updated estimates are lower than our initial estimates, we experience favorable development. Conversely, in accident years where the revised estimates are higher than our original estimates, there is adverse development on prior accident year reserves.

Potential Variability in Loss Reserve Estimates

        There are possible variations from current estimates of loss reserves due to changes in a few key assumptions. In order to quantify the potential volatility in the loss reserve estimates for Global A&H, Sirius Group employs a stochastic simulation approach to produce a range of results around the central estimate and estimated probabilities of possible outcomes. Both the probabilities and the related modeling are subject to inherent uncertainties. The simulation relies on a significant number of

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assumptions, such as variation in historical loss reserve development patterns, individual claims estimates and unanticipated inflation.

Specialty & Casualty

Actual Results vs. Initial Estimates

        Generally, initial actuarial estimates of IBNR reserves not related to a specific event are based on the loss ratio method applied to each class of business. Sirius Group regularly reviews the adequacy of its recorded reserves by using a variety of generally accepted actuarial methods, including historical incurred and paid loss development methods. Estimates of the initial expected ultimate losses involve management judgment and are based on historical information for that class of business, which includes loss ratios, market conditions, changes in pricing and conditions, underwriting changes, changes in claims emergence, and other factors that may influence expected ultimate losses. If actual loss activity differs substantially from expectations, an adjustment to recorded reserves may be warranted. As time passes, loss reserve estimates for a given year will rely more on actual loss activity and historical patterns than on initial assumptions.

        For major events, Sirius Group develops assessments of the ultimate losses associated with each individual event. Estimates are based on information from ceding companies and by applying overall estimates of insured industry losses to Sirius Group's exposure information.

        Changes in all estimates will be recorded in the period in which the changes occur. In accident years where the updated estimates are lower than our initial estimates, we experience favorable development. Conversely, in accident years where the revised estimates are higher than our original estimates, there is adverse development on prior accident year reserves.

Potential Variability in Loss Reserve Estimates

        There are possible variations from current estimates of loss reserves due to changes in key assumptions. In order to quantify the potential volatility in the loss reserve estimates for Specialty & Casualty lines, Sirius Group employs a stochastic simulation approach to produce a range of results around the central estimate and estimated probabilities of possible outcomes. Both the probabilities and the related modeling are subject to inherent uncertainties. The simulation relies on a significant number of assumptions, such as variation in historical loss reserve development patterns, individual claims estimates, potential misestimating the initial expected losses during the pricing process, and unanticipated inflation.

Runoff & Other

        Runoff & Other consists of results from Sirius Global Solutions, which specializes in the acquisition and management of runoff liabilities for insurance and reinsurance companies along with other lines of business that Sirius Group is currently not writing.

Actual Results vs. Initial Estimates

        Generally, initial actuarial estimates of IBNR reserves not related to a specific event are based on the loss ratio method applied to each class of business. Sirius Group regularly reviews the adequacy of its recorded reserves by using a variety of generally accepted actuarial methods, including historical incurred and paid loss development methods. Estimates of the initial expected ultimate losses involve management judgment and are based on historical information for that class of business, which includes loss ratios, market conditions, changes in pricing and conditions, underwriting changes, changes in claims emergence, and other factors that may influence expected ultimate losses. If actual loss activity differs substantially from expectations, an adjustment to recorded reserves may be warranted. As time

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passes, loss reserve estimates for a given year will rely more on actual loss activity and historical patterns than on initial assumptions.

        Changes in all estimates will be recorded in the period in which the changes occur. In accident years where the updated estimates are lower than our initial estimates, we experience favorable development. Conversely, in accident years where the revised estimates are higher than our original estimates, there is adverse development on prior accident year reserves.

Potential Variability in Loss Reserve Estimates

        There are possible variations from current estimates of loss reserves due to changes in key assumptions. In order to quantify the potential volatility in the loss reserve estimates for Runoff & Other, Sirius Group employs a stochastic simulation approach to produce a range of results around the central estimate and estimated probabilities of possible outcomes. Both the probabilities and the related modeling are subject to inherent uncertainties. The simulation relies on a significant number of assumptions, such as variation in historical loss reserve development patterns, individual claims estimates, litigation and judicial trends and unanticipated inflation.

Asbestos and Environmental (" A&E ") Reserves

        Included in Sirius Group's Runoff & Other are A&E loss reserves. Sirius Group's A&E exposure is primarily from reinsurance contracts written between 1974 through 1985 by acquired companies. The exposures are mostly higher layer excess of loss treaty and facultative coverages with relatively low limits exposed for each claim. The acquisition of companies having modest portfolios of A&E exposure has been typical of several prior Sirius Global Solutions transactions and is likely to be an element of at least some future acquisitions. However, the acquisition of new A&E liabilities is undertaken only after careful due diligence and utilizing conservative reserving assumptions in relation to industry benchmarks. In the case of portfolios acquired previously, the exposures arise almost entirely from old assumed reinsurance contracts having small limits of liability.

        Net incurred loss activity for asbestos and environmental for the years ended December 31, 2017, 2016 and 2015 was as follows:

 
  Year Ended December 31,  
Net incurred loss and LAE activity
($ in millions)
  2017   2016   2015  

Asbestos

  $ 59.0   $ 13.6   $ (0.5 )

Environmental

    6.1     0.4     3.0  

Total

  $ 65.1   $ 14.0   $ 2.5  

        Sirius Group recorded an increase of $59 million, an increase of $14 million, and an insignificant amount of asbestos-related incurred losses and LAE on its asbestos reserves in 2017, 2016, and 2015, respectively. The 2017 incurred losses were primarily a result of an in-depth analysis of Sirius Group's loss reserves undertaken in 2017. The asbestos study was initiated in response to increased estimates of industry asbestos losses promulgated by leading financial analysts. External asbestos experts were engaged by Sirius Group to assist with the actuarial and claims review of asbestos exposures within Sirius Group. Management booked the highest central estimate of the internal and external indications resulting from the in-depth study. The 2016 incurred losses were primarily the result of management's monitoring of a variety of metrics including actual paid and reported claims activity.

        Sirius Group recorded $6 million, $0 million, and $3 million of environmental losses in 2017, 2016, and 2015, respectively, on its already existing reserves.

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        Sirius Group's net reserves for A&E losses were $221 million and $180 million as of December 31, 2017 and 2016, respectively. Sirius Group's asbestos three-year net paid survival ratio was approximately 10.2 years and 8.8 years as of December 31, 2017 and 2016, respectively. Sirius Group's environmental three-year net paid survival ratio was approximately 4.3 years and 4.8 years as of December 31, 2017 and 2016, respectively.

        Sirius Group's reserves for A&E losses as of December 31, 2017 represent management's best estimate of its ultimate liability based on information currently available. However, as case law expands, and medical and clean-up costs increase and industry settlement practices change, Sirius Group may be subject to asbestos and environmental losses beyond currently estimated amounts. Sirius Group cannot reasonably estimate at the present time loss reserve additions arising from any such future adverse developments and cannot be sure that allocated loss reserves will be sufficient to cover additional liability arising from any such adverse developments.

        The following tables show gross and net loss and LAE payments for A&E exposures for the years ended December 31, 2008 through December 31, 2017:

 
  Asbestos
paid loss
and LAE
  Environmental
paid loss
and LAE
 
($ in millions)
Year Ended December 31
  Gross   Net   Gross   Net  

2008

  $ 19.7   $ 14.3   $ 2.2   $ 1.6  

2009

    11.4     10.3     1.5     1.5  

2010

    14.5     12.1     0.8     0.9  

2011

    20.4     15.6     3.2     3.6  

2012

    34.7     29.4     2.3     1.5  

2013

    25.9     20.3     1.8     1.8  

2014

    21.9     16.8     1.5     1.5  

2015

    22.0     19.4     4.2     3.6  

2016

    21.8     20.1     3.4     3.3  

2017

    24.7     20.8     4.7     4.0  

A&E Claims Activity

        Sirius Group utilizes specialized claims-handling processes on A&E exposures, including management notification of claims development, and a quarterly monitoring meeting. The issues presented by these types of claims require expertise and an awareness of the various trends and developments in relevant jurisdictions. Generally, Sirius Group sets up claim files for each reported claim by each cedent for each individual insured. In many instances, a single claim notification from a cedent could involve several years and layers of coverage resulting in a file being set up for each involvement. Precautionary claim notices are submitted by the ceding companies in order to preserve their right to pursue coverage under the reinsurance contract. Such notices do not contain an incurred loss amount. Accordingly, an open claim file is not established.

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        As of December 31, 2017, Sirius Group had 1,741 open claim files for asbestos and 357 open claim files for environmental exposures. Sirius Group's A&E claim activity for the last three years is illustrated in the table below:

 
  Year Ended December 31,  
A&E Claims Activity
  2017   2016   2015  

Asbestos

                   

Total asbestos claims at the beginning of the year

    1,935     2,348     2,492  

Asbestos claims reported during the year

    180     207     180  

Asbestos claims closed during the year

    (374 )   (620 )   (324 )

Total asbestos claims at the end of the year

    1,741     1,935     2,348  

Environmental

                   

Total environmental claims at the beginning of the year

    361     462     490  

Environmental claims reported during the year

    80     59     69  

Environmental claims closed during the year

    (84 )   (160 )   (97 )

Total environmental claims at the end of the year

    357     361     462  

Total

                   

Total A&E claims at the beginning of the year

    2,296     2,810     2,982  

A&E claims reported during the year

    260     266     249  

A&E claims closed during the year

    (458 )   (780 )   (421 )

Total A&E claims at the end of the year

    2,098     2,296     2,810  

Fair Value Measurements

General

        Fair value measurements are categorized into a hierarchy that distinguishes between inputs based on market data from independent sources (" observable inputs ") and a reporting entity's internal assumptions based upon the best information available when external market data is limited or unavailable (" unobservable inputs "). Quoted prices in active markets for identical assets or liabilities have the highest priority (" Level 1 "), followed by observable inputs other than quoted prices, including prices for similar but not identical assets or liabilities (" Level 2 ") and unobservable inputs, including the reporting entity's estimates of the assumptions that market participants would use, having the lowest priority (" Level 3 ").

        The availability of observable inputs can vary from financial instrument to financial instrument and is affected by a wide variety factors including, for example, the type of financial instrument, whether the financial instrument is new and not yet established in the marketplace, and other characteristics particular to the instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment.

        Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This may lead Sirius Group to change the selection of the valuation technique (for example, from market to cash flow approach) or to use multiple valuation techniques to estimate the fair value of a financial instrument. These circumstances could cause an instrument to be reclassified between levels within fair value hierarchy.

        Investments valued using Level 1 inputs include fixed-maturity investments, primarily in U.S. Treasuries, equity securities and short-term investments, which include U.S. Treasury Bills. Investments

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valued using Level 2 inputs are primarily comprised of fixed-maturity investments, which have been disaggregated into classes, including U.S. government and government agency, corporate debt securities, mortgage-backed and asset-backed securities, non U.S. government and government agency, U.S. state and municipalities and political sub division and preferred stocks. Investments valued using Level 2 inputs also include certain ETFs that track U.S. stock indices such as the S&P 500 but are traded on foreign exchanges. Fair value estimates for investments that trade infrequently and have few or no observable market prices are classified as Level 3 measurements. Sirius Group determines when transfers between levels have occurred as of the beginning of the period.

Valuation techniques

        Sirius Group uses outside pricing services to assist in determining fair values. For investments in active markets, Sirius Group uses the quoted market prices provided by outside pricing services to determine fair value. The outside pricing services Sirius Group uses have indicated that they will only provide prices where observable inputs are available. In circumstances where quoted market prices are unavailable or are not considered reasonable, Sirius Group estimates the fair value using industry standard pricing models and observable inputs such as benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers, prepayment speeds, reference data including research publications and other relevant inputs. Given that many fixed-maturity investments do not trade on a daily basis, the outside pricing services evaluate a wide range of fixed-maturity investments by regularly drawing parallels from recent trades and quotes of comparable securities with similar features. The characteristics used to identify comparable fixed-maturity investments vary by asset type and take into account market convention.

        The valuation process above is generally applicable to all of Sirius Group's fixed-maturity investments. The techniques and inputs specific to asset classes within Sirius Group's fixed-maturity investments for Level 2 securities that use observable inputs are as follows:

U.S. government and government agency

        U.S. government and government agency securities consist primarily of debt securities issued by the U.S. Treasury and mortgage pass-through agencies such as the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. Fixed-maturity investments included in U.S. government and government agency securities are primarily priced by pricing services. When evaluating these securities, the pricing services gather information from market sources and integrate other observations from markets and sector news. Evaluations are updated by obtaining broker dealer quotes and other market information including actual trade volumes, when available. The fair value of each security is individually computed using analytical models which incorporate option adjusted spreads and other daily interest rate data.

Corporate debt securities

        Corporate debt securities consist primarily of investment-grade debt of a wide variety of U.S. and non-U.S. corporate issuers and industries. The corporate fixed-maturity investments are primarily priced by pricing services. When evaluating these securities, the pricing services gather information from market sources regarding the issuer of the security and obtain credit data, as well as other observations, from markets and sector news. Evaluations are updated by obtaining broker dealer quotes and other market information including actual trade volumes, when available. The pricing services also consider the specific terms and conditions of the securities, including any specific features which may influence risk.

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Mortgage-backed and asset-backed securities

        The fair value of mortgage and asset-backed securities is primarily priced by pricing services using a pricing model that uses information from market sources and leveraging similar securities. Key inputs include benchmark yields, reported trades, underlying tranche cash flow data, collateral performance, plus new issue data, as well as broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including issuer, vintage, loan type, collateral attributes, prepayment speeds, default rates, recovery rates, cash flow stress testing, credit quality ratings and market research publications.

U.S. States, municipalities and political subdivision

        The U.S. states, municipalities and political subdivisions portfolio contains debt securities issued by U.S. domiciled state and municipal entities. These securities are generally priced by independent pricing services using the techniques described for U.S. government and government agency securities described above.

Non-U.S. government and government agency

        Non-U.S. government and government agency securities consist of debt securities issued by non-U.S. governments and their agencies along with supranational organizations (also known as sovereign debt securities). Securities held in these sectors are primarily priced by pricing services that employ proprietary discounted cash flow models to value the securities. Key quantitative inputs for these models are daily observed benchmark curves for treasury, swap and high issuance credits. The pricing services then apply a credit spread for each security which is developed by in-depth and real time market analysis. For securities in which trade volume is low, the pricing services utilize data from more frequently traded securities with similar attributes. These models may also be supplemented by daily market and credit research for international markets.

Preferred stocks

        The fair value of preferred stocks is generally priced by independent pricing services based on an evaluated pricing model that calculates the appropriate spread over a comparable security for each issue. Key inputs include exchange prices (underlying and common stock of same issuer), benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including sector, coupon, credit quality ratings, duration, credit enhancements, early redemption features and market research publications.

Level 3 Investments

        Level 3 valuations are generated from techniques that use assumptions not observable in the market. These unobservable assumptions reflect Sirius Group's assumptions that market participants would use in valuing the investment. Generally, certain securities may start out as Level 3 when they are originally issued but as observable inputs become available in the market, they may be reclassified to Level 2.

        Sirius Group employs a number of procedures to assess the reasonableness of the fair value measurements for its other long-term investments, including obtaining and reviewing the audited annual financial statements of hedge funds and private equity funds and periodically discussing each fund's pricing with the fund manager. However, since the fund managers do not provide sufficient information to evaluate the pricing inputs and methods for each underlying investment, the inputs are considered to be unobservable. Accordingly, the fair values of Sirius Group's investments in private equity securities and private debt instruments have been classified as Level 3 measurements. The fair values of other investments carried at fair value are initially determined based on transaction price and are

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subsequently estimated based on available evidence, such as market transactions in similar instruments and other financial information for the issuer.

Investments measured using Net Asset Value

        The fair value of Sirius Group's investments in hedge funds and private equity funds has been determined using net asset value(" NAV "). The hedge fund's administrator provides quarterly updates of fair value in the form of Sirius Group's proportional interest in the underlying fund's NAV, which is deemed to approximate fair value, generally with a three month delay in valuation. The fair value of investment in hedge funds is measured using the NAV practical expedient and therefore has been not categorized within the fair value hierarchy. The private equity funds provide quarterly or semi-annual partnership capital statements with a three or six month delay which are used as a basis for valuation. These private equity investments vary in investment strategies and are not actively traded in any open markets. The fair value of these investments are measured using NAV practical expedient and therefore have not been categorized with the fair value hierarchy. Due to a lag in reporting, some of the fund managers, fund administrators, or both, are unable to provide final fund valuations as of Sirius Group's reporting date. In these circumstances, Sirius Group estimates the return of the current period and uses all credible information available. This includes utilizing preliminary estimates reported by its fund managers and using information that is available to Sirius Group with respect to the underlying investments, as necessary.

        The following tables summarize Sirius Group's fair value measurements for investments as of June 30, 2018 and December 31, 2017 and 2016 by level. The major security types were based on the legal form of the securities. Sirius Group has disaggregated its fixed-maturity investments based on the issuing entity type, which impacts credit quality, with debt securities issued by U.S. government entities carrying minimal credit risk, while the credit and other risks associated with other issuers, such as corporations, foreign governments, municipalities or entities issuing asset-backed securities vary depending on the nature of the issuing entity type. Sirius Group further disaggregates debt securities issued by corporations and equity securities by industry sector because investors often reference commonly used benchmarks and their subsectors to monitor risk and performance. Accordingly, Sirius

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Group has further disaggregated the asset classifications it uses to evaluate investment risk and performance against benchmarks, such as the BarcAg1-3, OMRX and the S&P 500 index.

 
  As of June 30, 2018  
($ in millions)
  Fair Value   Level 1
Inputs
  Level 2
Inputs
  Level 3
Inputs
 

Assets Measured at Fair Value

                         

Fixed maturities:

                         

U.S. government and government agency

  $ 97.0   $ 95.3   $ 1.7   $  

Corporate debt securities:

                         

Consumer

    170.3         170.3      

Financials

    394.8         394.8      

Industrial

    53.3         53.3      

Communications

    45.9         45.9      

Energy

    65.2         65.2      

Utilities

    16.7         16.7      

Materials

    4.7         4.7      

Technology

    28.0         28.0      

Total corporate debt securities

    778.9         778.9      

Mortgage-backed and asset-backed securities

    917.6         917.6      

Non-U.S. government and government agency

    83.6     42.2     41.4      

Preferred stocks

    6.9         0.9     6.0  

U.S. States, municipalities and political subdivision

    1.4         1.4      

Total fixed-maturity investments

    1,885.4     137.5     1,741.9     6.0  

Short-term investments

    819.6     803.9     15.7      

Equity securities:

                         

Financials

    117.2     117.2          

Exchange traded funds

    181.0     181.0          

Consumer

    32.6     32.6          

Energy

    6.9     6.9          

Industrial

    16.9     16.9          

Technology

    10.7     10.7          

Materials

    11.7     11.7          

Communications

    25.1     25.1          

Other

    13.0     13.0          

Total equity securities

    415.1     415.1          

Other long-term investments(1)

    69.0             69.0  

Total investments

  $ 3,189.1   $ 1,356.5   $ 1,757.6   $ 75.0  

Derivative instruments

    2.2             2.2  

Total assets measured at fair value

  $ 3,191.3   $ 1,356.5   $ 1,757.6   $ 77.2  

Liabilities Measured at Fair Value

                         

Contingent consideration liabilities

    42.8             42.8  

Derivative instruments

    8.1             8.1  

Total liabilities measured at fair value

  $ 50.9   $   $   $ 50.9  

(1)
Excludes carrying value of $247.6 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.

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  December 31, 2017  
($ in millions)
  Fair Value   Level 1
Inputs
  Level 2
Inputs
  Level 3
Inputs
 

Assets Measured at Fair Value

                         

Fixed maturities:

                         

U.S. government and government agency

  $ 84.8   $ 83.2   $ 1.6   $  

Corporate debt securities:

                         

Consumer

    252.0         252.0      

Financials

    460.5         460.5      

Industrial

    73.3         73.3      

Communications

    53.5         53.5      

Energy

    95.8         95.8      

Utilities

    20.9         20.9      

Materials

    7.1         7.1      

Technology

    51.4         51.4      

Total corporate debt securities

    1,014.5         1,014.5      

Mortgage-backed and asset-backed securities

    959.9         959.9      

Non-U.S. government and government agency

    107.2     94.8     12.4      

Preferred stocks

    9.8         1.8     8.0  

U.S. States, municipalities and political subdivision

    3.8         3.8      

Total fixed-maturity investments

    2,180.0     178.0     1,994.0     8.0  

Short-term investments

    625.0     566.2     58.8      

Equity securities:

                         

Financials

    96.8     96.8          

Exchange traded funds

    104.0     103.4     0.6      

Consumer

    27.0     27.0          

Energy

    5.8     5.8          

Industrial

    9.3     9.3          

Technology

    6.4     6.4          

Basic materials

    13.0     13.0          

Communications

    21.9     21.9          

Other

    15.0     15.0          

Total equity securities

    299.2     298.6     0.6      

Other long-term investments(1)

    64.2             64.2  

Total investments

  $ 3,168.4   $ 1,042.8   $ 2,053.4   $ 72.2  

Derivative instruments

    4.5                 4.5  

Total assets measured at fair value

  $ 3,172.9   $ 1,042.8   $ 2,053.4   $ 76.7  

Liabilities Measured at Fair Value

                         

Contingent consideration liabilities

    42.8             42.8  

Derivative instruments

    10.6             10.6  

Total liabilities measured at fair value

  $ 53.4   $   $   $ 53.4  

(1)
Excludes carrying value of $205.3 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.

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  December 31, 2016  
($ in millions)
  Fair Value   Level 1
Inputs
  Level 2
Inputs
  Level 3
Inputs
 

Assets Measured at Fair Value

                         

Fixed maturities:

                         

U.S. government and government agency

  $ 89.4   $ 86.2   $ 3.2   $  

Corporate debt securities:

                         

Consumer

    340.0         340.0      

Financials

    557.8         557.8      

Industrial

    145.9         145.9      

Communications

    116.5         116.5      

Energy

    168.9         168.9      

Utilities

    57.8         57.8      

Materials

    22.8         22.8      

Technology

    68.3         68.3      

Total corporate debt securities

    1,478.0         1,478.0      

Mortgage-backed and asset-backed securities

    1,165.9         1,147.5     18.4  

Non-U.S. government and government agency

    146.5     18.1     128.4      

Preferred stocks

    10.8         1.8     9.0  

U.S. States, municipalities and political subdivision

    1.0         1.0      

Total fixed-maturity investments

    2,891.6     104.3     2,759.9     27.4  

Short-term investments

    538.0     498.7     39.3      

Equity securities:

                         

Financials

    5.4     5.4          

Exchange traded funds

    117.6     117.6          

Total equity securities

    123.0     123.0          

Other long-term investments(1)

    29.1             29.1  

Total investments

  $ 3,581.7   $ 726.0   $ 2,799.2   $ 56.5  

Derivative instruments

    12.7                 12.7  

Total assets measured at fair value

  $ 3,594.4   $ 726.0   $ 2,799.2   $ 69.2  

Liabilities Measured at Fair Value

                         

Contingent consideration liabilities

                 

Derivative instruments

                 

Total liabilities measured at fair value

  $   $   $   $  

(1)
Excludes carrying value of $95.7 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.

Other Long-Term Investments

        Sirius Group's other long-term investments accounted for at fair value as of June 30, 2018 include $83 million in hedge funds and $165 million in private equity funds. As of June 30, 2018, Sirius Group held investments in 8 hedge funds and 28 private equity funds. The largest investment in a single fund was $36 million at June 30, 2018.

        Sirius Group's other long-term investments accounted for at fair value as of December 31, 2017 include $60 million in hedge funds and $145 million in private equity funds. As of December 31, 2017, Sirius Group held investments in seven hedge funds and 28 private equity funds. The largest investment in a single fund was $31 million and $24 million as of December 31, 2017 and 2016, respectively. The

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fair value of Sirius Group's investments in hedge funds and private equity funds is based upon Sirius Group's proportionate interest in the underlying fund's net asset value, which is deemed to approximate fair value. Sirius Group employs a number of procedures to assess the reasonableness of the fair value measurements for its other long-term investments, including obtaining and reviewing each fund's audited financial statements and discussing each fund's pricing with the fund's manager. However, since the fund managers do not provide sufficient information to independently evaluate the pricing inputs and methods for each underlying investment, the inputs are considered to be unobservable.

        In circumstances where the underlying investments are publicly traded, such as the investments made by hedge funds, the fund manager uses current market prices to determine fair value. In circumstances where the underlying investments are not publicly traded, such as the investments made by private equity funds, the private equity fund managers generally consider the need for a liquidity discount on each of the underlying investments when determining the fund's NAV. In the event Sirius Group believes that the valuation provided by the fund manager differs from its expectations due to illiquidity or other factors associated with its investment in the fund, Sirius Group will adjust the fund manager's NAV to more appropriately represent the fair value of its interest in the investment.

Sensitivity analysis of likely returns on hedge fund and private equity fund investments

        Sirius Group's investment portfolio includes investments in hedge funds and private equity funds. As of June 30, 2018, the value of investments in hedge funds and in private equity funds was $83 million and $165 million, respectively. As of December 31, 2017, the value of investments in hedge funds and in private equity funds was $60 million and $145 million, respectively. The underlying investments are typically publicly traded and private equity securities and investments, and, as such, are subject to market risks that are similar to Sirius Group's equity securities. The following illustrates the estimated effect on June 30, 2018 and December 31, 2017 fair value resulting from a 10% change and a 30% change in market value:

 
  As of June 30, 2018  
 
  Change In Fair Value   Change In Fair Value  
($ in millions)
Fund Type
  10% decline   10% increase   30% decline   30% increase  

Hedge funds

  $ (8.3 ) $ 8.3   $ (24.8 ) $ 24.8  

Private equity funds

  $ (16.5 ) $ 16.5   $ (49.5 ) $ 49.5  

 

 
  As of December 31, 2017  
 
  Change In Fair Value   Change In Fair Value  
($ in millions)
Fund Type
  10% decline   10% increase   30% decline   30% increase  

Hedge funds

  $ (6.0 ) $ 6.0   $ (18.0 ) $ 18.0  

Private equity funds

  $ (14.5 ) $ 14.5   $ (43.5 ) $ 43.5  

        Hedge fund and private equity fund returns are commonly measured against the benchmark returns of hedge fund indices and/or the S&P 500 Index. The historical returns for each index in the past five years are listed below:

 
  Year Ended December 31,  
 
  2017   2016   2015   2014   2013   2012  

HFRX Equal Weighted Strategies Index

    4.8 %   3.8 %   –1.5 %   –0.5 %   6.3 %   2.5 %

S&P 500 Index

    21.8 %   12.0 %   1.4 %   13.7 %   32.4 %   16.0 %

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Goodwill and Intangible Assets

        Goodwill represents the excess of purchase price over the fair value of nets assets acquired from the acquisitions of IMG and Armada. Intangible assets with a finite life are amortized over the estimated useful life of the asset. Intangible assets with an indefinite useful life are not amortized.

        Sirius Group early adopted Accounting Standards Update (" ASU ") No. 2017-04, Simplifying the Test for Goodwill Impairment , which eliminates Step Two from the goodwill impairment test. Under the new standard, to the extent the carrying amount of a reporting unit exceeds the fair value, an impairment charge should be recorded that is equal to the difference. The impairment charge recognized should not exceed the total amount of goodwill allocated to the reporting unit.

        Goodwill and intangible assets are assessed for impairment on an annual basis or more frequently if events or changes in circumstances indicate that it is more likely than not that an impairment exists. Such events or circumstances may include an economic downturn in a geographic market or change in the assessment of future operations.

        In the absence of any indications of potential impairment, the evaluation of goodwill is performed during the fourth quarter of each year and when events or changes in circumstances indicate that it is more likely than not that the asset is impaired. Sirius Group primarily uses two approaches to value goodwill and intangibles: the income approach, which converts future estimates of cash flows by reporting unit to a single (discounted) current value and the market approach, which uses prices and other information from transactions for identical or similar assets or liabilities. If goodwill or intangible assets are impaired, they are written down to their fair value with a corresponding expense reflected in the Consolidated Statements of Income and Comprehensive Income in the period in which the determination is made.

        There was no evidence of potential impairment for goodwill and intangible assets as of June 30, 2018.

Goodwill

        Sirius Group recognized goodwill of $278 million and $123 million from the 2017 acquisitions of IMG and Armada, respectively. These amounts represent the fair value of the consideration paid, less the aforementioned identified and valued intangible assets. IMG's goodwill balance is primarily attributed to IMG's assembled workforce and access to the supplemental health care and medical travel insurance market. Armada's goodwill balance is primarily attributed to Armada's assembled workforce and access to the supplemental healthcare insurance market, and additional synergies to be realized in the future.

        In the fourth quarter of 2017, Sirius Group performed goodwill impairment testing for IMG and Armada. Management calculated a range of fair values using the income approach and market approach and compared the concluded fair values to the carrying values of each reporting unit. Management determined that no point in the fair value range was the best estimate of fair value for each reporting unit, so the midpoint was used to assess goodwill. Next, management compared the fair values to the carrying values of each reporting unit. For IMG and Armada, the fair value midpoint exceeded the carrying value by 2.4% and 6.5% respectively. Expected future cash flows and/or earnings may be materially and negatively impacted as a result of, among other things, a decrease in renewals and new business, loss of key personnel, lower-than-expected yields or higher-than-expected claims activity and incurred losses as well as other general economic factors.

Intangible Assets

        Sirius Group recognized intangible assets of $145 million and $82 million from the 2017 acquisitions of IMG and Armada, respectively. Intangible assets acquired consisted primarily of customer relationships, distribution relationships, trade names and technology. Prior to 2017, Sirius Group's intangible assets consisted solely of insurance licenses with indefinite lives.

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        For the year ended December 31, 2017, Sirius Group recognized an impairment of $5 million related to a trade name intangible asset, with an indefinite life, acquired as part of the acquisition of IMG. The impairment resulted from lower than anticipated growth when comparing the preliminary plan at the time of acquisition against a reforecast of IMG's operations at year-end. A quantitative impairment review of the IMG trade name intangible asset was performed by applying the royalty replacement method to determine the asset's fair value as of December 31, 2017. Under the royalty replacement method, the fair value of IMG's trade name intangible asset was determined based on a market participant's view of the royalty that would be paid to license the right to use the trade name. This quantitative analysis incorporated several assumptions, including forecasted future revenues and cash flows, estimated royalty rate based on similar licensing transactions and market royalty rates and discount rate, which incorporates assumptions such as weighted-average cost of capital and risk premium. As a result of this impairment test, the carrying value of the IMG trade name intangible asset exceeded its estimated fair value and an impairment was recorded. For the years ended December 31, 2016 and 2015, Sirius Group did not recognize any impairments on intangible assets with an indefinite life.

Premiums

        Sirius Group accounts for insurance and reinsurance policies that it writes in accordance with authoritative guidance. Premiums written are recognized as revenues and are earned ratably over the term of the related policy or reinsurance treaty. Unearned premiums represent the portion of premiums written that are applicable to future insurance or reinsurance coverage provided by policies or treaties in force. Sirius Group also charges fees on certain insurance policies.

        Sirius Group writes primary insurance business (" primary business " or " insurance "), as well as treaty and facultative reinsurance business (" assumed business "). The majority of Sirius Group's treaty reinsurance premiums are derived from pro-rata (" proportional ") and excess of loss (" non-proportional ") reinsurance contracts, which in 2017 amounted to 37% and 32%, respectively, of its total gross written premiums. Primary business represented 31% of total gross written premiums.

Primary Business

        Sirius Group's primary business is predominantly accident and health insurance. In recent years, we have expanded our primary business capabilities in the United States, which has resulted in increased accident and health insurance business. During 2017, Sirius Group acquired IMG and Armada to further expand the accident and health business. Both acquired entities are MGUs.

Assumed Business

        Reinsurance premiums, commissions, expense reimbursements and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Reinsurance premiums ceded are expensed over the period the reinsurance coverage is provided. Ceded unearned insurance and reinsurance premiums represent the portion of premiums ceded applicable to the unexpired term of policies in force.

        Sirius Group's reinsurance protection primarily consists of proportional and non-proportional protections to cover aviation, trade credit, energy, marine and property exposures. Attachment points and coverage limits vary by region around the world. Sirius Group's core proportional property reinsurance programs provide protection for parts of the non-proportional treaty accounts written in Europe, the Americas, Caribbean, Asia, the Middle East and Australia. These reinsurance protections are designed to increase underwriting capacity where appropriate, and to reduce exposure both to large catastrophe losses and to a frequency of smaller loss events.

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        The following table summarizes Sirius Group's gross premiums written for primary and assumed business for the years ended December 31, 2017, 2016 and 2015:

 
  Years Ended December 31,  
 
  2017   2016   2015  
($ in millions)
  Gross
Premiums Written
  % of Total   Gross
Premiums Written
  % of Total   Gross
Premiums Written
  % of Total  

Primary

                                     

Global Property

  $ 31.1     2 % $ 35.5     3 % $ 16.9     1 %

Global A&H

    390.7     27 %   281.0     22 %   243.9     21 %

Specialty & casualty

    33.0     2 %   32.5     2 %   32.9     3 %

Runoff & Other

    (4.6 )   %   19.5     2 %       %

Total primary

  $ 450.2     31 % $ 368.5     29 % $ 293.7     25 %

Assumed

   
 
   
 
   
 
   
 
   
 
   
 
 

Proportional

                                     

Global Property

  $ 327.1     23 % $ 262.2     21 % $ 201.6     17 %

Global A&H

    57.9     4 %   112.3     9 %   103.7     9 %

Specialty & casualty

    142.9     10 %   93.4     7 %   96.8     8 %

Runoff & Other

    (0.7 )   %   5.2     %   17.6     2 %

Total proportional

  $ 527.2     37 % $ 473.1     37 % $ 419.7     36 %

Non-proportional

   
 
   
 
   
 
   
 
   
 
   
 
 

Global Property

  $ 373.9     26 % $ 337.2     27 % $ 356.2     32 %

Global A&H

    46.0     3 %   42.8     3 %   38.3     3 %

Specialty & Casualty

    42.2     3 %   44.8     4 %   51.7     4 %

Runoff & Other

    (0.2 )   %   2.6     %   0.9     %

Total non-proportional

  $ 461.9     32 % $ 427.4     34 % $ 447.1     39 %

Total assumed

    989.1     69 %   900.5     70 %   866.8     75 %

Gross premiums written

  $ 1,439.3     100 % $ 1,269.0     100 % $ 1,160.5     100 %

Premium Estimates

        The nature of the insurance and reinsurance business requires Sirius Group to record premium estimates due to a time lag from the point when premium and related commission and expense activity is recorded by a ceding company and the point when such information is reported by the ceding company to Sirius Group. This time lag can vary from one to several contractual reporting periods (i.e., quarterly / monthly). This lag is common in the reinsurance business and is slightly longer when a reinsurance intermediary is involved.

        As a result of this time lag in reporting, Sirius Group estimates a portion of its written premium and related commissions and expenses. Given the nature of Sirius Group's business, estimated premium balances, net of related commissions and expenses, comprise a large portion of total premium balances receivable. The estimation process begins by identifying which major accounts have not reported activity at the most recent period end. In general, premium estimates for excess of loss business are based on expected premium income included in the contractual terms. For proportional business, Sirius Group's estimates are derived from expected premium volume based on contractual terms or ceding company reports and other correspondence and communication with underwriters, intermediaries and ceding companies. Once premium estimates are determined, related commission and expense estimates are derived using contractual terms.

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        Sirius Group closely monitors its estimation process on a quarterly basis and adjusts its estimates as more information and actual amounts become known. There is no assurance that the amounts estimated by Sirius Group will not deviate from the amounts reported by the ceding company or reinsurance intermediary. Any such deviations are reflected in the results of operations when they become known.

        The following table summarizes Sirius Group's premium estimates and related commissions and expenses as of December 31, 2017 and 2016:

 
  December 31, 2017  
($ in millions)
  Gross
Premium Estimates
  Net
Premium Estimates
  Net
Commission and
Expense Estimates
  Net Amount
Included in
Reinsurance
Balances Receivable
 

Global Property

  $ 329.2   $ 247.8   $ (72.1 ) $ 175.7  

Global A&H

    174.1     130.8     (49.7 )   81.1  

Specialty & Casualty

    158.6     146.4     (40.8 )   105.6  

Runoff & Other

                 

  $ 661.9   $ 525.0   $ (162.6 ) $ 362.4  

 

 
  December 31, 2016  
($ in millions)
  Gross
Premium Estimates
  Net
Premium Estimates
  Net
Commission and
Expense Estimates
  Net Amount
Included in
Reinsurance
Balances Receivable
 

Global Property

  $ 226.5   $ 195.8   $ (40.6 ) $ 155.2  

Global A&H

    121.3     87.5     (32.2 )   55.3  

Specialty & Casualty

    114.6     98.9     (26.4 )   72.5  

Runoff & Other

    4.4     4.4     1.0     5.4  

  $ 466.8   $ 386.6   $ (98.2 ) $ 288.4  

Earnout Obligations

        Current accounting guidance related to business combinations requires us to estimate and recognize the fair value of liabilities related to potential earnout obligations as of the acquisition dates for all acquisitions subject to earnout provisions. During 2017, we completed two acquisitions resulting in the initial recognition of $122 million of earnout obligations.

        The fair value of these earnout obligations is based on the present value of the expected future payments to be made to the sellers of the acquired entities in accordance with the provisions outlined in the respective purchase agreements. In determining fair value, we estimate the acquired entity's future operating results and obtain market participant assumptions. Based on these inputs, we estimate future payments in accordance with the earnout formula and performance targets specified in each purchase agreement. We then discount these payments to present value using a risk-adjusted rate that takes into consideration market-based rates of return that reflect the ability of the acquired entity to achieve the targets. Changes in estimated future operating results, market participant assumptions, or the risk-adjusted discount rate would result in a change in the fair value of recorded earnout obligations.

        The amounts recorded as earnout payables, which are primarily based upon the estimated future operating results of the acquired entities subsequent to the acquisition date, are measured at fair value as of the acquisition date and are included on that basis in the recorded purchase price consideration. See Note 3 " Significant transactions " and Note 9 "Fair value measurements" in Sirius Group's audited

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financial statements included elsewhere in this proxy statement/prospectus. We will record subsequent changes in these estimated earnout obligations in our consolidated statement of (loss) income when incurred.

        As of December 31, 2017 the aggregate amount of the maximum earnout obligations related to these acquisitions was $73 million, of which $43 million was recorded, based on the estimated fair value of the expected future payments to be made. The maximum potential earnout payables represent the maximum amount of additional consideration that could be paid pursuant to the terms of the purchase agreements. See Note 3 " Significant transactions " in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus for additional discussion on 2017 business combinations.

Income Taxes

        Sirius Group and its Bermuda domiciled subsidiaries are not subject to Bermuda income tax under current Bermuda law. In the event there is a change in the current law such that taxes are imposed, Sirius Group and its Bermuda domiciled subsidiaries would be exempt from such tax until March 31, 2035, pursuant to the Bermuda Exempted Undertakings Tax Protection Act of 1966. Sirius Group has subsidiaries and branches that operate in various other jurisdictions around the world that are subject to tax in the jurisdictions in which they operate. The jurisdictions in which Sirius Group's subsidiaries and branches are subject to tax are Australia, Belgium, Canada, Germany, Gibraltar, Luxembourg, Malaysia, the Netherlands, Singapore, Sweden, Switzerland, the United Kingdom and the United States.

Recoverability of Net Deferred Tax Asset

        Sirius Group records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in income tax expense in the period of change. In determining whether or not a valuation allowance, or change therein, is warranted, Sirius Group considers factors such as prior earnings history, expected future earnings, carryback and carryforward periods and strategies that, if executed, would result in the realization of a deferred tax asset. It is possible that certain planning strategies or projected earnings in certain subsidiaries may not be feasible to utilize the entire deferred tax asset, which could result in material changes to Sirius Group's deferred tax assets and tax expense.

        For a more detailed discussion of our net deferred tax asset and our framework for assessing its recoverability, see Note 12 " Income taxes" in Sirius Group's audited financial statements included elsewhere in this proxy statement/prospectus.

Uncertain Tax Positions

        Recognition of the benefit of a given tax position is based upon whether a company determines that it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. In evaluating the more likely than not recognition threshold, Sirius Group must presume that the tax position will be subject to examination by a taxing authority with full knowledge of all relevant information. If the recognition threshold is met, then the tax position is measured at the largest amount of benefit that is more than 50% likely of being realized upon ultimate settlement.

        The Swedish Tax Authority (" STA " ) has denied deductions claimed by two of Sirius Group's Swedish subsidiaries in certain tax years for interest paid on intra-group debt instruments. Sirius Group is currently challenging the STA's denial in court based on the technical merits. Sirius Group's reserve for uncertain tax positions has taken into account relevant developments in these tax disputes and in

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applicable Swedish tax law including recent case law. Sirius Group has also taken into account the Stock Purchase Agreement by which Sirius Group was sold to CMIG International in 2016. Pursuant to the Stock Purchase Agreement, the seller agreed to indemnify the buyer and Sirius Group for, among other things, (1) any additional tax liability in excess of Sirius Group's accounting for uncertain tax positions for tax periods prior to the sale of Sirius Group to CMIG International, and (2) an impairment in Sirius Group's net deferred tax assets resulting from a final determination by a tax authority. While Sirius Group intends to continue challenging the STA's denial based on the technical merits, the ultimate resolution of these tax disputes is uncertain and no assurance can be given that there will be no material changes to Sirius Group's operating results or balance sheet in connection with these uncertain tax positions or the related indemnification.

        With few exceptions, Sirius Group is no longer subject to U.S. federal, state or non-U.S. income tax examinations by tax authorities for years before 2013.

        For a more detailed discussion of our uncertain tax positions, see Note 12 "Income taxes" in Sirius Group's audited financial statements and Note 10 "Income taxes" in Sirius Group's unaudited interim financial statements included elsewhere in this proxy statement/prospectus.

Earnings of Certain Subsidiaries

        Sirius Group has capital and liquidity in many of its subsidiaries, some of which may reflect undistributed earnings. If such capital or liquidity were to be paid or distributed to us or our subsidiaries, as dividends or otherwise, they may be subject to income or withholding taxes. Sirius Group generally intends to operate, and manage its capital and liquidity, in a tax-efficient manner. However, the applicable tax laws in the relevant countries are subject to change, possibly with retroactive effect, including in response to Organisation for Economic Cooperation and Development (" OECD ") guidance. Accordingly, such payments or earnings may be subject to income or withholding tax in jurisdictions where they are not currently taxed or at higher rates of tax than currently taxed, and the applicable tax authorities could also attempt to apply income or withholding tax to past earnings or payments.

U.S. Tax Reform

        The Tax Cut and Jobs Act was enacted into law in the US in December 2017. Among other provisions, the Act includes a new 21% corporate tax rate, the impacts of which (including on our deferred tax assets) were already taken into account in our financial results for the year ended December 31, 2017. The Act also includes a new base erosion and anti-abuse tax (" BEAT "), which is essentially a minimum tax that is potentially applicable to certain otherwise deductible payments made by U.S. entities to non-U.S. affiliates, including cross-border interest payments and reinsurance premiums. The statutory BEAT rate is 5% in 2018 and will rise to 10% in 2019-2025 and then 12.5% in 2026 and after. While we intend to operate in a manner that limits our exposure to BEAT, at this time, absent regulations and other detailed guidance, uncertainty about the financial impact on us of this new tax remains and no assurance can be given that Sirius Group will not be subject to material amounts of BEAT in the future. Accordingly, BEAT could materially impact our provision for taxes in the future.

Recent Accounting Pronouncements

Premium amortization on callable debt securities

        In March 2017, the Financial Accounting Standards Board (" FASB ") issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities (ASC 310-20), which changes the amortization period for certain purchased callable debt securities. Under the new guidance, for investments in callable debt securities held at a premium, the premium will be amortized over the period to the earliest call date. The new guidance does not change the amortization period for callable debt

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securities held at a discount. The new guidance is effective for annual and interim periods beginning after December 15, 2018. Sirius Group does not expect adoption to have any effect on its financial statements.

Credit losses

        In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (ASC 326), which establishes new guidance for the recognition of credit losses for financial assets measured at amortized cost. The new guidance, which applies to financial assets that have the contractual right to receive cash, including reinsurance receivables, requires reporting entities to estimate the credit losses expected over the life of a credit exposure using historical information, current information and reasonable and supportable forecasts that affect the collectability of the financial asset. The new guidance is effective for annual and interim periods beginning after December 15, 2019. Sirius Group is evaluating the expected impact of this new guidance.

Leases

        In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842). The new guidance requires lessees to recognize lease assets and liabilities on the balance sheet for both operating and financing leases, with the exception of leases with an original term of 12 months or less. Under existing guidance, recognition of lease assets and liabilities is not required for operating leases. The lease assets and liabilities to be recognized are both measured initially based on the present value of the lease payments. The new guidance is effective for Sirius Group for annual and interim periods beginning after December 15, 2018. Sirius Group is evaluating the expected impact of this new guidance and available adoption methods.

Quantitative and Qualitative Disclosures about Market Risk

        Sirius Group's consolidated balance sheet includes a substantial amount of assets and liabilities whose fair values are subject to market risk. The term market risk refers to the risk of loss arising from adverse changes in interest rates, credit spreads, equity markets prices and other relevant market rates and prices. Due to Sirius Group's sizable investment portfolio, market risk can have a significant effect on Sirius Group's consolidated financial position.

Interest Rate Risk of Fixed-maturity Investments

        In connection with Sirius Group's consolidated insurance and reinsurance subsidiaries, Sirius Group invests in interest rate sensitive securities, primarily debt securities. Sirius Group generally manages the interest rate risk associated with its portfolio of fixed-maturity investments by monitoring the average of investment-grade corporate securities; U.S. government and agency securities; foreign government, agency and provincial obligations; preferred stocks; asset-backed and mortgage-backed securities; and municipal obligations.

        Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of fixed-maturity investments, respectively. Additionally, fair values of interest rate sensitive instruments may be affected by the creditworthiness of the issuer, prepayment options, relative values of alternative investments, the liquidity of the instrument and other market factors.

        The tables below summarize the estimated effects of hypothetical increases and decreases in market interest rates on Sirius Group's fixed-maturity investments as of June 30, 2018 and

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December 31, 2017. The size of interest rate decreases presented may be limited in order to floor interest rates at a de minimis level.

($ in millions)
  Fair Value at
June 30, 2018
  Assumed Change in
Relevant Interest Rate
  Estimated
Fair Value
After
Change in
Interest Rate
  Pre-Tax
Increase
(Decrease) in
Carrying Value
 

Fixed maturity investments

  $ 1,885.4   300 bp decrease   $ 2,021.1   $ 135.7  

        200 bp decrease     1,978.7     93.3  

        100 bp decrease     1,933.6     48.2  

        50 bp decrease     1,910.3     24.9  

        50 bp increase     1,857.8     (27.6 )

        100 bp increase     1,830.6     (54.8 )

        200 bp increase     1,776.0     (109.4 )

        300 bp increase   $ 1,721.5   $ (163.9 )

 

($ in millions)
  Fair Value at
December 31, 2017
  Assumed Change in
Relevant Interest Rate
  Estimated
Fair Value
After
Change in
Interest Rate
  Pre-Tax
Increase
(Decrease) in
Carrying Value
 

Fixed-maturity investments

  $ 2,180.0   300 bp decrease   $ 2,286.6   $ 106.6  

        200 bp decrease     2,264.5     84.5  

        100 bp decrease     2,225.1     45.1  

        50 bp decrease     2,203.7     23.7  

        50 bp increase     2,154.1     (25.9 )

        100 bp increase     2,128.2     (51.8 )

        200 bp increase     2,076.3     (103.7 )

        300 bp increase     2,024.5     (155.5 )

        The magnitude of the fair value decrease in rising rates scenarios may be more significant than the fair value increase in comparable falling rates scenarios. This can occur because (i) the analysis floors interest rates at a de minimis level in falling rate scenarios, muting price increases, (ii) portions of the fixed-maturity investment portfolio may be callable, muting price increases in falling interest rate scenarios and/or (iii) portions of the fixed-maturity investment portfolio may experience cash flow extension in higher interest rate environments, which generally results in lower fixed income asset prices.

Equity Securities and Other Long-term Investments Price Risk

        The carrying values of Sirius Group's equity securities and other long-term investments are based on quoted market prices or management's estimates of fair value as of the balance sheet date. Market prices of equity securities, in general, are subject to fluctuations. These fluctuations could cause the amount realized upon sale or exercise of these instruments to differ significantly from the current reported value. The fluctuations may result from perceived changes in the underlying economic characteristics of the investment, the relative price of alternative investments, supply and demand imbalances for a particular security, or other market factors. Assuming a hypothetical 10% and 30% increase or decrease in the value of Sirius Group's equity securities and other long-term investments as of June 30, 2018, the carrying value of Sirius Group's equity securities and other long-term investments would have increased or decreased by approximately $73 million and $220 million, pre-tax. As of December 31, 2017, the carrying value of Sirius Group's equity securities and other long-term investments would have increased or decreased by approximately $57 million and $171 million pre-tax.

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Long-term obligations

        The following table summarizes the fair value and carrying value of financial instruments as of June 30, 2018 and December 31, 2017 and 2016:

 
  June 30, 2018   December 31,
2017
  December 31,
2016
 
($ in millions)
  Fair
Value
  Carrying
Value
  Fair
Value
  Carrying
Value
  Fair
Value
  Carrying
Value
 

Liabilities and Mezzanine equity:

                                     

2017 SEK Subordinated Notes

  $ 312.6   $ 303.0   $ 341.4   $ 330.7   $   $  

2016 SIG Senior Notes

  $ 374.1   $ 392.9   $ 392.3   $ 392.5   $ 382.4   $ 392.5  

Old Lyme Note

  $   $   $   $   $ 3.7   $ 3.7  

Sirius Group Series A redeemable preference shares

  $ 95.0   $ 108.8   $ 90.0   $ 106.1   $   $  

SIG Preference Shares

  $   $   $   $   $ 252.8   $ 250.0  

        The fair value estimates at June 30, 2018 and December 31, 2017 for the 2017 SEK Subordinated Notes and 2016 SIG Senior Notes were determined by internal pricing and are considered a Level 3 measurement. The fair value estimates at December 31, 2016 for the 2016 SIG Senior Notes and the SIG Preference Shares were determined by internal pricing and is considered a Level 3 measurement. The fair value estimate at December 31, 2016 for the Old Lyme Note was determined by internal pricing, based on the expected amount due to the sellers of Old Lyme, and is considered a Level 3 measurement.

        The fair value estimates at December 31, 2017 for the 2017 SEK Subordinated Notes and 2016 SIG Senior Notes were determined by internal pricing and are considered a Level 3 measurement. The fair value estimates at December 31, 2016 for the 2016 SIG Senior Notes and the SIG Preference Shares were determined by internal pricing and is considered a Level 3 measurement. The fair value estimate at December 31, 2016 for the Old Lyme Note was determined by internal pricing, based on the expected amount due to the sellers of Old Lyme, and is considered a Level 3 measurement.

Foreign Currency Exchange Risk

        Sirius Group holds non-U.S. dollar denominated assets and liabilities, which are valued using period-end exchange rates. Sirius Group has non-U.S. dollar denominated foreign revenues and expenses, which are valued using average exchange rates over the period. Foreign currency exchange-rate risk is the risk that Sirius Group will incur losses on a U.S. dollar basis due to adverse changes in foreign currency exchange rates.

        The following table illustrates the pre-tax effect that a hypothetical 10% increase (i.e., U.S. dollar strengthening) or decrease (i.e., U.S. dollar weakening) in the rate of exchange from the Swedish Krona, the Euro, the British Pound Sterling, the Canadian Dollar and the Israeli Shekel to the U.S. dollar would have on the carrying value of Sirius Group's total operations net assets, continuing operations net assets, as of June 30, 2018 and December 31, 2017 and 2016:

 
  June 30, 2018   December 31, 2017   December 31, 2016  
($ in millions)
  10% increase   10% decrease   10% increase   10% decrease   10% increase   10% decrease  

Swedish Krona to U.S. dollar

  $ 12.7   $ (12.7 ) $ 16.7   $ (16.7 ) $ (8.5 ) $ 8.5  

Euro to U.S. dollar

    2.0     (2.0 )   (0.4 )   0.4     (2.1 )   2.1  

British Pound Sterling to U.S. dollar

    0.2     (0.2 )   0.4     (0.4 )   (14.1 )   14.1  

Canadian Dollar to U.S. dollar

    (0.6 )   0.6     (1.0 )   1.0     (5.6 )   5.6  

Israeli Shekel to U.S. dollar

    (6.5 )   6.5     (7.2 )   7.2          

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MANAGEMENT OF SIRIUS GROUP

Executive Officers of Sirius Group

        The following table sets forth information concerning Sirius Group's executive officers as of September 10, 2018, and the expected executive officers of the combined company upon completion of the Merger.

Name
  Age   Position

Allan L. Waters

    60   Chairman of the Board and CEO, Sirius Group

Kernan (Kip) V. Oberting

    49   President, CFO and Director, Sirius Group and President, Sirius Capital Markets, Inc.

Monica Cramér Manhem

    59   COO and Director, Sirius Group and President and CEO, Sirius International

Jeffrey W. Davis

    54   Executive Vice President, CRO & Chief Actuary, Sirius Group

Gene Boxer

    44   Executive Vice President, CSO & Group General Counsel, Sirius Group

        The board of directors of Sirius Group has designated a Management Committee comprised of Messrs. Waters, Oberting and Boxer and Ms. Cramér Manhem as the senior management and decision making body of Sirius Group responsible for the oversight of the day-to-day business operations of Sirius Group.

        Information with respect to the principal occupation and relevant business experience of Sirius Group's executive officers is as follows:

         Mr. Waters serves as Chairman of the Board and Chief Executive Officer of Sirius Group. Mr. Waters was appointed Chief Executive Officer of Sirius Group in March 2007. Mr. Waters served as a director of White Mountains from 2003 to 2004 and was re-elected as a director in November 2005. From 1998 to 2007, Mr. Waters was the founder and Managing Member of Mulherrin Capital Advisors, LLC. Mr. Waters formerly served as Senior Vice President and Chief Financial Officer of White Mountains from 1993 to 1998, and originally joined White Mountains in 1985.

         Mr. Oberting serves as President, Chief Financial Officer and a director of Sirius Group and President, Sirius Capital Markets, Inc. Mr. Oberting was appointed President of Sirius Group in September 2018 and Chief Financial Officer of Sirius Group in April 2016. Prior to that, Mr. Oberting served as a Senior Partner of White Mountains Capital, Inc. from July 2012 until April 2016. Mr. Oberting was appointed as the President of Sirius Capital Markets, Inc. in January 2015. From 2008 to 2012, Mr. Oberting was the founder and Managing Member of Oakum Bay Capital (f/k/a KVO Capital Management). From 2004 to 2008, Mr. Oberting served as Executive Vice President and Chief Financial Officer of Montpelier Re Holdings, Ltd. Mr. Oberting previously worked for White Mountains entities from 1995 to 2004 in various capacities. Prior to White Mountains, Mr. Oberting was a trader at CS First Boston (Japan) from 1993 to 1995.

         Ms. Cramér Manhem serves as Chief Operating Officer and a director of Sirius Group and President and Chief Executive Officer of Sirius International. Ms. Cramér Manhem was appointed Chief Operating Officer of Sirius Group in September 2018, has been the Chief Executive Officer of Sirius International since March 2014, and also serves as the Chairperson of Sirius Bermuda. Prior to March 2014, Ms. Cramér Manhem served as Senior Vice President and Business Unit Manager of Sirius International from January 2004 until March 2014. Ms. Cramér Manhem served in various positions at Sirius International prior to 2004, having joined Sirius Group in 1985.

         Mr. Davis serves as Executive Vice President, Chief Risk Officer & Chief Actuary of Sirius Group. Mr. Davis has served as Executive Vice President, Chief Risk Officer & Chief Actuary of Sirius Group since April 2016. Mr. Davis previously served also as Senior Vice President and Chief Actuary at White

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Mountains from October 2008 until April 2016. In April 2016, Mr. Davis assumed the additional responsibilities as Chief Risk Officer for Sirius Group. Prior to joining Sirius Group, Mr. Davis served as Head of Central Reserving for Munich Re from 2005 until September 2008, and previously in various capacities at American Re-Insurance Company since 1999. Mr. Davis previously served as an actuary for Nationwide Insurance from 1991 until 1999.

         Mr. Boxer serves as Executive Vice President, Chief Strategy Officer & Group General Counsel of Sirius Group. Mr. Boxer was appointed Chief Strategy Officer of Sirius Group in September 2018 and Executive Vice President and Group General Counsel of Sirius Group in August 2016. From 2011 until 2015, Mr. Boxer served as Global General Counsel of Cushman & Wakefield, a commercial real estate services firm. From 2006 until 2011, Mr. Boxer served as a senior member of the Restructuring Group and Legal Mergers & Acquisitions Group of American International Group, Inc. (AIG). Prior to 2006, Mr. Boxer practiced at Milbank, Tweed, Hadley & McCloy LLP, focusing on mergers and acquisitions and securities offerings.

Board of Directors of Sirius Group

        Sirius Group's global strategy is overseen by the board of directors of Sirius Group. The following table sets forth information concerning the membership of Sirius Group's board of directors as of September 10, 2018, each of whom is expected to serve as a director of the combined company upon completion of the Merger.

Name
  Age   Primary Occupation

Allan L. Waters

    60   Chairman of the Board and CEO, Sirius Group

Kernan (Kip) V. Oberting

    49   President and CFO, Sirius Group and President, Sirius Capital Markets, Inc.

Monica Cramér Manhem

    59   COO, Sirius Group and President and CEO, Sirius International

Laurence Liao

    47   CEO of CMIG International

Robert L. Friedman

    59   Former CEO and Chief Investment Officer of Savannah-Baltimore Capital Management, LLC

Meyer (Sandy) Frucher

    72   Vice Chairman of Nasdaq, Inc.

        Mr. Waters, Mr. Oberting and Ms. Cramér Manhem serve as executive officers of Sirius Group, and their biographies are set forth above under " Management of Sirius Group ."

         Mr. Liao , has served as a representative of CMIG International on the board of directors of Sirius Group since April 2016. Mr. Liao has served as Chief Executive Officer and director of CMIG International, an international private investment company, since December 2014, and as a director of CM Bermuda since July 2015. Mr. Liao has also served as Assistant President of China Minsheng Investment Group Corp., Ltd. since October 2014, and as Chief Executive Officer and director of CMIG International Capital Limited since February 2015. From April 2004 to September 2014, Mr. Liao served in various positions culminating in the role of Vice President of Corporate Bank Department of Head Office of China Minsheng Banking Corp., Ltd., a private financial institution engaged in the corporate, institutional and personal banking sectors in China. Mr. Liao has served as a director of China Medical & HealthCare Group Limited since June 2016. From May 2015 to November 2017, Mr. Liao also served as a director of New Universe Environmental Group Limited.

         Mr. Friedman has served as a director of Sirius Group since August 2016. He served as the Chief Executive Officer and Chief Investment Officer of Savannah-Baltimore Capital Management, LLC, an investment firm, from 2005 until 2007. In 1988, Mr. Friedman joined the Mutual Series Funds as an insurance analyst, and later served as a Vice President. From 1996 until 2001, Mr. Friedman served as Senior Vice President of Franklin Mutual Series Funds, as well as a Portfolio Manager and, from 1998

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to 2000, as Chief Investment Officer. He has a B.A. from Johns Hopkins University, an M.B.A. from the University of Pennsylvania's Wharton School and an A.L.M. from Harvard University.

         Mr. Frucher has served as a director of Sirius Group since August 2016. He is Vice Chairman of Nasdaq, Inc., a corporation that owns and operates the Nasdaq Stock Market, a position he has held since 2008. Mr. Frucher also serves as a director of The Options Clearing Corporation, a position he has held since 2000. From 1998 to 2008, Mr. Frucher served as Chairman and Chief Executive Officer of the Philadelphia Stock Exchange. Mr. Frucher has also served in various government positions, including as the chief labor negotiator for New York State, Chief Executive Officer of Battery Park City Authority and Chief Executive Officer of the School Construction Authority. He received a B.A. from Columbia University, and a M.P.A. from the John F. Kennedy School of Government, Harvard University.

Composition of the Board of Directors after the Completion of the Merger

        Sirius Group is in the process of identifying additional individuals who are expected to serve on the Sirius Group board of directors, in order to satisfy independence requirements set forth in Nasdaq listing standards and Rule 10A-3 under the Exchange Act, subject to the transition rules available to newly public companies under the Nasdaq listing rules. It is anticipated that, upon consummation of the Merger, a majority of the members of the Sirius Group board of directors will qualify as independent directors in accordance with the applicable rules of Nasdaq.

Independence of Directors

        The Sirius Group board of directors expects that each of Messrs. Friedman and Frucher will qualify as an independent director, as the term is currently defined under Nasdaq Listing Rule 5605(a)(2). Sirius Group's board of directors considered that Sirius Group has applied to list the Sirius Group common shares and converted warrants on the Nasdaq Stock Market, effective as of the closing of the Merger, and Mr. Frucher's service as Vice Chairman of Nasdaq, Inc. Mr. Frucher has notified Nasdaq, Inc. of this relationship. Messrs. Waters, Mr. Oberting and Ms. Cramér Manhem are not independent directors because each currently serves as an executive officer of Sirius Group. Mr. Liao is not an independent director due to his service as an executive officer of CMIG International, which owns 100% of CM Bermuda, the sole holder of Sirius Group common shares prior to the Merger.

Background and Experience of Directors

        When considering whether directors and director nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Sirius Group board of directors to satisfy its oversight responsibilities effectively in light of the business and structure of Sirius Group, the board of directors focused primarily on each person's background and experience as reflected in the information discussed in each of the directors' individual biographies set forth above. In particular, the members of our board of directors considered the following important characteristics, among others:

    Allan L. Waters—our board of directors considered his extensive knowledge of Sirius Group's business, having served as its Chief Executive Officer since March 2007, his leadership over Sirius Group in returning $2.2 billion in capital to White Mountains during the period from 2007 through 2016 and positioning Sirius Group for the sale to CMIG International in April 2016, and his overall reputation and experience in the insurance and reinsurance industry.

    Kernan (Kip) V. Oberting—our board of directors considered his extensive knowledge of strategic planning, investment management, corporate finance matters and public company financial reporting, having served as Chief Financial Officer of Sirius Group since April 2016, in

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      various executive finance positions at Sirius Group's former parent company, as founder of a private investment fund, and as Chief Financial Officer of a public reinsurance company.

    Monica Cramér Manhem—our board of directors considered her leadership of Sirius International through challenging market conditions by focusing on the maintenance of sustainable, profitable underwriting and strengthening client relationships, her responsibility for Sirius Group's outwards reinsurance strategy and purchasing until 2014, and her role in identifying and supporting strategic initiatives to develop and strengthen Sirius Group's brand around the globe.

    Laurence Liao—our board of directors considered his position as Chief Executive Officer of CMIG International, a leading international private investment group and the 100% owner of CM Bermuda, the sole holder of Sirius Group common shares prior to the Merger, his leadership on behalf of CMIG International of its acquisition of Sirius Group, and his extensive financial services experience.

    Robert L. Friedman—our board of directors considered his extensive experience with investment portfolio matters, having served as a Chief Investment Officer of two investment firms, his lengthy experience as an insurance analyst as well as his knowledge of White Mountains Insurance Group (the former parent of Sirius Group), and his qualification as an independent director.

    Meyer (Sandy) Frucher—our board of directors considered his extensive capital markets and corporate finance experience, as well as his expertise in the areas of corporate governance and strategic planning, and his qualification as an independent director.

Committees of the Board

        Upon the completion of the Merger, the committees of the Sirius Group board of directors are expected to consist of an Audit & Risk Management Committee, a Compensation Committee, a Nominating and Governance Committee and a Finance Committee. Each of the Audit & Risk Management, Compensation and Nominating and Governance Committees will be comprised entirely of independent directors, subject to the transition rules available to newly public companies under the Nasdaq listing rules. In addition, subject to such transition rules, the members of the Audit & Risk Management Committee will meet the enhanced independence standards set forth in Nasdaq listing standards and Rule 10A-3 under the Exchange Act, and at least one member will qualify as an "audit committee financial expert" as such term is defined in applicable SEC rules. The initial members of the committees will be determined prior to the completion of the Merger. The written charters for each of these committees will meet the requirements of Nasdaq listing standards and will be available on the Sirius Group website upon completion of the Merger.

Audit & Risk Management Committee

        The Audit & Risk Management Committee will be responsible for, among other things: (i) the appointment, compensation and oversight of the work of the independent auditor; (ii) reviewing and discussing with management and the independent auditor the accounting practices and systems of internal accounting controls of Sirius Group, as applicable; (iii) reviewing financial reports, accounting and financial policies in general, and procedures and policies with respect to internal accounting controls; (iv) reviewing the independence qualifications and quality controls of the independent auditor; and (v) approving all auditing services and permitted non-audit services to be performed by the independent auditor.

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Compensation Committee

        The Compensation Committee will be responsible for, among other things: (i) reviewing and developing general compensation policies; (ii) reviewing and approving the compensation of the Chief Executive Officer and other executive officers, including salary, bonus, long-term incentive and equity compensation and any other perquisites; (iii) making awards under equity incentive plans; (iv) overseeing administration of other employee benefit plans; and (v) making recommendations regarding director compensation.

Nominating and Governance Committee

        The Nominating and Governance Committee will be responsible for, among other things: (i) identifying individuals qualified for membership on the board; (ii) recommending individuals to the Sirius Group board of directors for nomination as members of the board and its committees; and (iii) advising and making recommendations to the Sirius Group board of directors on corporate governance matters and the overall governance structure of Sirius Group and the board.

Finance Committee

        The Finance Committee will be responsible for, among other things: (i) formulating Sirius Group's investment policy and investment guidelines; (ii) reviewing the performance and asset allocation of Sirius Group's investment portfolio and asset allocation on a regular basis; and (iii) monitoring the capital, debt, and corporate structure of Sirius Group and, in coordination with the Audit & Risk Management Committee, reviewing the adequacy of risk management.

Compensation Committee Interlocks and Insider Participation

        The Compensation Committee is currently composed of Messrs. Waters, Liao and Frucher and Cramér Manhem. Neither Messrs. Liao nor Frucher has ever been an executive officer or employee of Sirius Group. Mr. Waters and Ms. Cramér Manhem will step down as members of the Compensation Committee effective upon completion of the Merger. None of Sirius Group's officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more officers serving as a member of Sirius Group's board of directors or Compensation Committee.

Corporate Governance Guidelines

        The Sirius Group board of directors has adopted a set of corporate governance guidelines which describe the corporate governance policies of Sirius Group and, together with Sirius Group's other governing documents, provide a framework for the functioning of the board of directors and its committees. The Sirius Group Corporate Governance Guidelines will be available on Sirius Group's website upon the completion of the Merger.

Code of Business Conduct

        Sirius Group has adopted a Code of Business Conduct that applies to all directors, officers and employees in carrying out their responsibilities to, and on behalf of, Sirius Group. The Sirius Group Code of Business Conduct will be available on Sirius Group's website upon completion of the Merger.

Status as a Foreign Private Issuer and Controlled Company

        Sirius Group is, and will upon the consummation of the Merger be, considered a "foreign private issuer" under the rules and regulations of the SEC. A "foreign private issuer" is any issuer incorporated or organized under the laws of a foreign country, except an issuer meeting both of the

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following conditions: (i) more than 50% of the outstanding voting securities of the issuer are directly or indirectly held of record by residents of the United States; and (ii) any one of the following: (a) the majority of the executive officers or directors of the issuer are United States citizens or residents; or (b) more than 50% of the assets of the issuer are located in the United States; or (c) the business of the issuer is administered principally in the United States. Pursuant to the "foreign private issuer" rules, Sirius Group is exempt from certain provisions of the Exchange Act applicable to U.S. domestic public companies, including: (1) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (2) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specific information, or current reports on Form 8-K, upon the occurrence of specified significant events.

        In addition, Sirius Group will qualify as a "controlled company" within the meaning of Nasdaq rules. A "controlled company" is a company of which more than 50% of the voting power is held by an individual, group or another company. Pursuant to the "controlled company" exemption, Sirius Group is not required to comply with the requirements that: (1) a majority of the board of directors consist of independent directors; (2) it have a nominating committee composed entirely of independent directors with a written charter addressing such committee's purpose and responsibilities and (3) it have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities.

        Sirius Group does not currently expect or intend to rely on the scaled disclosure practices permitted by the SEC or the alternate governance practices permitted by Nasdaq applicable to foreign private issuers and/or controlled companies, and is voluntarily choosing to register and report using the SEC's domestic forms and comply with the Nasdaq governance practices applicable to domestic companies.

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COMPENSATION DISCUSSION AND ANALYSIS OF SIRIUS GROUP

        This Compensation Discussion and Analysis (" CD&A ") provides an overview of our executive compensation philosophy and the compensation provided to our named executive officers (" NEOs ") for 2017. In addition, this CD&A briefly describes certain compensation arrangements adopted in 2018 with respect to our NEOs. As used in this MD&A, "we," "our," and "us" refer to Sirius Group.

        Our NEOs for 2017 consist of our principal executive officer, principal financial officer and the three most highly compensated executive officers serving as executive officers for the year ended December 31, 2017. For 2017, our NEOs were:

Name
  Title
Allan L. Waters   Chairman of the Board and Chief Executive Officer (" CEO "), Sirius Group
Kernan "Kip" V. Oberting   President, Chief Financial Officer (" CFO ") and Director, Sirius Group and President, Sirius Capital Markets, Inc.
Monica Cramér Manhem   Chief Operating Officer (" COO ") and Director, Sirius Group and President and CEO, Sirius International Insurance Corp. (" Sirius International ")
Jeffrey W. Davis   Executive Vice President, Chief Risk Officer (" CRO ") & Chief Actuary, Sirius Group
Gene Boxer   Executive Vice President, Chief Strategy Officer (" CSO ") & Group General Counsel, Sirius Group

        In August 2018, the board of directors of Sirius Group designated a Management Committee comprised of Messrs. Waters, Oberting and Boxer and Ms. Cramér Manhem as the senior management and decision making body of Sirius Group responsible for the oversight of the day-to-day business operations of Sirius Group. In September 2018, Mr. Oberting was appointed as President of Sirius Group, Ms. Cramér Manhem was appointed as Chief Operating Officer of Sirius Group and Mr. Boxer was appointed as Chief Strategy Officer of Sirius Group.


Executive Compensation Philosophy

        We believe that Sirius Group's executive compensation program should be designed to align management incentives with the creation of shareholder returns over the long-term. For that reason and as illustrated in the chart below, our senior executives have typically received the majority of their total target direct compensation ( i.e.,  annual base salary, annual bonus awards and long-term incentive awards) in the form of long-term performance-based incentive compensation. We believe that delivering a significant portion of total direct compensation in the form of long-term performance-based incentive compensation focuses management on making decisions linked to optimizing the long-term economic performance of Sirius Group.

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GRAPHIC

        The Compensation Committee believes that compensation goals should be predominantly objective and clearly measurable. We believe that effective compensation programs should be designed so that participants understand how their performance will be assessed and how performance will impact payouts under our incentive programs. Accordingly, Sirius Group has designed its long-term incentive compensation program with payouts based on financial performance compared to objective performance targets. Our annual cash bonus program is designed in a similar manner, but with Compensation Committee discretion to adjust payouts to reflect individual performance, based on measurable individual and team performance achievements and a subjective assessment of performance. Sirius Group believes this design incentivizes management and employees to think like owners.

        Based on a November 2017 competitive analysis, the Compensation Committee determined that a higher portion of Sirius Group's senior executive target compensation pay mix is "at risk," in the form of annual cash bonus and long-term incentives, than that of many of Sirius Group's peer companies. Accordingly, our senior executive officers will generally earn less total compensation than those at our peer companies for comparable positions in times of poor financial performance, but tend to be well compensated on both an absolute and relative basis when we perform well. We believe that this approach has not only the effect of aligning management interests with that of the owners, it is also a strong recruiting tool to attract candidates who are confident in producing outstanding results over the long term.

        Historically, Sirius Group's compensation programs have been cash-based in nature, with payout levels based upon performance metrics that we believe are objectively measurable and aligned with the strategic success of Sirius Group. For example, as a global (re)insurance company, the Compensation Committee believes underwriting discipline is a core tenet to long-term success in the market, and thus underwriting performance is a metric that influences the payout of these long-term awards. That said, an accounting metric that we believe is also a strong indicator of Company performance is growth in book value per share (" BVPS "), which tracks management of our shareholders' capital, and we believe is linked to shareholder value creation over the long-term as a public company. Accordingly, since our acquisition by CMIG International, the underlying value of long-term incentive awards granted to senior executives tracked BVPS. The amount of long-term incentive awards earned, if any, is determined based on achievement of pre-established financial performance criteria over each three-year performance cycle.

        In connection with the Merger, and from time to time, Sirius Group engages outside consulting specialists to evaluate Sirius Group's approach to compensation and to provide an assessment of the competitive market. See the " Competitive Analysis and Compensation Program Enhancements

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Commensurate with Public Listing " section below for additional information with respect to the foregoing.


Components of 2017 NEO Compensation

        The primary components of Sirius Group's 2017 NEO compensation are:

    1.
    Base Salary

    2.
    Annual Cash Bonuses

    3.
    Long Term Incentive Plan (" LTIP ") Performance Share Based Awards

        In addition, as described further below, our NEOs participate in our corporate-wide benefit programs and receive perquisites and other benefits that we believe are commensurate with their positions and the competitive market.

Base Salary

        Base salaries are designed to provide competitive levels of compensation to our NEOs based upon their experience, duties and scope of responsibilities. While Sirius Group emphasizes variable, long-term compensation, it pays base salaries because they provide a basic level of compensation at a level that we believe is appropriate to retain high-caliber executives. In 2017, Sirius Group's NEOs received base salaries ranging from $450,000 to $500,000, as described below under the " 2017 NEO Compensation and Performance Summary ."

Annual Cash Bonuses

        Annual cash bonus awards are designed to create a "pay-for-performance" environment while providing competitive levels of compensation to our NEOs based upon their experience, duties and scope of responsibilities. Target bonuses for our NEOs in 2017 equaled 50% of their respective base salaries.

2017 Annual Bonus Design

        For 2017, the target annual bonus pool was $13.7 million for 215 participants, including the NEOs. The overall awarded bonus pool size can range from 20% to 200% of target, depending upon Sirius Group's performance as compared to the performance goals established for 2017. The Compensation Committee retains authority to adjust the overall pool when it determines that overall performance is not reflected in the pre-established financial performance achievement criteria, for example in the case of a large strategic acquisition. If the threshold pre-established financial performance achievement criteria are not achieved, the minimum 20% of target bonus pool will be allocated among select participants who made unusually significant contributions during the year.

        For the 2017 annual bonus plan, there were four objective and quantitative financial performance metrics established by the Compensation Committee, as set forth in the table below. If target performance was met, payout would be 100% of target with a range of 20% to 200% for performance between threshold and maximum.

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        The following table sets forth the pre-established financial performance criteria and the weighting for each of the NEOs under the 2017 annual bonus plan:

 
   
   
   
  Weighting  
2017 Performance Metrics
  Threshold
(20% Payout)
  Target
(100% Payout)
  Maximum
(200% Payout)
  Waters, Oberting
and Cramér
Manhem
  Davis and
Boxer
 

ROE(1)

  0.1%   7.1%   14.1%     25 %   50 %

UROC(2)

  2.45%   9.45%   16.45%     25 %   50 %

Chinese Premiums(3)

  0%   35%   70%     10 %   0 %

Asset Growth(4)

  $5.14 billion   $10.28 billion   $15.42 billion     40 %   0 %

(1)
Return on Equity (" ROE ") is calculated as follows: (50% GAAP Comprehensive Income plus 50% GAAP Net Income) divided by time-averaged common shareholders' equity. Both Comprehensive Income and Net Income include gains and losses from acquisitions. Time-averaged common shareholders' equity equals beginning equity plus time-weighted capital contributions during the year less time-weighted capital distributions during the year plus simple average of accumulated profit (loss) during the year.

(2)
Underwriting Return on Capital (" UROC ") represents the after-tax, leveraged underwriting return on average "Deployed Capital" in the Sirius Group. For purposes of this performance metric, "Deployed Capital" is defined as GAAP capital less excess rating agency capital plus an internal safety margin. GAAP comprehensive income results are adjusted to reflect: (i) reduction of investments equal to un-deployed capital; (ii) application of a standard investment crediting rate on remaining investment assets; (iii) removal of the impact of currency fluctuations; and (iv) adjustment of income taxes related to (i), (ii) and (iii).

(3)
This metric is based upon growth in gross premiums written in China during 2017 relative to those written in 2016.

(4)
This metric is based upon growth in Total Assets of Sirius Group through the end of 2017.

Annual Bonus Results

        Financial results for 2017 were unfavorable due to the third quarter catastrophe losses. The primary compensation metrics, UROC and ROE, were 1.0% and –5.4%, respectively, both below the respective minimum thresholds. These results caused the overall weighted average of the 2017 bonus pool to be below its threshold for funding above the 20% minimum amount; therefore, the 2017 bonus pool was 20% of target. Despite these financial results, based on the Compensation Committee's individual performance assessments, Messrs. Oberting, Boxer and Davis did receive cash bonus payouts for 2017, as described further below under " 2017 NEO Compensation and Performance Summary ."

Long-Term Incentive Compensation

        Sirius Group has historically awarded long-term incentive compensation in the form of three-year, cliff-vested, performance units or phantom performance shares that can be paid in cash, or upon Sirius Group becoming public, Sirius Group common shares, at the discretion of the Compensation Committee. A new long-term incentive award is granted each year so that there are three different performance cycles outstanding at any given time.

        Grants made prior to our acquisition by CMIG International, while Sirius Group was a wholly-owned subsidiary of White Mountains, were in the form of performance units with an award date value of $1,000. The value of each performance unit grew over the three-year performance cycle based on UROC performance during that period. UROC was a measurement used by White Mountains to

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evaluate Sirius Group's underwriting performance, but designed to remove volatility from investment and currency fluctuations by applying a standard investment return.

        Since the CMIG International acquisition, LTIP grants have been governed by the Sirius Group Long Term Incentive Plan (the " 2016 LTIP "), and have been granted in the form of phantom performance shares at the BVPS of Sirius Group on the date of grant and earned (or "harvested") based on specific, objective financial performance measures established at the beginning of the three-year performance cycle. Each phantom performance share is valued at BVPS at the end of each performance cycle for payouts if our common shares are not publicly traded. If vested and our common shares are publicly-traded, (i) each phantom performance share will be valued at the market price at time of payout and (ii) the Compensation Committee has discretion to settle these awards in in common shares, rather than cash.

        For the three-year performance cycle beginning in 2015, which was governed under a prior long-term incentive plan under prior White Mountains ownership, the performance metric was UROC. The performance metrics for the three-year performance cycle beginning in 2016 were UROC and ROE.

        For the three-year performance cycle beginning in 2017, the performance metrics were UROC, ROE, Chinese Premium and Asset Growth, with the same relative weightings for the NEOs as discussed above with respect to the 2017 annual bonus plan, except that for Messrs. Waters and Oberting and Ms. Cramér Manhem UROC and ROE were both weighted 35% and Asset Growth was weighted 20%. The number of shares earned can range from 0% to 200% of the target number granted based on proscribed threshold, target and maximum performance levels. Given the economic and market conditions at the time the 2017 targets were set, the target payout levels were designed to be challenging but achievable, while payouts at the maximum levels were designed to be "stretch" goals.

        The table below provides the number of Sirius Group common shares that may be issued assuming payout at the target and maximum performance levels in respect of all outstanding LTIP awards, including outstanding NEO LTIP awards, for pending LTIP award cycles.

Shares by Award Cycle
  Common Share Issuance
at 100% Vesting
Level
  Maximum Potential
Vesting Level
  Common Share Issuance
at Maximum Vesting
Level
 

2016 - 18

    819,215     290 %   2,375,724  

2017 - 19

    860,732     200 %   1,721,464  

2018 - 20

    758,858     200 %   1,517,716  

Total Potential Common Share Issuance

    2,438,805           5,614,904  

2015-17 LTIPs

        For the Sirius Group performance units issued for the 2015-17 performance cycle, each performance unit was valued at $1,000 at the beginning of the three-year performance cycle, with the value of each unit growing or diminishing based on Sirius Group's average annual UROC over the performance cycle. The payouts were to be 0% at threshold three-year average UROC of 3% or less, 100% at target UROC of 10% and 200% at maximum UROC of 17%. A summary of the 2015-2017 performance unit cycle settled in cash in March 2018 is as follows:

 
   
   
  Final Result:  
UROC Performance Levels  
  Actual UROC    
 
Threshold   Target   Maximum   % of Target  
  3 %   10 %   17 %   5.5 %   36.1 %(1)

(1)
Reflects the value percentage applied to each unit that grew in value from $1,000 to $1,175 over the three-year performance cycle.

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        Messrs. Waters, Oberting and Davis and Ms. Cramér Manhem received payouts for the three-year performance cycle based on the formulaic payout percentage of 36.1% applied to each of their units, which had a value of $1,175 at the end of the three-year performance cycle. Accordingly, based on performance, each of the participating NEOs received a cash payout as described in " 2017 NEO Compensation and Performance Summary ." Mr. Boxer was not an employee of Sirius Group at the time of grant and, accordingly, did not participate in the 2015-2017 performance cycle.

White Mountains Awards

        For the 2015-17 performance period, Messrs. Waters, Oberting and Davis and Ms. Cramér Manhem received a portion of their incentives based on the legacy compensation schemes of Sirius Group's former parent, White Mountains. The last of such awards vested in 2017. These awards are paid by Sirius Group based on the contractual arrangements entered into between the NEOs and White Mountains, with payout determined based on the performance of White Mountains. Please see the " 2017 NEO Compensation and Performance Summary " for a discussion of the amounts received under these awards.

Other Components Executive Compensation

Retention Cash Payouts

        In conjunction with our acquisition by CMIG International, Sirius Group entered into a Transaction and Retention Bonus Plan, whereby executives were granted awards that paid 50% at the time the transaction closed in 2016, 25% at the 12-month anniversary of the closing of the transaction, and the remaining 25% at the 20-month anniversary of the closing of the transaction, subject to their continued employment through the applicable payment date. The 12-month and 20-month anniversary payouts occurred in April and December of 2017. Mr. Boxer joined Sirius Group following the transaction, and thus did not have an acquisition retention bonus. However, in conjunction with his joining Sirius Group in 2016, Mr. Boxer received a special bonus in the amount of $325,000, with the payout occurring in August 2017 subject to Mr. Boxer's continued employment through such date.

Employment Agreements/Executive Severance Plan

        Prior to the Merger, Mr. Waters and Ms. Cramér Manhem had employment agreements, which were entered into in conjunction with our acquisition by CMIG International. These employment agreements were entered into in July 2015 and granted certain rights for termination without cause and other customary rights, which the other NEOs did not have. See the " Employment Arrangements " and " 2017 Potential Payments Upon a Termination or a Change in Control " sections below for a more detailed discussion of these employment agreements and estimate of the potential compensation and benefits provided pursuant to these arrangements.

        In September 2018, Sirius Group adopted the Sirius Group Severance and Change in Control Plan (the " Executive Severance Plan "), which provides for severance terms applicable to each of our NEOs relating to severance and post-employment benefits provided upon certain termination events. The terms of the Executive Severance Plan were determined after consulting with the Compensation Committee's independent consultant, Frederick W. Cook & Co., Inc. (" FW Cook "), regarding market practices. The Compensation Committee believes that the Executive Severance Plan is competitive with typical industry practices and that the severance opportunities provide appropriate levels of compensation for executive separations. Further, the Compensation Committee believes that these arrangements are an important component of our compensation packages in terms of attracting and retaining top caliber talent in senior leadership roles and in defining terms and conditions of executive separation events.

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        In general, the Executive Severance Plan provides our NEOs with severance in the event of (i) an involuntary termination without cause or (ii) a resignation by the NEO for good reason. For these qualifying terminations of employment prior to a change in control, our NEOs will receive severance benefits equal to one times base salary, any earned but unpaid annual bonus for the year prior to termination, a pro-rata annual bonus for the year of termination with the payout for such bonus based on actual performance, and medical continuation benefits for 12 months. In the event of a qualifying termination of employment following a change in control, the severance benefits are the same, except the severance pay is increased to two times base salary for the NEOs, the medical continuation period is increased to two years for the NEOs, and the prorated annual bonus for the year of termination is paid at the target level of performance. Additionally, the Executive Severance Plan provides that in the event of a qualifying termination within 24 months following a Change in Control, all outstanding equity compensation awards will become fully vested, with the attainment or deemed attainment of any applicable performance conditions determined under the terms of the applicable equity compensation plan or award agreements. In order to be eligible to receive severance payments, pursuant to the Executive Severance Plan, the NEO must execute a release in the Company's favor.

        The Executive Severance Plan provides that, to the extent that Mr. Waters' or Ms. Cramér Manhem's employment agreements provide additional severance protections, they will continue to receive the employment agreement severance protections, to the extent they do not result in duplicative benefits under the Executive Severance Plan.

        For a discussion of how our NEOs are protected in case of a termination without cause or for good reason in connection with awards granted under the 2016 LTIP, please see the " 2016 LTIP " section below.

Retirement Benefits

        Sirius Group maintains a tax qualified 401(k) plan for our U.S. employees, including Messrs. Waters, Oberting, Davis and Boxer. Additionally, Ms. Cramér Manhem participates in a Swedish statutory pension scheme and, consistent with competitive practices in Sweden, receives supplemental retirement benefits from Sirius Group in the form of annual contributions to a non-qualified deferred compensation program. The Compensation Committee believes these benefits encourage retention and are part of delivering an overall competitive pay package necessary to recruit and retain talented executives. Please refer to the " 2017 Summary Compensation Table ," " 2017 Nonqualified Deferred Compensation " table and related footnotes for additional information.

Perquisites

        Sirius Group provides the NEOs certain perquisites that the Compensation Committee believes are generally consistent with those provided to executives at similar levels at companies within our industry. The Compensation Committee believes that providing certain additional perquisites benefits to our NEOs enhances retention and results in a cost savings to Sirius Group, while strengthening our relationships with our NEOs. In addition, certain of our NEOs receive housing allowances relating to their service in Bermuda. We believe that providing these housing allowances is necessary in order to attract and retain executive officers located in Bermuda. Please refer to the " 2017 Summary Compensation Table " and related footnotes for additional information.

Other Executive Compensation Matters

Compensation Committee

        The Compensation Committee is responsible for determining and approving the individual elements of total compensation paid to the CEO and our other executive officers and establishing overall compensation policies for our employees. The Compensation Committee also oversees the

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administration of executive compensation plans and certain employee benefits. Our board of directors appoints each member of the Compensation Committee and has determined that it will be comprised entirely of independent directors prior to the closing of the Merger, in accordance with applicable listing standards of Nasdaq.

        Our CEO annually presents the Compensation Committee with his evaluation of our executive officers (other than himself), considering their individual performances, responsibilities, and the contributions they made to the Company's accomplishments and his expectations for their future performance and succession plans. In connection with this evaluation, the CEO presents the Compensation Committee with his recommendations for the compensation of these executives. The Compensation Committee sets executive officer compensation, considering the CEO's recommendations as well as its own assessment of performance.


2017 NEO Compensation and Performance Summary

Overview of 2017 Results

        Underwriting results for 2017 were negative reflecting multiple catastrophes around the globe. Sirius Group's key underwriting return metric and overall return on equity were below the minimum payout levels for the year. Despite this financial performance, we believe that Sirius Group made significant progress positioning itself for the future by closing two acquisitions within our Global A&H Segment (IMG and Armada) and launching new lines of business (Primary Surety and Environmental, and Casualty Reinsurance). Additionally, Sirius Group raised $331 million of SEK-denominated, variable rate, subordinated debt and redeemed $250 million of perpetual preferred shares, saving $10 million annually.

Allan Waters, Chairman of the Board and CEO, Sirius Group

        Mr. Waters serves as the Chairman and CEO of Sirius Group. Under Mr. Water's leadership, Sirius Group returned $2.2 billion in capital to White Mountains during the period from 2007 through 2016, positioning it for the acquisition by CMIG International in 2016. Mr. Waters has executed Sirius Group's new mission of growth by leading Sirius Group's expansion into the Casualty, Primary Surety and Environmental markets. By initiating strategic acquisitions, he has further strengthened Sirius Group's position in the Accident & Health market.

        Mr. Waters' salary for 2017 was $500,000, which was unchanged from prior year. Mr. Waters had a target bonus of $250,000, or 50% of salary. Given the unfavorable financial results of Sirius Group and consistent with the overall Company's bonus payouts, Mr. Waters did not receive a cash bonus payout for the 2017 year. Mr. Waters received retention bonus payouts totaling $6,827,486 in 2017 related to the CMIG International acquisition, as discussed above.

        Mr. Waters received cash payouts with respect to his 2015-17 Sirius Group LTIP performance units and 2015-17 White Mountains phantom performance shares in the amounts of $1,118,452 and $1,407,312, respectively. On January 1, 2018, Mr. Waters vested in 1,200 shares of White Mountains common stock upon settlement of legacy White Mountains performance awards with respect to the 2015-17 performance period. In addition, Mr. Waters receives reimbursements for Bermudian housing costs, which totaled $183,333 for 2017 and is eligible for a home leave allowance for the equivalent of seven trips to the United States per year, with a maximum allowance of $15,000.

        In 2017, Mr. Waters was issued 273,961 performance shares under the 2016 LTIP for the 2017-2019 performance cycle with a target award value of $5,670,993, which was consistent with the prior year.

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Kernan "Kip" Oberting, President and CFO, Sirius Group and President, Sirius Capital Markets, Inc.

        Mr. Oberting is President and CFO of Sirius Group and the President of Sirius Capital Markets, Inc., the organization dedicated to management and direction of Sirius Group's financial and strategic planning function. In addition to leading Sirius Group's mergers and acquisition opportunities and activities, Mr. Oberting is responsible for the capital and tax management strategy for the entire organization. Additionally, Mr. Oberting and his team are responsible for the assessment and execution of financial market opportunities and investment strategies.

        Mr. Oberting's salary for 2017 was $471,000, which reflected a raise from $450,000 to $475,000 effective as of February 21, 2017. Mr. Oberting had a target bonus of $237,500, or 50% of salary. Given Mr. Oberting's extensive contributions to the M&A and capital markets transactions during the year, Mr. Oberting received a discretionary cash bonus payout of $121,125, or 51% of target, for the 2017 year from the overall bonus pool, which was 20% of target. Mr. Oberting's cash bonus is in part reflective of his contributions to the acquisitions of IMG and Armada and the favorable refinancing of certain aspects of Sirius Group's financing structure. In addition, as discussed above, Mr. Oberting received retention bonus payouts totaling $2,186,736 in 2017 related to our acquisition by CMIG International.

        Mr. Oberting received cash payouts with respect to his 2015-17 Sirius Group LTIP performance units and 2015-17 White Mountains phantom performance shares in the amounts of $275,585 and $310,781, respectively. On January 1, 2018, Mr. Oberting vested in 265 shares of White Mountains common stock upon settlement of legacy White Mountains performance awards with respect to the 2015-17 performance period. In addition, Mr. Oberting receives reimbursements for Bermudian housing costs, which totaled $206,568 for 2017 and is eligible for a home leave allowance for the equivalent of seven trips to the United States per year, with a maximum allowance of $15,000.

        Mr. Oberting was issued 118,261 Sirius Group LTIP performance shares for the 2017-2019 performance cycle with a target award value of $2,448,003.

Monica Cramér Manhem, Chief Operating Officer, Sirius Group and President and CEO, Sirius International

        Ms. Cramér Manhem serves as the Chief Operating Officer, Sirius Group and the President and CEO, Sirius International. In determining Ms. Cramér Manhem's 2017 compensation, the Compensation Committee considered Ms. Cramér Manhem's performance in leading Sirius International through challenging market conditions by focusing on the maintenance of sustainable, profitable underwriting and strengthening relationships. The Compensation Committee also considered her role in identifying and supporting initiatives to develop and strengthen Sirius Group's brand around the globe.

        Ms. Cramér Manhem's salary for 2017 was $439,025, which reflected a raise from approximately $430,000 to $450,000 effective as of June 1, 2017. Ms. Cramér Manhem had a target bonus of $225,000, or 50% of salary. Ms. Cramér Manhem did not receive a cash bonus payout for the 2017 year. As discussed above, Ms. Cramér Manhem received retention bonus payouts totaling $2,305,438 in 2017 related to our acquisition by CMIG International.

        Ms. Cramér Manhem received cash payouts with respect to her 2015-17 Sirius Group LTIP performance units and 2015-17 White Mountains phantom performance shares in the amounts of $180,190 and $175,914, respectively. On January 1, 2018, Ms. Cramér Manhem vested in 150 shares of White Mountains common stock upon settlement of legacy White Mountains performance awards with respect to the 2015-17 performance period. In addition, Ms. Cramér Manhem receives a Company-provided car and participates in a nonqualified deferred compensation program, as further described in

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the " 2017 Summary Compensation Table ," " 2017 Nonqualified Deferred Compensation " table and related footnotes.

        Ms. Cramér Manhem was issued 56,956 Sirius Group LTIP performance shares for the 2017-19 performance cycle with a target award value of $1,178,989.

Jeffrey W. Davis, Executive Vice President, CRO & Chief Actuary, Sirius Group

        Mr. Davis serves as Sirius Group's Executive Vice President, CRO & Chief Actuary, responsible for overseeing Sirius Group's loss reserving and risk management functions, including managing the internal economic capital model, managing key exposures and mitigating risk for multiple lines of business and geographic regions in the (re)insurance arena.

        Mr. Davis's salary for 2017 was $450,000, which was unchanged relative to prior year. Mr. Davis had a target bonus of $225,000, or 50% of salary. Given Mr. Davis's extensive contributions and overall value to Sirius Group, Mr. Davis received a discretionary cash bonus payout of $45,000, or 20% of target, for the 2017 year from the overall bonus pool, which was 20% of target. Mr. Davis's cash bonus is in part reflective of his direction of Sirius Group's reserving process as well as direction of Sirius Group's Solvency II and Group Supervision duties. As discussed above, Mr. Davis received retention bonus payouts totaling $583,094 in 2017 related to our acquisition by CMIG International.

        Mr. Davis received cash payouts with respect to his 2015-17 Sirius Group LTIP performance units and 2015-17 White Mountains phantom performance shares in the amounts of $89,883 and $398,738, respectively. On January 1, 2018, Mr. Davis vested in 340 shares of White Mountains common stock upon settlement of legacy White Mountains performance awards with respect to the 2015-17 performance period. In addition, Mr. Davis receives reimbursements for Bermudian housing costs, which totaled $275,000 for 2017.

        Mr. Davis was issued 49,621 Sirius Group LTIP performance shares for the 2017-2019 performance cycle with a target award value of $1,027,155.

Gene Boxer, Executive Vice President, Chief Strategy Officer & Group General Counsel, Sirius Group

        Mr. Boxer serves as Sirius Group's Executive Vice President, Chief Strategy Officer & Group General Counsel, responsible for managing its legal and compliance functions globally. Mr. Boxer is also responsible for overseeing the execution of Sirius Group's strategic M&A and capital markets initiatives.

        Mr. Boxer's salary for 2017 was $450,000, which was unchanged relative to the prior year. Mr. Boxer had a target bonus of $225,000, or 50% of salary. Given Mr. Boxer's extensive contributions to the M&A and capital markets transactions during the year, he received a cash bonus payout of $225,000, or 100% of target, for the 2017 year from the overall bonus pool, which was 20% of target. Mr. Boxer's cash bonus in part reflects his contributions to the acquisitions of IMG and Armada and the favorable refinancing of certain aspects of Sirius Group's financing structure.

        Mr. Boxer received no payouts in connection with the 2015-17 performance cycles as he was not an employee of Sirius Group in 2015. Further, Mr. Boxer did not receive a retention bonus payout related to our acquisition by CMIG International. Mr. Boxer received a special bonus payment of $325,000 in August 2017 in connection with his joining Sirius Group in August 2016.

        Mr. Boxer was issued 35,024 Sirius Group LTIP performance shares for the 2017-2019 performance cycle with a target award value of $724,997.

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Competitive Analysis and Compensation Program Enhancements Commensurate with Public Listing

Competitive Analysis

        In November 2017, Sirius Group engaged FW Cook to perform a competitive analysis of Sirius Group's compensation program.

        As noted above, the November 2017 study found that our compensation program for our senior executives is generally more variable than that at many of our peer companies. Specifically, the salaries and other fixed compensation components of Sirius Group's senior executives tend to be somewhat lower than that of Sirius Group's peers, while variable compensation opportunities tend to be greater than the average of Sirius Group's peers. The peers included in that study were: White Mountains Insurance Group, Validus, Renaissance Re, Hiscox, Aspen Insurance, Allied World Assurance Company, Maiden Holdings, Argo Group, OneBeacon Insurance Group, James River Group and Global Indemnity. Additional companies of interest for which compensation data was provided to the Compensation Committee included AXIS Capital, Arch Capital, Allegheny and Everest Group. This peer group was selected based on publicly traded companies that generally as a group (i) approximate to Sirius Group's scope of business and that of its subsidiaries, including revenue and market capitalization, (ii) are similar to us in the importance to their business of capital allocation, investments and risk management, (iii) compete with Sirius Group for a comparable pool of talent, and (iv) reflect Sirius Group's global presence.

        In anticipation of the Merger, the Compensation Committee again has engaged FW Cook as a compensation consultant to assist the Compensation Committee in its review of executive and director compensation practices in light of the transition of Sirius Group from a private to a public company, and specifically, with respect to the competitiveness of Sirius Group's executive and director compensation, executive compensation program design matters, market trends and technical considerations. Prior to engaging FW Cook in anticipation of the Merger, the Compensation Committee reviewed and assessed the independence of FW Cook as a firm and the individuals providing advice to the Compensation Committee in compliance with Nasdaq's listing standards. The Compensation Committee determined that FW Cook as a firm and the relevant individual advisers were independent and that the work to be performed by FW Cook did not raise any conflict of interest.

        The nature and scope of services that FW Cook will provide to the Compensation Committee include the following: assistance with providing one-time equity grants to a select group of executives in connection with the closing of the Merger; competitive market compensation analyses; assistance with the redesign of executive compensation programs and resetting ongoing executive compensation levels for base salary, annual cash bonus and long-term incentives; assistance with finalizing the 2018 Omnibus Incentive Plan; assistance with non-change-in-control and change-in-control severance arrangements, including severance amounts for certain key executives; assistance with analyzing the director compensation program, including board cash and equity retainers, committee fees and leadership compensation; assistance with updating the Compensation Committee charter for a public company; and preparation for and attendance at selected Compensation Committee meetings.

        In evaluating Sirius Group's executive compensation program, the Compensation Committee has been advised by FW Cook as to the compensation levels of other companies that might compete with Sirius Group for executive talent. Competitive market data has been developed by FW Cook from several different sources, including proxy statements, and has been updated as deemed necessary.

        FW Cook provided its analysis in a report provided to the Compensation Committee in July 2018, and identified the following peer group companies for Sirius Group: White Mountains Insurance Group, Validus, Renaissance Re, Hiscox, Aspen Insurance, Maiden Holdings, Argo Group, James River Group and Global Indemnity. Additional companies of interest for which compensation data was

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provided to the Compensation Committee included AXIS Capital, Arch Capital and Everest Group. The peer companies were the same ones used by FW Cook in the compensation study performed for the Compensation Committee in November 2017 except that Allied World Assurance Company and OneBeacon Insurance Group were removed due to being acquired.

Compensation Program Enhancements Commensurate with Public Listing

        In connection with the Merger, the Compensation Committee has approved grants of performance share unit awards to members of management, including the NEOs, under the 2018 Omnibus Incentive Plan. The aggregate number of shares subject to these awards, determined at the target level of performance, is projected to have a grant date value of $15 million, based on the per share value of Sirius Group common shares at the closing of the Merger (the " IPO Price "), with the portion of these awards allocated to the members of the Management Committee having a value of $8 million. Pursuant to these grants, effective at the closing of the Merger, each eligible employee will be awarded a target number of performance share units equal to a specified dollar value divided by the IPO Price. See the " 2018 Omnibus Incentive Plan—New Plan Benefits ," section below for the amounts of such awards that will be granted to the NEOs.

        One fourth of the number of these performance share units granted to each participant will become earned and vested based on ROE performance goals that have been approved by the Compensation Committee with respect to each of 2019, 2020 and 2021, and an additional one-fourth of the number of performance share units will become earned and vested based on Sirius Group's average annual ROE performance over 2019, 2020 and 2021. The vesting of the awards will also be subject to the participant's continued employment with Sirius Group through the end of the applicable performance period, provided that a participant who has a qualifying termination of employment will become vested in a prorated portion of the award earned in the then-current performance period, subject to actual performance results.

        As a condition to the receipt of the performance share units, each participant is required to purchase a number of common shares equal to the target number of shares that are subject to the performance share unit award granted by Sirius Group, rounded down to the nearest 100 shares. The purchased units will not be subject to any vesting conditions, but will be subject to the holding requirements discussed below. A participant may elect either to purchase all of the shares in 2018 or to purchase the shares in three annual installments, by March 31, 2019, 2020 and 2021, respectively. If the shares are purchased in 2018, the purchase price will be the IPO Price. If the shares are purchased in three annual installments, one third of the shares must be purchased in each of the three years at the IPO Price for shares purchased by March 31, 2019, 105% of the IPO Price for shares purchased by March 31, 2020 and 112% of the IPO Price for shares purchased by March 31, 2021.

        Purchased shares cannot be transferred or sold prior to December 31, 2021, for so long as the participant is employed, and performance share units that are earned and vested will not be issued to the participant until after the determination of performance following the conclusion of 2021.

        Based on the input of FW Cook, we believe that this type of one-time equity grant is typical for companies undertaking a merger involving a public offering or similar significant strategic transaction resulting in a structural change in operating structure. Additionally, the purchase and holding requirements are designed to further align the management team with Sirius Group's shareholders.

Equity Arrangements

2016 LTIP

        The following is a description of the material terms of the 2016 LTIP. The summary below does not contain a complete description of all provisions of the 2016 LTIP and is qualified in its entirety by reference to the plan, as amended, which is included as Exhibits 10.7 to the registration statement of which this proxy statement/prospectus forms a part.

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        As discussed below, we expect to replace the 2016 LTIP with a new plan adopted prior to the consummation of this offering. Once that new plan becomes effective, we will no longer make awards under the 2016 LTIP. However, the 2016 LTIP will continue to govern outstanding awards granted prior to its termination.

        Authorized Shares.     Subject to adjustment for share splits and other similar changes in capitalization, under the 2016 LTIP, 5,614,904 of our common shares are reserved for issuance, based on the potential vesting level with respect to outstanding awards, assuming achievement of the underlying performance goals at the maximum performance level. As of December 31, 2017, our employees hold outstanding performance units or performance shares granted under the 2016 LTIP and no other awards were outstanding under the 2016 LTIP as of such date.

        Administration.     The Compensation Committee administers the 2016 LTIP.

        Participants.     Employees, directors and consultants of the company and our affiliates are eligible to participate in the 2016 LTIP, if selected for participation by the Compensation Committee.

        Types and Terms of Awards.     Under the 2016 LTIP, we are authorized to grant performance units or performance shares. Only performance shares were awarded and are outstanding for the 2016-18, 2017-19 and 2018-20 performance cycles.

        Termination of Employment.     In general, each performance unit or share is subject to a three-year performance cycle, but may be accelerated on a pro-rata basis in the case of a termination due to disability, retirement or death. In addition, in September 2018, the Compensation Committee amended the 2016 LTIP to provide for continued vesting in the event of a termination by the Company without cause or by the participant due to good reason, other than during the 24-month period following a change in control. In these qualifying terminations of employment events, our NEOs will continue to vest in outstanding awards for 12 months following a termination of employment. The ability to receive payments during these vesting continuation periods will be subject to actual performance. Please see the " 2017 Potential Payments Upon a Termination or a Change in Control " section for information regarding the treatment of the outstanding 2016 LTIP awards upon a termination of employment as of December 31, 2017.

        Change in Control.     In the event there is a termination without cause, constructive termination or adverse change to the 2016 LTIP within 24 months following a change in control, the portion of each outstanding award for which time-vesting has already occurred will pay out at the maximum, and the remaining portion will immediately accelerate on a pro-rata basis at a minimum 100%, with the underlying share value determined based on the greater of the value of a common share: (A) immediately prior to the change in control; (B) five business days after the change in control; and (C) on the date of termination. The Merger will not constitute a change in control under the plan. Please see the " 2017 Potential Payments Upon a Termination or a Change in Control " section for information regarding the treatment of the outstanding 2016 LTIP awards upon a termination of employment following a change in control as of December 31, 2017.

        Amendment and Termination.     The Compensation Committee may, at any time, amend or terminate the 2016 LTIP. No amendment may alter or impair the rights or obligations of a participant without the consent of such participant.

2018 Omnibus Incentive Plan

        Based on advice received from FW Cook, and the recommendation of the Compensation Committee, and following the approval of the Board and existing shareholders, on August 6, 2018, Sirius Group adopted the 2018 Omnibus Incentive Plan. The 2018 Omnibus Incentive Plan, which is included as Exhibit 10.6 to the registration statement of which this proxy statement/prospectus forms a

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part, is designed to enhance the value of Sirius Group by enabling it to offer eligible employees, directors and consultants cash and stock-based incentive awards in order to attract, retain and reward these individuals and align the long-term interests between them and Sirius Group's shareholders. As discussed above, the 2018 Omnibus Incentive Plan will replace the 2016 LTIP with respect to new equity grants.

        The material terms of the 2018 Omnibus Incentive Plan are as follows:

    Shares Subject to the Plan.   The aggregate number of shares initially reserved under the 2018 Omnibus Incentive Plan is 8,500,000 Sirius Group common shares. This amount, together with the amount reserved for issuance under the 2016 LTIP, represents approximately 10% of Sirius Group's outstanding common shares following the completion of the Merger assuming no redemptions by Easterly's public stockholders in connection with the Merger Proposal and taking into account the shares reserved for issuance under the 2016 LTIP and the 2018 Omnibus Incentive Plan. To the extent an equity award granted under the 2018 Omnibus Incentive Plan (other than any substitute award) or the 2016 LTIP expires or otherwise terminates without having been exercised or paid in full, or is settled in cash, the shares subject to such award will become available for future grant under the 2018 Omnibus Incentive Plan. In addition, to the extent shares subject to an award are withheld to satisfy a participant's tax withholding obligation upon the exercise or settlement of such award (other than any substitute award) or to pay the exercise price of a share option, such shares will become available for future grant under the 2018 Omnibus Incentive Plan.

    Plan Administration.   The Compensation Committee will administer the 2018 Omnibus Incentive Plan. The Board has the authority to amend and modify the plan, subject to any shareholder approval required by law or stock exchange rules. Subject to the terms of the 2018 Omnibus Incentive Plan, the Compensation Committee will have the authority to determine the eligibility for awards and the terms, conditions, and restrictions, including vesting terms, the number of shares subject to an award, and any performance goals applicable to grants made under the 2018 Omnibus Incentive Plan. The Compensation Committee also will have the authority, subject to the terms of the 2018 Omnibus Incentive Plan, to construe and interpret the 2018 Omnibus Incentive Plan and awards, and amend outstanding awards at any time.

    Share Options and Share Appreciation Rights.   The Compensation Committee may grant incentive share options, nonstatutory share options, and share appreciation rights under the 2018 Omnibus Incentive Plan, provided that incentive share options are granted only to employees. The exercise price of share options and share appreciation rights under the 2018 Omnibus Incentive Plan will be fixed by the Compensation Committee, but must equal at least 100% of the fair market value of a common share on the date of grant. The term of an option or share appreciation right may not exceed ten years; provided, however, that an incentive share option held by an employee who owns more than 10% of all of our classes of shares, or of certain of our affiliates, may not have a term in excess of five years, and must have an exercise price of at least 110% of the fair market value of a common share on the grant date. Subject to the provisions of the 2018 Omnibus Incentive Plan, the Compensation Committee will determine the remaining terms of the options and share appreciation rights ( e.g. , vesting). Upon a participant's termination of service, the participant may exercise his or her option or share appreciation right, to the extent vested (unless the Compensation Committee permits otherwise), as specified in the award agreement.

    Share Awards.   The Compensation Committee will decide at the time of grant whether an award will be in the form of restricted shares, restricted share units, or another share award. The Compensation Committee will determine the number of shares subject to the award, vesting, and the nature of any performance measures. Unless otherwise specified in the award agreement, the

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      recipient of restricted shares will have voting rights and be entitled to receive dividends with respect to his or her restricted shares. The recipient of restricted share units will not have voting rights, but his or her award agreement may provide for the receipt of dividend equivalents. The Compensation Committee may grant other share awards that are based on or related to the common shares, such as awards of common shares granted as bonus and not subject to any vesting conditions, deferred share units, share purchase rights, and common shares issued in lieu of our obligations to pay cash under any compensatory plan or arrangement. Any dividends or dividend equivalents paid with respect to restricted shares, restricted share units or other share awards will be subject to the same vesting conditions as the underlying awards.

    Performance Awards.   The Compensation Committee will determine the value of any performance award, the vesting and nature of the performance measures, and whether the award is denominated or settled in cash or in common shares. The performance goals applicable to a particular award will be determined by the Compensation Committee at the time of grant.

    Transferability of Awards.   The 2018 Omnibus Incentive Plan does not allow awards to be transferred other than by will or the laws of inheritance following the participant's death, and options may be exercised, during the lifetime of the participant, only by the participant. However, an award agreement may permit a participant to assign an award to a family member by gift or pursuant to a domestic relations order, or to a trust, family limited partnership or similar entity established for one of the participant's family members. A participant may also designate a beneficiary who will receive outstanding awards upon the participant's death.

    Certain Adjustments.   If any change is made in the common shares subject to the 2018 Omnibus Incentive Plan, or subject to any award agreement under the 2018 Omnibus Incentive Plan, without the receipt of consideration by us, such as through a share split, share dividend, extraordinary distribution, recapitalization, combination of shares, exchange of shares or other similar transaction, appropriate adjustments will be made in the number, class, and price of shares subject to each outstanding award and the numerical share limits contained in the plan.

    Change in Control.   Subject to the terms of the applicable award agreement, upon a "change in control" (as defined in the 2018 Omnibus Incentive Plan), the Board may, in its discretion, determine whether some or all outstanding options and share appreciation rights will become exercisable in full or in part, whether the restriction period and performance period applicable to some or all outstanding restricted share awards and restricted share unit awards will lapse in full or in part and whether the performance measures applicable to some or all outstanding awards will be deemed to be satisfied. The Board may further require that shares of stock of the surviving entity resulting from such a change in control, or a parent thereof, be substituted for some or all of the common shares subject to an outstanding award and that any outstanding awards, in whole or in part, be surrendered to us by the holder and be immediately cancelled by us in exchange for a cash payment, shares of capital stock of the corporation resulting from or succeeding us or a combination of both cash and such shares of stock.

    Clawback.   Awards granted under the 2018 Omnibus Incentive Plan and any cash payment or common shares delivered pursuant to an award are subject to forfeiture, recovery, or other action pursuant to the applicable award agreement or any clawback or recoupment policy that Sirius Group has adopted.

    Plan Termination and Amendment.   The Board has the authority to amend, suspend, or terminate the 2018 Omnibus Incentive Plan, subject to any requirement of shareholder approval required by law or stock exchange rules. The 2018 Omnibus Incentive Plan will terminate on the ten-year anniversary of its approval by the Board, unless terminated earlier by the Board.

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    New Plan Benefits.   The Compensation Committee has the discretion to grant awards under the 2018 Omnibus Incentive Plan. All officers, directors, employees, consultants, and independent contractors are eligible for consideration to participate in the 2018 Omnibus Incentive Plan. Pursuant to the 2018 Omnibus Incentive Plan, a select group of executives of Sirius Group, including our NEOs, will receive one-time grants of performance share units upon the closing of the Merger to further align their compensation with the long-term performance of Sirius Group's common shares following the Merger and shareholder interests. The performance share unit awards have been allocated to the NEOs as follows, based on the grant date value of the award at target levels of performance:
NEO
  Grant Date
Value of
Target Award
 

Allan L. Waters

  $ 2,600,000  

Other Management Committee members (Mr. Oberting, Ms. Cramér Manhem and Mr. Boxer)

  $ 1,800,000  

Jeff Davis

  $ 700,000  


Executive Compensation Tables and Narratives

2017 Summary Compensation Table

        The following table provides compensation information for Sirius Group's principal executive officer, principal financial officer and other NEOs for services in their capacities as such during 2017.

Name and Principal Position
  Year   Salary   Bonus(1)   Non-Equity
Incentive Plan
Compensation(2)
  All Other
Compensation(3)
  Total  

Allan L. Waters,

    2017   $ 500,000   $ 6,827,486   $ 2,525,764   $ 208,514   $ 10,061,764  

Chairman and CEO, Sirius

                                     

Group

                                     

Kernan "Kip" V. Oberting,

    2017   $ 471,154   $ 2,307,861   $ 586,366   $ 225,635   $ 3,591,016  

President, CFO, Sirius Group

                                     

and President, Sirius Capital

                                     

Markets, Inc.

                                     

Monica Cramér Manhem,

    2017   $ 439,025   $ 2,305,348   $ 356,104   $ 141,370   $ 3,241,847  

COO, Sirius Group and

                                     

President and CEO, Sirius

                                     

International(4)

                                     

Jeffrey W. Davis,

    2017   $ 450,000   $ 628,094   $ 488,621   $ 296,264   $ 1,862,979  

Executive Vice President,

                                     

CRO & Chief Actuary, Sirius

                                     

Group

                                     

Gene Boxer,

    2017   $ 450,000   $ 550,000   $ 0   $ 11,700   $ 1,011,700  

Executive Vice

                                     

President, CSO & Group

                                     

General Counsel, Sirius

                                     

Group

                                     

(1)
Amounts reported in this column consist of: (i) retention bonuses paid with respect to the CMIG Acquisition for Messrs. Waters, Oberting and Davis and Ms. Cramér Manhem in the amounts of $6,827,486, $2,186,736, $583,094 and $2,305,348, respectively; (ii) a special bonus of $325,000 paid to Mr. Boxer in connection with the commencement of his employment; and (iii) discretionary

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    annual bonuses paid to Messrs. Oberting, Davis and Boxer in the amounts of $121,125, $45,000 and $225,000, respectively. Please see the CD&A for a further discussion of these amounts.

(2)
Amounts reported in this column consist of: (i) cash payouts under the Sirius Group 2015-2017 LTIP performance units for Mr. Waters, Mr. Oberting, Ms. Cramér Manhem and Mr. Davis in the amounts of $1,118,452, $275,585, $180,190 and $89,883, respectively; and (ii) cash payouts under the White Mountains phantom performance share awards for Mr. Waters, Mr. Oberting, Ms. Cramér Manhem and Mr. Davis in the amounts of $1,407,312, $310,781, $175,194 and $398,738, respectively.

(3)
The amounts reported in this column consist of (i) housing allowances in Bermuda for Messrs. Waters, Oberting and Davis in the amounts of $183,333, $206,568 and $275,000, respectively, (ii) a Company-provided car for Ms. Cramér Manhem, (iii) health club reimbursements for Messrs. Waters and Davis, (iv) group term life insurance for Messrs. Waters, Oberting, Davis and Boxer, (v) $10,800 in employer 401(k) contributions on behalf of Mr. Waters, Mr. Oberting, Mr. Davis and Mr. Boxer, (vi) $131,310 in Sirius Group contributions to a deferred compensation plan maintained for Ms. Cramér Manhem in Sweden and (vii) reimbursements for travel between the United States and Bermuda for Messrs. Waters and Oberting pursuant to their home leave allowances. The housing allowances were valued on the basis of the aggregate incremental cost to the Company and represent the amount accrued for payment or paid directly to the NEO.

(4)
Ms. Cramér Manhem is a Swedish resident and paid in Swedish Krona. Her 2017 salary, annual bonus and other compensation was awarded and paid in Swedish Krona and converted herein at the December 30, 2016 spot rate of 9.05. The LTIP awards and retention bonuses were paid in U.S. dollars.

2017 Grants of Plan-Based Awards

        The following table provides information regarding the possible payouts to our NEOs in 2017 under the annual bonus program and the performance unit awards received by our NEOs in 2017 under the 2016 LTIP.

 
   
  Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
 
Name
  Type of
Award
  Threshold
($)
  Target
($)
  Maximum
($)
 

Allan L. Waters

  Annual Bonus(1)   $ 0   $ 250,000   $ 500,000  

  2017 - 2019 LTIP(2)   $ 0   $ 5,670,993   $ 11,341,985  

Kernan "Kip" V. Oberting

  Annual Bonus(1)   $ 0   $ 237,500   $ 475,000  

  2017 - 2019 LTIP(2)   $ 0   $ 2,448,003   $ 4,896,005  

Monica Cramér Manhem

  Annual Bonus(1)   $ 0   $ 225,000   $ 450,000  

  2017 - 2019 LTIP(2)   $ 0   $ 1,178,989   $ 2,357,978  

Jeffrey W. Davis

  Annual Bonus(1)   $ 0   $ 225,000   $ 450,000  

  2017 - 2019 LTIP(2)   $ 0   $ 1,027,155   $ 2,054,309  

Gene Boxer

  Annual Bonus(1)   $ 0   $ 225,000   $ 450,000  

  2017 - 2019 LTIP(2)   $ 0   $ 724,997   $ 1,449,994  

(1)
The amounts reported for the annual bonus represent threshold, target and maximum cash award levels set in 2017 under the 2017 annual bonus program. Please see the CD&A for further information regarding the 2017 annual bonus program.

(2)
The amounts reported for the 2017-2019 LTIP represent the threshold, target and maximum performance share awards payable under the 2016 LTIP with respect to the 2017-2019 performance

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    cycle. For actively employed NEOs, these performance shares are scheduled to vest on December 31, 2019 based on UROC, ROE, Chinese Premium and Asset Growth performance goals over the 2017-2019 performance cycle. Please see the CD&A for further information regarding this award.

2017 Nonqualified Deferred Compensation

        The following table provides information regarding a nonqualified deferred compensation plan provided to Ms. Cramér Manhem in Sweden.

Name
  Registrant Contributions
in Last Fiscal Year
  Aggregate Earnings in
Last Fiscal Year
  Aggregate Balance at
Last Fiscal Year End
 

Monica Cramér Manhem

  $ 131,310   $ 32,843   $ 694,016 (1)

(1)
Ms. Cramér Manhem is a Swedish resident and paid in Swedish Krona. The aggregate balance at last fiscal year end has been converted to U.S. dollars using the December 30, 2016 spot rate of 9.05.

        Ms. Cramér Manhem participates in a nonqualified deferred compensation plan for select employees in Sweden. Pursuant to the terms of Ms. Cramér Manhem's employment agreement, beginning in March 2014, Sirius Group makes an annual contribution to the plan in a minimum amount equal to SEK 1,100,004 (or $121,482, based on a December 30, 2016 conversion rate), but adjusted to reflect cost of living adjustments in Sweden. As noted above, the contribution rate for 2017 was $131,310. Ms. Cramér Manhem does not make any corresponding contributions to the plan. Contributions are invested in a variety of generally available mutual funds and indexes, as selected by Ms. Cramér Manhem. Payments from the plan will occur following Ms. Cramér Manhem's retirement over a payment period as selected by Ms. Cramér Manhem.

2017 Potential Payments Upon a Termination or a Change in Control

        The following table reflects the potential payments and benefits to which each of our NEOs would be entitled in the event of a termination of his or her employment or change in control of Sirius Group as of December 31, 2017. The amounts shown in the table below are estimates and were calculated assuming that the termination of employment or change in control was effective as of December 31, 2017 based on the employment arrangement that existed between Sirius Group and the respective NEO at such date. The actual amounts that would be paid to a NEO can only be determined at the time of the termination of employment or change in control. The section entitled " Employment Arrangements " below contains a summary of the material terms of the employment arrangements we have with each of the NEOs shown in the table below, including terms related to any payments to which the NEO would be entitled in connection with a termination of his or her employment or change in control of Sirius

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Group. In addition, as discussed in the CD&A and below, the 2016 LTIP provides for certain benefits upon a qualifying termination of employment.

Name
  Cash
Severance(1)
  Bonus(2)   Continuation of
Medical
Benefits(3)
  LTIP
Awards(4)
  Tax
Reimbursements(5)
  Other(6)   Total  

Allan L. Waters

                                           

Death/Disability

              $ 4,418,053           $ 4,418,053  

Termination without Cause/Good Reason

  $ 500,000   $ 250,000   $ 72,745   $ 5,458,718       $ 100,000   $ 6,381,463  

Retirement

          $ 72,745   $ 5,458,718 (7)     $ 100,000   $ 5,631,463  

CIC Qualifying Termination

  $ 500,000   $ 250,000   $ 72,745   $ 15,896,410       $ 100,000   $ 16,819,155  

Kernan "Kip" V. Oberting

                                       

Death/Disability

              $ 1,823,268           $ 1,823,268  

Termination without Cause/Good Reason

                             

Retirement

                      (7)                  

CIC Qualifying Termination

              $ 6,576,838           $ 6,576,838  

Monica Cramér Manhem

                                           

Death/Disability

              $ 918,509           $ 918,509  

Termination without Cause/Good Reason

  $ 450,000   $ 225,000   $ 2,650   $ 1,134,861       $ 330,000   $ 2,142,511  

Retirement

          $ 2,650   $ 1,134,861 (7)     $ 330,000   $ 1,467,511  

CIC Qualifying Termination

  $ 450,000   $ 225,000   $ 2,650   $ 3,304,849       $ 330,000   $ 4,312,499  

Jeffrey W. Davis

                                           

Death/Disability

              $ 800,219           $ 800,219  

Termination without Cause/Good Reason

                             

Retirement

                      (7)                  

CIC Qualifying Termination

              $ 2,879,236           $ 2,879,236  

Gene Boxer

                                           

Death/Disability

              $ 564,816           $ 564,816  

Termination without Cause/Good Reason

                             

Retirement

                      (7)                  

CIC Qualifying Termination

              $ 2,032,242           $ 2,032,242  

(1)
Represents severance payable under the terms of the employment agreements with Mr. Waters and Ms. Cramér Manhem for a qualifying termination of employment.

(2)
Under the terms of the employment agreements with Mr. Waters and Ms. Cramér Manhem, if terminated for death or disability, each would be eligible for a prorated bonus for the year of termination based on actual performance. If terminated by Sirius Group without cause or by the executive for good reason, each would receive a non-pro-rated bonus equal to the greater of actual performance or the target bonus for the year of termination.

(3)
Each of Mr. Waters and Ms. Cramér Manhem are eligible to continue to receive healthcare coverage during the term of their respective advisory engagement with Sirius Group under the terms of their employment agreements. The amounts reported are based on current insurance premiums paid by Sirius Group and the expected length of the advisory engagement.

(4)
Represents the accelerated or continued vesting, as applicable, of the outstanding awards for the 2016-18 and 2017-19 performance cycles under the 2016 LTIP, as described further below.

(5)
Pursuant to the terms of his employment agreement entered into in connection with our acquisition by CMIG International, Mr. Waters is eligible for a 280G reimbursement in the event he incurs excise taxes relating to a change in control. If a change in control and qualifying termination of employment had occurred as of December 31, 2017, Mr. Waters would not have received any additional payments with respect to the 280G reimbursement provisions under his agreement.

(6)
Represents the advisory fee payable to Mr. Waters and Ms. Cramér Manhem during the expected duration of the advisory engagement and for Ms. Cramér Manhem also includes an additional potential payment equal to 60% of her base salary for the six month non-competition period pursuant to the terms of her employment agreement.

(7)
As noted below, the 2016 LTIP does not require accelerated vesting in the case of retirement, although the Compensation Committee has the authority to accelerate awards upon retirement in its sole discretion. The amounts reported for Mr. Waters and Ms. Cramér Manhem represent the vesting of the LTIP awards during their advisory engagements with Sirius Group in the event of a retirement with the consent of Sirius Group.

Employment Arrangements

        We have entered into employment agreements with Mr. Waters and Ms. Cramér Manhem that generally provide for minimum base salaries, annual cash bonus opportunities under the Company's

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annual incentive plan (subject to the achievement of annual performance goals) and severance benefits in the case of certain termination events. As of December 31, 2017, Messrs. Oberting, Davis and Boxer were not parties to an employment agreement, but as discussed in the CD&A will be eligible to participate in the Executive Severance Plan.

Allan L. Waters

        In connection with our acquisition by CMIG International, we entered into an employment agreement with Mr. Waters, effective July 24, 2015. The employment agreement has an initial three-year term and automatically extends for one-year terms, unless either party provides notice of non-renewal at least 90 days prior to the expiration of the then-current term. Under the employment agreement, Mr. Waters will receive an annual base salary of not less than $500,000 and is eligible to receive an annual cash bonus with a target opportunity of no less than 50% of base salary and is eligible for future long-term incentives with a target payout level of no less than Mr. Waters' February 2015 target awards. The employment agreement binds Mr. Waters to certain non-solicitation and non-competition restrictions during the term of his employment and for a period of one year thereafter.

        The employment agreement provides, among other things, that if Sirius Group terminates Mr. Waters due to death or disability, Mr. Waters will receive a pro rata bonus for the year of termination based on actual performance and his outstanding 2016 LTIP awards will be treated in accordance with the 2016 LTIP. In the event Mr. Waters' employment is terminated other than for "cause" (as defined in the employment agreement) or Mr. Waters terminates his employment for "good reason" (as defined in the employment agreement), then Sirius Group will pay to Mr. Waters a severance benefit equal to one times Mr. Waters' then current base salary and Mr. Waters will receive an annual bonus (without pro ration for time) based on actual performance, but not less than the target bonus opportunity for the year of termination. In addition, if Mr. Waters retires with the consent of Sirius Group, he will be eligible to remain as an advisor to Sirius Group under his employment agreement. The term of Mr. Waters' advisory services under his employment agreement commences on a qualifying termination of employment and continues until the later of (i) the first date of COBRA participation under Sirius Group's applicable health plan which would upon its expiration result in an effective date for immediate Medicare eligibility (April 2021) and (ii) the last date on which his outstanding long-term incentive awards are earned in accordance with their terms. During the period of advisory services, Mr. Waters will receive an annual base salary of $30,000 and continued health care coverage and his outstanding long-term incentive awards will continue to vest in accordance with their terms. In the event of a termination of Mr. Waters' employment without cause or due to good reason which results in the payment of excise taxes under Section 4999 of the Internal Revenue Code of 1986, as amended, Mr. Waters will be entitled to an additional payment equal to such excise taxes.

Monica Cramér Manhem

        In connection with our acquisition by CMIG International, we entered into an employment agreement with Ms. Cramér Manhem, effective July 24, 2015. The employment agreement continues until the termination of Ms. Cramér Manhem's employment under the terms of the employment agreement. Under the employment agreement, Ms. Cramér Manhem will receive an annual base salary of not less than SEK 3,498,186 ($386,331, based on a December 30, 2016 conversion rate) and is eligible to receive an annual cash bonus with a target opportunity of no less than 50% of base salary and is eligible for future long-term incentives with a target payout level of no less than Ms. Cramér Manhem's February 2015 target awards. The employment agreement binds Ms. Cramér Manhem to certain non-solicitation and non-competition restrictions during the term of her employment and for a period of six months thereafter. During the non-compete period, Ms. Cramér Manhem is eligible to receive an additional payment from Sirius Group equal to the difference between the compensation

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received from any subsequent employment and her base salary from Sirius Group, with any payment not to exceed 60% of her base salary at the time of such termination of employment.

        The employment agreement provides, among other things, that if Sirius Group terminates Ms. Cramér Manhem due to death or disability, Ms. Cramér Manhem will receive a pro rata bonus for the year of termination based on actual performance and her outstanding 2016 LTIP awards will be treated in accordance with the 2016 LTIP. In the event Ms. Cramér Manhem's employment is terminated other than for "cause" (as defined in the employment agreement) or Ms. Cramér Manhem terminates her employment for "good reason" (as defined in the employment agreement), then Sirius Group will pay to Ms. Cramér Manhem a severance benefit equal to one times Ms. Cramér Manhem's then current base salary and Ms. Cramér Manhem will receive an annual bonus (without pro ration for time) based on actual performance, but not less than the target bonus opportunity for the year of termination. In addition, if Ms. Cramér Manhem retires with the consent of Sirius Group, she will be eligible to remain as an advisor to Sirius Group under her employment agreement. The term of Ms. Cramér Manhem's advisory services under her employment agreement commences on a qualifying termination of employment and continues until the last date on which her outstanding long-term incentive awards are earned in accordance with their terms. During the period of advisory services, Ms. Cramér Manhem will receive an annual base salary of $30,000 and continued health care coverage and her outstanding long-term incentive awards will continue to vest in accordance with their terms. The employment agreement also provides that in the event of Ms. Cramér Manhem's retirement between the ages of 64 and 65, Ms. Cramér Manhem will receive an additional payment equal to 75% of her pensionable salary, as determined under the occupational pension plan provided in Sweden. As of December 31, 2017, Ms. Cramér Manhem was not eligible for this additional retirement payment.

2016 LTIP

        The 2016 LTIP under which the NEOs hold outstanding performance shares provide for accelerated or continued vesting of outstanding equity awards upon certain qualifying terminations of employment. In general, each performance share is subject to a three-year performance cycle, but may be accelerated in the case of a termination due to disability, retirement or death. If a participant dies or becomes disabled, the performance shares will immediately accelerate on a pro-rata basis. If a participant retires, then the 2016 LTIP provides that the Compensation Committee may accelerate vesting in its sole discretion. In addition, as noted in the " Employment Arrangements " section above, Mr. Waters' and Ms. Cramér Manhem's employment agreements provide for continued vesting in the event of a termination without cause, a resignation for good reason or retirement with the consent of Sirius Group.

        In the event there is a termination without cause, constructive termination or adverse change to the 2016 LTIP within 24 months following a change in control, the portion of each outstanding award for which time-vesting has already occurred will pay out at the maximum, and the remaining portion will immediately accelerate on a pro-rata basis at a minimum 100%, with the underlying share value determined based on the greater of the value of a common share: (A) immediately prior to the change in control; (B) five business days after the change in control; and (C) on the date of termination. As noted above, the Merger will not constitute a change in control under the plan.

        As noted in the CD&A, the 2016 LTIP was amended in 2018 to provide for continued vesting in the case of a termination by the Company without cause or by the participation for good reason, other during the 24-month period following a change in control. For these qualifying terminations of employment, our CEO will continue to vest in outstanding awards for 18 months following a termination of employment and our other NEOs will continue to vest in outstanding awards for 12 months following a termination of employment. The ability to receive payments during these vesting continuation periods will be subject to actual performance.

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Executive Severance Plan

        As discussed in the CD&A, in September 2018, Sirius Group adopted the Executive Severance Plan, which provides for severance terms applicable to each of our NEOs relating to severance and post-employment benefits provided upon certain termination events. In general, the Executive Severance Plan provides our NEOs with severance in the event of (i) an involuntary termination without cause or (ii) a resignation by the NEO for good reason. For these qualifying terminations of employment prior to a change in control, our NEOs will receive severance benefits equal to one times base salary, any earned but unpaid annual bonus for the year prior to termination, a pro-rata annual bonus for the year of termination with the payout for such bonus based on actual performance, and medical continuation benefits for 12 months. In the event of a qualifying termination of employment within 24 months following a change in control, the severance benefits are the same, except the severance pay is increased to two times base salary for the NEOs, the medical continuation period is increased to two years for the NEOs, and the prorated annual bonus for the year of termination is paid at the target level of performance. Additionally, the Executive Severance Plan provides that in the event of a qualifying termination within 24 months following a Change in Control, all outstanding equity compensation awards will become fully vested, with the attainment or deemed attainment of any applicable performance conditions determined under the terms of the applicable equity compensation plan or award agreements. In order to be eligible to receive severance payments, pursuant to the Executive Severance Plan, the NEO must execute a release in the Company's favor.

        The Executive Severance Plan provides that, to the extent that Mr. Waters' or Ms. Cramér Manhem's employment agreements provide additional severance protections, they will continue to receive the employment agreement severance protections, to the extent they do not result in duplicative benefits under the Executive Severance Plan.

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DIRECTOR COMPENSATION OF SIRIUS GROUP

2017 Director Compensation

        The table below sets forth the elements of our 2017 annual compensation program for our non-employee directors by Sirius Group.

2017 Director Compensation Summary
Annual Compensation Retainers
  Amount  

Board Retainer

  $ 150,000  

Audit & Risk Management Committee Chair

  $ 25,000  

Audit & Risk Management Committee Member

  $ 10,000  

Finance Committee Chair

  $ 15,500  

Finance Committee Member

  $ 10,000  

Compensation Committee Chair

  $ 10,000  

Compensation Committee Member

  $ 7,500  

        All retainers have been paid quarterly in arrears in cash and are prorated based upon Board or chair service during the calendar year.

        The table below summarizes the compensation paid by Sirius Group to our non-employee directors for the year ended December 31, 2017. Messrs. Waters and Oberting and Ms. Cramér Manhem did not receive any additional compensation for their service on Sirius Group's board of directors during 2017. Please see the " 2017 Summary Compensation Table " for a summary of the compensation paid to Messrs. Waters and Oberting and Ms. Cramér Manhem with respect to 2017. In addition, Mr. Laurence Liao did not receive any fees for his service on the Sirius Group board during 2017.

Name
  Fees Earned or
Paid in Cash ($)
  Total ($)  

Robert L. Friedman

  $ 170,000   $ 170,000  

Meyer (Sandy) Frucher

  $ 177,500   $ 177,500  

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INFORMATION ABOUT EASTERLY

General

        Easterly is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

Significant Activities since Inception

        On May 4, 2015, the Sponsor purchased 4,312,500 Founder Shares, for an aggregate purchase price of $25,000 or approximately $0.006 per share. On July 3, 2015, the Sponsor transferred 20,000 Founder Shares to each of Easterly's three original independent directors at their original purchase price. On July 29, 2015, Easterly effected a stock dividend of 0.2 shares for each outstanding share of Easterly common stock, resulting in the Sponsor and officers and directors holding an aggregate of 5,175,000 Founder Shares. Up to 675,000 Founder Shares were subject to forfeiture by the initial stockholders (or their permitted transferees) depending on the extent to which the underwriters' over-allotment option was exercised.

        On August 4, 2015 Easterly consummated the IPO of 20,000,000 of its units, including 2,000,000 units as a result of the underwriters' partial exercise of their over-allotment option. Each unit consists of one share of Easterly common stock and one-half of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one share of Easterly common stock at an exercise price of $11.50 per share of Easterly common stock. The public units were sold at a price of $10.00 per share, generating gross proceeds to Easterly of $200,000,000. As a result of the expiration of the underwriters' option to exercise the remaining portion of the over-allotment, the Sponsor forfeited an aggregate of 175,000 Founder Shares. The Sponsor and Easterly's original independent directors and their permitted transferees own 25.8% of Easterly's issued and outstanding shares.

        On August 4, 2015, simultaneously with the consummation of the IPO, Easterly consummated the private sale of 6,750,000 of Private Placement Warrants at a purchase price of $1.00 per Private Placement Warrant, to the Sponsor, generating gross proceeds to it of $6,750,000. The Private Placement Warrants are identical to the warrants sold as part of the public units in the IPO, except that, so long as they are held by the Sponsor or its permitted transferees, (i) they will not be redeemable by Easterly, (ii) they (including the common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of Easterly's initial business combination and (iii) they may be exercised by the holders on a cashless basis. Pursuant to the Sponsor Letter, the Sponsor has agreed to cancel the 6,750,000 Private Placement Warrants at the closing of the Merger.

        A total of $200,000,000 of the proceeds from the IPO were placed in the Trust Account maintained by Continental Stock Transfer & Trust Company, acting as trustee. These funds will not be released until the earlier of the completion of Easterly's initial business combination or Easterly's liquidation, although Easterly may withdraw the interest earned on the funds held in the Trust Account to pay franchise and income taxes.

        On September 17, 2015, Easterly announced that the holders of its units may elect to separately trade the Easterly common stock and public warrants included in the units commencing on or about September 21, 2015 on the Nasdaq Capital Market under the symbols "EACQ" and "EACQW", respectively. Those units not separated will continue to trade on the Nasdaq Capital Market under the symbol "EACQU."

        On March 17, 2016, Easterly issued the Convertible Promissory Note to the Sponsor that provides for the Sponsor to loan it up to $1,000,000 for ongoing expenses. As of the date of this proxy statement/prospectus, Easterly has borrowed $895,000 under the Convertible Promissory Note. The

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Sponsor is not obligated to loan Easterly additional amounts under the Convertible Promissory Note. The Convertible Promissory Note is interest bearing at 5% per annum and is due and payable on November 30, 2018. Pursuant to the Sponsor Letter, to the extent any amounts remain outstanding under the Convertible Promissory Note at the closing of the Merger the Sponsor will contribute the Convertible Promissory Note to Easterly for no consideration, as a contribution to the capital of Easterly.

        On June 28, 2016, Easterly entered into a definitive agreement with respect to a business combination with Sungevity, Inc. (" Sungevity "). Easterly was unable to consummate the business combination with Sungevity and on December 31, 2016, Easterly terminated the definitive agreement with Sungevity.

        On June 28, 2017, Easterly entered into a definitive agreement with respect to a business combination with JH Capital Group Holdings, LLC (" JH Capital "). On August 1, 2017, Easterly held its annual meeting of stockholders and 23,415,152 of Easterly's 25,000,000 shares were voted in favor of the proposal to amend Easterly's charter to extend the date by which Easterly had to consummate a business combination, to change the term of Easterly directors from two years to one year, and to change the provision with respect to removal of directors to permit removal with or without cause by the affirmative vote of a majority of Easterly's stockholders and the proposal to amend the agreement with respect to the Trust Account to provide for the extension. In addition, Easterly's board of directors was reelected. The holders of 4,289,791 public shares of Easterly common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.02 per share.

        On December 14, 2017, Easterly held a special meeting of stockholders and 19,325,891 of Easterly's 20,710,209 shares were voted in favor of the proposal to amend Easterly's charter to extend the date by which Easterly had to consummate a business combination until March 31, 2018, and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until March 31, 2018. In addition, Easterly's board of directors was reelected. The holders of 687,597 public shares of Easterly common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.06 per share. In connection with the approval of this extension, JH Capital agreed to make loans to Easterly of $0.03 for each public share that was not redeemed in connection with the December 14, 2017 special meeting, for each calendar month or portion thereof that is needed by Easterly to complete a business combination from December 15, 2017 until March 31, 2018.

        On March 29, 2018, Easterly held a special meeting of stockholders and 19,081,332 of Easterly's 20,022,612 shares were voted in favor of the proposal to amend Easterly's charter to extend the date by which Easterly had to consummate a business combination until June 30, 2018, and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until June 30, 2018. The holders of 7,035 public shares of Easterly common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.18 per share. In connection with the approval of this extension, JH Capital agreed to continue to make loans to Easterly of $0.03 for each public share that was not redeemed in connection with the March 29, 2018 special meeting, for each calendar month or portion thereof that is needed by Easterly to complete a business combination from March 31, 2018 until June 30, 2018.

        Easterly was unable to consummate the business combination with JH Capital and, on May 31, 2018, Easterly, JH Capital and the other parties to the definitive agreement terminated by mutual agreement the definitive agreement. Pursuant to the terms of the mutual termination of the definitive agreement, the loans to Easterly were forgiven.

        On June 28, 2018, Easterly held a special meeting of stockholders and 18,704,279 of Easterly's 20,015,577 shares were voted in favor of the proposal to amend Easterly's charter to extend the date by which Easterly had to consummate a business combination until November 30, 2018, and the proposal

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to amend the agreement with respect to the Trust Account to provide for the extension until November 30, 2018. The holders of 807,170 public shares of Easterly common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.32 per share. In connection with the approval of this extension, pursuant to the Promissory Note, Sirius Group agreed to lend Easterly $0.03 per month for every public share of Easterly common stock outstanding as of June 30, 2018, until the earlier of the consummation of the Merger and November 30, 2018. The amounts will be lent to Easterly on the first business day of each month and will be deposited by Easterly into a special account within the Trust Account.

        Easterly is providing its stockholders with the opportunity to redeem their shares of Easterly common stock upon the consummation of the Merger at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including any amounts representing interest earned on the Trust Account, less any interest released to Easterly for the payment of franchise and income taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the Trust Account is anticipated to be approximately $10.00 per public share.

        Easterly's initial stockholders have agreed to waive their redemption rights with respect to any public shares they may acquire following the IPO, in connection with its initial business combination. Each of its initial stockholders has agreed to waive its redemption rights with respect to the Founder Shares (i) in connection with the consummation of a business combination, (ii) if Easterly fails to consummate its initial business combination by November 30, 2018, (iii) in connection with an expired or unwithdrawn tender offer, and (iv) upon its liquidation prior to November 30, 2018.

        There will be no redemption rights upon the consummation of the Merger with respect to the units or warrants.

Potential Purchases of Public Shares

        In connection with the stockholder vote to approve the proposed Merger, the Sponsor, Easterly's directors, officers or advisors, or their respective affiliates may privately negotiate transactions to purchase shares from stockholders who would have otherwise elected to have their shares redeemed for a per-share pro rata portion of the Trust Account in conjunction with their consideration of a proposal to approve the Merger. None of the Sponsor, Easterly's directors, officers or advisors, or their respective affiliates will make any such purchases when they are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. It is expected that such a purchase would include a contractual acknowledgement that such stockholder, although still the record holder of Easterly's shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. To the extent required to comply with applicable securities laws, Easterly expects that any purchase by the Sponsor would be reported promptly on an amendment to the Sponsor's Schedule 13D. In the event that the Sponsor, Easterly's directors, officers or advisors, or their respective affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are in excess of the per-share pro rata portion of the Trust Account. There is no limit to the number of public shares that the Sponsor, Easterly's directors, officers or advisors, or their respective affiliates could purchase. The purpose of any such purchases would be to increase the likelihood of obtaining stockholder approval of the Merger.

        The purpose of any such purchases would be to increase the likelihood of obtaining stockholder approval of the Merger or, where the purchases are made by the Sponsor, Easterly's directors, officers

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or advisors or their respective affiliates, to satisfy a closing condition in an agreement related to the Merger.

Redemption of Public Shares and Liquidation if No Initial Acquisition

        Easterly has only until November 30, 2018 to complete its initial business combination. If Easterly is unable to complete its initial business combination by November 30, 2018 or extend such deadline to a later date by obtaining the approval of Easterly's stockholders at a special meeting of Easterly's stockholders, Easterly will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest will be net of taxes payable and reduced by up to $100,000 to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders' rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of its remaining stockholders and its board of directors, dissolve and liquidate, subject in each case to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to its warrants, which will expire worthless if Easterly fails to complete its initial business combination by November 30, 2018.

        Easterly's initial stockholders have entered into a letter agreement with it, pursuant to which they have waived their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if Easterly fails to complete its initial business combination by November 30, 2018. However, if the initial stockholders acquire public shares in or after the IPO, they will be entitled to liquidating distributions from the Trust Account with respect to such public shares if Easterly fails to complete its initial business combination by November 30, 2018.

        The Sponsor, and Easterly's executive officers and directors agreed, pursuant to a written letter agreement with Easterly, that they would not propose any amendment to Easterly's charter that would affect the substance or timing of its obligation to redeem 100% of its public shares if Easterly does not complete its initial business combination within 24 months from the closing of the IPO, unless Easterly provided its public stockholders with the opportunity to redeem their shares of common stock on the date of such approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares. This redemption right applied in the event of the approval of any such amendment, whether proposed by the Sponsor, any executive officer, director or any other person and, in connection with the extensions sought at Easterly's annual meeting of stockholders on August 1, 2017, and special meetings of stockholders on December 14, 2017, March 29, 2018 and June 28, 2018, Easterly complied with this redemption requirement.

        Easterly expects that all costs and expenses associated with implementing its plan of dissolution, as well as payments to any creditors, will be funded from funds held outside the Trust Account, although Easterly cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing its plan of dissolution, to the extent that there is any interest accrued in the Trust Account not required to pay franchise and income taxes, Easterly may request the trustee to release to it an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses. If Easterly dissolves and liquidates, it does not expect there to be any funds held outside the Trust Account remaining for distribution. However, to the extent such funds remain, after payment or provision for payment of the debts and other liabilities of Easterly, the holders of the common stock remaining after Easterly redeems the public shares will be

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entitled to receive all the remaining assets of Easterly available for distribution to its stockholders, ratably in proportion to the number of shares of common stock held by them.

        If Easterly were to expend all of the net proceeds of the IPO, other than the proceeds deposited in the Trust Account, and without taking into account interest, if any, earned on the Trust Account, the per-share redemption amount received by stockholders upon its dissolution would be approximately $10.00. The proceeds deposited in the Trust Account could, however, become subject to the claims of Easterly's creditors which would have higher priority than the claims of its public stockholders. Easterly cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00. Under Section 281(b) of the DGCL, Easterly's plan of dissolution must provide for all claims against it to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before Easterly makes any distribution of its remaining assets to its stockholders. While Easterly intends to pay such amounts, if any, it cannot assure you that it will have funds sufficient to pay or provide for all creditors' claims.

        Although Easterly seeks to have all vendors, service providers (other than the underwriters for the IPO and its independent auditors), prospective target businesses or other entities with which Easterly does business execute agreements with it waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of its public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the Trust Account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against its assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, Easterly's management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party's engagement would be significantly more beneficial to Easterly than any alternative. Examples of possible instances where Easterly may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with Easterly and will not seek recourse against the Trust Account for any reason. In order to protect the amounts held in the Trust Account, Messrs. Cody, Crate and Kalichstein, managing directors of an affiliate of the Sponsor have agreed, jointly and severally, that they will be liable to Easterly if and to the extent any claims by a vendor for services rendered or products sold to it, or a prospective target business with which Easterly has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under Easterly's indemnity of the underwriters of its IPO against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, then Messrs. Cody, Crate and Kalichstein will not be responsible to the extent of any liability for such third-party claims. Easterly cannot assure you, however, that Messrs. Cody, Crate and Kalichstein would be able to satisfy those obligations. Messrs. Cody, Crate and Kalichstein will not be personally liable to pay Easterly's debts and obligations except as provided above. None of Easterly's other officers will indemnify it for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

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        In the event that the proceeds in the Trust Account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets and Messrs. Cody, Crate and Kalichstein assert that they are unable to satisfy their indemnification obligations or that they have no indemnification obligations related to a particular claim, Easterly's independent directors would determine whether to take legal action against Messrs. Cody, Crate and Kalichstein to enforce their indemnification obligations. While Easterly currently expects that its independent directors would take legal action on its behalf against Messrs. Cody, Crate and Kalichstein to enforce their indemnification obligations to it, it is possible that its independent directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly, Easterly cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be substantially less than $10.00 per public share.

        Easterly seeks to reduce the possibility that Messrs. Cody, Crate and Kalichstein will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the underwriters for the IPO and its independent auditors), prospective target businesses or other entities with which Easterly does business execute agreements with it waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Messrs. Cody, Crate and Kalichstein are also not liable as to any claims under Easterly's indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. Easterly has access to proceeds held outside of the Trust Account with which to pay any such potential claims (including costs and expenses incurred in connection with its liquidation, currently estimated to be no more than approximately $100,000). In the event that Easterly liquidates and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from the Trust Account could be liable for claims made by creditors.

        Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of the Trust Account distributed to Easterly's public stockholders upon the redemption of its public shares in the event Easterly does not complete its initial business combination by November 30, 2018 may be considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder's pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.

        Furthermore, if the pro rata portion of the Trust Account distributed to Easterly's public stockholders upon the redemption of its public shares in the event Easterly does not complete its initial business combination by November 30, 2018 is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution. If Easterly is unable to complete its initial business combination by November 30, 2018, it will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (net of the amount of interest which may be withdrawn to pay franchise and income taxes and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders' rights as stockholders (including the right to

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receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of its remaining stockholders and its board of directors, dissolve and liquidate, subject in each case to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is Easterly's intention to redeem its public shares as soon as reasonably possible following November 30, 2018 and, therefore, Easterly does not intend to comply with those procedures. As such, Easterly's stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of its stockholders may extend well beyond the third anniversary of such date.

        Because Easterly will not be complying with Section 280, Section 281(b) of the DGCL requires it to adopt a plan, based on facts known to it at such time that will provide for its payment of all existing and pending claims or claims that may be potentially brought against it within the subsequent 10 years. However, because Easterly is a blank check company, rather than an operating company, and its operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from its vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in its underwriting agreement, Easterly will seek to have all vendors, service providers (other than the underwriters in the IPO and its independent auditors), prospective target businesses or other entities with which Easterly does business execute agreements with it waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account.

        As a result of this obligation, the claims that could be made against Easterly are significantly limited and the likelihood that any claim that would result in any liability extending to the Trust Account is remote. Further, the managing directors may be liable only to the extent necessary to ensure that the amounts in the Trust Account are not reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets and will not be liable as to any claims under its indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, the managing directors will not be responsible to the extent of any liability for such third-party claims.

        If Easterly files a bankruptcy petition or an involuntary bankruptcy petition is filed against it that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate and subject to the claims of third parties with priority over the claims of its stockholders. To the extent any bankruptcy claims deplete the Trust Account, Easterly cannot assure you it will be able to return $10.00 per share to its public stockholders. Additionally, if Easterly files a bankruptcy petition or an involuntary bankruptcy petition is filed against it that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a "preferential transfer" or a "fraudulent conveyance." As a result, a bankruptcy court could seek to recover all amounts received by Easterly's stockholders. Furthermore, Easterly's board of directors may be viewed as having breached its fiduciary duty to its creditors and/or may have acted in bad faith, and thereby exposing itself and its company to claims of punitive damages, by paying public stockholders from the Trust Account prior to addressing the claims of creditors. Easterly cannot assure you that claims will not be brought against it for these reasons.

        Easterly's public stockholders will be entitled to receive funds from the Trust Account only in the event of the redemption of its public shares if Easterly does not complete its initial business combination by November 30, 2018 if they redeem their respective shares for cash upon the completion of the initial business combination or if they redeem their respective shares in connection with a vote seeking to amend Section 9.2(d) of Easterly's charter in a manner that would affect the substance or timing of its obligation to redeem 100% of its public shares if Easterly does not complete its initial

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business combination by November 30, 2018. In no other circumstances does a stockholder have any right or interest of any kind to or in the Trust Account. In the event Easterly seeks stockholder approval in connection with its initial business combination, a stockholder's voting in connection with the business combination alone will not result in a stockholder's redeeming its shares to Easterly for an applicable pro rata share of the Trust Account. Such stockholder must have also exercised its redemption rights described above.

Employees

        Easterly currently has three executive officers. Members of its management team are not obligated to devote any specific number of hours to its matters but they intend to devote as much of their time as they deem necessary to Easterly's affairs until it has completed its initial business combination. The amount of time that Messrs. Crate, Kalichstein and Lika or any other members of Easterly's management team will devote in any time period will vary based on whether a target business has been selected for its initial business combination and the current stage of the business combination process.

Properties

        Easterly currently maintain its principal executive offices at 205 Hudson Street, 7 th  Floor, New York, New York 10013. The cost for this space is included in the $10,000 per month fee that Easterly pays an affiliate of the Sponsor for certain office space, utilities, and general office, receptionist and secretarial support. Easterly considers its current office space, combined with the other office space otherwise available to its executive officers, adequate for its current operations.

Legal Proceedings

        Easterly is not currently subject to any material legal proceedings, nor, to its knowledge, is any material legal proceeding threatened against it or any of its officers and directors in their corporate capacity.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF EASTERLY

         The following discussion and analysis should be read in conjunction with the financial statements and related notes of Easterly included elsewhere in this proxy statement/prospectus. This discussion contains forward-looking statements reflecting Easterly's current expectations, estimates and assumptions concerning events and financial trends that may affect Easterly's future operating results and financial position. Actual results and the timing of events may differ materially from those contained in or implied by these forward-looking statements due to a number of factors, including those discussed in the sections entitled "Risk Factors" and " Cautionary Statement Regarding Forward-Looking Statements."

Overview

        Easterly is a blank check company incorporated on April 29, 2015 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Subject to the possibility of failing to consummate an initial business combination by November 30, 2018 as required by its charter, Easterly intends to effectuate its initial business combination using cash from the proceeds of its IPO and the sale of the private placement warrants that occurred simultaneously with the completion of its IPO, its capital stock, debt or a combination of cash, stock and debt.

        As indicated in the accompanying financial statements of Easterly for the six months ended June 30, 2018 included in this proxy statement/prospectus, at June 30, 2018, Easterly had approximately $1,889 in cash. Further, Easterly expects to continue to incur significant costs in the pursuit of its acquisition plans. See Note 1 to the accompanying financial statements of Easterly for the six months ended June 30, 2018 included in this proxy statement/prospectus. Further, Easterly cannot assure you that its plans to complete an initial business combination will be successful.

        On June 28, 2017, Easterly entered into an Investment Agreement (as amended, the " Investment Agreement ") by and among JH Capital Group Holdings, LLC (" JH Capital "), Jacobsen Credit Holdings, LLC (" Jacobsen Holdings "), NJK Holding LLC (" NJK Holding "), Kravetz Capital Funding LLC (" KCF " together with NJK Holding and Jacobsen Holdings, the " Founding Members ") and Easterly, to effect a business combination with JH Capital. On May 31, 2018, Easterly, JH Capital and the Founding Members entered into an Investment Agreement Termination Agreement (the " JH Capital Termination Agreement "). The JH Capital Termination Agreement terminated the Investment Agreement by mutual agreement.

        On June 23, 2018, Easterly entered into the Merger Agreement providing for the Merger of Merger Sub with and into Easterly, with Easterly surviving the Merger as a wholly owned subsidiary of Sirius Group.

Results of Operations

        For the three and six months ended June 30, 2018, Easterly had net income of $2,836,576 and $2,899,755, respectively, which consisted of general and administrative expenses and operating costs offset by interest income generated from the Trust Account as well as gain on forgiveness of debt. During these periods, the interest income generated from the Trust Account was $599,249 and $1,067,787, respectively, the general and administrative and operating expenses were $640,856 and $976,215, respectively. Easterly was incorporated in the State of Delaware and is required to pay franchise taxes to the State of Delaware. Franchise taxes for the three and six months ended June 30, 2018 were accrued in the amount of $50,488 and $120,488. As further discussed in Note 1 of the financial statements of Easterly for the six months ended June 30, 2018 included in this proxy statement/prospectus, Easterly recognized a $2,928,671 gain on forgiveness of debt resulting from the JH Capital Termination Agreement in the three months ended June 30, 2018.

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        This compares with a net loss of $23,999 and $371,028 for the three and six months ended June 30, 2017, respectively, which consisted of $302,110 and $768,940 general and administrative expenses and operating costs offset by interest income generated from the Trust Account of $323,111 and $489,030. Franchise taxes for the three and six months ended June 30, 2017 were accrued in the amount of $45,000 and $91,118.

        A valuation allowance of $278,135 was recorded in the six months ended June 30, 2017. The valuation allowance was related to a receivable from Sungevity, Inc. (" Sungevity ") pursuant to a letter of intent (the " Sungevity LOI ") dated April 20, 2016, where Sungevity agreed to pay or reimburse Easterly for certain reasonable and documented out-of-pocket costs and expenses incurred. On March 13, 2017, Sungevity filed for Chapter 11 Bankruptcy proceedings in U.S. Bankruptcy Court for the District of Delaware to pursue and consummate a sale of its business and on November 2017 the proceedings were dismissed without any recovery to Easterly. As a result of the November 2017 dismissal, the entire receivable and corresponding allowance were written off.

Liquidity and Capital Resources

        Prior to the IPO, on May 4, 2015, the Sponsor purchased an aggregate of 4,312,500 Founder Shares for an aggregate purchase price of $25,000, or approximately $0.006 per share. On July 29, 2015, Easterly's board of directors effected a stock dividend of 0.2 shares for each outstanding share of Easterly common stock, resulting in 5,175,000 Founder Shares outstanding. On July 29, 2015, the underwriters exercised part of their over-allotment option resulting in 20,000,000 units issued as a result of the IPO at a price of $10.00 per unit generating gross proceeds of $200,000,000 before underwriting discounts and expenses. As a result of the expiration of the underwriters' option to exercise the remaining portion of the over-allotment, Easterly's initial stockholders forfeited an aggregate of 175,000 Founder Shares. On August 1, 2017, December 14, 2017, March 29, 2018 and June 28, 2018, Easterly stockholders representing 4,289,791, 687,597, 7,035 and 807,170 shares, respectively, elected to redeem their shares, resulting in redemption amounts of $42,983,883, $6,915,728, $71,614 and $8,329,744, respectively. Prior to this, the Sponsor, Easterly's original independent directors and their permitted transferees owned 20% of Easterly's issued and outstanding shares but now the sponsor and the current independent directors own approximately 25.8%. The Sponsor purchased from Easterly an aggregate of 6,750,000 private placement warrants, each exercisable to purchase one share of Easterly common stock at $11.50 per share, at a price of $1.00 per private placement warrant in a private placement that occurred simultaneously with the IPO generating proceeds, before expenses, of $6,750,000. Easterly received net proceeds from the IPO and the sale of the private placement warrants of approximately $201,750,000, net of the non-deferred portion of the underwriting commissions of $5,000,000. The amount of proceeds not deposited in the Trust Account were $1,750,000 at closing of the IPO and such proceeds, together with $25,000 from the sale of Easterly common stock to the Sponsor, were used to pay $517,145 for costs and expenses related to the IPO and $2,910 for formation, general and administrative expenses. In addition, interest income on the funds held in the Trust Account may be released to Easterly to pay its franchise and income tax obligations. For a description of the proceeds generated in the IPO and a discussion of the use of such proceeds, we refer you to Notes 3 and 4 of the financial statements of Easterly for the six months ended June 30, 2018 included in this proxy statement/prospectus.

        Easterly presently has no revenue, has had losses since inception and has no operations other than the active identification of a target business with which to complete an initial business combination. As of June 30, 2018, Easterly has cash of $1,889 held outside the Trust Account and $146,665,970 cash equivalents held in the Trust Account, including interest.

        Easterly will have available to it the $1,889 of proceeds held outside the Trust Account (as of June 30, 2018) to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target

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businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination. Easterly will also have available to it interest earned on the funds held in the Trust Account to pay franchise and income taxes.

        At June 30, 2018, Easterly had a working capital deficit of $2,898,123 (total current assets minus total current liabilities). Easterly expects to continue incurring expenses related to professional services including, but not limited to, engaging legal counsel, consultants, advisors and accountants, as well as other operating expenses such as insurance and fees under the Administrative Services Agreement.

        Easterly entered into an agreement with the Sponsor (" Liabilities Assumption Agreement ") whereby the Sponsor assumed and agreed to pay Easterly's liabilities to third-party service providers liabilities (the " Assumed Liabilities "). No such payments were made by the Sponsor for the six months ended June 30, 2018. Pursuant to the Liabilities Assumption Agreement, the Sponsor contributed equity of $200,000 and $600,000 on July 5, 2018 and July 10, 2018, respectively, directly into Easterly.

        On March 17, 2016, Easterly issued the Convertible Promissory Note to the Sponsor that provides for the Sponsor to loan Easterly up to $1,000,000 for ongoing expenses. On March 17, 2016, February 2, 2017, June 29, 2017, July 12, 2017, October 1, 2017, December 4, 2017, February 1, 2018 and April 6, 2018, Easterly borrowed $15,000, $250,000, $75,000, $150,000, $30,000, $75,000, $100,000 and $200,000, respectively, pursuant to the Convertible Promissory Note. The Sponsor is not obligated to loan Easterly additional amounts pursuant to the Convertible Promissory Note. The Convertible Promissory Note is interest bearing at 5% per annum and is due and payable on November 30, 2018. As of June 30, 2018, the interest accrued is $39,330. At the option of the Sponsor, any amounts outstanding under the Convertible Promissory Note may be converted into warrants to purchase shares of Easterly common stock at any time on or prior to the maturity date at a conversion price of $1.00 per warrant. Each warrant will entitle the Sponsor to purchase one share of Easterly common stock at an exercise price of $11.50 per share. Each warrant will contain other terms identical to the terms contained in the private placement warrants.

        If the funds available to Easterly outside of the Trust Account, any loans under the March 17, 2016 Convertible Promissory Note and payments of Assumed Liabilities by the Sponsor are insufficient to fund Easterly's ongoing expenses, it may need to raise additional capital through additional loans or additional investments from the Sponsor, an affiliate of the Sponsor or certain of its officers and directors. None of the Sponsor, any affiliate of the Sponsor, or its officers and directors are under any obligation to loan Easterly funds. The uncertainty regarding the lack of resources to pay the above noted expenses raises substantial doubt about Easterly's ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should Easterly be unable to continue operations.

        If Easterly completes its initial business combination, it would repay such loaned amounts to the extent they were not converted into warrants. In the event that Easterly's initial business combination does not close, it may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used for such repayment. Up to $1,000,000 of such loans, inclusive of any loans under the March 17, 2016 convertible promissory note, may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants issued to the Sponsor. Easterly does not expect to seek loans from parties other than the Sponsor, an affiliate of the Sponsor, or its officers and directors as it does not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the Trust Account.

        If Easterly consummates an initial business combination, it intends to use substantially all of the funds held in the Trust Account, including interest (which interest shall be net of taxes payable) to

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consummate such initial business combination. To the extent that Easterly's capital stock or debt is used, in whole or in part, as consideration to consummate Easterly's initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue its growth strategies.

        On August 1, 2017, Easterly held its annual meeting of stockholders and 23,415,152 of the outstanding 25,000,000 shares were voted in favor of the proposal to amend Easterly's charter to extend the date by which it had to consummate a business combination until December 15, 2017, to change the term of its directors from two years to one year, and to change the provision with respect to removal of directors to permit removal with or without cause by the affirmative vote of a majority of Easterly's stockholders and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until December 15, 2017. In addition, Easterly's board of directors was reelected. The holders of 4,289,791 public shares of Easterly common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.02 per share.

        On December 14, 2017, Easterly held a special meeting of stockholders and 19,325,891 of the outstanding 20,710,209 shares were voted in favor of the proposal to amend Easterly's charter to extend the date by which it had to consummate a business combination until March 31, 2018, and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until March 31, 2018. The holders of 687,597 public shares of Easterly common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.06 per share. In connection with the approval of this extension, JH Capital agreed to contribute to Easterly as a loan of $0.03 for each public share that was not redeemed in connection with the December 14, 2017 special meeting, for each calendar month or portion thereof that is needed by Easterly to complete a business combination from December 15, 2017 until March 31, 2018, which amounts were added to the Trust Account. On February 14, 2018, Easterly's board of directors approved the second amendment to the Investment Agreement and, on February 14, 2018, the parties executed the second amendment to the Investment Agreement. JH Capital agreed to continue to make the contributions of $0.03 for each public share, for each calendar month or portion thereof, to Easterly through the earlier of (A) June 30, 2018 or (B) the date by which Easterly is required to dissolve and liquidate the Trust Account in accordance with the terms of Easterly's charter. On January 15, 2018, February 15, 2018, March 15, 2018 and April 16, 2018, these contributions were added to the Trust Account.

        On March 29, 2018, Easterly held a special meeting of stockholders and 19,081,332 of the outstanding 20,022,612 shares were voted in favor of the proposal to amend Easterly's charter to extend the date by which it had to consummate a business combination until June 30, 2018, and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until June 30, 2018. The holders of 7,035 public shares of Easterly common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.18 per share.

        On June 28, 2018, Easterly held a special meeting of stockholders and 18,704,270 of the outstanding 20,015,577 shares were voted in favor of the proposal to amend Easterly's charter to extend the date by which it had to consummate a business combination until November 30, 2018, and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until November 30, 2018. The holders of 807,170 public shares of Easterly common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.32 per share.

Off-balance sheet financing arrangements

        Easterly has no obligations, assets or liabilities which would be considered off-balance sheet arrangements. Easterly does not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

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        Easterly has not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets.

Contractual obligations

        Easterly does not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities other than an administrative agreement to pay the Sponsor a monthly fee of $10,000. This amount covers office space, utilities, secretarial support and administrative services provided to members of Easterly's management team by the Sponsor, members of the Sponsor, and Easterly's management team or their affiliates. Upon completion of Easterly's initial business combination or its liquidation, it will cease paying these monthly fees.

        The underwriters are entitled to underwriting commissions of 6.0%, of which 2.5% ($5,000,000) was paid at the closing of the IPO, and 3.5% ($7,000,000) is deferred. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that Easterly completes its initial business combination, subject to the terms of the underwriting agreement. The underwriters are not entitled to any interest accrued on the deferred underwriting discounts and commissions.

Critical Accounting Policies

        The preparation of financial statements and related disclosures in conformity with GAAP requires Easterly management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. Easterly has identified the following as its critical accounting policies:

Redeemable common stock

        Easterly accounts for Easterly common stock subject to possible redemption in accordance with the guidance in Financial Accounting Standards Board Accounting Standard Codification 480, "Distinguishing Liabilities from Equity." Easterly common stock subject to mandatory redemption is classified as a liability instrument and measured at fair value. Conditionally redeemable common stock (including Easterly common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within Easterly's control) are classified as temporary equity. At all other times, common stock is classified as stockholders' equity. Easterly common stock features certain redemption rights that are considered to be outside of its control and subject to occurrence of uncertain future events. Accordingly, Easterly common stock subject to possible redemption is presented as temporary equity, outside of the stockholders' equity section of Easterly's consolidated balance sheet.

Recent accounting pronouncements

        Easterly management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on Easterly's financial statements.

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DESCRIPTION OF SIRIUS GROUP SHARE CAPITAL

         The following description of the material terms of Sirius Group's share capital is a summary only and is not a complete description of such terms. Following completion of the Merger, the rights of the holders of Sirius Group will be governed by the Companies Act and Sirius Group's memorandum of association and bye-laws. You are urged to read Sirius Group's memorandum of association and bye-laws carefully and in their entirety.

General

        Under the Sirius Group memorandum of association, Sirius Group is authorized to issue 500,000,000 common shares of par value $0.01, and 100,000,000 preference shares of par value $0.01, of which 150,000 have been designated as Series A redeemable preference shares. Of its authorized shares, 120,000,000 common shares are issued and outstanding and 100,000 Series A redeemable preference shares are issued and outstanding. As of August 31, 2018, there are also 14,114,904 shares reserved for issuance under Sirius Group's Long Term Incentive Plan and 2018 Omnibus Incentive Plan. In addition, approximately 11.4 million Series B preference shares and common shares (assuming a purchase price of $17.77 per share) are issuable pursuant to the Sirius Group Private Placement.

Common Shares

Voting Rights

        Each holder of a Sirius Group common share has one vote per share held of record on the applicable record date on all matters voted upon by the shareholders of Sirius Group. See the section of this proxy statement/prospectus entitled " Comparison of Rights of Shareholders of Easterly and Sirius Group " beginning on page 327 for additional information on voting rights of Sirius Group common shares.

Dividend Rights

        Under Bermuda law, shareholders are entitled to receive dividends, when and as declared by a company's board of directors, out of any funds of the company legally available for the payment of such dividends, subject to any preferred dividend right of any holders of any preference shares from time to time. Bermuda law does not permit payment of dividends or distributions of contributed surplus by a company if there are reasonable grounds for believing that:

    the company is, or would be, after the payment is made, unable to pay its liabilities as they become due; or

    the realizable value of the company's assets would be less than its liabilities.

        Under Sirius Group's bye-laws, the board of directors has the power to declare dividends or distributions out of contributed surplus, and to determine that any dividend shall be paid in cash or shall be satisfied in paying up in full shares to be issued to the shareholders credited as fully paid or partly paid or partly in one way or partly in the other. The board of directors may also pay any fixed cash dividend whenever the position of the company justifies such payment.

        The terms of the Sirius Group Series A redeemable preference shares and Sirius Group Series B preference shares prohibit dividends from being declared or paid on Sirius Group common shares unless dividends on all outstanding Sirius Group Series A redeemable preference shares and Sirius Group Series B preference shares have been paid in full.

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Liquidation Rights

        Subject to the rights of holders of Sirius Group Series A redeemable preference shares, in the event of a liquidation, dissolution or winding up of Sirius Group, the holders of Sirius Group common shares will be entitled to receive, after payment or provision for payment of all of its debts and liabilities, all of the assets of Sirius Group legally available for distribution to shareholders.

Other Rights

        Holders of Sirius Group common shares are not entitled to preemptive rights with respect to any shares which may be issued, and there are no conversion rights or redemption, purchase, retirement or sinking fund provisions with respect to Sirius Group common shares.

Series A Redeemable Preference Shares

        Sirius Group's board of directors is authorized to provide for the issuance of the preference shares in one or more series, and to establish from time to time the number of shares to be included in each such series, and to fix the terms, including designation, powers, preferences, rights, qualifications, limitations and restrictions of the shares of each such series. The following is a description of Sirius Group's Series A redeemable preference shares.

Voting Rights

        Each holder of a Sirius Group Series A redeemable preference share has voting power equal to the number of Sirius Group common shares into which it is convertible as of the record date of such vote or written consent or, if there is no specified record date, as of the date of such vote or written consent, and, except as otherwise provided in the Series A redeemable preference share certificate of designation (the " Series A Certificate of Designation ") or required by law, the Series A redeemable preference shares and common shares shall vote together as a single class with respect to any and all matters presented to the shareholders of Sirius Group for their action or consideration (whether at a meeting of shareholders of Sirius Group, by written resolutions of shareholders of Sirius Group in lieu of a meeting, or otherwise).

        Notwithstanding the Sirius Group bye-laws, without the prior affirmative vote or written consent of the holders of at least a majority of the outstanding Series A redeemable preference shares voting separately as a single class with one vote per Series A redeemable preference share, Sirius Group shall not take (and shall cause its subsidiaries not to take) any of the following actions: (i) amend, alter or repeal the memorandum of association or bye-laws or any organizational documents of any subsidiary of Sirius Group, in each case, in a manner that would adversely affect the rights, preferences and powers of the holders of the Series A redeemable preference share; (ii) issue or authorize the issuance of any Senior Shares or Parity Shares (as such terms are defined in the Series A Certificate of Designation); (iii) enter into any agreement, or otherwise engage in any transaction or other arrangement, with affiliates of Sirius Group (other than any such agreement or arrangement exclusively between Sirius Group and/or its direct or indirect subsidiaries) or any officer or director of Sirius Group or any of its subsidiaries, in each case, other than on arms'-length terms; or (iv) agree or commit to do any of the foregoing.

Dividend Rights

        Pursuant to the Series A Certificate of Designation, in the event that any dividend on the Sirius Group common shares or other Junior Shares (as such term is defined in the Series A Certificate of Designation) is declared and paid other than a dividend payable solely in common shares or other Junior Shares, as applicable, the holders of Series A redeemable preference shares as of the record date established by the Board of Directors for such dividend on common shares or Junior Shares shall

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be entitled to receive (and Sirius Group shall simultaneously declare and pay) a dividend on the Series A redeemable preference shares on a pro rata basis with the common shares or other Junior Shares, as applicable, determined on an as-converted basis assuming all Series A redeemable preference shares had been converted pursuant to the Series A Certificate of Designation.

        If a merger, amalgamation, or consolidation of Sirius Group where the surviving entity is a publicly traded entity or a qualified public offering by Sirius Group has not occurred prior to May 26, 2020, the holders of Series A redeemable preference shares are also entitled to receive, out of funds legally available for the payment of dividends under Bermuda law, cumulative dividends on each outstanding Series A redeemable preference share, prior and in preference to any declaration, payment or decision to set aside funds for the payment of any dividend (other than dividends payable solely in common shares or other securities or rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional common shares), at a per annum rate equal to ten percent (10%) of the liquidation preference, payable in cash quarterly in arrears on the last day of March, June, September and December of each year, compounding quarterly, with respect to future periods as well as with retroactive effect as though dividends had begun accruing and compounding on May 26, 2017. Such dividends shall be paid only when, as and if declared by the Board of Directors, out of funds legally available for the payment of dividends under Bermuda law, and shall accrue until paid, whether or not declared by the Board of Directors and whether or not there are funds legally available for the payment of dividends.

Liquidation Rights

        In the event of any liquidation, dissolution or winding-up of Sirius Group as a result of any bankruptcy, reorganization, or similar proceeding, or any foreclosure by creditors of Sirius Group on all or substantially all assets of, or equity interests in, Sirius Group, whether voluntary or involuntary, the holders of the Series A redeemable preference shares will be entitled to receive out of Sirius Group's assets legally available for distribution to shareholders, after satisfaction of liabilities of Sirius Group, an amount in cash equal to the greater of (i) $1,000 per Series A redeemable preference share for all the Series A redeemable preference shares held by such holders plus all unpaid, accrued and accumulated dividends thereon (whether or not declared), if any, to, but excluding, the date fixed for distribution and (ii) an amount equal to the aggregate value of all the Series A redeemable preference shares held by such holders as of the date fixed for distribution, determined on an as-converted basis assuming all Series A redeemable preference shares had been converted, in each case, before any distribution of assets or any other payment is made to holders of common shares or any other Junior Shares.

Other Rights

        The Series A redeemable preference shares are also entitled to certain other rights, including without limitation, conversion, redemption and purchase rights.

Preference Shares Redemption Agreement

        On July 14, 2018, Sirius Group and IMGAH entered into the Preference Shares Redemption Agreement pursuant to which, effective as of and subject to the closing of the Merger, Sirius Group has agreed to redeem all of the issued and outstanding Series A redeemable preference shares, which are held by IMGAH, for $95 million, payable in cash at the time of the redemption. Effective as of the completion of such redemption, there will be no Series A redeemable preference shares outstanding and the parties have agreed to terminate the registration rights agreement and the shareholder's agreement, each dated May 26, 2017, between Sirius Group and IMGAH.

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Series B Preference Shares

        The following is a description of Sirius Group's Series B preference shares, which are to be issued pursuant to the Sirius Group Private Placement.

Voting Rights

        Each holder of a Sirius Group Series B preference share has voting power equal to the number of Sirius Group common shares into which it is convertible as of the record date of such vote or written consent or, if there is no specified record date, as of the date of such vote or written consent, and, except as otherwise provided in the Series B preference share certificate of designation (the " Series B Certificate of Designation ") or required by law, the Series B preference shares and common shares shall vote together as a single class with respect to any and all matters presented to the shareholders of Sirius Group for their action or consideration (whether at a meeting of shareholders of Sirius Group, by written resolutions of shareholders of Sirius Group in lieu of a meeting, or otherwise).

        Notwithstanding the Sirius Group bye-laws, without the prior affirmative vote or written consent of the holders of at least a majority of the outstanding Series B preference shares voting separately as a single class with one vote per Series B preference share, Sirius Group shall not take (and shall cause its subsidiaries not to take) any of the following actions: (i) amend, alter or repeal the memorandum of association or bye-laws of Sirius Group or any organizational documents of any subsidiary of Sirius Group; (ii) enter into any transaction with any related person (within the meaning of Item 404 of Regulation S-K), other than any such transaction contemplated by the Series B Certificate of Designation, the subscription agreement related to the Sirius Group Private Placement or the Shareholders Agreement or any such transaction that is approved in accordance with Sirius Group's Related Person Transactions Policy, or (iii) amend, alter or repeal Sirius Group's Related Person Transactions Policy, in each case, in a manner that would adversely affect the rights, preferences and powers of the holders of Series B preference shares or the common shares issuable pursuant to a conversion of the Series B preference shares.

Dividend Rights

        Pursuant to the Series B Certificate of Designation, in the event that any dividend on the Sirius Group common shares or other Junior Shares (as such term is defined in the Series B Certificate of Designation) is declared and paid other than a dividend payable solely in common shares, other Junior Shares or any other equity or equity equivalent securities of Sirius Group, as applicable, the holders of Series B preference shares as of the record date established by the Board of Directors for such dividend on common shares or Junior Shares shall be entitled to receive (and Sirius Group shall simultaneously declare and pay) a dividend on the Series B preference shares on a pro rata basis with the common shares or other Junior Shares, as applicable, determined on an as-converted basis assuming all Series B preference shares had been converted pursuant to the Series B Certificate of Designation.

        From and after the fifth anniversary of the initial issue date of the Series B preference shares, the holders of Series B preference shares are also entitled to receive, out of funds legally available for the payment of dividends under Bermuda law, cumulative dividends on each outstanding Series B preference share, prior and in preference to any declaration, payment or decision to set aside funds for the payment of any dividend (other than dividends payable solely in common shares, other Junior Shares or any other equity or equity equivalent securities of Sirius Group), at a per annum rate equal to the Conversion Price (as such term is defined in the Series B Certificate of Designation) multiplied by the three-month LIBOR plus 4%, payable in cash quarterly in arrears on the last day of March, June, September and December of each year. Such dividends shall be paid out of funds legally available for the payment of dividends under Bermuda law, and shall accrue until paid, whether or not

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declared by the Board of Directors and whether or not there are funds legally available for the payment of dividends.

        If Sirius Group fails to declare and pay any such dividend, the rate at which all dividends thereunder shall accrue (whether or not declared) shall increase to a per annum rate equal to the Conversion Price multiplied by LIBOR plus 6% until such time as Sirius Group has declared and paid all such accrued dividends. If Sirius Group fails to declare and pay dividends for four consecutive dividend periods, the holders of a majority of the Series B preference shares entitled to enforce the rights with respect to the election and removal of directors pursuant to the Shareholders Agreement (the " Designating Holders ") shall be entitled to designate one director to the Board of Directors. For each additional dividend period for which dividends on the Series B preference shares are not declared or paid, the Designating Holders shall be entitled to designate one additional director. Such rights compound in the event that Sirius Group, after curing its failure to declare and pay all such accrued dividends, thereafter fails to declare and pay any required dividend.

        No dividend or other distribution on the common shares or any other Junior Shares (other than a dividend payable solely in common shares, other Junior Shares, or other any other equity or equity equivalent securities of Sirius Group) may be declared or paid unless the full dividends on all outstanding Preference Shares have been paid, or a sum sufficient for the payment thereof has been set aside for payment.

Liquidation Rights

        In the event of any liquidation, dissolution or winding-up of Sirius Group as a result of any bankruptcy, reorganization, or similar proceeding, or any foreclosure by creditors of Sirius Group on all or substantially all assets of Sirius Group, whether voluntary or involuntary, the holders of the Series B preference shares will be entitled to receive a liquidation preference per share initially equal to the issue price per Series B preference share, subject to adjustment in accordance with the Series B Certificate of Designation, plus all accrued and unpaid dividends (less the amount of any Extraordinary Dividends (as such term is defined in the Series B Certificate of Designation)) (such per share price, the " Liquidation Price "), before any distributions of assets is made to the holders of common shares or other Junior Shares, and thereafter, the holders of Series B preference shares shall be entitled to receive an amount equal to (x) the pro rata portion (pro rata with the common shares or other Junior Shares, as applicable, determined on a per share as-converted basis assuming all Series B preference shares had been converted) of any assets and funds of Sirius Group available for distribution less (x) the Liquidation Price.

Optional and Mandatory Redemption

        Sirius Group may redeem all then-outstanding Series B preference shares in connection with the consummation of any (i) merger, amalgamation, consolidation or similar transaction that would result in the inability of the holders of a majority of the then-outstanding voting shares of Sirius Group to elect a majority of the members of the board of directors of the resulting entity or its parent company or (ii) sale or series of related sales of all or substantially all of the consolidated assets of Sirius Group and its subsidiaries to a third party, but in each case excluding certain affiliate transactions. Any holder of a Series B preference share may require Sirius Group to redeem all or a portion of such holder's Series B preference shares (A) in connection with the consummation of any (i) merger, amalgamation, consolidation or similar transaction that would result in the inability of the holders of a majority of the then-outstanding voting shares of Sirius Group to elect a majority of the members of the board of directors of the resulting entity or its parent company, (ii) sale or series of related sales of all or substantially all of the consolidated assets of Sirius Group and its subsidiaries, or (iii) transaction pursuant to which any person or group, other than CMIG International or an affiliate, becomes the beneficial owner of more than 20% of the outstanding equity securities of Sirius Group (and such

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percentage exceeds the beneficial ownership percentage of CMIG International) or (B) in the event the common shares of Sirius Group are delisted from a securities exchange on which they were then listed. The redemption price per share for any such redemption will be equal to (A) (i) 1.28 multiplied by (ii) (x) the book value of Sirius Group divided by (y) the fully diluted number of common shares outstanding, plus all accrued and unpaid dividends thereon, plus (B) (i) 0.28 multiplied by (ii) the aggregate amount of any Extraordinary Dividends paid by Sirius Group during the period that is (x) in the event such calculation is made on or prior to the second anniversary of the initial issue date of the Series B preference shares, the 365 days preceding such calculation, or (y) in the event such calculation is made after the second anniversary of such initial issue date, the 730 days preceding such calculation (such redemption price, the " Redemption Price ").

        After the fifth anniversary of the initial issue date of the Series B preference shares, (i) any holder of Series B preference shares may require Sirius Group to redeem all of such holder's preference shares for the Redemption Price and (ii) Sirius Group may redeem all of the Series B preference shares for a redemption price per share equal to the Liquidation Price.

        In the event (i) of any involuntary liquidation, dissolution or winding-up of any of Sirius Bermuda, Sirius International or Sirius America (each, a " Principal Operating Company ") as a result of any bankruptcy, reorganization or similar proceeding, (ii) of any involuntary supervision or run-off of any Principal Operating Company, (iii) of any foreclosure by creditors of any Principal Operating Company on all or substantially all assets of, or equity interests in, such Principal Operating Company or (iv) that the Principal Operating Companies are disapproved for writing any business globally from insurance or reinsurance intermediaries or direct cedants representing a majority of the Principal Operating Companies' premiums, then Sirius Group shall redeem all Series B Preference shares for a redemption price equal to the Liquidation Price.

        At the option of Sirius Group, any redemption price payable may be paid in common shares of Sirius Group.

Conversion

        Unless a Qualified Sale Transaction (as such term is defined in the Shareholders Agreement) has been approved by the board of directors, each outstanding Series B preference share will automatically convert into common shares of Sirius Group in the event (i) the daily average price per common share (excluding the effects of certain affiliate transactions) plus the aggregate per share amounts of all dividends and distributions paid on the common shares since the initial issue date of the Series B preference shares (other than dividends or distributions payable in the form of common shares), in each case, subject to certain adjustments, equals or exceeds 1.40 multiplied by the Conversion Price and (ii) the number of shares issuable upon conversion of the Series B preference shares represents 25% or less of the "public float" (the occurrence of clause (i) and (ii), the " Mandatory Conversion Event "). The number of common shares into which each Series B preference shares shall convert is determined by dividing (x) the issue price per Series B preference share by (y) the applicable Conversion Price then in effect (such ratio, the " Conversion Ratio "), and such holder shall be entitled to receive a sum in cash equal to any accrued and unpaid cash dividends as of the date of such Mandatory Conversion Event.

        In addition, at the option of any holder of Series B preference shares, such holder may elect, by notice to Sirius Group prior to the occurrence of any Mandatory Conversion Event, to cause Sirius Group to convert any or all of such holder's preference shares into the number of common shares equal to (x) the number of preference shares subject to such conversion multiplied by (y) the Conversion Ratio then in effect, and such holder shall be entitled to receive a sum in cash equal to any accrued and unpaid cash dividends as of the date of such conversion.

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Preemptive Rights

        If Sirius Group proposes to issue and sell any class of share capital that will rank senior or pari passu to the Series B preference shares as to dividend rights or rights upon liquidation, winding-up or dissolution, in each case that are convertible into common shares (such shares, " Senior/Parity Shares "), then Sirius Group, must offer to sell such shares to each holder on a pro rata basis in proportion to the percentage of Series B preference shares held by such holder. From and after the initial issue date of the Series B preference shares, Sirius Group may not issue any Senior/Parity Shares without the prior written consent of the holders of a majority of the Series B preference shares if the aggregate gross proceeds of such issuance (together with all other such Senior/Parity Shares) equal or exceed $100 million.

Other Rights

        The Series B preference shares are also entitled to certain information and other rights, as set forth in the Series B Certificate of Designation.

Public Warrants

        From the closing of the Merger, each converted warrant will represent the right to acquire Sirius Group common shares. The Warrant Agreement, as amended by the Warrant Amendment, will govern the terms of the converted warrants.

        The number of Sirius Group common shares subject to each converted warrant will be equal to the number of shares of Easterly common stock subject to each public warrant immediately prior to the closing of the Merger multiplied by the Exchange Ratio, and such converted warrant will have an exercise price per Sirius Group common share equal to $11.50, which is the exercise price per share immediately prior to the closing of the Merger, divided by the Exchange Ratio. Based on an estimated Exchange Ratio of 0.586, each converted warrant would be exercisable for 0.586 Sirius Group common shares at an exercise price of $19.62 per Sirius Group common share. Investors are cautioned that 0.586 is only an estimate of the Exchange Ratio, has not been agreed as the final Exchange Ratio for purposes of the Merger Agreement, and is subject to change prior to the closing of the Merger.

        Converted warrants will be exercisable at any time commencing on the date that is 30 days after the completion of the Merger. No fractional shares will be issued upon exercise of the converted warrants. If, upon exercise of the converted warrants, a holder would be entitled to receive a fractional interest in a share, Sirius Group will, upon exercise, round down to the nearest whole number the number of Sirius Group common shares to be issued to the warrant holder. The converted warrants will expire five years after the date on which they first became exercisable, at 5:00 p.m., New York time, or earlier upon redemption or liquidation.

        Sirius Group will not be obligated to deliver any Sirius Group common shares pursuant to the exercise of a converted warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Sirius Group common shares underlying the converted warrants is then effective and a prospectus relating thereto is current, subject to Sirius Group satisfying its obligations described below with respect to registration. No converted warrant will be exercisable for cash or on a cashless basis, and Sirius Group will not be obligated to issue any shares to holders seeking to exercise their converted warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, unless an exemption is available. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a converted warrant, the holder of such converted warrant will not be entitled to exercise such converted warrant and such converted warrant may have no value and expire worthless. In no event will Sirius Group be required to net cash settle any warrant.

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        Once the converted warrants become exercisable, Sirius Group may call the converted warrants for redemption:

    in whole and not in part;

    at a price of $0.01 per converted warrant;

    upon not less than 30 days' prior written notice of redemption to each warrant holder; and

    if, and only if, the reported last sale price of Sirius Group common shares equals or exceeds (x) $18.00 divided by (y) the Exchange Ratio for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date Sirius Group sends to the notice of redemption to the warrant holders.

        If the foregoing conditions are satisfied and Sirius Group issues a notice of redemption of the converted warrants, each warrant holder will be entitled to exercise his, her or its converted warrant prior to the scheduled redemption date. However, the price of Sirius Group common shares may fall below the redemption trigger price as well as the per share warrant exercise price after the redemption notice is issued.

        Under the terms of the Warrant Agreement, Sirius Group has agreed, as soon as practicable and in no event later than fifteen business days after the closing of the Merger, to use its best efforts to file a registration statement under the Securities Act covering such shares and maintain a current prospectus relating to the common stock issuable upon exercise of the converted warrants, until the expiration of the converted warrants. If the shares issuable upon exercise of the converted warrants are not registered under the Securities Act by the 60 th  business day following the closing of the Merger, Sirius Group will be required to permit holders to exercise their converted warrants on a cashless basis during the period beginning on the 61 st  business day after the closing of the Merger and ending upon such registration being declared effective by the SEC. However, no converted warrant will be exercisable for cash or on a cashless basis, and Sirius Group will not be obligated to issue any shares to holders seeking to exercise their converted warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available. Notwithstanding the above, if Sirius Group's common shares are at the time of any exercise of a converted warrant not listed on a national securities exchange, Sirius Group may, at its option, require holders of converted warrants who exercise their converted warrants to do so on a "cashless basis" in accordance with Section 3(a)(9) of the Securities Act and, in the event it so elects, Sirius Group will not be required to file or maintain in effect a registration statement, but Sirius Group will use its best efforts to register or qualify the shares under applicable state securities laws to the extent an exemption is not available. In no event will Sirius Group be required to net cash settle any converted warrant, or issue securities or other compensation in exchange for the converted warrants in the event that Sirius Group is unable to register or qualify the shares underlying the converted warrants under applicable state securities laws.

        If Sirius Group calls the converted warrants for redemption as described above, its management will have the option to require any holder that wishes to exercise his, her or its converted warrant to do so on a "cashless basis." In determining whether to require all holders to exercise their converted warrants on a "cashless basis," Sirius Group's management will consider, among other factors, its cash position, the number of converted warrants that are outstanding and the dilutive effect on Sirius Group's shareholders of issuing the maximum number of Sirius Group common shares issuable upon the exercise of its converted warrants. If Sirius Group's management takes advantage of this option, all holders of converted warrants would pay the exercise price by surrendering their converted warrants for that number of Sirius Group common shares equal to the quotient obtained by dividing (x) the product of the number of Sirius Group common shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the "fair market value" (defined below), by (y) the fair

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market value. The "fair market value" shall mean the average reported last sale price of Sirius Group common shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of converted warrants. If Sirius Group's management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of Sirius Group common shares to be received upon exercise of the converted warrants, including the "fair market value" in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. Sirius Group believes this feature is an attractive option to it if it does not need the cash from the exercise of the converted warrants after the Merger.

        A holder of a converted warrant may notify Sirius Group in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such converted warrant, to the extent that after giving effect to such exercise, such person (together with such person's affiliates), to the warrant agent's actual knowledge, would beneficially own in excess of 4.9% or 9.8% (as specified by the holder) of the Sirius Group common shares outstanding immediately after giving effect to such exercise.

        If the number of outstanding Sirius Group common shares is increased by a stock dividend payable in Sirius Group common shares, or by a split-up of Sirius Group common shares or other similar transactions, then, on the effective date of such stock dividend, split-up or similar transactions, the number of Sirius Group common shares issuable on exercise of each converted warrant will be increased, in order to prevent dilution, in proportion to such increase in the outstanding Sirius Group common shares. A rights offering to holders of Sirius Group common shares entitling holders to purchase Sirius Group common shares at a price less than the fair market value will be deemed a stock dividend of a number of Sirius Group common shares equal to the product of (i) the number of Sirius Group common shares actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Sirius Group common shares) multiplied by (ii) one (1) minus the quotient of (x) the price per Sirius Group common share paid in such rights offering divided by (y) the fair market value. For these purposes (i) if the rights offering is for securities convertible into or exercisable for Sirius Group common shares, in determining the price payable for Sirius Group common shares, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) fair market value means the volume weighted average price of Sirius Group common shares as reported during the ten (10) trading day period ending on the trading day prior to the first date on which the Sirius Group common shares trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.

        In addition, if Sirius Group, at any time while the converted warrants are outstanding and unexpired, pays a dividend or makes a distribution in cash, securities or other assets to the holders of Sirius Group common shares on account of such Sirius Group common shares (or other shares of Sirius Group's capital stock into which the warrants are convertible), other than (a) as described above or (b) certain ordinary cash dividends, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each Sirius Group common share in respect of such event.

        If the number of outstanding Sirius Group common shares is decreased by a consolidation, combination, reverse stock split or reclassification of Sirius Group common shares or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of Sirius Group common shares issuable on exercise of each converted warrant will be decreased in proportion to such decrease in outstanding Sirius Group common shares.

        Whenever the number of Sirius Group common shares purchasable upon the exercise of the converted warrants is adjusted, as described above, the warrant exercise price will be adjusted by

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multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of Sirius Group common shares purchasable upon the exercise of the converted warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of Sirius Group common shares so purchasable immediately thereafter.

        In case of any reclassification or reorganization of the outstanding Sirius Group common shares (other than those described above or that solely affects the par value of such Sirius Group common shares), or in the case of any merger or consolidation of it with or into another corporation (other than a consolidation or merger in which Sirius Group is the continuing corporation and that does not result in any reclassification or reorganization of outstanding Sirius Group common shares), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of it as an entirety or substantially as an entirety in connection with which Sirius Group is dissolved, the holders of the converted warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the converted warrants and in lieu of the Sirius Group common shares immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event. However, if (a) such holders were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets for which each warrant will become exercisable will be deemed to be the weighted average of the kind and amount received per share by such holders in such consolidation or merger that affirmatively make such election, and (b) if a tender, exchange or redemption offer has been made to and accepted by such holders under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more than 50% of the outstanding Sirius Group common shares, the holder of a converted warrant will be entitled to receive the highest amount of cash, securities or other property to which such holder would actually have been entitled as a shareholder if such warrant holder had exercised the converted warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the Sirius Group common shares held by such holder had been purchased pursuant to such tender or exchange offer, subject to adjustments (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in the Warrant Agreement. Additionally, if less than 70% of the consideration receivable by the holders of common stock in such a transaction is payable in the form of common stock in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the converted warrant properly exercises the converted warrant within thirty days following public disclosure of such transaction, the warrant exercise price will be reduced as specified in the Warrant Agreement based on the per share consideration minus the Black-Scholes Warrant Value (as defined in the Warrant Agreement) of the converted warrant in order to determine and realize the option value component of the converted warrant. This formula is to compensate the warrant holder for the loss of the option value portion of the warrant value due to the requirement that the warrant holder exercise the converted warrant within 30 days of the event. The Black-Scholes model is an accepted pricing model for estimating fair market value where no quoted market price for an instrument is available.

        The Warrant Agreement provides that the terms of the converted warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires

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the approval by the holders of at least 65% of the then outstanding converted warrants to make any change that adversely affects the interests of the registered holders of converted warrants.

        The converted warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to it, for the number of converted warrants being exercised. The warrant holders do not have the rights or privileges of holders of Sirius Group common shares or any voting rights until they exercise their converted warrants and receive Sirius Group common shares. After the issuance of Sirius Group common shares upon exercise of the converted warrants, each holder will be entitled to one vote for each Sirius Group common share held of record on all matters to be voted on by shareholders.

Private Placement Warrants

        In connection with the closing of the Sirius Group Private Placement, Sirius Group will issue to the Preference Share Investors warrants to purchase Sirius Group common shares. Each warrant will initially be exercisable for one Sirius Group common share at an initial exercise price equal to 125% of (i) 1.05 multiplied by (ii) the Sirius Group September 30 Adjusted DBVPS, estimated as of August 31, 2018 to be $22.21, subject to customary anti-dilution adjustments. The private placement warrants will be exercisable at any time commencing on the date of the closing of the Sirius Group Private Placement and will expire five (5) years after such date.

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COMPARISON OF RIGHTS OF SHAREHOLDERS OF EASTERLY AND SIRIUS GROUP

        Sirius Group is an exempted company incorporated under Bermuda law. As Sirius Group is a Bermuda company, the rights of holders of Sirius Group common shares will be governed directly by Bermuda law, including the Companies Act, and Sirius Group's memorandum of association and bye-laws. Easterly is a Delaware corporation and is governed by the DGCL. The rights of Easterly stockholders are governed by Delaware law, including the DGCL, and by Easterly's charter and bylaws. Bermuda law differs in some material respects from laws generally applicable to United States corporations and their stockholders, including the DGCL. See " Description of Sirius Group Share Capital " for more information about Sirius Group common shares.

        Below is a summary chart outlining important similarities and differences in the corporate governance and stockholder/shareholder rights associated with each of Easterly and Sirius Group according to applicable law and/or Easterly's charter and bylaws in effect on the date hereof and Sirius Group's memorandum of association and bye-laws expected to be in effect as of the closing of the Merger. The following discussion is qualified in its entirety by reference to the Delaware and Bermuda law, including the DGCL and the Companies Act, as well as the full text of the Sirius Group bye-laws expected to be in effect as of the closing of the Merger, the form of which will be filed as an exhibit to the registration statement of which this proxy statement/prospectus forms a part, and Easterly's charter and bylaws, copies of which are on file with the SEC. For information on how you can obtain copies of these documents, see " Where You Can Find More Information ."

 
  Sirius Group   Easterly

Authorized Capital

  The total number of shares of all classes of shares authorized under the existing charter of Sirius Group prior to the Merger is 600,000,000 shares, which is comprised of:

500,000,000 common shares, par value $0.01 per share;

99,850,000 undesignated preference shares, par value $0.01 per share; and

150,000 Series A redeemable preference shares, par value $0.01 per share.

In addition, approximately 11.4 million Series B preference shares and common shares (assuming a purchase price of $17.77 per share) are issuable pursuant to the Sirius Group Private Placement.

Sirius Group's board of directors is authorized to provide for the issuance of the preference shares in one or more series, and to establish from time to time the number of shares to be included in each such series, and to fix the terms, including designation, powers, preferences, rights, qualifications, limitations and restrictions of the shares of each such series.

  The total number of shares of all classes of shares authorized under the existing charter of Easterly is 101,000,000 shares, which is comprised of:

100,000,000 shares of common stock, par value $0.0001 per share; and

1,000,000 shares of preferred stock, par value $0.0001 per share.

Easterly's board of directors is authorized to provide for the issuance of the preferred stock in one or more series, and to establish from time to time the number of shares to be included in each such series, and to fix the terms, including designation, powers, preferences, rights, qualifications, limitations and restrictions of the shares of each such series.

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  Sirius Group   Easterly

Voting Rights

 

Holders of both the common shares and the Series A redeemable preference shares are entitled to (and holders of the Series B preference shares will be entitled to) one vote per share of common share they hold or into which their preference share is convertible pursuant to the terms of the respective Certificate of Designation.

 

Holders of common stock are entitled to one vote per share.

Number of Directors

 

The total number of current directors is six. The number of directors shall be fixed from time to time exclusively by the Sirius Group board of directors pursuant to a resolution adopted by a majority of the board. In accordance with the bye-laws, the number cannot be less than one director or such number in excess thereof as the shareholders may determine.

 

The total number of current directors is five. The number of directors, other than those who may be elected by the holders of one or more series of the preferred stock voting separately by class or series, shall be fixed from time to time exclusively by the Easterly board of directors pursuant to a resolution adopted by a majority of the board.

Election of Directors

 

The board of directors is elected or appointed at the annual general meeting of Sirius Group or at any special general meeting called for that purpose and the directors hold office for such term as the shareholders may determine or, in the absence of such determination, until the next annual general meeting or until their successors are elected or appointed or their office is otherwise vacated.

 

Each member of the board of directors is elected to serve for a one year term. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors.

 

The quorum required for the election of directors is two or more persons present in person and representing in person or by proxy in excess of 50% of the total voting shares. A resolution approving the election of the directors can be approved by the affirmative votes of a majority of the votes cast in accordance with the bye-laws and in the case of an equality of votes the resolution fails. As CM Bermuda will own the majority of Sirius Group's shares, it will be entitled to elect all of the directors.

   

 

An individual may be appointed an alternate director by or in accordance with a resolution of the shareholders. Unless otherwise determined by the board of directors (and subject to such limitations as may be set by the board of directors), no director shall have the right to appoint another person to act as his alternate director.

   

Vacancies

 

The office of a director shall be vacated if the director (a) is removed from office or is prohibited from being a director by law; (b) is or becomes bankrupt, or makes any arrangement or composition with his creditors generally; (c) is or becomes of unsound mind or dies; or (d) resigns his office by notice.

 

Any vacancy on the board of directors that results from an increase in the number of directors or resulting from death, resignation, retirement, disqualification, removal or other cause may only be filled by a majority of the directors then in office or by a sole remaining director.

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  Sirius Group   Easterly

 

The board shall have the power to appoint any person as a director to fill a vacancy on the board.

   

Manner of Acting by Board

 

At all meetings of the board of directors, one half (1/2) of the directors then in office (but not less than two directors) if present in person at such meeting shall be sufficient to constitute a quorum for a meeting of directors.

 

The board of directors may act at any meeting where a quorum is present. A quorum is a majority of the directors then in office. The board may also act without meetings to the extent and in the manner authorized by the DGCL.

Removal of Directors

 

The shareholders entitled to vote for the election of a director may, at any special general meeting convened and held in accordance with the Sirius Group bye-laws, remove a director provided that the notice of any such meeting shall contain a statement of the intention to do so and it is served on such director not less than 14 days before the meeting.

The removal of a director is decided by the affirmative votes of a majority of the votes cast.

 

Subject to the rights of any preferred stockholders with respect to directors elected by them, any or all of the directors may be removed from office at any time, with or without cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class.

Interested Directors

 

Bermuda law provides that a transaction entered into by Sirius Group in which a director has an interest will not be voidable by Sirius Group and such director will not be liable to Sirius Group for any profit realized pursuant to such transaction as a result of such interest, provided the nature of the interest is disclosed at the first opportunity either at a meeting of directors or in writing to the directors. While we are not aware of any Bermuda case law on the meaning of "first opportunity," a Bermuda court will likely employ a practical interpretation of those words. Subject to the rules of Nasdaq and applicable U.S. securities laws, Sirius Group's bye-laws do not require directors to recuse themselves from any discussion or decision involving any contract or proposed contract or arrangement in which the director is directly or indirectly interested so long as the nature of the interest is disclosed, and such director may be counted in the quorum for such meeting.

 

Under Delaware law, a transaction entered into by Easterly in which a director has an interest would not be voidable if (1) the material facts as to such interested director's relationship or interests are disclosed or are known to the board of directors and the board in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, (2) such material facts are disclosed or are known to the stockholders entitled to vote on such transaction and the transaction is specifically approved in good faith by vote of the majority of shares entitled to vote on the matter or (3) the transaction is fair as to the company as of the time it is authorized, approved or ratified. Under Delaware law, such interested director could be held liable for a transaction in which such director derived an improper personal benefit.

Easterly's charter provides that the doctrine of corporate opportunity shall not apply with respect to Easterly or any of its officers or directors in circumstances where the application of any such doctrine to a corporate opportunity would conflict with any fiduciary duties or contractual obligations they may have.

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  Sirius Group   Easterly

Nomination of Director Candidates Business Proposals by Stockholders Special Meetings of the Board

 

Nominations for the election of directors may be made by the board or by any shareholder entitled to vote for the election of directors. Any shareholder entitled to vote for the election of directors may nominate persons for election as directors only if written notice of such shareholder's intent to make such nomination is given, either by personal delivery or by mail, postage prepaid or any recognized overnight delivery service, to the Secretary of Sirius Group not later than (i) with respect to an election to be held at an annual general meeting, 90 days prior to the anniversary date of the immediately preceding annual meeting or not later than 10 days after notice or public disclosure of the date of the annual meeting is given or made available to shareholders, whichever date is earlier, and (ii) with respect to an election to be held at a special general meeting for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to shareholders. The chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the procedures set forth Sirius Group's bye-laws.

 

Easterly's bylaws require that stockholders seeking to bring business before the annual meeting of stockholders, or to nominate candidates for election as directors at the annual meeting of stockholders, must provide timely notice of their intent in writing. To be timely, a stockholder's notice needs to be received not later than the close of business on the 90th day nor earlier than the opening of business on the 120th day prior to the scheduled date of the annual meeting of stockholders. Pursuant to Rule 14a-8 of the Securities Act, proposals seeking inclusion in Easterly's annual proxy statement must comply with the notice periods contained therein.

 

Under the Bermuda Companies Act, shareholders may, at their own expense (unless the company otherwise resolves) require a company to: (i) give to the shareholder entitled to receive notice of the next annual general meeting notice of any resolution that shareholders can properly propose at that meeting; and/or (ii) circulate to any shareholder entitled to notice of any general meeting a statement (of not more than 1,000 words) in respect of any matter referred to in a proposed resolution or any business to be conducted at that meeting.

   

 

The number of shareholders necessary for such a request is either the number of shareholders representing not less than one-twentieth of the total voting rights of all the shareholders having at the date of the request a right to vote at the meeting to which the request relates, or not less than 100 shareholders.

   

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  Sirius Group   Easterly

Special Meetings of Stockholders

 

The president or the chairman of Sirius Group (if any) or any two directors or any director and the secretary or the board may convene a special general meeting whenever in their judgement such meeting is necessary. Shareholders holding not less than one-tenth of the paid up share capital of Sirius Group may requisition the board to convene a special general meeting.

 

Subject to the rights of the holders of any outstanding preferred stock and applicable law, special meetings of stockholders, for any purpose or purposes, may be called only by the Chairman of the Board, Chief Executive Officer, or the board of directors pursuant to a resolution adopted by a majority of the board, and the ability of the stockholders to call a special meeting is specifically denied.

Manner of Acting by Stockholders

 

The quorum for any general meeting is two or more persons present in person and representing in person or by proxy in excess of 50% of the total voting shares. Subject to the Companies Act and the bye-laws, any question proposed for the consideration of the shareholders at any general meeting is decided by the affirmative votes of a majority of the votes cast in accordance with the bye-laws and in the case of an equality of votes the resolution fails.

 

At any stockholders meeting, a quorum is constituted when a majority of the voting power of all outstanding shares of capital stock are present, unless otherwise required by law or designated in the certificate of incorporation or bylaws. If a quorum is present, action can be taken by a majority vote of the stockholders present unless otherwise required by law, exchange rules or designated in the certificate of incorporation or bylaws.

Stockholders Action without Meeting

 

Subject to applicable law and the bye-laws, anything which may be done by resolution of Sirius Group in a general meeting or by resolution of a meeting of any class of the shareholders may be done without a meeting by written resolution in accordance with the bye-laws.

 

Any action required or permitted to be taken by the stockholders must be effected by a duly called annual or special meeting of such holders and may not be effected by written consent of the stockholders.

 

As CM Bermuda will own the majority of Sirius Group's shares, it will be entitled to take approve shareholder actions by written consent.

   

Approval of Mergers

 

The amalgamation or merger of a Bermuda company with another company or corporation (other than certain affiliated companies) requires the amalgamation or merger agreement to be approved by the company's board of directors and by its shareholders. Unless the company's bye-laws provide otherwise, the approval of 75% of the shareholders voting at such meeting is required to approve the amalgamation or merger agreement, and the quorum for such meeting must be two persons holding or representing more than one-third of the issued shares of the company. Sirius Group's bye-laws provide that a majority of the total voting power of the common shares of the company is required to approve an amalgamation or merger.

 

Under Delaware law, with certain exceptions, a merger, consolidation or sale of all or substantially all the assets of a corporation must be approved by the board of directors and a majority of the issued and outstanding shares entitled to vote on such transaction. A stockholder of a company participating in certain merger and consolidation transactions may, under certain circumstances, be entitled to appraisal rights, such as having a court to determine the fair value of the stock or requiring the company to pay such value in cash. However, such appraisal right is not available to shareholders if the stock received in such transaction is listed on a national securities exchange, including either the New York Stock Exchange or the Nasdaq Stock Market.

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  Sirius Group   Easterly

 

Under Bermuda law, in the event of an amalgamation or merger of a Bermuda company with another company or corporation, including a public Bermuda company, a shareholder of the Bermuda company who did not vote in favor of the amalgamation or merger and is not satisfied that fair value has been offered for such shareholder's shares may, within one month of notice of the shareholders meeting, apply to the Supreme Court of Bermuda to appraise the fair value of those shares.

 

Easterly did not opt out of the provisions of Section 203 of the DGCL, which, subject to certain exceptions, would prohibit a company that opts in from engaging in specified mergers which any interested stockholder for a period of three years following the time that such stockholder became an interested stockholder, unless the merger or transaction in which such stockholder became an interested stockholder is approved in a prescribed manner.

Acquisitions of Minority Interests

  Under Bermuda law, an acquiring party is generally able to acquire compulsorily the common shares of minority holders of a company in the following ways:

By a procedure under the Companies Act known as a "scheme of arrangement." A scheme of arrangement could be effected by obtaining the agreement of the company and of holders of common shares, representing in the aggregate a majority in number and at least 75% in value of the common shareholders present and voting at a court ordered meeting held to consider the scheme of arrangement. The scheme of arrangement must then be sanctioned by the Bermuda Supreme Court. If a scheme of arrangement receives all necessary agreements and sanctions, upon the filing of the court order with the Registrar of Companies in Bermuda, all holders of common shares could be compelled to sell their shares under the terms of the scheme of arrangement. Upon consummation of the Merger, CM Bermuda is expected to own in excess of 75% of Sirius Group's common shares and, therefore, CM Bermuda could choose to implement a scheme of arrangement.

 

Delaware law provides that a parent corporation, by resolution of its board of directors and without any stockholder vote, may merge with any subsidiary of which it owns at least 90% of each class of its capital stock.

Upon any such merger, and in the event the parent corporation does not own all of the stock of the subsidiary, dissenting stockholders of the subsidiary are entitled to certain appraisal rights.

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  Sirius Group   Easterly

 

By acquiring pursuant to a tender offer 90% of the shares or class of shares not already owned by, or by a nominee for, the acquiring party (the offeror), or any of its subsidiaries. If an offeror has, within four months after the making of an offer for all the shares or class of shares not owned by, or by a nominee for, the offeror, or any of its subsidiaries, obtained the approval of the holders of 90% or more of all the shares to which the offer relates, the offeror may, at any time within two months beginning with the date on which the approval was obtained, by notice compulsorily acquire the shares of any non-tendering shareholder on the same terms as the original offer unless the Supreme Court of Bermuda (on application made within a one-month period from the date of the offeror's notice of its intention to acquire such shares) orders otherwise.

Where the acquiring party or parties hold not less than 95% of the shares or a class of shares of the company, by acquiring, pursuant to a notice given to the remaining shareholders or class of shareholders, the shares of such remaining shareholders or class of shareholders. When this notice is given, the acquiring party is entitled and bound to acquire the shares of the remaining shareholders on the terms set out in the notice, unless a remaining shareholder, within one month of receiving such notice, applies to the Supreme Court of Bermuda for an appraisal of the value of their shares. This provision only applies where the acquiring party offers the same terms to all holders of shares whose shares are being acquired.

   

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  Sirius Group   Easterly

Duties of Directors

  The Companies Act authorizes the directors of a company, subject to its bye-laws, to exercise all powers of the company except those that are required by the Companies Act or the company's bye-laws to be exercised by the shareholders of the company. Sirius Group's bye-laws provide that its business is to be generally managed and conducted by the board of directors. In accordance with Bermuda common law, members of a board of directors owe a fiduciary duty to the company to act in good faith in their dealings with or on behalf of the company and exercise their powers and fulfill the duties of their office honestly. This duty includes the following essential elements:

a duty to act in good faith in the best interests of the company;

a duty not to make a personal profit from opportunities that arise from the office of director;

a duty to avoid situations in which there is an actual or potential conflict between a personal interest or the duties owed to third parties and/or the director's duty to the company; and

a duty to exercise powers for the purpose for which such powers were intended.

The Companies Act imposes a duty on directors and officers of a Bermuda company:

to act honestly and in good faith with a view to the best interests of the company; and

to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

The Companies Act also imposes various duties on directors and officers of a company with respect to certain matters of management and administration of the company.

Under Bermuda law, directors and officers generally owe fiduciary duties to the company itself, not to the company's individual shareholders or members, creditors, or any class of either shareholders, members or creditors. Sirius Group's shareholders may not have a direct cause of action against the directors.

 

Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its stockholders. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to stockholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the company. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the company and its stockholders take precedence over any interest possessed by a director, officer or controlling stockholder and not shared by the stockholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the company.

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  Sirius Group   Easterly

Indemnification of Directors and Officers

 

The bye-laws of Sirius Group provide that all of the directors and officers shall be indemnified and secured harmless out of the assets of Sirius Group from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their heirs, executors or administrators, shall or may incur or sustain by or by reason of any act done, concurred in or omitted in or about the execution of their duty, or supposed duty, or in their respective offices or trusts, and no indemnified party shall be answerable for the acts, receipts, neglects or defaults of the others of them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any monies or effects belonging to Sirius Group shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any monies or belonging to Sirius Group shall be placed out on or invested or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in relation thereto, provided that this indemnity shall not extend to any matter in respect of any fraud or dishonestly in relation to Sirius Group which may attach to any of the indemnified parties.

 

Easterly's charter provides that, to the fullest extent provided by law, Easterly will indemnify and hold harmless directors and officers of Easterly against all liability and loss suffered and expenses (including attorneys' fees) reasonably incurred in connection with a proceeding which arises by reason of the fact that such person was servicing as a director, officer, agent or employee of Easterly or of another entity at Easterly's request.

Limitation on Liability of Directors

 

Under the bye-laws, each shareholder of Sirius Group agrees to waive any claim or right of action such shareholder might have, whether individually or by or in the right of Sirius Group, against any director on account of any action taken by such director or the failure of such director to take any action in the performance of his or her duties with or for Sirius Group or any subsidiary thereof, provided that such waiver shall not extend to any matter in respect of any fraud or dishonesty in relation to Sirius Group which may attach to such director.

 

Easterly's charter provides that, to the fullest extent permitted by law, no director of Easterly will be personally liable to Easterly or its stockholders for monetary damages for a breach of fiduciary duty as a director except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL.

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  Sirius Group   Easterly

Amendments to Bye-Laws or Bylaws

 

No bye-law may be rescinded, altered or amended and no new bye-law may be made, save in accordance with the Companies Act and until the same has been approved by a resolution of the board and by a resolution of the shareholders.

Amendments to the bye-laws adversely affecting the rights of the holders of the Series A redeemable preference shares or Series B preference shares require the prior affirmative vote or written consent of the holders of at least a majority of such preference shares voting separately as a single class with one vote per preference share.

 

The affirmative vote of a majority of the board of directors is required to adopt, amend, alter or repeal the bylaws. The bylaws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of at least a majority of the voting power of all outstanding shares of capital stock of Easterly entitled to vote generally in the election of directors, voting together as a single class.

Amendments to Memorandum of Association or Charter

 

No alteration or amendment to the Sirius Group memorandum of association may be made save in accordance with the Companies Act and until the same has been approved by a resolution of the board and by a resolution of the shareholders.

Amendments to the Sirius Group memorandum of association adversely affecting the rights of the holders of the Series A redeemable preference shares or Series B preference shares require the prior affirmative vote or written consent of the holders of at least a majority of such preference shares voting separately as a single class with one vote per preference share.

 

Except as specifically set forth therein (for example, see the " Protective Provisions " section below) or as required by the DGCL, Easterly's charter can generally be amended upon adoption by the board of a resolution setting forth the amendment and declaring the advisability of the amendment and approval by a majority of the outstanding stock entitled to vote thereon and a majority of the outstanding stock of each class entitled to vote thereon.

Redemption Rights

 

Series A redeemable preference shareholders have redemption rights; however, the Series A redeemable preference shares will be redeemed upon the closing of the Merger.

 

Easterly public stockholders have redemption rights.

 

Series B preference shares will have redemption and conversion rights.

 

 

Protective Provisions

 

None.

 

Prior to Easterly's initial business combination, the affirmative vote of the holders of at least 65% of all of the outstanding Easterly common stock is required to amend the provisions of Easterly's charter related to Easterly's status as a blank check company in Article IX of Easterly's charter, including provisions with respect to redemption and repurchase rights and distributions from the Trust Account.

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  Sirius Group   Easterly

Shareholders' Suits

 

Class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company's memorandum of association or bye-laws, including any breach of fiduciary duty claims in cases where the actions from which such claims arise have not been ratified by a majority of the shareholders.

Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company's shareholders than that which actually approved it.

When the affairs of a company are being conducted in a manner which is oppressive or prejudicial to the interests of some part of the shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company's affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company.

 

Class actions and derivative actions generally are available to stockholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court generally has discretion to permit the winning party to recover attorneys' fees incurred in connection with such action.

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SHARES ELIGIBLE FOR FUTURE SALE

        Immediately upon completion of the Merger, Sirius Group will have 126.6 million common shares issued outstanding, which assumes (i) the Exchange Ratio is equal to 0.586, (ii) no Easterly stockholders exercise their redemption rights in connection with the Merger Proposal, (iii) Sirius Group issues 11.4 million common shares and Series B preference shares convertible into common shares in connection with the Sirius Group Private Placement, (iv) Sirius Group redeems 14.1 million common shares from CM Bermuda pursuant to the Common Shares Redemption Agreement and (v) all of the issued and outstanding Sirius Group Series A redeemable preference shares are redeemed pursuant to the Preference Shares Redemption Agreement prior to the closing of the Merger.

        All of the Sirius Group common shares issued in connection with the Merger will be freely transferable by persons other than by Sirius Group's "affiliates" or Easterly's "affiliates" without restriction or further registration under the Securities Act. Sales of substantial amounts of Sirius Group common shares in the public market could adversely affect prevailing market prices of the Sirius Group common shares. Prior to the Merger, there has been no public market for Sirius Group common shares. Sirius Group has applied to list the Sirius Group common shares on the Nasdaq Stock Market, but Sirius Group cannot assure you that a regular trading market will develop in the Sirius Group common shares.

Lock-up Agreements

        On the date of the closing of the Merger and as a condition precedent for the closing, the Sponsor and CM Bermuda will each deliver a Lock-Up Agreement to Sirius Group pursuant to which the Sponsor and CM Bermuda will agree not to sell any Sirius Group common shares for a period of 180 days from the Effective Time without the consent of Sirius Group, subject to specified exemptions. Sirius Group may consent to such a sale at any time without prior notice.

Registration Rights

        In connection with, and as a condition to the consummation of, the Merger, the Merger Agreement provides that Sirius Group, CM Bermuda and the Sponsor will be entitled to certain registration rights described in the Registration Rights Agreement with respect to the Sirius Group common shares owned by CM Bermuda and the Sirius Group common shares received by the Sponsor upon the exchange of its Easterly common stock in the Merger. Among other things, pursuant to the Registration Rights Agreement, CM Bermuda will be entitled to the right to initiate the filing of registrations statements, including for underwritten offerings, and unlimited piggyback registration rights. The Sponsor will be entitled to unlimited piggyback registration rights. The registration rights of CM Bermuda and the Sponsor are subject to customary black-out periods, cutback provisions and other limitations as set forth in the Registration Rights Agreement. Sirius Group will agree to pay certain fees and expenses relating to registrations under the Registration Rights Agreement. For more information on the Registration Rights Agreement, please see the full text of the form of Registration Rights Agreement which is attached as Annex E hereto.

        Sirius Group has also granted registration rights to the Sirius Group Private Placement Investors pursuant to which, as a condition to the consummation of the Sirius Group Private Placement, Sirius Group has agreed to file a registration statement related to the resale of the Sirius Group Series B preference shares, Sirius Group common shares and Sirius Group warrants, as well as the Sirius Group common shares underlying the preference shares and warrants, within 30 days after the consummation of the Merger. In addition, Sirius Group has agreed to cooperate to effect an underwritten offering of such common shares upon the election of certain of the Sirius Group Private Placement Investors, which election must be made during the 30 business days after the date of a Mandatory Conversion Event (as defined under " Description of Sirius Group Share Capital—Series B Preference Shares ").

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Regulation S

        Regulation S under the Securities Act provides an exemption from registration requirements in the United States for offers and sales of securities that occur outside the United States. Rule 903 of Regulation S provides the conditions to the exemption for a sale by an issuer, a distributor, their respective affiliates or anyone acting on their behalf, while Rule 904 of Regulation S provides the conditions to the exemption for a resale by persons other than those covered by Rule 903. In each case, any sale must be completed in an offshore transaction, as that term is defined in Regulation S, and no directed selling efforts, as that term is defined in Regulation S, may be made in the United States.

        Sirius Group is a foreign issuer as defined in Regulation S. As a foreign issuer, securities that Sirius Group sells outside the United States pursuant to Regulation S are not considered to be restricted securities under the Securities Act, and, subject to the offering restrictions imposed by Rule 903, are freely tradable without registration or restrictions under the Securities Act, unless the securities are held by Sirius Group's affiliates. Generally, subject to certain limitations, holders of Sirius Group's restricted shares who are not affiliates of Sirius Group or who are affiliates of Sirius Group by virtue of their status as an officer or director of Sirius Group may, under Regulation S, resell their restricted shares in an "offshore transaction" if none of the seller, its affiliate nor any person acting on their behalf engages in directed selling efforts in the United States and, in the case of a sale of Sirius Group restricted shares by an officer or director who is an affiliate of Sirius Group solely by virtue of holding such position, no selling commission, fee or other remuneration is paid in connection with the offer or sale other than the usual and customary broker's commission that would be received by a person executing such transaction as agent. Additional restrictions are applicable to a holder of Sirius Group restricted shares who will be an affiliate of Sirius Group other than by virtue of his or her status as an officer or director of Sirius Group.

Rule 144

        All of Sirius Group's common shares that will be issued and outstanding upon the completion of the Merger, other than those common shares issued to Easterly stockholders in connection with the Merger, are "restricted securities" as that term is defined in Rule 144 under the Securities Act and may be sold publicly in the United States only if they are subject to an effective registration statement under the Securities Act or pursuant to an exemption from the registration requirement such as those provided by Rule 144 promulgated under the Securities Act. In general, beginning 90 days after the date of this proxy statement/prospectus, a person (or persons whose shares are aggregated) who, at the time of a sale, is not, and has not been during the three months preceding the sale, an affiliate of Sirius Group and has beneficially owned Sirius Group's restricted securities for at least six months will be entitled to sell the restricted securities without registration under the Securities Act, subject only to the availability of current public information about Sirius Group. Persons who are affiliates of Sirius Group and have beneficially owned Sirius Group's restricted securities for at least six months may sell a number of restricted securities within any three-month period that does not exceed the greater of the following:

    1% of the then outstanding common shares of the same class; or

    the average weekly trading volume of Sirius Group's common shares of the same class during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.

        Sales by affiliates of Sirius Group under Rule 144 are also subject to certain requirements relating to manner of sale, notice and the availability of current public information about Sirius Group.

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Rule 701

        In general, under Rule 701 of the Securities Act, each of Sirius Group's employees, consultants or advisors who purchases common shares from Sirius Group in connection with a compensatory stock plan or other written agreement executed prior to the completion of the Merger is eligible to resell those common shares in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144.

        In connection with the Merger, Sirius Group has implemented an Employee Share Purchase Program, which provides all employees of Sirius Group with a one-time opportunity to purchase between 100 and 1,000 Sirius Group common shares.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following tables set forth information regarding (i) the actual beneficial ownership of Easterly common stock as of August 31, 2018 (pre-Merger) and (ii) the actual beneficial ownership of Sirius Group common shares as of August 31, 2018 (pre-Merger) and the expected beneficial ownership of Sirius Group common shares immediately following the consummation of the Merger, by:

    each person who is, or is expected to be, the beneficial owner of more than 5% of such company's common shares;

    each person who is a current executive officer or director of such company; and

    all executive officers and directors such company as a group.

        Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days.

Beneficial Ownership of Easterly Common Stock Before the Merger

Name of Beneficial Owner(1)
  Number of
Shares
  %  

Easterly Acquisition Sponsor, LLC

    4,928,000     25.7 %

Polar Asset Management Partners Inc.(2)

   
3,171,070
   
16.5

%

GFIC II LLC(3)

             

Gerald Beeson(3)

             

Kenneth Griffin(3)

    2,003,100     10.4 %

Putnam Investments, LLC(4)

             

Putnam Investment Management, LLC(4)

             

The Putnam Advisory Company, LLC(4)

    1,627,444     8.5 %

Summit Partners Public Asset Management, LLC(5)

             

Summit Partners, L.P.(5)

             

Summit Partners Concentrated Growth L/S Master Fund, L.P.(5)

             

Summit Partners Alydar GP, L.P.(5)

             

Summit Partners Alydar GP, LLC(5)

             

Philip Furse(5)

             

Timothy Albright(5)

             

Robert MacAulay(5)

    1,200,000     6.2 %

David Cody(6)

   
4,928,000
   
25.7

%

Darrell Crate(6)

    4,928,000     25.7 %

Avshalom Kalichstein(6)

    4,928,000     25.7 %

David W. Knowlton

    24,000     *  

Neil Medugno

         

Justin Tuck

         

Jurgen Lika

         

All directors and executive officers as a group (Pre-Merger) (6 individuals)

    4,952,000     25.8 %

*
Less than one percent.

(1)
Ownership is based on 19,208,407 shares of Easterly common stock outstanding as of August 31, 2018. Except as described in the footnotes below and subject to applicable community property laws and similar laws, Easterly believes that each person listed above has sole voting and investment power with respect to such shares. Unless otherwise indicated, the business address of

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    the Sponsor and each of the directors and executive officers in this table is 205 Hudson Street, 7 th  Floor, New York, New York 10013. The table does not reflect record or beneficial ownership of the 6,750,000 Private Placement Warrants as these warrants are not exercisable within 60 days of August 31, 2018.

(2)
According to a Form 3 filed with the SEC on June 29, 2018 on behalf of Polar Asset Management Partners Inc. The business address of this stockholder is 401 Bay Street, Suite 1900, PO Box 19, Toronto, Ontario M5H 2Y4, Canada. Polar Asset Management Partners Inc., a company incorporated under the laws of Ontario, Canada, serves as investment advisor to Polar Multi-Strategy Master Fund, a Cayman Islands exempted company (" PMSMF "), and certain managed accounts (together with PMSMF, the " Polar Vehicles ") and has sole voting and investment discretion with respect to the securities reported herein which are held by the Polar Vehicles.

(3)
According to a Schedule 13G/A filed with the SEC on February 14, 2018 on behalf of GFIC II LLC (" GFIC "), Gerald Beeson and Kenneth Griffin with respect to shares of common stock (and warrants to purchase common stock) of Easterly owned by GFIC and Citadel Securities LLC. The business address of these stockholders is c/o Citadel LLC, 131 S. Dearborn Street, 32 nd  Floor, Chicago, IL 60603.

(4)
According to a Schedule 13G/A filed with the SEC on February 7, 2018 on behalf of Putnam Investments, LLC (" PI "), Putnam Investment Management, LLC (" PIM ") and Putnam Advisory Company, LLC (" PAC "). PIM individually beneficially owns 1,627,444 shares of common stock. PI wholly owns PIM and PAC, each a registered investment adviser. PIM is the investment adviser to the Putnam family of mutual funds. Putnam mutual funds managed by PIM, through their boards of trustees, have voting power. The business address of these stockholders is One Post Office Square, Boston, MA 02109.

(5)
According to a Schedule 13G filed with the SEC on March 5, 2018 on behalf of Summit Partners Public Asset Management, LLC (" SPPAM "), Summit Partners, L.P. (" SP "), Summit Partners Concentrated Growth L/S Master Fund, L.P. (the " Fund "), Summit Partners Alydar GP, L.P. (" Fund GP "), Summit Partners Alydar GP, LLC (" GP "), Philip Furse, Timothy Albright and Robert MacAulay. SPPAM is the investment manager with respect to the shares directly held by the Fund. SP is the Managing Member of SPPAM with respect to the shares directly held by the Fund. Fund GP is the general partner of the Fund with respect to the shares directly held by the Fund. GP is the general partner of Fund GP with respect to the shares directly held by the Fund. Philip Furse is the Chief Investment Officer of SPPAM and a Portfolio Manager of the Fund with respect to the shares directly held by the Fund. Timothy Albright is a Portfolio Manager of SPPAM with respect to the shares directly held by the Fund. Robert MacAulay is the Chief Risk Officer of SPPAM with respect to the shares directly held by the Fund. The business address of each of these stockholders is 222 Berkeley Street, 18th Floor, Boston, MA 02116, except for the Fund whose business address is 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands.

(6)
David Cody, Darrell Crate and Avshalom Kalichstein may be deemed to beneficially own shares held by the Sponsor by virtue of their shared control of the Sponsor. Mr. Cody, Mr. Crate and Mr. Kalichstein together have sole voting and investment power over the shares held by the Sponsor. The amount for Mr. Crate does not include 121,500 Easterly warrants owned by Mr. Crate as these warrants are not exercisable within 60 days of August 31, 2018.

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Beneficial Ownership of Sirius Group Common Shares Before and After the Merger

 
  Sirius Group Before
the Merger
  Sirius Group After
the Merger and
Related Transactions
 
Name of Beneficial Owner(1)
  Number of
Shares
  %   Number of
Shares
  %  

CM Bermuda Ltd.(2)

    120,000,000     100 %   105,930,689     83.7 %

Allan L. Waters

            500,000     *  

Kernan (Kip) V. Oberting

                 

Monica Cramér Manhem

                 

Jeffrey W. Davis

                 

Gene Boxer

                 

Laurence Liao

                 

Robert L. Friedman

                 

Meyer (Sandy) Frucher

                 

All directors and executive officers as a group (Pre-Merger and Post-Merger) (8 individuals)

            500,000     *  

*
Less than one percent.

(1)
Ownership pre-Merger is based on 120.0 million common shares of Sirius Group outstanding as of August 31, 2018. Ownership post-Merger is based on 126.6 million common shares outstanding, which assumes (i) the Exchange Ratio is equal to 0.586, (ii) no Easterly stockholders exercise their redemption rights in connection with the Merger Proposal, (iii) Sirius Group issues 11.4 million common shares and Series B preference shares convertible into common shares in connection with the Sirius Group Private Placement, including 0.5 million common shares to Mr. Waters, (iv) Sirius Group redeems 14.1 million common shares from CM Bermuda pursuant to the Common Shares Redemption Agreement and (v) all of the issued and outstanding Sirius Group Series A redeemable preference shares are redeemed pursuant to the Preference Shares Redemption Agreement prior to the closing of the Merger. Such percentages do not take into account (i) the issuance of up to 14.1 million shares under Sirius Group's Long Term Incentive Plan and 2018 Omnibus Incentive Plan or (ii) the issuance of any shares upon the exercise of warrants to purchase Sirius Group common shares that may remain outstanding following the Merger (which would be 5.9 million Sirius Group common shares using the assumed Exchange Ratio) or that are issued pursuant to the Sirius Group Private Placement (which are estimated to be approximately 5.4 million Sirius Group common shares). If the facts differ from these assumptions, Easterly's stockholders may experience dilution of their ownership interest unless they elect to have their shares of Easterly common stock redeemed in connection with the Merger Proposal. Except as described in the footnotes below and subject to applicable community property laws and similar laws, Sirius Group believes that each person listed above has sole voting and investment power with respect to such shares. Unless otherwise indicated, the business address of each of the directors and executive officers in this table is 14 Wesley Street Hamilton HM 11, Bermuda.

(2)
CM Bermuda Ltd. (" CM Bermuda ") is a direct wholly owned subsidiary of CMIG International Holding Pte. Ltd. (" CMIG International "). The board of directors of CMIG International, which is comprised of seven members exercises voting and dispositive control over the common shares held by CM Bermuda. The business address of CM Bermuda is Cannon's Court, 22 Victoria Street, Hamilton, HM12, Bermuda and the business address of CMIG International is 8 Marina Boulevard #13-01, Marina Bay Financial Centre, Tower 1, Singapore 018981.

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RELATED PERSON TRANSACTIONS

Relationships with our Controlling Shareholder

        In 2017, Sirius Group expensed various operating costs on behalf of CMIG International which totaled $0.9 million pre-tax. These costs primarily related to external consulting services associated with the CMIG International transactional accounting for its acquisition of Sirius Group, various due diligence matters, and other investment-related activities.

        In connection with the closing of the Merger, Sirius Group and CM Bermuda will enter into the Registration Rights Agreement, which will govern certain rights and obligations of Sirius Group and CM Bermuda with respect to the registration of the Sirius Group common shares owned by CM Bermuda, and CM Bermuda will deliver the Lock-Up Agreement, pursuant to which it will agree not to sell any Sirius Group common shares for a period of 180 days from the Effective Time without the consent of Sirius Group, subject to specified exemptions. See " Proposal No. 1—The Merger Proposal—Agreements Related to the Merger Agreement " for additional information.

Transactions Related to the Merger

    Sirius Group Private Placement

        In connection with the closing of the Merger, Sirius Group expects to complete the Sirius Group Private Placement at a price per share equal to (i) 1.05 multiplied by (ii) the Sirius Group September 30 Adjusted DBVPS, estimated as of August 31, 2018 to be $17.77. Gross proceeds of the Sirius Group Private Placement, together with cash in the Trust Account upon the closing of the Merger (which was $148.0 million as of August 31, 2018, before taking into account any redemptions of Easterly common stock or other transactions related to or in connection with the Merger Proposal), are intended to aggregate up to $350 million. Sirius Group's Chief Executive Officer, Allan L. Waters, has indicated his intent to purchase 500,000 common shares in the Sirius Group Private Placement for an aggregate purchase price of approximately $8.9 million.

        In connection with the closing of the Sirius Group Private Placement, Sirius Group, CM Bermuda and the Preference Share Investors will enter into a shareholders agreement (the " Shareholders Agreement "), which will govern certain matters with respect to the governance of Sirius Group, the voting of CM Bermuda's common shares, the repurchase of CM Bermuda's common shares and certain other matters. The form of Shareholders Agreement is filed as an exhibit to the registration statement of which this proxy statement/prospectus forms a part.

        Pursuant to the Shareholders Agreement, until the third anniversary of the date of the closing of the Sirius Group Private Placement: (i) CM Bermuda will vote in favor of the election of the number of Independent Directors (as such term is defined in the Shareholders Agreement) as is necessary to provide that at least a majority of the Board of Directors of Sirius Group is comprised of Independent Directors; and (ii) CM Bermuda will not vote in favor of the removal of any director (other than any director affiliated with CM Bermuda) other than for cause. After the third anniversary of the date of the closing of the Sirius Group Private Placement (or earlier in the event of an increase to the size of the Board of Directors), CM Bermuda will not vote in favor of the election of any director not then serving on the Board of Directors (including any election to fill a vacancy then existing on the Board of Directors as a result of death, resignation, removal, expansion of the Board of Directors or otherwise) who is not an Agreed Director. "Agreed Director" means an Independent Director mutually agreeable to CM Bermuda and Preference Share Investors representing a majority of the Sirius Group Series B preference shares; provided , that if CM Bermuda and the Preference Share Investors have not identified an Agreed Director after negotiating in good faith for a period of 60 days, then an Agreed Director means any Independent Director recommended for election by the Nominating and Governance Committee of the Sirius Group Board of Directors.

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        Pursuant to the Shareholders Agreement, CM Bermuda will also agree to vote (i) in favor of a Qualified Sale Transaction (as such term is defined in the Shareholders Agreement) that is approved by a majority of Independent Directors and 80% of Sirius Group's voting shares after the first anniversary of the date of the closing of the Sirius Group Private Placement, and (ii) against any merger, amalgamation, consolidation or similar transaction or any sale or transfer of all or substantially all of Sirius Group's consolidated assets, in each case where the per share value of the consideration received by CM Bermuda in such transaction is greater than the per share value of the consideration received by any other holder of Sirius Group common shares.

        The Shareholders Agreement also grants the Preference Share Investors tag-along rights to the extent Sirius Group agrees to repurchase or redeem any common shares held by CM Bermuda.

        The Shareholders Agreement terminates on the date that fewer than 25% of the Sirius Group Series B preference shares issued in the Sirius Group Private Placement are outstanding, and earlier with respect to any Preference Share Investor at the time that it or its affiliates or permitted assigns ceases to own any Sirius Group Series B preference shares.

    Common Shares Redemption Agreement

        Prior to the closing of the Merger, Sirius Group and CM Bermuda will enter into the Common Shares Redemption Agreement, pursuant to which, effective as of and subject to the closing of the Merger, Sirius Group will redeem Sirius Group common shares from CM Bermuda, at a price per share equal to (i) 1.05 multiplied by (ii) the Sirius Group September 30 Adjusted DBVPS, estimated as of August 31, 2018 to be $17.77, for an aggregate amount of between $120 million and $250 million, as elected by CM Bermuda at least two business days in advance of the closing of the Merger. Assuming a redemption amount of approximately $250 million at a price per share of $17.77, Sirius Group would redeem 14.1 million common shares from CM Bermuda in connection with the Common Shares Redemption Agreement. Investors are cautioned that this is only an estimate based on the foregoing assumptions, and is subject to change.

Policies and Procedures for Related Person Transactions

        Prior to the completion of the Merger, the Sirius Group board of directors will approve policies and procedures with respect to the review and approval of certain transactions between Sirius Group and a "Related Person," or a "Related Person Transaction," which is referred to herein as the " Related Person Transaction Policy ." Pursuant to the terms of the Related Person Transaction Policy, the disinterested members of the board of directors will review and decide whether to approve or ratify any Related Person Transaction. Any Related Person Transaction will be required to be reported to the Sirius Group legal department and Sirius Group legal department will then determine whether it should be submitted to the Audit & Risk Management Committee for concurrent consideration by its disinterested members.

        A " Related Person Transaction " is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) that would be reportable by Sirius Group under Item 404(a) of Regulation S-K in which Sirius Group (including any of its subsidiaries) was, is or will be a participant, the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect interest.

        A " Related Person " means any person who is, or at any time since the beginning of Sirius Group's last fiscal year was a director or executive officer of Sirius Group or a nominee to become a director of Sirius Group; any person who is known to be the beneficial owner of more than 5% of the Sirius Group common shares; any immediate family member of any of the foregoing persons, including any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than

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5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than 5% beneficial owner; and any firm, corporation or other entity in which any of the foregoing persons is a general partner or, for other ownership interests, a limited partner or other owner in which such person has a beneficial ownership interest of 10% or more.

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PRICE RANGE OF SECURITIES AND DIVIDENDS

Easterly

    Price Range of Easterly Securities

        Easterly common stock, warrants and units are currently quoted on the Nasdaq Capital Market under the symbols "EACQ", "EACQW" and "EACQU", respectively. Easterly's units commenced public trading on July 30, 2015, and its common stock and warrants became available for public trading on September 22, 2015.

        The following table sets forth, for the calendar quarter indicated, the high and low sales prices per Easterly Common Stock, public warrant as reported on the Nasdaq Capital Market for the period from January 1, 2016 through [                        ], 2018.

 
  Common Stock
(EACQ)
  Warrants
(EACQW)
  Units (EACQU)  
 
  High   Low   High   Low   High   Low  

Fiscal Year Ended December 31, 2016:

                                     

Quarter ended 3/31/2016

  $ 9.90   $ 9.39   $ 0.40   $ 0.32   $ 10.10   $ 9.56  

Quarter ended 6/30/2016

  $ 9.85   $ 9.60   $ 0.81   $ 0.30   $ 10.18   $ 9.60  

Quarter ended 9/30/2016

  $ 10.00   $ 9.65   $ 0.70   $ 0.54   $ 11.24   $ 9.92  

Quarter ending 12/31/2016

  $ 10.50   $ 9.70   $ 0.76   $ 0.14   $ 12.12   $ 9.96  

Fiscal Year Ended December 31, 2017:

                                     

Quarter ended 3/31/2017

  $ 11.85   $ 9.85   $ 0.55   $ 0.25   $ 12.64   $ 10.05  

Quarter ended 6/30/2017

  $ 10.05   $ 9.90   $ 0.87   $ 0.22   $ 10.75   $ 10.48  

Quarter ended 9/30/2017

  $ 10.15   $ 9.25   $ 0.95   $ 0.66   $ 10.15   $ 9.97  

Quarter ended 12/31/2017

  $ 10.15   $ 9.45   $ 0.97   $ 0.59   $ 11.05   $ 10.00  

Fiscal Year Ending December 31, 2018:

                                     

Quarter ended 3/31/18

  $ 10.30   $ 10.00   $ 0.89   $ 0.60   $ 10.10   $ 10.10  

Quarter ended 6/30/18

  $ 10.35   $ 10.10   $ 1.29   $ 0.02   $ 10.45   $ 10.45  

Quarter ending 9/30/18 (through [    ]/[    ]/18)

  $ [      ]   $ [      ]   $ [    ]   $ [    ]   $ [      ]   $ [      ]  

        The closing prices of Easterly common stock and warrants as reported on June 22, 2018, the last trading day before the Merger was publicly announced, were $10.30 and $0.32, respectively. The closing prices of Easterly common stock and warrants as reported on [                        ], 2018 the most recent practicable date prior to the printing of this proxy statement/prospectus, were $[            ] and $[            ], respectively.

         The market prices of Easterly's securities will fluctuate prior to the consummation of the Merger. You should obtain current market quotations for Easterly's securities.

        On [                        ], 2018, there was four record holders and approximately [            ] beneficial holders of Easterly's common stock, and [            ] record holders and approximately [            ] beneficial holders of Easterly's warrants and one record holder and approximately [            ] beneficial holders of Easterly's units.

    Dividend Policy of Easterly

        Easterly has not paid any cash dividends on its common stock to date and does not intend to pay cash dividends prior to the completion of the Merger. The payment of cash dividends in the future will be dependent upon Easterly's revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Merger.

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Sirius Group

Price Range of Securities of Sirius Group

        Historical market price information regarding Sirius Group's securities is not provided because prior to the Merger there is no public market for Sirius Group's securities.

        As of the date of this proxy statement/prospectus, CM Bermuda is the only holder of Sirius Group common shares.

    Dividend Policy of Sirius Group Following the Merger

        Sirius Group does not currently pay dividends on any of its common shares. Following completion of the Merger, Sirius Group's board of directors will consider whether to pay dividends on its common shares in the future. Any future determination to pay dividends will be made at the discretion of the board of directors and will depend upon many factors, including Sirius Group's financial condition, earnings, legal and regulatory requirements, the maintenance of stock regulatory and rating agency ratios, enterprise risk management best practices, restrictions in its debt agreements and other factors the board of directors deems relevant. While it is not expected that Sirius Group will have any preference shares issued and outstanding upon the completion of the Merger, if it were to issue such shares in the future, the board of directors may declare and pay a dividend on one or more classes of shares to the extent one or more classes of shares ranks senior to or has a priority over another class of shares.

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APPRAISAL RIGHTS

        Easterly's stockholders do not have appraisal rights in connection with the Merger under Delaware law.


DELIVERY OF DOCUMENTS TO STOCKHOLDERS

        Pursuant to the rules of the SEC, Easterly and servicers that Easterly employ to deliver communications to Easterly's stockholders are permitted to deliver to two or more stockholders sharing the same address a single copy of this proxy statement/prospectus. Upon written or oral request, Easterly will deliver a separate copy of this proxy statement/prospectus to any stockholder at a shared address to which a single copy of this proxy statement/prospectus was delivered and who wishes to receive separate copies in the future. Stockholders receiving multiple copies of this proxy statement/prospectus may likewise request that Easterly deliver single copies of the proxy statement/prospectus in the future. Stockholders may notify Easterly of their requests by calling or writing it at Easterly's executive office is at 205 Hudson Street, 7 th  Floor, New York, New York 10013, telephone number (646) 712-8300.


LEGAL MATTERS

        Certain legal matters relating to the validity of the common shares to be issued hereunder will be passed upon for Sirius Group by Conyers Dill & Pearman Limited.


EXPERTS

        The audited financial statements of Easterly Acquisition Corp. as of and for the years ended December 31, 2017 and 2016 and for the period from April 29, 2015 (inception) to December 31, 2015, included in this proxy statement/prospectus have been included herein in reliance upon the reports of Marcum LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

        The consolidated financial statements of Sirius International Insurance Group, Ltd. as of December 31, 2017 and 2016 and for each of the three years in the period ended December 31, 2017 included in this proxy statement/prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

        In connection with its appointment as independent registered public accounting firm, PricewaterhouseCoopers LLP (" PwC ") completed an independence assessment to evaluate the services and relationships with Sirius Group that may bear on PwC's independence under the SEC and Public Company Accounting Oversight Board (United States) (" PCAOB ") independence rules. During the year ended December 31, 2017, a PwC member firm provided a non-audit service to syndicate of insurance companies of which Sirius International, an indirect wholly owned subsidiary of Sirius Group, was a member. The service related to the provision of an expert service in connection with a legal procedure for an insurance claim that was immaterial to Sirius Group.

        PwC provided to the Audit & Risk Management Committee of Sirius Group an overview of the facts and circumstances, including the entity affected, the nature of and period over which the service was provided, the fee billed and other factors related to its assessment of independence. PwC noted the service was entered into before PwC had been engaged as Sirius Group's independent registered public accounting firm and during a period when SEC and PCAOB independence was not required of Sirius Group and its affiliates. The filing of this proxy statement/prospectus necessitates compliance with the SEC's independence rules, a circumstance that was not contemplated when the service was entered into. Based on the totality of the information available, the Audit & Risk Management Committee of Sirius Group and PwC each separately concluded that PwC is capable of exercising objective and impartial judgement in connection with the audit of Sirius Group's consolidated financial statements as of and for the year ended December 31, 2017.

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TRANSFER AGENT AND REGISTRAR

        The transfer agent and registrar for Easterly's securities is Continental Stock Transfer & Trust Company.


SUBMISSION OF STOCKHOLDER PROPOSALS

        Easterly's board of directors is aware of no other matter that may be brought before the Easterly special meeting. Under Delaware law and Easterly's bylaws, only business that is specified in the notice of special meeting to stockholders may be transacted at the Easterly special meeting.


FUTURE STOCKHOLDER PROPOSALS

        Easterly does not expect to hold a 2018 annual meeting of stockholders because it will not be a separate public company if the Merger is completed. Alternatively, if Easterly does not consummate a Merger by November 30, 2018, Easterly is required to begin the dissolution process provided for in Easterly's charter. Easterly will liquidate as soon as practicable following such dissolution and will conduct no annual meetings thereafter.


WHERE YOU CAN FIND MORE INFORMATION

        Sirius Group has filed with the SEC a registration statement on Form S-4 under the Securities Act with respect to the securities offered by this proxy statement/prospectus. This proxy statement/prospectus does not contain all of the information included in the registration statement. For further information pertaining to Sirius Group and its securities, you should refer to the registration statement and to its exhibits. Whenever reference is made in this proxy statement/prospectus to any of Sirius Group's or Easterly's contracts, agreements or other documents, the references are not necessarily complete, and you should refer to the Annexes to the proxy statement/prospectus and the exhibits attached to the registration statement for copies of the actual contract, agreement or other document.

        Upon the effectiveness of the registration statement of which this proxy statement/prospectus forms a part, Sirius Group be subject to the periodic reporting requirements of the Exchange Act and expects to file annual, quarterly and current reports, proxy statements and other information with the SEC. You can read Sirius Group's and Easterly's SEC filings, including Sirius Group's registration statement of which this proxy statement/prospectus forms a part, over the internet at the SEC's website at www.sec.gov . You may also read and copy any document Sirius Group or Easterly files with the SEC at the SEC public reference room located at 100 F Street, N.E., Room 1580 Washington, D.C., 20549. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. You may also obtain copies of the materials described above at prescribed rates by writing to the SEC, Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.

        If you would like additional copies of this proxy statement/prospectus or if you have questions about the Merger or the proposals to be presented at the Easterly special meeting, you should contact Easterly's proxy solicitation agent at the following address and telephone number:

Morrow Sodali LLC
470 West Avenue, 3 rd  Floor
Stamford, CT 06902

Stockholders, please call toll free: (800) 662-5200
Banks and Brokerage Firms, please call collect: (203) 658-9400
Email: Easterly.info@morrowsodali.com

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         If you are a stockholder of Easterly and would like to request documents, please do so by [                        ], 2018 in order to receive them before the Easterly special meeting . If you request any documents from Easterly, it will mail them to you by first class mail, or another equally prompt means.

        All information contained in this proxy statement/prospectus relating to Easterly has been supplied by Easterly, and all such information relating to Sirius Group has been supplied by Sirius Group. Information provided by either Easterly or Sirius Group does not constitute any representation, estimate or projection of any other party.

        This document is a proxy statement for Easterly for the Easterly special meeting. Easterly and Sirius Group have not authorized anyone to give any information or make any representation about the Merger, Easterly or Sirius Group that is different from, or in addition to, that contained in this proxy statement/prospectus. Therefore, if anyone does give you information of this sort, you should not rely on it. The information contained in this document speaks only as of the date of this document unless the information specifically indicates that another date applies.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 
  Page  

Unaudited Interim Consolidated Financial Statements:

       

Consolidated Balance Sheets as at June 30, 2018 and December 31, 2017

   
F-3
 

Consolidated Statements of Income for the three months and six months ended June 30, 2018 and 2017

   
F-4
 

Consolidated Statements of Comprehensive Income for the three months and six months ended June 30, 2018 and 2017

   
F-5
 

Consolidated Statements of Shareholder's Equity for the six months ended June 30, 2018 and 2017

   
F-6
 

Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017

   
F-7
 

Notes to Consolidated Financial Statements

   
F-8
 

Audited Consolidated Financial Statements:

   
 
 

Report of Independent Registered Public Accounting Firm

   
F-63
 

Consolidated Balance Sheets as at December 31, 2017 and 2016

   
F-64
 

Consolidated Statements of (Loss) Income for the years ended December 31, 2017, 2016, and 2015

   
F-65
 

Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2017, 2016, and 2015

   
F-66
 

Consolidated Statements of Shareholder's Equity for the years ended December 31, 2017, 2016, and 2015

   
F-67
 

Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016, and 2015

   
F-68
 

Notes to Consolidated Financial Statements

   
F-69
 

Audited Consolidated Financial Statement Schedules:

   
 
 

Schedule I—Summary of Investments—Other than Investments in Related Parties, as at December 31, 2017

   
F-175
 

Schedule II—Condensed Financial Information of Registrant, as at December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016, and 2015

   
F-176
 

Schedule III—Supplementary Insurance Information, as at and for the years ended December 31, 2017, 2016, and 2015

   
F-181
 

Schedule IV—Reinsurance, for the years ended December 31, 2017, 2016, and 2015

   
F-182
 

Schedule V—Valuation and Qualifying Accounts, as at and for the years ended December 31, 2017, 2016, and 2015

   
F-183
 

Schedule VI—Insurance Operations, as at and for the years ended December 31, 2017, 2016 and 2015

   
F-184
 

Table of Contents

 
  Page  

EASTERLY ACQUISITION CORP.

 

Condensed Consolidated Financial Statements:

   
 
 

Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017

   
F-185
 

Condensed Consolidated Statements of Operations for the Three Months and Six Months ended June 30, 2018 and 2017

   
F-186
 

Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2018 and 2017

   
F-187
 

Notes to Condensed Consolidated Financial Statements

   
F-188
 

Audited Consolidated Financial Statements:

   
 
 

Report of Independent Registered Public Accounting Firm

   
F-207
 

Consolidated Balance Sheets as of December 31, 2017 and 2016

   
F-208
 

Consolidated Statements of Operations for the Years ended December 31, 2017 and 2016 and the Period from April 29, 2015 (Inception) through December 31, 2015

   
F-209
 

Consolidated Statements of Changes in Stockholders' Equity for the Years ended December 31, 2017 and 2016 and the Period from April 29, 2015 (Inception) through December 31, 2015

   
F-210
 

Consolidated Statements of Cash Flows for the Years ended December 31, 2017 and 2016 and the Period from April 29, 2015 (Inception) through December 31, 2015

   
F-211
 

Notes to Consolidated Financial Statements

   
F-212
 

Table of Contents


Sirius International Insurance Group, Ltd.

Consolidated Balance Sheets

As at June 30, 2018 and December 31, 2017

(Expressed in millions of U.S. dollars, except share information)
  June 30, 2018   December 31, 2017  
 
  Unaudited
   
 

Assets

             

Fixed maturity investments, trading at fair value ( Amortized cost 2018: $1,883.1; 2017: $2,195.3 )

  $ 1,885.4   $ 2,180.0  

Short-term investments, at fair value ( Amortized cost 2018: $814.5; 2017: $625.3 )

    819.6     625.0  

Equity securities, trading at fair value ( Cost 2018: $390.4; 2017: $275.1 )

    415.1     299.2  

Other long-term investments, at fair value ( Cost 2018: $285.7; 2017: $255.5 )

    316.6     269.5  

Cash

    114.1     215.8  

Restricted cash

    15.9     14.8  

Total investments and cash

    3,566.7     3,604.3  

Accrued investment income

    12.5     14.1  

Insurance and reinsurance premiums receivable

    807.4     543.6  

Reinsurance recoverable on unpaid losses

    358.3     319.7  

Reinsurance recoverable on paid losses

    17.8     17.5  

Funds held by ceding companies

    157.4     153.2  

Ceded unearned insurance and reinsurance premiums

    207.3     106.6  

Deferred acquisition costs

    151.4     120.9  

Deferred tax asset

    197.9     244.1  

Accounts receivable on unsettled investment sales

        0.3  

Goodwill

    400.8     401.0  

Intangible assets

    208.4     216.3  

Other assets

    124.2     82.0  

Total assets

  $ 6,210.1   $ 5,823.6  

Liabilities

             

Loss and loss adjustment expense reserves

  $ 1,827.1   $ 1,898.5  

Unearned insurance and reinsurance premiums

    800.5     506.8  

Ceded reinsurance payable

    254.2     139.1  

Funds held under reinsurance treaties

    72.6     73.4  

Deferred tax liability

    255.7     282.2  

Debt

    695.9     723.2  

Accounts payable on unsettled investment purchases

    6.2     0.3  

Other liabilities

    191.8     176.8  

Total liabilities

    4,104.0     3,800.3  

Commitments and Contingencies (See Note 18)

             

Mezzanine equity

             

Series A redeemable preference shares

    108.8     106.1  

Common shareholder's equity

             

Common shares ( shares issued and outstanding: 120,000,000 )

    1.2     1.2  

Additional paid-in surplus

    1,199.3     1,197.9  

Retained earnings

    998.2     858.4  

Accumulated other comprehensive (loss)

    (202.4 )   (140.5 )

Total common shareholder's equity

    1,996.3     1,917.0  

Non-controlling interests

    1.0     0.2  

Total equity

    1,997.3     1,917.2  

Total liabilities, mezzanine equity, and equity

  $ 6,210.1   $ 5,823.6  

   

See Notes to Consolidated Financial Statements

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Sirius International Insurance Group, Ltd.

Consolidated Statements of Income

For the three months and six months ended June 30, 2018 and 2017

Unaudited

 
  Three months ended June 30,   Six months ended June 30,  
(Expressed in millions of U.S. dollars, except share and
per share information)
  2018   2017   2018   2017  

Revenues

                         

Net earned insurance and reinsurance premiums

  $ 308.9   $ 243.9   $ 593.4   $ 467.8  

Net investment income

    19.2     16.6     30.0     32.1  

Net realized investment gains (losses)

    7.8     2.1     4.1     (2.5 )

Net unrealized investment gains (losses)

    24.7     (16.3 )   40.7     (22.5 )

Net foreign exchange gains

    25.6     3.5     22.1     1.3  

Other revenue

    55.6     2.8     79.0     2.3  

Total revenues

    441.8     252.6     769.3     478.5  

Expenses

                         

Loss and loss adjustment expenses

    151.4     133.1     292.4     255.4  

Insurance and reinsurance acquisition expenses

    66.8     44.5     129.8     94.0  

Other underwriting expenses

    38.2     30.8     81.4     57.9  

General and administrative expenses

    24.2     24.6     38.5     40.8  

Intangible asset amortization expenses

    4.0     2.4     7.9     2.4  

Interest expense on debt

    7.8     4.8     15.5     9.6  

Total expenses

    292.4     240.2     565.5     460.1  

Pre-tax income

    149.4     12.4     203.8     18.4  

Income tax expense

    (51.2 )   (2.6 )   (62.3 )   (1.5 )

Net income

    98.2     9.8     141.5     16.9  

Income attributable to non-controlling interests

    (0.4 )   (9.6 )   (0.6 )   (9.0 )

Income before accrued dividends on Series A redeemable preference shares

    97.8     0.2     140.9     7.9  

Accrued dividends on Series A redeemable preference shares

        (1.0 )   (2.6 )   (1.0 )

Net income (loss) attributable to Sirius Group's common shareholder

  $ 97.8   $ (0.8 ) $ 138.3   $ 6.9  

Net income (loss) per common share and common share equivalent

                         

Basic earnings per common share and common share equivalent

  $ 0.78   $ (0.01 ) $ 1.11   $ 0.06  

Diluted earnings per common share and common share equivalent

  $ 0.78   $ (0.01 ) $ 1.11   $ 0.06  

Weighted average number of common shares and common share equivalents outstanding:

                         

Basic weighted average number of common shares and common share equivalents outstanding

    120,000,000     120,000,000     120,000,000     120,000,000  

Diluted weighted average number of common shares and common share equivalents outstanding

    120,000,000     120,000,000     120,000,000     120,000,000  

   

See Notes to Consolidated Financial Statements

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Sirius International Insurance Group, Ltd.

Consolidated Statements of Comprehensive Income

For the three months and six months ended June 30, 2018 and 2017

Unaudited

 
  Three months
ended June 30,
  Six months
ended June 30,
 
(Expressed in millions of U.S. dollars)
  2018   2017   2018   2017  

Comprehensive income

                         

Net income

  $ 98.2   $ 9.8   $ 141.5   $ 16.9  

Other comprehensive (loss) income, net of tax

                         

Change in foreign currency translation, net of tax

    (48.5 )   33.5     (61.9 )   47.2  

Total other comprehensive (loss) income

    (48.5 )   33.5     (61.9 )   47.2  

Comprehensive income

    49.7     43.3     79.6     64.1  

Net (income) loss attributable to non-controlling interests

    (0.4 )   (9.6 )   (0.6 )   (9.0 )

Comprehensive income attributable to Sirius Group's common shareholder

  $ 49.3   $ 33.7   $ 79.0   $ 55.1  

   

See Notes to Consolidated Financial Statements

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Sirius International Insurance Group, Ltd.

Consolidated Statements of Shareholder's Equity

For the six months ended June 30, 2018 and 2017

Unaudited

 
  Six months
ended June 30,
 
(Expressed in millions of U.S. dollars)
  2018   2017  

Common shares

             

Balance at beginning and end of period

  $ 1.2   $ 1.2  

Additional paid-in surplus

             

Balance at beginning of period

    1,197.9     1,184.6  

Capital contribution from former parent

    1.4     9.6  

Balance at end of period

    1,199.3     1,194.2  

Retained earnings

             

Balance at beginning of period

    858.4     1,014.5  

Cumulative effect of an accounting change (See Note 2 )

    1.6      

Balance at beginning of period, as adjusted

    860.0     1,014.5  

Net income

    141.5     16.9  

Income attributable to non-controlling interests

    (0.6 )   (9.0 )

Accrued dividends on Series A redeemable preference shares

    (2.6 )   (1.0 )

Other, net

    (0.1 )    

Balance at end of period

    998.2     1,021.4  

Accumulated other comprehensive (loss)

             

Balance at beginning of period

    (140.5 )   (212.2 )

Accumulated net foreign currency translation gains (losses)

             

Balance at beginning of period

    (140.5 )   (212.2 )

Net change in foreign currency translation

    (61.9 )   47.2  

Balance at the end of period

    (202.4 )   (165.0 )

Balance at the end of period

    (202.4 )   (165.0 )

Total common shareholder's equity

  $ 1,996.3   $ 2,051.8  

Non-controlling interests

    1.0     250.2  

Total equity

  $ 1,997.3   $ 2,302.0  

   

See Notes to Consolidated Financial Statements

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Sirius International Insurance Group, Ltd.

Consolidated Statements of Cash Flows

For the six months ended June 30, 2018 and 2017

Unaudited

 
  Six months
ended June 30,
 
(Expressed in millions of U.S. dollars)
  2018   2017  

Cash flows from operations:

             

Net income

  $ 141.5   $ 16.9  

Adjustments to reconcile net income to net cash provided from (used for) operations:

             

Net realized and unrealized investment (gains) losses

    (44.7 )   25.0  

Amortization of premium on fixed maturity investments

    5.6     10.0  

Amortization of intangible assets

    7.9     2.4  

Depreciation and other amortization

    4.8     3.8  

Other operating items:

             

Net change in loss and loss adjustment expense reserves

    18.6     (30.7 )

Net change in reinsurance recoverable on paid and unpaid losses

    (69.1 )   3.3  

Net change in funds held by ceding companies

    (18.9 )   (28.8 )

Net change in unearned insurance and reinsurance premiums

    348.1     139.4  

Net change in ceded reinsurance payable

    141.1     13.7  

Net change in ceded unearned insurance and reinsurance premiums

    (123.4 )   13.8  

Net change in insurance and reinsurance premiums receivable

    (320.0 )   (129.6 )

Net change in deferred acquisition costs

    (38.2 )   (36.3 )

Net change in funds held under reinsurance treaties

    4.7     (5.8 )

Net change in current and deferred income taxes, net

    50.5     (4.1 )

Net change in other assets and liabilities, net

    (73.5 )   (18.4 )

Net cash provided from (used for) operations

    35.0     (25.4 )

Cash flows from investing activities:

             

Net change in short-term investments

    (218.6 )   (4.3 )

Sales of fixed maturities and convertible fixed maturity investments

    945.0     932.7  

Maturities, calls, and paydowns of fixed maturity and convertible fixed maturity investments

    58.0     193.7  

Sales of common equity securities

    189.0     29.1  

Distributions and redemptions of other long-term investments

    60.2     37.3  

Sales of consolidated subsidiaries, net of cash sold

        0.8  

Contributions to other long-term investments

    (94.8 )   (89.3 )

Purchases of common equity securities

    (317.3 )   (107.7 )

Purchases of fixed maturities and convertible fixed maturity investments

    (753.2 )   (609.6 )

Purchases of consolidated subsidiaries, net of cash acquired

        (354.5 )

Net change in unsettled investment purchases and sales

    6.7     0.7  

Other, net

    (1.7 )   (3.0 )

Net cash (used for) provided from investing activities

    (126.7 )   25.9  

Cash flows from financing activities:

             

Capital contribution from former parent

    1.4     9.6  

Repayment of debt

        (3.7 )

Change in collateral held on Interest Rate Cap

        (0.8 )

Cash dividends paid to non-controlling interests

        (9.4 )

Other, net

        (0.9 )

Net cash provided from financing activities

    1.4     (5.2 )

Effect of exchange rate changes on cash

    (10.3 )   6.8  

Net (decrease) increase in cash during period

    (100.6 )   2.1  

Cash and restricted cash balance at beginning of period

    230.6     137.1  

Cash and restricted cash balance at end of period

  $ 130.0   $ 139.2  

   

See Notes to Consolidated Financial Statements

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements

Unaudited

Note 1. General

        Sirius International Insurance Group, Ltd. (the "Company") is a Bermuda exempted company whose principal businesses are conducted through its wholly and majority owned insurance subsidiaries (collectively with the Company, "Sirius Group"). The company provides insurance, reinsurance, and insurance services on a worldwide basis.

Note 2. Summary of significant accounting policies

Basis of presentation

        The accompanying unaudited consolidated financial statements at June 30, 2018, have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for interim financial information. The accompanying unaudited consolidated financial statements present the consolidated results of operations, financial condition, and cash flows of the Company and its subsidiaries and those entities in which the Company has control and a majority economic interest as well as those variable interest entities ("VIEs") that meet the requirements for consolidation. All intercompany transactions have been eliminated in consolidation.

        These unaudited consolidated financial statements do not include all disclosures normally included in annual financial statements prepared in accordance with GAAP and should be read in conjunction with the audited Consolidated Financial Statements and the related notes for the year ended December 31, 2017. The consolidated financial information as of December 31, 2017 included herein has been derived from the audited Consolidated Financial Statements as of December 31, 2017.

        The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. Tabular dollar amounts are in millions, with the exception of share and per share amounts. All amounts are reported in U.S. dollars, except where noted otherwise.

        During the second quarter of 2018, management identified a disclosure misclassification within the categories of mortgage and asset backed securities presented in tables within Note 7 and Note 8 . The impact to the year ended December 31, 2017 disclosure was not considered to be material. In order to improve the consistency and comparability of the financial statement disclosures, management revised the December 31, 2017 disclosure related to mortgage and asset backed securities within Note 7 and Note 8 to be consistent with the June 30, 2018 presentation.

Recently adopted changes in accounting principles

Definition of a business

        Effective January 1, 2018, Sirius Group adopted Accounting Standards Update ("ASU") 2017-01, Business Combinations: Clarifying the Definition of a Business (Accounting Standards Codification ("ASC") 805), which clarifies the definition of a business and affects the determination of whether

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 2. Summary of significant accounting policies (Continued)

acquisitions or disposals are accounted for as assets or as a business. Under the new guidance, when substantially all of the fair value of the assets is concentrated in a single identifiable asset or a group of similar identifiable assets, it is not a business. Sirius Group has not had any transactions falling within the scope of the guidance during the six months ended June 30, 2018 and, accordingly, adoption did not have any impact on Sirius Group's financial statements.

Financial instruments—recognition and measurement

        Effective January 1, 2018, Sirius Group adopted ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (ASC 825-10). The new guidance modifies the guidance for financial instruments, including investments in equity securities. Under the new guidance, all equity securities with readily determinable fair values are required to be measured at fair value with changes therein recognized through current period earnings. In addition, the new guidance requires a qualitative assessment for equity securities without readily determinable fair values to identify impairment, and for impaired equity securities to be measured at fair value. Sirius Group measures its portfolio of investment securities at fair value with changes therein recognized through current period earnings and, accordingly, adoption did not have any impact on its financial statements.

Revenue recognition

        Effective January 1, 2018, Sirius Group adopted ASU 2014-09, Revenue from Contracts with Customers (ASC 606), which modifies the guidance for revenue recognition. The scope of the new guidance excludes insurance contracts but is applicable to certain fee arrangements as well as commissions and other non-insurance revenues. This guidance impacts the timing of service fee recognition by International Medical Group Acquisition, Inc, ("IMG") and ArmadaCorp Capital, LLC ("Armada"). Sirius Group used the modified retrospective transition approach to adopt this guidance which resulted in the recognition of a cumulative effect of adoption as an adjustment to the beginning balance of retained earnings at the date of initial application of $1.6 million, net of tax.

Recent accounting pronouncements

Premium amortization on callable debt securities

        In March 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities (ASC 310-20), which changes the amortization period for certain purchased callable debt securities. Under the new guidance, for investments in callable debt securities held at a premium, the premium will be amortized over the period to the earliest call date. The new guidance does not change the amortization period for callable debt securities held at a discount. The new guidance is effective for annual and interim periods beginning after December 15, 2018. Sirius Group does not expect adoption to have any effect on its financial statements.

Credit losses

        In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (ASC 326), which establishes new guidance for the recognition of credit losses for financial

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 2. Summary of significant accounting policies (Continued)

assets measured at amortized cost. The new guidance, which applies to financial assets that have the contractual right to receive cash, including reinsurance receivables, requires reporting entities to estimate the credit losses expected over the life of a credit exposure using historical information, current information and reasonable and supportable forecasts that affect the collectability of the financial asset. The new guidance is effective for annual and interim periods beginning after December 15, 2019. Sirius Group is evaluating the expected impact of this new guidance.

Leases

        In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842). The new guidance requires lessees to recognize lease assets and liabilities on the balance sheet for both operating and financing leases, with the exception of leases with an original term of 12 months or less. Under existing guidance recognition of lease assets and liabilities is not required for operating leases. The lease assets and liabilities to be recognized are both measured initially based on the present value of the lease payments. The new guidance is effective for Sirius Group for annual and interim periods beginning after December 15, 2018. Sirius Group is evaluating the expected impact of this new guidance and available adoption methods.

Note 3. Significant transactions

        The following are Sirius Group's significant transactions for the six month period ended June 30, 2018 and the year ended December 31, 2017:

    On June 25, 2018, the Company announced it has executed a definitive agreement and plan of merger ("Merger Agreement") for a proposed merger that would result in the Company becoming a publicly listed company. Under the terms of the Merger Agreement, Easterly Acquisition Corp. ("Easterly") would merge with a subsidiary of the Company and become a wholly owned subsidiary (the "Merger"). Upon the closing of the Merger, Easterly's common stock would be exchanged for the Company's common shares at a price of 1.05x Sirius Group's pro forma diluted GAAP book value per share as of June 30, 2018. Following the Merger, the Company's common shares would be traded on the Nasdaq.

      Easterly held a special meeting of its stockholders on June 28, 2018 and approved an extension of time to complete the Merger through November 30, 2018. Sirius Group agreed to lend to Easterly $0.03 per month through the extension period for each public share that was not redeemed at Easterly's special meeting. Easterly will deposit such loan proceeds into its trust account upon receipt. The loan will be forgiven if the Merger does not close by November 30, 2018.

      The proposed all-stock transaction is expected to yield a combined entity with a pro forma market capitalization of approximately $2.2 billion at closing, with current Easterly stockholders owning approximately 7% of the combined company immediately following the Merger. Pursuant to the Merger Agreement, Sirius Group intends to execute a private placement of common shares. (See Note 19 .)

      The Merger has been approved by the boards of directors of each of Sirius Group and Easterly, and is expected to close in the second half of 2018. Completion of the Merger is subject to the

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 3. Significant transactions (Continued)

      satisfaction of certain conditions including, but not limited to, approval of the transaction by Easterly's stockholders, but is not subject to any insurance regulatory approvals or a minimum cash condition. In connection with the Merger, the Compensation Committee has approved grants of performance share unit awards to certain members of management, including the Named Executive Officers.

    On May 26, 2017, Sirius Group acquired 100% ownership of IMG and its subsidiaries, a leading provider of global travel medical insurance products and assistance services. The purchase of IMG was undertaken to expand on Sirius Group's existing Global Accident and Health ("Global A&H") platform and to accelerate the growth strategy of the Global A&H international insurance business, to add service fee revenues to Sirius Group's existing risk-transfer based insurance revenues, and to gain access to IMG's distribution networks and client base. Total consideration consisted of $250.8 million of cash, $100.0 million of Series A redeemable preference shares that are convertible into common shares, and up to $50.0 million of contingent consideration ("IMG Earnout") payable in Series A redeemable preference shares, which was stated as $43.1 million at fair value at acquisition date, resulting in a total enterprise value of $393.9 million. Sirius Group assumed certain IMG debt of $129.5 million, reducing its cash consideration by that amount and resulting in a total equity consideration of $264.4 million.

      At June 30, 2018 and December 31, 2017, the IMG Earnout was remeasured at a fair value of $29.5 million and is reflected within Other liabilities.

      For further information regarding the acquisition of IMG, please refer to " Note 3. Significant transactions ", included within the Company's Consolidated Financial Statements and the related notes for the year ended December 31, 2017.

    On April 3, 2017, Sirius Group purchased 100% of Armada and its subsidiaries from Armada Enterprises LLC ("Seller"). Armada is an insurance services and health care technology business that creates specialty employee benefit products and serves to strengthen health care coverage and access. The purchase of Armada was undertaken to expand and accelerate the growth of Sirius Group's Global A&H platform in the United States, to diversify Sirius Group's revenues to include fee based revenues, and to gain access to Armada's distribution networks. Total consideration for the acquisition consisted of (1) the purchase of 50% of Armada by Sirius Group for $123.4 million, and (2) the redemption by Armada of the remaining 50% held by Seller for a redemption price based on a three year contingent earn-out mechanism that could result in an additional payment to Seller of up to $125.0 million ("Armada Earnout"), with fair value of $79.1 million at acquisition date, resulting in a total enterprise value of $202.5 million.

      At June 30, 2018 and December 31, 2017 Armada Earnout was remeasured at a fair value of $13.3 million and is reflected within Other liabilities.

      For further information regarding the acquisition of Armada, please refer to " Note 3. Significant transactions ", included within the Company's Consolidated Financial Statements and the related notes for the year ended December 31, 2017.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information

        Sirius Group classifies its business into four reportable segments—Global Property, Global Accident and Health ("Global A&H"), Specialty and Casualty ("Specialty & Casualty"), and Runoff and Other ("Runoff & Other"). The accounting policies of the reportable segments are the same as those used for the preparation of the Company's consolidated financial statements.

        The Company's Global Property, Global A&H, Specialty & Casualty, and Runoff & Other reportable segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company's chief operating decision maker, the Chief Executive Officer ("CEO") of the Company. The CEO assesses segment operating performance, allocates capital, and makes resource allocation decisions based on Technical profit (loss), Underwriting profit (loss), and Underwriting profit (loss), including net service fee revenue.

        Segment results are shown prior to corporate eliminations. Corporate eliminations are shown to reconcile to consolidated Technical profit (loss), consolidated Underwriting profit (loss) and consolidated Underwriting profit (loss), including net service fee revenue.

        Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets, and, accordingly, investment income is not allocated to each segment.

Global Property

        Global Property consists of Sirius Group's underwriting lines of business which offer other property insurance and reinsurance, property catastrophe excess reinsurance, and agriculture reinsurance on a worldwide basis:

        Other Property —Sirius Group participates in the broker market for property reinsurance treaties written on a proportional and excess of loss basis. For Sirius Group's international business, the book consists of treaty, written on both a proportional and excess of loss basis, facultative, and primary business, primarily in Europe, Asia and Latin America. In the United States, the book predominantly centers on significant participations on proportional and excess of loss treaties mostly in the excess and surplus lines segment of the market.

        Property Catastrophe Excess —Property catastrophe excess of loss reinsurance treaties cover losses from catastrophic events. Sirius Group writes a worldwide book with the largest concentration of exposure in Europe and the United States. The U.S. book written in Bermuda has a national account focus supporting principally the lower and/or middle layers of large capacity programs. Additionally, Stockholm writes a U.S. book mainly consisting of select small regional and standard lines carriers. The exposures written in the international book are diversified across many countries, regions, perils and layers.

        Agriculture —Sirius Group provides stop-loss reinsurance coverage to companies writing U.S. government-sponsored multi-peril crop insurance ("MPCI"). Sirius Group's participation is net of the government's stop-loss reinsurance protection. Sirius Group also provides coverage for crop-hail and certain named perils when bundled with MPCI business. Sirius Group also writes agriculture business outside of the United States.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information (Continued)

Global A&H

        Global A&H consists of Sirius Group's Global A&H insurance and reinsurance underwriting unit along with two managing general underwriters ("MGU") (Armada and IMG):

        Accident and Health insurance and reinsurance —Sirius Group is an insurer of accident and health insurance business in the United States, either on an admitted or surplus lines basis, as well as international business written through IMG. Sirius Group also writes proportional and excess treaties covering employer medical stop-loss for per person (specific) and per employer (aggregate) exposures. In addition, Sirius Group writes some medical, health, travel and personal accident coverages written on a treaty, facultative and primary basis.

         IMG i s a full service provider of global health & travel insurance benefits and assistance service. IMG offers various international medical insurance products, trip cancellation programs, medical management service and 24/7 emergency medical and travel assistance.

         Armada is a specialty health services business that strengthens health care coverage through ArmadaGlobal and ArmadaHealth. ArmadaGlobal is a supplemental medical insurance MGU that markets and underwrites supplemental health products. ArmadaHealth is a health care data science business that focuses on the physician referral process.

Specialty & Casualty

        Specialty & Casualty consists of Sirius Group's insurance and reinsurance underwriting units which offer specialty & casualty product lines on a worldwide basis. Specialty lines represent unique risks where the more difficult and unusual risks are underwritten. Because specialty lines tend to be the more unusual or higher risks, much of the market is characterized by a high degree of specialization:

         Aviation & Space provides aviation insurance that covers loss of or damage to an aircraft and the aircraft operations' liability to passengers, cargo and hull as well as to third parties. Additionally, liability arising out of non-aircraft operations such as hangars, airports and aircraft products can be covered. Space insurance primarily covers loss of or damage to a satellite during launch and in orbit. The book consists of treaty, written on both a proportional and excess of loss basis, facultative, and primary business.

         Marine provides marine reinsurance, primarily written on an excess of loss and proportional basis. Coverage offered includes damage to ships and goods in transit, marine liability lines, and offshore energy industry insurance. Sirius Group also writes yacht business, both on reinsurance and a primary basis. The marine portfolio is diversified across many countries and regions.

         Trade credit writes credit and bond reinsurance worldwide. The bulk of the business is traditional short-term commercial credit insurance, covering pre-agreed domestic and export sales of goods and services with typical coverage periods of 60 to 120 days. Losses under these policies are correlated to adverse changes in a respective country's gross national product.

        Contingency —Sirius Group underwrites contingency insurance for event cancellation and non-appearance, primarily on a primary policy and facultative reinsurance basis. Additionally, coverage

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information (Continued)

for liabilities arising from contractual bonus, prize redemption and over-redemption is also offered. The contingency portfolio is diversified across many countries and regions.

        Casualty —Sirius Group underwrites a cross section of all casualty lines, including general liability, umbrella, auto, workers compensation, professional liability, and other specialty classes, written on a proportional and excess of loss basis.

        Surety —Sirius Group underwrites commercial surety bonds, including non-construction contract bonds, in a broad range of business segments in the United States.

        Environmental —Sirius Group underwrites a pure environmental insurance book in the United States consisting of four core products that revolve around pollution coverage, which are premises pollution liability, contractor's pollution liability, contractor's pollution and professional liability.

Runoff & Other

        Runoff & Other consists of asbestos risks, environmental risks and other latent liability exposures, and results from Sirius Global Solutions. Sirius Global Solutions is a Connecticut-based division of Sirius Group specializing in the acquisition and management of runoff liabilities for insurance and reinsurance companies, both in the United States and internationally.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information (Continued)

        The following tables summarize the segment results for the three months ended June 30, 2018 and 2017:

 
  For the Three Months Ended June 30, 2018  
 
  Global
Property
  Global
A&H
  Specialty &
Casualty
  Runoff &
Other
  Corporate
Elimination
  Total  
 
  (Millions)
 

Gross written premiums

  $ 325.4   $ 112.3   $ 60.9   $ 6.4   $   $ 505.0  

Net written premiums

  $ 177.0   $ 82.8   $ 55.1   $ 5.4   $   $ 320.3  

Net earned insurance and reinsurance premiums

  $ 167.5   $ 80.8   $ 55.5   $ 5.1   $   $ 308.9  

Loss and allocated LAE(1)

    (68.2 )   (40.9 )   (31.7 )   (0.3 )       (141.1 )

Insurance and reinsurance acquisition expenses

    (34.1 )   (26.4 )   (14.6 )   (1.5 )   9.8     (66.8 )

Technical profit

    65.2     13.5     9.2     3.3     9.8     101.0  

Unallocated LAE(2)

    (2.5 )   (1.0 )   (1.7 )       (5.1 )   (10.3 )

Other underwriting expenses

    (18.1 )   (6.3 )   (7.9 )   (2.4 )   (3.5 )   (38.2 )

Underwriting income

    44.6     6.2     (0.4 )   0.9     1.2     52.5  

Service fee revenue(3)

        27.4             (9.8 )   17.6  

Managing general underwriter unallocated LAE(4)

        (5.1 )           5.1      

Managing general underwriter other underwriting expenses(5)

        (3.5 )           3.5      

General and administrative expenses, MGU + Runoff & Other(6)

        (14.2 )       (1.0 )       (15.2 )

Underwriting income (loss), including net service fee income

    44.6     10.8     (0.4 )   (0.1 )       54.9  

Net investment income

                                  19.2  

Net realized investment (losses) gains

                                  7.8  

Net unrealized investment (losses) gains

                                  24.7  

Net foreign exchange gains (losses)

                                  25.6  

Other revenue(7)

                                  38.0  

General and administrative expenses(8)

                                  (9.0 )

Intangible asset amortization expenses

                                  (4.0 )

Interest expense on debt

                                  (7.8 )

Pre-tax income

                                $ 149.4  

Underwriting Ratios

                                     

Loss ratio

    42.2 %   51.9 %   60.2 %   NM     NM     49.0 %

Acquisition expense ratio

    20.4 %   32.7 %   26.3 %   NM     NM     21.6 %

Other underwriting expense ratio

    10.8 %   7.8 %   14.2 %   NM     NM     12.4 %

Combined ratio(9)

    73.4 %   92.4 %   100.7 %   NM     NM     83.0 %

Goodwill and intangible assets(10)

  $   $ 604.2   $   $ 5.0   $   $ 609.2  

(1)
Loss and allocated loss adjustment expenses ("LAE") are part of Loss and loss adjustment expenses on the Consolidated Statements of Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of Income).

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information (Continued)

(2)
Unallocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of Income).

(3)
Service fee revenue is part of Other revenue on the Consolidated Statements of Income (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of Income).

(4)
Managing general underwriter unallocated LAE represents IMG and Armada generated operating expenses following their integration with the Accident and Health insurance and reinsurance underwriting unit, representing costs associated with the claims process. In prior periods, all Armada and IMG expenses were disclosed within General and administrative expenses, MGU + Runoff & Other.

(5)
Managing general underwriter other underwriting expenses represent IMG and Armada generated operating expenses following their integration with the Accident and Health insurance and reinsurance underwriting unit, representing costs associated with the underwriting process. In prior periods, all Armada and IMG expenses were disclosed within General and administrative expenses, MGU + Runoff & Other.

(6)
General and administrative expenses, MGU + Runoff & Other is part of General and administrative expenses on the Consolidated Statements of Income (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of Income).

(7)
Other revenue is presented net of Service fee revenue and is comprised mainly of the right of indemnification (see Note 10 ), gains (losses) from derivatives (see Note 11 ), and the termination of the call option to purchase The Phoenix Holdings, Ltd. (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of Income).

(8)
General and administrative expenses are presented net of General and administrative expenses, MGU + Runoff & Other (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of Income).

(9)
Ratios considered not meaningful ("NM") to Runoff & Other and Corporate Elimination.

(10)
Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information (Continued)

 
  For the Three Months Ended June 30, 2017  
(Millions)
  Global
Property
  Global
A&H
  Specialty &
Casualty
  Runoff &
Other
  Corporate
Elimination
  Total  

Gross written premiums

  $ 168.1   $ 96.2   $ 49.6   $ (10.5 ) $   $ 303.4  

Net written premiums

  $ 130.0   $ 66.2   $ 46.7   $ (1.5 ) $   $ 241.4  

Net earned insurance and reinsurance premiums

  $ 130.6   $ 73.3   $ 40.6   $ (0.6 ) $   $ 243.9  

Loss and allocated LAE(1)

    (43.4 )   (40.8 )   (21.7 )   (19.8 )       (125.7 )

Insurance and reinsurance acquisition expenses

    (23.0 )   (21.4 )   (9.2 )   1.8     7.3     (44.5 )

Technical profit

    64.2     11.1     9.7     (18.6 )   7.3     73.7  

Unallocated LAE(2)

    (2.5 )   (1.1 )   (2.2 )   (1.6 )       (7.4 )

Other underwriting expenses

    (19.1 )   (5.6 )   (4.8 )   (1.3 )       (30.8 )

Underwriting income

    42.6     4.4     2.7     (21.5 )   7.3     35.5  

Service fee revenue(3)

        14.6             (7.3 )   7.3  

Managing general underwriter unallocated LAE(4)

                         

Managing general underwriter other underwriting expenses(5)

                         

General and administrative expenses, MGU + Runoff & Other(6)

        (11.4 )       (1.4 )       (12.8 )

Underwriting income (loss), including net service fee income

    42.6     7.6     2.7     (22.9 )       30.0  

Net investment income

                                  16.6  

Net realized investment (losses) gains

                                  2.1  

Net unrealized investment (losses) gains

                                  (16.3 )

Net foreign exchange gains (losses)

                                  3.5  

Other revenue(7)

                                  (4.5 )

General and administrative expenses(8)

                                  (11.8 )

Intangible asset amortization expenses

                                  (2.4 )

Interest expense on debt

                                  (4.8 )

Pre-tax income

                                $ 12.4  

Underwriting Ratios

                                     

Loss ratio

    35.1 %   57.2 %   58.9 %   NM     NM     54.6 %

Acquisition expense ratio

    17.6 %   29.2 %   22.7 %   NM     NM     18.2 %

Other underwriting expense ratio

    14.6 %   7.6 %   11.8 %   NM     NM     12.6 %

Combined ratio(9)

    67.3 %   94.0 %   93.4 %   NM     NM     85.4 %

Goodwill and intangible assets(10)

  $   $ 618.1   $   $ 5.0   $   $ 623.1  

(1)
Loss and allocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of Income).

(2)
Unallocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of Income).

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information (Continued)

(3)
Service fee revenue is part of Other revenue on the Consolidated Statements of Income (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of Income).

(4)
Managing general underwriter unallocated LAE represents IMG and Armada generated operating expenses following their integration with the Accident and Health insurance and reinsurance underwriting unit, representing costs associated with the claims process. In prior periods, all Armada and IMG expenses were disclosed within General and administrative expenses, MGU + Runoff & Other.

(5)
Managing general underwriter other underwriting expenses represent IMG and Armada generated operating expenses following their integration with the Accident and Health insurance and reinsurance underwriting unit, representing costs associated with the underwriting process. In prior periods, all Armada and IMG expenses were disclosed within General and administrative expenses, MGU + Runoff & Other.

(6)
General and administrative expenses, MGU + Runoff & Other is part of General and administrative expenses on the Consolidated Statements of Income (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of Income).

(7)
Other revenue is presented net of Service fee revenue and is comprised mainly of gains (losses) from derivatives (see Note 11 ) (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of Income).

(8)
General and administrative expenses are presented net of General and administrative expenses, MGU + Runoff & Other (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of Income).

(9)
Ratios considered not meaningful ("NM") to Runoff & Other and Corporate Elimination.

(10)
Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information (Continued)

        The following tables summarize the segment results for the six months ended June 30, 2018 and 2017:

 
  For the Six Months Ended June 30, 2018  
(Millions)
  Global
Property
  Global
A&H
  Specialty &
Casualty
  Runoff &
Other
  Corporate
Elimination
  Total  

Gross written premiums

  $ 672.0   $ 257.9   $ 176.4   $ 13.9   $   $ 1,120.2  

Net written premiums

  $ 424.2   $ 198.3   $ 155.7   $ 11.5   $   $ 789.7  

Net earned insurance and reinsurance premiums

  $ 303.6   $ 168.8   $ 109.9   $ 11.1   $   $ 593.4  

Loss and allocated LAE(1)

    (138.6 )   (86.7 )   (53.3 )   2.1         (276.5 )

Insurance and reinsurance acquisition expenses

    (63.4 )   (55.6 )   (28.7 )   (2.2 )   20.1     (129.8 )

Technical profit

    101.6     26.5     27.9     11.0     20.1     187.1  

Unallocated LAE(2)

    (4.4 )   (2.6 )   (2.9 )   (0.9 )   (5.1 )   (15.9 )

Other underwriting expenses

    (35.5 )   (14.3 )   (15.9 )   (3.8 )   (11.9 )   (81.4 )

Underwriting income

    61.7     9.6     9.1     6.3     3.1     89.8  

Service fee revenue(3)

        60.2             (20.1 )   40.1  

Managing general underwriter unallocated LAE(4)

        (5.1 )           5.1      

Managing general underwriter other underwriting expenses(5)

        (11.9 )           11.9      

General and administrative expenses, MGU + Runoff & Other(6)

        (23.7 )       (2.1 )       (25.8 )

Underwriting income (loss), including net service fee income

    61.7     29.1     9.1     4.2         104.1  

Net investment income

                                  30.0  

Net realized investment (losses) gains

                                  4.1  

Net unrealized investment (losses) gains

                                  40.7  

Net foreign exchange gains (losses)

                                  22.1  

Other revenue(7)

                                  38.9  

General and administrative expenses(8)

                                  (12.7 )

Intangible asset amortization expenses

                                  (7.9 )

Interest expense on debt

                                  (15.5 )

Pre-tax income

                                $ 203.8  

Underwriting Ratios

                                     

Loss ratio

    47.1 %   52.9 %   51.1 %   NM     NM     49.3 %

Acquisition expense ratio

    20.9 %   32.9 %   26.1 %   NM     NM     21.9 %

Other underwriting expense ratio

    11.7 %   8.5 %   14.5 %   NM     NM     13.7 %

Combined ratio(9)

    79.7 %   94.3 %   91.7 %   NM     NM     84.9 %

Goodwill and intangible assets(10)

  $   $ 604.2   $   $ 5.0   $   $ 609.2  

(1)
Loss and allocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of Income).

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information (Continued)

(2)
Unallocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of Income).

(3)
Service fee revenue is part of Other revenue on the Consolidated Statements of Income (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of Income).

(4)
Managing general underwriter unallocated LAE represents IMG and Armada generated operating expenses following their integration with the Accident and Health insurance and reinsurance underwriting unit, representing costs associated with the claims process. In prior periods, all Armada and IMG expenses were disclosed within General and administrative expenses, MGU + Runoff & Other.

(5)
Managing general underwriter other underwriting expenses represent IMG and Armada generated operating expenses following their integration with the Accident and Health insurance and reinsurance underwriting unit, representing costs associated with the underwriting process. In prior periods, all Armada and IMG expenses were disclosed within General and administrative expenses, MGU + Runoff & Other.

(6)
General and administrative expenses, MGU + Runoff & Other is part of General and administrative expenses on the Consolidated Statements of Income (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of Income).

(7)
Other revenue is presented net of Service fee revenue and is comprised mainly of the right of indemnification (see Note 10 ), gains (losses) from derivatives (see Note 11 ), and the termination of the call option to purchase The Phoenix Holdings, Ltd. (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of Income).

(8)
General and administrative expenses are presented net of General and administrative expenses, MGU + Runoff & Other (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of Income).

(9)
Ratios considered not meaningful ("NM") to Runoff & Other and Corporate Elimination.

(10)
Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets.

F-20


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information (Continued)

 
  For the Six Months Ended June 30, 2017  
(Millions)
  Global
Property
  Global
A&H
  Specialty &
Casualty
  Runoff &
Other
  Corporate
Elimination
  Total  

Gross written premiums

  $ 452.0   $ 231.8   $ 130.8   $ (4.9 ) $   $ 809.7  

Net written premiums

  $ 329.4   $ 152.5   $ 116.1   $ (0.9 ) $   $ 597.1  

Net earned insurance and reinsurance premiums

  $ 250.1   $ 138.9   $ 78.5   $ 0.3   $   $ 467.8  

Loss and allocated LAE(1)

    (104.2 )   (80.6 )   (39.5 )   (18.5 )       (242.8 )

Insurance and reinsurance acquisition expenses

    (47.9 )   (37.6 )   (18.1 )   2.3     7.3     (94.0 )

Technical profit

    98.0     20.7     20.9     (15.9 )   7.3     131.0  

Unallocated LAE(2)

    (4.5 )   (3.1 )   (3.2 )   (1.8 )       (12.6 )

Other underwriting expenses

    (33.9 )   (12.4 )   (8.9 )   (2.7 )       (57.9 )

Underwriting income

    59.6     5.2     8.8     (20.4 )   7.3     60.5  

Service fee revenue(3)

        14.6             (7.3 )   7.3  

Managing general underwriter unallocated LAE(4)

                         

Managing general underwriter other underwriting expenses(5)

                         

General and administrative expenses, MGU + Runoff & Other(6)

        (11.4 )       (3.0 )       (14.4 )

Underwriting income (loss), including net service fee income

    59.6     8.4     8.8     (23.4 )       53.4  

Net investment income

                                  32.1  

Net realized investment (losses) gains

                                  (2.5 )

Net unrealized investment (losses) gains

                                  (22.5 )

Net foreign exchange gains (losses)

                                  1.3  

Other revenue(7)

                                  (5.0 )

General and administrative expenses(8)

                                  (26.4 )

Intangible asset amortization expenses

                                  (2.4 )

Interest expense on debt

                                  (9.6 )

Pre-tax income

                                $ 18.4  

Underwriting Ratios

                                     

Loss ratio

    43.5 %   60.3 %   54.4 %   NM     NM     54.6 %

Acquisition expense ratio

    19.2 %   27.1 %   23.1 %   NM     NM     20.1 %

Other underwriting expense ratio

    13.6 %   8.9 %   11.3 %   NM     NM     12.4 %

Combined ratio(9)

    76.3 %   96.3 %   88.8 %   NM     NM     87.1 %

Goodwill and intangible assets(10)

  $   $ 618.1   $   $ 5.0   $   $ 623.1  

(1)
Loss and allocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of Income).

(2)
Unallocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of Income).

F-21


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information (Continued)

(3)
Service fee revenue is part of Other revenue on the Consolidated Statements of Income (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of Income).

(4)
Managing general underwriter unallocated LAE represents IMG and Armada generated operating expenses following their integration with the Accident and Health insurance and reinsurance underwriting unit, representing costs associated with the claims process. In prior periods, all Armada and IMG expenses were disclosed within General and administrative expenses, MGU + Runoff & Other.

(5)
Managing general underwriter other underwriting expenses represent IMG and Armada generated operating expenses following their integration with the Accident and Health insurance and reinsurance underwriting unit, representing costs associated with the underwriting process. In prior periods, all Armada and IMG expenses were disclosed within General and administrative expenses, MGU + Runoff & Other.

(6)
General and administrative expenses, MGU + Runoff & Other is part of General and administrative expenses on the Consolidated Statements of Income (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of Income).

(7)
Other revenue is presented net of Service fee revenue and is comprised mainly of gains (losses) from derivatives (see Note 11 ) (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of Income).

(8)
General and administrative expenses are presented net of General and administrative expenses, MGU + Runoff & Other (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of Income).

(9)
Ratios considered not meaningful ("NM") to Runoff & Other and Corporate Elimination.

(10)
Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets.

F-22


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information (Continued)

        The following tables provide summary information regarding net premiums written by client location and underwriting location by reportable segment for the three months ended June 30, 2018 and 2017:

 
  For the Three Months Ended June 30, 2018  
(Millions)
  Global
Property
  Global
A&H
  Specialty &
Casualty
  Runoff &
Other
  Total  

Net written premiums by client location:

                               

United States

  $ 91.6   $ 70.6   $ 37.0   $ 5.4   $ 204.6  

Europe

    19.3     6.1     9.9         35.3  

Canada, the Caribbean, Bermuda and Latin America

    21.8     1.2     2.0         25.0  

Asia and Other

    44.3     4.9     6.2         55.4  

Total net written premium by client location for the three months ended June 30, 2018

  $ 177.0   $ 82.8   $ 55.1   $ 5.4   $ 320.3  

Net written premiums by underwriting location:

                               

United States

  $ 10.9   $ 32.3   $ 3.6   $ 5.4   $ 52.2  

Europe

    73.7     43.2     24.7         141.6  

Canada, the Caribbean, Bermuda and Latin America

    80.4     7.1     26.3         113.8  

Asia and Other

    12.0     0.2     0.5         12.7  

Total written premiums by underwriting location for the three months ended June 30, 2018

  $ 177.0   $ 82.8   $ 55.1   $ 5.4   $ 320.3  

 

 
  For the Three Months Ended June 30, 2017  
(Millions)
  Global
Property
  Global
A&H
  Specialty &
Casualty
  Runoff &
Other
  Total  

Net written premiums by client location:

                               

United States

  $ 66.3   $ 57.4   $ 12.5   $ (1.5 ) $ 134.7  

Europe

    10.1     2.8     22.6         35.5  

Canada, the Caribbean, Bermuda and Latin America

    18.6     1.8     2.7         23.1  

Asia and Other

    35.0     4.2     8.9         48.1  

Total net written premium by client location for the three months ended June 30, 2017

  $ 130.0   $ 66.2   $ 46.7   $ (1.5 ) $ 241.4  

Net written premiums by underwriting location:

                               

United States

  $ 14.3   $ 19.7   $ 0.3   $ (1.5 ) $ 32.8  

Europe

    48.1     32.4     38.1         118.6  

Canada, the Caribbean, Bermuda and Latin America

    56.3     14.0     7.9         78.2  

Asia and Other

    11.3     0.1     0.4         11.8  

Total written premiums by underwriting location for the three months ended June 30, 2017

  $ 130.0   $ 66.2   $ 46.7   $ (1.5 ) $ 241.4  

F-23


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 4. Segment information (Continued)

        The following tables provide summary information regarding net premiums written by client location and underwriting location by reportable segment for the six months ended June 30, 2018 and 2017:

 
  For the Six Months Ended June 30, 2018  
(Millions)
  Global
Property
  Global
A&H
  Specialty &
Casualty
  Runoff &
Other
  Total  

Net written premiums by client location:

                               

United States

  $ 178.6   $ 158.1   $ 74.3   $ 11.5   $ 422.5  

Europe

    125.6     17.7     60.2         203.5  

Canada, the Caribbean, Bermuda and Latin America

    45.0     6.0     4.6         55.6  

Asia and Other

    75.0     16.5     16.6         108.1  

Total net written premium by client location for the six months ended June 30, 2018

  $ 424.2   $ 198.3   $ 155.7   $ 11.5   $ 789.7  

Net written premiums by underwriting location:

                               

United States

  $ 16.2   $ 53.3   $ 3.5   $ 11.5   $ 84.5  

Europe

    210.2     111.8     96.7         418.7  

Canada, the Caribbean, Bermuda and Latin America

    170.2     32.8     53.8         256.8  

Asia and Other

    27.6     0.4     1.7         29.7  

Total written premiums by underwriting location for the six months ended June 30, 2018

  $ 424.2   $ 198.3   $ 155.7   $ 11.5   $ 789.7  

 

 
  For the Six Months Ended June 30, 2017  
(Millions)
  Global
Property
  Global
A&H
  Specialty &
Casualty
  Runoff &
Other
  Total  

Net written premiums by client location:

                               

United States

  $ 140.3   $ 125.3   $ 24.7   $ (0.9 ) $ 289.4  

Europe

    94.1     11.3     59.9         165.3  

Canada, the Caribbean, Bermuda and Latin America

    36.7     4.6     6.3         47.6  

Asia and Other

    58.3     11.3     25.2         94.8  

Total net written premium by client location for the six months ended June 30, 2017

  $ 329.4   $ 152.5   $ 116.1   $ (0.9 ) $ 597.1  

Net written premiums by underwriting location:

                               

United States

  $ 37.6   $ 43.2   $ (0.6 ) $ (0.9 ) $ 79.3  

Europe

    163.9     71.0     102.1         337.0  

Canada, the Caribbean, Bermuda and Latin America

    107.0     38.0     12.9         157.9  

Asia and Other

    20.9     0.3     1.7         22.9  

Total written premiums by underwriting location for the six months ended June 30, 2017

  $ 329.4   $ 152.5   $ 116.1   $ (0.9 ) $ 597.1  

F-24


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 5. Reserves for unpaid losses and loss adjustment expenses

        The following table summarizes the loss and LAE reserve activities of Sirius Group for the three months and six months ended June 30, 2018 and 2017:

 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
 
 
  2018   2017   2018   2017  
 
  (Millions)
 

Gross beginning balance

  $ 1,875.9   $ 1,638.4   $ 1,898.5   $ 1,620.1  

Less beginning reinsurance recoverable on unpaid losses

    (327.8 )   (293.6 )   (319.7 )   (291.5 )

Net loss and LAE reserve balance

    1,548.1     1,344.8     1,578.8     1,328.6  

Losses and LAE incurred relating to:

                         

Current year losses

    156.7     132.7     300.2     247.9  

Prior years losses

    (10.4 )   0.4     (12.9 )   7.5  

Total net incurred losses and LAE

    146.3     133.1     287.3     255.4  

Foreign currency translation adjustment to net loss and LAE reserves

    (22.2 )   13.6     (15.5 )   20.2  

Acquisition of IMG (See Note 3 )

        14.3         14.3  

Loss and LAE paid relating to:

                         

Current year losses

    35.6     37.7     66.9     64.4  

Prior years losses

    167.8     113.5     314.9     199.5  

Total loss and LAE payments

    203.4     151.2     381.8     263.9  

Net ending balance

    1,468.8     1,354.6     1,468.8     1,354.6  

Plus ending reinsurance recoverable on unpaid losses

    358.3     304.7     358.3     304.7  

Gross ending balance

  $ 1,827.1   $ 1,659.3   $ 1,827.1   $ 1,659.3  

Loss and LAE development—Three Months Ended June 30, 2018

        For the three months ended June 30, 2018, Sirius Group had net favorable loss reserve development of $10.4 million. The major reductions in loss reserve estimates were recorded in Global A&H ($4.6 million), Specialty & Casualty ($3.1 million), and Runoff & Other ($3.1 million). These reductions were partially offset by increases in Global Property loss reserve development of $0.6 million resulting from higher than expected reporting from recent accident years.

Loss and LAE development—Three Months Ended June 30, 2017

        For the three months ended June 30, 2017, Sirius Group had net unfavorable loss reserve development of $0.4 million. The major increase in loss reserve estimates were recorded in Runoff & Other ($21.4 million), as the Company increased its asbestos reserves by $58.4 million, which were offset by reductions of other runoff claims reserves of $37.0 million. The increase was mostly offset by reserve reductions in Global Property ($13.8 million), Specialty & Casualty ($4.5 million), and Global A&H ($2.7 million).

F-25


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Loss and LAE development—Six Months Ended June 30, 2018

        For the six months ended June 30, 2018, Sirius Group had net favorable loss reserve development of $12.9 million. The major reductions in loss reserve estimates were recorded in Runoff & Other ($12.0 million), Specialty & Casualty ($10.4 million), and Global A&H ($8.4 million). Favorable loss reserve development for Runoff & Other included reduction in World Trade Center claims in response to revised information received by the Company. These reductions were partially offset by increases in Global Property loss reserve development of $17.9 million resulting from higher than expected reporting from recent accident years, including $4.6 million of increases from natural catastrophes, including the 2017 North American natural catastrophes. Also, in Other Property, there was loss deterioration from recent accident years reported in client account statements received in the first quarter, which accounted for the remainder of Global Property unfavorable loss development in the six months ended June 30, 2018.

Loss and LAE development—Six Months Ended June 30, 2017

        For the six months ended June 30, 2017, Sirius Group had net unfavorable loss reserve development of $7.5 million. The major increase in loss reserve estimates were recorded in Runoff & Other ($20.1 million), as the Company increased its asbestos reserves by $59.3 million, which were offset by reductions of other runoff claims reserves of $39.2 million. The increase was mostly offset by reserve reductions in Specialty & Casualty ($5.9 million), Global A&H ($4.7 million), and Global Property ($1.9 million).

Note 6. Third party reinsurance

        In the normal course of business, Sirius Group seeks to protect its businesses from losses due to concentration of risk and losses arising from catastrophic events by reinsuring with third-party reinsurers. Sirius Group remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts.

        At June 30, 2018, Sirius Group had reinsurance recoverables on paid losses of $17.8 million and reinsurance recoverables of $358.3 million on unpaid losses. At December 31, 2017, Sirius Group had reinsurance recoverables on paid losses of $17.5 million and reinsurance recoverables of $319.7 million on unpaid losses. Because retrocessional reinsurance contracts do not relieve Sirius Group of its obligation to its insureds, the collectability of balances due from Sirius Group's reinsurers is important to its financial strength. Sirius Group monitors the financial strength and ratings of retrocessionaires on an ongoing basis. Uncollectible amounts historically have not been significant.

Note 7. Investment securities

        Sirius Group's invested assets consist of investment securities and other long-term investments held for general investment purposes. The portfolio of investment securities includes fixed maturity investments, short-term investments, equity securities, and other-long term investments which are all classified as trading securities. All securities and other long-term investments are classified as trading securities. Realized and unrealized investment gains and losses on trading securities are reported in pre-tax revenues.

F-26


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 7. Investment securities (Continued)

Net Investment Income

        Sirius Group's net investment income is comprised primarily of interest income along with associated amortization of premium and accretion of discount on Sirius Group's fixed maturity investments, dividend income from its equity investments, and interest income from its short-term investments.

        Net investment income for the three months and six months ended June 30, 2018 and 2017 consisted of the following:

 
  For the Three
Months Ended
June 30,
  For the Six
Months Ended
June 30,
 
 
  2018   2017   2018   2017  
 
  (Millions)
 

Fixed maturity investments

  $ 13.7   $ 13.5   $ 23.6   $ 27.9  

Short-term investments

    0.5     (0.2 )   1.3     0.1  

Equity securities

    7.1     1.9     8.3     2.9  

Other long-term investments

    1.3     3.4     2.5     5.7  

Total investment income

    22.6     18.6     35.7     36.6  

Investment expenses

    (3.4 )   (2.0 )   (5.7 )   (4.5 )

Net investment income

  $ 19.2   $ 16.6   $ 30.0   $ 32.1  

Net Realized and Unrealized Investment Gains (Losses)

        Net realized and unrealized investment gains (losses) for the three months and six months ended June 30, 2018 and 2017 consisted of the following:

 
  For the Three
Months Ended
June 30,
  For The Six
Months Ended
June 30,
 
 
  2018   2017   2018   2017  
 
  (Millions)
 

Gross realized gains

  $ 12.0   $ 10.9   $ 20.4   $ 28.9  

Gross realized (losses)

    (4.2 )   (8.8 )   (16.3 )   (31.4 )

Net realized gains (losses) on investments (1)(2)

    7.8     2.1     4.1     (2.5 )

Net unrealized gains (losses) on investments(3)(4)

    24.7     (16.3 )   40.7     (22.5 )

Net realized and unrealized gains (losses) on investments

  $ 32.5   $ (14.2 ) $ 44.8   $ (25.0 )

(1)
Includes $7.1 and $3.3 of realized gains due to foreign currency for the three months ended June 30, 2018 and 2017, respectively.

(2)
Includes $5.9 and $0.8 of realized gains due to foreign currency for the six months ended June 30, 2018 and 2017, respectively.

F-27


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 7. Investment securities (Continued)

(3)
Includes $29.7 and $(31.8) of unrealized gains (losses) due to foreign currency for the three months ended June 30, 2018 and 2017, respectively.

(4)
Includes $48.6 and $(44.5) of unrealized gains (losses) due to foreign currency for the six months ended June 30, 2018 and 2017, respectively.

Net realized investment gains (losses)

        Net realized investment gains (losses) for the three months and six months ended June 30, 2018 and 2017 consisted of the following:

 
  For the Three
Months Ended
June 30,
  For The Six
Months Ended
June 30,
 
 
  2018   2017   2018   2017  
 
  (Millions)
 

Fixed maturity investments

  $ 3.6   $ 2.3   $ 0.8   $ (3.1 )

Equity securities

    1.7     (2.4 )   0.2     (0.5 )

Other long-term investments

    2.5     2.2     3.1     1.1  

Net realized investment gains (losses)

  $ 7.8   $ 2.1   $ 4.1   $ (2.5 )

Net unrealized investment gains (losses)

        Net unrealized investment gains (losses) for the three months and six months ended June 30, 2018 and 2017 consisted of the following:

 
  For the Three
Months Ended
June 30,
  For The Six
Months Ended
June 30,
 
 
  2018   2017   2018   2017  
 
  (Millions)
 

Fixed maturity investments

  $ 17.8   $ (20.2 ) $ 20.8   $ (26.6 )

Equity securities

    (5.2 )   2.3     1.2     2.5  

Other long-term investments

    12.1     1.6     18.7     1.6  

Net unrealized investment (losses) gains

  $ 24.7   $ (16.3 ) $ 40.7   $ (22.5 )

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 7. Investment securities (Continued)

        The following table summarizes the amount of total gains (losses) included in earnings attributable to unrealized investment gains (losses) for Level 3 investments for the three months and six months ended June 30, 2018 and 2017:

 
  For the Three
Months Ended
June 30,
  For The Six
Months Ended
June 30,
 
 
  2018   2017   2018   2017  
 
  (Millions)
 

Fixed maturity investments

  $ (2.1 ) $   $ (2.1 ) $ (0.1 )

Equity securities

        0.1         0.1  

Other long-term investments

    7.3     (1.3 )   7.7     (0.3 )

Total unrealized investment gains (losses)—Level 3 investments

  $ 5.2   $ (1.2 ) $ 5.6   $ (0.3 )

Investment Holdings

Fixed maturity investments

        The cost or amortized cost, gross unrealized investment gains (losses), net foreign currency gains (losses), and fair value of Sirius Group's fixed maturity investments as of June 30, 2018 and December 31, 2017, were as follows:

 
  June 30, 2018  
 
  Cost or
amortized
cost
  Gross
unrealized
gains
  Gross
unrealized
losses
  Net foreign
currency gains
(losses)
  Fair value  
 
  (Millions)
 

Corporate debt securities

  $ 775.4   $ 2.0   $ (10.4 ) $ 11.9   $ 778.9  

Residential mortgage-backed securities

    437.8     0.4     (11.1 )   7.3     434.4  

Asset-backed securities

    316.0     0.1     (1.3 )   2.3     317.1  

Commercial mortgage-backed securities

    167.7     1.6     (4.0 )   0.8     166.1  

Non-U.S. government and government agency

    82.9     0.6     (0.4 )   0.5     83.6  

U.S. government and government agency

    93.2     0.1     (1.0 )   4.7     97.0  

Preferred stocks

    8.7     0.2     (2.1 )   0.1     6.9  

U.S. States, municipalities and political subdivision

    1.4                 1.4  

Total fixed maturity investments

  $ 1,883.1   $ 5.0   $ (30.3 ) $ 27.6   $ 1,885.4  

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 7. Investment securities (Continued)


 
  December 31, 2017  
 
  Cost or
amortized
cost
  Gross
unrealized
gains
  Gross
unrealized
losses
  Net foreign
currency gains
(losses)
  Fair value  
 
  (Millions)
 

Corporate debt securities

  $ 1,017.0   $ 3.1   $ (4.8 ) $ (0.8 ) $ 1,014.5  

Residential mortgage-backed securities(1)

    300.7     0.1     (5.6 )   (1.7 )   293.5  

Asset-backed securities

    478.1     0.4     (0.6 )   (2.5 )   475.4  

Commercial mortgage-backed securities(1)

    193.8     0.8     (3.6 )       191.0  

Non-U.S. government and government agency

    106.8     0.1     (0.9 )   1.2     107.2  

U.S. government and government agency

    85.8         (0.8 )   (0.2 )   84.8  

Preferred stocks

    9.3     0.3         0.2     9.8  

U.S. States, municipalities and political subdivision

    3.8                 3.8  

Total fixed maturity investments

  $ 2,195.3   $ 4.8   $ (16.3 ) $ (3.8 ) $ 2,180.0  

(1)
2017 figures have been revised to correct for a misclassification in prior disclosure of subcategories within residential mortgage-backed securities and commercial mortgage back-securities. Cost or amortized cost and fair value balances increased by $41.4 million for residential mortgage-backed securities and decreased by the same amounts for commercial mortgage-backed securities. Gross unrealized losses and net foreign currency gain/(losses) increased by $0.3 million for residential mortgage-backed securities and decreased by the same amounts for commercial mortgage-backed securities.

        The weighted average duration of Sirius Group's fixed income portfolio as of June 30, 2018 was approximately 2.3 years, including short-term investments, and approximately 2.9 years excluding short-term investments.

        The cost or amortized cost and fair value of Sirius Group's fixed maturity investments as of June 30, 2018 and December 31, 2017 are presented below by contractual maturity. Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.

 
  June 30, 2018   December 31, 2017  
 
  Cost or
amortized
cost
  Fair value   Cost or
amortized
cost
  Fair value  
 
  (Millions)
 

Due in one year or less

  $ 172.8   $ 177.1   $ 106.3   $ 106.5  

Due after one year through five years

    694.1     698.0     1,009.0     1,006.5  

Due after five years through ten years

    77.8     77.5     71.2     70.8  

Due after ten years

    8.2     8.3     26.9     26.6  

Mortgage-backed and asset-backed securities

    921.5     917.6     972.6     959.9  

Preferred stocks

    8.7     6.9     9.3     9.7  

Total

  $ 1,883.1   $ 1,885.4   $ 2,195.3   $ 2,180.0  

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 7. Investment securities (Continued)

        The following table summarizes the ratings and fair value of fixed maturity investments held in Sirius Group's investment portfolio as of June 30, 2018 and December 31, 2017:

 
  June 30, 2018   December 31, 2017  
 
  (Millions)
 

AAA

  $ 525.9   $ 689.4  

AA

    703.1     635.2  

A

    332.4     416.4  

BBB

    207.6     333.8  

Other

    116.4     105.2  

Total fixed maturity investments(1)

  $ 1,885.4   $ 2,180.0  

(1)
Credit ratings are assigned based on the following hierarchy: 1) Standard & Poor's and 2) Moody's Investor Service.

        At June 30, 2018, the above totals included $68.4 million of sub-prime securities. Of this total, $35.4 million was rated AAA, $15.2 million rated AA, $6.9 million rated A, $6.3 million rated BBB and $4.6 million classified as Other. At December 31, 2017, the above totals included $93.0 million of sub-prime securities. Of this total, $53.0 million was rated AAA, $25.7 million rated AA, $1.3 million rated A, $8.4 million rated BBB and $4.6 million classified as Other.

Mortgage-backed, Asset-backed Securities

        Sirius Group purchases commercial mortgage-backed securities ("CMBS") and residential mortgage-backed securities ("RMBS") and asset-backed securities with the goal of maximizing risk adjusted returns in the context of a diversified portfolio. Sirius Group considers sub-prime securities as those that have underlying loan pools that exhibit weak credit characteristics, or those that are issued from dedicated sub-prime shelves or dedicated second-lien shelf registrations (i.e., Sirius Group considers investments backed primarily by second-liens to be sub-prime risks). Given the tranched nature of mortgage-backed and asset-backed securities, Sirius Group relies primarily on rating agency credit ratings (i.e., S&P and Moody's) to evaluate credit worthiness of these securities and to a lesser extent on credit scores such as FICO.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 7. Investment securities (Continued)

        The following table summarizes the total mortgage and asset-backed securities held at fair value in Sirius Group's investment portfolio as of June 30, 2018 and December 31, 2017:

(Millions)
  June 30, 2018   December 31, 2017(1)  

Mortgage-backed securities:

             

Agency:

             

Government National Mortgage Association

  $ 63.0   $ 57.2  

Federal National Mortgage Association

    199.6     159.8  

Federal Home Loan Mortgage Corporation

    163.4     62.0  

Total Agency(2)

    426.0     279.0  

Non-agency:

             

Residential

    41.6     57.2  

Commercial

    132.9     148.3  

Total Non-agency

    174.5     205.5  

Total Mortgage-backed Securities

    600.5     484.5  

Asset-backed Securities:

             

Credit Card Receivables

    17.9     53.0  

Vehicle Receivables

    128.8     314.6  

Other(3)

    170.4     107.8  

Total Asset-Backed Securities

    317.1     475.4  

Total Mortgage and Asset-backed Securities(4)

  $ 917.6   $ 959.9  

(1)
2017 figures have been revised to correct for a misclassification in prior disclosure of subcategories within agency and non-agency mortgage back-securities : total agency balances increased by $39.7 million and total non-agency balances decreased by the same amount.

(2)
Represents publicly traded mortgage-backed securities which carry the full faith and credit guaranty of the U.S. government (i.e., GNMA) or are guaranteed by a government sponsored entity (i.e., FNMA, FHLMC).

(3)
Includes $94.7 of collateralized loan obligations held in Sirius Group's investment portfolio at June 30, 2018. There were no collateralized loan obligations held in Sirius Group's investment portfolio at December 31, 2017.

(4)
At June 30, 2018 and December 31, 2017, all mortgage and asset-backed securities held by Sirius Group were classified as Level 2 investments.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 7. Investment securities (Continued)

Equity securities and Other long-term investments

        The cost or amortized cost, gross unrealized investment gains and losses, net foreign currency gains and losses, and fair values of Sirius Group's equity securities and other long-term investments as of June 30, 2018 and December 31, 2017, were as follows:

 
  June 30, 2018  
 
  Cost or
amortized
cost
  Gross
unrealized
gains
  Gross
unrealized
losses
  Net foreign
currency gains
(losses)
  Fair value  
 
  (Millions)
 

Equity securities

  $ 390.3   $ 27.3   $ (10.8 ) $ 8.3   $ 415.1  

Other long-term investments

  $ 285.7   $ 29.0   $ (6.5 ) $ 8.4   $ 316.6  

 

 
  December 31, 2017  
 
  Cost or
amortized
cost
  Gross
unrealized
gains
  Gross
unrealized
losses
  Net foreign
currency gains
(losses)
  Fair value  
 
  (Millions)
 

Equity securities

  $ 275.1   $ 29.3   $ (5.1 ) $ (0.1 ) $ 299.2  

Other long-term investments

  $ 255.5   $ 14.2   $ (4.1 ) $ 3.9   $ 269.5  

        Other long-term investments at fair value consisted of the following as at June 30, 2018 and December 31, 2017:

 
  June 30,
2018
  December 31,
2017
 
 
  (Millions)
 

Hedge funds and private equity funds

  $ 247.6   $ 205.3  

Limited liability companies and private equity securities

    69.0     64.2  

Total other long-term investments

  $ 316.6   $ 269.5  

Hedge Funds and Private Equity Funds

        Sirius Group holds investments in hedge funds and private equity funds, which are included in other long-term investments. The fair value of these investments has been estimated using the net asset value of the funds. As of June 30, 2018, Sirius Group held investments in 8 hedge funds and 28 private equity funds. The largest investment in a single fund was $35.6 million as of June 30, 2018 and $31.4 million as of December 31, 2017.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 7. Investment securities (Continued)

        The following table summarizes investments in hedge funds and private equity interests by investment objective and sector as of June 30, 2018 and December 31, 2017:

 
  June 30, 2018   December 31, 2017  
 
  Fair Value   Unfunded
Commitments
  Fair Value   Unfunded
Commitments
 
 
  (Millions)
 

Hedge funds:

                         

Long/short multi-sector

  $ 53.3   $   $ 31.5   $  

Distressed mortgage credit

    26.6         25.5      

Other

    2.7         3.2      

Total hedge funds

    82.6         60.2      

Private equity funds:

                         

Energy infrastructure & services

    89.5     42.2     73.5     56.4  

Multi-sector

    8.4     1.9     9.5     1.0  

Healthcare

    27.0     23.0     23.4     28.6  

Life settlement

    23.0         21.5      

Manufacturing/Industrial

    15.8     5.1     15.9     5.1  

Private equity secondaries

    1.1         1.1     1.0  

Real estate

    0.2         0.2      

Total private equity funds

    165.0     72.2     145.1     92.1  

Total hedge and private equity funds included in other long-term investments

  $ 247.6   $ 72.2   $ 205.3   $ 92.1  

        Redemption of investments in certain hedge funds is subject to restrictions including lock-up periods where no redemptions or withdrawals are allowed, restrictions on redemption frequency, and advance notice periods for redemptions. Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period.

        The following summarizes the June 30, 2018 fair value of hedge funds subject to restrictions on redemption frequency and advance notice period requirements for investments in active hedge funds:

 
  Notice Period  
Redemption Frequency
  30 - 59 days
notice
  60 - 89 days
notice
  90 - 119 days
notice
  120+ days
notice
  Total  
 
  (Millions)
 

Monthly

  $   $ 33.5   $   $   $ 33.5  

Quarterly

    0.7                 0.7  

Semi-annual

        0.9             0.9  

Annual

        19.8     27.6     0.1     47.5  

Total

  $ 0.7   $ 54.2   $ 27.6   $ 0.1   $ 82.6  

F-34


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 7. Investment securities (Continued)

        Certain of the hedge fund and private equity fund investments in which Sirius Group is invested are no longer active and are in the process of disposing of their underlying investments. Distributions from such funds are remitted to investors as the fund's underlying investments are liquidated. As of June 30, 2018, no distributions were outstanding from these investments. Investments in private equity funds are generally subject to a "lock-up" period during which investors may not request a redemption. Distributions prior to the expected termination date of the fund may be limited to dividends or proceeds arising from the liquidation of the fund's underlying investments.

        In addition, certain private equity funds provide an option to extend the lock-up period at either the sole discretion of the fund manager or upon agreement between the fund and the investors.

        As of June 30, 2018, investments in private equity funds were subject to lock-up periods as follows:

 
  1 - 3 years   3 - 5 years   5 - 10 years   Total  
 
  (Millions)
 

Private Equity Funds—expected lock up period remaining

  $ 6.2   $ 5.6   $ 153.2   $ 165.0  

Investments Held on Deposit or as Collateral

        As of June 30, 2018 and December 31, 2017 investments of $456.6 million and $548.2 million, respectively, were held in trusts required to be maintained in relation to various reinsurance agreements. Sirius Group's consolidated reinsurance operations are required to maintain deposits with certain insurance regulatory agencies in order to maintain their insurance licenses. The fair value of such deposits which are included within total investments totaled $461.4 million and $548.4 million as of June 30, 2018 and December 31, 2017, respectively.

        As of June 30, 2018, Sirius Group held $0.3 million of collateral in the form of short-term investments associated with Interest Rate Cap agreements. (See Note 11 .)

Unsettled investment purchases and sales

        As of June 30, 2018 and December 31, 2017 Sirius Group reported $6.2 million and $0.3 million, respectively, in Accounts payable on unsettled investment purchases.

        As of December 31, 2017, Sirius Group reported $0.3 million in Accounts receivable on unsettled investment sales. As of June 30, 2018, Sirius Group did not report any amount in Accounts receivable on unsettled investment sales.

Note 8. Fair value measurements

Fair value measurements

        Fair value measurements are categorized into a hierarchy that distinguishes between inputs based on market data from independent sources ("observable inputs") and a reporting entity's internal assumptions based upon the best information available when external market data is limited or unavailable ("unobservable inputs"). Quoted prices in active markets for identical assets or liabilities have the highest priority ("Level 1"), followed by observable inputs other than quoted prices, including prices for similar but not identical assets or liabilities ("Level 2"), and unobservable inputs, including

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 8. Fair value measurements (Continued)

the reporting entity's estimates of the assumptions that market participants would use, having the lowest priority ("Level 3").

        The availability of observable inputs can vary from financial instrument to financial instrument and is affected by a wide variety factors including, for example, the type of financial instrument, whether the financial instrument is new and not yet established in the marketplace, and other characteristics particular to the instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment.

        Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This may lead the Company to change the selection of the valuation technique (for example, from market to cash flow approach) or to use multiple valuation techniques to estimate the fair value of a financial instrument. These circumstances could cause an instrument to be reclassified between levels within fair value hierarchy. Investments valued using Level 1 inputs include fixed maturity investments, primarily investments in U.S. Treasuries Bills and Notes, equity securities, and short-term investments. Investments valued using Level 2 inputs are primarily comprised of fixed maturity investments, which have been disaggregated into classes, including U.S. government and government agency, corporate debt securities, mortgage-backed and asset-backed securities, non-U.S. government and government agency, U.S. state and municipalities and political sub division and preferred stocks. Investments valued using Level 2 inputs also include certain ETFs that track U.S. stock indices such as the S&P 500 but are traded on foreign exchanges. Fair value estimates for investments that trade infrequently and have few or no observable market prices are classified as Level 3 measurements. Sirius Group determines when transfers between levels have occurred as of the beginning of the period.

Valuation techniques

        Sirius Group uses outside pricing services to assist in determining fair values for its investments. For investments in active markets, Sirius Group uses the quoted market prices provided by outside pricing services to determine fair value. The outside pricing services Sirius Group uses have indicated that they will only provide prices where observable inputs are available. In circumstances where quoted market prices are unavailable or are not considered reasonable, Sirius Group estimates the fair value using industry standard pricing models and observable inputs such as benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers, prepayment speeds, reference data including research publications, and other relevant inputs. Given that many fixed maturity investments do not trade on a daily basis, the outside pricing services evaluate a wide range of fixed maturity investments by regularly drawing parallels from recent trades and quotes of comparable securities with similar features. The characteristics used to identify comparable fixed maturity investments vary by asset type and take into account market convention.

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 8. Fair value measurements (Continued)

        The valuation process above is generally applicable to all of Sirius Group's fixed maturity investments. The techniques and inputs specific to asset classes within Sirius Group's fixed maturity investments for Level 2 securities that use observable inputs are as follows:

U.S. government and government agency

        U.S. government and government agency securities consist primarily of debt securities issued by the U.S. Treasury and mortgage pass-through agencies such as the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. Fixed maturity investments included in U.S. government and government agency securities are primarily priced by pricing services. When evaluating these securities, the pricing services gather information from market sources and integrate other observations from markets and sector news. Evaluations are updated by obtaining broker dealer quotes and other market information including actual trade volumes, when available. The fair value of each security is individually computed using analytical models which incorporate option adjusted spreads and other daily interest rate data.

Non-U.S. government and government agency

        Non-U.S. government and government agency securities consist of debt securities issued by non-U.S. governments and their agencies along with supranational organizations (also known as sovereign debt securities). Securities held in these sectors are primarily priced by pricing services who employ proprietary discounted cash flow models to value the securities. Key quantitative inputs for these models are daily observed benchmark curves for treasury, swap, and high issuance credits. The pricing services then apply a credit spread for each security which is developed by in-depth and real time market analysis. For securities in which trade volume is low, the pricing services utilize data from more frequently traded securities with similar attributes. These models may also be supplemented by daily market and credit research for international markets.

Corporate debt securities

        Corporate debt securities consist primarily of investment-grade debt of a wide variety of U.S. and non-U.S. corporate issuers and industries. The corporate fixed maturity investments are primarily priced by pricing services. When evaluating these securities, the pricing services gather information from market sources regarding the issuer of the security and obtain credit data, as well as other observations, from markets and sector news. Evaluations are updated by obtaining broker dealer quotes and other market information including actual trade volumes, when available. The pricing services also consider the specific terms and conditions of the securities, including any specific features which may influence risk.

Mortgage-backed and asset-backed securities

        The fair value of mortgage and asset-backed securities is primarily priced by pricing services using a pricing model that uses information from market sources and leveraging similar securities. Key inputs include benchmark yields, reported trades, underlying tranche cash flow data, collateral performance, plus new issue data, as well as broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including issuer, vintage, loan type, collateral attributes, prepayment speeds, default rates, recovery rates, cash flow stress testing, credit quality ratings, and market research publications.

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 8. Fair value measurements (Continued)

U.S. states, municipalities and political subdivisions

        The U.S. states, municipalities and political subdivisions portfolio contains debt securities issued by U.S. domiciled state and municipal entities. These securities are generally priced by independent pricing services using the techniques described for U.S. government and government agency securities described above.

Preferred stocks

        The fair value of preferred stocks is generally priced by independent pricing services using an evaluated pricing model that calculates the appropriate spread over a comparable security for each issue. Key inputs include exchange prices (underlying and common stock of same issuer), benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including sector, coupon, credit quality ratings, duration, credit enhancements, early redemption features, and market research publications.

Level 3 Investments

        Level 3 valuations are generated from techniques that use assumptions not observable in the market. These unobservable assumptions reflect Sirius Group's assumptions that market participants would use in valuing the investment. Generally, certain securities may start out as Level 3 when they are originally issued but as observable inputs become available in the market, they may be reclassified to Level 2.

        Sirius Group employs a number of procedures to assess the reasonableness of the fair value measurements for its other long-term investments, including obtaining and reviewing the audited annual financial statements of hedge funds and private equity funds and periodically discussing each fund's pricing with the fund manager. However, since the fund managers do not provide sufficient information to evaluate the pricing inputs and methods for each underlying investment, the inputs are considered to be unobservable.

        The fair values of Sirius Group's investments in private equity securities and private debt instruments have been classified as Level 3 measurements. They are carried at fair value and are initially valued based on transaction price and their valuation is subsequently estimated based on available evidence such as a market transaction in similar instruments and other financial information for the issuer.

Investments measured using Net Asset Value

        The fair value of Sirius Group's investments in hedge funds and private equity funds has been determined using net asset value. The hedge fund's administrator provides quarterly updates of fair value in the form of Sirius Group's proportional interest in the underlying fund's net asset value (collectively "NAV"), which is deemed to approximate fair value, generally with a three month delay in valuation. The fair value of investment in hedge funds is measured using the NAV practical expedient and therefore has been not categorized within the fair value hierarchy. The private equity funds provide quarterly or semi-annual partnership capital statements with a three or six month delay which are used as a basis for valuation. These private equity investments vary in investment strategies and are not

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 8. Fair value measurements (Continued)

actively traded in any open markets. The fair value of these investments are measured using NAV practical expedient and therefore have not been categorized with the fair value hierarchy. Due to a lag in reporting, some of the fund managers, fund administrators, or both, are unable to provide final fund valuations as of the Company's reporting date. In these circumstances, Sirius Group estimates the return of the current period and uses all credible information available. This includes utilizing preliminary estimates reported by its fund managers and using other information that is available to Sirius Group with respect to the underlying investments, as necessary.

Fair Value Measurements by Level

        The following tables summarize Sirius Group's financial assets and liabilities measured at fair value as of June 30, 2018 and December 31, 2017 by level:

 
  June 30, 2018  
 
  Fair Value   Level 1 Inputs   Level 2 Inputs   Level 3 Inputs  
 
  (Millions)
 

Assets measured at fair value

                         

Fixed maturity investments:

                         

U.S. Government and government agency

  $ 97.0   $ 95.3   $ 1.7   $  

Corporate debt securities

    778.9         778.9      

Residential mortgage-backed securities

    434.4         434.4      

Asset-backed securities

    317.1         317.1      

Commercial mortgage-backed securities

    166.1         166.1      

Non-U.S. government and government agency

    83.6     42.2     41.4      

Preferred stocks

    6.9         0.9     6.0  

U.S. States, municipalities, and political subdivision

    1.4         1.4      

Total fixed maturity investments

    1,885.4     137.5     1,741.9     6.0  

Short-term investments

    819.6     803.9     15.7      

Equity securities

    415.1     415.1          

Other long-term investments(1)

    69.0             69.0  

Total investments

  $ 3,189.1   $ 1,356.5   $ 1,757.6   $ 75.0  

Derivative instruments

    2.2             2.2  

Total assets measured at fair value

  $ 3,191.3   $ 1,356.5   $ 1,757.6   $ 77.2  

Liabilities measured at fair value

                         

Contingent consideration liabilities

  $ 42.8   $   $   $ 42.8  

Derivative instruments

    8.1             8.1  

Total liabilities measured at fair value

  $ 50.9   $   $   $ 50.9  

(1)
Excludes fair value of $247.6 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 8. Fair value measurements (Continued)

 
  December 31, 2017  
 
  Fair Value   Level 1 Inputs   Level 2 Inputs   Level 3 Inputs  
 
  (Millions)
 

Assets measured at fair value

                         

Fixed maturity investments:

                         

U.S. Government and government agency

  $ 84.8   $ 83.2   $ 1.6   $  

Corporate debt securities

    1,014.5         1,014.5      

Residential mortgage-backed securities(1)

    293.5         293.5      

Asset-backed securities

    475.4         475.4      

Commercial mortgage-backed securities(1)

    191.0         191.0      

Non-U.S. government and government agency

    107.2     94.8     12.4      

Preferred stocks

    9.8         1.8     8.0  

U.S. States, municipalities, and political subdivision

    3.8         3.8      

Total fixed maturity investments

    2,180.0     178.0     1,994.0     8.0  

Short-term investments

    625.0     566.2     58.8      

Equity securities

    299.2     298.6     0.6      

Other long-term investments(2)

    64.2             64.2  

Total investments

  $ 3,168.4   $ 1,042.8   $ 2,053.4   $ 72.2  

Derivative instruments

    4.5             4.5  

Total assets measured at fair value

  $ 3,172.9   $ 1,042.8   $ 2,053.4   $ 76.7  

Liabilities measured at fair value

                         

Contingent consideration liabilities

  $ 42.8   $   $   $ 42.8  

Derivative instruments

    10.6             10.6  

Total liabilities measured at fair value

  $ 53.4   $   $   $ 53.4  

(1)
2017 figures have been revised to correct for a misclassification in prior disclosure of subcategories within residential mortgage-backed securities and commercial mortgage back-securities. Fair value and level 2 input balances increased by $41.4 million for residential mortgage-backed securities and decreased by the same amounts for commercial mortgage-backed securities.

(2)
Excludes fair value of $205.3 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 8. Fair value measurements (Continued)

Rollforward of Level 3 Fair Value Measurements

        The following tables present changes in Level 3 for financial instruments measured at fair value for the three months ended June 30, 2018 and June 30, 2017:

 
  For the Three Months Ended June 30, 2018  
 
  Fixed Maturities   Other
long-term
investments(1)
  Derivative
instruments
assets &
(liabilities)
  Contingent
consideration
(liabilities)
 
 
  (Millions)
 

Balance at March 31, 2018

  $ 8.6   $ 64.9   $ (6.1 ) $ (42.8 )

Fair value of contingent consideration liabilities at date of purchase (See Note 3 )

                 

Total realized and unrealized gains (losses)

    (2.1 )   8.5     5.6      

Foreign currency gains (losses) through Other Comprehensive Income

        (1.3 )        

Purchases

        0.5          

Sales/Settlements

    (0.5 )   (3.6 )   (5.3 )    

Balance at June 30, 2018

  $ 6.0   $ 69.0   $ (5.8 ) $ (42.8 )

(1)
Excludes fair value of $247.6 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.
 
  For the Three Months Ended June 30, 2017  
 
  Fixed
Maturities
  Other
long-term
investments(1)
  Derivative
instruments
assets &
(liabilities)
  Contingent
consideration
(liabilities)
 
 
  (Millions)
 

Balance at March 31, 2017

  $ 27.4   $ 29.9   $ 0.6   $  

Fair value of contingent consideration liabilities at date of purchase (See Note 3 )

                (119.2 )

Total realized and unrealized gains (losses)

    (0.1 )   (2.2 )   (9.7 )    

Foreign currency gains (losses) through Other Comprehensive Income

    0.1     0.9          

Purchases

    0.5     34.5          

Sales/Settlements

    (18.4 )   (0.2 )   (0.4 )    

Balance at June 30, 2017

  $ 9.5   $ 62.9   $ (9.5 ) $ (119.2 )

(1)
Excludes fair value of $127.2 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 8. Fair value measurements (Continued)

        The following tables present changes in Level 3 for financial instruments measured at fair value for the six months ended June 30, 2018 and June 30, 2017:

 
  For the Six Months Ended June 30, 2018  
 
  Fixed
Maturities
  Other
long-term
investments(1)
  Derivative
instruments
assets &
(liabilities)
  Contingent
consideration
(liabilities)
 
 
  (Millions)
 

Balance at December 31, 2017

  $ 8.0   $ 64.2   $ (6.1 ) $ (42.8 )

Fair value of contingent consideration liabilities at date of purchase (See Note 3 )

                 

Total realized and unrealized gains (losses)

    (2.1 )   9.3     5.6      

Foreign currency gains (losses) through Other Comprehensive Income

        (1.6 )        

Purchases

    0.6     0.9          

Sales/Settlements

    (0.5 )   (3.8 )   (5.3 )    

Balance at June 30, 2018

  $ 6.0   $ 69.0   $ (5.8 ) $ (42.8 )

(1)
Excludes fair value of $247.6 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.
 
  For the Six Months Ended June 30, 2017  
 
  Fixed
Maturities
  Other
long-term
investments(1)
  Derivative
instruments
assets &
(liabilities)
  Contingent
consideration
(liabilities)
 
 
  (Millions)
 

Balance at December 31, 2016

  $ 27.7   $ 29.1   $ 12.7   $  

Fair value of contingent consideration liabilities at date of purchase (See Note 3 )

                (119.2 )

Total realized and unrealized gains (losses)

    (0.4 )   (1.4 )   (13.9 )    

Foreign currency gains (losses) through Other Comprehensive Income

    0.1     1.1          

Purchases

    0.5     34.5          

Sales/Settlements

    (18.4 )   (0.4 )   (8.3 )    

Balance at June 30, 2017

  $ 9.5   $ 62.9   $ (9.5 ) $ (119.2 )

(1)
Excludes fair value of $127.2 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 8. Fair value measurements (Continued)

Fair Value Measurements—transfers between levels

        There were no transfers between Level 3 and Level 2 measurements during the three months ended June 30, 2018 and 2017. There were no transfers between Level 3 and Level 2 measurements during the six months ended June 30, 2018 and 2017.

Significant Unobservable Inputs

        The table below presents information about the significant unobservable inputs used for recurring fair value measurements for certain Level 3 instruments as of June 30, 2018 and December 31, 2017, and includes only those instruments for which information about the inputs is reasonably available to Sirius Group, such as data from independent third-party valuation service providers and from internal valuation models.

 
  June 30, 2018  
Description
  Valuation Technique(s)   Fair Value   Unobservable Input  
 
  (Millions)
 

Private equity securities(1)

  Share price of recent transaction   $ 32.5   Share price   $ 40.63  

Private equity securities(1)

  Multiple of GAAP book value   $ 18.2   Book value multiple     1.0X  

Private debt instrument(1)

  Purchase price of recent transaction   $ 9.0   Purchase price   $ 9.0  

Private debt instrument(1)

  Purchase price of recent transaction   $ 6.0   Purchase price   $ 6.0  

Preferred stock(1)

  Purchase price of recent transaction   $ 3.9   Average share price   $ 0.6  

Weather derivatives(2)

  External pricing model   $ 1.8   Broker quote   $ 1.8  

Private debt instrument(1)

  Internal valuation model   $ 2.0   Purchase price less pay down   $ 2.0  

Preferred stock(1)

  Share price of recent transaction   $ 2.1   Average share price   $ 11.79  

Private debt instrument(1)

  Purchase price of recent transaction   $ 1.3   Purchase price   $ 1.3  

Interest rate cap(2)

  External pricing model   $ 0.4   Broker quote   $ 0.4  

Currency swaps(2)

  External pricing model   $ (8.1 ) Broker quote   $ (8.1 )

Contingent consideration

  External valuation model   $ (42.8 ) Discounted future payments   $ (42.8 )

(1)
As of June 30, 2018, each asset type consists of one security.

(2)
See Note 11 for discussion of derivative instruments.
 
  December 31, 2017  
Description
  Valuation Technique(s)   Fair Value   Unobservable Input  
 
  (Millions)
 

Private equity securities(1)

  Share price of recent transaction   $ 25.0   Purchase share price   $ 31.25  

Private equity securities(1)

  Multiple of GAAP book value   $ 17.2   Book value multiple     1.0X  

Private debt instrument(1)

  Purchase price of recent transaction   $ 9.0   Purchase price   $ 9.0  

Private debt instrument(1)

  Purchase price of recent transaction   $ 9.0   Purchase price   $ 9.0  

Preferred stock(1)

  Purchase price of recent transaction   $ 6.0   Average share price   $ 0.6  

Weather derivatives(2)

  External pricing model   $ 4.2   Broker quote   $ 4.2  

Private debt instrument(1)

  Internal valuation model   $ 2.5   Purchase price less pay down   $ 2.5  

Preferred stock(1)

  Share price of recent transaction   $ 2.0   Average share price   $ 11.79  

Private debt instrument(1)

  Purchase price of recent transaction   $ 1.5   Purchase price   $ 1.5  

Interest rate cap(2)

  External pricing model   $ 0.3   Broker quote   $ 0.3  

Currency swaps(2)

  External pricing model   $ (10.6 ) Broker quote   $ (10.6 )

Contingent consideration

  External valuation model   $ (42.8 ) Discounted future payments   $ (42.8 )

(1)
As of December 31, 2017, each asset type consists of one security.

(2)
See Note 11 for discussion of derivative instruments.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 8. Fair value measurements (Continued)

Financial instruments disclosed, but not carried at fair value

        Sirius Group uses various financial instruments in the normal course of its business. The carrying values of Cash, Accrued investment income, certain other assets, Accounts payable on unsettled investment purchases, certain other liabilities, and other financial instruments not included in the table below approximated their fair values at June 30, 2018 and December 31, 2017, due to their respective short maturities. As these financial instruments are not actively traded, their respective fair values are classified within Level 3. The following table includes financial instruments for which the carrying value differs from the estimated fair values at June 30, 2018 and December 31, 2017:

 
  June 30, 2018   December 31, 2017  
 
  Fair Value(1)   Carrying Value   Fair Value(1)   Carrying Value  
 
  (Millions)
 

Liabilities, Mezzanine equity, and Non-controlling interest:

                         

2017 SEK Subordinated Notes

  $ 312.6   $ 303.0   $ 341.4   $ 330.7  

2016 SIG Senior Notes

  $ 374.1   $ 392.9   $ 392.3   $ 392.5  

Series A Redeemable preference shares

  $ 95.0   $ 108.8   $ 90.0   $ 106.1  

(1)
Fair value estimated by internal pricing and considered a Level 3 measurement.

Note 9. Debt and standby letters of credit facilities

        Sirius Group's debt outstanding as of June 30, 2018 and December 31, 2017 consisted of the following:

 
  June 30,
2018
  Effective
Rate(1)
  December 31,
2017
  Effective
Rate(1)
 
 
  (Millions)
 

2017 SEK Subordinated Notes, at face value

  $ 307.1     3.5 % $ 335.2     3.5 %

Unamortized issuance costs

    (4.1 )         (4.5 )      

2017 SEK Subordinated Notes, carrying value

    303.0           330.7        

2016 SIG Senior Notes, at face value

    400.0     4.7 %   400.0     4.7 %

Unamortized discount

    (2.7 )         (2.9 )      

Unamortized issuance costs

    (4.4 )         (4.6 )      

2016 SIG Senior Notes, carrying value

    392.9           392.5        

Total debt

  $ 695.9         $ 723.2        

(1)
Effective rate considers the effect of the debt issuance costs.

2017 SEK Subordinated Notes

        On September 22, 2017, Sirius Group issued floating rate callable subordinated notes denominated in Swedish kronor ("SEK") in the amount of SEK 2,750.0 million (or $346.1 million on date of

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 9. Debt and standby letters of credit facilities (Continued)

issuance) at a 100% issue price ("2017 SEK Subordinated Notes"). The 2017 SEK Subordinated Notes were issued in an offering that was exempt from the registration requirements of the Securities Act of 1933. The 2017 SEK Subordinated Notes bear interest on their principal amount at a floating rate equal to the applicable Stockholm Interbank Offered Rate ("STIBOR") for the relevant interest period plus an applicable margin, payable quarterly in arrears on March 22, June 22, September 22, and December 22 in each year commencing on December 22, 2017, until maturity in September 2047.

        Beginning on September 22, 2022, the 2017 SEK Subordinated Notes may be redeemed, in whole or in part, at Sirius Group's option. In addition, within 90 days following the occurrence of a Specified Event (as defined below), the 2017 SEK Subordinated Notes may be redeemed, in whole but not in part, at Sirius Group's option. "Specified Event" means (a) an "Additional Amounts Event" in connection with a change in laws, rules or regulations as a result of which Sirius Group is obligated to pay additional amounts on the notes in respect of any withholding or deduction for taxes, (b) a "Tax Event" in connection with a change in laws, rules or regulations as a result of which interest on the notes is no longer fully deductible by Sirius Group for income tax purposes in the applicable jurisdiction (to the extent that such interest was so deductible as of the time of such tax event), (c) a "Rating Methodology Event" in connection with a change in, or clarification to, the rating methodology of Standard & Poor's or Fitch that results in a materially unfavorable capital treatment of the notes, or (d) a "Regulatory Event" in connection with a change in, or clarification to, applicable supervisory regulations that results in the notes no longer qualifying as Tier 2 Capital.

        Sirius Group incurred $4.6 million in expenses related to the issuance of the 2017 SEK Subordinated Notes (including SEK 27.5 million, or $3.5 million, in underwriting fees), which have been deferred and are being recognized into interest expense over the life of the 2017 SEK Subordinated Notes. For the three months and six months ended June 30, 2018, Sirius Group recognized $27.8 million of foreign currency exchange gains on the remeasurement of the 2017 SEK Subordinated Notes into USD from SEK.

        A portion of the proceeds were used to fully redeem the outstanding $250.0 million Sirius International Group, Ltd. Preference Shares ("SIG Preference Shares"). (See Note 12 ).

        Taking into effect the amortization of all underwriting and issuance expenses, and applicable STIBOR, the 2017 SEK Subordinated Notes yield an effective rate of approximately 3.5% per annum. Sirius Group recorded $3.0 million and $5.9 million of interest expense, inclusive of amortization of issuance costs on the 2017 SEK Subordinated Notes for the three months and six months ended June 30, 2018.

2016 SIG Senior Notes

        On November 1, 2016, Sirius Group issued $400.0 million face value of senior unsecured notes ("2016 SIG Senior Notes") at an issue price of 99.209% for net proceeds of $392.4 million after taking into effect both deferrable and non-deferrable issuance costs. The SIG Senior Notes were issued in an offering that was exempt from the registration requirements of the Securities Act of 1933. The 2016 SIG Senior Notes bear an annual interest rate of 4.6%, payable semi-annually in arrears on May 1, and November 1, in each year commencing on May 1, 2017, until maturity in November 2026.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 9. Debt and standby letters of credit facilities (Continued)

        Sirius Group incurred $5.1 million in expenses related to the issuance of the 2016 SIG Senior Notes (including $3.4 million in underwriting fees), which have been deferred and are being recognized into interest expense over the life of the 2016 SIG Senior Notes.

        Taking into effect the amortization of the original issue discount and all underwriting and issuance expenses, the 2016 SIG Senior Notes yield an effective rate of approximately 4.7% per annum. Sirius Group recorded $4.8 million, inclusive of amortization of issuance costs on the 2016 SIG Senior Notes, for both three month periods ended June 30, 2018 and 2017. Sirius Group recorded $9.6 million and $9.5 million of interest expense, inclusive of amortization of issuance costs on the 2016 SIG Senior Notes, for the six months ended June 30, 2018 and 2017, respectively.

Standby letter of credit facilities

        On November 8, 2017, Sirius International Insurance Corporation ("Sirius International") entered into four standby letter of credit facility agreements totaling $215 million to provide capital support for Lloyd's Syndicate 1945. The first letter of credit is a renewal of a $125 million facility with Nordea Bank Finland plc, $100 million of which is issued on an unsecured basis. The second letter of credit is a $25 million secured facility with Lloyds Bank plc. Lloyds Bank plc had previously participated on this program but at a different capacity. The third letter of credit agreement is a $30 million unsecured facility with Barclays Bank plc. The fourth letter of credit agreement is a $35 million facility with DNB Bank ASA London Branch, $25 million of which is issued on an unsecured basis. Each facility is renewable annually. The above referenced facilities are subject to various affirmative, negative and financial covenants that the Company considers to be customary for such borrowings, including certain minimum net worth and maximum debt to capitalization standards.

        Sirius International has other secured letter of credit and trust arrangements with various financial institutions to support its insurance operations. As of June 30, 2018 and December 31, 2017, these secured letter of credit and trust arrangements were collateralized by pledged assets and assets in trust of SEK 2.3 billion and SEK 2.1 billion, or $254.6 million and $261.2 million (based on the June 30, 2018 and December 31, 2017 SEK to USD exchange rates). As of June 30, 2018 and December 31, 2017, Sirius America Insurance Company's ("Sirius America") trust arrangements were collateralized by pledged assets and assets in trust of $55.9 million and $55.8 million, respectively. As of June 30, 2018 and December 31, 2017, Sirius Bermuda Insurance Company's trust arrangements were collateralized by pledged assets and assets in trust of $195.7 million and $123.3 million, respectively.

Revolving credit facility

        In February 2018, Sirius Group, through its indirectly wholly-owned subsidiary SIG, entered into a three-year, $300 million senior unsecured revolving credit facility (the "Facility"). The Facility provides access to loans for working capital and general corporate purposes, and letters of credit to support obligations under insurance and reinsurance agreements and retrocessional agreements. The Facility is subject to various affirmative, negative and financial covenants that Sirius Group considers to be customary for such borrowings, including certain minimum net worth, maximum debt to capitalization and financial strength rating standards. As of June 30, 2018, there were no outstanding borrowings under the Facility.

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 9. Debt and standby letters of credit facilities (Continued)

Debt and standby letter of credit facility covenants

        As of June 30, 2018, Sirius Group was in compliance with all of the covenants under the 2016 SIG Senior Notes, 2017 SEK Subordinated Notes, the Nordea facility, the Lloyd's Bank facility, Barclays Bank facility, and the DNB Bank ASA London Branch facility.

Interest

        Total interest expense incurred by Sirius Group for its indebtedness for the three months ended June 30, 2018 and 2017 was $7.8 million and $4.8 million, respectively. Total interest expense incurred by Sirius Group for its indebtedness for the six months ended June 30, 2018 and 2017 was $15.5 million and $9.6 million, respectively. Total interest paid by Sirius Group for its indebtedness for the three months ended June 30, 2018 and 2017 was $12.1 million and $9.9 million, respectively. Total interest paid by Sirius Group for its indebtedness for the six months ended June 30, 2018 and 2017 was $15.0 million and $9.9 million, respectively.

Note 10. Income taxes

        The Company and its Bermuda domiciled subsidiaries are not subject to Bermuda income tax under current Bermuda law. In the event there is a change in the current law such that taxes are imposed, the Company and its Bermuda domiciled subsidiaries would be exempt from such tax until March 31, 2035, pursuant to the Bermuda Exempted Undertakings Tax Protection Act of 1966. The Company has subsidiaries and branches that operate in various other jurisdictions around the world that are subject to tax in the jurisdictions in which they operate. The jurisdictions in which the Company's subsidiaries and branches are subject to tax are Australia, Belgium, Canada, Germany, Gibraltar, Luxembourg, Malaysia, the Netherlands, Singapore, Sweden, Switzerland, the United Kingdom and the United States.

        Sirius Group reported an income tax expense of $51.2 million and $2.6 million during the three months ended June 30, 2018 and 2017, respectively, on pre-tax income of $149.4 million and $12.4 million, respectively. Sirius Group reported an income tax expense of $62.3 million and $1.5 million during the six months ended June 30, 2018 and 2017, respectively, on pre-tax income of $203.8 million and $18.4 million, respectively. The effective tax rate for the six months ended June 30, 2018 was 30.6%, which was higher than the Swedish statutory rate of 22% (the rate at which the majority of Sirius Group's worldwide operations are taxed) primarily because of non-recurring adjustments to Sirius Group's deferred tax assets which resulted from various internal restructurings and changes in Sirius Group's accounting for uncertain tax positions. The effective tax rate for the six months ended June 30, 2017 was 8%, which was lower than the Swedish statutory rate of 22% primarily because of income recognized in a jurisdiction with a different rate than Sweden and non-recurring adjustments to Sirius Group's deferred tax assets which resulted from various internal restructuring. In arriving at the effective tax rate for the six month period ended June 30, 2018 and 2017, Sirius Group forecasted all income and expense items including the change in unrealized investment gains (losses) and realized investment gains (losses) for the years ending December 31, 2018 and 2017.

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 10. Income taxes (Continued)

        The Tax Cuts and Jobs Act (the "TCJA") was enacted into law in the U.S. in December 2017. Among other provisions, the TCJA includes a new 21% corporate tax rate, the impacts of which (including on Sirius Group's deferred tax assets) were already taken into account in Sirius Group's financial results for the year ended December 31, 2017. The TCJA also includes a new base erosion and anti-abuse tax ("BEAT"), which is essentially a minimum tax that is potentially applicable to certain otherwise deductible payments made by U.S. entities to non-U.S. affiliates, including cross- border interest payments and reinsurance premiums. The statutory BEAT rate is 5% in 2018 and will rise to 10% in 2019-2025 and then 12.5% in 2026 and after. The TCJA also includes provisions for Global Intangible Low-Taxed Income ("GILTI") under which taxes on foreign income are imposed on the excess of a deemed return on tangible assets of certain foreign subsidiaries. Consistent with accounting guidance, Sirius Group will treat BEAT as an in period tax charge when incurred in future periods for which no deferred taxes need to be provided and has made an accounting policy election to treat GILTI taxes in a similar manner. No provision for income taxes related to BEAT or GILTI was recorded as of December 31, 2017 or June 30, 2018.

        Additionally, the SEC staff issued Staff Accounting Bulletin 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the TCJA. SAB 118 addresses situations where accounting for certain income tax effects of the TCJA under ASC 740, Income Taxes ("ASC 740"), may be incomplete upon issuance of an entity's financial statements and provides a one-year measurement period from the enactment date to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the following: (1) income tax effects of those aspects of the TCJA for which accounting under ASC 740 is complete, (2) provisional estimate of income tax effects of the TCJA to the extent accounting is incomplete but a reasonable estimate is determinable, and (3) if a provisional estimate cannot be determined, ASC 740 should still be applied on the basis of tax law provisions that were in effect immediately before the enactment of the TCJA. Sirius Group's provision for income taxes for the year ended December 31, 2017 is based on the application of SAB 118 taking into account existing deferred tax balances and certain provisions of the TCJA. The income tax effects of the TCJA for which accounting is complete (category (1) above) are set forth in the paragraph above. To the extent Sirius Group's accounting was incomplete and a reasonable estimate of the impact of certain provisions was determinable (category (2) above), the provisional estimates prescribed by SAB 118 were insignificant. To the extent a reasonable estimate of the impact of certain provisions was not determinable (category (3) above), Sirius Group has not recorded any adjustments and has continued accounting for them in accordance with ASC 740 on the basis of the tax laws in effect before enactment of the TCJA. These items include Sirius Group's tax accounting for loss reserves based on a new discounting methodology prescribed by the TCJA. Sirius Group continues to analyze the impact of the TCJA, and there were no changes to these estimates during the current period.

        Sirius Group has capital and liquidity in many of its subsidiaries, some of which may reflect undistributed earnings. If such capital or liquidity were to be paid or distributed to the Company or Sirius Group's subsidiaries, as dividends or otherwise, they may be subject to income or withholding taxes. Sirius Group generally intends to operate, and manage its capital and liquidity, in a tax-efficient manner. However, the applicable tax laws in relevant countries are still evolving, including in response to guidance from the Organisation for Economic Cooperation and Development. Accordingly, such payments or earnings may be subject to income or withholding tax in jurisdictions where they are not

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 10. Income taxes (Continued)

currently taxed or at higher rates of tax than currently taxed, and the applicable tax authorities could attempt to apply income or withholding tax to past earnings or payments.

Deferred Tax Asset, net of Valuation Allowance

        Sirius Group's net deferred tax liability, net of the valuation allowance as of June 30, 2018 is $57.8 million. Of the $57.8 million, $24.5 million relates to net deferred tax assets in U.S. subsidiaries, $160.1 million relates to net deferred tax assets in Luxembourg subsidiaries, $12.1 million relates to net deferred tax assets in United Kingdom subsidiaries, $254.7 million relates to net deferred tax liabilities in Sweden subsidiaries, and $0.2 million relates to other net deferred tax assets.

        Sirius Group records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in income tax expense in the period of change. In determining whether or not a valuation allowance, or change therein, is warranted, Sirius Group considers factors such as prior earnings history, expected future earnings, carryback and carryforward periods and strategies that if executed would result in the realization of a deferred tax asset. It is possible that certain planning strategies or projected earnings in certain subsidiaries may not be feasible to utilize the entire deferred tax asset, which could result in material changes to Sirius Group's deferred tax assets and tax expense.

Uncertain Tax Positions

        Recognition of the benefit of a given tax position is based upon whether a company determines that it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. In evaluating the more likely than not recognition threshold, Sirius Group must presume that the tax position will be subject to examination by a taxing authority with full knowledge of all relevant information. If the recognition threshold is met, then the tax position is measured at the largest amount of benefit that is more than 50% likely of being realized upon ultimate settlement.

        As of June 30, 2018, the total reserve for unrecognized tax benefits is $63.8 million. If Sirius Group determines in the future that its reserves for unrecognized tax benefits on permanent differences and interest and penalties are not needed, the reversal of $63.6 million of such reserves as of June 30, 2018 would be recorded as an income tax benefit and would impact the effective tax rate. If Sirius Group determines in the future that its reserves for unrecognized tax benefits on temporary differences are not needed, the reversal of $0.2 million of such reserves as of June 30, 2018 would not impact the effective tax rate due to deferred tax accounting but would accelerate the payment of cash to the taxing authority. The vast majority of Sirius Group's reserves for unrecognized tax benefits on temporary differences relate to deductions for loss reserves where the timing of the deductions is uncertain.

        The Swedish Tax Authority ("STA") has denied deductions claimed by two of the Company's Swedish subsidiaries in certain tax years for interest paid on intra-group debt instruments. Sirius Group is currently challenging the STA's denial in court based on the technical merits. Sirius Group's reserve for uncertain tax positions has taken into account relevant developments in these tax disputes and in applicable Swedish tax law including recent case law. As of June 30, 2018, the total amount of such

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 10. Income taxes (Continued)

reserve attributable to this issue is $62.1 million. Sirius Group has also taken into account the Stock Purchase Agreement ("SPA") by which Sirius Group was sold to CMIG International Holding Pte. Ltd ("CMIG International") in 2016 and recorded an indemnification asset as of June 30, 2018. Pursuant to the SPA, the seller agreed to indemnify the buyer and Sirius Group for, among other things, (1) any additional tax liability in excess of Sirius Group's accounting for uncertain tax positions for tax periods prior to the sale of Sirius Group to CMIG International, and (2) an impairment in Sirius Group's net deferred tax assets resulting from a final determination by a tax authority. While Sirius Group intends to continue challenging the STA's denial based on the technical merits, the ultimate resolution of these tax disputes is uncertain and no assurance can be given that there will be no material changes to Sirius Group's operating results or balance sheet in connection with these uncertain tax positions or the related indemnification.

        With few exceptions, Sirius Group is no longer subject to U.S. federal, state or non-U.S. income tax examinations by tax authorities for years before 2013.

Note 11. Derivatives

Interest Rate Cap

        Sirius Group entered into an interest rate swap ("Interest Rate Cap") with two financial institutions where it paid an upfront premium and in return receives a series of quarterly payments based on the 3-month London Interbank Offered Rate ("LIBOR") at the time of payment. The Interest Rate Cap does not qualify for hedge accounting. Changes in fair value are recognized as unrealized gains or losses and are presented within Other revenue. The fair value of the interest rate cap has been estimated using a single broker quote and, accordingly, has been classified as a Level 3 measurement as of June 30, 2018 and December 31, 2017. Collateral held is recorded within short-term investments with an equal amount recognized as a liability to return collateral. Sirius Group's liability to return that collateral is based on the amounts provided by the counterparties and investment earnings thereon. The following table summarizes the Interest Rate Cap collateral balances held by Sirius Group and ratings by counterparty:

 
  June 30, 2018  
 
  Collateral Balances Held   S & P Rating(1)  
 
  (Millions)
 

Barclays Bank Plc

  $ 0.2     A–  

Nordea Bank Finland Plc

    0.1     AA–  

Total

  $ 0.3        

(1)
Standard & Poor's ratings as detailed above are: "AA–" (Very Strong, which is the fourth highest of twenty-three creditworthiness ratings) and "A–" (Strong, which is the seventh highest of twenty-three credit worthiness ratings).

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 11. Derivatives (Continued)

Foreign Currency Swaps

        Sirius Group executes foreign currency swaps to manage foreign currency exposure. The foreign currency swaps have not been designated or accounted for under hedge accounting. Changes in fair value are recognized as unrealized gains or losses and are presented within Net foreign exchange gains (losses). The fair value of the foreign currency swaps has been estimated using a single broker quote and, accordingly, has been classified as a Level 3 measurement as of June 30, 2018 and December 31, 2017. Sirius Group does not provide or hold any collateral associated with the swaps.

Foreign Currency Forward

        During 2016, Sirius Group executed a foreign currency forward to manage currency exposure against a foreign currency investment. During 2017, the foreign currency forward expired and was not renewed. The foreign currency forward was not designated or accounted for under hedge accounting. Changes in fair value are recognized as unrealized gains or losses and are presented within Net foreign exchange gains (losses). The fair value of the foreign currency forward was estimated using a single broker quote and accordingly, was classified as a Level 3 measurement. Sirius Group did not provide or hold any collateral associated with the forwards.

Weather Derivatives

        Sirius Group holds assets and assumes liabilities related to weather and weather contingent risk management products. Weather and weather contingent derivative contracts are entered into with the objective of generating profits in normal climatic conditions. Accordingly, Sirius Group's weather and weather contingent derivatives are not designed to meet the criteria for hedge accounting under GAAP. Sirius Group receives payment of premium at the contract inception in exchange for bearing the risk of variations in a quantifiable weather index. Changes in fair value are recognized as unrealized gains or losses and are presented within Other revenue. Management uses available market data and internal pricing models based upon consistent statistical methodologies to estimate the fair value. Because of the significance of the unobservable inputs used to estimate the fair value of Sirius Group's weather risk contracts, the fair value measurements of the contracts are deemed to be Level 3 measurements in the fair value hierarchy as of June 30, 2018 and December 31, 2017. Sirius Group does not provide or hold any collateral associated with the weather derivatives.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 11. Derivatives (Continued)

        The following tables summarize information on the classification and amount of the fair value of derivatives not designated as hedging instruments within the Company's Consolidated Balance Sheets as at June 30, 2018 and December 31, 2017:

 
  June 30, 2018   December 31, 2017  
Derivatives not
designated as hedging
instruments
  Notional Value   Asset derivative
at fair value(1)
  Liability
derivative at
fair
value(2)
  Notional Value   Asset derivative
at fair value(1)
  Liability
derivative at
fair
value(2)
 
 
  (Millions)
 

Interest rate cap

  $ 250.0   $ 0.4   $   $ 250.0   $ 0.3   $  

Foreign currency swaps

  $ 45.0   $   $ 8.1   $ 45.0   $   $ 10.6  

Weather derivatives

  $ 51.7   $ 1.8   $   $ 113.3   $ 4.2   $  

(1)
Asset derivatives are classified within Other assets within the Company's Consolidated Balance Sheets at June 30, 2018 and December 31, 2017.

(2)
Liability derivatives are classified within Other liabilities within the Company's Consolidated Balance Sheets at June 30, 2018 and December 31, 2017.

        The following table summarizes information on the classification and net impact on earnings, recognized in the Company's Consolidated Statements of Income relating to derivatives during the three months and six months ended June 30, 2018 and 2017:

 
   
  For the Three
Months
Ended
June 30,
  For the Six
Months
Ended
June 30,
 
 
  Classification of gains (losses) recognized in earnings  
Derivatives not designated as
hedging instruments
  2018   2017   2018   2017  
 
  (Millions)
 

Interest rate cap

  Other revenues   $ (0.1 ) $ (0.5 ) $ 0.2   $ (1.2 )

Foreign currency swaps

  Net foreign exchange gains (losses)   $ 4.3   $ (3.9 ) $ 3.0   $ (6.8 )

Foreign currency forwards(1)

  Net foreign exchange gains (losses)   $   $   $   $ (0.3 )

Weather derivatives

  Other revenues   $ 1.4   $ (5.3 ) $ 2.4   $ (5.6 )

(1)
There were no Foreign currency forwards at June 30, 2018 or at December 31, 2017 on the Consolidated Balance Sheets.

Note 12. Common shareholder's equity, mezzanine equity, and non-controlling interests

Common shareholder

        The Company is a Bermuda exempted company and is an indirect wholly-owned subsidiary of CMIG International, a Singapore holding company, through CM Bermuda Ltd., a Bermuda exempted company. The Company was acquired from White Mountains Insurance Company ("White Mountains" or "former parent").

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 12. Common shareholder's equity, mezzanine equity, and non-controlling interests (Continued)

        At June 30, 2018 and December 31, 2017, the Company had 120,000,000 common shares issued and outstanding with a par value of $0.01 per share. From December 12, 2016 and ending on May 22, 2017, the Company was authorized to issue up to 600,000,000 common shares. On May 22, 2017, the Company divided its authorized share capital into two classes: (i) 500,000,000 common shares, with a par value of $0.01 per share and (ii) 100,000,000 preference shares, with a par value of $0.01 per share.

Additional paid-in surplus

        The following table summarizes the contributions made to Sirius Group by White Mountains for the three months and six months ended June 30, 2018 and 2017:

 
  For the
Three
Months
Ended
June 30,
  For the
Six
Months
Ended
June 30,
 
 
  2018   2017   2018   2017  
 
  (Millions)
 

Reimbursement for performance shares

  $   $   $ 1.4   $ 2.5  

Reimbursement for retention bonuses

        1.7         7.1  

Total Additional paid-in surplus

  $   $ 1.7   $ 1.4   $ 9.6  

Dividends

        The Company did not pay dividends to its parent company during the three months and six months ended June 30, 2018 and 2017.

Mezzanine equity

        In connection with the acquisition of IMG, the Company issued mandatorily convertible stock in the form of Series A redeemable preference shares as a portion of the consideration paid. (See Note 3 .) The Company issued 100,000 of the 150,000 authorized Series A redeemable preference shares to the seller of IMG. Each Series A redeemable preference share has a liquidation preference per share of $1,000. In addition to the initial issuance, the Company will issue the seller up to an additional 50,000 shares if IMG meets certain mutually agreed upon growth targets. The Series A redeemable preference shares accrue dividends at a per annum rate equal to 10%. During the three months ended June 30, 2018, the Company did not accrue any dividends on the Series A redeemable preference shares. (See Note 19 .)

        The Series A redeemable preference shares rank senior to common shares with respect to dividend rights, rights of liquidation, winding-up, or dissolution of the Company and junior to all of the Company's existing and future policyholder obligations and debt obligations. Any class or series of shares of the Company issued in the future must rank junior to the Series A redeemable preference shares, as to the payment of dividends or as to distribution of assets upon any voluntary or involuntary return of assets on liquidation, winding-up, or dissolution of the Company for as long as they are issued and outstanding.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 12. Common shareholder's equity, mezzanine equity, and non-controlling interests (Continued)

        At June 30, 2018, the balance of the Series A redeemable preference shares with accrued dividends was $108.8 million.

Non-controlling interests

        Non-controlling interests consist of the ownership interests of non-controlling shareholders in consolidated entities and are presented separately on the balance sheet. At June 30, 2018 and December 31, 2017 Sirius Group's balance sheet included $1.0 million and $0.2 million, respectively, in non-controlling interests.

        The following tables show the change in non-controlling interest for the three months and six months ended June 30, 2018 and 2017:

 
  For the Three Months
Ended June 30,
2018
  For the Six Months
Ended June 30,
2018
 
 
  (Millions)
 

Non-controlling interests

  $ 0.5   $ 0.2  

Net income attributable to non-controlling interests

    0.4     0.6  

Other, net

    0.1     0.2  

Non-controlling interests as of June 30, 2018

  $ 1.0   $ 1.0  

 

 
  For the Three Months
Ended June 30,
2017
  For the Six Months
Ended June 30,
2017
 
 
  (Millions)
 

Non-controlling interests

  $ 250.7   $ 251.3  

Net income attributable to non-controlling interests

    9.6     9.0  

Dividends to non-controlling interests

    (9.4 )   (9.4 )

Other, net

    (0.7 )   (0.7 )

Non-controlling interests as of June 30, 2017

  $ 250.2   $ 250.2  

SIG Preference Shares

        On October 25, 2017, the Company's indirect wholly-owned subsidiary, Sirius International Group, Ltd., redeemed all of its outstanding 250,000 Fixed/Floating Perpetual Non-Cumulative Preference Shares ("SIG Preference Shares"). The redemption price equaled the $1,000 liquidation preference per preference share. Sirius Group accounted for the SIG Preference Shares as a conditionally redeemable instrument within Non-controlling interests.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 12. Common shareholder's equity, mezzanine equity, and non-controlling interests (Continued)

Alstead Re

        As of June 30, 2018 and December 31, 2017, Sirius Group recorded non-controlling interest of $1.0 million and $0.2 million, respectively, in Alstead Re Insurance Company ("Alstead Re"). (See Note 16 .)

Note 13. Earnings per share

        Basic earnings (loss) per share is computed by dividing net income (loss) available to Sirius Group common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income available to Sirius Group common shareholders by the weighted-average number of common shares outstanding adjusted to give effect to potentially dilutive securities.

        The Series A redeemable preference shares qualify as participating securities which requires the application of the two-class method to compute both basic and diluted earnings per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common shareholders. The Series A redeemable preference shares have no obligation to absorb losses of the Company in periods of net loss.

        For the periods presented, there are no potentially dilutive securities or instruments that would have an effect on the calculation of dilutive earnings per share.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 13. Earnings per share (Continued)

        The following table sets forth the computation of basic and diluted earnings per common share for the three months and six months ended June 30, 2018 and 2017:

 
  For the Three Months Ended
June 30,
  For the Six Months Ended
June 30,
 
 
  2018   2017   2018   2017  
 
  (Millions, except share and per share information)
 

Numerator:

                         

Net income

  $ 98.2   $ 9.8   $ 141.5   $ 16.9  

Less: Income attributable to non-controlling interests

    (0.4 )   (9.6 )   (0.6 )   (9.0 )

Less: Accrued dividends on Series A redeemable preference shares

        (1.0 )   (2.6 )   (1.0 )

Net income available for dividends out of undistributed earnings

  $ 97.8   $ (0.8 ) $ 138.3   $ 6.9  

Less: Earnings attributable to Series A redeemable preference shares

    (4.0 )       (5.7 )   (0.3 )

Net income available to Sirius Group common shareholders

  $ 93.8   $ (0.8 ) $ 132.6   $ 6.6  

Denominator:

                         

Weighted average shares outstanding for basic and diluted earnings per share

    120,000,000     120,000,000     120,000,000     120,000,000  

Earnings per share

                         

Basic earnings per share

  $ 0.78   $ (0.01 ) $ 1.11   $ 0.06  

Diluted earnings per share

  $ 0.78   $ (0.01 ) $ 1.11   $ 0.06  

Note 14. Accumulated other comprehensive (loss)

        The changes in accumulated other comprehensive (loss), by component, for the three months and six months ended June 30, 2018 and 2017 are as follows:

 
  For the Three Months
Ended June 30, 2018
  For the Six Months
Ended June 30, 2018
 
 
  Foreign currency
translation
adjustment
  Total   Foreign currency
translation
adjustment
  Total  
 
  (Millions)
 

Balance, beginning of period

  $ (153.9 ) $ (153.9 ) $ (140.5 ) $ (140.5 )

Other comprehensive income (loss)

    (48.5 )   (48.5 )   (61.9 )   (61.9 )

Balance as at June 30, 2018

  $ (202.4 ) $ (202.4 ) $ (202.4 ) $ (202.4 )

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 14. Accumulated other comprehensive (loss) (Continued)


 
  For the Three Months
Ended June 30, 2017
  For the Six Months
Ended June 30, 2017
 
 
  Foreign currency
translation
adjustment
  Total   Foreign currency
translation
adjustment
  Total  
 
  (Millions)
 

Balance, beginning of period

  $ (198.5 ) $ (198.5 ) $ (212.2 ) $ (212.2 )

Other comprehensive income (loss)

    33.5     33.5     47.2     47.2  

Balance as at June 30, 2017

  $ (165.0 ) $ (165.0 ) $ (165.0 ) $ (165.0 )

Note 15. Investments in unconsolidated entities

        Sirius Group's investments in unconsolidated entities are included within Other long-term investments and consist of investments in common equity securities or similar instruments, which give Sirius Group the ability to exert significant influence over the investee's operating and financial policies ("equity method eligible unconsolidated entities"). Such investments may be accounted for under either the equity method or, alternatively, Sirius Group may elect to account for them under the fair value option.

        The following table presents the components of Other long-term investments as of June 30, 2018 and December 31, 2017:

 
  June 30,
2018
  December 31,
2017
 
 
  (Millions)
 

Equity method eligible unconsolidated entities, at fair value

  $ 160.3   $ 121.2  

Other unconsolidated investments, at fair value(1)

    156.3     148.3  

Total Other long-term investments(2)

  $ 316.6   $ 269.5  

(1)
Includes Other long-term investments that are not equity method eligible.

(2)
There were no investments accounted for using the equity method as of June 30, 2018 and December 31, 2017.

Equity method eligible unconsolidated entities, at fair value

        Sirius Group has elected the Fair Value Option to account for its equity method eligible investments accounted for as part of Other long-term investments for consistency of presentation with rest of its investment portfolio. The following table presents Sirius Group's investments in equity

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 15. Investments in unconsolidated entities (Continued)

method eligible unconsolidated entities as of June 30, 2018 and December 31, 2017 with ownership interest greater than 20%:

 
  Ownership interest at    
Investee
  June 30, 2018   December 31, 2017   Instrument Held

BE Reinsurance Limited

    25.0 %   25.0 % Common shares

BioVentures Investors (Offshore) IV LP

    73.0 %   73.0 % Units

Camden Partners Strategic Fund V (Cayman), LP

    37.2 %   36.5 % Units

NEC Cypress Buyer LLC

    23.5 %   23.5 % Units

New Energy Capital Infrastructure Credit Fund LP

    23.3 %   23.3 % Units

New Energy Capital Infrastructure Offshore Credit Fund LP

    56.2 %   56.2 % Units

Scion G7, LP(1)

    29.8 %   N/A   Units

Tuckerman Capital V LP

    48.3 %   48.3 % Units

Tuckerman Capital V Co-Investment I LP

    49.5 %   49.5 % Units

(1)
Sirius Group did not have an investment in Scion G7, LP at December 31, 2017.

Note 16. Variable interest entities

        Sirius Group consolidates the results of operations and financial position of every voting interest entity ("VOE") in which it has a controlling financial interest and VIEs in which it is considered to be the primary beneficiary. The consolidation assessment, including the determination as to whether an entity qualifies as a VOE or VIE, depends on the facts and circumstances surrounding each entity.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 16. Variable interest entities (Continued)

        Sirius Group has determined that Alstead Re is a VIE for which Sirius Group is the primary beneficiary and is required to consolidate it. The following table presents Alstead Re's assets and liabilities, as classified in the Consolidated Balance Sheets as at June 30, 2018 and December 31, 2017:

 
  June 30,
2018
  December 31,
2017
 
 
  (Millions)
 

Assets:

             

Cash

  $ 4.5   $ 4.5  

Total investments

    4.5     4.5  

Insurance and reinsurance premiums receivable

    6.5     4.1  

Funds held by ceding companies

    3.5     2.7  

Deferred acquisition costs

    1.7     1.3  

Other assets

    0.1      

Total assets

  $ 16.3   $ 12.6  

Liabilities

             

Loss and loss adjustment expense reserves

  $ 3.4   $ 3.5  

Unearned insurance and reinsurance premiums

    7.3     4.3  

Other liabilities

    0.1      

Total liabilities

  $ 10.8   $ 7.8  

        Sirius Group is a passive investor in certain third-party-managed hedge and private equity funds, some of which are VIEs. Sirius Group is not involved in the design or establishment of these VIEs, nor does it actively participate in the management of the VIEs. The exposure to loss from these investments is limited to the carrying value of the investments at the balance sheet date.

        Sirius Group calculates maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE, (ii) the notional amount of VIE assets or liabilities where Sirius Group has also provided credit protection to the VIE with the VIE as the referenced obligation, and (iii) other commitments and guarantees to the VIE. Sirius Group does not have any VIEs that it sponsors nor any VIEs where it has recourse to it or has provided a guarantee to the VIE interest holders.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 16. Variable interest entities (Continued)

        The following table presents total assets of unconsolidated VIEs in which Sirius Group holds a variable interest, as well as the maximum exposure to loss associated with these VIEs:

 
   
  Maximum Exposure to Loss  
 
  Total VIE
Assets
  On-Balance
Sheet
  Off-Balance
Sheet
  Total  
 
  (Millions)
 

June 30, 2018

                         

Other long-term investments(1)

  $ 1,450.0   $ 141.5   $ 44.7   $ 186.2  

Total at June 30, 2018

  $ 1,450.0   $ 141.5   $ 44.7   $ 186.2  

December 31, 2017

                         

Other long-term investments(1)

  $ 1,378.1   $ 108.2   $ 57.4   $ 165.6  

Total at December 31, 2017

  $ 1,378.1   $ 108.2   $ 57.4   $ 165.6  

(1)
Comprised primarily of hedge funds and private equity funds.

Note 17. Transactions with related parties

(Re)insurance contracts

        In the normal course of business, Sirius Group enters into insurance and reinsurance contracts with certain of its insurance and MGU affiliates, or their subsidiaries. During the three months and six months ended June 30, 2018, these contracts resulted in gross written premiums of $38.2 million and $18.9 million, respectively. As at June 30, 2018 and December 31, 2017, Sirius Group had total receivables due from affiliates of $29.2 million and $10.4 million, respectively. As at June 30, 2018 and December 31, 2017, Sirius Group had total payables due to affiliates of $2.2 million and $0.5 million, respectively.

Other

        On August 16, 2016, the Company announced that Meyer "Sandy" Frucher was added as an independent director to its board of directors. Mr. Frucher is Vice Chairman of Nasdaq, Inc. On June 25, 2018, the Company announced the Merger Agreement with Easterly that would result in the Company becoming publicly listed and traded on the Nasdaq stock exchange. (See Note 3 .)

Note 18. Commitments and contingencies

Legal Proceedings

        Sirius Group, and the insurance and reinsurance industry in general, are routinely subject to claims related litigation and arbitration in the normal course of business, as well as litigation and arbitration that do not arise from, or are directly related to, claims activity. Sirius Group estimates of the costs of settling matters routinely encountered in claims activity are reflected in the reserves for unpaid loss and LAE. (See Note 5. )

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 18. Commitments and contingencies (Continued)

        Sirius Group considers the requirements of ASC 450, Contingencies ("ASC 450"), when evaluating its exposure to non-claims related litigation and arbitration. ASC 450 requires that accruals be established for litigation and arbitration if it is probable that a loss has been incurred and it can be reasonably estimated. ASC 450 also requires that litigation and arbitration be disclosed if it is probable that a loss has been incurred or it there is a reasonable possibility that a loss may have been incurred.

        The following summarizes one, ongoing non-claims related litigation:

Tribune Company

        In June 2011, Deutsche Bank Trust Company Americas, Law Debenture Company of New York and Wilmington Trust Company (collectively referred to as "Plaintiffs"), in their capacity as trustees for certain senior notes issued by the Tribune Company ("Tribune"), filed lawsuits in various jurisdictions (the "Noteholder Actions") against numerous defendants including Sirius Group in their capacity as former shareholders of Tribune seeking recovery of the proceeds from the sale of common stock of Tribune in connection with Tribune's leveraged buyout in 2007 (the "LBO"). Tribune filed for bankruptcy in 2008 in the Delaware bankruptcy court (the "Bankruptcy Court"). The Bankruptcy Court granted Plaintiffs permission to commence these LBO-related actions, and in 2011, the Judicial Panel on Multidistrict Litigation granted a motion to consolidate the actions for pretrial matters and transferred all such proceedings to the United States District Court for the Southern District of New York (the "SDNY"). Plaintiffs seek recovery of the proceeds received by the former Tribune shareholders on a theory of constructive fraudulent transfer asserting that Tribune purchased or repurchased its common shares without receiving fair consideration at a time when it was, or as a result of the purchases of shares, was rendered, insolvent. Certain subsidiaries of Sirius Group received approximately $6.1 million for Tribune common stock tendered in connection with the LBO.

        In addition, Sirius Group in its capacity as a former shareholder of Tribune, along with thousands of former Tribune shareholders, have been named as defendants in an adversary proceeding brought by the Official Committee of Unsecured Creditors of the Tribune Company (the "Committee"), on behalf of the Tribune Company, which seeks to avoid the repurchase of shares by Tribune in the LBO on a theory of intentional fraudulent transfer (the "Committee Action"). Tribune emerged from bankruptcy in 2012, and a litigation trustee replaced the Committee as plaintiff in the Committee Action. This matter was consolidated for pretrial matters with the Noteholder Actions in the SDNY and was stayed pending the motion to dismiss in the Noteholder Actions.

        An omnibus motion to dismiss the shareholder defendants in the Committee Action was filed in May 2014, and was granted on January 6, 2017. The plaintiff moved to amend its fifth amended complaint to add a constructive fraudulent conveyance claim against the shareholder defendants. On August 24, 2017, the SDNY denied the plaintiff's motion without prejudice. However, on March 8, 2018, the plaintiff moved to renew its request to amend the complaint based on the Supreme Court's decision in Merit Mgmt Grp. LP. v. FTI Consulting, Inc., holding that the safe harbor protections of Section 546(e) (which prevent the bankruptcy trustee from unwinding certain transactions) did not apply where a transfer is conducted through a financial institution that is neither the debtor, nor the transferee, but serves only as a conduit. On May 16, 2018 the SDNY recalled its mandate in connection with the dismissal of the constructive fraudulent conveyance claim. On July 9, 2018, the Judge requested the parties to submit a joint letter addressing a potential global resolution and the status of

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

Unaudited

Note 18. Commitments and contingencies (Continued)

discovery. While both the trustee and the shareholder defendants were in favor of exploring settlement discussions, they have voiced very different views about the manner in which any such a settlement discussion would take place.

        No amount has been accrued in connection with this matter as of June 30, 2018 and December 31, 2017.

Note 19. Subsequent events

        On August 30, 2018, Sirius Group and Easterly announced that they have executed an amendment to the Merger Agreement for the previously announced business combination of Sirius Group with Easterly, pursuant to which Easterly will merge with and become a wholly-owned subsidiary of Sirius Group and Sirius Group will become a publicly listed company.

        The amendment, among other things, modifies the date on which the exchange ratio, used to calculate the number of Sirius Group common shares to be issued in the Merger, is determined. Pursuant to the terms of the Merger Agreement, as amended, Easterly's common stock will be exchanged for Sirius Group's common shares at a value equal to 1.05x Sirius Group's diluted GAAP book value per share as of September 30, 2018 (the "Merger Price"), instead of as of June 30, 2018.

        Sirius Group has also entered into subscription agreements with affiliated funds of Gallatin Point Capital, The Carlyle Group, Centerbridge Partners, L.P. and Bain Capital Credit (the "investors") pursuant to which the investors have committed to purchase $213 million of Series B preference shares and common shares in a private placement at the Merger Price, which amount may be decreased to $111 million at Sirius Group's option. In addition, the investors will receive warrants that are exercisable for a period of five years after the issue date at a strike price equal to 125% of the Merger Price.

        On August 16, 2018, Sirius Group acquired WRM America Indemnity Company, Inc. from WRM America Indemnity Holding Company, LLC for $16.9 million.

        On July 14, 2018, the Company, IMG Acquisition Holdings, LLC ("IMGAH"), and Sirius Acquisitions Holding Company II entered into a Redemption Agreement pursuant to which, effective as of and subject to the closing of the Merger, the Company has agreed to redeem all of the outstanding Sirius Group Series A redeemable preference shares, which are held by IMGAH, for $95 million, payable in cash at the time of the redemption. Effective as of the completion of such redemption, the parties have agreed to terminate the registration rights agreement and the shareholder's agreement between the Company and IMGAH. In addition, the parties agreed that any remaining contingent consideration in respect of the IMG acquisition, which may be in an amount of up to $50 million, will be paid in cash, not in Sirius Group Series A redeemable preference shares as previously contemplated in the agreement in respect of the IMG acquisition.

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LOGO


Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholder of
Sirius International Insurance Group, Ltd.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Sirius International Insurance Group, Ltd. and its subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of (loss) income, comprehensive (loss) income, shareholder's equity, and cash flows for each of the three years in the period ended December 31, 2017, including the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP
New York, New York
August 6, 2018

We have served as the Company's auditor since at least 2001. We have not determined the specific year we began serving as auditor of the Company.

   

GRAPHIC

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Sirius International Insurance Group, Ltd.

Consolidated Balance Sheets

As at December 31, 2017 and 2016

(Expressed in millions of U.S. dollars, except share information)
  2017   2016  

Assets

             

Fixed maturity investments, trading, at fair value ( Amortized cost 2017: $2,195.3; 2016: $2,871.2 )

  $ 2,180.0   $ 2,891.6  

Short-term investments, at fair value ( Amortized cost 2017: $625.3; 2016: $539.7 )

    625.0     538.0  

Equity securities, trading, at fair value (C ost 2017: $275.1; 2016: $125.7 )

    299.2     123.0  

Other long-term investments, at fair value (C ost 2017: $255.5; 2016: $115.8 )

    269.5     124.8  

Cash

    215.8     137.1  

Restricted cash

    14.8      

Total investments and cash

    3,604.3     3,814.5  

Accrued investment income

    14.1     19.0  

Insurance and reinsurance premiums receivable

    543.6     394.6  

Reinsurance recoverable on unpaid losses

    319.7     291.5  

Reinsurance recoverable on paid losses

    17.5     17.1  

Funds held by ceding companies

    153.2     100.0  

Ceded unearned insurance and reinsurance premiums

    106.6     101.1  

Deferred acquisition costs

    120.9     84.7  

Deferred tax asset

    244.1     279.1  

Accounts receivable on unsettled investment sales

    0.3      

Goodwill

    401.0      

Intangible assets

    216.3     5.0  

Other assets

    82.0     59.9  

Total assets

  $ 5,823.6   $ 5,166.5  

Liabilities

             

Loss and loss adjustment expense reserves

  $ 1,898.5   $ 1,620.1  

Unearned insurance and reinsurance premiums

    506.8     398.0  

Ceded reinsurance payable

    139.1     99.6  

Funds held under reinsurance treaties

    73.4     63.4  

Deferred tax liability

    282.2     239.7  

Debt

    723.2     396.2  

Accounts payable on unsettled investment purchases

    0.3     7.6  

Other liabilities

    176.8     102.5  

Total liabilities

    3,800.3     2,927.1  

Commitments and Contingencies (see Note 23)

             

Mezzanine equity

             

Series A redeemable preference shares

    106.1      

Common shareholder's equity

             

Common shares ( shares issued and outstanding: 120,000,000 )

    1.2     1.2  

Additional paid-in surplus

    1,197.9     1,184.6  

Retained earnings

    858.4     1,014.5  

Accumulated other comprehensive (loss)

    (140.5 )   (212.2 )

Total common shareholder's equity

    1,917.0     1,988.1  

Non-controlling interests

    0.2     251.3  

Total equity

    1,917.2     2,239.4  

Total liabilities, mezzanine equity, and equity

  $ 5,823.6   $ 5,166.5  

   

See Notes to Consolidated Financial Statements

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Sirius International Insurance Group, Ltd.

Consolidated Statements of (Loss) Income

For the years ended December 31, 2017, 2016, and 2015

(Expressed in millions of U.S. dollars, except share and per
share information)
  2017   2016   2015  

Revenues

                   

Net earned insurance and reinsurance premiums

  $ 1,035.3   $ 890.1   $ 847.0  

Net investment income

    56.8     56.2     39.9  

Net realized investment (losses) gains

    (27.2 )   288.3     138.5  

Net unrealized investment (losses) gains

    (10.5 )   (238.2 )   102.5  

Net foreign exchange gains (losses)

    9.2     (11.0 )   (18.2 )

Gain on revaluation of contingent consideration

    48.8          

Other revenue

    21.7     9.1     (2.4 )

Total revenues

    1,134.1     994.5     1,107.3  

Expenses

                   

Loss and loss adjustment expenses

    811.2     519.3     422.7  

Insurance and reinsurance acquisition expenses

    197.2     210.3     189.8  

Other underwriting expenses

    106.1     107.3     107.9  

General and administrative expenses

    91.9     85.1     27.1  

Intangible asset amortization expenses

    10.2          

Impairment of intangible assets

    5.0          

Interest expense on debt

    22.4     34.6     26.6  

Total expenses

    1,244.0     956.6     774.1  

Pre-tax (loss) income

    (109.9 )   37.9     333.2  

Income tax (expense) benefit

    (26.4 )   7.3     (47.1 )

(Loss) income before equity in earnings of unconsolidated affiliates

    (136.3 )   45.2     286.1  

Equity in earnings of unconsolidated affiliates, net of tax

        6.6     23.9  

Net (loss) income

    (136.3 )   51.8     310.0  

Income attributable to non-controlling interests

    (13.7 )   (19.3 )   (18.8 )

(Loss) income before accrued dividends on Series A redeemable preference shares

    (150.0 )   32.5     291.2  

Accrued dividends on Series A redeemable preference shares

    (6.1 )        

Net (loss) income attributable to Sirius Group's common shareholder

  $ (156.1 ) $ 32.5   $ 291.2  

Net (Loss) income per common share and common share equivalent

                   

Basic earnings per common share and common share equivalent

  $ (1.30 ) $ 0.27   $ 2.43  

Diluted earnings per common share and common share equivalent

  $ (1.30 ) $ 0.27   $ 2.43  

Weighted average number of common shares and common share equivalents outstanding:

                   

Basic weighted average number of common shares and common share equivalents outstanding

    120,000,000     120,000,000     120,000,000  

Diluted weighted average number of common shares and common share equivalents outstanding

    120,000,000     120,000,000     120,000,000  

   

See Notes to Consolidated Financial Statements.

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Sirius International Insurance Group, Ltd.

Consolidated Statements of Comprehensive (Loss) Income

For the years ended December 31, 2017, 2016, and 2015

(Expressed in millions of U.S. dollars)
  2017   2016   2015  

Comprehensive (Loss) Income

                   

Net (loss) income

  $ (136.3 ) $ 51.8   $ 310.0  

Other comprehensive income (loss)

                   

Change in equity in net unrealized (losses) gains from investments in unconsolidated affiliates, net of tax

            (29.8 )

Change in foreign currency translation, net of tax

    71.7     (67.3 )   (65.4 )

Net change in other, net of tax

        1.2     0.2  

Total other comprehensive income (loss)

    71.7     (66.1 )   (95.0 )

Comprehensive (loss) income

    (64.6 )   (14.3 )   215.0  

Net (income) attributable to non-controlling interests

    (13.7 )   (19.3 )   (18.8 )

Comprehensive (loss) income attributable to Sirius Group's common shareholder

  $ (78.3 ) $ (33.6 ) $ 196.2  

   

See Notes to Consolidated Financial Statements.

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Sirius International Insurance Group, Ltd.

Consolidated Statements of Shareholder's Equity

For the years ended December 31, 2017, 2016, and 2015

(Expressed in millions of U.S. dollars, except per share information)
  2017   2016   2015  

Common shares

                   

Balance at beginning of year

  $ 1.2   $ 0.1   $ 0.1  

Stock split

        1.1      

Balance at end of year

    1.2     1.2     0.1  

Additional paid-in surplus

                   

Balance at beginning of year

    1,184.6     1,096.1     1,095.9  

Capital contribution from former parent

    13.3     89.6      

Stock split

        (1.1 )    

Other, net

            0.2  

Balance at end of year

    1,197.9     1,184.6     1,096.1  

Retained earnings

                   

Balance at beginning of year

    1,014.5     1,009.0     717.8  

Net income

    (136.3 )   51.8     310.0  

Income attributable to non-controlling interests

    (13.7 )   (19.3 )   (18.8 )

Accrued dividends on Series A redeemable preference shares

    (6.1 )        

Dividends to former parent

        (27.0 )    

Balance at end of year

    858.4     1,014.5     1,009.0  

Accumulated other comprehensive income (loss)

                   

Balance at beginning of year

    (212.2 )   (146.1 )   (51.1 )

Accumulated unrealized investment gains (losses) from investments in unconsolidated affiliates

                   

Balance at beginning of year

            29.8  

Net change in unrealized investment gains (losses) from investments in unconsolidated affiliates

            (29.8 )

Balance at end of year

             

Accumulated net foreign currency translation gains (losses)

                   

Balance at beginning of year

    (212.2 )   (144.9 )   (79.5 )

Net change in foreign currency translation

    71.7     (67.3 )   (65.4 )

Balance at end of year

    (140.5 )   (212.2 )   (144.9 )

Accumulated other comprehensive income (loss), other

                   

Balance at beginning of year

        (1.2 )   (1.4 )

Net change, other

        1.2     0.2  

Balance at end of year

            (1.2 )

Balance at the end of year

    (140.5 )   (212.2 )   (146.1 )

Total common shareholder's equity

  $ 1,917.0   $ 1,988.1   $ 1,959.1  

Non-controlling interests

    0.2     251.3     250.1  

Total equity

  $ 1,917.2   $ 2,239.4   $ 2,209.2  

Per share data

                   

Dividends declared per common share

  $   $ 0.23   $  

   

See Notes to Consolidated Financial Statements.

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Sirius International Insurance Group, Ltd.

Consolidated Statements of Cash Flows

For the years ended December 31, 2017, 2016, and 2015

(Expressed in millions of U.S. dollars)
  2017   2016   2015  

Cash flows from operations:

                   

Net (loss) income

  $ (136.3 ) $ 51.8   $ 310.0  

Adjustments to reconcile net (loss) income to net cash (used for) provided from operations:

                   

Net realized and unrealized investment (losses) gains

    37.7     (50.1 )   (241.0 )

Amortization of premium on fixed maturity investments

    16.6     21.1     22.4  

Amortization of intangible assets

    10.2          

Depreciation and other amortization

    8.9     6.7     5.5  

Revaluation of contingent consideration

    (48.8 )        

Impairment of intangible assets

    5.0          

Excess of fair value of acquired net assets over cost

        (4.3 )    

Net gain on sale of consolidated affiliates

            (1.0 )

Undistributed equity in earnings of unconsolidated affiliates, after-tax

        (6.6 )   (23.8 )

Other operating items:

                   

Net change in loss and loss adjustment expense reserves

    188.3     18.1     (100.7 )

Net change in reinsurance recoverable on paid and unpaid losses

    (11.1 )   (23.6 )   24.6  

Net change in funds held by ceding companies

    (38.9 )   (15.1 )   (4.8 )

Net change in unearned insurance and reinsurance premiums

    55.7     60.8     27.4  

Net change in ceded reinsurance payable

    22.8     11.5     8.4  

Net change in ceded unearned insurance and reinsurance premiums

    14.4     (1.9 )   (18.9 )

Net change in insurance and reinsurance premiums receivable

    (102.3 )   (95.4 )   (39.2 )

Net change in deferred acquisition costs

    (27.0 )   (14.2 )   (8.6 )

Net change in funds held under reinsurance treaties

    5.8     13.0     (0.9 )

Net change in current and deferred income taxes, net

    13.3     (12.0 )   12.0  

Net change in other assets and liabilities, net

    50.3     (6.6 )   38.1  

Net cash (used for) provided from operations

    (36.0 )   (46.8 )   9.5  

Cash flows from investing activities:

                   

Net change in short-term investments

    (1.0 )   (202.7 )   109.8  

Sales of fixed maturities and convertible fixed maturity investments

    1,422.4     2,454.7     2,176.5  

Maturities, calls, and paydowns of fixed maturity and convertible fixed maturity investments

    292.2     141.8     178.3  

Sales of common equity securities

    87.6     851.6     312.6  

Distributions and redemptions of other long-term investments

    40.6     27.9     13.2  

Sales of consolidated subsidiaries and unconsolidated affiliates, net of cash sold

    0.8     173.5     14.3  

Contributions to other long-term investments

    (167.5 )   (73.5 )   (10.7 )

Purchases of common equity securities

    (222.3 )   (232.7 )   (266.1 )

Purchases of fixed maturities and convertible fixed maturity investments

    (1,018.5 )   (3,192.3 )   (2,458.0 )

Purchases of consolidated subsidiaries, net of cash acquired

    (354.5 )   27.5      

Net change in unsettled investment purchases and sales

    (7.9 )   38.4     (12.2 )

Other, net

    (5.9 )   4.3     (9.1 )

Net cash provided from investing activities

    66.0     18.5     48.6  

Cash flows from financing activities:

                   

Capital contribution from former parent

    13.3     89.6      

Issuance of debt, net of issuance costs

    340.8     392.4      

Redemption of SIG Preference Shares

    (250.0 )        

Repayment of debt

    (3.8 )   (405.6 )    

Payment of contingent consideration

    (30.6 )        

Change in collateral held on Interest Rate Cap

    (1.1 )   (0.5 )   (2.4 )

Cash dividends paid to former parent

        (27.0 )    

Cash dividends paid to non-controlling interests

    (14.1 )   (18.8 )   (18.8 )

Other, net

    (0.9 )   0.8      

Net cash provided from (used for) financing activities

    53.6     30.9     (21.2 )

Effect of exchange rate changes on cash

    9.9     (9.4 )   (4.5 )

Net increase (decrease) in cash during year

    93.5     (6.8 )   32.4  

Cash and restricted cash balance at beginning of year

    137.1     143.9     111.5  

Cash and restricted cash balance at end of year

  $ 230.6   $ 137.1   $ 143.9  

Supplemental disclosures of cash flow information:

                   

Income taxes paid

  $ 16.7   $ 8.3   $ 31.7  

Interest paid

  $ 22.0   $ 31.6   $ 25.5  

   

See Notes to Consolidated Financial Statements.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements

For the years ended December 31, 2017, 2016, and 2015

Note 1. General

        Sirius International Insurance Group, Ltd. (the "Company") is a Bermuda exempted company whose principal businesses are conducted through its wholly and majority owned insurance subsidiaries (collectively with the Company, "Sirius Group"). The company provides insurance, reinsurance, and insurance services on a worldwide basis.

Note 2. Summary of significant accounting policies

Basis of presentation

        The accompanying consolidated financial statements at December 31, 2017, have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). The accompanying consolidated financial statements present the consolidated results of operations, financial condition, and cash flows of the Company and its subsidiaries and those entities in which the Company has control and a majority economic interest as well as those variable interest entities ("VIEs") that meet the requirements for consolidation. All intercompany transactions have been eliminated in consolidation.

        The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain amounts in the prior period financial statements have been reclassified to conform to the current presentation. Tabular dollar amounts are in millions, with the exception of share and per share amounts. All amounts are reported in U.S. dollars, except where noted otherwise.

Significant Accounting Policies

Investment securities

        Sirius Group's invested assets consist of securities and other investments held for general investment purposes. Sirius Group's portfolio of fixed maturity investments and equity securities held for general investment purposes are classified as trading and are reported at fair value as of the balance sheet date. Changes in unrealized gains and losses are reported pre-tax in revenues. Realized investment gains and losses are accounted for using the specific identification method and are reported pre-tax in revenues. Premiums and discounts on all fixed maturity investments are amortized and/or accreted to income over the anticipated life of the investment and are reported in Net investment income.

        Sirius Group's invested assets that are measured at fair value include fixed maturity investments, common and preferred equity securities, and other long-term investments, such as interests in hedge funds and private equities. Fair value is defined as the price received to sell an asset in an orderly transaction between market participants at the measurement date reflecting the highest and best use valuation concepts. In determining its estimates of fair value, Sirius Group uses a variety of valuation approaches and inputs. Whenever possible, Sirius Group estimates fair value using valuation methods that maximize the use of quoted prices and other observable inputs.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 2. Summary of significant accounting policies (Continued)

Short-term investments

        Short-term investments consist of money market funds, certificates of deposit and other securities which, at the time of purchase, mature or become available for use within one year. Short-term investments are carried at fair value.

Other long-term investments

        Other long-term investments consist primarily of hedge funds, private equity funds, other investments in limited partnerships and other private equity securities. The fair value of other long-term investments is generally based upon Sirius Group's proportionate interest in the underlying fund's net asset value, which is deemed to approximate fair value. In addition, due to a lag in reporting, some of the fund managers, fund administrators, or both, are unable to provide final fund valuations as of the Company's reporting date. In these circumstances, Sirius Group estimates the return of the current period and uses all credible information available. This includes utilizing preliminary estimates reported by its fund managers and using information that is available to Sirius Group with respect to the underlying investments, as necessary. The changes in fair value are reported in pre-tax revenues in Net unrealized investment (losses) gains. Actual final fund valuations may differ from Sirius Group's estimates and these differences are recorded in the period they become known as a change in estimate.

        Other long-term investments also includes certain investments that are eligible for the equity method where Sirius Group has elected the fair value option under which the changes in fair value are reported in pre-tax revenues in Net unrealized investment (losses) gains. (See Note 20 .)

Cash

        Cash includes amounts on hand and demand deposits with banks and other financial institutions. Amounts presented in the statement of cash flows are shown net of balances acquired and sold in the purchase or sale of the Company's consolidated subsidiaries.

Restricted cash

        Restricted cash represents cash and cash equivalents that Sirius Group is (a) holding for the benefit of a third party and is legally or contractually restricted as to withdrawal or usage for general corporate purposes; and (b) not replaceable by another type of asset other than cash or cash equivalents, under the terms of Sirius Group's contractual arrangements with such third parties.

Insurance and reinsurance operations

        Premiums written are recognized as revenues and are earned ratably over the term of the related policy or reinsurance treaty. Premiums written include amounts reported by brokers, managing general agents, and ceding companies, supplemented by the Company's own estimates of premiums where reports have not been received. The determination of premium estimates requires a review of the Company's experience with the ceding companies, managing general agents, familiarity with each market, the timing of the reported information, an analysis and understanding of the characteristics of each class of business, and management's judgment of the impact of various factors, including premium

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Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 2. Summary of significant accounting policies (Continued)

or loss trends, on the volume of business written and ceded to the Company. On an ongoing basis, the Company's underwriters review the amounts reported by these third parties for reasonableness based on their experience and knowledge of the subject class of business, taking into account the Company's historical experience with the brokers or ceding companies. Unearned premiums represent the portion of premiums written that are applicable to future insurance or reinsurance coverage provided by policies or treaties in force.

        Deferred acquisition costs represent commissions, premium taxes, brokerage expenses, and other costs which are directly attributable to the successful acquisition or renewal of contracts and vary with the production of business. These costs are deferred and amortized over the period during which the premiums are earned. Amortization of Deferred acquisition costs are shown net of contractual commissions earned on reinsurance ceded within Insurance and reinsurance acquisition expenses. Deferred acquisition costs are limited to the amount expected to be recovered from future earned premiums and anticipated investment income. This limitation is referred to as a premium deficiency. A premium deficiency is recognized if the sum of expected loss and loss adjustment expenses ("LAE"), expected dividends to policyholders, unamortized acquisition costs, and maintenance costs exceeds related unearned premiums and anticipated investment income. A premium deficiency is recognized by charging any unamortized acquisition costs to expense to the extent required in order to eliminate the deficiency. If the premium deficiency exceeds unamortized acquisition costs, then a liability is accrued for the excess deficiency.

        Other underwriting expenses consist primarily of personnel related expenses (including salaries, benefits, and variable compensation expense) and other general operating expenses related to the underwriting operations.

        Losses and LAE are charged against income as incurred. Unpaid insurance loss and LAE reserves are based on estimates (generally determined by claims adjusters, legal counsel, and actuarial staff) of the ultimate costs of settling claims, including the effects of inflation and other societal and economic factors. Unpaid reinsurance loss and LAE reserves are based primarily on reports received from ceding companies and actuarial projections. Unpaid loss and LAE reserves represent management's best estimate of ultimate losses and LAE, net of estimated salvage and subrogation recoveries, if applicable. Such estimates are regularly reviewed and updated and any resulting adjustments are reflected in current operations. The process of estimating loss and LAE reserves involves a considerable degree of judgment by management and the ultimate amount of expense to be incurred could be greater or less than the amounts currently reflected in the financial statements.

        Sirius Group enters into ceded reinsurance contracts to protect its businesses from losses due to concentration of risk, to manage its operating leverage ratios and to limit losses arising from catastrophic events. Such reinsurance contracts are executed through excess of loss treaties and catastrophe contracts under which the reinsurer indemnifies for a specified part or all of certain types of losses over stipulated amounts arising from any one occurrence or event. Sirius Group has also entered into quota share treaties with reinsurers under which all risks meeting prescribed criteria are covered on a pro-rata basis. The amount of each risk ceded by Sirius Group is subject to maximum limits which vary by line of business and type of coverage. Although these contracts protect Sirius Group, these reinsurance arrangements do not relieve Sirius Group from its primary obligations to insureds.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 2. Summary of significant accounting policies (Continued)

        Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. The collectability of reinsurance recoverables is subject to the solvency of the reinsurers. Sirius Group is selective in regard to its reinsurers, principally placing reinsurance with those reinsurers with a strong financial condition, industry ratings, and underwriting ability. Management monitors the financial condition and ratings of its reinsurers on an ongoing basis.

        Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Reinsurance premiums ceded are expensed over the period the reinsurance coverage is provided. Ceded unearned insurance and reinsurance premiums represent the portion of premiums ceded applicable to the unexpired term of policies in force. Funds held by ceding companies represent amounts due to Sirius Group in connection with certain assumed reinsurance agreements in which the ceding company retains a portion of the premium to provide security against future loss payments. The funds held by ceding companies are generally invested by the ceding company and a contractually agreed interest amount is credited to Sirius Group and recognized as investment income. Funds held under reinsurance treaties represent contractual payments due from Sirius Group that have been retained to secure such obligations.

        Accruals for contingent commission liabilities are established for reinsurance contracts that provide for the stated commission percentage to increase or decrease based on the loss experience of the contract. Changes in the estimated liability for contingent commission arrangements are recorded as Insurance and reinsurance acquisition expenses. Accruals for contingent commission liabilities are determined through the review of the contracts that have these adjustable features and are estimated based on expected loss and LAE.

Derivative financial instruments

        Sirius Group holds derivative financial instruments for both risk management and investment purposes. Sirius Group recognizes all derivatives as either assets or liabilities, measured at fair value, in the Consolidated Balance Sheets. Changes in the fair value of derivative instruments are recognized in current period pre-tax income.

Deferred software costs

        Sirius Group capitalizes costs related to computer software developed for internal use during the application development stage of software development projects. These costs generally consist of certain external, payroll, and payroll-related costs. Sirius Group begins amortization of these costs once the project is completed and ready for its intended use. Amortization is on a straight-line basis and over a useful life of three to five years. As of December 31, 2017 and 2016, Sirius Group had unamortized deferred software costs of $10.5 million and $8.1 million, respectively. For the years ended December 31, 2017, 2016, and 2015, Sirius Group had amortization expenses of $4.6 million, $3.2 million, and $3.0 million, respectively, related to software developed for internal use.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 2. Summary of significant accounting policies (Continued)

Defined benefit plans

        Certain Sirius Group employees in Europe participate in defined benefit plans. The liability for the defined benefit plans that is reported on the Consolidated Balance Sheets is the current value of the defined benefit obligation at the end of the period, reduced by the fair value of the plan's managed assets, with adjustments for actuarial gains and losses. The defined benefit pension plan obligation is calculated annually by independent actuaries. The current value of the defined benefit obligation is determined through discounting of expected future cash flows, using interest rates determined by current market interest rates. The service costs and actuarial gains and losses on the defined benefit obligation and the fair value on the plan assets are recognized in the Consolidated Statements of Income.

Commission and other revenue recognition

        Sirius Group recognizes agent commissions and other revenues when it has fulfilled all of its obligations necessary to earn the revenue and when it can both reliably estimate the amount of revenue, net of any amounts expected to be uncollectible, and any amounts associated with expected cancellations.

Earnings per share

        Earnings per share is reported in accordance with Accounting Standards Codification ("ASC") Topic 260 Earnings per Share . Basic earnings (loss) per share is computed by dividing net income (loss) available to Sirius Group common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income available to Sirius Group common shareholders by the weighted-average number of common shares outstanding adjusted to give effect to potentially dilutive securities. (See Note 16 .)

Federal and foreign income taxes

        Some of Sirius Group's subsidiaries file consolidated tax returns in the United States. Sirius Group has subsidiaries in various jurisdictions, including but not limited to Sweden, the United Kingdom, and Luxembourg, which are subject to applicable taxes in those jurisdictions.

        Deferred tax assets and liabilities are recorded when a difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for tax purposes exists, and for other temporary differences. The deferred tax asset or liability is recorded based on tax rates expected to be in effect when the difference reverses. The deferred tax asset is recognized when it is more likely than not that it will be realized.

Foreign currency exchange

        The U.S. dollar is the functional currency for Sirius Group's businesses except for Sirius International Insurance Corporation ("Sirius International"), Lloyd's Syndicate 1945 ("Syndicate 1945"), several subsidiaries of International Medical Group Acquisition, Inc. ("IMG"), and the Canadian reinsurance operations of Sirius America Insurance Company ("Sirius America"). Sirius Group also invests in securities denominated in foreign currencies. Assets and liabilities recorded in

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 2. Summary of significant accounting policies (Continued)

these foreign currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date, and revenues and expenses are converted using the average exchange rates for the period. Net foreign exchange gains and losses arising from the translation of functional currencies are reported in shareholder's equity, in Accumulated other comprehensive (loss). As of December 31, 2017 and 2016, Sirius Group had Net unrealized foreign currency translation losses of $140.5 million and $212.2 million, respectively, recorded in Accumulated other comprehensive (loss) on its Consolidated Balance Sheets.

        Assets and liabilities relating to foreign operations are remeasured into the functional currency using current exchange rates; revenues and expenses are remeasured into the functional currency using the weighted average exchange rate for the period. The resulting exchange gains and losses are reported as a component of net income in the period in which they arise within Net realized investment (losses) gains, Net unrealized investment (losses) gains, and Net foreign exchange gains (losses).

        The following rates of exchange for the U.S. dollar have been used for translation of assets and liabilities for subsidiaries whose functional currency is not the U.S. dollar at December 31, 2017 and 2016:

Currency
  Closing
Rate 2017
  Closing
Rate 2016
 

Swedish kronor

    8.2051     9.0549  

British pound

    0.7398     0.8074  

Euro

    0.8339     0.9479  

Canadian dollar

    1.2556     1.3432  

Goodwill and intangible assets

        Goodwill represents the excess of the purchase price of an acquisition over the fair value of the identifiable net assets acquired and is assigned to the applicable reporting unit at acquisition. Goodwill is evaluated for impairment on an annual basis. Sirius Group initially evaluates goodwill using a qualitative approach to determine whether it is more likely than not that the fair value of goodwill is greater than its carrying value. If the results of the qualitative evaluation indicate that it is more likely than not that the carrying value of goodwill exceeds its fair value, Sirius Group performs the quantitative test for impairment.

        Indefinite-lived intangible assets are evaluated for impairment similar to goodwill. Finite-lived intangible are amortized on a straight-line basis over their estimated useful lives. The amortization periods approximate the period over which Sirius Group expects to generate future net cash inflows from the use of these assets. All of these assets are subject to impairment testing for the impairment or disposal of long-lived assets when events or conditions indicate that the carrying value of an asset may not be fully recoverable from future cash flows.

        If goodwill or intangible assets are impaired, such assets are written down to their fair values with the related expense recorded in Sirius Group's results of operations. (See Note 10 .)

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 2. Summary of significant accounting policies (Continued)

Non-controlling interests

        Non-controlling interests consist of the ownership interests of non-controlling shareholders in consolidated subsidiaries, and are presented separately on the balance sheet.

Mezzanine equity

        In connection with the purchase of IMG, the Company issued Series A redeemable preference shares. (See Note 3 .) The Series A redeemable preference shares are redeemable at the option of the holder with the passage of time. The Company classifies the Series A redeemable preference shares in accordance with GAAP guidance which requires conditionally redeemable securities to be classified outside of permanent shareholders' equity. Accordingly, the Company classifies these shares as mezzanine equity in the Consolidated Balance Sheets.

Variable interest entities

        Sirius Group consolidates a VIE when it has both the power to direct the activities of the VIE that most significantly impact its economic performance and either the obligation to absorb losses or the right to receive returns from the VIE that could potentially be significant to the VIE.

        An entity in which Sirius Group holds a variable interest is a VIE if any of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) as a group, the holders of equity investment at risk lack either the direct or indirect ability through voting rights or similar rights to make decisions about an entity's activities that most significantly impact the entity's economic performance or the obligation to absorb the expected losses or right to receive the expected residual returns, or (c) the voting rights of some investors are disproportionate to their obligation to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both, and substantially all of the entity's activities either involve or are conducted on behalf of an investor with disproportionately few voting rights. The primary beneficiary is defined as the variable interest holder that is determined to have the controlling financial interest as a result of having both (a) the power to direct the activities of a VIE that most significantly impact the economic performance of the VIE and (b) the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. At inception of the VIE, as well as following an event that requires reassessment, Sirius Group determines whether it is the primary beneficiary based on the facts and circumstances surrounding each entity. (See Note 21 .)

Recently adopted changes in accounting principles

Presentation of net periodic cost and net periodic postretirement benefit cost

        During 2017, Sirius Group elected early adoption of Accounting Standards Update ("ASU") 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASC 715), which provides guidance that increases transparency and usefulness of information about defined benefit costs for pension plans and other post-retirement plans presented in financial statements. Under the new guidance, the new standard requires separation of the service cost component from the other components of net benefit cost for presentation purposes. While the

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Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 2. Summary of significant accounting policies (Continued)

guidance provides for additional pension disclosures in Note 14 , there was no impact on the Company's financial position, results of operations or cash flows.

Statement of cash flows

        Effective January 1, 2018, Sirius Group adopted ASU 2016-18, Statement of Cash Flows: Restricted Cash (ASC 230), which requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents in the reconciliation of beginning and ending cash on the statements of cash flows. As a result, transfers between cash and cash equivalents and restricted cash and restricted cash equivalents will no longer be presented on the statement of cash flows. The revised presentation required in this guidance is reflected in the Company's Consolidated Statements of Cash Flows for all periods presented. The adoption of this guidance did not have any effect on the Company's results of operations, financial position, or comprehensive income.

        Effective January 1, 2017, Sirius Group elected early adoption of ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (ASC 230), which addresses diversity in practice in how eight specific cash receipts and cash payments should be presented and classified on the statement of cash flows. The adoption of this guidance did not impact the Company's results of operations, financial condition, or liquidity.

Goodwill

        Effective January 1, 2017, Sirius Group elected early adoption of ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The guidance simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the amendments in this guidance, an entity performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The guidance also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. While the guidance changes the Company's goodwill impairment testing procedures, there was no impact on the Company's financial position, results of operations or cash flows.

Short-duration contracts

        Effective December 31, 2017, Sirius Group adopted ASU 2015-09, Disclosures about Short Duration Contracts (ASC 944), which requires expanded footnote disclosures about Loss and loss adjustment expense reserves. Upon adoption, Sirius Group modified its footnote disclosures to include loss

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Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 2. Summary of significant accounting policies (Continued)

development tables on a disaggregated basis by accident year and a reconciliation of loss development data to the Loss and loss adjustment expense reserves reflected on the balance sheet. The additional disclosures required by this guidance have been included in Note 5 .

Recent accounting pronouncements

Premium amortization on callable debt securities

        In March 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities (ASC 310-20), which changes the amortization period for certain purchased callable debt securities. Under the new guidance, for investments in callable debt securities held at a premium, the premium will be amortized over the period to the earliest call date. The new guidance does not change the amortization period for callable debt securities held at a discount. The new guidance is effective for annual and interim periods beginning after December 15, 2018. Sirius Group does not expect adoption to have any effect on its financial statements.

Definition of a business

        In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business (ASC 805), which clarifies the definition of a business and affects the determination of whether acquisitions or disposals are accounted for as assets or as a business. Under the new guidance, when substantially all of the fair value of the assets is concentrated in a single identifiable asset or a group of similar identifiable assets, it is not a business. The new guidance is effective for annual and interim periods beginning after December 15, 2017. Sirius Group does not expect adoption to have any effect on its financial statements.

Credit losses

        In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (ASC 326), which establishes new guidance for the recognition of credit losses for financial assets measured at amortized cost. The new guidance, which applies to financial assets that have the contractual right to receive cash, including reinsurance receivables, requires reporting entities to estimate the credit losses expected over the life of a credit exposure using historical information, current information and reasonable and supportable forecasts that affect the collectability of the financial asset. The new guidance is effective for annual and interim periods beginning after December 15, 2019. Sirius Group is evaluating the expected impact of this new guidance.

Leases

        In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842). The new guidance requires lessees to recognize lease assets and liabilities on the balance sheet for both operating and financing leases, with the exception of leases with an original term of 12 months or less. Under existing guidance, recognition of lease assets and liabilities is not required for operating leases. The lease assets and liabilities to be recognized are both measured initially based on the present value of the lease payments. The new guidance is effective for Sirius Group for annual and interim periods beginning

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Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 2. Summary of significant accounting policies (Continued)

after December 15, 2018. Sirius Group is evaluating the expected impact of this new guidance and available adoption methods.

Financial instruments—recognition and measurement

        In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (ASC 825-10). The new guidance modifies the guidance for financial instruments, including investments in equity securities. Under the new guidance, all equity securities with readily determinable fair values are required to be measured at fair value with changes therein recognized through current period earnings. In addition, the new guidance requires a qualitative assessment for equity securities without readily determinable fair values to identify impairment, and for impaired equity securities to be measured at fair value. The new guidance is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. Sirius Group measures its portfolio of investment securities at fair value with changes therein recognized through current period earnings and, accordingly, adoption will not have any effect on its financial statements.

Revenue recognition

        In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASU 606). ASU 2014-09 was updated through various ASUs, including ASU 2015-14 and ASU 2017-13 that delayed the effective date of ASU 2014-09. The guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017. Accounting for insurance contracts is not within the scope of ASU 2014-09. Sirius Group generates service fee income, primarily from the operations of IMG and ArmadaCorp Capital, LLC ("Armada"), which is reported in Other revenues in the Consolidated Statements of (Loss) Income and is within the scope of ASU 2014-09. The guidance is effective January 1, 2018. Sirius Group intends to adopt the guidance on that date using the modified retrospective approach to transition. Adoption of the guidance will not have a significant effect on the Company's financial position, results of operations, or comprehensive income, as the accounting for insurance contracts is outside of the scope of the guidance.

Note 3. Significant transactions

        The following are Sirius Group's significant transactions for the years ended December 31, 2017, 2016, and 2015:

    On September 14, 2017, Sirius Group entered into a definitive agreement to purchase 4.9% ("Initial Phoenix Shares") of The Phoenix Holdings, Ltd. ("The Phoenix") from Delek Group Ltd. ("Delek Group") for New Israeli Shekel ("NIS") 208 million in cash (or $58.8 million on date of purchase). As part of the agreement, Sirius Group purchased the Initial Phoenix Shares on September 19, 2017, and submitted an application to the Israeli Commissioner of Capital Markets, Insurance and Savings (the "Israeli Commissioner of

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Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 3. Significant transactions (Continued)

      Insurance") for a permit to control The Phoenix. Sirius Group had an exclusivity period expiring November 23, 2017 to conduct due diligence, during which time Sirius Group exercised the option to purchase all of Delek Group's remaining shares in The Phoenix (approximately 47.4%) for an additional sum of NIS 2.3 billion in cash (or $663.1 million using the December 31, 2017 NIS to USD conversion rate), subject to certain adjustments for interest and earnings. In January 2018, The Phoenix issued an additional 5.249 million shares, which changed the Company's ownership percentage to 4.85% and the Delek Group ownership percentage to 46.24%. At December 31, 2017, Sirius Group was awaiting regulatory approval from the Israeli Commissioner of Insurance, the Israel Securities Authority, the Tel Aviv Stock Exchange, and the Israel Antitrust Commissioner in connection with the proposed change in control of The Phoenix. At December 31, 2017, the investment in The Phoenix was included in Equity securities, at fair value at $67.3 million. The exercised call option to purchase the 46.24% of outstanding shares is valued at a cost of $4.5 million and is included in Other assets. (See  Note 25 .)

    On May 26, 2017, Sirius Group acquired 100% ownership of IMG and its subsidiaries, a leading provider of global travel medical insurance products and assistance services. The purchase of IMG was undertaken to expand on Sirius Group's existing Global Accident and Health ("Global A&H") platform and to accelerate the growth strategy of the Global A&H international insurance business, to add service fee revenues to Sirius Group's existing risk-transfer based insurance revenues, and to gain access to IMG's distribution networks and client base. Total consideration consisted of $250.8 million of cash, $100.0 million of Series A redeemable preference shares that are convertible into common shares (as explained further below), and up to $50.0 million of contingent consideration ("IMG Earnout"), payable in Series A redeemable preference shares, which was stated as $43.1 million at fair value at acquisition date, resulting in a total enterprise value of $393.9 million. Sirius Group assumed certain IMG debt of $129.5 million ("Debt Assumption"), reducing its cash consideration by that amount and resulting in a total equity consideration of $264.4 million. Concurrently with the transaction, IMG's subsidiary International Medical Group—Stop-Loss, Inc. ("IMG—Stop Loss") was sold to Certus Management Group, Inc. ("Certus"). (See Note 22 .) As part of the sale of IMG—Stop Loss, Sirius Group issued a secured promissory note of $9.0 million to Certus.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 3. Significant transactions (Continued)

        The following table summarizes the fair value of net assets acquired and allocation of purchase price of IMG, measured as of the acquisition date:

 
  Total   Useful Life
 
  (Millions)

Purchase price

         

Cash paid

  $ 250.8    

Series A redeemable preference shares

    100.0    

Contingent consideration

    43.1    

Total enterprise value

    393.9    

Less: Debt assumed

    (129.5 )  

Total purchase price (a)

  $ 264.4    

Assets acquired

         

Total investments

  $ 41.0    

Cash

    10.5    

Accrued investment income

    0.2    

Insurance and reinsurance premiums receivable

    1.6    

Deferred acquisition costs

    2.9    

Other assets

    12.9    

Intangible asset—distribution relationships

    91.0   13.0 years

Intangible asset—customer relationships

    17.0   12.5 years

Intangible asset—trade names

    27.0    

Intangible asset—technology

    10.0   5.0 years

Total assets acquired

    214.1    

Liabilities assumed

         

Loss and loss adjustment expense reserves

    14.3    

Unearned insurance and reinsurance premiums

    9.8    

Deferred tax liability

    55.9    

Debt

    129.5    

Other liabilities

    18.2    

Total liabilities assumed

    227.7    

Net assets acquired (b)

    (13.6 )  

Goodwill (a)-(b)

  $ 278.0    

        The goodwill balance is primarily attributed to IMG's assembled workforce and access to the supplemental healthcare and medical travel insurance market. None of the goodwill recognized is expected to be deductible for income tax purposes. The IMG Earnout is payable if earnings before interest expense, taxes, depreciation and amortization ("EBITDA") of IMG exceed amounts defined in the purchase agreement for each year during the three year period ending December 31, 2019. At December 31, 2017 the IMG Earnout liability was remeasured at a fair value of $29.5 million and is reflected within Other liabilities. As a result of the remeasurement of the IMG Earnout, Sirius Group recorded a $13.6 million gain in Gain on revaluation of contingent consideration in 2017.

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Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 3. Significant transactions (Continued)

        During 2017, Sirius Group obtained $152.2 million, or 11%, of its gross written premiums through IMG. During 2016 and 2015, Sirius Group received 14% and 15% of its gross written premiums through IMG, respectively.

        During 2017, IMG's revenues and net income after acquisition, inclusive of intangible asset amortization expenses, were $79.6 million and $13.3 million, respectively.

    Series A Redeemable Preference Shares

        As a part of the IMG acquisition, Sirius Group issued Series A redeemable preference shares, with 150,000 shares authorized and 100,000 issued at issuance date, with liquidation preference of $1,000 per preference share ("Liquidation Preference"). Up to 50,000 Series A redeemable preference shares are available pursuant to the IMG Earnout. The Series A redeemable preference shares participate in dividends on an as-converted basis with common shares and other shares junior to the Series A redeemable preference shares ("Special Dividends") and, provided that a sale or merger of Sirius Group where the surviving entity is a publicly traded entity or a qualified public offering of Sirius Group on certain named stock exchanges ("Liquidity Event"), has not occurred on the three-year anniversary of May 26, 2017 ("Initial Issue Date"), will receive cumulative dividends at 10% of the Liquidation Preference, compounded quarterly prospectively and in arrears (as if dividends were accruing and compounding as of the Initial Issue Date) ("Fixed Dividends"). The Series A redeemable preference shares will, per the automatic conversion feature, automatically convert into common shares, upon (i) the occurrence of a Liquidity Event, (ii) the five-year anniversary of the Initial Issue Date or (iii) a change of control (each a "Triggering Event"). Additionally, the holder has the option, per the optional redemption feature, to redeem for the Liquidation Preference plus accrued and unpaid dividends upon either (x) the occurrence of a change of control or (y) the five-year anniversary of the Initial Issue Date, provided a Liquidity Event or change of control has not occurred prior to such time. As a result of the automatic conversion feature and optional redemption feature of the Initial Issue Date, the Series A redeemable preference shares will either be converted into common shares or redeemed upon the fifth anniversary (or a change of control if earlier) and if a Liquidity Event has not occurred prior to such time. Beginning on the six-year anniversary of the Initial Issue Date, the Series A redeemable preference shares that do convert into common shares, pursuant to the conversion feature, ("Conversion Shares") are redeemable, at the option of the holder, at the fair market value of such Conversion Shares at such time.

        The redemption value for the Series A redeemable preference shares is equal to the Liquidation Preference plus all accrued dividends. In substance, these dividends are payable to the holder from the Initial Issue Date unless a Liquidity Event occurs prior to the third-year anniversary of the Initial Issue Date. As the occurrence of a Liquidity Event is not considered probable, Sirius Group includes the 10% Fixed Dividends accrued in the redemption value at the reporting date. The Company will include Special Dividends in the redemption value to the extent they are declared and unpaid. Increases in the carrying amount of the Series A redeemable preference shares are charged against Net (loss) income attributable to Sirius Group's common shareholder.

        The Liquidation Preference of the Series A redeemable preference shares are reflected as Mezzanine equity in the balance sheet. It is not subject to fair value or remeasurement, except for

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 3. Significant transactions (Continued)

accrued dividends. At December 31, 2017, the Series A redeemable preference shares are carried at $106.1 million.

    Supplemental Pro Forma Information

        The following table presents unaudited pro forma consolidated information for the years ended December 31, 2017 and 2016 and assumes the IMG acquisition occurred on January 1, 2016. The pro forma financial information is presented for informational purposes only and does not necessarily reflect the results that would have occurred had the acquisition taken place on January 1, 2016, nor is it necessarily indicative of future results. It does not consider the impact of possible revenue enhancements, expense efficiencies, or synergies that may result from the acquisition of IMG.

 
  Unaudited Pro Forma
for the Year Ended
December 31,
 
 
  2017   2016  
 
  (Millions)
 

Total revenues

  $ 1,176.8   $ 1,096.0  

Net income

  $ (173.2 ) $ (4.6 )
    On April 3, 2017, Sirius Group purchased 100% of Armada and its subsidiaries from Armada Enterprises LLC ("Seller"). Armada is an insurance services and health care technology business that creates specialty employee benefit products and serves to strengthen health care coverage and access. The purchase of Armada was undertaken to expand and accelerate the growth of Sirius Group's Global A&H platform in the United States, to diversify Sirius Group's revenues to include fee based revenues, and to gain access to Armada's distribution networks. Total consideration for the acquisition consisted of (1) the purchase of 50% of Armada by Sirius Group for $123.4 million, and (2) the redemption by Armada of the remaining 50% held by Seller for a redemption price based on a three year contingent earn-out mechanism that could result in an additional payment to Seller of up to $125.0 million ("Armada Earnout"), with fair value of $79.1 million at acquisition date, resulting in a total enterprise value of $202.5 million.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 3. Significant transactions (Continued)

        The following table summarizes the fair value of net assets acquired and allocation of purchase price of Armada, measured as of the acquisition date:

 
  Total   Useful Life
 
  (Millions)

Purchase price

         

Cash paid

  $ 123.4    

Contingent consideration

    79.1    

Total purchase price (a)

  $ 202.5    

Assets acquired

         

Restricted cash

  $ 10.4    

Other assets

    1.2    

Intangible asset—distribution relationships

    60.0   22.5 years

Intangible asset—trade name

    16.0   7.5 years

Intangible asset—technology

    5.5   9.0 years

Total assets acquired

    93.1    

Liabilities assumed

         

Other liabilities

    13.3    

Total liabilities assumed

    13.3    

Net assets acquired (b)

    79.8    

Goodwill (a)-(b)

  $ 122.7    

        The goodwill balance is primarily attributed to Armada's assembled workforce and access to the supplemental healthcare insurance market, and additional synergies to be realized in the future. The goodwill recognized is expected to be deductible for income tax purposes in the future. The contingent consideration is payable if EBITDA of Armada exceeds amounts defined in the redemption agreement. The Armada Earnout can be settled in the Company's common shares, subject to certain criteria. The Armada Earnout is subject to fair value and quarterly measurement, which is a component of net income each period and reflected in Gain on revaluation of contingent consideration. In December 2017, the Company settled approximately 82% of the Armada Earnout with the Seller for $30.6 million. The remaining Armada Earnout liability was remeasured at a fair value of $13.3 million and is reflected in Other liabilities. As a result of the settlement and remeasurement of the Armada Earnout, Sirius Group recorded a $35.2 million gain in Gain on revaluation of contingent consideration in 2017.

        During 2017, Armada's revenues and net income after acquisitions, inclusive of intangible asset amortization expenses, were $24.7 million and $9.7 million, respectively.

    Supplemental Pro Forma Information

        The following table presents unaudited pro forma consolidated information for the years ended December 31, 2017 and 2016 and assumes the Armada acquisition occurred on January 1, 2016. The pro forma financial information is presented for informational purposes only and does not necessarily reflect the results that would have occurred had the acquisition taken place on January 1, 2016, nor is

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 3. Significant transactions (Continued)

it necessarily indicative of future results. It does not consider the impact of possible revenue enhancements, expense efficiencies, or synergies that may result from the acquisition of Armada.

 
  Unaudited Pro Forma
for the Year Ended
December 31,
 
 
  2017   2016  
 
  (Millions)
 

Total revenues

  $ 1,144.6   $ 1,032.6  

Net income

  $ (155.1 ) $ 45.9  
    On May 17, 2016, Sirius Global Solutions Holding Company ("Sirius Global Solutions") and Florida Specialty Insurance Company partnered to form Florida Specialty Acquisition LLC ("FSA"). Sirius Global Solutions provided $15.8 million to acquire 100% of FSA's common shares. FSA acquired Mount Beacon Holdings, LLC and its subsidiaries including Mount Beacon Insurance Company ("Mount Beacon").

    On April 18, 2016, Sirius Group sold its investment in OneBeacon Insurance Group, Ltd. ("OneBeacon") at fair value to White Mountains Insurance Company ("White Mountains" or "former parent") for proceeds of $178.3 million in connection with the sale of Sirius Group to CMIG International Holding Pte. Ltd ("CMIG International") and recorded $22.1 million of Additional paid-in surplus for the excess of fair value over the equity method carrying value of OneBeacon. (See Note 20. ).

    On April 18, 2016, Sirius Global Solutions sold Ashmere Insurance Company to White Mountains for proceeds of $18.5 million in connection of the sale of Sirius Group by White Mountains.

    On February 1, 2016, Sirius Group sold its investment in Symetra Financial Corporation ("Symetra") for proceeds of $559.8 million, or $32.00 per share. (See Note 20. )

    On September 24, 2015, Sirius Global Solutions completed the sale of Woodridge Insurance Company to Sojourner Holding Co., which resulted in a gain of $1.0 million recorded in Other revenue.

Note 4. Segment information

        Sirius Group classifies its business into four reportable segments—Global Property, Global Accident and Health ("Global A&H"), Specialty and Casualty ("Specialty & Casualty"), and Runoff and Other ("Runoff & Other"). The accounting policies of the reportable segments are the same as those used for the preparation of the Company's consolidated financial statements.

        The Company's Global Property, Global A&H, Specialty & Casualty, and Runoff & Other reportable segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company's chief operating decision maker, the Chief Executive Officer ("CEO") of the Company. The CEO assesses segment operating performance, allocates capital, and makes resource allocation decisions based on Technical profit (loss), Underwriting profit (loss), and Underwriting profit (loss), including net service fee revenue.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 4. Segment information (Continued)

        Segment results are shown prior to corporate eliminations. Corporate eliminations are shown to reconcile to consolidated Technical profit (loss), consolidated Underwriting profit (loss) and consolidated Underwriting profit (loss), including net service fee revenue.

        Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets, and, accordingly, investment income is not allocated to each segment.

Global Property

        Global Property consists of Sirius Group's underwriting lines of business which offer other property insurance and reinsurance, property catastrophe excess reinsurance, and agriculture reinsurance on a worldwide basis:

        Other Property —Sirius Group participates in the broker market for property reinsurance treaties written on a proportional and excess of loss basis. For Sirius Group's international business, the book consists of treaty, written on both a proportional and excess of loss basis, facultative, and primary business, primarily in Europe, Asia and Latin America. In the United States, the book predominantly centers on significant participations on proportional and excess of loss treaties mostly in the excess and surplus lines segment of the market.

        Property Catastrophe Excess —Property catastrophe excess of loss reinsurance treaties cover losses from catastrophic events. Sirius Group writes a worldwide book with the largest concentration of exposure in Europe and the United States. The U.S. book written in Bermuda has a national account focus supporting principally the lower and/or middle layers of large capacity programs. Additionally, Stockholm writes a U.S. book mainly consisting of select small regional and standard lines carriers. The exposures written in the international book are diversified across many countries, regions, perils and layers.

        Agriculture —Sirius Group provides stop-loss reinsurance coverage to companies writing U.S. government-sponsored multi-peril crop insurance ("MPCI"). Sirius Group's participation is net of the government's stop-loss reinsurance protection. Sirius Group also provides coverage for crop-hail and certain named perils when bundled with MPCI business. Sirius Group also writes agriculture business outside of the United States.

Global A&H

        Global A&H consists of Sirius Group's Global A&H insurance and reinsurance underwriting unit along with two managing general underwriters ("MGU") (Armada and IMG):

        Accident and Health insurance and reinsurance —Sirius Group is an insurer of accident and health insurance business in the United States, either on an admitted or surplus lines basis, as well as international business written through IMG. Sirius Group also writes proportional and excess treaties covering employer medical stop-loss for per person (specific) and per employer (aggregate) exposures. In addition, Sirius Group writes some medical, health, travel and personal accident coverages written on a treaty, facultative and primary basis.

         IMG i s a full service provider of global health & travel insurance benefits and assistance service. IMG offers various international medical insurance products, trip cancellation programs, medical management service and 24/7 emergency medical and travel assistance.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 4. Segment information (Continued)

         Armada is a specialty health services business that strengthens health care coverage through ArmadaGlobal and ArmadaHealth. ArmadaGlobal is a supplemental medical insurance MGU that markets and underwrites supplemental health products. ArmadaHealth is a health care data science business that focuses on the physician referral process.

Specialty & Casualty

        Specialty & Casualty consists of Sirius Group's insurance and reinsurance underwriting units which offer specialty & casualty product lines on a worldwide basis. Specialty lines represent unique risks where the more difficult and unusual risks are underwritten. Because specialty lines tend to be the more unusual or higher risks, much of the market is characterized by a high degree of specialization:

         Aviation & Space provides aviation insurance that covers loss of or damage to an aircraft and the aircraft operations' liability to passengers, cargo and hull as well as to third parties. Additionally, liability arising out of non-aircraft operations such as hangars, airports and aircraft products can be covered. Space insurance primarily covers loss of or damage to a satellite during launch and in orbit. The book consists of treaty, written on both a proportional and excess of loss basis, facultative, and primary business.

         Marine provides marine reinsurance, primarily written on an excess of loss and proportional basis. Coverage offered includes damage to ships and goods in transit, marine liability lines, and offshore energy industry insurance. Sirius Group also writes yacht business, both on reinsurance and a primary basis. The marine portfolio is diversified across many countries and regions.

         Trade credit writes credit and bond reinsurance worldwide. The bulk of the business is traditional short-term commercial credit insurance, covering pre-agreed domestic and export sales of goods and services with typical coverage periods of 60 to 120 days. Losses under these policies are correlated to adverse changes in a respective country's gross national product.

        Contingency —Sirius Group underwrites contingency insurance for event cancellation and non-appearance, primarily on a primary policy and facultative reinsurance basis. Additionally, coverage for liabilities arising from contractual bonus, prize redemption and over-redemption is also offered. The contingency portfolio is diversified across many countries and regions.

        Casualty —Sirius Group underwrites a cross section of all casualty lines, including general liability, umbrella, auto, workers compensation, professional liability, and other specialty classes, written on a proportional and excess of loss basis.

        Surety —Sirius Group underwrites commercial surety bonds, including non-construction contract bonds, in a broad range of business segments in the United States.

        Environmental —Sirius Group underwrites a pure environmental insurance book in the United States consisting of four core products that revolve around pollution coverage, which are premises pollution liability, contractor's pollution liability, contractor's pollution and professional liability.

Runoff & Other

        Runoff & Other consists of asbestos risks, environmental risks and other latent liability exposures, and results from Sirius Global Solutions. Sirius Global Solutions is a Connecticut-based division of Sirius Group specializing in the acquisition and management of runoff liabilities for insurance and reinsurance companies, both in the United States and internationally.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 4. Segment information (Continued)

        The following tables summarize the segment results for the years ended December 31, 2017, 2016, and 2015:

 
  For the year ended December 31, 2017  
 
  Global Property   Global A&H   Specialty &
Casualty
  Runoff &
Other
  Corporate
Elimination
  Total  
 
  (Millions)
 

Gross written premiums

  $ 732.1   $ 494.6   $ 218.1   $ (5.5 ) $   $ 1,439.3  

Net written premiums

  $ 556.2   $ 341.5   $ 193.0   $ (0.5 ) $   $ 1,090.2  

Net earned insurance and reinsurance premiums

  $ 564.4   $ 306.8   $ 163.2   $ 0.9   $   $ 1,035.3  

Loss and allocated LAE(1)

    (499.5 )   (175.0 )   (99.6 )   (11.0 )       (785.1 )

Insurance and reinsurance acquisition expenses

    (112.9 )   (89.6 )   (41.1 )   3.5     42.9     (197.2 )

Technical profit (loss)

    (48.0 )   42.2     22.5     (6.6 )   42.9     53.0  

Unallocated LAE(2)

    (12.9 )   (4.8 )   (5.3 )   (3.1 )       (26.1 )

Other underwriting expenses

    (63.3 )   (23.4 )   (16.5 )   (2.9 )       (106.1 )

Underwriting (loss) income

    (124.2 )   14.0     0.7     (12.6 )   42.9     (79.2 )

Service fee revenue(3)

        65.9             (42.9 )   23.0  

General and administrative expenses, MGU + Runoff & Other(4)

        (44.8 )       (4.0 )       (48.8 )

Underwriting (loss) income, including net service fee income

    (124.2 )   35.1     0.7     (16.6 )       (105.0 )

Net investment income

                                  56.8  

Net realized investment (losses) gains

                                  (27.2 )

Net unrealized investment (losses) gains

                                  (10.5 )

Net foreign exchange gains (losses)

                                  9.2  

Gain on revaluation of contingent consideration

                                  48.8  

Other revenue(5)

                                  (1.3 )

General and administrative expenses(6)

                                  (43.1 )

Intangible asset amortization expenses

                                  (10.2 )

Impairment of intangible assets

                                  (5.0 )

Interest expense on debt

                                  (22.4 )

Pre-tax (loss) income

                                $ (109.9 )

Underwriting Ratios

                                     

Loss ratio

    90.8 %   58.6 %   64.3 %   NM     NM     78.4 %

Acquisition expense ratio

    20.0 %   29.2 %   25.2 %   NM     NM     19.0 %

Other underwriting expense ratio

    11.2 %   7.6 %   10.1 %   NM     NM     10.2 %

Combined ratio(7)

    122.0 %   95.4 %   99.6 %   NM     NM     107.6 %

Goodwill and intangible assets(8)

  $   $ 612.3   $   $ 5.0   $   $ 617.3  

(1)
Loss and allocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income).

(2)
Unallocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income).

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 4. Segment information (Continued)

(3)
Service fee revenue is part of Other revenue on the Consolidated Statements of (Loss) Income (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).

(4)
General and administrative expenses, MGU + Runoff & Other is part of General and administrative expenses on the Consolidated Statements of (Loss) Income (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of (Loss) Income).

(5)
Other revenue is presented net of Service fee revenue (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).

(6)
General and administrative expenses are presented net of General and administrative expenses, MGU + Runoff & Other (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of (Loss) Income).

(7)
Ratios considered not meaningful ("NM") to Runoff & Other and Corporate Elimination.

(8)
Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 4. Segment information (Continued)


 
  For the year ended December 31, 2016  
 
  Global Property   Global A&H   Specialty &
Casualty
  Runoff &
Other
  Corporate
Elimination
  Total  
 
  (Millions)
 

Gross written premiums

  $ 634.9   $ 436.1   $ 170.7   $ 27.3   $   $ 1,269.0  

Net written premiums

  $ 514.2   $ 277.6   $ 137.4   $ 8.9   $   $ 938.1  

Net earned insurance and reinsurance premiums

  $ 481.8   $ 272.2   $ 135.2   $ 0.9   $   $ 890.1  

Loss and allocated LAE(1)

    (256.6 )   (164.8 )   (71.2 )   (2.6 )       (495.2 )

Insurance and reinsurance acquisition expenses

    (100.3 )   (71.7 )   (37.7 )   (0.6 )       (210.3 )

Technical profit (loss)

    124.9     35.7     26.3     (2.3 )       184.6  

Unallocated LAE(2)

    (11.9 )   (6.8 )   (4.4 )   (1.0 )       (24.1 )

Other underwriting expenses

    (65.1 )   (23.3 )   (15.1 )   (3.8 )       (107.3 )

Underwriting (loss) income

    47.9     5.6     6.8     (7.1 )       53.2  

Service fee revenue(3)

                4.3         4.3  

General and administrative expenses, MGU + Runoff & Other(4)

                (6.2 )       (6.2 )

Underwriting (loss) income, including net service fee income

    47.9     5.6     6.8     (9.0 )       51.3  

Net investment income

                                  56.2  

Net realized investment (losses) gains

                                  288.3  

Net unrealized investment (losses) gains

                                  (238.2 )

Net foreign exchange gains (losses)

                                  (11.0 )

Gain on revaluation of contingent consideration

                                   

Other revenue(5)

                                  4.8  

General and administrative expenses(6)

                                  (78.9 )

Intangible asset amortization expenses

                                   

Impairment of intangible assets

                                   

Interest expense on debt

                                  (34.6 )

Pre-tax (loss) income

                                $ 37.9  

Underwriting Ratios

                                     

Loss ratio

    55.7 %   63.0 %   55.9 %   NM     NM     58.3 %

Acquisition expense ratio

    20.8 %   26.3 %   27.9 %   NM     NM     23.6 %

Other underwriting expense ratio

    13.5 %   8.6 %   11.2 %   NM     NM     12.1 %

Combined ratio(7)

    90.0 %   97.9 %   95.0 %   NM     NM     94.0 %

Goodwill and intangible assets(8)

  $   $   $   $ 5.0   $   $ 5.0  

(1)
Loss and allocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income).

(2)
Unallocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income).

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 4. Segment information (Continued)

(3)
Service fee revenue is part of Other revenue on the Consolidated Statements of (Loss) Income (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).

(4)
General and administrative expenses, MGU + Runoff & Other is part of General and administrative expenses on the Consolidated Statements of (Loss) Income (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of (Loss) Income).

(5)
Other revenue is presented net of Service fee revenue (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).

(6)
General and administrative expenses are presented net of General and administrative expenses, MGU + Runoff & Other (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of (Loss) Income).

(7)
Ratios considered not meaningful ("NM") to Runoff & Other and Corporate Elimination.

(8)
Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 4. Segment information (Continued)


 
  For the year ended December 31, 2015  
 
  Global Property   Global A&H   Specialty &
Casualty
  Runoff &
Other
  Corporate
Elimination
  Total  
 
  (Millions)
 

Gross written premiums

  $ 574.7   $ 385.9   $ 182.4   $ 17.5   $   $ 1,160.5  

Net written premiums

  $ 440.7   $ 262.3   $ 147.5   $ (2.9 ) $   $ 847.6  

Net earned insurance and reinsurance premiums

  $ 446.0   $ 258.1   $ 138.2   $ 4.7   $   $ 847.0  

Loss and allocated LAE(1)

    (156.8 )   (151.6 )   (91.0 )   4.6         (394.8 )

Insurance and reinsurance acquisition expenses

    (84.0 )   (70.9 )   (32.3 )   (2.6 )       (189.8 )

Technical profit (loss)

    205.2     35.6     14.9     6.7         262.4  

Unallocated LAE(2)

    (10.3 )   (6.5 )   (6.8 )   (4.3 )       (27.9 )

Other underwriting expenses

    (65.8 )   (24.2 )   (15.6 )   (2.3 )       (107.9 )

Underwriting (loss) income

    129.1     4.9     (7.5 )   0.1         126.6  

Service fee revenue(3)

                1.0         1.0  

General and administrative expenses, MGU + Runoff & Other(4)

                (4.0 )       (4.0 )

Underwriting (loss) income, including net service fee income

    129.1     4.9     (7.5 )   (2.9 )       123.6  

Net investment income

                                  39.9  

Net realized investment (losses) gains

                                  138.5  

Net unrealized investment (losses) gains

                                  102.5  

Net foreign exchange gains (losses)

                                  (18.2 )

Gain on revaluation of contingent consideration

                                   

Other revenue(5)

                                  (3.4 )

General and administrative expenses(6)

                                  (23.1 )

Intangible asset amortization expenses

                                   

Impairment of intangible assets

                                   

Interest expense on debt

                                  (26.6 )

Pre-tax (loss) income

                                $ 333.2  

Underwriting Ratios

                                     

Loss ratio

    37.5 %   61.3 %   70.8 %   NM     NM     49.9 %

Acquisition expense ratio

    18.8 %   27.5 %   23.4 %   NM     NM     22.4 %

Other underwriting expense ratio

    14.8 %   9.4 %   11.3 %   NM     NM     12.7 %

Combined ratio(7)

    71.1 %   98.2 %   105.5 %   NM     NM     85.0 %

Goodwill and intangible assets(8)

  $   $   $   $ 10.2   $   $ 10.2  

(1)
Loss and allocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income).

(2)
Unallocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income).

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 4. Segment information (Continued)

(3)
Service fee revenue is part of Other revenue on the Consolidated Statements of (Loss) Income (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).

(4)
General and administrative expenses, MGU + Runoff & Other is part of General and administrative expenses on the Consolidated Statements of (Loss) Income (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of (Loss) Income).

(5)
Other revenue is presented net of Service fee revenue (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).

(6)
General and administrative expenses are presented net of General and administrative expenses, MGU + Runoff & Other (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of (Loss) Income).

(7)
Ratios considered not meaningful ("NM") to Runoff & Other and Corporate Elimination.

(8)
Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets.

        The following tables provide summary information regarding net premiums written by client location and underwriting location by reportable segment for the years ended December 31, 2017, 2016, and 2015:

 
  For the year ended December 31, 2017  
 
  Global Property   Global A&H   Specialty &
Casualty
  Runoff &
Other
  Total  
 
  (Millions)
 

Net written premiums by client location:

                               

United States

  $ 220.8   $ 284.5   $ 59.0   $ (1.2 ) $ 563.1  

Europe

    142.4     28.2     91.7         262.3  

Canada, the Caribbean, Bermuda and Latin America

    93.0     9.5     8.7     0.2     111.4  

Asia and Other

    100.0     19.3     33.6     0.5     153.4  

Total net written premium by client location

  $ 556.2   $ 341.5   $ 193.0   $ (0.5 ) $ 1,090.2  

Net written premiums by underwriting location:

                               

United States

  $ 54.4   $ 98.2   $ (1.0 ) $ (1.1 ) $ 150.5  

Europe

    239.4     196.4     147.5         583.3  

Canada, the Caribbean, Bermuda and Latin America

    225.2     46.4     43.9         315.5  

Asia and Other

    37.2     0.5     2.6     0.6     40.9  

Total written premiums by underwriting location

  $ 556.2   $ 341.5   $ 193.0   $ (0.5 ) $ 1,090.2  

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 4. Segment information (Continued)


 
  For the year ended December 31, 2016  
 
  Global Property   Global A&H   Specialty &
Casualty
  Runoff &
Other
  Total  
 
  (Millions)
 

Net written premiums by client location:

                               

United States

  $ 214.8   $ 211.7   $ 28.4   $ 8.1   $ 463.0  

Europe

    146.0     34.0     78.9         258.9  

Canada, the Caribbean, Bermuda and Latin America

    67.4     9.4     11.3     0.2     88.3  

Asia and Other

    86.0     22.5     18.8     0.6     127.9  

Total net written premium by client location

  $ 514.2   $ 277.6   $ 137.4   $ 8.9   $ 938.1  

Net written premiums by underwriting location:

                               

United States

  $ 192.9   $ 111.6   $ 6.5   $ 8.3   $ 319.3  

Europe

    238.3     164.2     128.8         531.3  

Canada, the Caribbean, Bermuda and Latin America

    50.1     1.4             51.5  

Asia and Other

    32.9     0.4     2.1     0.6     36.0  

Total written premiums by underwriting location

  $ 514.2   $ 277.6   $ 137.4   $ 8.9   $ 938.1  

 

 
  For the year ended December 31, 2015  
 
  Global Property   Global A&H   Specialty &
Casualty
  Runoff &
Other
  Total  
 
  (Millions)
 

Net written premiums by client location:

                               

United States

  $ 163.5   $ 209.2   $ 29.1   $ (4.3 ) $ 397.5  

Europe

    134.6     22.6     81.5     3.2     241.9  

Canada, the Caribbean, Bermuda and Latin America

    74.9     12.0     14.1     0.2     101.2  

Asia and Other

    67.7     18.5     22.8     (2.0 )   107.0  

Total net written premium by client location

  $ 440.7   $ 262.3   $ 147.5   $ (2.9 ) $ 847.6  

Net written premiums by underwriting location:

                               

United States

  $ 156.9   $ 104.2   $ 8.2   $ (4.1 ) $ 265.2  

Europe

    203.5     157.9     136.8     0.8     499.0  

Canada, the Caribbean, Bermuda and Latin America

    49.6         0.1         49.7  

Asia and Other

    30.7     0.2     2.4     0.4     33.7  

Total written premiums by underwriting location

  $ 440.7   $ 262.3   $ 147.5   $ (2.9 ) $ 847.6  

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses

        Sirius Group establishes loss and LAE reserves that are estimates of future amounts needed to pay claims and related expenses for events that have already occurred. Sirius Group also obtains reinsurance whereby another reinsurer contractually agrees to indemnify Sirius Group for all or a portion of the reinsurance risks underwritten by Sirius Group. Such arrangements, where one reinsurer provides reinsurance to another reinsurer, are usually referred to as "retrocessional reinsurance" arrangements. Sirius Group establishes estimates of amounts recoverable from retrocessional reinsurance in a manner consistent with the loss and LAE liability associated with reinsurance contracts offered to its customers (the "ceding companies"), net of an allowance for uncollectible amounts. Net reinsurance loss reserves represent loss and LAE reserves reduced by retrocessional reinsurance recoverable on unpaid losses.

        In addition to those factors which give rise to inherent uncertainties in establishing loss and LAE reserves, the inherent uncertainties of estimating such reserves are even greater for the reinsurer, due primarily to: (1) the claim-tail for reinsurers and insurers working through MGUs being further extended because claims are first reported to either the original primary insurance company or the MGU and then through one or more intermediaries or reinsurers, (2) the diversity of loss development patterns among different types of reinsurance treaties, facultative contracts or direct insurance contracts, (3) the necessary reliance on the ceding companies, intermediaries, and MGUs for information regarding reported claims and (4) the differing reserving practices among ceding companies and MGUs.

        As with insurance reserves, the process of estimating reinsurance reserves involves a considerable degree of judgment by management and, as of any given date, is inherently uncertain. Based on the above, such uncertainty may be larger relative to the reserves for a company that principally writes reinsurance compared to an insurance company, and certainty may take a longer time to emerge.

        Upon notification of a loss from an insured (typically a ceding company), Sirius Group establishes case reserves, including LAE reserves, based upon Sirius Group's share of the amount of reserves reported by the insured and Sirius Group's independent evaluation of the loss. In cases where available information indicates that reserves reported by a ceding company are inadequate or excessive, Sirius Group establishes case reserves or incurred but not reported ("IBNR") in excess of or below its share of the reserves reported by the ceding company. Also, in certain instances, Sirius Group may decide not to establish case reserves or IBNR, when the information available indicates that reserves established by ceding companies are not adequately supported. In addition, specific claim information reported by insureds or obtained through claim audits can alert management to emerging trends such as changing legal interpretations of coverage and liability, claims from unexpected sources or classes of business, and significant changes in the frequency or severity of individual claims where customary. Generally, ceding company audits are not customary outside the United States. This information is often used to supplement estimates of IBNR.

        Generally, initial actuarial estimates of IBNR reserves not related to a specific event are based on the loss ratio method applied to each class of business. Sirius Group regularly reviews the adequacy of its recorded reserves by using a variety of generally accepted actuarial methods, including historical incurred and paid loss development methods. Estimates of the initial expected ultimate losses involve management judgment and are based on historical information for that class of business, which includes loss ratios, market conditions, changes in pricing and conditions, underwriting changes, changes in

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

claims emergence, and other factors that may influence expected ultimate losses. If actual loss activity differs substantially from expectations, an adjustment to recorded reserves may be warranted. As time passes, loss reserve estimates for a given year will rely more on actual loss activity and historical patterns than on initial assumptions.

        The actuarial methods are used to calculate a point estimate of loss and LAE reserves for each company within Sirius Group. These point estimates are then aggregated to produce an actuarial point estimate for Sirius Group. Once a point estimate is established, Sirius Group's actuaries estimate loss reserve ranges to measure the sensitivity of the actuarial assumptions used to set the point estimates. These ranges are calculated from historical variations in loss ratios, payment, and reporting patterns by class and type of business. Management then establishes an estimate for the carried loss and LAE reserves shown in the financial statement. The management selection is within the range of loss reserve estimates provided by Sirius Group's actuaries.

Loss and Loss Adjustment Expense Reserve Summary

        The following table summarizes the loss and LAE reserve activities of Sirius Group for the years ended December 31, 2017, 2016, and 2015:

 
  2017   2016   2015  
 
  (Millions)
 

Gross beginning balance

  $ 1,620.1   $ 1,644.4   $ 1,809.8  

Less beginning reinsurance recoverable on unpaid losses

    (291.5 )   (283.1 )   (322.2 )

Net loss and LAE reserve balance

    1,328.6     1,361.3     1,487.6  

Loss and LAE reserves acquired(1)

   
14.3
   
9.8
   
 

Losses and LAE incurred relating to:

                   

Current year losses

    811.8     583.0     473.9  

Prior years losses

    (0.6 )   (63.7 )   (51.2 )

Total net incurred losses and LAE

    811.2     519.3     422.7  

Accretion of fair value adjustment to net loss and LAE reserves

    0.1     0.5     0.7  

Foreign currency translation adjustment to net loss and LAE reserves

    36.8     (14.0 )   (27.2 )

Loss and LAE paid relating to:

                   

Current year losses

    222.8     207.6     162.4  

Prior years losses

    389.5     340.7     360.1  

Total loss and LAE payments

    612.3     548.3     522.5  

Net ending balance

    1,578.8     1,328.6     1,361.3  

Plus ending reinsurance recoverable on unpaid losses

    319.7     291.5     283.1  

Gross ending balance

  $ 1,898.5   $ 1,620.1   $ 1,644.4  

(1)
Loss and LAE reserves acquired in 2017 relate to Sirius Group's purchase of IMG; 2016 relates to Sirius Group's purchase of Mount Beacon.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Loss and LAE development—2017

        During the year ended December 31, 2017, Sirius Group had net favorable prior year loss reserve development of $0.6 million. During 2017, Sirius Group strengthened its asbestos loss reserves by $59.0 million, which was offset by reductions of other runoff claims reserves of $45.7 million, which is reflected in the Runoff & Other segment. The Specialty & Casualty segment had net favorable prior year loss development of $12.1 million, which is comprised of the Marine ($5.4 million), Trade credit ($4.2 million), Aviation & Space ($1.7 million), and Contingency ($0.8 million) operating segments.

Loss and LAE development—2016

        During the year ended December 31, 2016, Sirius Group had net favorable prior year loss reserve development of $63.7 million. The major reductions in loss reserve estimates were recognized in the Global Property ($26.8 million) and Specialty & Casualty ($24.8 million) segments. The decrease in Global Property was driven by Other Property ($23.4 million) due primarily to reductions in the ultimate loss estimates for natural catastrophes that occurred between 2010 and 2015 due to lower than expected claims activity. The decrease in Specialty & Casualty was mainly due to Aviation & Space and Marine with decreases of $11.5 million and $7.2 million, respectively. Asbestos losses of $13.6 million in 2016 were offset by other long tail favorable loss reserve development in Runoff & Other.

Loss and LAE development—2015

        During the year ended December 31, 2015, Sirius Group had net favorable prior year loss reserve development of $51.2 million. The major reductions in loss reserve estimates were recognized in the Global Property ($27.0 million) and Specialty & Casualty ($7.9 million) segments. The decrease in Global Property was driven primarily by reductions in the ultimate loss estimates for natural catastrophes that occurred between 2010 and 2014 due to less than expected claims activity for Other Property ($16.7 million) and Property Catastrophe Excess ($8.9 million). The decrease in Specialty & Casualty was mainly due to Aviation & Space ($5.9 million).

Fair value adjustment to loss and LAE reserves

        In connection with purchase accounting for acquisitions, Sirius Group is required to adjust loss and LAE reserves and the related reinsurance recoverables to fair value on their respective acquired balance sheets. The net reduction to loss and LAE reserves is being recognized through an income statement charge ratably with and over the period the claims are settled and is recorded within General and administrative expenses. Sirius Group recognized $0.1 million, $0.5 million, and $0.7 million of such charges during 2017, 2016, and 2015, respectively. As of December 31, 2017, the pre-tax un-accreted adjustment was $2.8 million.

Asbestos and Environmental Loss and Loss Adjustment Expense Reserve Activity

        In the Runoff & Other segment, Sirius Group's reserves include provisions made for claims that assert damages from asbestos and environmental ("A&E") related exposures primarily at Sirius America. Asbestos claims relate primarily to injuries asserted by those who came in contact with asbestos or products containing asbestos. Environmental claims relate primarily to pollution and related

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

clean-up cost obligations, particularly as mandated by U.S. federal and state environmental protection agencies. In addition to the factors described above regarding the reserving process, Sirius Group estimates its A&E reserves based upon, among other factors, facts surrounding reported cases and exposures to claims, such as policy limits and deductibles, current law, past and projected claim activity, and past settlement values for similar claims, as well as analysis of industry studies and events, such as recent settlements and asbestos-related bankruptcies. The cost of administering A&E claims, which is an important factor in estimating loss reserves, tends to be higher than in the case of non-A&E claims due to the higher legal costs typically associated with A&E claims.

        Sirius Group's A&E exposure is primarily from reinsurance contracts written between 1974 through 1985 by acquired companies, mainly MONY Reinsurance Company, which was acquired in 1991, and Christiania General Insurance Company, which was acquired in 1996. The exposures are mostly higher layer excess of loss treaty and facultative coverages with relatively low limits exposed for each claim.

        The acquisition of companies having modest portfolios of A&E exposure has been typical of several prior Sirius Global Solutions transactions and is likely to be an element of at least some future acquisitions. However, the acquisition of new A&E liabilities is undertaken only after careful due diligence and utilizing conservative reserving assumptions in relation to industry benchmarks. In the case of portfolios acquired previously, the exposures arise almost entirely from old assumed reinsurance contracts having small limits of liability.

        Sirius Group recorded an increase of $59.0 million, an increase of $13.6 million, and a decrease of $0.5 million of asbestos-related incurred losses and LAE on its asbestos reserves in 2017, 2016, and 2015, respectively. The 2017 incurred losses were primarily a result of an in-depth analysis of Sirius Group's loss reserves undertaken in the second quarter. The 2016 incurred losses were primarily the result of management's monitoring of a variety of metrics including actual paid and reported claims activity.

        Sirius Group recorded $6.1 million, $0.4 million, and $3.0 million of environmental losses in 2017, 2016, and 2015, respectively, on its already existing reserves.

        Sirius Group's net reserves for A&E losses were $220.6 million and $180.3 million as of December 31, 2017 and 2016, respectively. Sirius Group's asbestos three-year net paid survival ratio was approximately 10.2 years and 8.8 years as of December 31, 2017 and 2016, respectively. Sirius Group's environmental three-year net paid survival ratio was approximately 4.3 years and 4.8 years as of December 31, 2017 and 2016, respectively.

        Sirius Group's reserves for A&E losses as of December 31, 2017 represent management's best estimate of its ultimate liability based on information currently available. However, as case law expands, medical and clean-up costs increase, and industry settlement practices change, Sirius Group may be subject to asbestos and environmental losses beyond currently estimated amounts. Sirius Group cannot reasonably estimate at the present time loss reserve additions arising from any such future adverse developments and cannot be sure that allocated loss reserves will be sufficient to cover additional liability arising from any such adverse developments.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

        The following table summarizes reported A&E loss and LAE reserve activities (gross and net of reinsurance) for the years ended December 31, 2017, 2016, and 2015:

 
  2017   2016   2015  
 
  Gross   Net   Gross   Net   Gross   Net  
 
  (Millions)
 

Asbestos:

                                     

Beginning balance

  $ 187.0   $ 166.4   $ 193.5   $ 172.9   $ 215.8   $ 192.8  

Incurred losses and LAE

    96.9     59.0     15.3     13.6     (0.3 )   (0.5 )

Paid losses and LAE

    (24.7 )   (20.8 )   (21.8 )   (20.1 )   (22.0 )   (19.4 )

Ending balance

    259.2     204.6     187.0     166.4     193.5     172.9  

Environmental:

                                     

Beginning balance

    18.5     13.9     21.5     16.8     22.7     17.4  

Incurred losses and LAE

    2.9     6.1     0.4     0.4     3.0     3.0  

Paid losses and LAE

    (4.7 )   (4.0 )   (3.4 )   (3.3 )   (4.2 )   (3.6 )

Ending balance

    16.7     16.0     18.5     13.9     21.5     16.8  

Total asbestos and environmental:

                                     

Beginning balance

    205.5     180.3     215.0     189.7     238.5     210.2  

Incurred losses and LAE

    99.8     65.1     15.7     14.0     2.7     2.5  

Paid losses and LAE

    (29.4 )   (24.8 )   (25.2 )   (23.4 )   (26.2 )   (23.0 )

Ending balance

  $ 275.9   $ 220.6   $ 205.5   $ 180.3   $ 215.0   $ 189.7  

Net loss reserves by type

        The following tables present Sirius Group's loss and LAE reserves, net of reinsurance, by type at December 31, 2017 and 2016:

 
  2017   2016  
 
  (Millions)
 

Case Reserve

  $ 833.9   $ 738.3  

IBNR Reserve

    744.9     590.3  

Loss and loss adjustment expense reserves, net of reinsurance

  $ 1,578.8   $ 1,328.6  

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Reconciliation of liabilities for unpaid loss and LAE

        The following table summarizes the ending liabilities for unpaid loss and LAE, net of reinsurance for each of Sirius Group's segments and start up lines of business as of December 31, 2017:

Liabilities for unpaid loss and LAE, net of reinsurance
  As of
December 31, 2017
 
 
  (Millions)
 

Unpaid and allocated LAE reserves, net of reinsurance

       

Other Property

  $ 432.6  

Property Catastrophe Excess

    161.4  

Agriculture

    45.6  

Accident & Health

    155.8  

Aviation & Space

    93.8  

Trade credit

    39.2  

Marine

    79.9  

Contingency

    11.6  

Casualty

    15.5  

Runoff & Other

    505.2  

Total unpaid and allocated LAE reserves, net of reinsurance

    1,540.6  

Unallocated LAE

    38.2  

Total unpaid loss and LAE reserves, net of reinsurance

    1,578.8  

Reinsurance recoverable on unpaid losses

       

Other Property

    61.0  

Property Catastrophe Excess

    40.1  

Agriculture

    2.8  

Accident & Health

    45.6  

Aviation & Space

    22.9  

Trade credit

    14.0  

Marine

    17.5  

Contingency

    2.6  

Casualty

     

Runoff & Other

    113.2  

Total reinsurance recoverable on unpaid losses

    319.7  

Total unpaid loss and LAE reserves

  $ 1,898.5  

        The following table groupings, reflecting the Other Property, Property Catastrophe Excess, Agriculture, Accident & Health, Aviation & Space, Trade credit, Marine, Contingency, Casualty, and Runoff & Other lines of business include three sections.

        The first table (top section of grouping) presents, for each of the previous 10 accident years (1) cumulative total undiscounted incurred loss and allocated LAE, net of reinsurance, as of each of the previous 10 year-end evaluations, (2) total IBNR plus expected development on reported claims as

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

of December 31, 2017, and (3) the cumulative number of reported claims as of December 31, 2017. The net reserves for losses and loss expenses related to the acquisitions described in Note 3 have been incorporated within the ten year short duration tables on a prospective basis. Sirius Group provides treaty reinsurance products for a significant portion and across all lines of its business. Sirius Group does not receive or maintain claims count information associated with its reserved claims. As such, Sirius Group has determined that it is impracticable to provide this information.

        The second table (middle section grouping) presents cumulative paid loss and allocated LAE, net of reinsurance for each of the previous 10 accident years, as of each of the previous 10 year-end evaluations. Also included in this table is a calculation of the liability for loss and allocated LAE as of December 31, 2017 which is then included in the reconciliation to the consolidated balance sheet presented above. The liability as of December 31, 2017 is calculated as the cumulative incurred loss and allocated LAE from the first table less the cumulative paid loss and allocated from the second table, plus any outstanding liabilities from accident years prior to 2008.

        The third table (bottom section of grouping) is supplementary information about the average historical claims duration as of December 31, 2017. It shows the weighted average annual percentage payout of incurred loss and allocated LAE by accident year as of each age. For example, the first column is calculated as the incremental paid loss and allocated LAE in the first calendar year for each given accident year (e.g. calendar year 2009 for accident year 2009, calendar year 2010 for accident year 2010) divided by the cumulative incurred loss and allocated LAE as of December 31, 2017 for that accident year. The resulting ratios are weighted together using cumulative incurred loss and allocated LAE as of December 31, 2017.

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Other Property

 
   
   
   
   
   
   
   
   
   
   
  December 31, 2017  
Incurred losses and allocated loss adjustment expenses, net of reinsurance  
  Total IBNR
liabilities
plus
expected
development
on reported
claims
   
 
 
  Year ended December 31,    
 
 
  Cumulative
number of
reported
claims
 
Accident Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017  
 
  (Millions)
 
2008     199.9     202.3     179.6     173.6     173.5     173.6     172.8     173.1     172.4     171.7     0.4     NA  
2009           117.3     107.7     97.3     93.3     93.2     92.1     94.9     93.7     91.9     0.3     NA  
2010                 156.0     153.4     144.7     145.6     140.6     139.6     138.8     137.1     1.6     NA  
2011                       162.3     149.8     140.3     132.3     130.3     130.9     131.0     0.4     NA  
2012                             166.3     152.4     147.3     142.7     137.9     135.9     2.1     NA  
2013                                   139.7     135.7     124.5     120.7     120.6     0.5     NA  
2014                                         126.7     129.1     126.1     126.6     2.9     NA  
2015                                               145.4     137.0     139.1     2.6     NA  
2016                                                     193.3     212.8     15.6     NA  
2017                                                           338.8     156.0     NA  
                                                      Total     1,605.5              

Other Property

Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance    
   
 
 
  Year ended December 31,    
   
 
Accident Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017    
   
 
 
  (Millions)
 
2008     39.1     111.4     143.0     157.1     165.9     170.0     170.5     170.5     170.5     170.5              
2009           22.6     59.9     79.1     85.8     90.0     91.1     90.9     91.6     91.6              
2010                 31.0     89.4     116.6     124.5     129.6     131.8     132.3     132.4              
2011                       27.4     81.0     105.2     118.3     124.4     126.9     129.6              
2012                             20.5     86.7     109.9     118.3     121.7     127.1              
2013                                   28.0     73.7     99.0     105.7     109.4              
2014                                         19.4     71.2     98.7     107.5              
2015                                               31.5     95.3     117.5              
2016                                                     32.1     130.6              
2017                                                           59.3              
                                                      Total     1,175.5              
                        All outstanding liabilities before 2008, net of reinsurance     2.6              
                        Liabilities for loss and loss adjustment expenses, net of reinsurance     432.6              

Other Property

Average annual percentage payout of incurred losses and allocated LAE by age, net of reinsurance    
   
 
Years
  1   2   3   4   5   6   7   8   9   10    
   
 
      19.4 %   43.2 %   19.0 %   7.2 %   4.0 %   2.3 %   0.7 %   0.2 %   0.0 %   0.0 %            

F-101


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Property Catastrophe Excess

 
   
   
   
   
   
   
   
   
   
   
  December 31, 2017
Incurred losses and allocated loss adjustment expenses, net of reinsurance
  Total IBNR
liabilities
plus
expected
development
on reported
claims
   
 
  Year ended December 31,    
 
  Cumulative
number of
reported
claims
Accident Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017
 
  (Millions)
2008     80.7     82.2     79.1     82.9     81.6     81.5     77.2     77.1     77.2     77.2       NA
2009           51.2     52.1     50.7     49.7     48.8     48.1     47.8     47.8     47.9     (0.1 ) NA
2010                 137.8     135.6     133.0     132.1     124.7     123.8     123.3     122.7     (0.2 ) NA
2011                       149.1     154.2     143.6     121.8     118.2     117.4     117.3     0.1   NA
2012                             71.5     59.8     53.2     51.2     51.7     46.8     0.1   NA
2013                                   78.5     85.2     81.9     81.4     80.5     0.1   NA
2014                                         59.5     61.1     58.1     58.0     0.6   NA
2015                                               29.0     31.4     29.0     0.1   NA
2016                                                     51.2     49.0     3.2   NA
2017                                                           107.4     46.0   NA
                                                      Total     735.8          

Property Catastrophe Excess

Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance    
   
 
  Year ended December 31,    
   
Accident Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017    
   
 
  (Millions)
2008     25.1     54.9     65.7     73.4     76.7     76.8     77.0     77.1     77.1     77.2          
2009           7.4     32.4     41.1     44.1     45.2     45.5     45.6     45.8     45.8          
2010                 50.1     91.4     104.2     109.4     112.9     115.4     119.3     119.2          
2011                       15.9     54.6     96.3     115.5     115.9     116.4     117.3          
2012                             2.8     26.7     36.4     41.1     42.0     43.9          
2013                                   11.7     51.6     65.0     70.2     71.6          
2014                                         9.9     38.0     44.5     50.4          
2015                                               1.8     9.9     17.9          
2016                                                     10.4     26.0          
2017                                                           13.3          
                                                      Total     582.6          
                        All outstanding liabilities before 2008, net of reinsurance     8.2          
                        Liabilities for loss and loss adjustment expenses, net of reinsurance     161.4          

Property Catastrophe Excess

Average annual percentage payout of incurred losses and allocated LAE by age, net of reinsurance    
   
Years
  1   2   3   4   5   6   7   8   9   10    
   
      20.2 %   39.8 %   19.3 %   9.3 %   2.2 %   1.3 %   1.4 %   0.1 %   0.0 %   0.1 %        

F-102


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Agriculture

 
   
   
   
   
   
   
   
   
   
   
  December 31, 2017  
Incurred losses and allocated loss adjustment expenses, net of reinsurance  
  Total IBNR
liabilities
plus expected
development
on reported
claims
   
 
 
  Year ended December 31,    
 
 
  Cumulative
number of
reported
claims
 
Accident Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017  
 
  (Millions)
 
2008     21.4     26.0     25.8     25.8     25.8     26.3     26.3     26.2     26.2     26.2         NA  
2009           11.9     9.9     8.7     8.7     8.5     8.5     8.5     8.5     8.5         NA  
2010                 12.9     10.9     11.0     10.8     10.8     10.8     10.8     10.8     (0.3 )   NA  
2011                       21.6     21.6     21.8     21.8     21.7     21.7     21.7         NA  
2012                             41.0     45.8     45.8     45.7     47.0     47.0     (0.3 )   NA  
2013                                   9.2     11.0     13.1     13.2     13.0     (0.1 )   NA  
2014                                         9.7     8.2     8.4     8.9     0.2     NA  
2015                                               7.1     9.2     9.6     0.1     NA  
2016                                                     34.1     31.5     2.2     NA  
2017                                                           51.3     33.4     NA  
Total     228.5              

Agriculture

Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance    
   
 
 
  Year ended December 31,    
   
 
Accident Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017    
   
 
 
  (Millions)
   
   
 
2008     1.8     25.3     25.8     25.8     25.8     26.4     26.3     26.2     26.2     26.2              
2009           2.2     9.0     8.6     8.6     8.4     8.5     8.5     8.5     8.5              
2010                 0.5     10.7     10.9     10.7     10.7     10.7     10.8     10.7              
2011                       1.1     21.4     21.7     21.7     21.7     21.7     21.7              
2012                             19.0     45.4     45.7     45.6     47.0     47.0              
2013                                   7.1     10.8     12.9     13.2     13.0              
2014                                         6.5     8.1     8.8     8.8              
2015                                               1.5     8.1     9.2              
2016                                                     10.2     28.8              
2017                                                           9.6              
Total     183.5              
All outstanding liabilities before 2008, net of reinsurance     0.6              
Liabilities for loss and loss adjustment expenses, net of reinsurance     45.6              

Agriculture

Average annual percentage payout of incurred losses and allocated LAE by age, net of reinsurance    
   
 
Years
  1   2   3   4   5   6   7   8   9   10    
   
 
      26.1 %   66.3 %   3.2 %   0.0 %   0.7 %   0.6 %   0.0 %   (0.2 )%   (0.1 )%   0.0 %            

F-103


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Accident & Health

 
   
   
   
   
   
   
   
   
   
   
  December 31, 2017  
Incurred losses and allocated loss adjustment expenses, net of reinsurance  
  Total IBNR
liabilities
plus expected
development
on reported
claims
   
 
 
  Year ended December 31,    
 
 
  Cumulative
number of
reported
claims
 
Accident Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017  
 
  (Millions)
 
2008     76.5     86.6     84.1     80.7     80.0     79.9     79.8     79.8     79.9     79.8         NA  
2009           86.6     84.4     81.5     79.3     79.1     79.1     79.1     79.2     79.1     0.1     NA  
2010                 118.7     126.2     123.8     123.0     122.7     122.7     122.7     122.6     (0.2 )   NA  
2011                       161.6     177.4     173.0     172.4     172.3     172.3     172.2     (0.6 )   NA  
2012                             164.3     161.1     148.8     148.1     147.8     147.7     (0.7 )   NA  
2013                                   126.5     124.3     119.8     119.2     118.6     0.7     NA  
2014                                         131.6     132.7     131.1     131.0     2.3     NA  
2015                                               154.4     150.2     146.7     2.3     NA  
2016                                                     177.2     191.6     16.4     NA  
2017                                                           178.8     62.8     NA  
Total     1,368.1              

Accident & Health

Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance    
   
 
 
  Year ended December 31,    
   
 
Accident Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017    
   
 
 
  (Millions)
   
   
 
2008     30.9     65.7     74.2     77.1     78.3     79.5     79.6     79.6     79.7     79.7              
2009           27.7     67.9     76.4     77.9     78.8     78.9     78.9     79.1     79.1              
2010                 53.3     102.7     119.8     122.0     122.3     122.4     122.5     122.5              
2011                       71.4     139.6     166.5     171.5     171.9     172.1     172.0              
2012                             72.5     137.0     147.0     147.4     147.6     147.6              
2013                                   54.7     104.5     115.0     116.4     117.7              
2014                                         59.5     111.7     125.3     127.0              
2015                                               76.0     130.8     142.3              
2016                                                     98.5     131.7              
2017                                                           96.6              
Total     1,216.2              
All outstanding liabilities before 2008, net of reinsurance     3.9              
Liabilities for loss and loss adjustment expenses, net of reinsurance     155.8              

Accident & Health

Average annual percentage payout of incurred losses and allocated LAE by age, net of reinsurance    
   
 
Years
  1   2   3   4   5   6   7   8   9   10    
   
 
      46.9 %   37.6 %   10.7 %   1.8 %   0.6 %   0.3 %   0.0 %   0.1 %   0.0 %   0.0 %            

F-104


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Aviation & Space

 
   
   
   
   
   
   
   
   
   
   
  December 31, 2017  
Incurred losses and allocated loss adjustment expenses, net of reinsurance  
  Total IBNR
liabilities
plus expected
development
on reported
claims
   
 
 
  Year ended December 31,    
 
 
  Cumulative
number of
reported
claims
 
Accident Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017  
 
  (Millions)
 
2008     19.0     30.4     33.4     34.1     35.0     34.7     34.1     33.6     33.5     33.4     (0.3 )   NA  
2009           30.9     34.1     35.4     37.3     35.6     35.5     34.6     32.2     32.3     (0.5 )   NA  
2010                 42.7     47.9     47.6     45.1     43.6     42.7     42.5     42.0     (1.1 )   NA  
2011                       47.0     42.5     38.1     36.1     34.8     34.7     35.9     (1.1 )   NA  
2012                             35.7     34.4     30.3     28.4     28.6     29.7     (1.0 )   NA  
2013                                   40.7     36.6     33.6     32.3     33.2     0.1     NA  
2014                                         36.0     38.6     35.4     34.6     4.0     NA  
2015                                               39.8     36.2     40.3     2.7     NA  
2016                                                     32.4     32.9     4.3     NA  
2017                                                           34.2     14.9     NA  
Total     348.5              

Aviation & Space

Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance    
   
 
 
  Year ended December 31,    
   
 
Accident Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017    
   
 
 
  (Millions)
   
   
 
2008     5.7     10.7     18.4     25.3     27.8     30.1     31.3     31.5     33.1     33.4              
2009           7.9     16.6     21.6     26.6     27.8     28.8     31.9     31.4     32.3              
2010                 12.0     22.3     31.9     36.6     38.2     39.3     40.2     40.4              
2011                       10.2     22.8     28.7     31.7     32.9     34.2     35.0              
2012                             7.6     18.5     22.7     24.7     27.4     28.4              
2013                                   13.6     20.0     24.2     26.9     28.7              
2014                                         8.1     18.1     23.9     26.5              
2015                                               10.6     21.4     27.4              
2016                                                     7.9     19.9              
2017                                                           9.1              
Total     281.1              
All outstanding liabilities before 2008, net of reinsurance     26.4              
Liabilities for loss and loss adjustment expenses, net of reinsurance     93.8              

Aviation & Space

Average annual percentage payout of incurred losses and allocated LAE by age, net of reinsurance    
   
 
Years
  1   2   3   4   5   6   7   8   9   10    
   
 
      26.6 %   27.5 %   17.2 %   11.2 %   5.4 %   3.8 %   4.2 %   0.0 %   3.6 %   0.7 %            

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Trade credit

 
   
   
   
   
   
   
   
   
   
   
  December 31, 2017  
Incurred losses and allocated loss adjustment expenses, net of reinsurance  
  Total IBNR
liabilities
plus expected
development
on reported
claims
   
 
 
  Year ended December 31,    
 
 
  Cumulative
number of
reported
claims
 
Accident Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017  
 
  (Millions)
 
2008     9.5     14.3     15.4     15.4     15.3     14.8     15.0     14.8     14.8     14.9     (0.1 )   NA  
2009           9.4     10.0     9.8     9.6     9.4     9.4     9.3     9.2     9.3     (0.1 )   NA  
2010                 14.7     12.8     9.9     10.1     10.2     10.0     10.0     10.1     (0.1 )   NA  
2011                       30.3     30.1     28.4     28.1     28.1     27.5     27.4     (0.1 )   NA  
2012                             35.8     35.0     33.1     33.3     32.9     32.9     (1.2 )   NA  
2013                                   30.7     29.2     28.2     28.0     28.6     0.1     NA  
2014                                         23.6     23.5     24.3     22.2     1.8     NA  
2015                                               20.9     20.4     19.8     0.5     NA  
2016                                                     16.0     13.6     2.1     NA  
2017                                                           19.7     10.0     NA  
Total     198.5              

Trade credit

Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance    
   
 
 
  Year ended December 31,    
   
 
Accident Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017    
   
 
 
  (Millions)
   
   
 
2008     2.6     7.5     13.3     14.1     14.5     14.5     14.7     14.8     14.8     14.9              
2009           3.4     7.8     8.7     9.0     9.1     9.2     9.3     9.3     9.3              
2010                 1.8     5.4     8.0     8.9     9.3     9.4     9.7     9.7              
2011                       6.7     18.0     24.3     25.5     26.5     26.8     26.6              
2012                             15.3     27.6     31.9     32.7     33.1     32.9              
2013                                   12.0     20.5     23.6     24.8     25.2              
2014                                         8.1     14.1     18.3     19.7              
2015                                               4.7     12.6     16.2              
2016                                                     4.7     9.2              
2017                                                           3.1              
Total     166.8              
All outstanding liabilities before 2008, net of reinsurance     7.5              
Liabilities for loss and loss adjustment expenses, net of reinsurance     39.2              

Trade credit

Average annual percentage payout of incurred losses and allocated LAE by age, net of reinsurance    
   
 
Years
  1   2   3   4   5   6   7   8   9   10    
   
 
      31.4 %   35.4 %   18.6 %   4.6 %   2.1 %   0.5 %   0.3 %   0.4 %   0.2 %   0.5 %            

F-106


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Marine

Incurred losses and allocated loss adjustment expenses, net of reinsurance   December 31, 2017  
 
  Year ended December 31,   Total IBNR
liabilities
plus expected
development on
reported claims
   
 
Accident
Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017   Cumulative
number of
reported claims
 
 
  (Millions)
   
   
 

2008

    46.2     52.5     56.0     50.9     49.9     48.2     47.8     47.8     47.1     46.9         NA  

2009

          27.9     25.7     24.6     24.3     23.9     23.9     24.0     23.6     23.9         NA  

2010

                32.7     35.5     33.0     32.7     32.8     32.4     31.1     30.8     0.4     NA  

2011

                      37.3     33.3     30.9     31.5     32.5     31.8     32.0     (0.3 )   NA  

2012

                            27.7     33.8     36.4     37.8     38.2     37.1     0.9     NA  

2013

                                  23.8     20.9     19.7     18.6     18.4     0.2     NA  

2014

                                        23.7     21.9     19.9     18.6     0.9     NA  

2015

                                              30.2     32.5     30.2     0.9     NA  

2016

                                                    28.7     29.7     5.0     NA  

2017

                                                          38.1     20.2     NA  

                                                    Total     305.7              

Marine

Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance    
   
 
 
  Year ended December 31,    
   
 
Accident
Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017    
   
 
 
  (Millions)
   
   
 

2008

    11.5     26.0     37.8     41.4     43.3     45.1     45.4     45.8     45.9     46.2              

2009

          3.6     12.6     17.7     20.1     22.0     22.9     23.1     23.3     23.3              

2010

                5.1     12.4     17.4     19.8     21.6     27.0     27.8     28.8              

2011

                      4.4     14.6     21.9     25.4     28.2     29.0     29.5              

2012

                            5.3     14.9     24.4     27.3     29.4     31.3              

2013

                                  2.9     9.5     12.8     14.3     14.7              

2014

                                        4.2     10.4     14.0     15.3              

2015

                                              4.4     12.0     22.4              

2016

                                                    6.9     17.7              

2017

                                                          7.4              

                                                    Total     236.6              

                All outstanding liabilities before 2008, net of reinsurance
    10.8              

                Liabilities for loss and loss adjustment expenses, net of reinsurance     79.9              

Marine

Average annual percentage payout of incurred losses and allocated LAE by age, net of reinsurance    
   
 
Years
  1   2   3   4   5   6   7   8   9   10    
   
 

    18.2 %   30.6 %   23.5 %   8.5 %   5.8 %   6.4 %   1.3 %   1.5 %   0.3 %   0.6 %            

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Contingency

Incurred losses and allocated loss adjustment expenses, net of reinsurance   December 31, 2017  
 
  Year ended December 31,   Total IBNR
liabilities
plus expected
development on
reported claims
   
 
Accident
Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017   Cumulative
number of
reported claims
 
 
  (Millions)
   
   
 

2008

    3.6     4.3     3.7     3.8     3.8     3.8     3.8     3.7     3.7     3.7         NA  

2009

          6.9     6.4     6.3     6.3     6.3     6.3     6.3     6.3     6.4         NA  

2010

                5.7     6.1     4.7     4.6     4.4     4.2     4.2     4.2         NA  

2011

                      8.0     7.3     6.8     6.7     6.8     6.8     6.8     0.1     NA  

2012

                            9.9     8.8     8.9     8.7     8.5     8.3     (0.1 )   NA  

2013

                                  5.5     4.3     3.6     3.6     3.6     0.2     NA  

2014

                                        4.2     7.1     5.3     4.8     0.2     NA  

2015

                                              10.1     9.8     9.2     0.3     NA  

2016

                                                    18.6     19.0     1.1     NA  

2017

                                                          9.9     4.2     NA  

                                                    Total     75.9              

Contingency

Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance    
   
 
 
  Year ended December 31,    
   
 
Accident
Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017    
   
 
 
  (Millions)
   
   
 

2008

    2.1     3.3     3.5     3.6     3.6     3.6     3.6     3.7     3.6     3.7              

2009

          4.9     5.9     6.2     6.2     6.2     6.2     6.3     6.3     6.4              

2010

                1.9     3.5     3.6     3.6     4.0     4.2     4.2     4.2              

2011

                      2.1     5.9     6.7     6.6     6.7     6.7     6.7              

2012

                            5.5     7.4     8.7     8.7     8.5     8.3              

2013

                                  1.9     3.1     3.3     3.3     3.3              

2014

                                        1.7     3.7     4.5     4.6              

2015

                                              2.9     7.3     7.9              

2016

                                                    12.6     16.1              

2017

                                                          3.1              

                                                    Total     64.3              

                All outstanding liabilities before 2008, net of reinsurance                  

                Liabilities for loss and loss adjustment expenses, net of reinsurance     11.6              

Contingency

Average annual percentage payout of incurred losses and allocated LAE by age, net of reinsurance    
   
 
Years
  1   2   3   4   5   6   7   8   9   10    
   
 

    50.8 %   31.5 %   8.9 %   0.5 %   0.9 %   0.0 %   0.6 %   0.5 %   0.6 %   0.7 %            

F-108


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Casualty

Incurred losses and allocated loss adjustment expenses, net of reinsurance   December 31, 2017  
 
  Year ended December 31,   Total IBNR
liabilities
plus expected
development on
reported claims
   
 
Accident
Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017   Cumulative
number of
reported claims
 
 
  (Millions)
   
   
 

2008

    2.4     2.6     2.4     2.3     2.6     2.6     2.4     2.4     2.3     2.3         NA  

2009

          0.9     0.8     0.7     0.6     0.5     0.4     0.3     0.2     0.2         NA  

2010

                1.7     1.5     1.6     1.4     1.1     0.9     0.6     0.6     0.1     NA  

2011

                      0.5     0.4     0.4     0.3     0.3     0.2     0.2         NA  

2012

                            0.2     0.2     0.4     0.5     0.5     0.5     0.1     NA  

2013

                                  0.4     0.4     0.4     0.4     0.5         NA  

2014

                                        0.4     0.4     0.5     0.5         NA  

2015

                                              0.5     0.8     0.6     0.1     NA  

2016

                                                    0.2     0.3     0.2     NA  

2017

                                                          9.7     9.5     NA  

                                                    Total     15.4              

Casualty

Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance    
   
 
 
  Year ended December 31,    
   
 
Accident
Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017    
   
 
 
  (Millions)
   
   
 

2008

    1.2     1.4     1.5     1.5     1.8     1.9     2.1     2.3     2.3     2.3              

2009

          0.1     0.1     0.1     0.1     0.1     0.1     0.2     0.2     0.2              

2010

                        0.1     0.1     0.2     0.4     0.3     0.4              

2011

                              0.1     0.1     0.2     0.2     0.2              

2012

                                    0.1     0.2     0.1     0.2              

2013

                                  0.1     0.1     0.2     0.3     0.4              

2014

                                        0.1     0.2     0.4     0.4              

2015

                                              0.2     0.4     0.4              

2016

                                                        0.1              

2017

                                                                       

                                                    Total     4.6              

                All outstanding liabilities before 2008, net of reinsurance     4.7              

                Liabilities for loss and loss adjustment expenses, net of reinsurance     15.5              

Casualty

Average annual percentage payout of incurred losses and allocated LAE by age, net of reinsurance    
   
 
Years
  1   2   3   4   5   6   7   8   9   10    
   
 

    10.7 %   13.9 %   9.6 %   7.4 %   11.4 %   9.0 %   4.6 %   6.9 %   4.0 %   0.0 %            

F-109


Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 5. Reserves for unpaid losses and loss adjustment expenses (Continued)

Runoff & Other

Incurred losses and allocated loss adjustment expenses, net of reinsurance   December 31, 2017  
 
  Year ended December 31,   Total IBNR
liabilities
plus expected
development on
reported claims
   
 
Accident
Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017   Cumulative
number of
reported claims
 
 
  (Millions)
   
   
 

2008

    617.6     607.4     591.5     586.6     584.8     584.8     584.9     585.3     587.1     586.0     5.2     NA  

2009

          527.0     520.5     510.0     509.6     510.0     510.6     511.5     512.6     511.9     8.5     NA  

2010

                389.1     390.4     390.6     391.1     392.3     393.8     394.8     394.8     4.7     NA  

2011

                      306.4     307.7     308.8     309.4     309.9     310.8     310.3     6.2     NA  

2012

                            3.6     4.0     4.1     4.2     4.1     4.1     1.5     NA  

2013

                                  1.3     0.2     0.2     0.2     0.2         NA  

2014

                                        0.2     0.2     0.3     0.4     0.1     NA  

2015

                                              9.5     15.7     17.5     0.5     NA  

2016

                                                    11.8     12.1     0.7     NA  

2017

                                                          0.6     0.1     NA  

                                                    Total`     1,837.9              

Runoff & Other

Cumulative paid losses and allocated loss adjustment expenses, net of reinsurance    
   
 
 
  Year ended December 31,    
   
 
Accident
Year
  2008
Unaudited
  2009
Unaudited
  2010
Unaudited
  2011
Unaudited
  2012
Unaudited
  2013
Unaudited
  2014
Unaudited
  2015
Unaudited
  2016
Unaudited
  2017    
   
 
 
  (Millions)
   
   
 

2008

    329.9     452.1     497.1     543.6     551.6     558.7     563.2     567.6     571.7     576.6              

2009

          289.1     402.5     480.3     483.8     488.3     492.1     495.1     496.5     499.0              

2010

                225.7     370.4     372.7     376.8     380.0     383.6     385.5     387.4              

2011

                      291.8     293.8     296.1     297.8     299.5     301.6     303.1              

2012

                            0.3     1.3     1.8     2.2     2.4     2.4              

2013

                                  0.7     0.1     0.1     0.1     0.1              

2014

                                                0.1     0.2              

2015

                                              5.2     10.0     15.3              

2016

                                                    6.2     10.1              

2017

                                                          0.4              

                                                    Total     1,794.6              

                All outstanding liabilities before 2008, net of reinsurance     461.9              

                Liabilities for loss and loss adjustment expenses, net of reinsurance     505.2              

Runoff & Other

Average annual percentage payout of incurred losses and allocated LAE by age, net of reinsurance    
   
 
Years
  1   2   3   4   5   6   7   8   9   10    
   
 

    62.5 %   21.3 %   7.3 %   3.1 %   1.0 %   0.9 %   0.6 %   0.5 %   0.6 %   0.8 %            

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 6. Third party reinsurance

        In the normal course of business, Sirius Group seeks to protect its businesses from losses due to concentration of risk and losses arising from catastrophic events by reinsuring with third-party reinsurers. Sirius Group remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts. The effects of reinsurance on Sirius Group's subsidiaries' written and earned premiums and on losses and LAE were as follows:

 
  2017   2016   2015  
 
  (Millions)
 

Written premiums:

                   

Direct

  $ 450.2   $ 368.5   $ 293.7  

Assumed

    989.1     900.5     866.8  

Gross written premiums

    1,439.3     1,269.0     1,160.5  

Ceded

    (349.1 )   (330.9 )   (312.9 )

Net written premiums

  $ 1,090.2   $ 938.1   $ 847.6  

Earned premiums:

                   

Direct

  $ 405.7   $ 351.6   $ 277.8  

Assumed

    942.2     877.7     868.3  

Gross earned premiums

    1,347.9     1,229.3     1,146.1  

Ceded

    (312.6 )   (339.2 )   (299.1 )

Net earned premiums

  $ 1,035.3   $ 890.1   $ 847.0  

Losses and LAE:

                   

Direct

  $ 294.9   $ 216.9   $ 151.3  

Assumed

    701.3     463.8     391.9  

Gross losses and LAE

    996.2     680.7     543.2  

Ceded

    (185.0 )   (161.4 )   (120.5 )

Net losses and LAE

  $ 811.2   $ 519.3   $ 422.7  

        Sirius Group's reinsurance protection primarily consists of pro-rata and excess of loss protections that protect all of its reportable segments. Attachment points and coverage limits vary by region around the world.

        For Global Property, Sirius Group's core proportional property reinsurance programs provide protection for parts of the non-proportional treaty accounts written in Europe, the Americas, Asia, the Middle East, and Australia. These reinsurance protections are designed to increase underwriting capacity where appropriate, and to reduce exposure both to large catastrophe losses and to a frequency of smaller loss events.

        Sirius Group has in place excess of loss retrocessional coverage for its non-U.S. earthquake-related exposures. This cover was renewed for one year at April 1, 2017, providing $40.0 million of reinsurance protection in excess of Sirius Group's retention of $35.0 million and a further $35.0 million of coverage in excess of $75.0 million.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 6. Third party reinsurance (Continued)

        Sirius Group periodically purchases industry loss warranty ("ILW") contracts to augment its overall retrocessional program. The following ILW contracts were in force as at December 31, 2017:

Scope
  Limit   Trigger   Expiration Date  

European wind & flood

  $ 7.5 million   $ 7.5 billion     April 30, 2018  

European all natural perils

  $ 15.0 million   $ 15.0 billion     May 31, 2018 (1)

United States all natural peril, excluding North East

  $ 5.0 million   $ 40.0 billion     June 30, 2018  

United States, European, Japan wind & earthquake

  $ 18.0 million   $ 5.0 - $10.0 billion     December 31, 2018 (2)

(1)
Second event aggregate excess cover.

(2)
Multiple layer covers.

        In connection with the CMIG International acquisition, White Mountains required Sirius Group to purchase ILWs, referred to as the WTM Covers, to mitigate the potential impact of major natural catastrophe events on Sirius Group's balance sheet pending the close of the sale to CMIG International. The cost and potential economic benefit provided by the WTM Covers inure to White Mountains. All but one of these contracts expired in May or June 2016; the other was a United States second event cover for an industry loss at $15 billion with a limit of $5 million that expired on July 15, 2016. Under the Stock Purchase Agreement ("SPA") between CMIG International and White Mountains, shortly after the sale of the Company, White Mountains paid the Company $16.5 million on an after-tax basis, which the Company recorded as paid-in surplus. (See Note 15 .) The costs of these programs are part of the Runoff & Other reportable segment.

        The following table summarizes the WTM Covers purchased in connection with the CMIG International acquisition that expired in 2016:

Scope
  Limit   Industry Loss Trigger  

United States first event

  $ 75.0 million   $ 40.0 billion  

United States first event

  $ 22.5 million   $ 50.0 billion  

United States second event

  $ 45.0 million   $ 15.0 billion  

Japan first event

  $ 25.0 million   $ 12.5 billion  

        At December 31, 2017, Sirius Group had reinsurance recoverables on paid losses of $17.5 million and reinsurance recoverables of $319.7 million on unpaid losses. At December 31, 2016, Sirius Group had reinsurance recoverables on paid losses of $17.1 million and reinsurance recoverables of $291.5 million on paid unpaid losses. Because retrocessional reinsurance contracts do not relieve Sirius Group of its obligation to its insureds, the collectability of balances due from Sirius Group's reinsurers is important to its financial strength. Sirius Group monitors the financial strength and ratings of retrocessionaires on an ongoing basis. Uncollectible amounts historically have not been significant.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 6. Third party reinsurance (Continued)

        The following tables provide a listing of Sirius Group's gross and net recoverable amounts by the reinsurer's Standard & Poor's Financial Services LLC ("Standard & Poor's") rating and the percentage of total recoverables at December 31, 2017 and 2016:

 
  December 31, 2017  
Rating(1)
  Gross   Collateral   Net   % of Net Total  

AA

  $ 116.9   $ 1.0   $ 115.9     43 %

A

    153.9     27.9     126.0     46 %

BBB+

                0 %

BBB or lower

    13.4     12.5     0.9     1 %

Not rated

    53.0     23.9     29.1     10 %

Total

  $ 337.2   $ 65.3   $ 271.9     100 %

(1)
Standard & Poor's ratings as detailed above are: "AA" (Very strong), "A" (Strong), and "BBB+" and "BBB" (Adequate).
 
  December 31, 2016  
Rating(1)
  Gross   Collateral   Net   % of Net Total  

AA

  $ 97.4   $ 1.1   $ 96.3     40 %

A

    139.7     20.3     119.4     49 %

BBB+

    3.5     3.2     0.3     0 %

BBB or lower

    7.3     5.4     1.9     1 %

Not rated

    60.7     37.1     23.6     10 %

Total

  $ 308.6   $ 67.1   $ 241.5     100 %

(1)
Standard & Poor's ratings as detailed above are: "AA" (Very strong), "A" (Strong), and "BBB+" and "BBB" (Adequate).

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 6. Third party reinsurance (Continued)

        The following tables provide a listing of the five highest gross recoverable amounts by reinsurer, along with percentage of total recoverable amount, the reinsurer's Standard & Poor's reinsurer rating, and the percentage that the recoverable is collateralized at December 31, 2017 and 2016:

 
  December 31, 2017  
 
  Balance   % of Total   S&P Rating   % Collateralized  
 
  (Millions)
 

Reinsurer:

                         

Swiss Reinsurance Company Ltd. 

  $ 45.5     13 %   AA–     0 %

Berkshire Hathaway, Inc. 

    41.1     12 %   AA+     0 %

Lloyd's of London

    19.4     6 %   A+     16 %

Argo Capital Group Ltd. 

    18.2     5 %   A–     78 %

General Insurance Corporation of India

    17.3     5 %   AA     11 %
 
  December 31, 2016  
 
  Balance   % of Total   S&P Rating   % Collateralized  
 
  (Millions)
 

Reinsurer:

                         

Berkshire Hathaway, Inc. 

  $ 54.1     18 %   AA+     0 %

Swiss Reinsurance Company Ltd. 

    21.1     7 %   AA–     0 %

Lloyd's of London

    18.2     6 %   A+     9 %

Argo Capital Group Ltd. 

    14.4     5 %   A–     108 %

International Medical Insurance Company(1)

    13.0     4 %   Not Rated     31 %

(1)
International Medical Insurance Company was acquired in 2017 as part of the acquisition of IMG.(See Note 3. )

Note 7. Deferred acquisition costs

        The following table presents a rollforward of Deferred acquisition costs for the years ended December 31, 2017, 2016, and 2015:

 
  2017   2016   2015  
 
  (Millions)
 

Deferred acquisition costs—balance, beginning of the year

  $ 84.7   $ 74.6   $ 69.9  

Acquisition costs deferred(1)

    220.7     137.7     122.8  

Amortization expense

    (186.7 )   (126.7 )   (116.2 )

Other, including foreign exchange

    2.2     (0.9 )   (1.9 )

Deferred acquisition costs—balance, end of the year

  $ 120.9   $ 84.7   $ 74.6  

(1)
Includes $2.9 from Acquisition of IMG. (See Note 3. )

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 8. Investment securities

Net Investment Income

        Sirius Group's net investment income is comprised primarily of interest income along with associated amortization of premium and accretion of discount on Sirius Group's fixed maturity investments, dividend income from its equity investments, and interest income from its short-term investments.

        Net investment income for the years ended December 31, 2017, 2016, and 2015 consisted of the following:

 
  2017   2016   2015  
 
  (Millions)
 

Fixed maturity investments

  $ 51.5   $ 58.0   $ 45.1  

Short-term investments

    1.5     0.9     2.2  

Equity securities

    5.1     4.1     5.9  

Convertible fixed maturity investments

            0.1  

Other long-term investments

    8.5     4.9     (0.3 )

Interest on funds held under reinsurance treaties

        (0.5 )   (0.5 )

Total investment income

    66.6     67.4     52.5  

Investment expenses

    (9.8 )   (11.2 )   (12.6 )

Net investment income

  $ 56.8   $ 56.2   $ 39.9  

Net Realized and Unrealized Investment (Losses) Gains

        Net realized and unrealized investment gains (losses) for the years ended December 31, 2017, 2016, and 2015 consisted of the following:

 
  2017   2016   2015  
 
  (Millions)
 

Gross realized gains

  $ 24.4   $ 310.8   $ 154.3  

Gross realized (losses)

    (51.6 )   (22.5 )   (15.8 )

Net realized (losses) gains on investments(1)(2)

    (27.2 )   288.3     138.5  

Net unrealized (losses) gains on investments(3)(4)

    (10.5 )   (238.2 )   102.5  

Net realized and unrealized investment (losses) gains on investments

  $ (37.7 ) $ 50.1   $ 241.0  

(1)
Includes $(19.1), $50.0, and $70.6 of realized (losses) gains due to foreign currency during 2017, 2016, and 2015, respectively.

(2)
Includes net realized gains of $222.5 related to Symetra in 2016. (See Note 20. )

(3)
Includes $(51.7), $(7.7), and $(15.4) of unrealized (losses) due to foreign currency during 2017, 2016, and 2015, respectively.

(4)
Includes net unrealized gains of $218.5 related to Symetra in 2015. (See Note 20. )

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 8. Investment securities (Continued)

Net realized investment (losses) gains

        Net realized investment gains for the years ended December 31, 2017, 2016, and 2015 consisted of the following:

 
  2017   2016   2015  
 
  (Millions)
 

Fixed maturity investments

  $ (19.1 ) $ 57.4   $ 75.1  

Equity securities

    0.1     231.9     60.9  

Other long-term investments

    (8.2 )   (1.0 )   2.5  

Net realized investment (losses) gains

  $ (27.2 ) $ 288.3   $ 138.5  

Net unrealized investment (losses) gains

        The following table summarizes the net unrealized investment (losses) gains and changes in fair value for the years ended December 31, 2017, 2016, and 2015:

 
  2017   2016   2015  
 
  (Millions)
 

Fixed maturity investments

  $ (41.3 ) $ (25.0 ) $ (46.1 )

Equity securities

    25.2     (214.5 )   162.9  

Other long-term investments

    5.6     1.3     (14.3 )

Net unrealized investment (losses) gains

  $ (10.5 ) $ (238.2 ) $ 102.5  

        The following table summarizes the amount of total gains (losses) included in earnings attributable to unrealized investment gains (losses) for Level 3 investments for the years ended December 31, 2017, 2016, and 2015:

 
  2017   2016   2015  
 
  (Millions)
 

Fixed maturity investments

  $ (0.2 ) $ (0.1 ) $  

Equity securities

    0.1         6.6  

Other long-term investments

    (0.6 )   1.2     (0.4 )

Total unrealized investment (losses) gains—Level 3 investments

  $ (0.7 ) $ 1.1   $ 6.2  

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 8. Investment securities (Continued)

        The components of Sirius Group's net realized and unrealized investment gains (losses), after-tax, as recorded on the Consolidated Statements of (Loss) Income and the Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2017, 2016, and 2015 were as follows:

 
  2017   2016   2015  
 
  (Millions)
 

Change in equity in net unrealized (losses) gains from investments in unconsolidated affiliates, pre-tax

  $   $   $ (35.4 )

Income tax benefit (expense)

            2.9  

Change in equity in net unrealized (losses) gains from investments in unconsolidated affiliates, after-tax

            (32.5 )

Change in net unrealized foreign currency gains (losses) on investments through accumulated other comprehensive income, after-tax

    83.9     (83.1 )   (110.7 )

Total investments gains (losses) through accumulated other comprehensive income, after tax

    83.9     (83.1 )   (143.2 )

Net realized and unrealized investment gains (losses), after-tax

    (24.8 )   37.4     191.9  

Total investment gains (losses) recorded during the period, after-tax

  $ 59.1   $ (45.7 ) $ 48.7  

Investment Holdings

Fixed maturity investments

        The cost or amortized cost, gross unrealized investment gains (losses), net foreign currency gains (losses), and fair value of Sirius Group's fixed maturity investments as of December 31, 2017 and 2016, were as follows:

 
  2017  
 
  Cost or
amortized
cost
  Gross
unrealized
gains
  Gross
unrealized
losses
  Net
foreign
currency
gains
(losses)
  Fair value  
 
  (Millions)
 

Corporate debt securities

  $ 1,017.0   $ 3.1   $ (4.8 ) $ (0.8 ) $ 1,014.5  

Asset-backed securities

    478.1     0.4     (0.6 )   (2.5 )   475.4  

Residential mortgage-backed securities

    259.3     0.1     (5.3 )   (2.0 )   252.1  

Commercial mortgage-backed securities

    235.2     0.8     (3.9 )   0.3     232.4  

Non-U.S. government and government agency

    106.8     0.1     (0.9 )   1.2     107.2  

U.S. government and government agency

    85.8         (0.8 )   (0.2 )   84.8  

Preferred stocks

    9.3     0.3         0.2     9.8  

U.S. States, municipalities and political subdivision

    3.8                 3.8  

Total fixed maturity investments

  $ 2,195.3   $ 4.8   $ (16.3 ) $ (3.8 ) $ 2,180.0  

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 8. Investment securities (Continued)


 
  2016  
 
  Cost or
amortized
cost
  Gross
unrealized
gains
  Gross
unrealized
losses
  Net
foreign
currency
gains
(losses)
  Fair value  
 
  (Millions)
 

Corporate debt securities

  $ 1,462.1   $ 8.7   $ (12.9 ) $ 20.1   $ 1,478.0  

Asset-backed securities

    462.6     0.8     (0.7 )   5.1     467.8  

Residential mortgage-backed securities

    471.6     0.3     (9.5 )   7.1     469.5  

Commercial mortgage-backed securities

    230.2     0.5     (3.7 )   1.6     228.6  

Non-U.S. government and government agency

    148.7     0.3     (1.7 )   (0.8 )   146.5  

U.S. government and government agency

    84.8         (0.6 )   5.2     89.4  

Preferred stocks

    10.2     0.3         0.3     10.8  

U.S. States, municipalities and political subdivision

    1.0                 1.0  

Total fixed maturity investments

  $ 2,871.2   $ 10.9   $ (29.1 ) $ 38.6   $ 2,891.6  

        The weighted average duration of Sirius Group's fixed income portfolio as of December 31, 2017 was approximately 2.0 years, including short-term investments, and approximately 2.4 years excluding short-term investments.

        The cost or amortized cost and fair value of Sirius Group's fixed maturity investments as of December 31, 2017 and 2016 are presented below by contractual maturity. Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.

 
  2017   2016  
 
  Cost or
amortized
cost
  Fair value   Cost or
amortized
cost
  Fair value  
 
  (Millions)
 

Due in one year or less

  $ 106.3   $ 106.5   $ 116.3   $ 122.5  

Due after one year through five years

    1,009.0     1,006.4     1,155.0     1,171.2  

Due after five years through ten years

    71.2     70.8     398.4     394.8  

Due after ten years

    26.9     26.6     26.9     26.4  

Mortgage-backed and asset-backed securities

    972.6     959.9     1,164.4     1,165.9  

Preferred stocks

    9.3     9.8     10.2     10.8  

Total

  $ 2,195.3   $ 2,180.0   $ 2,871.2   $ 2,891.6  

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Table of Contents


Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 8. Investment securities (Continued)

        The following table summarizes the ratings and fair value of fixed maturity investments held in Sirius Group's investment portfolio as of December 31, 2017 and 2016:

 
  2017   2016  
 
  (Millions)
 

AAA

  $ 689.4   $ 636.5  

AA

    635.2     964.9  

A

    416.4     543.3  

BBB

    333.8     640.5  

Other

    105.2     106.4  

Total fixed maturity investments(1)

  $ 2,180.0   $ 2,891.6  

(1)
Credit ratings are assigned based on the following hierarchy: 1) Standard & Poor's and 2) Moody's Investor Service.

        At December 31, 2017, the above totals included $93.0 million of sub-prime securities. Of this total, $53.0 million was rated AAA, $25.7 million rated AA, $1.3 million rated A, $8.4 million rated BBB and $4.6 million classified as Other. At December 31, 2016, the above totals included $95.0 million of sub-prime securities. Of this total, $42.4 million was rated AAA, $47.4 million rated AA and $5.2 million rated A.

Mortgage-backed, Asset-backed Securities

        Sirius Group purchases commercial mortgage-backed securities ("CMBS") and residential mortgage-backed securities ("RMBS") and asset-backed securities with the goal of maximizing risk adjusted returns in the context of a diversified portfolio. Sirius Group considers sub-prime securities as those that have underlying loan pools that exhibit weak credit characteristics, or those that are issued from dedicated sub-prime shelves or dedicated second-lien shelf registrations (i.e., Sirius Group considers investments backed primarily by second-liens to be sub-prime risks). Given the tranched nature of mortgage-backed and asset-backed securities, Sirius Group relies primarily on rating agency credit ratings (i.e., S&P and Moody's) to evaluate credit worthiness of these securities and to a lesser extent on credit scores such as FICO.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 8. Investment securities (Continued)

        The following table summarizes the total mortgage and asset-backed securities held at fair value in Sirius Group's investment portfolio as of December 31, 2017 and 2016:

 
  2017   2016  
 
  (Millions)
 

Mortgage-backed securities:

             

Agency:

             

Government National Mortgage Association

  $ 0.1   $ 77.3  

Federal National Mortgage Association

    96.6     287.2  

Federal Home Loan Mortgage Corporation

    142.6     88.2  

Total Agency(1)

    239.3     452.7  

Non-agency:

             

Residential

    12.8     16.8  

Commercial

    232.4     228.6  

Total Non-agency

    245.2     245.4  

Total Mortgage-backed Securities

    484.5     698.1  

Asset-backed Securities:

             

Credit Card Receivables

    53.0     99.1  

Vehicle Receivables

    314.6     260.6  

Other

    107.8     108.1  

Total Asset-Backed Securities

    475.4     467.8  

Total Mortgage and Asset-backed Securities(2)

  $ 959.9   $ 1,165.9  

(1)
Represents publicly traded mortgage-backed securities which carry the full faith and credit guaranty of the U.S. government (i.e., GNMA) or are guaranteed by a government sponsored entity (i.e., FNMA, FHLMC).

(2)
At December 31, 2017, all mortgage-backed and asset-backed securities held by Sirius Group were classified as Level 2 investments. At December 31, 2016, $1,147.5 and $18.4 of mortgage-backed securities and asset backed securities held by Sirius Group were classified as Level 2 investments and Level 3 investments, respectively. (See Note 9 ).

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 8. Investment securities (Continued)

Equity securities and Other long-term investments

        The cost or amortized cost, gross unrealized investment gains and losses, net foreign currency gains and losses, and fair values of Sirius Group's equity securities and other long-term investments as of December 31, 2017 and 2016, were as follows:

 
  2017  
 
  Cost or
amortized
cost
  Gross
unrealized
gains
  Gross
unrealized
losses
  Net
foreign
currency
gains
(losses)
  Fair value  
 
  (Millions)
 

Equity securities

  $ 275.1   $ 29.3   $ (5.1 ) $ (0.1 ) $ 299.2  

Other long-term investments

  $ 255.5   $ 14.2   $ (4.1 ) $ 3.9   $ 269.5  

 

 
  2016  
 
  Cost or
amortized
cost
  Gross
unrealized
gains
  Gross
unrealized
losses
  Net foreign
currency
gains
(losses)
  Fair value  
 
  (Millions)
 

Equity securities

  $ 125.7   $ 0.1   $ (2.7 ) $ (0.1 ) $ 123.0  

Other long-term investments

  $ 115.8   $ 4.2   $ (2.1 ) $ 6.9   $ 124.8  

        Other long-term investments at fair value consist of the following as of December 31, 2017 and 2016:

 
  2017   2016  
 
  (Millions)
 

Hedge funds and private equity funds

  $ 205.3   $ 85.4  

Limited liability companies and private equity securities

    64.2     39.4  

Total other long-term investments

  $ 269.5   $ 124.8  

Hedge Funds and Private Equity Funds

        Sirius Group holds investments in hedge funds and private equity funds, which are included in other long-term investments. The fair value of these investments has been estimated using the net asset value of the funds. As of December 31, 2017, Sirius Group held investments in 7 hedge funds and 28 private equity funds. The largest investment in a single fund was $31.4 million as of December 31, 2017 and $24.2 million as of December 31, 2016.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 8. Investment securities (Continued)

        The following table summarizes investments in hedge funds and private equity interests by investment objective and sector as of December 31, 2017 and 2016:

 
  2017   2016  
 
  Fair Value   Unfunded
Commitments
  Fair Value   Unfunded
Commitments
 
 
  (Millions)
 

Hedge funds:

                         

Long/short multi-sector

  $ 31.5   $   $   $  

Distressed mortgage credit

    25.5              

Other

    3.2         3.7      

Total hedge funds

    60.2         3.7      

Private equity funds:

                         

Energy infrastructure & services

    73.5     56.4     50.7     60.0  

Multi-sector

    9.5     1.0     8.9     1.5  

Healthcare

    23.4     28.6     19.4     24.4  

Life settlement

    21.5              

Manufacturing/Industrial

    15.9     5.1     0.4     19.6  

Private equity secondaries

    1.1     1.0     1.8     1.1  

Real estate

    0.2         0.3      

Venture capital

            0.2      

Total private equity funds

    145.1     92.1     81.7     106.6  

Total hedge and private equity funds included in other long-term investments

  $ 205.3   $ 92.1   $ 85.4   $ 106.6  

        Redemption of investments in certain hedge funds is subject to restrictions including lock-up periods where no redemptions or withdrawals are allowed, restrictions on redemption frequency, and advance notice periods for redemptions. Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period.

        The following summarizes the December 31, 2017 fair value of hedge funds subject to restrictions on redemption frequency and advance notice period requirements for investments in active hedge funds:

 
  Notice Period  
Redemption Frequency
  30 - 59 days
notice
  60 - 89 days
notice
  90 - 119 days
notice
  120+ days
notice
  Total  
 
  (Millions)
 

Monthly

  $   $ 31.5   $   $   $ 31.5  

Quarterly

    1.0                 1.0  

Semi-annual

        1.0             1.0  

Annual

            26.6     0.1     26.7  

Total

  $ 1.0   $ 32.5   $ 26.6   $ 0.1   $ 60.2  

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 8. Investment securities (Continued)

        Certain of the hedge fund and private equity fund investments in which Sirius Group is invested are no longer active and are in the process of disposing of their underlying investments. Distributions from such funds are remitted to investors as the fund's underlying investments are liquidated. As of December 31, 2017, no distributions were outstanding from these investments.

        Investments in private equity funds are generally subject to a "lock-up" period during which investors may not request a redemption. Distributions prior to the expected termination date of the fund may be limited to dividends or proceeds arising from the liquidation of the fund's underlying investments. In addition, certain private equity funds provide an option to extend the lock-up period at either the sole discretion of the fund manager or upon agreement between the fund and the investors.

        As of December 31, 2017, investments in private equity funds were subject to lock-up periods as follows:

 
  1 - 3 years   3 - 5 years   5 - 10 years   Total  
 
  (Millions)
   
 

Private Equity Funds—expected lock up period remaining

  $ 7.1   $ 6.1   $ 131.9   $ 145.1  

Investments Held on Deposit or as Collateral

        As of December 31, 2017 and 2016, investments of $548.2 million and $406.0 million, respectively, were held in trusts required to be maintained in relation to various reinsurance agreements. Sirius Group's consolidated reinsurance operations are required to maintain deposits with certain insurance regulatory agencies in order to maintain their insurance licenses. The fair value of such deposits which are included within total investments totaled $548.4 million and $413.0 million as of December 31, 2017 and 2016, respectively.

        As of December 31, 2017, Sirius Group held $0.3 million of collateral in the form short-term investments associated with Interest Rate Cap agreements. (See Note 13 .)

Unsettled investment purchases and sales

        As of December 31, 2017 and 2016, Sirius Group reported $0.3 million and $7.6 million, respectively, in Accounts payable on unsettled investment purchases.

        As of December 31, 2017, Sirius Group reported $0.3 million in Accounts receivable on unsettled investment sales. No amount was reported for December 31, 2016.

Note 9. Fair value measurements

Fair value measurements

        Fair value measurements are categorized into a hierarchy that distinguishes between inputs based on market data from independent sources ("observable inputs") and a reporting entity's internal assumptions based upon the best information available when external market data is limited or unavailable ("unobservable inputs"). Quoted prices in active markets for identical assets or liabilities have the highest priority ("Level 1"), followed by observable inputs other than quoted prices, including

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 9. Fair value measurements (Continued)

prices for similar but not identical assets or liabilities ("Level 2"), and unobservable inputs, including the reporting entity's estimates of the assumptions that market participants would use, having the lowest priority ("Level 3").

        The availability of observable inputs can vary from financial instrument to financial instrument and is affected by a wide variety factors including, for example, the type of financial instrument, whether the financial instrument is new and not yet established in the marketplace, and other characteristics particular to the instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment.

        Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This may lead the Company to change the selection of the valuation technique (for example, from market to cash flow approach) or to use multiple valuation techniques to estimate the fair value of a financial instrument. These circumstances could cause an instrument to be reclassified between levels within fair value hierarchy. Investments valued using Level 1 inputs include fixed maturity investments, primarily investments in U.S. Treasuries Bills and Notes, equity securities, and short-term investments. Investments valued using Level 2 inputs are primarily comprised of fixed maturity investments, which have been disaggregated into classes, including U.S. government and government agency, corporate debt securities, mortgage-backed and asset-backed securities, non-U.S. government and government agency, U.S. state and municipalities and political sub division and preferred stocks. Investments valued using Level 2 inputs also include certain ETFs that track U.S. stock indices such as the S&P 500 but are traded on foreign exchanges. Fair value estimates for investments that trade infrequently and have few or no observable market prices are classified as Level 3 measurements. Sirius Group determines when transfers between levels have occurred as of the beginning of the period.

Valuation techniques

        Sirius Group uses outside pricing services to assist in determining fair values for its investments. For investments in active markets, Sirius Group uses the quoted market prices provided by outside pricing services to determine fair value. The outside pricing services Sirius Group uses have indicated that they will only provide prices where observable inputs are available. In circumstances where quoted market prices are unavailable or are not considered reasonable, Sirius Group estimates the fair value using industry standard pricing models and observable inputs such as benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers, prepayment speeds, reference data including research publications, and other relevant inputs. Given that many fixed maturity investments do not trade on a daily basis, the outside pricing services evaluate a wide range of fixed maturity investments by regularly drawing parallels from recent trades and quotes of comparable securities with similar features. The characteristics used to identify comparable fixed maturity investments vary by asset type and take into account market convention.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 9. Fair value measurements (Continued)

        The valuation process above is generally applicable to all of Sirius Group's fixed maturity investments. The techniques and inputs specific to asset classes within Sirius Group's fixed maturity investments for Level 2 securities that use observable inputs are as follows:

U.S. government and government agency

        U.S. government and government agency securities consist primarily of debt securities issued by the U.S. Treasury and mortgage pass-through agencies such as the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. Fixed maturity investments included in U.S. government and government agency securities are primarily priced by pricing services. When evaluating these securities, the pricing services gather information from market sources and integrate other observations from markets and sector news. Evaluations are updated by obtaining broker dealer quotes and other market information including actual trade volumes, when available. The fair value of each security is individually computed using analytical models which incorporate option adjusted spreads and other daily interest rate data.

Non-U.S. government and government agency

        Non-U.S. government and government agency securities consist of debt securities issued by non-U.S. governments and their agencies along with supranational organizations (also known as sovereign debt securities). Securities held in these sectors are primarily priced by pricing services who employ proprietary discounted cash flow models to value the securities. Key quantitative inputs for these models are daily observed benchmark curves for treasury, swap, and high issuance credits. The pricing services then apply a credit spread for each security which is developed by in-depth and real time market analysis. For securities in which trade volume is low, the pricing services utilize data from more frequently traded securities with similar attributes. These models may also be supplemented by daily market and credit research for international markets.

Corporate debt securities

        Corporate debt securities consist primarily of investment-grade debt of a wide variety of U.S. and non-U.S. corporate issuers and industries. The corporate fixed maturity investments are primarily priced by pricing services. When evaluating these securities, the pricing services gather information from market sources regarding the issuer of the security and obtain credit data, as well as other observations, from markets and sector news. Evaluations are updated by obtaining broker dealer quotes and other market information including actual trade volumes, when available. The pricing services also consider the specific terms and conditions of the securities, including any specific features which may influence risk.

Mortgage-backed and asset-backed securities

        The fair value of mortgage and asset-backed securities is primarily priced by pricing services using a pricing model that uses information from market sources and leveraging similar securities. Key inputs include benchmark yields, reported trades, underlying tranche cash flow data, collateral performance, plus new issue data, as well as broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including issuer, vintage, loan type, collateral attributes,

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 9. Fair value measurements (Continued)

prepayment speeds, default rates, recovery rates, cash flow stress testing, credit quality ratings, and market research publications.

U.S. states, municipalities, and political subdivisions

        The U.S. states, municipalities, and political subdivisions portfolio contains debt securities issued by U.S. domiciled state and municipal entities. These securities are generally priced by independent pricing services using the techniques for U.S. government and government agency securities described above.

Preferred stocks

        The fair value of preferred stocks is generally priced by independent pricing services using an evaluated pricing model that calculates the appropriate spread over a comparable security for each issue. Key inputs include exchange prices (underlying and common stock of same issuer), benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including sector, coupon, credit quality ratings, duration, credit enhancements, early redemption features, and market research publications.

Level 3 Investments

        Level 3 valuations are generated from techniques that use assumptions not observable in the market. These unobservable assumptions reflect Sirius Group's assumptions, that market participants would use in valuing the investment. Generally, certain securities may start out as Level 3 when they are originally issued but as observable inputs become available in the market, they may be reclassified to Level 2.

        Sirius Group employs a number of procedures to assess the reasonableness of the fair value measurements for its other long-term investments, including obtaining and reviewing the audited annual financial statements of hedge funds and private equity funds and periodically discussing each fund's pricing with the fund manager. However, since the fund managers do not provide sufficient information to evaluate the pricing inputs and methods for each underlying investment, the inputs are considered to be unobservable.

        The fair values of Sirius Group's investments in private equity securities and private debt instruments have been classified as Level 3 measurements. They are carried at fair value and are initially valued based on transaction price and their valuation is subsequently estimated based on available evidence such as a market transaction in similar instruments and other financial information for the issuer.

Investments measured using Net Asset Value

        The fair value of Sirius Group's investments in hedge funds and private equity funds has been determined using net asset value. The hedge fund's administrator provides quarterly updates of fair value in the form of Sirius Group's proportional interest in the underlying fund's net asset value (collectively "NAV"), which is deemed to approximate fair value, generally with a three month delay in valuation. The fair value of investment in hedge funds is measured using the NAV practical expedient

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 9. Fair value measurements (Continued)

and therefore has been not categorized within the fair value hierarchy. The private equity funds provide quarterly or semi-annual partnership capital statements with a three or six month delay which are used as a basis for valuation. These private equity investments vary in investment strategies and are not actively traded in any open markets. The fair value of these investments are measured using NAV practical expedient and therefore have not been categorized with the fair value hierarchy. Due to a lag in reporting, some of the fund managers, fund administrators, or both, are unable to provide final fund valuations as of the Company's reporting date. In these circumstances, Sirius Group estimates the return of the current period and uses all credible information available. This includes utilizing preliminary estimates reported by its fund managers and using other information that is available to Sirius Group with respect to the underlying investments, as necessary.

Fair Value Measurements by Level

        The following tables summarize Sirius Group's financial assets and liabilities measured at fair value as of December 31, 2017 and 2016 by level:

 
  2017  
 
  Fair
Value
  Level 1
Inputs
  Level 2
Inputs
  Level 3
Inputs
 
 
  (Millions)
 

Assets measured at fair value

                         

Fixed maturity investments:

                         

U.S. Government and government agency

  $ 84.8   $ 83.2   $ 1.6   $  

Corporate debt securities

    1,014.5         1,014.5      

Asset-backed securities

    475.4         475.4      

Residential mortgage-backed securities

    252.1         252.1      

Commercial mortgage-backed securities

    232.4         232.4      

Non-U.S. government and government agency

    107.2     94.8     12.4      

Preferred stocks

    9.8         1.8     8.0  

U.S. States, municipalities, and political subdivision

    3.8         3.8      

Total fixed maturity investments

    2,180.0     178.0     1,994.0     8.0  

Short-term investments

    625.0     566.2     58.8      

Equity securities

    299.2     298.6     0.6      

Other long-term investments(1)

    64.2             64.2  

Total investments

  $ 3,168.4   $ 1,042.8   $ 2,053.4   $ 72.2  

Derivative instruments

    4.5             4.5  

Total assets measured at fair value

  $ 3,172.9   $ 1,042.8   $ 2,053.4   $ 76.7  

Liabilities measured at fair value

                         

Contingent consideration liabilities

  $ 42.8   $   $   $ 42.8  

Derivative instruments

    10.6             10.6  

Total liabilities measured at fair value

  $ 53.4   $   $   $ 53.4  

(1)
Excludes fair value of $205.3 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 9. Fair value measurements (Continued)

 
  2016  
 
  Fair
Value
  Level 1
Inputs
  Level 2
Inputs
  Level 3
Inputs
 
 
  (Millions)
 

Assets measured at fair value

                         

Fixed maturity investments:

                         

U.S. Government and government agency

  $ 89.4   $ 86.2   $ 3.2   $  

Corporate debt securities

    1,478.0         1,478.0      

Asset-backed securities

    467.8         455.8     12.0  

Residential mortgage-backed securities

    469.5         463.1     6.4  

Commercial mortgage-backed securities

    228.6         228.6      

Non-U.S. government and government agency

    146.5     18.1     128.4      

Preferred stocks

    10.8         1.8     9.0  

U.S. States, municipalities, and political subdivision

    1.0         1.0      

Total fixed maturity investments

    2,891.6     104.3     2,759.9     27.4  

Short-term investments

    538.0     498.7     39.3      

Equity securities

    123.0     123.0          

Other long-term investments(1)

    29.1             29.1  

Total investments

  $ 3,581.7   $ 726.0   $ 2,799.2   $ 56.5  

Derivative instruments

    12.7             12.7  

Total assets measured at fair value

  $ 3,594.4   $ 726.0   $ 2,799.2   $ 69.2  

Liabilities measured at fair value

                         

Contingent consideration liabilities

  $   $   $   $  

Derivative instruments

                 

Total liabilities measured at fair value

  $   $   $   $  

(1)
Excludes fair value of $95.7 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 9. Fair value measurements (Continued)

Rollforward of Level 3 Fair Value Measurements

        The following tables present changes in Level 3 for financial instruments measured at fair value for the years ended December 31, 2017 and 2016:

 
  2017  
 
  Fixed
Maturities
  Other
long-term
investments(1)
  Derivative
instruments
assets &
(liabilities)
  Contingent
consideration
(liabilities)
 
 
  (Millions)
 

Balance at January 1, 2017

  $ 27.7   $ 29.1   $ 12.7   $  

Fair value of contingent consideration liabilities at date of purchase (See Note 3 )

                (122.2 )

Total realized and unrealized gains

    (4.9 )   (0.5 )   (14.6 )   48.8  

Foreign currency losses through Other Comprehensive Income

    (0.1 )   1.0          

Purchases

    4.7     36.0          

Sales/Settlements

    (1.0 )   (1.4 )   (4.2 )   30.6  

Transfers out(2)

    (18.4 )            

Balance at December 31, 2017

  $ 8.0   $ 64.2   $ (6.1 ) $ (42.8 )

(1)
Excludes fair value of $205.3 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.

(2)
Transfer from Level 3 to Level 2.
 
  2016  
 
  Fixed
Maturities
  Other
long-term
investments(1)
  Derivative
instruments
assets &
(liabilities)
  Contingent
consideration
(liabilities)
 
 
  (Millions)
 

Balance at January 1, 2016

  $ 3.0   $ 19.7   $ (0.1 ) $  

Fair value of contingent consideration liabilities at date of purchase (See Note 3 )

                 

Total realized and unrealized gains

    (0.1 )   1.1     10.7      

Foreign currency losses through Other Comprehensive Income

        (0.2 )        

Purchases

    26.7     9.1          

Sales/Settlements

        (0.6 )   2.1      

Transfers out(2)

    (2.2 )            

Balance at December 31, 2016

  $ 27.4   $ 29.1   $ 12.7   $  

(1)
Excludes fair value of $95.7 associated with hedge funds and private equity funds which fair value is measured at net asset value using the practical expedient.

(2)
Transfer from Level 3 to Level 2.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 9. Fair value measurements (Continued)

Fair Value Measurements—transfers between levels

        During 2017, two fixed maturity securities classified as Level 3 measurements in the prior period were recategorized as a Level 2 measurement because quoted market prices for similar securities that were considered reliable and could be validated against an alternative source were available as of December 31, 2017. These measurements comprise "Transfers out" of Level 3 and "Transfers in" to Level 2 of $18.4 million for the period ended December 31, 2017.

        During 2016, one fixed maturity security classified as Level 3 measurements in the prior period was recategorized as a Level 2 measurement because quoted market prices for similar securities that were considered reliable and could be validated against an alternative source were available as of December 31, 2016. These measurements comprise "Transfers out" of Level 3 and "Transfers in" to Level 2 of $2.2 million for the period ended December 31, 2016.

Significant Unobservable Inputs

        The table below presents information about the significant unobservable inputs used for recurring fair value measurements for certain Level 3 instruments as of December 31, 2017 and December 31, 2016, and includes only those instruments for which information about the inputs is reasonably available to Sirius Group, such as data from independent third-party valuation service providers and from internal valuation models.

 
  2017  
Description
  Valuation Technique(s)   Fair
Value
  Unobservable Input  
 
  (Millions)
 

Private equity securities(1)

  Share price of recent transaction   $ 25.0   Purchase share price   $ 31.25  

Private equity securities(1)

  Multiple of GAAP book value   $ 17.2   Book value multiple     1.0X  

Private debt instrument(1)

  Purchase price of recent transaction   $ 9.0   Purchase price   $ 9.0  

Private debt instrument(1)

  Purchase price of recent transaction   $ 9.0   Purchase price   $ 9.0  

Preferred stock(1)

  Purchase price of recent transaction   $ 6.0   Average share price   $ 0.6  

Weather derivatives(2)

  External pricing model   $ 4.2   Broker quote   $ 4.2  

Private debt instrument(1)

  Internal valuation model   $ 2.5   Purchase price less pay down   $ 2.5  

Preferred stock(1)

  Share price of recent transaction   $ 2.0   Average share price   $ 11.79  

Private debt instrument(1)

  Purchase price of recent transaction   $ 1.5   Purchase price   $ 1.5  

Interest rate cap(2)

  External pricing model   $ 0.3   Broker quote   $ 0.3  

Currency swaps(2)

  External pricing model   $ (10.6 ) Broker quote   $ (10.6 )

Contingent consideration

  External valuation model   $ (42.8 ) Discounted future payments   $ (42.8 )

(1)
As of December 31, 2017 each asset type consists of one security.

(2)
See Note 13 for discussion of derivative instruments.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 9. Fair value measurements (Continued)

 
  2016
Description
  Valuation Technique(s)   Fair
Value
  Unobservable Input
 
  (Millions)

Private equity securities(1)

  Multiple of GAAP book value   $ 16.1   Book value multiple   1.0X

Asset-backed securities(1)

  Broker pricing   $ 12.0   Purchase price   $12.0

Private debt instrument(1)

  Purchase price of recent transaction   $ 9.0   Purchase price   $9.0

Residential mortgage-backed securities(1)

  Broker pricing   $ 6.4   Purchase price   $6.4

Preferred stock(1)

  Purchase price of recent transaction   $ 6.0   Average share price   $0.6

Weather derivatives(2)

  External pricing model   $ 5.8   Broker quote   $5.8

Currency swaps(2)

  External pricing model   $ 5.2   Broker quote   $5.2

Private debt instrument(1)

  Purchase price of recent transaction   $ 3.3   Purchase price less pay down   $3.3

Preferred stock(1)

  Average fair value   $ 3.0   Average share price   $86.3

Interest rate cap(2)

  External pricing model   $ 1.7   Broker quote   $1.7

Common stock warrant(1)

  Average fair value   $ 0.5   Discount rate range   14 - 17%

(1)
As of December 31, 2016 each asset type consists of one security.

(2)
See Note 13 for discussion of derivative instruments.

Financial instruments disclosed, but not carried at fair value

        Sirius Group uses various financial instruments in the normal course of its business. The carrying values of Cash, Accrued investment income, certain other assets, Accounts payable on unsettled investment purchases, certain other liabilities, and other financial instruments not included in the table below approximated their fair values at December 31, 2017 and 2016, due to their respective short maturities. As these financial instruments are not actively traded, their respective fair values are classified within Level 3. The following table includes financial instruments for which the carrying value differs from the estimated fair values at December 31, 2017 and 2016:

 
  2017   2016  
 
  Fair
Value(1)
  Carrying
Value
  Fair
Value(1)
  Carrying
Value
 
 
  (Millions)
 

Liabilities, Mezzanine equity, and Non-controlling interest:

                         

2017 SEK Subordinated Notes

  $ 341.4   $ 330.7   $   $  

2016 SIG Senior Notes

  $ 392.3   $ 392.5   $ 382.4   $ 392.5  

Old Lyme Note

  $   $   $ 3.7   $ 3.7  

Series A redeemable preference shares

  $ 90.0   $ 106.1   $   $  

SIG Preference Shares

  $   $   $ 252.8   $ 250.0  

(1)
Fair value estimated by internal pricing and considered a Level 3 measurement.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 9. Fair value measurements (Continued)

Fair Value Measurements on a Non-Recurring Basis

        Sirius Group measures the fair value of certain assets on a non-recurring basis, generally quarterly, annually, or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These include goodwill, indefinite-lived intangible assets, and long-lived assets. Sirius Group uses a variety of techniques to measure the fair value of these assets when appropriate, as described below:

        Goodwill and Indefinite-Lived Intangible Assets:     The preliminary fair value of the goodwill and indefinite-lived intangible asset acquired as part of the acquisitions of both IMG and Armada (see Note 3 ) was determined using the income valuation and market valuation methodologies. The income approach determines value for an asset based on the present value of cash flows projected to be generated over the remaining economic life of the asset being measured. The net cash flows are discounted to present value using a discount rate that reflects the relative risk of achieving the cash flow and the time value of money. The market approach is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable assets or group of assets.

        Determining the fair value goodwill and indefinite-lived intangible assets acquired requires the exercise of significant judgment, including the amount and timing of expected future cash flows, long-term growth rates and discount rates. The cash flows employed in the valuation are based on Sirius Group's best estimates of future sales, earnings, and cash flows after considering factors such as general market conditions, changes in working capital, long term business plans, and recent operating performance. Use of different estimates and judgments could yield different results.

        Sirius Group tests goodwill and indefinite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. When Sirius Group determines goodwill and indefinite-lived intangible assets may be impaired, Sirius Group uses techniques, including discounted expected future cash flows, to measure fair value. Sirius Group used Level 3 inputs to measure and record a $5.0 million impairment of Trade Names indefinite-lived intangible asset during 2017 that was recorded in Impairment of Intangible Assets in the Consolidated Statements of (Loss) Income. (See Note 10 ).

        Long-Lived Assets:     Sirius Group tests its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of a long-lived asset may not be recoverable.

Note 10. Goodwill and intangible assets

        Goodwill represents the excess of the amount paid to acquire subsidiaries over the fair value of identifiable net assets at the date of acquisition. Intangible assets consist primarily of distribution relationships, trade names, customer relationships, technology, and insurance licenses. Finite-life intangible assets are measured at their acquisition date fair values, are amortized over their economic lives, and presented net of accumulated amortization on the balance sheet.

        Goodwill is not amortized, but rather is evaluated for impairment on an annual basis, or whenever indications of potential impairment exist. In the absence of any indications of potential impairment, the evaluation of goodwill is performed during the fourth quarter of each year. Sirius Group uses widely

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 10. Goodwill and intangible assets (Continued)

accepted valuation techniques to determine the fair value of its reporting units used in its annual goodwill impairment analysis. Sirius Group's valuation is primarily based on qualitative and quantitative assessments regarding the fair value of the reporting unit relative to its carrying value. Sirius Group models the fair value of the reporting unit based on projected earnings and cash flows of the reporting unit.

        Intangible assets with indefinite lives are evaluated for impairment at least annually and when events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

        The following table shows the change in goodwill, intangible assets with an indefinite life, and intangible assets with a finite life during the years ended December 31, 2017 and 2016:

 
  Goodwill   Intangible
assets with an
indefinite life
  Intangible
assets with
a finite life
  Total  
 
  (Millions)
 

Net balance at December 31, 2015(1)

  $   $ 10.2   $   $ 10.2  

Additions

                 

Sales(2)

        (5.2 )       (5.2 )

Foreign currency translation

                 

Impairments

                 

Amortization

                 

Net balance at December 31, 2016(1)

        5.0         5.0  

Additions(3)

    400.7     27.0     199.5     627.2  

Sales

                 

Foreign currency translation(3)

    0.3             0.3  

Impairments(3)

        (5.0 )       (5.0 )

Amortization(3)

            (10.2 )   (10.2 )

Net balance at December 31, 2017

  $ 401.0   $ 27.0   $ 189.3   $ 617.3  

(1)
Net balance at December 31, 2016 and 2015 for Intangible assets with an indefinite life relate to insurance licenses allocated to the Runoff & Other segment.

(2)
Intangible assets related to insurance licenses sold with Ashmere during 2016. (See  Note 3. )

(3)
Additions, foreign currency translation, impairments, and amortization in 2017 relate Armada and IMG and are allocated to the Global A&H segment.

        For the year ended December 31, 2017, Sirius Group recognized an impairment of Intangible assets with an indefinite life that relate to a trade name intangible asset acquired as part of the acquisition of IMG. The impairment resulted from lower than anticipated growth when comparing the forecasted results at the time of acquisition against a reforecast of results at year end. A quantitative impairment review of the IMG trade name intangible asset was performed by applying the royalty replacement method to determine the asset's fair value as of December 31, 2017. Under the royalty replacement method, the fair value of IMG's trade names intangible asset was determined based on a market participant's view of the royalty that would be paid to license the right to use the trade name. This quantitative analysis incorporated several assumptions including forecasted future revenues and cash flows, estimated royalty rate, based on similar licensing transactions and market royalty rates, and

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 10. Goodwill and intangible assets (Continued)

discount rate, which incorporates assumptions such as weighted-average cost of capital and risk premium. As a result of this impairment test, the carrying value of IMG's trade names intangible asset exceeded its estimated fair value and an impairment of $5.0 million was recorded as Impairment of intangible assets on the Consolidated Statements of (Loss) Income for the year ended December 31, 2017. For the years ended December 31, 2016 and 2015, Sirius Group did not recognize any impairments on Intangible assets with an indefinite life.

        The following tables presents components of goodwill and intangible assets at December 31, 2017 and 2016:

 
  2017  
 
  Gross
Balance
  Accumulated
Amortization
  Impairments   Foreign
Currency
Translation
  Net
Balance
 
 
  (Millions)
 

Customer relationships—finite life(1)

  $ 17.0   $ (0.8 ) $   $   $ 16.2  

Distribution relationships—finite life(1)

    151.0     (6.2 )           144.8  

Goodwill—infinite life(1)

    400.7             0.3     401.0  

Insurance licenses—infinite life(2)

    5.0                 5.0  

Technology—finite life(1)

    15.5     (1.6 )           13.9  

Trade names—finite life(1)

    16.0     (1.6 )           14.4  

Trade names—infinite life(1)

    27.0         (5.0 )       22.0  

Net balance at December 31, 2017

  $ 632.2   $ (10.2 ) $ (5.0 ) $ 0.3   $ 617.3  

(1)
Allocated to the Global A&H segment.

(2)
Allocated to the Runoff & Other segment.


 
  2016  
 
  Gross
Balance
  Accumulated
Amortization
  Impairments   Foreign
Currency
Translation
  Net
Balance
 
 
  (Millions)
 

Customer relationships—finite life

  $   $   $   $   $  

Distribution relationships—finite life

                     

Goodwill—infinite life

                     

Insurance licenses—infinite life(1)

    5.0                 5.0  

Technology—finite life

                     

Trade names—finite life

                     

Trade names—infinite life

                     

Net balance at December 31, 2016

  $ 5.0   $   $   $   $ 5.0  

(1)
Allocated to the Runoff & Other segment.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 10. Goodwill and intangible assets (Continued)

        The amortization of intangibles assets for the year ended December 31, 2017 was $10.2 million. There was no amortization of intangible assets during the years ended December 31, 2016 or 2015.

        The estimated remaining amortization expense for Sirius Group's intangible assets with finite lives is as follows:

 
  (Millions)  

2018

  $ 15.8  

2019

    15.8  

2020

    15.8  

2021

    15.8  

2022

    14.6  

2023 and thereafter

    111.5  

Total remaining amortization expense

  $ 189.3  

        The estimated remaining useful lives of these intangible assets range from 5.0 to 22.5 years.

Note 11. Debt and standby letters of credit facilities

        Sirius Group's debt outstanding as of December 31, 2017 and 2016 consisted of the following:

 
  December 31,
2017
  Effective
Rate(1)
  December 31,
2016
  Effective
Rate(1)
 
 
  (Millions)
 

2017 SEK Subordinated Notes, at face value

  $ 335.2     3.5 % $        

Unamortized issuance costs

    (4.5 )                

2017 SEK Subordinated Notes, carrying value

    330.7                  

2016 SIG Senior Notes, at face value

    400.0     4.7 %   400.0     4.7 %

Unamortized discount

    (2.9 )         (3.1 )      

Unamortized issuance costs

    (4.6 )         (4.4 )      

2016 SIG Senior Notes, carrying value

    392.5           392.5        

Old Lyme Note

              3.7     3.6 %

Total debt

  $ 723.2         $ 396.2        

(1)
Effective rate considers the effect of the debt issuance costs.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 11. Debt and standby letters of credit facilities (Continued)

        A schedule of contractual repayments of Sirius Group's debt as of December 31, 2017 follows:

 
  December 31,
2017
 
 
  (Millions)
 

Due in one year or less

  $  

Due in one to three years

     

Due in three to five years

     

Due after five years

    735.2  

Total

  $ 735.2  

2017 SEK Subordinated Notes

        On September 22, 2017, Sirius Group issued floating rate callable subordinated notes denominated in Swedish kronor ("SEK") in the amount of SEK 2,750.0 million (or $346.1 million on date of issuance) at a 100% issue price ("2017 SEK Subordinated Notes"). The 2017 SEK Subordinated Notes were issued in an offering that was exempt from the registration requirements of the Securities Act of 1933. The 2017 SEK Subordinated Notes bear interest on their principal amount at a floating rate equal to the applicable Stockholm Interbank Offered Rate ("STIBOR") for the relevant interest period plus an applicable margin, payable quarterly in arrears on March 22, June 22, September 22, and December 22 in each year commencing on December 22, 2017, until maturity in September 2047.

        Beginning on September 22, 2022, the 2017 SEK Subordinated Notes may be redeemed, in whole or in part, at Sirius Group's option. In addition, within 90 days following the occurrence of a Specified Event (as defined below), the 2017 SEK Subordinated Notes may be redeemed, in whole but not in part, at Sirius Group's option. "Specified Event" means (a) an "Additional Amounts Event" in connection with a change in laws, rules or regulations as a result of which Sirius Group is obligated to pay additional amounts on the notes in respect of any withholding or deduction for taxes, (b) a "Tax Event" in connection with a change in laws, rules or regulations as a result of which interest on the notes is no longer fully deductible by Sirius Group for income tax purposes in the applicable jurisdiction (to the extent that such interest was so deductible as of the time of such tax event), (c) a "Rating Methodology Event" in connection with a change in, or clarification to, the rating methodology of Standard & Poor's or Fitch that results in a materially unfavorable capital treatment of the notes, or (d) a "Regulatory Event" in connection with a change in, or clarification to, applicable supervisory regulations that results in the notes no longer qualifying as Tier 2 Capital.

        Sirius Group incurred $4.6 million in expenses related to the issuance of the 2017 SEK Subordinated Notes (including SEK 27.5 million, or $3.5 million, in underwriting fees), which have been deferred and are being recognized into interest expense over the life of the 2017 SEK Subordinated Notes.

        A portion of the proceeds were used to fully redeem the outstanding $250.0 million Sirius International Group, Ltd. Preference Shares ("SIG Preference Shares"). (See Note 15 ).

        Taking into effect the amortization of all underwriting and issuance expenses, and applicable STIBOR, the 2017 SEK Subordinated Notes yield an effective rate of approximately 3.5% per annum.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 11. Debt and standby letters of credit facilities (Continued)

Sirius Group recorded $3.3 million of interest expense, inclusive of amortization of issuance costs, on the 2017 SEK Subordinated Notes for the year ended December 31, 2017.

2016 SIG Senior Notes

        On November 1, 2016, Sirius Group issued $400.0 million face value of senior unsecured notes ("2016 SIG Senior Notes") at an issue price of 99.209% for net proceeds of $392.4 million after taking into effect both deferrable and non-deferrable issuance costs. The SIG Senior Notes were issued in an offering that was exempt from the registration requirements of the Securities Act of 1933. The 2016 SIG Senior Notes bear an annual interest rate of 4.6%, payable semi-annually in arrears on May 1 and November 1, in each year commencing on May 1, 2017, until maturity in November 2026.

        Sirius Group incurred $5.1 million in expenses related to the issuance of the 2016 SIG Senior Notes (including $3.4 million in underwriting fees), which have been deferred and are being recognized into interest expense over the life of the 2016 SIG Senior Notes.

        Taking into effect the amortization of the original issue discount and all underwriting and issuance expenses, the 2016 SIG Senior Notes yield an effective rate of approximately 4.7% per annum. Sirius Group recorded $19.1 and $3.2 million of interest expense, inclusive of amortization of issuance costs, on the 2016 SIG Senior Notes for the years ended December 31, 2017 and 2016, respectively.

2007 SIG Senior Notes

        During 2016, using the funds received from the issuance of the 2016 SIG Senior Notes, Sirius Group retired the $400.0 million face value of senior unsecured notes that were issued in 2007 ("2007 SIG Senior Notes"). The retirement of the 2007 SIG Senior Notes resulted in a $5.7 million loss recorded in interest expense, which includes the write-off of the remaining $0.1 million in unamortized deferred costs and original issue discount at the time of retirement.

        In anticipation of the issuance of the 2007 SIG Senior Notes, Sirius Group entered into an interest rate lock agreement to hedge its interest rate exposure from the date of the agreement until the pricing of the 2007 SIG Senior Notes. The agreement was terminated on March 15, 2007 with a loss of $2.4 million, which was recorded in other comprehensive income. The loss was reclassified from accumulated other comprehensive income over the life of the 2007 SIG Senior Notes using the interest method and was included in interest expense until it was retired in 2016. When the 2007 SIG Senior Notes were retired, the $0.1 million loss remaining in accumulated other comprehensive income was reclassified to interest expense.

        Prior to retirement, taking into effect the amortization of the original issue discount and all underwriting and issuance expenses, including the interest rate lock agreement, the 2007 SIG Senior Notes yielded an effective rate of approximately 6.5% per annum. Sirius Group recorded $31.2 million and $26.3 million of interest expense, inclusive of loss on repurchase, amortization of issuance costs and the interest rate lock agreement, on the 2007 SIG Senior Notes for each of the years ended December 31, 2016, and 2015, respectively.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 11. Debt and standby letters of credit facilities (Continued)

Old Lyme Note

        On April 25, 2017, Sirius Group made a payment of $3.8 million to retire the Old Lyme Note that was originally issued as part of the acquisition of the runoff loss reserve portfolio of Old Lyme Insurance Company Ltd. As part of the acquisition in 2011, Sirius Group entered into a five-year $2.1 million note that was subject to upward adjustments for favorable loss reserve development (up to 50% of $6.0 million) and downward adjustments for any adverse loss reserve development. From inception, Sirius Group had favorable loss reserve development of $3.4 million on the Old Lyme loss reserve position that resulted in an increase of $1.7 million on the Old Lyme Note.

Standby Letter of Credit Facilities

        On November 8, 2017, Sirius International entered into four standby letter of credit facility agreements totaling $215 million to provide capital support for Syndicate 1945. The first letter of credit is a renewal of a $125 million facility with Nordea Bank Finland plc, $100 million of which is issued on an unsecured basis. The second letter of credit is a $25 million secured facility with Lloyds Bank plc. Lloyds Bank plc had previously participated on this program but at a different capacity. The third letter of credit agreement is a $30 million unsecured facility with Barclays Bank plc. The fourth letter of credit agreement is a $35 million facility with DNB Bank ASA London Branch, $25 million of which is issued on an unsecured basis. Each facility is renewable annually. The above referenced facilities are subject to various affirmative, negative and financial covenants that the Company considers to be customary for such borrowings, including certain minimum net worth and maximum debt to capitalization standards.

        Sirius International has other secured letter of credit and trust arrangements with various financial institutions to support its insurance operations. As of December 31, 2017 and 2016, respectively, these secured letter of credit and trust arrangements were collateralized by pledged assets and assets in trust of SEK 2.1 billion and SEK 1.8 billion, or $261.2 million and $203.0 million (based on the December 31, 2017 and December 31, 2016 SEK to USD exchange rates). As of December 31, 2017 and 2016, respectively, Sirius America's trust arrangements were collateralized by pledged assets and assets in trust of $55.8 million and $18.8 million. As of December 31, 2017, Sirius Bermuda Insurance Company's ("Sirius Bermuda") trust arrangements were collateralized by pledged assets and assets in trust of $123.3 million. At December 31, 2016, Sirius Bermuda did not have any trust arrangements that were collateralized by pledged assets and assets in trust.

Debt and Standby Letter of Credit Facility Covenants

        As of December 31, 2017, Sirius Group was in compliance with all of the covenants under the 2016 SIG Senior Notes, 2017 SEK Subordinated Notes, the Nordea facility, the Lloyd's Bank facility, Barclays Bank facility, and the DNB Bank ASA London Branch facility.

Interest

        Total interest expense incurred by Sirius Group for its indebtedness was $22.4 million, $34.6 million, and $26.6 million in 2017, 2016, and 2015. Total interest paid by Sirius Group for its indebtedness was $22.0 million, $31.6 million, and $25.5 million in 2017, 2016, and 2015, respectively.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 12. Income taxes

        The Company and its Bermuda domiciled subsidiaries are not subject to Bermuda income tax under current Bermuda law. In the event there is a change in the current law such that taxes are imposed, the Company and its Bermuda domiciled subsidiaries would be exempt from such tax until March 31, 2035, pursuant to the Bermuda Exempted Undertakings Tax Protection Act of 1966. The Company has subsidiaries and branches that operate in various other jurisdictions around the world that are subject to tax in the jurisdictions in which they operate. The jurisdictions in which the Company's subsidiaries and branches are subject to tax are Australia, Belgium, Canada, Germany, Gibraltar, Luxembourg, Malaysia, the Netherlands, Singapore, Sweden, Switzerland, the United Kingdom, and the United States.

        Sirius Group's net (loss) income before income taxes for the years ended December 31, 2017, 2016, and 2015 was generated in the following domestic and foreign jurisdictions:

 
  2017   2016   2015  
 
  (Millions)
 

Domestic:

                   

Bermuda

  $ (95.0 ) $ (4.9 ) $ 1.2  

Foreign:

                   

U.S. 

    (22.4 )   (25.3 )   68.9  

U.K. 

    (27.0 )   (7.0 )   (3.5 )

Sweden

    (26.1 )   (29.5 )   15.6  

Luxembourg

    43.4     105.3     250.9  

Netherlands

    18.2     (0.1 )   (0.1 )

Other

    (1.0 )   (0.6 )   0.2  

Total (loss) income before income taxes

  $ (109.9 ) $ 37.9   $ 333.2  

        The total income tax benefit (expense) for the years ended December 31, 2017, 2016, and 2015 consisted of the following:

 
  2017   2016   2015  
 
  (Millions)
 

Current tax (expense):

                   

U.S. Federal

  $ (0.9 ) $ 2.1   $ (0.1 )

State

    (2.0 )   (1.7 )   (1.5 )

Non-U.S. 

    (3.6 )   (11.4 )   (9.6 )

Total current tax (expense)

    (6.5 )   (11.0 )   (11.2 )

Deferred tax (expense) benefit:

                   

U.S. Federal

    (10.7 )   16.0     (21.4 )

State

             

Non-U.S. 

    (9.2 )   2.3     (14.5 )

Total deferred tax (expense) benefit

    (19.9 )   18.3     (35.9 )

Total income tax (expense) benefit

  $ (26.4 ) $ 7.3   $ (47.1 )

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 12. Income taxes (Continued)

Effective Rate Reconciliation

        A reconciliation of taxes calculated using the 22% Swedish statutory rate (the rate at which the majority of Sirius Group's worldwide operations are taxed) to the income tax (expense) benefit on pre-tax income follows:

 
  2017   2016   2015  
 
  (Millions)
 

Tax benefit (expense) at the statutory rate

  $ 24.2   $ (8.3 ) $ (73.3 )

Differences in taxes resulting from:

                   

Tax rate change enacted in the United States

    (29.7 )        

Non-Sweden Earnings

    (19.1 )   (8.0 )   17.1  

Foreign tax credits

    2.2     6.9     6.5  

Change in valuation allowance including benefit from intercompany debt restructuring

    1.4     55.0     11.3  

Tax reserve adjustments

    (0.7 )   (6.0 )   (5.7 )

Withholding taxes

    (0.8 )   (1.4 )   (1.9 )

Tax rate change enacted in Luxembourg

    0.4     (30.6 )    

Other, net

    (4.3 )   (0.3 )   (1.1 )

Total income tax (expense) benefit on pre-tax earnings

  $ (26.4 ) $ 7.3   $ (47.1 )

        The non-Sweden component of Pre-tax (loss) income was $(83.8) million, $67.3 million, and $317.6 million for the years ended December 31, 2017, 2016, and 2015, respectively.

        On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted into law. Substantially all of the provisions of the TCJA are effective for taxable years beginning after December 31, 2017. The TCJA includes significant changes to the Internal Revenue Code of 1986, including amendments which significantly change the taxation of individuals and business entities. Among numerous other changes, the corporate federal income tax rate was reduced from 35% to 21%, effective January 1, 2018. The tax effects of changes in tax laws must be recognized in the period in which the law is enacted, and deferred tax assets and liabilities to be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled. Thus, the Company's deferred taxes were remeasured on December 31, 2017, based upon the 21% federal income tax rate, which resulted in a $29.7 million reduction in the net deferred tax assets. Of this amount, $12.1 million was primarily related to net operating loss carryforwards and book-tax timing differences in its U.S. subsidiaries and $17.6 million was related to net operating loss carryforwards in one of the Luxembourg subsidiaries, which is re-measured in part by reference to the U.S. tax rate. The $29.7 million reduction in net deferred tax assets was recorded through income from operations.

        Additionally, the SEC staff issued Staff Accounting Bulletin 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the TCJA. SAB 118 addresses situations where accounting for certain income tax effects of the TCJA under ASC 740, Income Taxes ("ASC 740") may be incomplete upon issuance of an entity's financial statements and provides a one-year measurement period from the enactment date to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the following: (1) income tax effects of those aspects of the TCJA for

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 12. Income taxes (Continued)

which accounting under ASC 740 is complete, (2) provisional estimate of income tax effects of the TCJA to the extent accounting is incomplete but a reasonable estimate is determinable, and (3) if a provisional estimate cannot be determined, ASC 740, should still be applied on the basis of tax law provisions that were in effect immediately before the enactment of the TCJA. Sirius Group's provision for income taxes for the year ended December 31, 2017 is based on the application of SAB 118 taking into account existing deferred tax balances and certain provisions of the TCJA. The income tax effects of the TCJA for which accounting is complete (category (1) above) are set forth in the paragraph above. To the extent Sirius Group's accounting was incomplete and a reasonable estimate of the impact of certain provisions was determinable (category (2) above), the provisional estimates prescribed by SAB 118 were insignificant. To the extent a reasonable estimate of the impact of certain provisions was not determinable (category (3) above), Sirius Group has not recorded any adjustments and has continued accounting for them in accordance with ASC 740 on the basis of the tax laws in effect before enactment of the TCJA. These items include Sirius Group's tax accounting for loss reserves based on a new discounting methodology prescribed by the TCJA.

        The TCJA includes provisions for Global Intangible Low-Taxed Income ("GILTI") under which taxes on foreign income are imposed on the excess of a deemed return on tangible assets of certain foreign subsidiaries and for Base Erosion and Anti-Abuse Tax ("BEAT") under which taxes are imposed on certain base eroding payment to affiliated foreign companies. Consistent with accounting guidance, Sirius Group will treat BEAT as an in period tax charge when incurred in future periods for which no deferred taxes need to be provided and has made an accounting policy election to treat GILTI taxes in a similar manner. Accordingly, no provision for income taxes related to BEAT or GILTI was recorded as of December 31, 2017.

        Sirius Group has capital and liquidity in many of its subsidiaries, some of which may reflect undistributed earnings. If such capital or liquidity were to be paid or distributed to the Company or Sirius Group's subsidiaries, as dividends or otherwise, they may be subject to income or withholding taxes. Sirius Group generally intends to operate, and manage its capital and liquidity, in a tax-efficient manner. However, the applicable tax laws in relevant countries are still evolving, including in response to guidance from the Organisation for Economic Cooperation and Development. Accordingly, such payments or earnings may be subject to income or withholding tax in jurisdictions where they are not currently taxed or at higher rates of tax than currently taxed, and the applicable tax authorities could attempt to apply income or withholding tax to past earnings or payments.

Tax Payments and Receipts

        Net income tax payments to national, state, and local governments totaled $16.7 million, $8.3 million, and $31.7 million for the years ended December 31, 2017, 2016, and 2015, respectively.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 12. Income taxes (Continued)

Deferred Tax Inventory

        Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for tax purposes. An outline of the significant components of Sirius Group's deferred tax assets and liabilities follows:

 
  2017   2016  
 
  (Millions)
 

Deferred income tax assets related to:

             

Non-U.S. net operating loss carry forwards

  $ 305.1   $ 270.8  

U.S. federal net operating loss and capital carry forwards

    34.7     40.0  

Tax credit carry forwards

    18.3     15.2  

Loss reserve discount

    8.9     22.0  

Incentive compensation and benefits accruals

    2.0     6.3  

Net unrealized investment losses

    1.8     3.4  

Unearned Premiums

    1.5     2.0  

Allowance for doubtful accounts

    1.4     2.3  

Deferred interest

    0.2     0.3  

Additional DTA as result of intercompany debt restructuring

        7.4  

Foreign currency translations on investments and other assets

        2.0  

Other items

    3.6     2.6  

Total gross deferred income tax assets

    377.5     374.3  

Valuation allowance

    (71.8 )   (58.1 )

Total adjusted deferred tax asset

    305.7     316.2  

Deferred income tax liabilities related to:

             

Safety Reserve (See Note 19 )

    286.6     259.7  

Intangible assets

    42.0      

Foreign currency translations on investments and other assets

    7.3      

Purchase accounting

    2.4     3.5  

Deferred acquisition costs

    1.2     3.4  

Investment basis differences

    1.1     8.7  

Other items

    3.2     1.5  

Total deferred income tax liabilities

    343.8     276.8  

Net deferred tax (liability) asset

  $ (38.1 ) $ 39.4  

        Sirius Group's deferred tax assets are net of U.S. federal and non-U.S. valuation allowances and, to the extent they relate to non-U.S. jurisdictions, they are shown at year-end exchange rates.

        Of the $38.2 million net deferred tax liability as of December 31, 2017, $17.9 million relates to net deferred tax assets in U.S. subsidiaries, $189.8 million relates to net deferred tax assets in Luxembourg subsidiaries, $11.3 million relates to net deferred tax assets in United Kingdom subsidiaries and $257.2 million relates to net deferred tax liabilities in Sweden subsidiaries.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 12. Income taxes (Continued)

        As a result of the acquisitions of IMG and Armada, a net deferred tax liability of $42.0 million related to intangible assets was recorded as of December 31, 2017. Of the $42.0 million, $33.3 million relates to a deferred tax liability for IMG and its subsidiaries' policyholder relationships, customer relationships, technology, and trade names, $9.8 million relates to a deferred tax liability related to the remeasurement at fair value of the Armada Earnout post-acquisition, and $1.1 million relates to a deferred tax asset for Armada's distribution relationships, trade name, and technology.

Net Operating Loss and Capital Loss Carryforwards

        Net operating loss and capital loss carryforwards as of December 31, 2017, the expiration dates, and the deferred tax assets thereon are as follows:

 
  2017  
 
  United States   Luxembourg   Sweden   Netherlands   UK   TOTAL  
 
  (Millions)
 

2018 - 2022

  $ 0.6   $   $   $ 1.0   $   $ 1.6  

2022 - 2037

    166.7             0.4         167.1  

No expiration date

        1,043.3     220.3         56.3     1,319.9  

Total

    167.3     1,043.3     220.3     1.4     56.3     1,488.6  

Gross Deferred Tax Asset

    35.1     271.4     22.5     0.3     10.8     340.1  

Valuation Allowance

        (71.9 )       (0.3 )       (72.2 )

Net Deferred Tax Asset

  $ 35.1   $ 199.5   $ 22.5   $   $ 10.8   $ 267.9  

        Sirius Group expects to utilize net operating loss carryforwards in Luxembourg of $821.8 million but does not expect to utilize the remainder as they belong to companies that are not expected to have sufficient taxable income in the future. Included in the U.S. net operating loss carryforwards are losses of $120.1 million subject to an annual limitation on utilization under Internal Revenue Code Section 382. Of these loss carryforwards, $14.0 million will expire between 2022 and 2025, $104.5 million will expire between 2030 and 2032, and $48.8 million will begin to expire in 2036. Sirius Group expects to utilize all of the U.S. net operating loss carryforwards.

        As of December 31, 2017, there are U.S. foreign tax credits carryforwards available of $13.7 million, of which an insignificant amount expires between 2018 and 2019, and the remaining, which Sirius Group expects to use, will begin to expire in 2022. As of December 31, 2017, there are alternative minimum tax credit carryforwards of $0.1 million which do not expire and are expected to become fully refundable beginning in the 2021 tax year under the TCJA.

Valuation Allowance

        Sirius Group records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in income tax expense in the period of change. In determining whether or not a valuation allowance, or change therein, is warranted, Sirius Group considers factors such as prior earnings history, expected future earnings, carryback and carryforward periods, and strategies that if executed would result in the realization of a deferred tax asset. It is

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 12. Income taxes (Continued)

possible that certain planning strategies or projected earnings in certain subsidiaries may not be feasible to utilize the entire deferred tax asset, which could result in material changes to Sirius Group's deferred tax assets and tax expense.

        Of the $71.8 million valuation allowance as of December 31, 2017, $72.2 million relates to net operating loss carryforwards in Luxembourg and Netherlands subsidiaries and $(0.4) million relates to other deferred tax assets in Luxembourg, Swedish, and United States subsidiaries.

United States

        Sirius Re Holdings, Inc. ("SReHi") has an insignificant valuation allowance on foreign tax credits, which will expire in 2018 and 2019. SReHi has an additional $13.7 million of foreign tax credits that will expire between the years 2020 and 2027, which are expected to be fully utilized.

Uncertain Tax Positions

        Recognition of the benefit of a given tax position is based upon whether a company determines that it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. In evaluating the more likely than not recognition threshold, Sirius Group must presume that the tax position will be subject to examination by a taxing authority with full knowledge of all relevant information. If the recognition threshold is met, then the tax position is measured at the largest amount of benefit that is more than 50% likely of being realized upon ultimate settlement.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 12. Income taxes (Continued)

        A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

 
  Permanent
Differences(1)
  Temporary
Differences(2)
  Interest and
Penalties(3)
  Total  
 
  (Millions)
 

Balance at January 1, 2015

  $ 15.0   $ 6.7   $ 0.1   $ 21.8  

Changes in prior year tax positions

                 

Tax positions taken during the current year

    5.0     (0.1 )       4.9  

Lapse in statute of limitations

    (0.2 )       (0.1 )   (0.3 )

Settlements with tax authorities

                 

Balance at December 31, 2015

  $ 19.8   $ 6.6   $   $ 26.4  

Changes in prior year tax positions

                 

Tax positions taken during the current year

    4.4     (2.5 )   0.2     2.1  

Lapse in statute of limitations

                 

Settlements with tax authorities

                 

Balance at December 31, 2016

  $ 24.2   $ 4.1   $ 0.2   $ 28.5  

Changes in prior year tax positions

    0.2     (0.1 )   0.1     0.2  

Tax positions taken during the current year

    3.8     (2.2 )       1.6  

Lapse in statute of limitations

    (0.5 )           (0.5 )

Settlements with tax authorities

    (0.3 )       (0.2 )   (0.5 )

Balance at December 31, 2017

  $ 27.4   $ 1.8   $ 0.1   $ 29.3  

(1)
Represents the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate.

(2)
Represents the amount of unrecognized tax benefits that, if recognized, would create a temporary difference between the reported amount of an item in the Consolidated Balance Sheets and its tax basis.

(3)
Net of tax benefit.

        If Sirius Group determines in the future that its reserves for unrecognized tax benefits on permanent differences and interest and penalties are not needed, the reversal of $27.4 million of such reserves as of December 31, 2017 would be recorded as an income tax benefit and would impact the effective tax rate. If Sirius Group determines in the future that its reserves for unrecognized tax benefits on temporary differences are not needed, the reversal of $1.8 million of such reserves as of December 31, 2017 would not impact the effective tax rate due to deferred tax accounting but would accelerate the payment of cash to the taxing authority. The vast majority of Sirius Group's reserves for unrecognized tax benefits on temporary differences relate to deductions for loss reserves where the timing of the deductions is uncertain.

        Sirius Group classifies all interest and penalties on unrecognized tax benefits as part of income tax expense. During the years ended December 31, 2017, 2016, and 2015, Sirius Group recognized $(0.1) million, $0.2 million, and $(0.1) million in interest income (expense), respectively, net of any tax benefit. The balance of accrued interest as of December 31, 2017 and 2016 is $0.1 million and $0.2 million, respectively, net of any tax benefit.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 12. Income taxes (Continued)

Tax Examinations

        The Swedish Tax Authority ("STA") has denied deductions claimed by two of the Company's Swedish subsidiaries in certain tax years for interest paid on intra-group debt instruments. Sirius Group is currently challenging the STA's denial in court based on the technical merits. Sirius Group's reserve for uncertain tax positions has taken into account relevant developments in these tax disputes and in applicable Swedish tax law including recent case law. Sirius Group has also taken into account the SPA by which Sirius Group was sold to CMIG International in 2016. Pursuant to the SPA, the seller agreed to indemnify the buyer and Sirius Group for, among other things, (1) any additional tax liability in excess of Sirius Group's accounting for uncertain tax positions for tax periods prior to the sale of Sirius Group to CMIG International, and (2) an impairment in Sirius Group's net deferred tax assets resulting from a final determination by a tax authority.

        With few exceptions, Sirius Group is no longer subject to U.S. federal, state or non-U.S. income tax examinations by tax authorities for years before 2013.

Note 13. Derivatives

Interest Rate Cap

        Sirius Group entered into an interest rate swap ("Interest Rate Cap") with two financial institutions where it paid an upfront premium and in return receives a series of quarterly payments based on the 3-month London Interbank Offered Rate ("LIBOR") at the time of payment. The Interest Rate Cap does not qualify for hedge accounting. Changes in fair value are recognized as unrealized gains or losses and are presented within Other revenue. The fair value of the interest rate cap has been estimated using a single broker quote and, accordingly, has been classified as a Level 3 measurement as of December 31, 2017 and 2016. Collateral held is recorded within short-term investments with an equal amount recognized as a liability to return collateral. Sirius Group's liability to return that collateral is based on the amounts provided by the counterparties and investment earnings thereon. The following table summarizes the Interest Rate Cap collateral balances held by Sirius Group and ratings by counterparty:

 
  2017
 
  Collateral Balances Held   S & P Rating(1)
 
  (Millions)

Barclays Bank Plc

  $ 0.2   A–

Nordea Bank Finland Plc

    0.1   AA–

Total

  $ 0.3    

(1)
Standard & Poor's ratings as detailed above are: "AA–" (Very Strong, which is the fourth highest of twenty-three creditworthiness ratings) and "A–" (Strong, which is the seventh highest of twenty-three credit worthiness ratings).

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 13. Derivatives (Continued)

Foreign Currency Swaps

        Sirius Group executes foreign currency swaps to manage foreign currency exposure. The foreign currency swaps have not been designated or accounted for under hedge accounting. Changes in fair value are recognized as unrealized gains or losses and are presented within Net foreign exchange gains (losses). The fair value of the foreign currency swaps has been estimated using a single broker quote and accordingly, has been classified as a Level 3 measurement as of December 31, 2017 and 2016. Sirius Group does not provide or hold any collateral associated with the swaps.

Foreign Currency Forward

        During 2016, Sirius Group executed a foreign currency forward to manage currency exposure against a foreign currency investment. During 2017, the foreign currency forward expired and was not renewed. The foreign currency forward was not designated or accounted for under hedge accounting. Changes in fair value are recognized as unrealized gains or losses and are presented within Net foreign exchange gains (losses). The fair value of the foreign currency forward was estimated using a single broker quote and, accordingly, was classified as a Level 3 measurement as at December 31, 2016. Sirius Group did not provide or hold any collateral associated with the forwards.

Weather Derivatives

        Sirius Group holds assets and assumes liabilities related to weather and weather contingent risk management products. Weather and weather contingent derivative contracts are entered into with the objective of generating profits in normal climatic conditions. Accordingly, Sirius Group's weather and weather contingent derivatives are not designed to meet the criteria for hedge accounting under GAAP. Sirius Group receives payment of premium at the contract inception in exchange for bearing the risk of variations in a quantifiable weather index. Changes in fair value are recognized as unrealized gains or losses and are presented within Other revenue. Management uses available market data and internal pricing models based upon consistent statistical methodologies to estimate the fair value. Because of the significance of the unobservable inputs used to estimate the fair value of Sirius Group's weather risk contracts, the fair value measurements of the contracts are deemed to be Level 3 measurements in the fair value hierarchy as at December 31, 2017 and 2016. Sirius Group does not provide or hold any collateral associated with the weather derivatives.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 13. Derivatives (Continued)

        The following tables summarize information on the classification and amount of the fair value of derivatives not designated as hedging instruments within the Company's Consolidated Balance Sheets as at December 31, 2017 and 2016:

 
  2017   2016  
Derivatives not
designated as hedging
instruments
  Notional Value   Asset derivative
at fair value(1)
  Liability
derivative at
fair
value(2)
  Notional Value   Asset derivative
at fair value(1)
  Liability
derivative at
fair
value(2)
 
 
  (Millions)
 

Interest rate cap

  $ 250.0   $ 0.3   $   $ 250.0   $ 1.7   $  

Foreign currency swaps

  $ 45.0   $   $ 10.6   $ 100.0   $ 5.2   $  

Weather derivatives

  $ 113.3   $ 4.2   $   $ 97.8   $ 5.8   $  

(1)
Asset derivatives are classified within Other assets within the Company's Consolidated Balance Sheets at December 31, 2017 and 2016.

(2)
Liability derivatives are classified within Other liabilities within the Company's Consolidated Balance Sheets at December 31, 2017 and 2016.

        The following table summarizes information on the classification and net impact on earnings, recognized in the Company's Consolidated Statements of (Loss) Income relating to derivatives during the years ended December 31, 2017, 2016 and 2015:

Derivatives not designated as hedging
instruments
  Classification of gains (losses) recognized in earnings   2017   2016   2015  
 
  (Millions)
 

Interest rate cap

  Other revenues   $ (1.5 ) $ (0.2 ) $ (2.2 )

Foreign currency swaps

  Net foreign exchange gains (losses)   $ (11.3 ) $ 6.6   $ (0.1 )

Foreign currency forwards(1)

  Net foreign exchange gains (losses)   $ (0.3 ) $   $  

Weather derivatives

  Other revenues   $ (1.5 ) $ 5.2   $ 1.9  

(1)
There were no Foreign currency forwards at December 31, 2017 and an insignificant amount at December 31, 2016 on the Consolidated Balance Sheets.

Note 14. Employee benefit plans and compensation plans

Employee Benefit Plans

        Sirius Group operates several retirement plans in accordance with the local regulations and practices. These plans cover substantially all Sirius Group employees and provide benefits to employees in event of death, disability, or retirement.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 14. Employee benefit plans and compensation plans (Continued)

Defined benefit plans

        Swedish and German employees of Sirius International can participate in defined benefit plans which are based on the employees' pension entitlements and length of employment. In Sweden, where a defined benefit pension plan is mandated by the government, Sirius International's employees participate in collective agreements funded by Sirius International. These collective agreements are managed by third party trustees who calculate the pension obligation, invoice Sirius International for additional funding, and invest the funds. All employees in Germany are covered by defined benefit pension plans sponsored by Sirius International called Sirius Rückversicherungs Service GmbH Pension Plan. Paid pension premiums are invested with Skandia Liv for employees in Sweden and with Allianz for employees in Germany. Skanda Liv held 94% and 93% of total plan assets in 2017 and 2016, respectively. Allianz held 6% and 7% of total plan assets in 2017 and 2016, respectively. Skandia manages the portfolio to be able to pay a guaranteed amount and a favorable return over time with the goal of getting the highest possible return along with well-balanced risk. The average return for the period 2015 through 2017 was 8.5%. The investment directive is decided by the Skandia Liv board of directors. To achieve the goals the portfolio is diversified with the asset allocation shown below.

        The breakdown of the investment of plan assets for the years ended December 31, 2017 and 2016 are as follows:

 
  2017   2016  

International equities

    18.1 %   19.5 %

Swedish equities

    9.8 %   8.6 %

Swedish nominal bonds

    32.7 %   32.8 %

Real estate

    11.3 %   10.7 %

Private equity

    9.7 %   9.7 %

Other

    18.4 %   18.7 %

        The assumptions used to determine Swedish benefit obligations for the years ended December 31, 2017 and 2016 are as follows:

 
  2017   2016  

Discount rate

    2.5 %   2.5 %

Increase in compensation levels rate

    3.2 %   3.0 %

Turnover rate

    3.0 %   3.0 %

        The Swedish actuaries follow the Swedish industry DUS14 mortality rate. The discount rate used to calculate the Swedish benefit obligation was derived from the expected return of an investment in Swedish covered mortgage bonds with a duration in accordance with the duration of the pension obligation. The duration of the Swedish pension liability is approximately 19 years.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 14. Employee benefit plans and compensation plans (Continued)

        The assumptions used to determine German benefit obligations for the years ended December 31, 2017 and 2016 are as follows:

 
  2017   2016  

Discount rate

    1.7 %   1.6 %

Increase in compensation levels rate

    2.0 %   2.0 %

        The German actuaries follow the Germany industry Richttafeln 2005 G mortality rates and standard turnover values for the years ended December 31, 2017 and 2016. The discount rate used to calculate the German benefit obligation was derived from markets yields on high quality corporate bonds with durations consistent with plan obligations.

        The following tables present a reconciliation of the beginning and ending funded status and the net amounts recognized for the defined benefit plans for the years ended December 31, 2017 and 2016:

 
  2017   2016  
 
  (Millions)
 

Change in benefit obligation

             

Projected benefit obligation, beginning of year

  $ 14.9   $ 15.0  

Service cost

    0.8     0.9  

Interest cost

    0.3     0.4  

Actuarial (gains) losses

    0.4     (0.8 )

Benefit payments

    (0.5 )   (0.6 )

Tax payments

    (0.2 )   (0.2 )

Currency revaluation effect

    1.7     0.2  

Projected benefit obligation, end of year

    17.4     14.9  

Change in plan assets

             

Fair value of plan assets, beginning of year

    11.6     11.6  

Employer contributions

    0.9     1.0  

Benefit payments

    (0.3 )   (0.2 )

Interest income

    2.5     0.5  

Currency revaluation effect

    1.4     (1.3 )

Fair value of plan assets, end of year

    16.1     11.6  

Funded status at end of year(1)

  $ (1.3 ) $ (3.3 )

(1)
At December 31, 2017 both plans had a negative funding status. At December 31, 2016, the Swedish plan had a funding status of $0.9 and the German plan had a funding status of $(4.2).

        Under the Swedish plan, a 100 basis point discount rate decrease would increase the 2018 defined benefit obligation by $2.1 million, with all other items remaining the same. Under the German plan, a 50 basis point decrease in the discount rate would increase the benefit obligation by $0.5 million, with all other items remaining the same. Conversely, a 50 basis point increase in the discount rate would decrease the benefit obligation by $0.4 million.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 14. Employee benefit plans and compensation plans (Continued)

        The accumulated benefit obligation for the years ended December 31, 2017 and 2016 was $17.4 million and $14.9 million, respectively.

        The components of net periodic pension expense for the years ended December 31, 2017, 2016, and 2015 are as follows:

 
  2017   2016   2015  
 
  (Millions)
 

Service cost

  $ (0.8 ) $ (0.9 ) $ 1.0  

Interest cost

    2.2         (0.1 )

Actuarial gain/(loss)

    (0.3 )   (0.9 )   (1.1 )

Net periodic pension expense

  $ 1.1   $ (1.8 ) $ (0.2 )

        The employer benefit payments/settlements for the years ended December 31, 2017 and 2016 were $0.2 million and $0.3 million, respectively. As at December 31, 2017, the projected benefit payments required for the defined pension benefits plans are as follows:

 
  December 31, 2017  
 
  (Millions)
 

2018

  $ 0.4  

2019

    0.4  

2020

    0.4  

2021

    0.4  

2022

    0.5  

2023 - 2027

    2.8  

Total benefit payments required

  $ 4.9  

Defined contributions plans

Non-U.S.

        In the United Kingdom, Sirius International contributes 12% of the employee's salary. Contributed funds are invested into an annuity of the employee's choice. In Belgium, Sirius International contributes 6.5%-8.5% of the employee's salary. Employees in Switzerland are eligible to participate in the industry-sponsored Swisscanto pension plan ("Swisscanto plan"). The Swisscanto plan is a combination of a defined contribution and a defined benefit plan. For the Swisscanto plan, Sirius International incurs 60%-70% of the total premium charges and the employees incur the remaining 30-40%. As of December 31, 2017 and 2016, the projected benefit obligation of Sirius International's various benefit plans was $17.4 million and $15.0 million, and the funded status was $(1.3) million and $(3.3) million, respectively. Sirius International recognized expenses related to these various plans of $4.9 million, $7.3 million, and $7.0 million in 2017, 2016, and 2015, respectively.

        Sirius Bermuda sponsors defined contribution plans which cover substantially all of the employees of Sirius Bermuda. Under these plans, Sirius Bermuda is required to contribute 10% of each participant's salary into an individual account maintained by an independent pension administrator.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 14. Employee benefit plans and compensation plans (Continued)

Employees become vested in the Sirius Bermuda contributions after two years of service. Sirius Bermuda recognized expenses of $0.4 million in 2017. In previous years, employees of Sirius Bermuda were covered by Sirius International sponsored plans and Sirius International incurred expenses of $0.5 million and $0.5 million in 2016 and 2015, respectively.

U.S.

        Sirius International Holding Company, Inc. ("SIHC") sponsors a defined contribution plan (the "SIHC 401(k) Plan") which offers participants the ability to invest their balances in several different investment options. The SIHC 401(k) Plan provides qualifying employees with matching contributions of 100% up to the first 2% and 50% of the next 4% of salary (subject to U.S. federal limits on allowable contributions in a given year). Total expense for matching contributions to the plan was $1.3 million, $0.7 million, and $0.5 million in 2017, 2016, and 2015, respectively. Additionally, all participants in the SIHC 401(k) Plan can earn a variable contribution of up to 7% of their salary, subject to the applicable IRS annual covered compensation limits ($0.3 million for 2017) and contingent upon Sirius Group's performance. Total expense for variable contributions to the SIHC 401(k) Plan was $0.3 million, $0.4 million, and $0.5 million in 2017, 2016, and 2015, respectively.

        IMG sponsors a 401(k) retirement savings plan (the "IMG 401(k) Plan"). IMG 401(k) Plan participants may elect to have a percentage of their salaries contributed to the IMG 401(k) Plan on a pre-tax basis subject to annual limits prescribed under the Internal Revenue Code. IMG makes safe harbor matching contributions to the IMG 401(k) Plan equal to 100% of participants' deferrals up to the first 1% of eligible compensation and 50% of participants' deferrals between 1% and 6% of eligible compensation. IMG may also elect to make discretionary contributions to the IMG 401(k) Plan which are allocated based on compensation. IMG made matching contributions to the IMG 401(k) Plan of $0.3 million from the date of acquisition to December 31, 2017.

        Armada maintains a qualified 401(k) plan (the "Armada 401(k) Plan"). Under provisions of the Armada 401(k) Plan, Armada may make discretionary, matching contributions. Matching contributions into the Armada 401(k) Plan totaled $0.1 million from the date of acquisition to December 31, 2017.

Long-Term Incentive Compensation Plans

        Sirius Group grants incentive awards to certain key employees. This includes awards that primarily consist of performance units. Awards earned are subject to the attainment of pre-specified performance goals at the end of a three-year period or as otherwise determined. The awards earned are typically paid in cash. For the years ended December 31, 2017, 2016, and 2015, Sirius Group expensed $3.9 million, $16.6 million, and $18.9 million, respectively, for certain incentive awards. Accrued incentive compensation for these plans was $16.0 million and $30.2 million at December 31, 2017 and 2016, respectively. During 2016, under the SPA, White Mountains paid Sirius Group for certain incentive awards that the Company paid to its employees, with $5.4 million recorded as Additional paid-in surplus.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 14. Employee benefit plans and compensation plans (Continued)

Transaction and Retention Bonuses

        Under the SPA, bonus arrangements for certain employees of Sirius Group were granted. Certain of these bonus arrangements were paid to bonus recipients as compensation for services performed before the sale date ("transaction bonuses"). In addition, certain employees received additional bonus payments under the bonus arrangements after the 12th month and 20th month anniversary of the sale date ("retention bonuses"). Under the SPA, White Mountains agreed to pay the Company an amount equal to the transaction bonuses plus the employer-paid portion of employment or similar taxes less tax benefits attributable to the payment. In addition, White Mountains also agreed to pay the Company for the retention bonuses under the same terms as the transaction bonuses shortly after Sirius Group paid those amounts to the employees. During 2016, Sirius Group recorded $36.9 million in general and administrative expenses in connection with the transaction bonuses. The Company was paid $25.3 million and $30.5 million in 2017 and 2016, respectively, from its former parent for the transaction and retention bonuses after employment costs and taxes, which was recorded as Additional paid-in surplus. During 2017 and 2016, Sirius Group recorded $13.3 million and $17.6 million, respectively, in general and administrative expenses in connection with the retention bonuses.

Note 15. Common shareholder's equity, mezzanine equity, and non-controlling interests

Common shareholder

        The Company is a Bermuda exempted company and is an indirect wholly-owned subsidiary of CMIG International, a Singapore holding company, through CM Bermuda Ltd., a Bermuda exempted company. The Company was acquired from White Mountains.

        On April 27, 2016, the Company split its common shares by a multiple of 10,000 resulting in 120,000,000 common shares issued and outstanding and changed the par value of the common shares from $1.00 per share to $0.01 per share. On November 16, 2016, the Company approved to increase its authorized share capital from $1.2 million to $6.0 million by the creation of an additional 480,000,000 common shares with a par value of $0.01 per share. The increase was effective as of December 12, 2016. On May 22, 2017, the Company divided its authorized share capital into two classes: (i) 500,000,000 common shares, with a par value of $0.01 per share and (ii) 100,000,000 preference shares with a par value of $0.01 per share.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 15. Common shareholder's equity, mezzanine equity, and non-controlling interests (Continued)

Additional paid-in surplus

        During 2017 and 2016, White Mountains made contributions totaling $13.3 million and $89.6 million, respectively, to Sirius Group which was reflected as Additional paid-in surplus. The following table summarizes the contributions made to Sirius Group:

 
  2017   2016  
 
  (Millions)
 

Reimbursement for retention bonuses(1)

  $ 10.8   $ 14.5  

Reimbursement for performance shares(1)

    2.5     5.4  

Reimbursement for transaction bonuses(1)

        30.5  

Excess of fair value received over equity method carrying value of OneBeacon(2)

        22.1  

Reimbursement for ILW parent covers(3)

        16.5  

Other

        0.6  

Total Additional paid-in surplus

  $ 13.3   $ 89.6  

(1)
See Note 14 .

(2)
See Note 20 .

(3)
See Note 6 .

Dividends

        The Company did not pay any dividends during 2017. The Company paid common dividends of $27.0 million in cash and investments to its former parent on April 18, 2016. The Company did not pay any dividends to its former parent during 2015.

Mezzanine equity

        In connection with the acquisition of IMG, the Company issued mandatorily convertible stock in the form of Series A redeemable preference shares as a portion of the consideration paid. (See Note 3 .) The Company issued 100,000 of the 150,000 authorized Series A redeemable preference shares to the seller of IMG. Each Series A redeemable preference share has a liquidation preference per share of $1,000. In addition to the initial issuance, the Company will issue the seller up to an additional 50,000 shares if IMG meets certain mutually agreed upon growth targets. The Series A redeemable preference shares accrue dividends at a per annum rate equal to 10%.

        The Series A redeemable preference shares rank senior to common shares with respect to dividend rights, rights of liquidation, winding-up, or dissolution of the Company and junior to all of the Company's existing and future policyholder obligations and debt obligations. Any class or series of shares of the Company issued in the future must rank junior to the Series A redeemable preference shares, as to the payment of dividends or as to distribution of assets upon any voluntary or involuntary return of assets on liquidation, winding-up, or dissolution of the Company for as long as they are issued and outstanding.

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Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 15. Common shareholder's equity, mezzanine equity, and non-controlling interests (Continued)

        At December 31, 2017, the balance of the Series A redeemable preference shares with accrued dividends was $106.1 million.

Non-controlling interests

        Non-controlling interests consist of the ownership interests of non-controlling shareholders in consolidated entities and are presented separately on the balance sheet. At December 31, 2017 and 2016, Sirius Group's balance sheet included $0.2 million and $251.3 million, respectively, in non-controlling interests.

        The following table shows the change in non-controlling interest for the years ended December 31, 2017, 2016, and 2015:

 
  Total  
 
  (Millions)
 

Non-controlling interests as of December 31, 2014

  $ 250.0  

Net income attributable to non-controlling interests

    18.8  

Dividends to non-controlling interests

    (18.8 )

Other, net

    0.1  

Non-controlling interests as of December 31, 2015

  $ 250.1  

Net income attributable to non-controlling interests

    19.3  

Dividends to non-controlling interests

    (18.8 )

Other, net

    0.7  

Non-controlling interests as of December 31, 2016

  $ 251.3  

Net income attributable to non-controlling interests

    13.7  

Dividends to non-controlling interests

    (14.1 )

Redemption of SIG Preference Shares

    (250.7 )

Non-controlling interests as of December 31, 2017

  $ 0.2  

SIG Preference Shares

        On October 25, 2017, the Company's indirect wholly-owned subsidiary, Sirius International Group, Ltd., redeemed all of its outstanding 250,000 Fixed/Floating Perpetual Non-Cumulative Preference Shares ("SIG Preference Shares"). The redemption price equaled the $1,000 liquidation preference per preference share. Sirius Group accounted for the SIG Preference Shares as a conditionally redeemable instrument within Non-controlling interests.

Alstead Re

        As of December 31, 2017 and 2016, Sirius Group recorded non-controlling interest of $0.2 million and $0.5 million, respectively, in Alstead Re Insurance Company ("Alstead Re"). (See Note 21 .)

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 16. Earnings per share

        Basic earnings (loss) per share is computed by dividing net income (loss) available to Sirius Group common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income available to Sirius Group common shareholders by the weighted-average number of common shares outstanding adjusted to give effect to potentially dilutive securities.

        The Series A redeemable preference shares qualify as participating securities which requires the application of the two-class method to compute both basic and diluted earnings per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common shareholders. The Series A redeemable preference shares have no obligation to absorb losses of the Company in periods of net loss.

        For the periods presented, there are no potentially dilutive securities or instruments that would have an effect on the calculation of dilutive earnings per share.

        The following table sets forth the computation of basic and diluted earnings per common share for the years ended December 31, 2017, 2016, and 2015:

 
  2017   2016   2015  
 
  (Millions, except share and per share information)
 

Numerator:

                   

Net (loss) income

  $ (136.3 ) $ 51.8   $ 310.0  

Less: Income attributable to non-controlling interests

    (13.7 )   (19.3 )   (18.8 )

Less: Accrued dividends on Series A redeemable preference shares

    (6.1 )        

Net (loss) income attributable to Sirius Group common shareholders

  $ (156.1 ) $ 32.5   $ 291.2  

Denominator:

                   

Weighted average shares outstanding for basic and diluted earnings per share(1)

    120,000,000     120,000,000     120,000,000  

Earnings (loss) per share

                   

Basic earnings per share

  $ (1.30 ) $ 0.27   $ 2.43  

Diluted earnings per share

  $ (1.30 ) $ 0.27   $ 2.43  

(1)
On April 27, 2016, the Company split its common shares by a multiple of 10,000 resulting in 120,000,000 common shares. The stock split has been applied retroactively to 2015.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 17. Accumulated other comprehensive (loss)

        The changes in accumulated other comprehensive (loss), by component, for the years ended December 31, 2017, 2016, and 2015 are as follows:

 
  For the year ended December 31, 2017  
 
  Foreign currency
translation
adjustment(1)
  Equity in
unrealized
gains from
investments in
affiliates(2)
  Other, net(3)   Total  
 
  (Millions)
 

Balance, beginning of year

  $ (212.2 ) $   $   $ (212.2 )

Other comprehensive income (loss)

    71.7             71.7  

Balance, end of year

  $ (140.5 ) $   $   $ (140.5 )

(1)
Foreign currency translation adjustment consisted of $83.9 and $(12.2) of gains (losses) related to investments and non-investment net liabilities, respectively. (See Note 18 .)

(2)
Equity in unrealized gains from investments in affiliates related to the AFS portfolio of investments held by Symetra which was accounted for under the equity method prior to November 5, 2015. (See Note 20 .)

(3)
Other, net consists of accumulated other comprehensive income related to balances arising from Sirius Group's share in OneBeacon's Pension Liability (See Note 20 ) and from amortization of hedge related to the 2007 SIG Senior Notes.
 
  For the year ended December 31, 2016  
 
  Foreign currency
translation
adjustment(1)
  Equity in
unrealized
gains from
investments in
affiliates(2)
  Other, net(3)   Total  
 
  (Millions)
 

Balance, beginning of year

  $ (144.9 ) $   $ (1.2 ) $ (146.1 )

Other comprehensive income (loss)

    (67.3 )       1.2     (66.1 )

Balance, end of year

  $ (212.2 ) $   $   $ (212.2 )

(1)
Foreign currency translation adjustment consisted of $(83.1) and $15.8 of gains (losses) related to investments and non-investment net liabilities, respectively. (See Note 18 .)

(2)
Equity in unrealized gains from investments in affiliates related to the AFS portfolio of investments held by Symetra which was accounted for under the equity method prior to November 5, 2015. (See Note 20 .)

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Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 17. Accumulated other comprehensive (loss) (Continued)

(3)
Other, net consists of accumulated other comprehensive income related to balances arising from Sirius Group's share in OneBeacon's Pension Liability (See Note 20 ) and from amortization of hedge related to the 2007 SIG Senior Notes.
 
  For the year ended December 31, 2015  
 
  Foreign currency
translation
adjustment(1)
  Equity in
unrealized
gains from
investments in
affiliates(2)
  Other, net(3)   Total  
 
  (Millions)
 

Balance, beginning of year

  $ (79.5 ) $ 29.8   $ (1.4 ) $ (51.1 )

Other comprehensive income (loss)

    (65.4 )   (29.8 )   0.2     (95.0 )

Balance, end of year

  $ (144.9 ) $   $ (1.2 ) $ (146.1 )

(1)
Foreign currency translation adjustment consisted of $(110.7) and $45.3 of gains (losses) related to investments and non-investment net liabilities, respectively. (See Note 18 .)

(2)
Equity in unrealized gains from investments in affiliates related to the AFS portfolio of investments held by Symetra which was accounted for under the equity method prior to November 5, 2015. (See Note 20 .)

(3)
Other, net consists of accumulated other comprehensive income related to balances arising from Sirius Group's share in OneBeacon's Pension Liability (See Note 20 ) and from amortization of hedge related to the 2007 SIG Senior Notes.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 18. Foreign Currency

        A summary of the impact of foreign currency translation on Sirius Group's consolidated financial results for the years ended December 31, 2017, 2016, and 2015 follows:

 
  2017   2016   2015  
 
  (Millions)
 

Net realized investment (losses) gains—foreign currency(1)

  $ (19.1 ) $ 50.0   $ 70.6  

Net unrealized investment (losses) gains—foreign currency(2)

    (51.7 )   (7.7 )   (15.4 )

Net realized and unrealized investment gains—foreign currency

    (70.8 )   42.3     55.2  

Net foreign exchange gains (losses)—foreign currency translation (losses) gains(3)

    20.7     (17.5 )   (18.1 )

Net foreign exchange gains (losses)—currency swaps(3)

    (11.3 )   6.5     (0.1 )

Net foreign exchange gains (losses)—other(3)

    (0.2 )        

Income tax expense

    3.3     2.4     (0.2 )

Total foreign currency remeasurement gains (losses) recognized through net income, after tax

    (58.3 )   33.7     36.8  

Change in foreign currency translation on investments recognized through other comprehensive income, after tax

    83.9     (83.1 )   (110.7 )

Change in foreign currency translation on non-investment net liabilities recognized through other comprehensive income, after tax

    (12.2 )   15.8     45.3  

Total foreign currency translation (losses) gains recognized through other comprehensive income, after tax

    71.7     (67.3 )   (65.4 )

Total foreign currency gains (losses) recognized in comprehensive (loss) income, after tax

  $ 13.4   $ (33.6 ) $ (28.6 )

(1)
Component of Net realized investment (losses) gains on the Consolidated Statements of (Loss) Income

(2)
Component of Net unrealized investment (losses) gains on the Consolidated Statements of (Loss) Income

(3)
Component of Net foreign exchange gains (losses) on the Consolidated Statements of (Loss) Income

Note 19. Statutory capital and surplus

        Sirius Group's insurance and reinsurance operations are subject to regulation and supervision in each of the jurisdictions where they are domiciled and licensed to conduct business. Generally, regulatory authorities have broad supervisory and administrative powers over such matters as licenses, standards of solvency, premium rates, policy forms, investments, security deposits, methods of accounting, form and content of financial statements, reserves for unpaid loss and LAE, reinsurance, minimum capital and surplus requirements, dividends and other distributions to shareholders, periodic examinations, and annual and other report filings. In general, such regulation is for the protection of policyholders rather than shareholders.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 19. Statutory capital and surplus (Continued)

Non-U.S.

        The Insurance Act 1978 of Bermuda and related regulations, as amended ("Insurance Act"), regulates the insurance business of Bermuda-domiciled insurers and reinsurers. The Insurance Act imposes solvency and liquidity standards on Bermuda insurance companies, as well as auditing and reporting requirements. The Bermuda Monetary Authority ("BMA"), a Solvency II-equivalent regulatory regime, has confirmed that it will act as the primary group supervisor effective July 1, 2016 and has designated Sirius Bermuda as the designated insurer. Therefore, Sirius Group is subject to the BMA's group supervision and solvency rules. Under the Insurance Act, insurers and reinsurers are required to maintain minimum statutory capital and surplus at a level equal to the greater of a minimum solvency margin ("MSM") and the Enhanced Capital Requirement ("ECR") which is established by reference to either a Bermuda Solvency Capital Requirement ("BSCR") model or an approved internal capital model. The BSCR model is a risk-based capital model that provides a method for determining an insurer's minimum required capital taking into account the risk characteristics of different aspects of the company's business. As of December 31, 2017, the eligible capital for Sirius Group exceeded the required capital as measured by the BSCR model.

        Management has also evaluated the group and principal operating subsidiaries' ability to maintain adequate levels of statutory capital, liquidity, and rating agency capital and believes they will be able to do so. In performing this analysis, management has considered the most recent statutory capital position of each of the principal operating subsidiaries as well as the group overall, through its holding companies as a result of BMA group regulation. In addition, management has evaluated the ability of the holding companies to allocate capital and liquidity around the group as and when needed.

        Sirius Group has two Bermuda based insurance subsidiaries: Sirius Bermuda, a Class 4 insurer, and Alstead Reinsurance Ltd. ("Alstead Re"), a Class 3A insurer. Each of these Bermuda insurance subsidiaries are registered under the Insurance Act and are subject to regulation and supervision of the BMA. The BSCR for Sirius Bermuda and Alstead Re as at December 31, 2017 was $902 million and $3 million, respectively. Actual statutory capital and surplus of the Bermuda based insurance subsidiaries as at December 31, 2017 was $2.2 billion. In addition, the Bermuda based insurance subsidiaries are required to maintain a minimum liquidity ratio. As of December 31, 2017, all liquidity ratio requirements were met.

        Sirius International is subject to regulation and supervision in Sweden by the Financial Supervisory Authority ("FSA"). Sirius International's total regulatory capital as of December 31, 2017 was $1.9 billion. In accordance with FSA regulations, Sirius International holds restricted equity of $1.3 billion as a component of Swedish regulatory capital. This restricted equity cannot be paid as dividends. Under Solvency II, the FSA also acts as the European Economic Area group supervisor, with Sirius International UK Holding Ltd. ("SIUK") serving as the highest European entity subject to the FSA's group supervision. Solvency II regulation in Europe gives the FSA the option to waive European-level group supervision if certain legal requirements are met. As of December 31, 2017, the FSA has not exercised this option.

        The financial services industry in the United Kingdom is dual-regulated by the Financial Conduct Authority and the Prudential Regulation Authority (collectively, the "U.K. Regulators"). The U.K. Regulators regulate insurers, insurance intermediaries and Lloyd's. The U.K. Regulators and Lloyd's

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Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 19. Statutory capital and surplus (Continued)

have common objectives in ensuring that the Lloyd's market is appropriately regulated. Lloyd's is required to implement certain rules prescribed by the U.K. Regulators by the powers it has under the Lloyd's Act of 1982 relating to the operation of the Lloyd's market. In addition, each year the U.K. Regulators require Lloyd's to satisfy an annual solvency test that measures whether Lloyd's has sufficient assets in the aggregate to meet all the outstanding liabilities of its members.

        Lloyd's permits its corporate and individual members ("Members") to underwrite insurance risks through Lloyd's syndicates. Members of Lloyd's may participate in a syndicate for one or more underwriting years by providing capital to support the syndicate's underwriting. All syndicates are managed by Lloyd's approved managing agents. Managing agents receive fees and profit commissions in respect of the underwriting and administrative services they provide to the syndicates. Lloyd's prescribes, in respect of its managing agents and Members, certain minimum standards relating to their management and control, solvency and various other requirements.

        Sirius Group participates in the Lloyd's market through the 100% ownership of Sirius International Corporate Member Ltd., a Lloyd's corporate member, which in turn provides underwriting capacity to Syndicate 1945. Sirius Group has its own Lloyd's managing agent, Sirius International Managing Agency, which manages Syndicate 1945. Lloyd's approved net capacity for 2018 is £101.9 million, or approximately $137.7 million (based on the December 31, 2017 GBP to USD exchange rate). Stamp capacity is a measure of the amount of net premium (premiums written less acquisition costs) that a syndicate is authorized by Lloyd's to write.

U.S.

        Sirius America and the insurance subsidiaries of Sirius Global Solutions are subject to regulation and supervision by the National Association of Insurance Commissioners ("NAIC") and the department of insurance in the state of domicile. The NAIC uses risk-based capital ("RBC") standards for U.S. property and casualty insurers as a means of monitoring certain aspects affecting the overall financial condition of insurance companies. As of December 31, 2017, the available capital of Sirius Group's U.S. insurance and reinsurance operating subsidiaries exceeded their respective RBC requirements.

        Sirius America's policyholders' surplus, as reported to regulatory authorities as of December 31, 2017 and 2016, was $521.8 million and $544.3 million. Sirius America's statutory net (loss) income for the years ended December 31, 2017, 2016, and 2015 was $(6.4) million, $82.7 million, and $74.7 million, respectively. The principal differences between Sirius America's statutory amounts and the amounts reported in accordance with GAAP include deferred acquisition costs, deferred taxes, gains recognized under retroactive reinsurance contracts, and market value adjustments for debt securities. The minimum policyholders' surplus necessary to satisfy Sirius America's regulatory requirements was $94.1 million as of December 31, 2017, which equals the authorized control level of the NAIC risk-based capital based on Sirius America's policyholders' surplus.

        Oakwood Insurance Company ("Oakwood") policyholders' surplus, as reported to regulatory authorities as of December 31, 2017 and 2016 was $41.4 million and $41.6 million, respectively. Oakwood's statutory net income (loss) for the years ended December 31, 2017, 2016, and 2015 was $0.5 million, $(12.0) million and $0.7 million, respectively. The minimum policyholders' surplus

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Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 19. Statutory capital and surplus (Continued)

necessary to satisfy Oakwood's regulatory requirements was $5.8 million as of December 31, 2017, which equals the authorized control level of the NAIC risk-based capital based on Oakwood's policyholders' surplus. During 2017, Mount Beacon was merged into Oakwood.

        Empire Insurance Company ("Empire") policyholders' surplus, as reported to regulatory authorities as of December 31, 2017 and 2016 was $10.5 million and $10.7 million, respectively. Empire's statutory net (loss) income for the years ended December 31, 2017, 2016, and 2015 was $(0.3) million, $0.0 million and $0.1 million, respectively. The minimum policyholders' surplus necessary to satisfy Empire's regulatory requirements was $8.8 million as of December 31, 2017, and the NAIC risk-based capital authorized control level was $1.0 million.

Dividend Capacity

        Sirius Bermuda has the ability to declare or pay dividends or make capital distributions during any 12-month period without the prior approval of Bermuda regulatory authorities on the condition that any such declaration or payment of dividends or capital distributions does not cause a breach of any of its regulatory solvency and liquidity requirements. During 2018, Sirius Bermuda has the ability to pay dividends or make capital distributions without the prior approval of regulatory authorities, subject to meeting all appropriate liquidity and solvency requirements, of $636.7 million, which is equal to 25% of its December 31, 2017 regulatory capital available for distribution. The amount of dividends available to be paid by Sirius Bermuda in any given year is also subject to cash flow and earnings generated by Sirius Bermuda's business, as well as to dividends received from its subsidiaries, including Sirius International. During 2017, Sirius Bermuda paid $120.0 million of dividends to its immediate parent.

        Sirius International has the ability to pay dividends up to Sirius Bermuda subject to the availability of unrestricted equity, calculated in accordance with the Swedish Act on Annual Accounts in Insurance Companies and the FSA. Unrestricted equity is calculated on a consolidated group account basis and on a parent account basis. Differences between the two include but are not limited to accounting for goodwill, subsidiaries (with parent accounts stated at original foreign exchange rates), taxes and pensions. Sirius International's ability to pay dividends is limited to the "lower of" unrestricted equity as calculated within the group and parent accounts. As of December 31, 2017, Sirius International had $391.6 million (based on the December 31, 2017 SEK to USD exchange rate) of unrestricted equity on a parent account basis (the lower of the two approaches) available to pay dividends in 2018. The amount of dividends available to be paid by Sirius International in any given year is also subject to cash flow and earnings generated by Sirius International's business, the maintenance of adequate solvency capital ratios for Sirius International and the consolidated SIUK group, as well as to dividends received from its subsidiaries, including Sirius America. Earnings generated by Sirius International's business that are allocated to the Safety Reserve are not available to pay dividends (see " Safety Reserve " below). During 2017, Sirius International declared $102.5 million and paid $20.0 million of dividends.

        Under normal course of business, Sirius America has the ability to pay dividends up to its immediate parent during any twelve-month period without the prior approval of regulatory authorities in an amount set by formula based on the lesser of net investment income, as defined by statute, or 10% of statutory surplus, in both cases as most recently reported to regulatory authorities, subject to the availability of earned surplus and subject to dividends paid in prior periods. Based upon an agreement with its regulators during 2016, Sirius America has committed to refrain from taking steps to

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Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 19. Statutory capital and surplus (Continued)

pay any dividends for a period of two years from the date of the sale of the Company from its former parent to CMIG International. As of December 31, 2017, Sirius America had $521.8 million of statutory surplus and $121.0 million of earned surplus. During 2017, Sirius America did not pay any dividends to its immediate parent.

        During 2017, the Company did not pay any dividends to its parent. The Company paid $27.0 million in dividends to its former parent on April 18, 2016. As of December 31, 2017, Sirius Group had $68.0 million of net unrestricted cash, short-term investments, and fixed maturity investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries.

Capital Maintenance

        There is a capital maintenance agreement between Sirius International and Sirius America which obligates Sirius International to make contributions to Sirius America's surplus in order for Sirius America to maintain surplus equal to at least 125% of the company action level risk based capital as defined in the NAIC Property/Casualty Risk-Based Capital Report. The agreement provides for a maximum contribution to Sirius America of $200.0 million. During 2017, Sirius International did not make any contributions to the surplus of Sirius America. In 2017, Sirius International provided Sirius America with an accident year stop loss cover, with an attachment point in excess of 83% and a limit of $27.0 million. This accident year loss reinsurance was not renewed in 2018. In addition, at November 1, 2016, Sirius America and Sirius International entered into a quota share agreement where Sirius America ceded Sirius International 75% of its reinsurance business on an accident year basis. This quota share agreement was in force through March 31, 2018. During 2017 and 2016, Sirius America ceded $115.0 million and $33.4 million, respectively, of premiums earned to Sirius International under this quota share agreement.

Safety Reserve

        Subject to certain limitations under Swedish law, Sirius International is permitted to transfer pre-tax income amounts into an untaxed reserve referred to as a Safety Reserve. As of December 31, 2017, Sirius International's Safety Reserve amounted to SEK 10.7 billion, or $1.3 billion (based on the December 31, 2017 SEK to USD exchange rate). Under GAAP, an amount equal to the Safety Reserve, net of a related deferred tax liability established at the Swedish tax rate of 22%, is classified as shareholder's equity. Generally, this deferred tax liability is only required to be paid by Sirius International if it fails to maintain prescribed levels of premium writings and loss reserves in future years. As a result of the indefinite deferral of these taxes, Swedish regulatory authorities apply no taxes to the Safety Reserve when calculating solvency capital under Swedish insurance regulations. Accordingly, under local statutory requirements, an amount equal to the deferred tax liability on Sirius International's Safety Reserve ($286.6 million as of December 31, 2017) is included in solvency capital. Access to the Safety Reserve is restricted to coverage of insurance and reinsurance losses. Access for any other purpose requires the approval of Swedish regulatory authorities. Similar to the approach taken by Swedish regulatory authorities, most major rating agencies generally include the $1.3 billion balance of the Safety Reserve, without any provision for deferred taxes, in Sirius International's regulatory capital when assessing Sirius International and Sirius Group's financial strength. Subject to certain limitations under Swedish law, Sirius International is permitted to transfer certain portions of its

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 19. Statutory capital and surplus (Continued)

pre-tax income to its Swedish parent companies to minimize taxes (referred to as a group contribution). During 2017, Sirius International did not transfer any of its 2016 pre-tax income via group contributions to its Swedish parent companies.

Note 20. Investments in unconsolidated entities

        Sirius Group's investments in unconsolidated entities are included within Other long-term investments and consist of investments in common equity securities or similar instruments, which give Sirius Group the ability to exert significant influence over the investee's operating and financial policies ("equity method eligible unconsolidated entities"). Such investments may be accounted for under either the equity method or, alternatively, Sirius Group may elect to account for them under the fair value option.

        The following table presents the components of Other long-term investments as of December 31, 2017 and 2016:

 
  2017   2016  
 
  (Millions)
 

Equity method eligible unconsolidated entities, at fair value

  $ 121.2   $ 77.1  

Other unconsolidated investments, at fair value(1)

    148.3     47.7  

Total Other long-term investments(2)

  $ 269.5   $ 124.8  

(1)
Includes Other long-term investments that are not equity method eligible.

(2)
There were no investments accounted for using the equity method as of December 31, 2017 and 2016.

Equity method eligible unconsolidated entities, at fair value

        Sirius Group has elected the Fair Value Option to account for its equity method eligible investments accounted for as part of Other long-term investments for consistency of presentation with rest of its investment portfolio. The following table presents Sirius Group's investments in equity

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 20. Investments in unconsolidated entities (Continued)

method eligible unconsolidated entities as of December 31, 2017 and 2016 with ownership interest greater than 20%:

 
  Ownership
interest at
December 31,
   
Investee
  2017   2016   Instrument Held

BE Reinsurance Limited

    25.0 %   25.0 % Common shares

BioVentures Investors (Offshore) IV LP

    73.0 %   71.4 % Units

Camden Partners Strategic Fund V (Cayman), LP

    36.5 %   37.2 % Units

NEC Cypress Buyer LLC(1)

    23.5 %   N/A   Units

New Energy Capital Infrastructure Credit Fund LP

    23.3 %   35.2 % Units

New Energy Capital Infrastructure Offshore Credit Fund LP

    56.2 %   71.4 % Units

Tuckerman Capital V LP

    48.3 %   48.3 % Units

Tuckerman Capital V Co-Investment I LP(2)

    49.5 %   N/A   Units

(1)
Sirius Group did not hold an investment in NEC Cypress Buyer LLC in 2016

(2)
Sirius Group did not hold an investment in Tuckerman Capital V Co-Investment I L.P. in 2016.

        The following tables present aggregated summarized financial information for Sirius Group's investments in equity method eligible unconsolidated entities:

 
  December 31,  
 
  2017   2016  
 
  (Millions)
 

Balance sheet data:

             

Total assets

  $ 336.7   $ 206.6  

Total liabilities

  $ 31.2   $ 16.5  

 

 
  For the years ended
December 31,
 
 
  2017   2016   2015  
 
  (Millions)
 

Income statement data:

                   

Revenues

  $ 38.1   $ 21.6   $ 2.7  

Expenses

  $ (12.2 ) $ (14.1 ) $ (5.5 )

Equity method eligible affiliates, accounted for using the equity method

Symetra

        Sirius Group accounted for its investment in Symetra common shares under the equity method until November 5, 2015, when Sirius Group's former parent White Mountains, relinquished its representation on Symetra's board of directors, and it no longer had the ability to exert significant influence. On November 5, 2015, Sirius Group began accounting for its investment in Symetra at fair

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 20. Investments in unconsolidated entities (Continued)

value. During the fourth quarter of 2015, Sirius Group recognized $218.5 million ($200.8 million after-tax) of unrealized investment gains through net income, representing the difference between the carrying value of Symetra common shares under the equity method at November 5, 2015 and fair value at December 31, 2015. On February 1, 2016 Sirius sold its investment in Symetra. (See Note 3 .)

        The following table presents financial information for Symetra as of September 30, 2015:

 
  September 30,
2015
 
 
  (Millions)
 

Symetra balance sheet data:

       

Total investments

  $ 32,409.2  

Separate account assets

    885.9  

Total assets

    34,962.8  

Policyholder liabilities

    29,492.0  

Long-term debt

    697.5  

Separate account liabilities

    885.9  

Total liabilities

    31,836.7  

Common shareholders' equity

    3,126.1  

        The following table presents financial information for Symetra for the nine months ended September 30, 2015:

 
  Nine months
ended
September 30,
2015
 
 
  (Millions)
 

Symetra income statement data:

       

Net premiums earned

  $ 539.3  

Net investment income

    994.3  

Total revenues

    1,605.9  

Policy benefits

    1,143.7  

Total expenses

    1,543.6  

Net income

    89.6  

Comprehensive net loss

    (234.1 )

OneBeacon

        On April 18, 2016, Sirius Group sold its investment in OneBeacon at fair value to its former parent for proceeds of $178.3 million in connection with the sale of Sirius Group to CMIG International and recorded $22.1 million of additional paid-in surplus for the excess of fair value over the equity method carrying value of OneBeacon. (See Note 3 .)

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 20. Investments in unconsolidated entities (Continued)

        The following table summarizes amounts recorded by Sirius Group under the equity method relating to its investment in OneBeacon for the period January 1, 2016 until April 18, 2016:

 
  Total  
 
  (Millions)
 

Equity method carrying value of investment in OneBeacon as of December 31, 2015

  $ 151.9  

Equity in earnings of OneBeacon

    6.6  

Dividends received

    (3.0 )

Other, net

    0.7  

Proceeds received for the sale of OneBeacon

    (178.3 )

Excess of fair value received over equity method carrying value of OneBeacon

    22.1  

Equity method carrying value of investment in OneBeacon as of April 18, 2016

  $  

        The following table presents financial information for OneBeacon as of March 31, 2016:

 
  March 31,
2016
 
 
  (Millions)
 

OneBeacon balance sheet data:

       

Total investments

  $ 2,562.1  

Total assets

    3,529.0  

Unpaid loss and loss adjustment expense reserves

    1,343.8  

Long-term debt

    272.9  

Total liabilities

    2,509.2  

Total non-controlling interests

    3.2  

Common shareholders' equity

    1,016.6  

        The following table presents financial information for OneBeacon for the three months ended March 31, 2016 and year ended December 31, 2015:

 
  Three months
ended
March 31, 2016
  For the year
ended
December 31, 2015
 
 
  (Millions)
 

OneBeacon income statement data:

             

Net premiums earned

  $ 278.6   $ 1,176.2  

Net investment income

    14.4     45.9  

Total revenues

    310.5     1,186.4  

Loss and loss adjustment expenses

    158.8     700.7  

Total expenses

    272.3     1,161.1  

Net income

    46.4     36.8  

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 21. Variable interest entities

        Sirius Group consolidates the results of operations and financial position of every voting interest entity ("VOE") in which it has a controlling financial interest and VIEs in which it is considered to be the primary beneficiary. The consolidation assessment, including the determination as to whether an entity qualifies as a VOE or VIE, depends on the facts and circumstances surrounding each entity.

        Sirius Group has determined that Alstead Re is a VIE for which Sirius Group is the primary beneficiary and is required to consolidate it. The following table presents Alstead Re's assets and liabilities, as classified in the Consolidated Balance Sheets as at December 31, 2017 and 2016:

 
  2017   2016  
 
  (Millions)
 

Assets:

             

Cash

  $ 4.5   $ 1.2  

Total investments

    4.5     1.2  

Insurance and reinsurance premiums receivable

    4.1     1.0  

Funds held by ceding companies

    2.7      

Ceded unearned insurance and reinsurance premiums

        0.1  

Deferred acquisition costs

    1.3     0.2  

Total assets

  $ 12.6   $ 2.5  

Liabilities

             

Loss and loss adjustment expense reserves

  $ 3.5   $ 0.3  

Unearned insurance and reinsurance premiums

    4.3     0.4  

Other liabilities

        0.1  

Total liabilities

  $ 7.8   $ 0.8  

        Sirius Group is a passive investor in certain third-party-managed hedge and private equity funds, some of which are VIEs. Sirius Group is not involved in the design or establishment of these VIEs, nor does it actively participate in the management of the VIEs. The exposure to loss from these investments is limited to the carrying value of the investments at the balance sheet date.

        Sirius Group calculates maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE, (ii) the notional amount of VIE assets or liabilities where Sirius Group has also provided credit protection to the VIE with the VIE as the referenced obligation, and (iii) other commitments and guarantees to the VIE. Sirius Group does not have any VIEs that it sponsors nor any VIEs where it has recourse to it or has provided a guarantee to the VIE interest holders.

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 21. Variable interest entities (Continued)

        The following table presents total assets of unconsolidated VIEs in which Sirius Group holds a variable interest, as well as the maximum exposure to loss associated with these VIEs:

 
   
  Maximum Exposure to Loss  
 
  Total VIE
Assets
  On-Balance
Sheet
  Off-Balance
Sheet
  Total  
 
  (Millions)
 

December 31, 2017

                         

Other long-term investments(1)

  $ 1,378.1   $ 108.2   $ 57.4   $ 165.6  

Total at December 31, 2017

  $ 1,378.1   $ 108.2   $ 57.4   $ 165.6  

December 31, 2016

                         

Other long-term investments(1)

  $ 42.3   $ 32.5   $ 67.5   $ 100.0  

Total at December 31, 2016

  $ 42.3   $ 32.5   $ 67.5   $ 100.0  

(1)
Comprised primarily of hedge funds and private equity funds.

Note 22. Transactions with related parties

Certus

        On May 26, 2017, as part of the acquisition of IMG, Sirius Group sold IMG—Stop Loss to Certus for $10.0 million. (See Note 3 .) Certus paid Sirius Group $1.0 million in cash and obtained $9.0 million in financing from Sirius Group in the form of a secured promissory note payable. The promissory note is secured by a pledge of the shares of IMG—Stop Loss by Certus. Sirius Group has determined that Certus and IMG—Stop Loss are VIEs that Sirius Group does not have to consolidate as it does not have the power to direct the activities of either company.

        Sirius America and IMG—Stop Loss have continued the Program Management Agreement that was in place prior to the purchase of IMG under amended terms. The amended agreement gives Sirius America rights of first refusal to act as insurance carrier for IMG—Stop Loss but does not give Sirius Group controlling power or impede IMG—Stop Loss from functioning as an independent entity. For the year ended December 31, 2017, Sirius Group wrote $11.0 million of Certus-managed gross written premium. At December 31, 2017, Sirius Group has total receivables due from Certus of $8.0 million and total payables due to Certus of $0.5 million.

Meyer "Sandy" Frucher

        On August 16, 2016, the Company announced that Meyer "Sandy" Frucher was added as an independent director to its board of directors. Mr. Frucher is Vice Chairman of Nasdaq, Inc. On June 25, 2018, the Company announced a definitive agreement and plan of merger ("Merger Agreement") with Easterly Acquisition Corp. ("Easterly") that would result in the Company becoming publicly listed and traded on the Nasdaq stock exchange. (See Note 25 .)

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 22. Transactions with related parties (Continued)

White Mountains Advisors

        White Mountains Advisors ("WMA"), an indirect wholly-owned subsidiary of Sirius Group's former parent, provided investment advisory and management services to Sirius Group and its subsidiaries under an Investment Advisory Services Agreement. During 2016, Sirius Group terminated this agreement. Sirius Group incurred $3.1 million and $5.5 million of investment fees during 2016 and 2015, respectively, for services provided directly by WMA or through its sub-advisors. As of December 31, 2017 and 2016, Sirius Group did not owe any amount to WMA under this agreement.

Note 23. Commitments and contingencies

Concentrations of credit risk

        Sirius Group underwrites a significant amount of its reinsurance business through reinsurance intermediaries that represent the ceding company. There is credit risk associated with payments of (re)insurance balances to Sirius Group in regards to these brokers' ability to fulfill their contractual obligations. These intermediaries are fairly large and well established, and there are no indications they are financially distressed.

        During the years ended December 31, 2017, 2016, and 2015, Sirius Group received a majority of its gross reinsurance premiums written from four major, third-party reinsurance intermediaries as detailed in the following table:

Gross written premium by intermediary
  2017   2016   2015  

AON Corporation and subsidiaries

    22 %   22 %   24 %

Guy Carpenter & Company and subsidiaries

    18 %   18 %   18 %

WT Butler and Co. Ltd. 

    10 %   8 %   7 %

Willis Group and subsidiaries

    9 %   8 %   9 %

Total

    59 %   56 %   58 %

Geographic Concentration

        The following table shows Sirius Group's net written premiums by geographic region based on the location of the ceding company for the years ended December 31, 2017, 2016, and 2015:

 
  2017   2016   2015  
 
  (Millions)
 

United States

  $ 563.1   $ 463.0   $ 397.5  

Europe

    262.3     258.9     241.9  

Canada, the Caribbean, Bermuda and Latin America

    111.4     88.3     101.2  

Asia and Other

    153.4     127.9     107.0  

Total

  $ 1,090.2   $ 938.1   $ 847.6  

        Sirius Group conducts a significant portion of its business outside of the United States. As a result, a significant portion of Sirius Group's assets, liabilities, revenues, and expenses are denominated in

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 23. Commitments and contingencies (Continued)

currencies other than the U.S. dollar and are therefore subject to foreign currency risk. Sirius Group's foreign currency risk cannot be eliminated entirely and significant changes in foreign exchange rates may adversely affect Sirius Group's results of operations and financial condition.

        Sirius Group's foreign operations are subject to legal, political, and operational risks that may be greater than those present in the United States. As a result, certain of Sirius Group's operations at these foreign locations could be temporarily or permanently disrupted.

Lloyd's Central Fund

        The Lloyd's Central Fund is available to satisfy claims if a member of Lloyd's is unable to meet its obligations to policyholders. Sirius Group has an obligation to pay contributions to the Lloyd's Central Fund each year based on gross written premium. For 2018, Sirius Group estimates the Lloyd's Central Fund contributions to be $0.6 million (based on the December 31, 2017 GBP to USD exchange rate) which is 0.35% of gross written premium. The Council of Lloyd's have the power to levy an additional contribution on members if it considered necessary, and the maximum additional contribution is currently 3% of capacity.

Leases

        Sirius Group leases certain office space under non-cancellable operating leases that expire on various dates. The future annual minimum rental payments required under non-cancellable leases for office space are as follows:

 
  Future
Payments
 
 
  (Millions)
 

2018

  $ 10.1  

2019

    9.0  

2020

    4.9  

2021

    3.7  

2022 and after

    8.3  

Total

  $ 36.0  

        Total rental expense for the years ended December 31, 2017, 2016, and 2015 was $10.2 million, $6.2 million, and $6.4 million, respectively. Sirius Group also has various other lease obligations, which are not significant in the aggregate.

The Phoenix

        At December 31, 2017 Sirius Group had a commitment to purchase approximately 46.24% of shares in The Phoenix from Delek Group for an additional sum of NIS 2.3 billion in cash (or $663.1 million using the December 31, 2017 NIS to USD conversion rate), subject to certain adjustments for interest and earnings. (See Note 25 ).

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 23. Commitments and contingencies (Continued)

Legal Proceedings

        Sirius Group, and the insurance and reinsurance industry in general, are routinely subject to claims related litigation and arbitration in the normal course of business, as well as litigation and arbitration that do not arise from, or are directly related to, claims activity. Sirius Group estimates of the costs of settling matters routinely encountered in claims activity are reflected in the reserves for unpaid loss and LAE. (See Note 5 .)

        Sirius Group considers the requirements of ASC 450, Contingencies ("ASC 450"), when evaluating its exposure to non-claims related litigation and arbitration. ASC 450 requires that accruals be established for litigation and arbitration if it is probable that a loss has been incurred and it can be reasonably estimated. ASC 450 also requires that litigation and arbitration be disclosed if it is probable that a loss has been incurred or it there is a reasonable possibility that a loss may have been incurred.

        The following summarizes one, ongoing non-claims related litigation:

Tribune Company

        In June 2011, Deutsche Bank Trust Company Americas, Law Debenture Company of New York and Wilmington Trust Company (collectively referred to as "Plaintiffs"), in their capacity as trustees for certain senior notes issued by the Tribune Company ("Tribune"), filed lawsuits in various jurisdictions (the "Noteholder Actions") against numerous defendants including Sirius Group in their capacity as former shareholders of Tribune seeking recovery of the proceeds from the sale of common stock of Tribune in connection with Tribune's leveraged buyout in 2007 (the "LBO"). Tribune filed for bankruptcy in 2008 in the Delaware bankruptcy court (the "Bankruptcy Court"). The Bankruptcy Court granted Plaintiffs permission to commence these LBO-related actions, and in 2011, the Judicial Panel on Multidistrict Litigation granted a motion to consolidate the actions for pretrial matters and transferred all such proceedings to the United States District Court for the Southern District of New York (the "SDNY"). Plaintiffs seek recovery of the proceeds received by the former Tribune shareholders on a theory of constructive fraudulent transfer asserting that Tribune purchased or repurchased its common shares without receiving fair consideration at a time when it was, or as a result of the purchases of shares, was rendered, insolvent. Certain subsidiaries of Sirius Group received approximately $6.1 million for Tribune common stock tendered in connection with the LBO.

        The Court granted an omnibus motion to dismiss the Noteholder Actions in September 2013 and Plaintiffs appealed. On March 29, 2016, a three judge panel of the U.S. Second Circuit Court of Appeals affirmed the dismissal of the Noteholder Actions. The Plaintiffs filed a petition for reconsideration or a rehearing en banc of the Second Circuit's decision affirming the dismissal of the state law fraudulent conveyance cases. By order dated July 22, 2016, the Second Circuit denied the petition in full. On September 9, 2016, Plaintiffs filed a petition for a writ of certiorari, seeking U.S. Supreme Court review.

        In addition, Sirius Group in its capacity as a former shareholder of Tribune, along with thousands of former Tribune shareholders, have been named as defendants in an adversary proceeding brought by the Official Committee of Unsecured Creditors of the Tribune Company (the "Committee"), on behalf of the Tribune Company, which seeks to avoid the repurchase of shares by Tribune in the LBO on a theory of intentional fraudulent transfer (the "Committee Action"). Tribune emerged from bankruptcy

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 23. Commitments and contingencies (Continued)

in 2012, and a litigation trustee replaced the Committee as plaintiff in the Committee Action. This matter was consolidated for pretrial matters with the Noteholder Actions in the SDNY and was stayed pending the motion to dismiss in the Noteholder Actions.

        An omnibus motion to dismiss the shareholder defendants in the Committee Action was filed in May 2014, and was granted on January 6, 2017. The plaintiff moved to amend its fifth amended complaint to add a constructive fraudulent conveyance claim against the shareholder defendants. On August 24, 2017, the SDNY denied the plaintiff's motion without prejudice. However, on March 8, 2018, the plaintiff moved to renew its request to amend the complaint based on the Supreme Court's decision in Merit Mgmt Grp. LP. v. FTI Consulting, Inc., holding that the safe harbor protections of Section 546(e) (which prevent the bankruptcy trustee from unwinding certain transactions) did not apply where a transfer is conducted through a financial institution that is neither the debtor, nor the transferee, but serves only as a conduit. On May 16, 2018, the SDNY recalled its mandate in connection with the dismissal of the constructive fraudulent conveyance claim. Accordingly, the SDNY is expected to reconsider the case.

        No amount has been accrued in connection with this matter as of December 31, 2017 and December 31, 2016.

Note 24. Unaudited condensed quarterly financial data

(Expressed in millions of U.S. dollars, except per share amounts)
  December 31,
2017
  September 30,
2017
  June 30,
2017
  March 31,
2017
 
 
  Unaudited
  Unaudited
  Unaudited
  Unaudited
 

Total revenues

  $ 362.6   $ 293.0   $ 252.6   $ 225.9  

Total expenses

  $ 305.8   $ 478.1   $ 240.2   $ 219.9  

Net (loss) income attributable to Sirius Group's common shareholder

  $ 16.0   $ (179.0 ) $ (0.8 ) $ 7.7  

Basic earnings per common share and common share equivalent

  $ 0.13   $ (1.49 ) $ (0.01 ) $ 0.06  

Diluted earnings per common share and common share equivalent

  $ 0.13   $ (1.49 ) $ (0.01 ) $ 0.06  

 

(Expressed in millions of U.S. dollars, except per share amounts)
  December 31,
2016
  September 30,
2016
  June 30,
2016
  March 31,
2016
 
 
  Unaudited
  Unaudited
  Unaudited
  Unaudited
 

Total revenues

  $ 243.6   $ 251.4   $ 293.1   $ 206.4  

Total expenses

  $ 240.8   $ 219.5   $ 292.8   $ 203.5  

Net (loss) income attributable to Sirius Group's common shareholder

  $ 6.9   $ 27.8   $ (12.0 ) $ 9.8  

Basic earnings per common share and common share equivalent

  $ 0.06   $ 0.23   $ (0.10 ) $ 0.08  

Diluted earnings per common share and common share equivalent

  $ 0.06   $ 0.23   $ (0.10 ) $ 0.08  

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Sirius International Insurance Group, Ltd.

Notes to Consolidated Financial Statements (Continued)

For the years ended December 31, 2017, 2016, and 2015

Note 25. Subsequent events

        On June 25, 2018, the Company announced it has executed a Merger Agreement for a proposed merger that would result in the Company becoming a publicly listed company. Under the terms of the Merger Agreement, Easterly Acquisition Corp. ("Easterly") would merge with a subsidiary of the Company and become a wholly owned subsidiary (the "Merger"). Upon the closing of the Merger, Easterly's common stock would be exchanged for the Company's common shares at a price of 1.05x Sirius Group's pro forma diluted GAAP book value per share as of June 30, 2018. Following the Merger, the Company's common shares would be traded on the Nasdaq.

        Easterly held a special meeting of its stockholders on June 28, 2018 and approved an extension of time to complete the Merger through November 30, 2018. Sirius Group agreed to lend to Easterly $0.03 per month through the extension period for each public share that was not redeemed at Easterly's special meeting. Easterly will deposit such loan proceeds into its trust account upon receipt. The loan will be forgiven if the Merger does not close by November 30, 2018.

        The proposed all-stock transaction is expected to yield a combined entity with a pro forma market capitalization of approximately $2.2 billion at closing, with current Easterly stockholders owning approximately 7% of the combined company immediately following the Merger. Pursuant to the Merger Agreement, Sirius Group intends to execute a private placement of common shares. Private placement investors are expected to own approximately 9% of the combined company.

        The Merger has been approved by the boards of directors of each of Sirius Group and Easterly, and is expected to close in the second half of 2018. Completion of the Merger is subject to the satisfaction of certain conditions including, but not limited to, approval of the transaction by Easterly's stockholders, but is not subject to any insurance regulatory approvals or a minimum cash condition. In connection with the Merger, the Compensation Committee has approved grants of performance share unit awards to certain members of management, including the Named Executive Officers.

        Also on June 25, 2018, Sirius Group announced it would allow its share purchase agreement to acquire a controlling interest in The Phoenix Holdings Ltd. to terminate, which was completed on July 2, 2018. As a result of the termination, Sirius Group recognized an income statement charge for the $4.5 million call option (See Note 3 ) during the second quarter of 2018.

        On July 14, 2018, the Company, IMG Acquisition Holdings, LLC ("IMGAH"), and Sirius Acquisitions Holding Company II entered into a Redemption Agreement pursuant to which, effective as of and subject to the closing of the Merger, the Company has agreed to redeem all of the outstanding Series A redeemable preference shares, which are held by IMGAH, for $95 million in cash. Effective as of the completion of such redemption, the parties have agreed to terminate the registration rights agreement and the shareholder's agreement between the Company and IMGAH. In addition, the parties agreed that the IMG Earnout liability will be paid in cash, not in Series A redeemable preference shares.

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Sirius International Insurance Group, Ltd.

Schedule I

Summary of Investments—Other Than Investments in Related Parties

As at December 31, 2017

(Expressed in millions of U.S. dollars)
  Cost or
Amortized Cost
  Fair Value   Amount
shown
on the
balance sheet
 

Corporate debt securities

  $ 1,017.0   $ 1,014.5   $ 1,014.5  

Asset-backed securities

    478.1     475.4     475.4  

Residential mortgage-backed securities

    259.3     252.1     252.1  

Commercial mortgage-backed securities

    235.2     232.4     232.4  

Non-U.S. government and government agency

    106.8     107.2     107.2  

U.S. government and government agency

    85.8     84.8     84.8  

Preferred stocks

    9.3     9.8     9.8  

U.S. States, municipalities and political subdivision

    3.8     3.8     3.8  

Total fixed maturities

  $ 2,195.3   $ 2,180.0   $ 2,180.0  

Total short-term investments

    625.3     625.0     625.0  

Total equity securities

    275.1     299.2     299.2  

Total other long-term investments

    255.5     269.5     269.5  

Total

  $ 3,351.2   $ 3,373.7   $ 3,373.7  

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Sirius International Insurance Group, Ltd.

Schedule II

Condensed Financial Information of Registrant

Balance Sheets

As at December 31, 2017 and 2016

(Expressed in millions of U.S. dollars, except share and per share information)
  2017   2016  

Assets

             

Fixed maturity investments, at fair value

  $ 3.9   $ 5.0  

Short-term investments, at fair value ( Amortized cost 2017: $625.3; 2016: $539.7 )

    30.8     33.4  

Equity securities, at fair value (C ost 2017: $275.1; 2016: $125.7 )

        4.9  

Total investments

    34.7     43.3  

Cash

    0.1      

Investments in unconsolidated affiliates

    2,030.4     1,957.8  

Other assets

    1.1     14.7  

Total assets

  $ 2,066.3   $ 2,015.8  

Liabilities

             

Other liabilities

  $ 43.2   $ 27.7  

Total liabilities

    43.2     27.7  

Commitments and Contingencies

             

Mezzanine equity

             

Series A redeemable preference shares

    106.1      

Common shareholder's equity

             

Common shares ( shares issued and outstanding: 120,000,000 )

    1.2     1.2  

Additional paid-in surplus

    1,197.9     1,184.6  

Retained earnings

    858.4     1,014.5  

Accumulated other comprehensive (loss)

    (140.5 )   (212.2 )

Total common shareholder's equity

    1,917.0     1,988.1  

Total liabilities, mezzanine equity, and common shareholder's equity

  $ 2,066.3   $ 2,015.8  

   

See Notes to Condensed Financial Information of Registrant

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Sirius International Insurance Group, Ltd.

Schedule II

Condensed Financial Information of Registrant

Statements of (Loss) Income

For the years ended December 31, 2017, 2016, and 2015

(Expressed in millions of U.S. dollars)
  2017   2016   2015  

Revenues

                   

Net investment income

  $ 0.3   $ (0.2 ) $ 0.1  

Net realized investment (losses) gains

    0.2     0.3      

Net unrealized investment (losses) gains

    12.8     (0.1 )   (0.1 )

Net foreign exchange gains (losses)

    (0.2 )        

Gain on revaluation of contingent consideration

    13.6          

Other revenue

    0.9          

Total revenues

    27.6          

Expenses

                   

Other underwriting expenses

    (0.2 )        

General and administrative expenses

    13.0     36.6     15.8  

Total expenses

    12.8     36.6     15.8  

Income (Loss) before equity earnings of unconsolidated affiliates, net of tax

    14.8     (36.6 )   (15.8 )

Equity in earnings of unconsolidated affiliates, net of tax

    (164.8 )   69.1     307.0  

(Loss) income before accrued dividends on Series A redeemable preference shares

    (150.0 )   32.5     291.2  

Accrued dividends on Series A redeemable preference shares

    (6.1 )        

Net (loss) income attributable to Sirius Group's common shareholder

  $ (156.1 ) $ 32.5   $ 291.2  

   

See Notes to Condensed Financial Information of Registrant

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Sirius International Insurance Group, Ltd.

Schedule II

Condensed Financial Information of Registrant

Statements of Comprehensive (Loss) Income

For the years ended December 31, 2017, 2016, and 2015

(Expressed in millions of U.S. dollars)
  2017   2016   2015  

Comprehensive Income

                   

Net (loss) income attributable to Sirius Group's common shareholder

  $ (156.1 ) $ 32.5   $ 291.2  

Other comprehensive income (loss)

                   

Change in equity in net unrealized (losses) gains from investments in unconsolidated affiliates, net of tax

            (29.8 )

Change in foreign currency translation

    71.7     (67.3 )   (65.4 )

Net change in other

        1.2     0.2  

Comprehensive (loss) income attributable to Sirius Group's common shareholder

  $ (84.4 ) $ (33.6 ) $ 196.2  

   

See Notes to Condensed Financial Information of Registrant

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Sirius International Insurance Group, Ltd.

Schedule II

Condensed Financial Information of Registrant

Statements of Cash Flows

For the years ended December 31, 2017, 2016, and 2015

(Expressed in millions of U.S. dollars)
  2017   2016   2015  

Cash flows from operations:

                   

Net (loss) income attributable to common shareholder

  $ (156.1 ) $ 32.5   $ 291.2  

Adjustments to reconcile net income to net cash (used for) provided from operations:

                   

Equity in earnings of subsidiaries

    164.8     (69.1 )   (307.0 )

Dividends received from subsidiaries

    110.0     20.0     48.0  

Net realized and unrealized investment gains

    (13.0 )   (0.2 )   0.1  

Amortization of premium on fixed maturity investments

    (0.1 )       0.1  

Revaluation of contingent consideration

    (13.6 )        

Accrued dividends on Series A redeemable preference shares

    6.1          

Other operating items:

                   

Net change in other assets and liabilities, net

    12.6     (6.8 )   1.0  

Net cash (used for) provided from operations

    110.7     (23.6 )   33.4  

Cash flows from investing activities:

                   

Net change in short-term investments

    2.5     (4.5 )   (25.1 )

Sales of fixed maturities and convertible fixed maturity investments

    1.1     16.3     17.5  

Sales of common equity securities

    59.6     3.2      

Purchases of common equity securities

    (54.4 )   (8.0 )    

Purchases of fixed maturities and convertible fixed maturity investments

        (6.3 )   (23.9 )

Contributions to subsidiaries

    (132.7 )   (42.1 )    

Net cash provided from investing activities

    (123.9 )   (41.4 )   (31.5 )

Cash flows from financing activities:

                   

Capital contribution from former parent

    13.3     89.6      

Cash dividends paid to former parent

        (27.0 )    

Net cash provided from (used for) financing activities

    13.3     62.6      

Net increase (decrease) in cash during year

    0.1     (2.4 )   1.9  

Cash balance at beginning of year

        2.4     0.5  

Cash balance at end of year

  $ 0.1   $   $ 2.4  

   

See Notes to Condensed Financial Information of Registrant

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Notes to Condensed Financial Information of Registrant

        Sirius International Insurance Group, Ltd. (the Registrant) investments in consolidated subsidiaries are stated at cost plus equity in income of consolidated subsidiaries. The accompanying condensed financial statements of the Registrant should be read in conjunction with the Consolidated Financial Statements and Notes thereto of Sirius International Insurance Group, Ltd. included in the Registrant's Form S-4 filed with the Securities and Exchange Commission on August 6, 2018.

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Sirius International Insurance Group, Ltd.

Schedule III

Supplementary Insurance Information

As at and for the years ended December 31, 2017, 2016, and 2015

 
  As at and for the year ended December 31, 2017  
 
  Deferred
Acquisition
Costs
  Loss and Loss
Adjustment
Expense
Reserves
  Unearned
Insurance and
Reinsurance
Premiums
  Net Earned
Insurance and
Reinsurance
Premiums
  Loss and Loss
Adjustment
Expenses
  Insurance and
Reinsurance
Acquisition
Expenses
  Other
Underwriting
Expenses
  Net Written
Insurance and
Reinsurance
Premiums
 
 
  (Millions)
 

Global Property

  $ 43.5   $ 759.6   $ 195.7   $ 564.4   $ 512.4   $ 112.9   $ 63.3   $ 556.2  

Global A&H

    49.1     206.2     195.8     306.8     179.8     89.6     23.4     341.5  

Specialty & Casualty

    28.2     304.5     115.0     163.2     104.9     41.1     16.5     193.0  

Runoff & Other

    0.1     628.2     0.3     0.9     14.1     (3.5 )   2.9     (0.5 )

Corporate Elimination

                        (42.9 )        

Total

  $ 120.9   $ 1,898.5   $ 506.8   $ 1,035.3   $ 811.2   $ 197.2   $ 106.1   $ 1,090.2  

 

 
  As at and for the year ended December 31, 2016  
 
  Deferred
Acquisition
Costs
  Loss and Loss
Adjustment
Expense
Reserves
  Unearned
Insurance and
Reinsurance
Premiums
  Net Earned
Insurance and
Reinsurance
Premiums
  Loss and Loss
Adjustment
Expenses
  Insurance and
Reinsurance
Acquisition
Expenses
  Other
Underwriting
Expenses
  Net Written
Insurance and
Reinsurance
Premiums
 
 
  (Millions)
 

Global Property

  $ 43.5   $ 506.6   $ 171.3   $ 481.8   $ 268.5   $ 100.3   $ 65.1   $ 514.2  

Global A&H

    24.4     158.3     122.5     272.2     171.6     71.7     23.3     277.6  

Specialty & Casualty

    18.3     314.0     85.3     135.2     75.6     37.7     15.1     137.4  

Runoff & Other

    (1.5 )   641.2     18.9     0.9     3.6     0.6     3.8     8.9  

Corporate Elimination

                                 

Total

  $ 84.7   $ 1,620.1   $ 398.0   $ 890.1   $ 519.3   $ 210.3   $ 107.3   $ 938.1  

 

 
  As at and for the year ended December 31, 2015  
 
  Deferred
Acquisition
Costs
  Loss and Loss
Adjustment
Expense
Reserves
  Unearned
Insurance and
Reinsurance
Premiums
  Net Earned
Insurance and
Reinsurance
Premiums
  Loss and Loss
Adjustment
Expenses
  Insurance and
Reinsurance
Acquisition
Expenses
  Other
Underwriting
Expenses
  Net Written
Insurance and
Reinsurance
Premiums
 
 
  (Millions)
 

Global Property

  $ 33.4   $ 454.9   $ 142.8   $ 446.0   $ 167.1   $ 84.0   $ 65.8   $ 440.7  

Global A&H

    22.4     147.4     111.5     258.1     158.1     70.9     24.2     262.3  

Specialty & Casualty

    18.2     351.4     85.2     138.2     97.8     32.3     15.6     147.5  

Runoff & Other

    0.6     690.7     2.7     4.7     (0.3 )   2.6     2.3     (2.9 )

Corporate Elimination

                                 

Total

  $ 74.6   $ 1,644.4   $ 342.2   $ 847.0   $ 422.7   $ 189.8   $ 107.9   $ 847.6  

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Sirius International Insurance Group, Ltd.

Schedule IV

Reinsurance

For the years ended December 31, 2017, 2016, and 2015

 
  Direct gross   Ceded to
other
companies
  Assumed from
other companies
  Net amount   Percentage of
amount assumed
to net
 
 
  (Millions)
 

Year ended December 31, 2017

  $ 450.2   $ 349.1   $ 989.1   $ 1,090.2     91 %

Year ended December 31, 2016

    368.5     330.9     900.5     938.1     96 %

Year ended December 31, 2015

    293.7     312.9     866.8     847.6     102 %

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Sirius International Insurance Group, Ltd.

Schedule V

Valuation and Qualifying Accounts

As at and for the years ended December 31, 2017, 2016, and 2015

 
   
  Additions (Subtractions)    
   
 
 
  Balance at
beginning of
period
  Charged to
costs and
expenses
  Charged to
other
accounts
  Deductions
described(1)
  Balance at
the end
of period
 
 
  (Millions)
 

Years ended:

                               

December 31, 2017

   
 
   
 
   
 
   
 
   
 
 

Reinsurance on recoverable paid losses:

                               

Allowance for reinsurance balances

  $ 5.8               $ 5.8  

Property and casualty insurance and reinsurance premiums receivable:

                               

Allowance for uncollectible accounts

  $ 5.3     (0.5 )   (0.5 )   0.3   $ 4.6  

December 31, 2016

   
 
   
 
   
 
   
 
   
 
 

Reinsurance on recoverable paid losses:

                               

Allowance for reinsurance balances

  $ 5.4             0.4   $ 5.8  

Property and casualty insurance and reinsurance premiums receivable:

                               

Allowance for uncollectible accounts

  $ 4.0     1.1         0.2   $ 5.3  

December 31, 2015

   
 
   
 
   
 
   
 
   
 
 

Reinsurance on recoverable paid losses:

                               

Allowance for reinsurance balances

  $ 4.3             1.1   $ 5.4  

Property and casualty insurance and reinsurance premiums receivable:

                               

Allowance for uncollectible accounts

  $ 5.9     (1.2 )       (0.7 ) $ 4.0  

(1)
Represents net collections (charge-offs) of balances receivable and foreign currency translation.

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Sirius International Insurance Group, Ltd.

Schedule VI

Insurance Operations

As at and for the years ended December 31, 2017, 2016, and 2015

Affiliation with registrant
  Deferred
Acquisition
Costs
  Loss and
Loss
Adjustment
Expense
Reserves
  Unearned
Insurance
and
Reinsurance
Premiums
  Net Earned
Insurance
and
Reinsurance
Premiums
  Net
Investment
Income
  Losses and
loss
expenses
incurred
related
to current
year
  Losses and
loss
expenses
incurred
related
to prior
year
  Net paid
losses
and loss
expenses
  Insurance
and
reinsurance
acquisition
costs
  Net
premiums
written
 
 
  (Millions)
 

Consolidated Subsidiaries

                                                             

2017

  $ 120.9   $ 1,898.5   $ 506.8   $ 1,035.3   $ 56.8   $ 811.8   $ (0.6 ) $ 612.3   $ 197.2   $ 1,090.2  

2016

    84.7     1,620.1     398.0     890.1     56.2     583.0     (63.7 )   548.3     210.3     938.1  

2015

    74.6     1,644.4     342.2     847.0     39.9     473.9     (51.2 )   522.5     189.8     847.6  

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Easterly Acquisition Corp.
Condensed Consolidated Balance Sheets

 
  June 30,
2018
  December 31,
2017
 
 
  Unaudited
   
 

ASSETS

             

Current assets

             

Cash

  $ 1,889   $ 13,874  

Prepaid expenses

    28,838     7,347  

Total current assets

    30,727     21,221  

Cash and cash equivalents held in Trust Account—restricted

    146,665,970     151,208,413  

Total assets

  $ 146,696,697   $ 151,229,634  

LIABILITIES AND STOCKHOLDERS' EQUITY

             

Current liabilities

             

Accounts payable and accrued expenses

  $ 2,129,002   $ 1,704,738  

Due to affiliate

    799,848     575,405  

Total current liabilities

    2,928,850     2,280,143  

Convertible note—due to Sponsor

    934,330     614,371  

Deferred underwriting fee

    7,000,000     7,000,000  

Total liabilities

    10,863,180     9,894,514  

Commitments

             

Common stock, subject to possible redemption or tender, 12,674,622 and 13,544,944 shares at redemption value at June 30, 2018, and December 31, 2017, respectively

    130,833,516     136,335,119  

Stockholders' equity:

             

Preferred stock, $.0001 par value; 1,000,000 shares authorized; none issued and outstanding

         

Common stock, $.0001 par value; 100,000,000 shares authorized; 6,533,785 and 6,477,668 shares issued and outstanding (excludes 12,674,622 and 13,544,944 shares subject to possible redemption) at June 30, 2018 and December 31, 2017, respectively

    653     648  

Additional paid-in capital

    5,122,718     8,022,478  

Accumulated deficit

    (123,370 )   (3,023,125 )

Total stockholders' equity

    5,000,001     5,000,001  

Total liabilities and stockholders' equity

  $ 146,696,697   $ 151,229,634  

   

The Accompanying Notes are an Integral Part of these Condensed Consolidated Financial Statements.

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Easterly Acquisition Corp.

Condensed Consolidated Statements of Operations

(Unaudited)

 
  Six Months Ended
June 30, 2018
  Six Months Ended
June 30, 2017
  Three Months Ended
June 30, 2018
  Three Months Ended
June 30, 2017
 

Operating costs

  $ (976,215 ) $ (768,940 ) $ (640,856 ) $ (302,110 )

State franchise taxes

    (120,488 )   (91,118 )   (50,488 )   (45,000 )

Loss from operations

    (1,096,703 )   (860,058 )   (691,344 )   (347,110 )

Other income

                         

Interest income

    1,067,787     489,030     599,249     323,111  

Gain on forgiveness of debt

    2,928,671         2,928,671      

Total other income

    3,996,458     489,030     3,527,920     323,111  

Income (loss) before taxes

    2,899,755     (371,028 )   2,836,576     (23,999 )

Provision for income taxes

                 

Net income (loss)

  $ 2,899,755   $ (371,028 ) $ 2,836,576   $ (23,999 )

Weighted average number of common shares outstanding, basic and diluted

    6,553,463     6,383,279     6,627,593     6,404,259  

Basic and diluted net loss per share

  $ 0.31   $ (0.12 ) $ 0.35   $ (0.04 )

   

The Accompanying Notes are an Integral Part of these Condensed Consolidated Financial Statements.

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Easterly Acquisition Corp.

Condensed Consolidated Statement of Cash Flows

(Unaudited)

 
  Six Months Ended
June 30, 2018
  Six Months Ended
June 30, 2017
 

Cash flows from operating activities:

             

Net income (loss)

  $ 2,899,755   $ (371,028 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

             

Interest on cash and cash equivalents held in Trust Account

    (1,067,787 )   (489,030 )

Interest on convertible note to Sponsor

    19,959     5,571  

Gain on forgiveness of debt

    (2,928,671 )    

Provision for uncollectible other receivables

        278,135  

Changes in operating assets and liabilities:

             

Prepaid expenses

    (21,491 )   (26,059 )

Other receivables

        1,484  

Accounts payable and accrued expenses

    424,264     (25,555 )

Net cash used in operating activities

    (673,971 )   (626,482 )

Cash flows from investing activities:

             

Cash released from Trust Account for redemption of common stock

    8,401,358      

Interest income released from Trust Account for franchise taxes          

    137,543     154,554  

Contributions into Trust Account

    (2,928,671 )    

Net cash provided by investing activities

    5,610,230     154,554  

Cash flows from financing activities:

             

Proceeds of convertible note received from Sponsor

    300,000     325,000  

Redemption of common stock

    (8,401,358 )    

Due to affiliate

    224,443     128,510  

Proceeds from promissory note

    2,928,671      

Net cash (used in) provided by financing activities

    (4,948,244 )   453,510  

Decrease in cash

    (11,985 )   (18,418 )

Cash at beginning of period

    13,874     24,571  

Cash at end of period

  $ 1,889   $ 6,153  

Supplemental disclosure of noncash financing activities:

             

Change in value of common stock subject to possible redemption

  $ 2,899,755   $ (371,028 )

   

The Accompanying Notes are an Integral Part of these Condensed Consolidated Financial Statements.

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Easterly Acquisition Corp.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization and Business Operations

Incorporation

        Easterly Acquisition Corp. (the "Company") was incorporated in Delaware on April 29, 2015.

Sponsor

        The Company's sponsor is Easterly Acquisition Sponsor, LLC, a Delaware limited liability company (the "Sponsor").

Business Purpose

        The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses that it had not yet identified ("Business Combination").

        As of June 30, 2018, the Company has neither commenced operations nor generated any revenues to date. All activity through June 30, 2018 relates to the Company's formation, initial public offering (described below), identifying a target company and engaging in due diligence for and negotiation of a proposed Business Combination.

        The Company's management has broad discretion with respect to the specific application of the remaining net proceeds of its initial public offering of Units (as defined in Note 3 below) (the "Public Offering"), although substantially all of the remaining net proceeds of the Public Offering and the private placement of warrants (as described in Note 4 below, the "Private Placement" and such warrants issued in connection with the Private Placement, the "Private Placement Warrants") are intended to be generally applied toward completing a Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect a Business Combination.

        On June 28, 2017, the Company entered into an Investment Agreement (as amended, the "Investment Agreement") by and among JH Capital Group Holdings, LLC ("JH Capital"), Jacobsen Credit Holdings, LLC ("Jacobsen Holdings"), NJK Holding LLC ("NJK Holding"), Kravetz Capital Funding LLC ("KCF" together with NJK Holding and Jacobsen Holdings, the "Founding Members") and the Company, to effect a business combination with JH Capital. On May 31, 2018, the Company, JH Capital and the Founding Members entered into an Investment Agreement Termination Agreement (the "JH Capital Termination Agreement"), dated as of May 31, 2018. The JH Capital Termination Agreement terminated the Investment Agreement by mutual agreement.

        As more fully described in Note 6 below, on June 23, 2018, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among Sirius International Insurance Group, Ltd. ("Sirius"), the Company and Sirius Acquisitions Holding Company III, a wholly owned subsidiary of Sirius ("Merger Sub"), providing for the merger (the "Merger") of Merger Sub with and into the Company, with the Company surviving the Merger as a wholly owned subsidiary of Sirius (the "Business Combination").

        The Company must complete a Business Combination prior to November 30, 2018 or cease all operations, redeem the public shares of its common stock and dissolve and liquidate its remaining assets to its creditors and remaining stockholders.

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Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

1. Organization and Business Operations (Continued)

Financing

        The registration statement for the Company's Public Offering was declared effective on July 29, 2015. On July 29, 2015, the Company filed a new registration statement to increase the size of the Public Offering by 20% pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Securities Act"). On August 4, 2015, the Company consummated the Public Offering and received proceeds of $195,000,000 (net of the underwriter's discount of $5,000,000) and simultaneously received $6,750,000 from the issuance of 6,750,000 Private Placement Warrants.

        See below regarding redemptions of common stock and the release of a portion of the funds from the Trust Account (defined below) in connection with stockholder approvals, in August 2017, December 2017, March 2018 and June 2018, to amend the Company's amended and restated certificate of incorporation to extend the date by which the Company must complete its Business Combination.

Trust Account

        The proceeds from the Public Offering and Private Placement, which were deposited into a segregated trust account located in the United States with Continental Stock Transfer & Trust Company acting as trustee (the "Trust Account"), may be invested only in permitted United States "government securities" within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the "Investment Company Act"), having a maturity of 180 days or less or in money market funds that invest solely in United States Treasuries that are compliant with Rule 2a-7 under the Investment Company Act.

        The Company amended and restated its certificate of incorporation on July 28, 2015 and further amended it on August 1, 2017, December 15, 2017, March 29, 2018, and June 28, 2018 to provide that, except for the withdrawal of interest to pay franchise and income taxes, if any, that none of the funds held in trust (including the interest on such funds) will be released from the Trust Account until the earlier of (i) the completion of the initial Business Combination, (ii) the redemption of the Public Shares (as defined in Note 3) if the Company is unable to complete a Business Combination by November 30, 2018 (subject to the requirements of applicable law) and (iii) the redemption of shares in connection with a vote seeking to amend Section 9.2(d) of the amended and restated certificate of incorporation in a manner that would affect the substance or timing of the Company's obligation to redeem 100% of the Public Shares if the Company does not complete an initial Business Combination by November 30, 2018. For the six-month period ended June 30, 2018, the Company withdrew $137,543 of interest earned to pay for franchise taxes in accordance with the amended and restated certificate of incorporation.

        On December 8, 2017, the Company and JH Capital entered into a non-interest bearing promissory note ("JH Capital Promissory Note"), which were drawn on January 15, 2018, February 15, 2018 and March 15, 2018 at individual amounts of $0.03 for each share of the Company's common stock outstanding as of such date, excluding the 5,000,000 Sponsor shares. On February 14, 2018, the Company's board of directors approved the second amendment to the Investment Agreement and, on February 14, 2018, the parties executed the second amendment to the Investment Agreement. JH Capital agreed to continue to make the contributions of $0.03 for each Public Share, for each calendar month or portion thereof, to the Company through the earlier of (A) June 30, 2018 or (B) the date by

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Easterly Acquisition Corp.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

1. Organization and Business Operations (Continued)

which the Company is required to dissolve and liquidate the Trust Account in accordance with the terms of the Company's charter, which will be added to the Trust Account (with partial period amounts to be pro-rated). For the six months ended June 30, 2018, the Company deposited $2,928,671 into the Trust Account with the proceeds from the JH Capital Promissory Note. As part of the JH Capital Termination Agreement, JH Capital agreed to forgive the entire principal of $2,928,671 drawn pursuant to the JH Capital Promissory Note. This is presented as Gain on forgiveness of debt on the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2018.

        On June 23, 2018, the Company issued Sirius a promissory note (the "Sirius Promissory Note") pursuant to which Sirius agreed to lend the Company $0.03 per month for every public share of the Company's Common Stock outstanding as of July 1, 2018, for five months. The amounts will be lent to the Company on the first business day of each month and will be deposited by the Company into the Trust Account. The Promissory Note will bear interest in an amount equal to the income (if any) actually earned from investing the principal in the Trust Account and will be due upon the completion of the Company's initial business combination.

        In order to protect the amounts held in the Trust Account, Messrs. Cody, Crate and Kalichstein, the managing principals of an affiliate of the Sponsor, have agreed, jointly and severally, that they will be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to it, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company's indemnity of the underwriters of its IPO against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, then Messrs. Cody, Crate and Kalichstein will not be responsible to the extent of any liability for such third-party claims. The Company cannot assure you, however, that Messrs. Cody, Crate and Kalichstein would be able to satisfy those obligations. Messrs. Cody, Crate and Kalichstein will not be personally liable to pay the Company's debts and obligations except as provided above. None of the Company's other officers will indemnify it for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

Stockholder Meetings

        On August 1, 2017, the Company held its annual meeting of stockholders and 23,415,152 of the Company's 25,000,000 shares were voted in favor of the proposal to amend the Company's amended and restated certificate of incorporation to extend the date by which the Company had to consummate a Business Combination until December 15, 2017, to change the term of the Company's directors from two years to one year, and to change the provision with respect to removal of directors to permit removal with or without cause by the affirmative vote of a majority of the Company's stockholders and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until December 15, 2017. In addition, the Company's board of directors was reelected. The holders of 4,289,791 Public Shares of the Company's common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.02 per share.

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Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

1. Organization and Business Operations (Continued)

        On December 14, 2017, the Company held a special meeting of stockholders and 19,325,891 of the Company's 20,710,209 shares were voted in favor of the proposal to amend the Company's amended and restated certificate of incorporation to extend the date by which the Company had to consummate a Business Combination until March 31, 2018, and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until March 31, 2018. The holders of 687,597 Public Shares of the Company's common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.06 per share.

        On March 29, 2018, the Company held a special meeting of stockholders and 19,081,332 of the Company's 20,022,612 shares were voted in favor of the proposal to amend the Company's amended and restated certificate of incorporation to extend the date by which the Company had to consummate a Business Combination until June 30, 2018, and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until June 30, 2018. The holders of 7,035 Public Shares of the Company's common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.18 per share.

        On June 28, 2018, the Company held a special meeting of stockholders and 18,704,270 of the Company's 20,015,577 shares were voted in favor of the proposal to amend the Company's amended and restated certificate of incorporation to extend the date by which the Company had to consummate a Business Combination until November 30, 2018, and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until November 30, 2018. The holders of 807,170 Public Shares of the Company's common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $ 10.32 per share.

Business Combination

        The Company, prior to the consummation of a Business Combination, will either (i) seek stockholder approval of the Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of an initial Business Combination, including interest earned on the funds and not previously released to the Company to pay franchise and income taxes, or (ii) provide public stockholders with the opportunity to tender their shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay franchise and income taxes, less franchise and income taxes payable from such interest. The decision as to whether the Company will seek stockholder approval of the Business Combination or conduct a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval. If the Company seeks stockholder approval, it will complete its Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Business Combination. However, in no event will the Company redeem its Public Shares (as defined in Note 3) in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the

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Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

1. Organization and Business Operations (Continued)

redemption of its Public Shares and the related Business Combination, and instead may search for an alternate Business Combination.

        Notwithstanding the foregoing redemption rights, if the Company seeks stockholder approval of its initial business combination and it does not conduct redemptions in connection with its business combination pursuant to the tender offer rules, the Company's amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a "group" (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in the Company's IPO.

        Shares of common stock subject to redemption or tender are recorded at redemption amount and classified as temporary equity, in accordance with Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 480, "Distinguishing Liabilities from Equity." At June 30, 2018, the amount in the Trust Account is approximately $10.32 per share of common stock sold in the Public Offering ($146,665,970 cash and cash equivalents held in the Trust Account divided by 14,208,407 of Public Shares).

        The Company has until November 30, 2018 to complete its initial Business Combination. If the Company does not complete a Business Combination within this period of time, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses, which interest shall be net of taxes payable) divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders' rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to the Company's obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

        The Company's Units, common stock and warrants are listed on the Nasdaq Capital Market ("Nasdaq"). The Nasdaq rules require that the initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of the Company signing a definitive agreement in connection with its initial Business Combination. The Company intends to fulfill the requirements of this Nasdaq rule even if the securities are not listed on Nasdaq at the relevant time.

Emerging Growth Company

        The Company is an "emerging growth company," as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012 (the "JOBS Act"), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,

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Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

1. Organization and Business Operations (Continued)

reduced disclosure obligations regarding executive compensation in the Company's periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

        Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company's financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.

Reimbursement of Expenses Related to Terminated Sungevity Business Combination

        On June 28, 2016, the Company entered into an Agreement and Plan of Merger (as amended, the "Sungevity Merger Agreement"), by and among the Company, Solaris Merger Sub Inc., Sungevity, Inc. ("Sungevity"), and Shareholder Representative Services LLC, to effect a business combination with Sungevity. On December 31, 2016, the Company terminated the Sungevity Merger Agreement.

        Pursuant to a letter of intent (the "LOI"), dated April 20, 2016, between Sungevity and the Company, Sungevity agreed to pay or reimburse the Company for all reasonable and documented out-of-pocket costs and expenses incurred between the date of the LOI and the date that definitive documents with respect to the proposed merger, including fees and expenses of third party advisors, due diligence-related expenses and such other necessary and related costs and expenses incurred in furtherance of the proposed business combination. For the year ended December 31, 2016, the Company incurred $909,787 in qualified reimbursable costs, of which $353,517 was reimbursed by Sungevity prior to December 31, 2016. The Company initiated legal action against Sungevity to recover the remaining amount of $556,270 due to the Company under the LOI. On March 13, 2017, Sungevity filed for Chapter 11 Bankruptcy proceedings in U.S. Bankruptcy Court for the District of Delaware to pursue and consummate a sale of its business, which proceedings were dismissed in November 2017 without any recovery to the Company. The Company's legal action was stayed pending resolution of the bankruptcy proceedings, but has not proceeded since dismissal of the bankruptcy proceedings. A valuation allowance of $278,135 was recorded in the quarter ended December 31, 2016 and the remaining amount of $278,135 was recorded in the quarter ended March 31, 2017 and is presented within Operating expenses in the Condensed Consolidated Statement of Operations for the six months ended June 30, 2017. As a result of the November 2017 dismissal, the entire receivable and corresponding allowance were written off.

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Easterly Acquisition Corp.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

1. Organization and Business Operations (Continued)

Going Concern Considerations

        The Company presently has no revenue, has had losses since inception and has no operations other than the active identification of a target business with which to complete its Business Combination. As of June 30, 2018, the Company had cash of $1,889 held outside the Trust Account and $146,665,970 cash equivalents held in trust, including interest.

        The Company will have available the $1,889 of proceeds held outside the Trust Account (as of June 30, 2018) and any additional Sponsor loans under the March 17, 2016 convertible promissory note (see Note 4) to fund its working capital needs and to continue to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination. The Company will also have available any interest earned on the funds held in the Trust Account to pay franchise and income taxes.

        At June 30, 2018, the Company has a working capital deficit of $2,898,123 (total current assets minus total current liabilities). The Company expects to continue incurring expenses related to professional services including, but not limited to, engaging legal counsel, consultants, advisors and accountants, as well as other operating expenses such as insurance and fees under the Administrative Services Agreement.

        The Company entered into an agreement with the Sponsor ("Liabilities Assumption Agreement") whereby the Sponsor assumed and agreed to pay the third-party service providers liabilities of the Company (the "Assumed Liabilities").

        If the proceeds held outside the Trust Account are insufficient for the Company's working capital needs and operations beyond those Assumed Liabilities to be paid by the Sponsor in connection with the completion of an initial Business Combination, the Company may need to raise additional capital through additional loans from the Sponsor under the March 17, 2016 convertible promissory note issued to the Sponsor or additional investments from its Sponsor, an affiliate of its Sponsor or certain of the Company's officers and directors. None of the Company's Sponsor, affiliate of the Sponsor, officers or directors are under any obligation to loan the Company funds.

        The uncertainty regarding the lack of resources to pay the above noted expenses raises substantial doubt about the Company's ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be unable to continue operations.

2. Significant Accounting Policies

Basis of Presentation

        The accompanying unaudited condensed consolidated financial statements are prepared in U.S. dollars in conformity with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim

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Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

2. Significant Accounting Policies (Continued)

financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

        The interim results for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 or any other period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company's financial statements and notes thereto included in the Company's annual report filed with the SEC on March 16, 2018.

Principles of Consolidation

        The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Solaris Merger Sub Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

Net Loss per Share of Common Stock

        The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, Earnings Per Share. Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. The Company applies the two-class method in calculating earnings per share. Shares of common stock subject to possible redemption, which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic loss per share since such shares, if redeemed, such shares only participate in their pro rata share of the Trust Account earnings.

        At each period, the Company had outstanding warrants to purchase 16,750,000 shares of common stock. The effect of these potential shares was excluded from the calculation of diluted loss per share of common stock since the exercise of the warrants is contingent upon the occurrence of future events. As a result, diluted loss per common share is the same as basic loss per common share for the periods.

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Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

2. Significant Accounting Policies (Continued)

Reconciliation of net loss per common share

        The Company's net income is adjusted for the portion of income that is attributable to common stock subject to redemption, as these shares only participate in the income of the Trust Account and not the losses of the Company. Accordingly, basic and diluted loss per common share is calculated as follows:

 
  Six
Months
Ended
June 30, 2018
  Six
Months
Ended
June 30, 2017
  Three
Months
Ended
June 30, 2018
  Three
Months
Ended
June 30, 2017
 

Net income

  $ 2,899,755   $ (371,028 ) $ 2,836,576   $ (23,999 )

Less: Income attributable to ordinary shares subject to redemption

    (845,039 )   (369,462 )   (489,523 )   (258,227 )

Adjusted net loss

  $ 2,054,716   $ (740,490 ) $ 2,347,053   $ (282,226 )

Weighted average shares outstanding, basic and diluted

    6,553,463     6,383,279     6,627,593     6,404,259  

Basic and diluted net loss per ordinary share

  $ 0.31   $ (0.12 ) $ 0.35   $ (0.04 )

Fair Value of Financial Instruments

        The Company follows the guidance in FASB ASC 820, Fair Value Measurements and Disclosures for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period.

        The fair value of the Company's financial assets and liabilities reflects management's estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1:   Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:

 

Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3:

 

Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

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Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

2. Significant Accounting Policies (Continued)

        At June 30, 2018, all but $225,234 of proceeds of the Trust Account were invested in the Western Asset Institutional U.S. Treasury Reserves money market fund that invests all of its assets in direct obligations of the U.S. Treasury and which is compliant with Rule 2a-7 under the Investment Company Act. The $225,234 was held in cash as of June 30, 2018.

        The following table presents information about the Trust Account assets that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Description
  Level   June 30,
2018
  December 31,
2017
 

Assets:

                   

Cash and/or cash equivalents held in the Trust Account

    1   $ 146,665,970   $ 151,208,413  

Concentration of Credit Risk

        Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which exceeds the Federal depository insurance coverage of $250,000. At June 30, 2018, the Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

Cash and cash equivalents

        The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. At June 30, 2018, all but $225,234 of the assets held in the Trust Account were held in the Western Asset Institutional U.S. Treasury Reserves money market fund that invests solely in United States Treasuries compliant with Rule 2a-7 under the Investment Company Act. The $225,234 was held in cash.

Use of Estimates

        The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Income Taxes

        The Company complies with the accounting and reporting requirements of FASB ASC 740, Income Taxes , which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce

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Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

2. Significant Accounting Policies (Continued)

deferred tax assets to the amount expected to be realized. As of June 30, 2018, a full valuation allowance has been established against the deferred tax asset.

        FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. There were no uncertain tax benefits as of June 30, 2018. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at June 30, 2018. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

        The Company may be subject to potential examination by U.S. federal, U.S. states or foreign jurisdiction authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, U.S. state and foreign tax laws. The Company's management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

        During the six months ended June 30, 2018, the Company utilized net operating losses to offset its taxable net income earned during this period. The utilization of the net operating loss carry-forward resulted no tax provision for the six months ended June 30, 2018.

Franchise Taxes

        The Company is incorporated in the State of Delaware and is required to pay franchise taxes to the State of Delaware on an annual basis.

Recent Accounting Pronouncements

        Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company's consolidated financial statements.

3. Public Offering

Public Units

        Pursuant to the Public Offering on August 4, 2015, the Company sold 20,000,000 units at a price of $10.00 per unit (the "Units"), including 2,000,000 Units as a result of the underwriters' partial exercise of their over-allotment option, generating gross proceeds of $200,000,000. The common stock and warrants comprising the Units began separate trading on September 22, 2015. The holders have the option to continue to hold Units or separate their Units into the component securities. Each Unit consists of one share of the Company's common stock ("Public Shares"), $0.0001 par value, and one-half of one redeemable warrant ("Public Warrant"). Each whole Public Warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share. Each Public Warrant will become exercisable on the later of 30 days after the completion of an initial Business Combination or

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Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

3. Public Offering (Continued)

12 months from the closing of the Public Offering, and will expire five years after the completion of the initial Business Combination or earlier upon redemption or liquidation. If the Company does not complete its initial Business Combination on or prior to November 30, 2018, the Public Warrants will expire worthless at the end of such period. Upon closing of the Public Offering, there were 16,750,000 warrants outstanding, which include 6,750,000 warrants purchased by the initial stockholders and 10,000,000 warrants purchased in connection with the sale of Units related to the Public Offering.

        The Public Warrants are issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and the Company. The Company did not register the shares of common stock issuable upon exercise of the Public Warrants under the Securities Act or any state securities law. The Company will use its best efforts to file a new registration statement for the shares of common stock issuable upon exercise of the Public Warrants under the Securities Act, following the completion of its initial Business Combination. If the shares issuable upon exercise of the Public Warrants are not registered under the Securities Act by the 60th business day following the closing of the initial Business Combination, the Company will be required to permit holders to exercise their Public Warrants on a cashless basis during the period beginning on the 61st business day after the closing of the initial Business Combination and ending upon such registration being declared effective by the SEC. However, no warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available. If such issuance is not so registered or qualified and no exemption is available under the securities laws of the state of the exercising holder, such holder would not be able to exercise its warrants and the Company could still redeem such holder's warrants. Notwithstanding the above, if the common stock is at the time of any exercise of a Public Warrant not listed on a national securities exchange such that it satisfies the definition of a "covered security" under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a "cashless basis" in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement or register or qualify the shares under applicable state securities laws.

        Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants (except as described herein with respect to the Private Placement Warrants discussed in Note 4) (i) in whole and not in part, (ii) at a price of $0.01 per warrant; (iii) upon a minimum of 30 days' prior written notice of redemption; and (iv) if, and only if, the last sale price of the common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company send the notice of redemption to the Public Warrant holders.

        The Company will not redeem the Public Warrants unless an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Public Warrants is effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the Public Warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the Public Warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities law.

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Easterly Acquisition Corp.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

3. Public Offering (Continued)

        If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a "cashless basis." In such event, each holder would pay the exercise price by surrendering their Public Warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the Public Warrants and the "fair market value" (defined below) by (y) the fair market value. The "fair market value" shall mean the average reported last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Public Warrants.

        In no event will the Company be required to net cash settle any Public Warrant, or issue securities or other compensation in exchange for the Public Warrants in the event that the Company is unable to register or qualify the shares underlying the Public Warrants under applicable state securities laws.

4. Related Party Transactions

Founder Shares

        On May 4, 2015, the Sponsor purchased 4,312,500 shares of the Company's common stock (the "Founder Shares") for $25,000, or approximately $.006 per share. On July 29, 2015, the Company's Board of Directors effected a stock dividend of 0.2 shares for each outstanding share of common stock, resulting in 5,175,000 Founder Shares outstanding. On July 29, 2015, the underwriters exercised part of their over-allotment option resulting in 20,000,000 Units issued as a result of the Public Offering. As a result of the expiration of the underwriters' option to exercise the remaining portion of the over-allotment, the Sponsor forfeited an aggregate of 175,000 Founder Shares. As described in Note 1, on August 1, 2017, December 14, 2017, March 29, 2018, and June 28, 2018, stockholders representing 4,289,791, 687,597, 7,035 and 807,170 shares, respectively elected to redeem their Public Shares. Prior to these redemptions, the Sponsor, the Company's original independent directors and their permitted transferees, which are referred to as the initial stockholders, owned 20% of the Company's issued and outstanding shares and, after the redemptions, the Sponsor and the Company's current independent directors currently own approximately 25.8%.

        The Founder Shares are identical to the common stock included in the Units sold in the Public Offering except that 1) the Founder Shares are subject to certain restrictions, as described in more detail below, and 2) the initial stockholders have agreed (i) to waive their redemption rights with respect to their Founder Shares in connection with the completion of the initial Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete its initial Business Combination by November 30, 2018, although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete its initial Business Combination within the prescribed time frame. If the Company submits its initial Business Combination to the public stockholders for a vote, the initial stockholders have agreed to vote their Founder Shares and any Public Shares purchased during or after the Public Offering in favor of the initial Business Combination.

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Easterly Acquisition Corp.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

4. Related Party Transactions (Continued)

        The initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until one year after the date of the consummation of the initial Business Combination or earlier if, subsequent to the initial Business Combination, (i) the last sale price of the common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination or (ii) the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Private Placement Warrants

        The Sponsor purchased from the Company an aggregate of 6,750,000 Private Placement Warrants, each exercisable to purchase one share of the Company's common stock at $11.50 per share, at a price of $1.00 per Private Placement Warrant ($6,750,000 in the aggregate) in a private placement that occurred simultaneously with the closing of the Public Offering. The proceeds from the sale of the Private Placement Warrants were added to the proceeds from the Public Offering held in the Trust Account. If the Company does not complete an initial Business Combination by November 30, 2018, to the degree that any proceeds remain, the proceeds of the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless. The Private Placement Warrants are identical to the Public Warrants sold as part of the Units in the Public Offering except that, so long as they are held by the Sponsor or its permitted transferees, (i) they will not be redeemable by the Company, (ii) they (including the common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of the initial Business Combination and (iii) they may be exercised by the holders on a cashless basis.

        The holders of the Founder Shares, Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans, discussed below, will have registration rights to require the Company to register a sale of any of the securities held by them pursuant to a registration rights agreement executed on July 29, 2015. The holders of the majority of these securities are entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have "piggy-back" registration rights to include such securities in other registration statements filed by the Company and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period.

Administrative Service Agreement

        The Company entered into an agreement to pay an affiliate of our Sponsor, Easterly Capital, LLC, a total of $10,000 per month starting on July 29, 2015 and continuing until the earlier of the Company's initial Business Combination or liquidation for office space, utilities, secretarial support and administrative services. This arrangement was agreed to for the Company's benefit and is not intended

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Easterly Acquisition Corp.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

4. Related Party Transactions (Continued)

to provide the Sponsor compensation in lieu of salary or other remuneration. For the three and six months ended June 30, 2018 and 2017, the Company incurred $30,000 and $60,000, respectively, under the Administrative Service Agreement. As of June 30, 2018, $250,000 of fees under the Administrative Service Agreement remain as payable and are reflected in Due to affiliate in the Condensed Consolidated Balance Sheet.

Related Party Advances

        For the three and six months ended June 30, 2018, an affiliate of the Sponsor advanced an aggregate of $49,982 and $154,908 directly to the Company's vendors related to operating expenses. For the three and six months ended June 30, 2017, an affiliate of the Sponsor advanced an aggregate of $41,491 and $68,511 directly to the Company's vendors related to operating expenses.

        As of June 30, 2018, $549,848 of such advances remain as payable and are reflected in Due to affiliate in the Consolidated Balance Sheet.

        These advances are non-interest bearing, unsecured and due on demand.

Sponsor Loans

        Prior to the Public Offering, the Sponsor had loaned the Company $100,000 to be used for a portion of the expenses of the Public Offering. This loan was non-interest bearing, unsecured and due at the earlier of May 31, 2016 or the closing of the Public Offering. This loan was repaid in full on the closing of the Public Offering.

        On March 17, 2016, the Company issued a convertible promissory note to the Sponsor that provides for the Sponsor to loan the Company up to $1,000,000 for ongoing expenses. On March 17, 2016, February 2, 2017, June 29, 2017, July 12, 2017, October 1, 2017, December 4, 2017, February 1, 2018 and April 5, 2018, the Company borrowed $15,000, $250,000, $75,000, $150,000, $30,000, $75,000, $100,000 and $200,000, respectively, pursuant to the convertible promissory note. The Sponsor is not obligated to loan the Company additional amounts pursuant to the convertible promissory note. The convertible promissory note is interest bearing at 5% per annum and is due and payable on November 30, 2018. At the option of the Sponsor, any amounts outstanding under the convertible promissory note may be converted into warrants to purchase shares of common stock at any time on or prior to the maturity date at a conversion price of $1.00 per warrant. Each warrant will entitle the Sponsor to purchase one share of common stock at an exercise price of $11.50 per share. Each warrant will contain other terms identical to the terms contained in the Private Placement Warrants. As of June 30, 2018, the outstanding principal balance of this convertible promissory note is $895,000 and accrued and unpaid interest of $39,330 is reflected in Convertible note—due to Sponsor in the Consolidated Balance Sheet.

        In addition, in order to finance transaction costs in connection with an intended initial Business Combination, the Sponsor, an affiliate of the Sponsor or certain of the officers and directors may, but are not obligated to, loan the Company additional funds as may be required. If the Company completes the initial Business Combination, the Company would repay such loaned amounts out of the proceeds of the Trust Account released. Otherwise, such loans would be repaid only out of funds held outside the Trust Account. In the event that the initial Business Combination does not close, the Company may

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Easterly Acquisition Corp.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

4. Related Party Transactions (Continued)

use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used to repay such loaned amounts. Up to $1,000,000 of such loans, inclusive of any loans under the March 17, 2016 convertible promissory note, may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants issued to the Sponsor. The Company does not expect to seek loans from parties other than the Sponsor, an affiliate of the Sponsor or certain of the officers and directors as the Company does not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the Trust Account.

Assumption of Liabilities by Sponsor

        The Company entered into an agreement with the Liabilities Assumption Agreement whereby the Sponsor assumed and agreed to the Assumed Liabilities. No such payments were made by the Sponsor for the six months ended June 30, 2018. Pursuant to the Liabilities Assumption Agreement, the Sponsor contributed $200,000 and $600,000 on July 5, 2018 and July 10, 2018, respectively, directly into the Company and was recorded as additional paid in capital.

5. Commitments

        The underwriters are entitled to underwriting commissions of 6.0%, of which 2.5% ($5,000,000) was paid at the closing of the Public Offering, and 3.5% ($7,000,000) is deferred. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement. The underwriters are not entitled to any interest accrued on the deferred underwriting discounts and commissions.

6. Proposed Business Combination with Sirius

Agreement and Plan of Merger

        On June 23, 2018, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among Sirius International Insurance Group, Ltd. ("Sirius"), the Company and Sirius Acquisitions Holding Company III, a wholly owned subsidiary of Sirius ("Merger Sub"), providing for the merger (the "Merger") of Merger Sub with and into the Company, with the Company surviving the Merger as a wholly owned subsidiary of Sirius (the "Business Combination").

        At the closing of the Merger, all outstanding shares of the Company's common stock (other than (i) shares of the Company's common stock with respect to which a Company's stockholder has validly exercised its redemption rights, and that will be redeemed as provided for by the Company's charter, (ii) shares of the Company's common stock held by the Company as treasury stock or owned by the Company, Sirius or Merger Sub or any wholly owned subsidiary of the Company or Sirius, which will be canceled for no consideration, and (iii) shares of the Company common stock held by the Sponsor that will be canceled pursuant to the Sponsor Letter (as defined below) will be exchanged for newly issued common shares of Sirius at an exchange ratio (the "Exchange Ratio") that will be determined prior to the closing of the Merger and will be equal to a fraction (rounded to the nearest one

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Easterly Acquisition Corp.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

6. Proposed Business Combination with Sirius (Continued)

thousandth) determined by dividing (i) the estimated amount of cash per public share of the Company common stock in the Trust Account immediately prior to the closing of the Merger by (ii) (x) 1.05 multiplied by (y) Sirius' adjusted diluted book value per common share as of June 30, 2018 ("Sirius June 30 Adjusted DBVPS"). The Sirius June 30 Adjusted DBVPS will be calculated by dividing (i) the book value of Sirius determined based on U.S. GAAP on a consolidated basis, as set forth in the final, Sirius board of directors approved, unaudited U.S. GAAP consolidated financial statements of Sirius for the six months ended June 30, 2018, decreased by the $7,000,000 deferred underwriting fee payable by the Company to Citigroup Global Markets Inc. as underwriter of the Company's initial public offering, and as adjusted by the U.S. GAAP accounting effect of converting, restructuring or settling Sirius Series A preference shares by (ii) the sum of (x) the fully diluted number of Sirius common shares outstanding as of June 30, 2018, (y) the number of Sirius common shares issuable upon conversion of any Sirius Series A preference shares outstanding immediately prior to the closing of the Merger and (z) 593,000 Sirius common shares.

        Additionally, each outstanding Public Warrant to acquire shares of the Company common stock will cease to represent a right to acquire shares of the Company common stock and will be converted into a right to acquire Sirius common shares (a "converted warrant"). The number of Sirius common shares subject to each converted warrant will be equal to the number of shares of the Company common stock subject to each public warrant immediately prior to the closing of the Merger multiplied by the Exchange Ratio, and such converted warrant will have an exercise price per Sirius common share equal to the exercise price per share of the Company common stock subject to such Company warrant immediately prior to the closing of the Merger divided by the Exchange Ratio. In addition, prior to the closing of the Merger, if requested in writing by Sirius, the Company will commence a tender offer pursuant to which it will offer to purchase up to such number of the Public Warrants at a cash price for each public warrant as mutually agreed between Sirius and the Company.

        Pursuant to a letter agreement among the Company and Sirius (the "Sponsor Letter"), at the closing of the Merger, (i) the Sponsor will surrender and the Company will cancel for no consideration between 3,328,000 and 4,528,000 shares of Company common stock owned by the Sponsor, which amount will be determined based on the amount of cash in the Trust Account at the closing of the Merger, after giving effect to any redemptions of public shares of the Company common stock and amounts raised in a private placement of Sirius common shares (or securities convertible into Sirius common shares), and (ii) the Sponsor will surrender and the Company will cancel, for no consideration, 6,750,000 Private Placement Warrants. Pursuant to the Sponsor Letter, the Sponsor also agreed to (a) pay or reimburse all liabilities and obligations of the Company due and owing or incurred at or prior to the closing of the Merger to the extent not repaid by the Company using unrestricted cash and up to $2,000,000 from the Trust Account, except for the $7,000,000 deferred underwriting fee payable by the Company to Citigroup Global Markets Inc. as underwriter of the Company's initial public offering, which will be paid using cash released from the Trust Account, and (b) contribute to the Company for no consideration, as a contribution to the capital of the Company, all amounts due and owing by the Company to the Sponsor under the convertible promissory note, dated as of March 17, 2016, made by Easterly in favor of the Sponsor to the extent any such amount is not repaid at the closing of the Merger.

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Easterly Acquisition Corp.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

6. Proposed Business Combination with Sirius (Continued)

Sirius Promissory Note

        Concurrent with the execution of the Merger Agreement, the Company issued Sirius the Sirius Promissory Note pursuant to which Sirius agreed to lend the Company $0.03 per month for every public share of the Company's Common Stock outstanding as of July 1, 2018, for five months. The amounts will be lent to the Company on the first business day of each month and will be deposited by the Company into the Trust Account. The Promissory Note will bear interest in an amount equal to the income (if any) actually earned from investing the principal in the Trust Account and will be due upon the completion of the Company's initial business combination.

7. Equity

        The Company is authorized to issue up to 100,000,000 shares of common stock with a par value $0.0001 per share. Holders of the Company's common stock are entitled to one vote for each share of common stock.

        As discussed further in Note 1, on August 1, 2017, December 14, 2017, March 29, 2018 and June 28, 2018, stockholders representing 4,289,791, 687,597, 7,035 and 807,170 shares, respectively elected to redeem their shares, resulting in redemption amounts of $42,983,883, $6,915,728, $71,614 and $8,329,744, respectively. At June 30, 2018, there were 6,533,785 shares of common stock issued and outstanding (excluding 12,674,622 shares of common stock subject to possible redemption).

        The Company is authorized to issue up to 1,000,000 shares of preferred stock with a par value $0.0001 per share. At June 30, 2018, there were no shares of preferred stock issued and outstanding.

8. Subsequent Events

        Management of the Company evaluated events that have occurred after the balance sheet date of June 30, 2018, through the date the consolidated financial statements were issued.

Equity Contributions by Sponsor

        Pursuant to the Liabilities Assumption Agreement, the Sponsor contributed equity of $200,000 and $600,000 on July 5, 2018 and July 10, 2018, respectively, directly into the Company.

Receipt of Funds and Deposit into Trust Account

        In accordance with the Sirius Promissory Note described in Note 6, on July 2, 2018 and August 1, 2018, the Company received the monthly principal draw from Sirius each in the amount of $426,252. The total of $852,504 was subsequently deposited into the Trust Account.

NASDAQ Notification Letter

        On April 2, 2018, the Company received a notification letter from the staff of the Listing Qualifications Department of The Nasdaq Stock Market notifying the Company that it no longer complies with Nasdaq Listing Rule 5550(a)(3) for continued listing due to its failure to maintain a minimum of 300 public holders of common stock. On May 21, 2018, the Company submitted to Nasdaq a plan to regain compliance. On May 31, 2018, Nasdaq granted the Company an extension until

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Easterly Acquisition Corp.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

8. Subsequent Events (Continued)

July 29, 2018 to regain compliance. As of July 29, 2018, the Company had not regained compliance with such requirement. On August 7, 2018 the Company received formal notification from the Listing Qualifications Department regarding the failure to meet such requirement by the extended deadline. On August 7, 2018, the Company received formal notification from the Listing Qualifications Department of The Nasdaq Stock Market regarding the failure to complete the initial business combination within 36 months of the effectiveness of the Company's IPO registration statement. The Company has engaged in preliminary discussions with Nasdaq in light of the pendency of the proposed merger with Sirius.

        The Company has the opportunity to appeal Nasdaq's decision regarding the above failures to a Nasdaq Listing Qualifications Panel, which the Company intends to do prior to the deadline to appeal. If the Company appeals in a timely manner, the securities would remain listed pending such decision. However, there can be no assurance that, if the Company does appeal, such appeal would be successful.

        If Nasdaq delists the Company's securities from trading on its exchange and the Company is not able to list the securities on another national securities exchange, the Company expects the securities could be quoted on an over-the-counter market. If this were to occur, Easterly could face significant material adverse consequences, including:

    a limited availability of market quotations for the Company's securities;

    reduced liquidity for the Company's securities;

    a determination that the Company's common stock is a "penny stock," which will require brokers trading in the Company common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for the Company's securities;

    a limited amount of news and analyst coverage; and

    a decreased ability to issue additional securities or obtain additional financing in the future

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of
Easterly Acquisition Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Easterly Acquisition Corp. (the "Company") as of December 31, 2017 and 2016, the related statements of operations, stockholders' equity and cash flows for each of the two years in the period ended December 31, 2017 and for the period from April 29, 2015 (inception) through December 31, 2015, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2017 and for the period from April 29, 2015 (inception) through December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph — Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Marcum LLP

/S/ Marcum LLP

We have served as the Company's auditor since 2015.

New York, NY
March 16, 2018

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EASTERLY ACQUISITION CORP.

CONSOLIDATED BALANCE SHEETS

 
  December 31,
2017
  December 31,
2016
 

ASSETS

             

Current assets

             

Cash

  $ 13,874   $ 24,571  

Prepaid expenses

    7,347     18,118  

Other receivables, net

        279,619  

Total current assets

    21,221     322,308  

Cash and cash equivalents held in Trust Account—restricted

    151,208,413     200,102,350  

Total assets

  $ 151,229,634   $ 200,424,658  

LIABILITIES AND STOCKHOLDERS' EQUITY

             

Current liabilities

             

Accounts payable and accrued expenses

  $ 1,704,738   $ 1,709,260  

Due to affiliate

    575,405     222,670  

Total current liabilities

    2,280,143     1,931,930  

Convertible note—due to Sponsor

    614,371     15,607  

Deferred underwriting fee

    7,000,000     7,000,000  

Total liabilities

    9,894,514     8,947,537  

Commitments

             

Common stock, subject to possible redemption or tender, 13,544,944 and 18,638,173 shares at redemption value at December 31, 2017 and December 31, 2016, respectively

    136,335,119     186,477,120  

Stockholders' equity:

             

Preferred stock, $.0001 par value; 1,000,000 shares authorized; none issued and outstanding

         

Common stock, $.0001 par value; 100,000,000 shares authorized; 6,477,668 and 6,361,827 shares issued and outstanding (excludes 13,544,944 and 18,638,173 shares subject to possible redemption) at December 31, 2017 and December 31, 2016, respectively

    648     636  

Additional paid-in capital

    8,022,478     7,780,100  

Accumulated deficit

    (3,023,125 )   (2,780,735 )

Total stockholders' equity

    5,000,001     5,000,001  

Total liabilities and stockholders' equity

  $ 151,229,634   $ 200,424,658  

   

See accompanying notes to consolidated financial statements.

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EASTERLY ACQUISITION CORP.

CONSOLIDATED STATEMENT OF OPERATIONS

 
  For the Year Ended
December 31, 2017
  For the Year Ended
December 31, 2016
  For the period from
April 29, 2015
(Inception) through
December 31, 2015
 

Operating costs

  $ (1,293,499 ) $ (1,812,645 ) $ (982,344 )

State franchise taxes

    (181,118 )   (182,685 )   (121,858 )

Loss from operations

    (1,474,617 )   (1,995,330 )   (1,104,202 )

Other income—interest income

    1,232,227     308,879     9,918  

Net loss

  $ (242,390 ) $ (1,686,451 )   (1,094,284 )

Weighted average number of common shares outstanding, basic and diluted

    6,412,873     6,221,263     5,469,153  

Basic and diluted net loss per share

  $ (0.19 ) $ (0.29 ) $ (0.20 )

   

See accompanying notes to consolidated financial statements.

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EASTERLY ACQUISITION CORP.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

For the Period from April 29, 2015 (inception) to December 31, 2017

 
  Common Shares    
   
   
 
 
  Additional
Paid-in
  Accumulated
Deficit
  Stockholders'
Equity
 
 
  Shares   Amount  

Balance, April 29, 2015 (Inception)

      $   $   $   $  

Sale of common stock to Sponsor

    5,175,000     517     24,483         25,000  

Sale of 20,000,000 Units, net of underwriters' commissions

    20,000,000     2,000     187,998,000         188,000,000  

Proceeds from issuance of Private Placement Warrants

            6,750,000         6,750,000  

Offering expenses

            (517,145 )       (517,145 )

Forfeiture of initial stockholder's shares pursuant to partial exercise of underwriters' over-allotment

    (175,000 )   (18 )   18          

Common stock subject to possible redemption or tender

    (18,816,357 )   (1,881 )   (188,161,689 )       (188,163,570 )

Net loss

                (1,094,284 )   (1,094,284 )

Balance, December 31, 2015

    6,183,643     618     6,093,667     (1,094,284 )   5,000,001  

Common stock subject to possible redemption or tender

    178,184     18     1,686,433         1,686,451  

Net loss

                (1,686,451 )   (1,686,451 )

Balance, December 31, 2016

    6,361,827     636     7,780,100     (2,780,735 )   5,000,001  

Redemption of 4,977,388 shares of common stock

    (4,977,388 )   (498 )   (49,899,113 )       (49,899,611 )

Common stock subject to possible redemption or tender

    5,093,229     510     50,141,491         50,142,001  

Net loss

                (242,390 )   (242,390 )

Balance, December 31, 2017

    6,477,668     648     8,022,478     (3,023,125 )   5,000,001  

   

See accompanying notes to consolidated financial statements.

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EASTERLY ACQUISITION CORP.

CONSOLIDATED STATEMENT OF CASH FLOWS

 
  For the
Year Ended
December 31,
2017
  For the
Year Ended
December 31,
2016
  For the period
from April 29,
2015 (Inception)
through
December 31,
2015
 

Cash flows from operating activities:

                   

Net loss

  $ (242,390 ) $ (1,686,451 ) $ (1,094,284 )

Adjustments to reconcile net loss to net cash used in operating activities:

                   

Interest on cash and cash equivalents held in Trust Account

    (1,232,227 )   (308,879 )   (9,918 )

Provision for uncollectible other receivables

    278,135     278,135      

Changes in operating assets and liabilities:

                   

Prepaid expenses

    10,771     78,388     (96,506 )

Other receivables

    1,484     (488,290 )   (69,464 )

Accounts payable and accrued expenses

    (4,522 )   1,442,344     266,916  

Due to affiliate

    352,735     205,210     18,067  

Interest on convertible note to Sponsor

    18,764          

Net cash used in operating activities

    (817,250 )   (479,543 )   (985,189 )

Cash flows from investing activities:

                   

Cash held in Trust Account—restricted

              (200,000,000 )

Cash released from Trust Account—redemption of shares of common stock

    49,899,611          

Interest income released from Trust Account for franchise taxes

    226,553     216,448      

Net cash provided by (used in) investing activities

    50,126,164     216,448     (200,000,000 )

Cash flows from financing activities:

                   

Proceeds from issuance of common stock to initial stockholder

            25,000  

Proceeds from sale of Units, net of underwriting commissions paid

            175,500,000  

Proceeds from sale of over-allotment Units, net of underwriting commissions paid

            19,500,000  

Proceeds from sale of Private Placement Warrants

            6,750,000  

Payment of offering expenses

            (471,108 )

Proceeds from promissory note—related parties

    580,000     15,000      

Proceeds of convertible note received from Sponsor                

            100,000  

Repayment of advances from affiliate and promissory note—related parties

            (146,037 )

Redemption of Units

    (49,899,611 )        

Net cash (used in) provided by financing activities

    (49,319,611 )   15,000     201,257,855  

Increase (decrease) increase in cash

    (10,697 )   (248,095 )   272,666  

Cash at beginning of period

    24,571     272,666      

Cash at end of period

  $ 13,874   $ 24,571   $ 272,666  

Supplemental disclosure of noncash financing activities:

                   

Deferred underwriting fees

  $   $   $ 7,000,000  

Payment of offering costs through advance from related party

  $   $   $ 46,037  

Change in value of common stock subject to possible redemption

  $ (242,390 ) $ (1,686,451 ) $  

   

See accompanying notes to consolidated financial statements.

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Business Operations

Incorporation

        Easterly Acquisition Corp. (the "Company") was incorporated in Delaware on April 29, 2015.

Sponsor

        The Company's sponsor is Easterly Acquisition Sponsor, LLC, a Delaware limited liability company (the "Sponsor").

Business Purpose

        The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses that it had not yet identified ("Business Combination").

        As of December 31, 2017, the Company has neither commenced operations nor generated any revenues to date. All activity through December 31, 2017 relates to the Company's formation, initial public offering (described below), identifying a target company and engaging in due diligence for a Business Combination.

        The Company's management has broad discretion with respect to the specific application of the net proceeds of its initial public offering of Units (as defined in Note 3 below) (the "Public Offering"), although substantially all of the net proceeds of the Public Offering and the private placement of warrants (as described in Note 4 below, the "Private Placement" and such warrants issued in connection with the Private Placement, the "Private Placement Warrants") are intended to be generally applied toward completing a Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect a Business Combination.

        As more fully described in Note 7 below, on June 28, 2017, the Company entered into an Investment Agreement (as amended, the "Investment Agreement") with JH Capital Group Holdings, LLC ("JH Capital"), Jacobsen Credit Holdings, LLC ("Jacobsen Holdings"), Kravetz Capital Funding LLC ("KCF" and, together with Jacobsen Holdings, the "Principal Members") and NJK Holding LLC ("NJK Holding" and, together with KCF and Jacobsen Holdings, the "Founding Members"), to effect a business combination with JH Capital, a leading specialty finance company in the debt recovery industry.

        The Company must complete a Business Combination prior to March 31, 2018 (or June 30, 2018 if approved by our stockholders at a special meeting of stockholders) or cease all operations, redeem the public shares of its common stock and dissolve and liquidate its remaining assets to its creditors and remaining stockholders.

Financing

        The registration statement for the Company's Public Offering was declared effective on July 29, 2015. On July 29, 2015, the Company filed a new registration statement to increase the size of the Public Offering by 20% pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Securities Act"). On August 4, 2015, the Company consummated the Public Offering and received proceeds of $195,000,000 (net of the underwriter's discount of $5,000,000) and simultaneously received $6,750,000 from the issuance of 6,750,000 Private Placement Warrants.

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Organization and Business Operations (Continued)

        See below as well as Note 1 regarding redemptions of common stock and the release of a portion of the funds from the Trust Account in connection with stockholder approvals, in August 2017 and December 2017, to amend the Company's amended and restated certificate of incorporation to extend the date by which the Company must complete its Business Combination.

Trust Account

        $200,000,000 of the proceeds from the Public Offering and Private Placement, which were deposited into a segregated Trust Account located in the United States with Continental Stock Transfer & Trust Company acting as trustee (the "Trust Account"), may be invested only in permitted United States "government securities" within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the "Investment Company Act"), having a maturity of 180 days or less or in money market funds that invest solely in United States Treasuries that are compliant with of Rule 2a-7 under the Investment Company Act.

        The Company amended and restated its certificate of incorporation on July 28, 2015 and further amended it on August 1, 2017 and December 15, 2017, to provide that, except for the withdrawal of interest to pay franchise and income taxes, if any, that none of the funds held in trust (including the interest on such funds) will be released from the Trust Account until the earlier of (i) the completion of the initial Business Combination, (ii) the redemption of the Public Shares (as defined in Note 3) if the Company is unable to complete a Business Combination by March 31, 2018 (subject to the requirements of applicable law) and (iii) the redemption of shares in connection with a vote seeking to amend Section 9.2(d) of the amended and restated certificate of incorporation in a manner that would affect the substance or timing of the Company's obligation to redeem 100% of the Public Shares if the Company does not complete an initial Business Combination by March 31, 2018. For the year ended December 31, 2017, the Company withdrew $226,553 of interest earned to pay for franchise taxes in accordance with the amended and restated certificate of incorporation.

        On December 8, 2017, the Company and JH Capital entered into a non-interest bearing promissory note ("JH Capital Promissory Note), which would be drawn on January 15, 2018, February 15, 2018 and March 15, 2018 at individual amounts of $0.03 for each share of the Company's common stock outstanding as of such date, excluding the 5,000,000 Sponsor shares. The Company will contribute this principal into the Trust Account. The contributions will not bear interest and will be repayable by the Company to JH Capital upon consummation of the Company's initial business combination.

        On February 14, 2018, the Company's board of directors approved the second amendment to the Investment Agreement and, on February 14, 2018, the parties executed the second amendment to the Investment Agreement. JH Capital agreed to continue to make the contributions of $0.03 for each public share, for each calendar month or portion thereof, to the Company through the earlier of (A) June 30, 2018 or (B) the date by which the Company is required to dissolve and liquidate the Trust Account in accordance with the terms of the Company's charter, which will be added to the Trust Account.

        In order to protect the amounts held in the Trust Account, Messrs. Cody, Crate and Kalichstein, managing principals of an affiliate of the Sponsor have agreed, jointly and severally, that they will be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to it, or a prospective target business with which the Company has discussed entering into a

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Organization and Business Operations (Continued)

transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company's indemnity of the underwriters of its IPO against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, then Messrs. Cody, Crate and Kalichstein will not be responsible to the extent of any liability for such third-party claims. The Company cannot assure you, however, that Messrs. Cody, Crate and Kalichstein would be able to satisfy those obligations. Messrs. Cody, Crate and Kalichstein will not be personally liable to pay the Company's debts and obligations except as provided above. None of the Company's other officers will indemnify it for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

Stockholder Meetings

        On August 1, 2017, the Company held its annual meeting of stockholders and 23,415,152 of the Company's 25,000,000 shares were voted in favor of the proposal to amend the Company's amended and restated certificate of incorporation to extend the date by which the Company had to consummate a Business Combination until December 15, 2017, to change the term of the Company's directors from two years to one year, and to change the provision with respect to removal of directors to permit removal with or without cause by the affirmative vote of a majority of the Company's stockholders and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until December 15, 2017. In addition, the Company's board of directors was reelected. The holders of 4,289,791 public shares of the Company's common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.02 per share.

        On December 14, 2017, the Company held a special meeting of stockholders and 19,325,891 of the Company's 20,710,209 shares were voted in favor of the proposal to amend the Company's amended and restated certificate of incorporation to extend the date by which the Company had to consummate a Business Combination until March 31, 2018, and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until March 31, 2018. The holders of 687,597 public shares of Easterly common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.06 per share.

Business Combination

        The Company, prior to the consummation of a Business Combination, will either (i) seek stockholder approval of the Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of an initial Business Combination, including interest earned on the funds and not previously released to the Company to pay franchise and income taxes, or (ii) provide public stockholders with the opportunity to tender their shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay franchise and income taxes, less franchise and income taxes payable from such

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Organization and Business Operations (Continued)

interest. The decision as to whether the Company will seek stockholder approval of the Business Combination or conduct a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval. If the Company seeks stockholder approval, it will complete its Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Business Combination. However, in no event will the Company redeem its Public Shares (as defined in Note 3) in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Business Combination, and instead may search for an alternate Business Combination.

        Notwithstanding the foregoing redemption rights, if the Company seeks stockholder approval of its initial business combination and it does not conduct redemptions in connection with its business combination pursuant to the tender offer rules, the Company's amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a "group" (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in the Company's IPO.

        Shares of common stock subject to redemption or tender are recorded at redemption amount and classified as temporary equity, in accordance with Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 480, "Distinguishing Liabilities from Equity." At December 31, 2017, the amount in the Trust Account is approximately $10.07 per share of common stock sold in the Public Offering ($151,208,413 cash equivalents held in the Trust Account divided by 15,022,612 of Public Shares).

        The Company has until March 31, 2018 (or June 30, 2018 if approved by our stockholders at a special meeting of stockholders) to complete its initial Business Combination. If the Company does not complete a Business Combination within this period of time, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses, which interest shall be net of taxes payable) divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders' rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to the Company's obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

        On March 8, 2018, the Company filed a definitive proxy statement to hold a special meeting of the Company's stockholders on March 29, 2018 for the purposes of extending the date by which the Company has to consummate a Business Combination from March 31, 2018 to June 30, 2018, and amending the Company's Amended and Restated Investment Management Trust Agreement to extend the date on which to commence liquidating the Trust Account established in connection with the Company's IPO in the event the Company has not consummated a Business Combination from March 31, 2018 to June 30, 2018.

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Organization and Business Operations (Continued)

        The Company's Units, common stock and warrants are listed on the Nasdaq Capital Market ("Nasdaq"). The Nasdaq rules require that the initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of the Company signing a definitive agreement in connection with its initial Business Combination. The Company intends to fulfill the requirements of this Nasdaq rule even if the securities are not listed on Nasdaq at the relevant time.

Emerging Growth Company

        The Company is an "emerging growth company," as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012 (the "JOBS Act"), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in the Company's periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

        Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company's financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.

Reimbursement of Expenses Related to Terminated Sungevity Business Combination

        On June 28, 2016, the Company entered into an Agreement and Plan of Merger (as amended, the "Sungevity Merger Agreement"), by and among the Company, Solaris Merger Sub Inc., Sungevity, Inc. ("Sungevity"), and Shareholder Representative Services LLC, to effect a business combination with Sungevity. On December 31, 2016, the Company terminated the Sungevity Merger Agreement.

        Pursuant to a letter of intent (the "LOI"), dated April 20, 2016, between Sungevity and the Company, Sungevity agreed to pay or reimburse the Company for all reasonable and documented out-of-pocket costs and expenses incurred between the date of the LOI and the date that definitive documents with respect to the proposed merger, including fees and expenses of third party advisors, due diligence-related expenses and such other necessary and related costs and expenses incurred in

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Organization and Business Operations (Continued)

furtherance of the proposed business combination. For the year ended December 31, 2016, the Company incurred $909,787 in qualified reimbursable costs, of which $353,517 was reimbursed by Sungevity prior to December 31, 2016. The Company initiated legal action against Sungevity to recover the remaining amount of $556,270 due to the Company under the LOI. On March 13, 2017, Sungevity filed for Chapter 11 Bankruptcy proceedings in U.S. Bankruptcy Court for the District of Delaware to pursue and consummate a sale of its business, which proceedings were dismissed in November 2017 without any recovery to the Company. The Company's legal action was stayed pending resolution of the bankruptcy proceedings, but has not proceeded since dismissal of the bankruptcy proceedings. A valuation allowance of $278,135 was recorded in the quarter ended December 31, 2016 and the remaining amount of $278,135 was recorded in the quarter ended March 31, 2017 and is presented within Operating expenses in the Consolidated Statement of Operations for the year ended December 31, 2017. As a result of the November 2017 dismissal, the entire receivable and corresponding allowance were written off.

        The remainder of the allowance was first expensed during the year ended December 31, 2016. The Company's estimate for this loss requires a number of assumptions available to the Company as of the date the consolidated financial statements are issued, about matters that are uncertain and, accordingly, the actual realized amount paid to the Company from the bankruptcy proceedings may be more than $0.

Going Concern Considerations

        The Company presently has no revenue, has had losses since inception and has no operations other than the active identification of a target business with which to complete its Business Combination. As of December 31, 2017, the Company had cash of $13,874 held outside the Trust Account and $151,208,413 cash equivalents held in trust, including interest.

        The Company will have available the $13,874 of proceeds held outside the Trust Account (as of December 31, 2017) and any additional Sponsor loans under the March 17, 2016 convertible promissory note (see Note 4) to fund its working capital needs and to continue to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination. The Company will also have available any interest earned on the funds held in the Trust Account to pay franchise and income taxes.

        At December 31, 2017 the Company has a working capital deficit of $2,258,922 (total current assets minus total current liabilities). The Company expects to continue incurring expenses related to professional services including, but not limited to, engaging legal counsel, consultants, advisors and accountants, as well as other operating expenses such as insurance and fees under the Administrative Services Agreement.

        If the proceeds held outside the Trust Account are insufficient for the Company's working capital needs and operations in connection with the completion of an initial Business Combination, the Company may need to raise additional capital through additional loans from the Sponsor under the March 17, 2016 convertible promissory note issued to the Sponsor or additional investments from its Sponsor, an affiliate of its Sponsor or certain of the Company's officers and directors. None of the Company's Sponsor, affiliate of the Sponsor, officers or directors are under any obligation to loan the Company funds.

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Organization and Business Operations (Continued)

        The uncertainty regarding the lack of resources to pay the above noted expenses raises substantial doubt about the Company's ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be unable to continue operations.

2. Significant Accounting Policies

Basis of Presentation

        The accompanying consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC").

Principles of Consolidation

        The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Solaris Merger Sub Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

Net Loss per Share of Common Stock

        The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, Earnings Per Share. Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. The Company applies the two-class method in calculating earnings per share. Shares of common stock subject to possible redemption at December 31, 2017 and 2016, which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic loss per share since such shares, if redeemed, such shares only participate in their pro rata share of the Trust Account earnings.

        At December 31, 2016 and 2015 the Company had outstanding warrants to purchase 16,750,000 shares of common stock. The effect of these potential shares was excluded from the calculation of diluted loss per share of common stock since the exercise of the warrants is contingent upon the occurrence of future events. As a result, diluted loss per common share is the same as basic loss per common share for the periods.

Reconciliation of net loss per common share

        The Company's net income is adjusted for the portion of income that is attributable to common stock subject to redemption, as these shares only participate in the income of the Trust Account and

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Significant Accounting Policies (Continued)

not the losses of the Company. Accordingly, basic and diluted loss per common share is calculated as follows:

 
  For the Year Ended
December 31, 2017
  For the Year Ended
December 31, 2016
(revised)
  For the Period
April 29, 2015
(Inception) Through
December 31, 2015
 

Net loss

  $ (242,390 ) $ (1,686,451 ) $ (1,094,284 )

Less: Income attributable to ordinary shares subject to redemption

    (947,719 )   (117,601 )    

Adjusted net loss

  $ (1,190,109 ) $ (1,804,052 ) $ (1,094,284 )

Weighted average shares outstanding, basic and diluted

    6,412,873     6,221,263     5,469,153  

Basic and diluted net loss per ordinary share

  $ (0.19 ) $ (0.29 ) $ (0.20 )

Fair Value of Financial Instruments

        The Company follows the guidance in FASB ASC 820, Fair Value Measurements and Disclosures for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period.

        The fair value of the Company's financial assets and liabilities reflects management's estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1:   Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:

 

Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3:

 

Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

        At December 31, 2017, the proceeds of the Trust Account were invested in the Western Asset Institutional U.S. Treasury Reserves money market fund that invests all of its assets in direct obligations of the U.S. Treasury and which is compliant with Rule 2a-7 under the Investment Company Act.

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Significant Accounting Policies (Continued)

        The following table presents information about the Trust Account assets that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Description
  Level   December 31, 2017  

Assets:

         

Cash and/or cash equivalents held in the Trust Account

  1   $ 151,208,413  

        The Trust Account assets were held in cash as of December 31, 2016.

Concentration of Credit Risk

        Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which exceeds the Federal depository insurance coverage of $250,000. At December 31, 2017, the Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

Cash and cash equivalents

        The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. At December 31, 2017, the assets held in the Trust Account were held in the Western Asset Institutional U.S. Treasury Reserves money market fund that invests solely in United States Treasuries compliant with Rule 2a-7 under the Investment Company Act.

Offering Costs

        The Company complies with the requirements of ASC 340-10-S99-1. Offering costs of $517,145 consisting of printing costs, professional fees and travel expenses incurred through the closing of the Public Offering were charged to capital at the time of closing of the Public Offering.

Use of Estimates

        The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Income Taxes

        The Company complies with the accounting and reporting requirements of FASB ASC 740, "Income Taxes," which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of December 31, 2017, a full valuation allowance has been established against the deferred tax asset.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Significant Accounting Policies (Continued)

        FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. There were no uncertain tax benefits as of December 31, 2017. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at December 31, 2017. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

        The Company may be subject to potential examination by U.S. federal, U.S. states or foreign jurisdiction authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, U.S. state and foreign tax laws. The Company's management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. The income tax provision was deemed to be immaterial as of December 31, 2017.

        On December 22, 2017, the United States government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act. The Tax Act significantly revises the existing tax law by, among other things, lowering the United States corporate income tax rate from 35% to 21% beginning in 2018. The Company reviewed and incorporated the impact of the Tax Act in its tax calculations and disclosures. The primary impact on the Company stems from the re-measurement of its deferred taxes at the new corporate tax rate of 21% for the year ending December 31, 2017, which reduced the Company's net deferred tax assets, before valuation allowance, by $391,456. Due to the full valuation allowance, the change in deferred taxes was fully offset by the change in valuation allowance. As a result, the Tax Act did not have a significant impact on the Company's Consolidated Financial Statements for the year ended December 31, 2017.

Franchise Taxes

        The Company is incorporated in the State of Delaware and is required to pay franchise taxes to the State of Delaware on an annual basis.

Stock Based Compensation

        As further discussed in Note 7, on December 28, 2017, the Company issued 888,000 warrants to Fortress Credit Corp. in connection with a loan provided by Fortress to JHPDE Finance I, LLC, a subsidiary of JH Capital. If the JH Capital Business Combination closes, the warrant will be exercisable to purchase one share of the Company's Class A common stock at $11.50 per share, have a term of 5 years from the date of the closing of the JH Capital Business Combination and may only be exercised on or after the date which is 30 days after the first date on which the Company and JH Capital complete the JH Capital Business Combination.

        The Company measures nonemployee stock-based awards at grant date based on the fair value of the award. The compensation cost is recognized as expense over the vesting period of the award. The warrant issued to Fortress will be recognized as an expense as it vests but only after the date which is 30 days after the first date on which the Company and JH Capital complete the JH Capital Business Combination.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Significant Accounting Policies (Continued)

        Stock-based awards issued to nonemployees are remeasured until the award vests. The Company uses the probability-weighted Black-Scholes option pricing model to value its warrant awards. Estimating the fair value of warrants requires management to apply judgment and make estimates, including volatility, the expected term of the Company's warrants, the expected dividend yield and the fair value of the common stock on the measurement date.

        Expected term — The expected term represents the contractual term of the award, which is 5 years.

        Expected volatility — the volatility is derived from the historical volatility of the Company's common stock, which is approximately 10.4%.

        Risk-free interest rate — The risk-free interest rate is based on the yield of a 5-year Treasury Bond in effect at the time of grant, which is approximately 2.2%.

        Expected dividend — the Company has never paid dividends on the common stock and the Company assumed no dividends will be paid by the Company after business combination, therefore we used an expected dividend yield of zero.

        The Company adjusted the warrants' fair value on measurement date, as estimated by the Black-Scholes model, by a liquidity discount of 10% as a result of lack of marketability of the Fortress Warrant.

Recent Accounting Pronouncements

        Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company's consolidated financial statements.

3. Public Offering

Public Units

        Pursuant to the Public Offering on August 4, 2015, the Company sold 20,000,000 units at a price of $10.00 per unit (the "Units"), including 2,000,000 Units as a result of the underwriters' partial exercise of their over-allotment option, generating gross proceeds of $200,000,000. The common stock and warrants comprising the Units began separate trading on September 22, 2015. The holders have the option to continue to hold Units or separate their Units into the component securities. Each Unit consists of one share of the Company's common stock ("Public Shares"), $0.0001 par value, and one-half of one redeemable warrant ("Public Warrant"). Each whole Public Warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share. Each Public Warrant will become exercisable on the later of 30 days after the completion of an initial Business Combination or 12 months from the closing of the Public Offering, and will expire five years after the completion of the initial Business Combination or earlier upon redemption or liquidation. If the Company does not complete its initial Business Combination on or prior to March 31, 2018 (or June 30, 2018 if approved by our stockholders at a special meeting of stockholders), the Public Warrants will expire worthless at the end of such period. Upon closing of the Public Offering, there were 16,750,000 warrants outstanding, which include 6,750,000 warrants purchased by the initial stockholders and 10,000,000 warrants purchased in connection with the sale of Units related to the Public Offering.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Public Offering (Continued)

        The Public Warrants are issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and the Company. The Company did not register the shares of common stock issuable upon exercise of the Public Warrants under the Securities Act or any state securities law. The Company will use its best efforts to file a new registration statement for the shares of common stock issuable upon exercise of the Public Warrants under the Securities Act, following the completion of its initial Business Combination. If the shares issuable upon exercise of the Public Warrants are not registered under the Securities Act by the 60th business day following the closing of the initial Business Combination, the Company will be required to permit holders to exercise their Public Warrants on a cashless basis during the period beginning on the 61st business day after the closing of the initial Business Combination and ending upon such registration being declared effective by the SEC. However, no warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available. If such issuance is not so registered or qualified and no exemption is available under the securities laws of the state of the exercising holder, such holder would not be able to exercise its warrants and the Company could still redeem such holder's warrants. Notwithstanding the above, if the common stock is at the time of any exercise of a Public Warrant not listed on a national securities exchange such that it satisfies the definition of a "covered security" under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a "cashless basis" in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement or register or qualify the shares under applicable state securities laws.

        Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants (except as described herein with respect to the Private Placement Warrants discussed in Note 4) (i) in whole and not in part, (ii) at a price of $0.01 per warrant; (iii) upon a minimum of 30 days' prior written notice of redemption; and (iv) if, and only if, the last sale price of the common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company send the notice of redemption to the Public Warrant holders.

        The Company will not redeem the Public Warrants unless an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Public Warrants is effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the Public Warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the Public Warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities law.

        If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a "cashless basis." In such event, each holder would pay the exercise price by surrendering their Public Warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the Public Warrants and the "fair market value" (defined below) by (y) the fair market value. The "fair market value" shall mean the average reported last sale price of the common stock for the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Public Offering (Continued)

10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Public Warrants.

        In no event will the Company be required to net cash settle any Public Warrant, or issue securities or other compensation in exchange for the Public Warrants in the event that the Company is unable to register or qualify the shares underlying the Public Warrants under applicable state securities laws.

4. Related Party Transactions

Founder Shares

        On May 4, 2015, the Sponsor purchased 4,312,500 shares of the Company's common stock (the "Founder Shares") for $25,000, or approximately $.006 per share. On July 29, 2015, the Company's Board of Directors effected a stock dividend of 0.2 shares for each outstanding share of common stock, resulting in 5,175,000 Founder Shares outstanding. On July 29, 2015, the underwriters exercised part of their over-allotment option resulting in 20,000,000 Units issued as a result of the Public Offering. As a result of the expiration of the underwriters' option to exercise the remaining portion of the over-allotment, the Sponsor forfeited an aggregate of 175,000 Founder Shares. As described in Note 1, on August 1, 2017 and December 14, 2017, stockholders representing 4,289,791 and 687,597 shares, respectively elected to redeem their shares, resulting in redemption amounts of $42,983,883 and $6,915,728, respectively. Prior to this redemption, the Sponsor, the Company's independent directors and their permitted transferees, which are referred to as the initial stockholders, owned 20% of the Company's issued and outstanding shares and after the redemptions own approximately 25%.

        The Founder Shares are identical to the common stock included in the Units sold in the Public Offering except that 1) the Founder Shares are subject to certain restrictions, as described in more detail below, and 2) the initial stockholders have agreed (i) to waive their redemption rights with respect to their Founder Shares in connection with the completion of the initial Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete its initial Business Combination by March 31, 2018 (or June 30, 2018 if approved by our stockholders at a special meeting of stockholders), although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete its initial Business Combination within the prescribed time frame. If the Company submits its initial Business Combination to the public stockholders for a vote, the initial stockholders have agreed to vote their Founder Shares and any Public Shares purchased during or after the Public Offering in favor of the initial Business Combination.

        The initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until one year after the date of the consummation of the initial Business Combination or earlier if, subsequent to the initial Business Combination, (i) the last sale price of the common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination or (ii) the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Related Party Transactions (Continued)

Private Placement Warrants

        The Sponsor purchased from the Company an aggregate of 6,750,000 Private Placement Warrants, each exercisable to purchase one share of the Company's common stock at $11.50 per share, at a price of $1.00 per Private Placement Warrant ($6,750,000 in the aggregate) in a private placement that occurred simultaneously with the closing of the Public Offering. The proceeds from the sale of the Private Placement Warrants were added to the proceeds from the Public Offering held in the Trust Account. If the Company does not complete an initial Business Combination by March 31, 2018 (or June 30, 2018 if approved by our stockholders at a special meeting of stockholders), to the degree that any proceeds remain, the proceeds of the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless. The Private Placement Warrants are identical to the Public Warrants sold as part of the Units in the Public Offering except that, so long as they are held by the Sponsor or its permitted transferees, (i) they will not be redeemable by the Company, (ii) they (including the common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of the initial Business Combination and (iii) they may be exercised by the holders on a cashless basis.

        The holders of the Founder Shares, Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans, discussed below, will have registration rights to require the Company to register a sale of any of the securities held by them pursuant to a registration rights agreement executed on July 29, 2015. The holders of the majority of these securities are entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have "piggy-back" registration rights to include such securities in other registration statements filed by the Company and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period.

Administrative Service Agreement

        The Company entered into an agreement to pay an affiliate of our Sponsor, Easterly Capital, LLC, a total of $10,000 per month starting on July 29, 2015 and continuing until the earlier of the Company's initial Business Combination or liquidation for office space, utilities, secretarial support and administrative services. This arrangement was agreed to for the Company's benefit and is not intended to provide the Sponsor compensation in lieu of salary or other remuneration. For the years ended December 31, 2017 and 2016 and for the period from April 29, 2015 (Inception) through December 31, 2015, the Company incurred $120,000, $120,000 and $50,000, respectively under the Administrative Service Agreement. As of December 31, 2017 and 2016, $190,000 and $70,000, respectively, remains as a payable and is reflected in Due to affiliate in the Consolidated Balance Sheet.

Related Party Advances

        For the year ended December 31, 2017, an affiliate of the Sponsor advanced an aggregate of $232,735 directly to the Company's vendors related to operating expenses. For the year ended

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Related Party Transactions (Continued)

December 31, 2016, an affiliate of the Sponsor advanced an aggregate of $181,403 directly to the Company's vendors related to operating expenses.

        As of December 31, 2017, $385,405 of such advances remain as payable and are reflected in Due to affiliate in the Consolidated Balance Sheet.

        These advances are non-interest bearing, unsecured and due on demand.

Sponsor Loans

        Prior to Public Offering, the Sponsor had loaned the Company $100,000 to be used for a portion of the expenses of the Public Offering. This loan was non-interest bearing, unsecured and due at the earlier of May 31, 2016 or the closing of the Public Offering. This loan was repaid in full on the closing of the Public Offering.

        On March 17, 2016, the Company issued a convertible promissory note to the Sponsor that provides for the Sponsor to loan the Company up to $1,000,000 for ongoing expenses. On March 17, 2016, February 2, 2017, June 29, 2017, July 12, 2017, October 1, 2017 and December 4, 2017, the Company borrowed $15,000, $250,000, $75,000, $150,000, $30,000 and $75,000, respectively, pursuant to the convertible promissory note. The Sponsor is not obligated to loan the Company additional amounts pursuant to the convertible promissory note. The convertible promissory note is interest bearing at 5% per annum and is due and payable on March 31, 2018, which date will be extended if our stockholders approve an extension of the deadline by which we have to complete our initial business combination from March 31, 2018 to June 30, 2018 at the special meeting of our stockholders that will be held on March 29, 2018. At the option of the Sponsor, any amounts outstanding under the convertible promissory note may be converted into warrants to purchase shares of common stock at any time on or prior to the maturity date at a conversion price of $1.00 per warrant. Each warrant will entitle the Sponsor to purchase one share of common stock at an exercise price of $11.50 per share. Each warrant will contain other terms identical to the terms contained in the Private Placement Warrants. As of December 31, 2017, the outstanding principal balance of this convertible promissory note is $595,000 and accrued and unpaid interest of $19,371 is reflected in Convertible note—due to Sponsor in the Consolidated Balance Sheet.

        In addition, in order to finance transaction costs in connection with an intended initial Business Combination, the Sponsor, an affiliate of the Sponsor or certain of the officers and directors may, but are not obligated to, loan the Company additional funds as may be required. If the Company completes the initial Business Combination, the Company would repay such loaned amounts out of the proceeds of the Trust Account released. Otherwise, such loans would be repaid only out of funds held outside the Trust Account. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used to repay such loaned amounts. Up to $1,000,000 of such loans, inclusive of any loans under the March 17, 2016 convertible promissory note, may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants issued to the Sponsor. The Company does not expect to seek loans from parties other than the Sponsor, an affiliate of the Sponsor or certain of the officers and directors as the Company does not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the Trust Account.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Income Taxes

        The Company's net deferred tax assets are as follows:

 
  December 31,
2017
  December 31,
2016
 

Deferred tax asset

             

Provision for uncollectible other receivables

  $   $ 94,566  

Net operating loss carryforward

    632,352     848,392  

Total deferred tax asset

    632,352     942,958  

Valuation allowance

    (632,352 )   (942,958 )

Deferred tax asset, net of allowance

  $   $  

        The income tax provision (benefit) consists of the following:

 
  For the
Year Ended
December 31,
2017
  For the
Year Ended
December 31,
2016
 

Federal

             

Current

  $   $  

Deferred

    310,606     (571,663 )

State and local

             

Current

         

Deferred

         

Change in valuation allowance

    (310,606 )   571,663  

Income tax provision (benefit)

  $   $  

        As of December 31, 2017, the Company had U.S. federal and state net operating loss carryovers ("NOLs") of $3,011,199 available to offset future taxable income. These NOLs expire beginning in 2036. In accordance with Section 382 of the Internal Revenue Code, deductibility of the Company's NOLs may be subject to an annual limitation in the event of a change in control as defined under the regulations.

        In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2017, and December 31, 2016, the change in the valuation allowance was $(310,606) and $571,663, respectively.

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Income Taxes (Continued)

        A reconciliation of the federal income tax rate to the Company's effective tax rate is as follows:

 
  For the
Year Ended
December 31,
2017
  For the
Year Ended
December 31,
2016
 

Statutory federal income tax rate

    34.0 %   34.0 %

State and local taxes, net of federal tax benefit

    0 %   0 %

Other

    (0.6 )%   (0.1 )%

Change in valuation allowance

    (33.4 )%   (33.9 )%

Income tax provision (benefit)

    0.0 %   0.0 %

        On December 22, 2017, the United States government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act. The Tax Act significantly revises the existing tax law by, among other things, lowering the United States corporate income tax rate from 35% to 21% beginning in 2018. The Company reviewed and incorporated the impact of the Tax Act in its tax calculations and disclosures. The primary impact on the Company stems from the re-measurement of its deferred taxes at the new corporate tax rate of 21% for the year ending December 31, 2017, which reduced the Company's net deferred tax assets, before valuation allowance, by $391,456. Due to the full valuation allowance, the change in deferred taxes was fully offset by the change in valuation allowance. As a result, the Tax Act did not have a significant impact on the Company's Consolidated Financial Statements for the year ended December 31, 2017.

6. Commitments

        The underwriters are entitled to underwriting commissions of 6.0%, of which 2.5% ($5,000,000) was paid at the closing of the Public Offering, and 3.5% ($7,000,000) is deferred. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement. The underwriters are not entitled to any interest accrued on the deferred underwriting discounts and commissions.

7. Proposed Business Combination with JH Capital

Investment Agreement with JH Capital

        On June 28, 2017, the Company entered into an Investment Agreement with JH Capital and the Founding Members of JH Capital, which are Jacobsen Credit Holdings, LLC, Kravetz Capital Funding LLC and NJK Holding LLC to effect the Business Combination. Based on the terms and subject to the conditions set forth in the Investment Agreement, at the closing (the "Closing") of the transactions contemplated by the Investment Agreement, the Company will contribute cash to JH Capital in exchange for newly issued voting Class A Units of JH Capital ("Class A Units"). The Company will receive a number of Class A Units equal to the aggregate number of shares of the Company's common stock outstanding at the Closing, after giving effect to the redemption of shares of the Company's common stock by the Company's public stockholders. At the Closing, the Company will file an amended and restated certificate of incorporation, which will, among other things, reclassify all of the outstanding Company's common stock as Class A common stock, par value $0.0001 per share,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Proposed Business Combination with JH Capital (Continued)

create a new class of the Company's Class B common stock, par value $0.0001 per share and change the Company's name to "JH Capital Group Holdings, Inc."

        Prior to the closing of the Business Combination, JH Capital and the Founding Members will effect an internal reorganization after which (i) all of the following companies and their respective direct and indirect subsidiaries are expected to be principally owned directly or indirectly by JH Capital: Credit Control, LLC, Century DS, LLC, New Credit America, LLC, and CreditMax Holdings, LLC (the "JH Group Companies") and (ii) without duplication of the companies referenced in clause (i), the direct and indirect subsidiaries of Next Level Finance Partners, LLC are expected to be principally owned, directly or indirectly, by JH Capital.

        Pursuant to the Investment Agreement, the aggregate consideration to be paid to JH Capital for the Class A Units of JH Capital will consist of an amount in cash equal to the cash and cash equivalents held by the Company outside of the Company's Trust Account, plus the amount of funds contained in the Trust Account, after giving effect to redemptions by the Company's public stockholders, less deferred underwriting fees payable to Citigroup Global Markets Inc. and fees payable to Cantor Fitzgerald & Co. and Jefferies LLC, less any reasonable (with respect to expenses incurred since April 27, 2017) and documented out-of-pocket transaction expenses of the Company that are accrued and unpaid as of the closing, less any outstanding amount under the Convertible Promissory Note, dated as of March 17, 2016, issued by Easterly to Easterly Acquisition Sponsor, LLC that has not been converted into warrants to purchase Easterly Class A common stock. In addition, 18,700,000 shares of newly-issued Class B common stock will be issued by the Company to the Principal Members and the other Class B members of JH Capital (the Principal Members, together with such other Class B members, the "JH Capital Class B Members"). The JH Capital Class B Members will also be issued 18,700,000 non-voting Class B Units of JH Capital, provided that such amount of JH Capital Class B Units is subject to reduction to the extent that certain of the JH Group Companies and certain subsidiaries of Next Level Finance Partners, LLC are not directly or indirectly wholly owned by JH Capital after the Reorganization. The Company's Class B common stock will have one vote per share but will not be entitled to any economic interest in the Company. The JH Capital Class B Units are entitled to distributions from JH Capital, but are not entitled to any voting or control rights over JH Capital, other than certain customary consent rights with respect to distributions, amendments to JH Capital's limited liability company agreement and certain other matters affecting the JH Capital Class B Members. In addition, on the date of the closing of the Business Combination, JH Capital or one or more JH Group Companies will, or will cause a subsidiary of JH Capital or any JH Group Company to, make a cash distribution to Jacobsen Holdings and KCF in an aggregate amount equal to $1,000,000.

        The Company is expected to hold approximately 48.4% of the outstanding equity in JH Capital and the JH Capital Class B Members are expected to hold the remaining 51.6%. These ownership interests assume that no shares of the Company's common stock are elected to be redeemed in connection with the Business Combination Proposal and also assume that there are no reductions to the JH Capital Class B Units pursuant to the Investment Agreement. Further, the ownership percentage with respect to the post-combination company does not take into account (i) the issuance of any shares (or options to acquire shares) under the JH Capital Group Holdings, Inc. 2018 Omnibus Equity Incentive Plan, (ii) the issuance of any shares upon the exercise of warrants to purchase up to a total of 20,138,000 shares of Easterly common stock that will remain outstanding following the Business Combination or any additional warrants that the Company may issue to the Sponsor to repay working

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Proposed Business Combination with JH Capital (Continued)

capital loans owed by the Company to the Sponsor or (iii) any shares of Easterly Class A common stock issued in exchange for JH Group Companies' and their respective subsidiaries' mezzanine loans.

        The JH Capital Class B Units may be exchanged for shares of the Company's Class A common stock on a one-for-one basis (subject to certain adjustments to the exchange ratio) or, at JH Capital's option, cash, pursuant to the Exchange Agreement that the Company will enter into with JH Capital and the JH Capital Class B Members. Upon any exchange of a JH Capital Class B Unit by a JH Capital Class B Member, one share of the Company's Class B common stock held by such JH Capital Class B Member will be cancelled by the Company.

        In connection with the Investment Agreement and the Exchange Agreement, the Company will also enter into the following agreements: (i) a Third Amended and Restated Limited Liability Company Agreement of JH Capital, (ii) a Tax Receivable Agreement relating to the payment to the JH Capital Class B Members of a portion of specified tax savings, and (iii) a Registration Rights Agreement providing registration rights for shares of the Company's Class A common stock issued upon the exchange of JH Capital Class B Units.

        Pursuant to a letter agreement among the Company, Easterly Acquisition Sponsor, LLC (the "Sponsor"), JH Capital and the Founding Members, at the closing of the Business Combination, (i) the Founding Members will have the option to purchase at a price of $0.005 per share up to 500,000 shares of the Company's Class A common stock owned by the Sponsor and (ii) the Sponsor will surrender to the Company 2,500,000 shares of the Company's Class A common stock issued to the Sponsor prior to the Company's initial public offering in exchange for a warrant (the "New Warrant") to purchase 2,500,000 shares of the Company's Class A common stock. The New Warrant will be exercisable at a price of $0.01 per share, have a term of 5 years and may only be exercisable as follows: (x) 1,000,000 shares will be exercisable if the average of the volume weighted averages of the trading price of a share of the Company's Class A common stock for 10 consecutive trading days is higher than $12.00, (y) an additional 1,000,000 shares will be exercisable if (A) the Company has raised gross proceeds of at least $200,000,000 from the sale of its equity securities, including the gross proceeds released to the Company from the Trust Account and the amount of the Fortress Loan, and (B) the average of the volume weighted averages of the trading price of a share of the Company's Class A common stock for 10 consecutive trading days is higher than $13.00 and (z) the final 500,000 shares will be exercisable if (A) the Company has raised gross proceeds of at least $200,000,000 from the sale of its equity securities, including the gross proceeds released to the Company from the Trust Account and the amount of the Fortress Loan, and (B) the average of the volume weighted averages of the trading price of a share of the Company's Class A common stock for 10 consecutive trading days is higher than $14.00.

Letter Agreement

        On December 28, 2017, the Company entered into a Letter Agreement (the "December 28 Letter Agreement") with JH Capital, Jacobsen Credit Holdings, LLC ("Jacobsen Holdings"), Kravetz Capital Funding LLC ("KCF" and, together with Jacobsen Holdings, the "Principal Members") and NJK Holding LLC ("NJK Holding" and, together with KCF and Jacobsen Holdings, the "Founding Members"). The December 28 Letter Agreement provided that the Company consented to (i) certain subsidiaries of Jacobsen Holdings entering into the Fortress Loan and the issuance of the Fortress Warrant (as defined below), (ii) the issuance by JHPDE Finance I, LLC ("JHPDE Finance") of

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Proposed Business Combination with JH Capital (Continued)

$25 million of its Class A Membership Interests to a new member, and (iii) the Founding Members issuing to the Company the Founding Member Warrants (as defined below). The December 28 Letter Agreement also provided that JH Capital consented to the Company issuing the Fortress Warrant.

        Pursuant to the December 28 Letter Agreement, Jacobsen Holdings issued to the Company a warrant, dated December 28, 2017 (the "Founding Member Warrants"), to acquire from Jacobsen Holdings 888,000 shares of the Company's Class A common stock or Class B Units of JH Capital. The Founding Member Warrants will be exercisable at a price of $11.50 per share of the Company's Class A common stock or Class B Units of JH Capital, have a term of 5 years from the date of the closing of the JH Capital Business Combination and may be exercised only to the extent that the Fortress Warrant has been exercised. The Founding Members Warrants will first be exercisable for an amount of the Company's Class A common stock equal to the number of shares of the Company's Class A common stock acquired by Jacobsen Holdings and NJK Holding from the Sponsor pursuant to the Letter Agreement and thereafter for Class B Units of JH Capital owned by them.

Fortress Warrant

        Pursuant to the Credit Agreement, dated as of December 28, 2017 (the "Credit Agreement"), by and among, JHPDE Finance, JH Portfolio Debt Equities, LLC ("JHPDE"), and Fortress Credit Corp. ("Fortress"), Fortress is providing JHPDE Finance with a senior secured delayed draw credit facility to purchase distressed or defaulted consumer receivables, unsecured small business loans and unsecured receivables. In connection with the Credit Agreement, for no additional consideration, the Company issued to Fortress the Fortress Warrant to acquire 888,000 shares of the Company's Class A common stock (as described above). The Fortress Warrant will be exercisable at a price of $11.50 per share of Easterly Class A common stock, have a term of 5 years from the date of the closing of the Business Combination and may only be exercisable as follows: 444,000 shares will be immediately exercisable, and the remaining 444,000 shares will become exercisable ratably with the funding of the first $100,000,000 under the Credit Facility (e.g., 111,000 shares will become exercisable on the date on which the first $25,000,000 has been funded under the Credit Facility). However, the Fortress Warrant may be exercised only on or after the date which is 30 days after the first date on which the Company and JH Capital complete the Business Combination. Upon the earliest to occur of (a) the termination of the Investment Agreement in accordance with its terms, (b) the date on which the Trust Fund containing the proceeds of the Company's IPO is liquidated due to the failure of the Company to complete an initial Business Combination, (c) at the sole option of Fortress, at any time after December 31, 2018, if at the time Fortress determines to exercise such option, the Business Combination has not been consummated, or (d) a change of control of Jacobsen Holdings, then Jacobsen Holdings will exchange the Fortress Warrant for a warrant to purchase membership interests in Jacobsen Holdings.

        The December 28 Letter Agreement also provides that the parties agree that the aggregate amount of the Fortress Loan shall constitute "equity securities" for purposes of determining the amount of gross proceeds raised by the Company for purposes of the vesting triggers contained in the New Warrant.

F-231


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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Equity

        The Company is authorized to issue up to 100,000,000 shares of common stock with a par value $0.0001 per share. Holders of the Company's common stock are entitled to one vote for each share of common stock.

        As discussed further in Note 1, on August 1, 2017 and December 14, 2017, stockholders representing 4,289,791 and 687,597 shares, respectively elected to redeem their shares, resulting in redemption amounts of $42,983,883 and $6,915,728, respectively. At December 31, 2017, there were 6,477,668 shares of common stock issued and outstanding (excluding 13,544,944 shares of common stock subject to possible redemption).

        The Company is authorized to issue up to 1,000,000 shares of preferred stock with a par value $0.0001 per share. At December 31, 2017 there were no shares of preferred stock issued and outstanding.

        The Investment Agreement for the Business Combination described in Note 7 calls for a change to the capital structure of the Company upon the initial Business Combination.

9. Quarterly Financial Results (unaudited)

        The following table sets forth certain unaudited quarterly results of operations of the Company for the period from April 29, 2015 (Inception) through December 31, 2015 and for the years ended December 31, 2016 and December 31, 2017. In the opinion of management, this information has been prepared on the same basis as the audited financial statements and all necessary adjustments, consisting only of normally recurring adjustments, have been included in the amounts sated below to present fairly the quarterly information when read in conjunction with the audited financial statements and related notes. The quarterly operating results are not necessarily indicative of future results of operations.

For the year ended December 31, 2017
  First Quarter
(Unaudited)
(Revised)
  Second Quarter
(Unaudited)
(Revised)
  Third Quarter
(Unaudited)
  Fourth Quarter
(Unaudited)
 

Loss from operations

  $ (512,948 ) $ (347,110 ) $ (304,431 ) $ (310,128 )

Interest income

    165,919     323,111     357,371     385,826  

Total other income

    165,919     323,111     357,371     385,826  

Net income (loss)

  $ (347,029 ) $ (23,999 ) $ 52,940   $ 75,698  

Weighted average number of common shares outstanding, excluding shares subjected to possible conversions-basic and diluted

    6,361,827     6,404,259     6,429,951     6,453,697  

Basic and diluted net income (loss) per Share

  $ (0.07 ) $ (0.04 ) $ (0.04 ) $ (0.04 )

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EASTERLY ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. Quarterly Financial Results (unaudited) (Continued)


For the year ended December 31, 2016
  First Quarter
(Unaudited)
  Second Quarter
(Unaudited)
  Third Quarter
(Unaudited)
(Revised)
  Fourth Quarter
(Unaudited)
 

Loss from operations

  $ (231,117 ) $ (181,181 ) $ (666,074 ) $ (916,958 )

Interest income

    69,443     87,245     102,959     49,232  

Total other income

    69,443     87,245     102,959     49,232  

Net loss

  $ (161,674 ) $ (93,936 ) $ (563,115 ) $ (867,726 )

Weighted average number of common shares outstanding, excluding shares subjected to possible conversions-basic and diluted

    6,183,643     6,207,268     6,220,297     6,272,876  

Basic and diluted net loss per Share

  $ (0.03 ) $ (0.02 ) $ (0.10 ) $ (0.14 )

10. Stock-Based Compensation

        As described in Note 7, on December 28, 2017, the Company issued 888,000 warrants to Fortress Credit Corp. in connection with a loan provided by Fortress to JHPDE Finance I, LLC, a subsidiary of JH Capital. If the JH Capital Business Combination closes, the Fortress Warrant will be exercisable to purchase one share of the Company's Class A common stock at $11.50 per share, have a term of 5 years from the date of the closing of the JH Capital Business Combination and may only be exercised on or after the date which is 30 days after the first date on which the Company and JH Capital complete the JH Capital Business Combination.

        No compensation expense is recognized by the Company for the year ended December 31, 2017 as a result of the Fortress Warrant. The total unrecognized expense related to the Fortress Warrant as of December 31, 2017 is $472,327.

11. Subsequent Events

        Management of the Company evaluated events that have occurred after the balance sheet date of December 31, 2017, through the date the consolidated financial statements were issued.

        On February 1, 2018, the Company borrowed an additional $100,000 pursuant to the March 17, 2016 convertible promissory note.

        As described in Note 1, on January 16, 2018, February 15, 2018 and March 15, 2018 the Company received the three principal draws pursuant to the JH Capital Promissory Note in the amount of $450,678 each. Each of the $450,678 draws was subsequently deposited into the Trust Account.

        On March 8, 2018, the Company filed a definitive proxy statement to hold a special meeting of the Company's stockholders on March 29, 2018 for the purposes of extending the date by which the Company has to consummate a business combination from March 31, 2018 to June 30, 2018. If the extension is approved at this special meeting, JH Capital has agreed to continue to contribute to the Company as a loan of $0.03 for each public share that is not redeemed in connection with the special meeting, for each calendar month or portion thereof that is needed by the Company to complete a business combination from March 31, 2018 to June 30, 2018.

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Table of Contents

Annex A

AGREEMENT AND PLAN OF MERGER
by and among
SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.,
EASTERLY ACQUISITION CORP.
and
SIRIUS ACQUISITIONS HOLDING COMPANY III
Dated as of June 23, 2018


Table of Contents


TABLE OF CONTENTS

 
   
  Page


ARTICLE I
THE MERGER


 

 

Section 1.1

 

The Merger

 
A-2

Section 1.2

 

Closing

  A-2

Section 1.3

 

Effective Time

  A-3

Section 1.4

 

Certificate of Incorporation and Bylaws of the Surviving Company

  A-3

Section 1.5

 

Directors and Officers of the Surviving Company

  A-3

ARTICLE II
EFFECT ON THE SHARE CAPITAL OR CAPITAL STOCK OF THE CONSTITUENT ENTITIES; EXCHANGE OF CERTIFICATES

   

Section 2.1

 

Effect on Capital Stock of Easterly and Merger Sub

 
A-3

Section 2.2

 

Certain Adjustments

  A-6

Section 2.3

 

Fractional Shares

  A-6

Section 2.4

 

Exchange of Certificates

  A-7

Section 2.5

 

Further Assurances

  A-10

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EASTERLY

   

Section 3.1

 

Corporate Organization

 
A-10

Section 3.2

 

Capitalization

  A-10

Section 3.3

 

Authority; Execution and Delivery; Enforceability; State Takeover Statutes

  A-11

Section 3.4

 

Consents and Approvals; No Conflicts

  A-12

Section 3.5

 

SEC Documents; Financial Statements; Undisclosed Liabilities

  A-13

Section 3.6

 

Absence of Certain Changes or Events

  A-14

Section 3.7

 

Information Supplied

  A-14

Section 3.8

 

Legal Proceedings

  A-15

Section 3.9

 

Compliance with Laws

  A-15

Section 3.10

 

No Employees or Benefit Plans

  A-15

Section 3.11

 

Properties

  A-16

Section 3.12

 

Taxes

  A-16

Section 3.13

 

Material Contracts

  A-17

Section 3.14

 

Intellectual Property

  A-17

Section 3.15

 

Indebtedness

  A-17

Section 3.16

 

Broker's Fees

  A-17

Section 3.17

 

Investment Company Act

  A-17

Section 3.18

 

Stockholder Vote and Warrant Amendment

  A-17

Section 3.19

 

Affiliate Transactions

  A-17

Section 3.20

 

Trust Account

  A-17

Section 3.21

 

No Other Representations or Warranties

  A-18

A-i


Table of Contents

 
   
  Page


ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SIRIUS AND MERGER SUB


 

 

Section 4.1

 

Corporate Organization

 
A-18

Section 4.2

 

Capitalization of Merger Sub

  A-19

Section 4.3

 

Sirius Capitalization

  A-19

Section 4.4

 

Sirius Subsidiaries

  A-20

Section 4.5

 

Authority; Execution and Delivery; Enforceability

  A-20

Section 4.6

 

Consents and Approvals; No Conflicts

  A-20

Section 4.7

 

Reports; Financial Statements; Undisclosed Liabilities

  A-21

Section 4.8

 

Absence of Certain Changes or Events

  A-22

Section 4.9

 

Information Supplied

  A-22

Section 4.10

 

Legal Proceedings

  A-23

Section 4.11

 

Compliance with Laws

  A-23

Section 4.12

 

Regulatory Reports

  A-23

Section 4.13

 

Employee Matters

  A-23

Section 4.14

 

Environmental Matters

  A-25

Section 4.15

 

Properties

  A-25

Section 4.16

 

Material Contracts

  A-26

Section 4.17

 

Taxes

  A-26

Section 4.18

 

Risk-Based Capital

  A-26

Section 4.19

 

Insurance Regulatory Matters; Agreements with Regulators

  A-26

Section 4.20

 

Reinsurance Contracts

  A-27

Section 4.21

 

Actuarial Reports

  A-27

Section 4.22

 

Sirius Ratings

  A-28

Section 4.23

 

Intellectual Property

  A-28

Section 4.24

 

Insurance

  A-28

Section 4.25

 

Broker's Fees

  A-28

Section 4.26

 

Affiliate Transactions

  A-28

Section 4.27

 

Agreements with Regulatory Agencies

  A-28

Section 4.28

 

No Other Representations or Warranties

  A-29

ARTICLE V
COVENANTS

   

Section 5.1

 

Easterly Conduct of Businesses Prior to the Effective Time

 
A-29

Section 5.2

 

Sirius Conduct of Businesses Prior to the Effective Time

  A-30

Section 5.3

 

Preparation of the Registration Statement and the Proxy Statement; Easterly Stockholder Meeting

  A-31

Section 5.4

 

No Solicitation; No-Shop

  A-32

Section 5.5

 

Publicity

  A-33

Section 5.6

 

Notification of Certain Matters

  A-34

Section 5.7

 

Access to Information

  A-34

Section 5.8

 

Reasonable Best Efforts

  A-35

Section 5.9

 

Indemnification

  A-36

Section 5.10

 

Control of Operations

  A-36

Section 5.11

 

Stock Exchange Listing

  A-37

Section 5.12

 

Section 16 Matters

  A-37

Section 5.13

 

Trust Account

  A-37

Section 5.14

 

Warrant Tender Offer

  A-37

A-ii


Table of Contents

 
   
  Page

Section 5.15

 

Tax Matters

  A-38

Section 5.16

 

Stockholder Litigation

  A-39

ARTICLE VI
CONDITIONS TO THE MERGER

   

Section 6.1

 

Conditions to Obligations of Each Party

 
A-39

Section 6.2

 

Conditions to Obligations of Sirius and Merger Sub to Effect the Merger

  A-39

Section 6.3

 

Conditions to Obligation of Easterly to Effect the Merger

  A-40

ARTICLE VII
TERMINATION

   

Section 7.1

 

Termination

 
A-41

Section 7.2

 

Effect of Termination

  A-42

Section 7.3

 

Expenses

  A-42

Section 7.4

 

Procedure for Termination or Amendment

  A-42

ARTICLE VIII
MISCELLANEOUS

   

Section 8.1

 

Amendment and Modification

 
A-42

Section 8.2

 

Extension; Waiver

  A-43

Section 8.3

 

Nonsurvival of Representations and Warranties

  A-43

Section 8.4

 

Notices

  A-43

Section 8.5

 

Counterparts

  A-44

Section 8.6

 

Entire Agreement; Third Party Beneficiaries

  A-44

Section 8.7

 

Severability

  A-44

Section 8.8

 

Specific Performance

  A-44

Section 8.9

 

Assignment

  A-44

Section 8.10

 

Headings; Interpretation

  A-44

Section 8.11

 

Governing Law

  A-45

Section 8.12

 

Exclusive Jurisdiction

  A-45

Section 8.13

 

Trust Account Waiver

  A-45

Section 8.14

 

WAIVER OF JURY TRIAL

  A-46

Section 8.15

 

Definitions

  A-46

Exhibit A

 

Sponsor Letter

 
A-1

Exhibit B

 

Form of Promissory Note

  B-1

Exhibit C

 

Form of Registration Rights Agreement

  C-1

Exhibit D

 

Form of Lock-Up Agreement

  D-1

Exhibit E

 

Form of Warrant Amendment

  E-1

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Table of Contents


INDEX OF DEFINED TERMS

A.M. Best

  4.22

Adjusted June 30 DBVPS

  8.15(a)

Affiliate

  8.15(a)

Agreement

  Preamble

Ancillary Agreements

  8.15(a)

Audited Financial Statements

  4.7(a)

Business Combination

  8.15(a)

Business Day

  8.15(a)

Certificate of Merger

  1.3(a)

Closing

  1.2

Closing Date

  1.2

CMB

  Recitals

Code

  Recitals

Common Shares Trust

  2.3(b)

Confidentiality Agreement

  8.15(a)

Consents

  3.4(a)

Contract

  3.4(b)

Control

  8.15(a)

Converted Warrant

  2.1(f)

Convertible Promissory Note

  8.15(a)

Designated Investors

  8.15(a)

DGCL

  1.1(a)

Dispute Notice

  2.1(g)(ii)

Easterly

  Preamble

Easterly Acquisition Proposal

  5.5(c)(ii)

Easterly Adverse Recommendation Change

  5.4(b)

Easterly Benefit Plan

  3.10(a)

Easterly Board

  3.3(b)

Easterly Book-Entry Shares

  2.1(c)

Easterly Bylaws

  3.1

Easterly Capital Stock

  3.2(a)

Easterly Certificate

  2.1(c)

Easterly Charter

  3.1

Easterly Closing Outstanding Shares

  8.15(a)

Easterly Common Stock

  2.1

Easterly Disclosure Letter

  Article III

Easterly Material Adverse Effect

  Article III

Easterly Preferred Stock

  3.2(a)

Easterly Recommendation

  3.3(b)

Easterly SEC Documents

  3.5(a)

Easterly SEC Financial Statements

  3.5(c)

Easterly Stockholder Approval

  3.18

Easterly Stockholders Meeting

  5.4(b)

Easterly Warrant

  2.1

Effective Time

  1.3(b)

Environmental Laws

  4.14

ERISA

  3.10(a)

ERISA Affiliate

  3.10(a)

Estimated Easterly Cash Per Share

  8.15(a)

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Table of Contents

Excess Shares

  2.3(a)

Exchange Act

  3.4(a)

Exchange Agent

  2.4(a)

Exchange Fund

  2.4(a)

Exchange Ratio

  2.1(b)

Extension Amendments

  3.20

Filings

  3.4(a)

Final Adjusted June 30 DBVPS

  2.1(g)(iv)

Final June 30 Book Value

  2.1(g)(ii)

Financial Statements

  4.7(a)

Fitch

  4.22

GAAP

  8.15(a)

Governmental Entity

  3.4(a)

HSR Act

  8.15(a)

Indebtedness

  8.15(a)

Indemnitees

  5.9(a)

Independent Firm

  2.1(g)(v)

Insurance Regulator

  8.15(a)

Insurance Reserves

  8.15(a)

Intellectual Property

  8.15(a)

Investment Assets

  8.15(a)

Investment Company Act

  3.17

IPO

  3.20

June 30 Book Value

  8.15(a)

Knowledge

  8.15(a)

Laws

  8.15(a)

Liens

  8.15(a)

Lloyd's

  8.15(a)

Lock-Up Agreement

  Recitals

Material Adverse Effect

  8.15(a)

Material Contracts

  8.15(a)

Merger

  1.1(a)

Merger Consideration

  2.1(b)

Merger Sub

  Preamble

NASDAQ

  8.15(a)

Non-US Sirius Benefit Plans

  4.13(e)

Order

  8.15(a)

Outside Date

  7.1(b)(ii)

Permitted Lien

  8.15(a)

Person

  8.15(a)

PIPE

  Recitals

Policies

  4.19(b)

Premium Cap

  5.10(d)

Proceeding

  8.15(a)

Producer

  4.19(d)

Promissory Note

  Recitals

Proposed Adjusted June 30 DBVPS

  2.1(g)(iii)

Proposed Book Value Schedule

  2.1(g)(i)

Prospectus

  8.14

Proxy Statement

  8.15(a)

Redemption Agreement

  Recitals

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Table of Contents

Redemption Shares

  2.1(d)

Registration Rights Agreement

  Recitals

Registration Statement

  3.7

Reinsurance Contracts

  4.20

Reinsurance Subsidiaries

  8.15(a)

Representatives

  5.4(a)

S&P

  4.22

SAP

  8.15(a)

Sarbanes-Oxley Act

  3.5(d)

SEC

  3.4(a)

Securities Act

  3.4(a)

Sirius

  Preamble

Sirius Acquisition Proposal

  5.5(c)(i)

Sirius Benefit Plan

  4.13(a)

Sirius Board

  4.5(b)

Sirius Capital Shares

  4.3(a)

Sirius Common Shares

  8.15(a)

Sirius Disclosure Letter

  Article IV

Sirius Equity Awards

  4.3(a)

Sirius Material Adverse Effect

  Article IV

Sirius Preference Shares

  4.3(a)

Sirius Reports

  4.12

Sponsor

  8.15(a)

Sponsor Letter

  Recitals

Statutory Statements

  4.7(c)

Subsidiary

  8.15(a)

Surviving Company

  1.1(a)

Takeover Laws

  3.3(c)

Tax Return

  8.15(a)

Taxes

  8.15(a)

Transactions. 

  1.1(a)

Trust Account

  3.20

Trust Agreement

  3.20

Trustee

  3.20

Unaudited Financial Statements

  4.7(a)

Warrant Agreement

  2.1

Warrant Amendment

  2.1(f)

Warrant Offer Documents

  5.16(a)

Warrant Tender Offer

  5.16(a)

Willful Breach

  8.15(a)

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AGREEMENT AND PLAN OF MERGER

         THIS AGREEMENT AND PLAN OF MERGER is dated as of June 23, 2018 (this " Agreement "), by and among SIRIUS INTERNATIONAL INSURANCE GROUP, LTD., a Bermuda exempted company (" Sirius "), EASTERLY ACQUISITION CORP., a Delaware corporation (" Easterly "), and SIRIUS ACQUISITIONS HOLDING COMPANY III, a Delaware corporation and a wholly owned Subsidiary of Sirius (" Merger Sub ").


WITNESSETH:

         WHEREAS, each of Sirius, Easterly and Merger Sub desire, following the satisfaction or waiver of the conditions set forth in Article VI , to effect the Merger upon the terms and conditions set forth in this Agreement whereby Merger Sub shall be merged with and into Easterly, with Easterly being the surviving entity in the Merger and the Surviving Company becoming a wholly owned subsidiary of Sirius;

         WHEREAS, the Boards of Directors of each of Sirius, Easterly and Merger Sub have determined that it is advisable and in the best interests of their respective companies and shareholders or stockholders to consummate the Merger and the other Transactions on the terms and conditions set forth herein;

         WHEREAS, concurrently with the execution of this Agreement, Sirius, Sponsor and Easterly have entered into a letter agreement, dated as of the date hereof and attached hereto as Exhibit A (the " Sponsor Letter") , with respect to the treatment of the shares of Easterly Common Stock and Easterly Warrants held by Sponsor in connection with the Transactions and pursuant to which, among other things, Sponsor has agreed to vote its shares of Easterly Common Stock in favor of certain matters, including the Merger and the other Transactions;

         WHEREAS, it is anticipated that, prior to filing the Registration Statement, Sirius and CM Bermuda Limited (" CMB "), a shareholder of Sirius, will enter into a redemption agreement (the " Redemption Agreement ") pursuant to which Sirius shall repurchase, at a price per share of Sirius Common Shares equal to the price per share of the Sirius Common Shares issued as part of the Merger Consideration hereunder, Sirius Common Shares for an aggregate purchase price between $120 million and $250 million, as elected by CMB, which purchase shall be contingent upon the occurrence of the Closing hereunder and which purchase price shall be funded from Sirius' cash on hand (and not, for the avoidance of doubt, out of the funds released from the Trust Account in connection with the completion of the Merger);

         WHEREAS, concurrently with the execution of this Agreement, Sirius, Easterly and CMB have entered into a letter agreement, dated as of the date hereof, pursuant to which, among other things, CMB has agreed, if Sirius elects to structure the acquisition of Easterly through a Direct Merger pursuant to Section 1.1(c) , to vote its Sirius Common Shares in favor of certain matters, including the Direct Merger;

         WHEREAS, concurrently with the execution of this Agreement, Sirius will make a loan to the Trust Account in an amount equal to $0.03 per month per each underlying share of Easterly Common Stock (but not to exceed $450,467.31per month in the aggregate) over the course of five calendar months commencing on July 1, 2018, through and on the terms and conditions set forth in a Promissory Note substantially in the form attached hereto as Exhibit B (the " Promissory Note ");

         WHEREAS, prior to the Closing, Sirius anticipates adopting an omnibus incentive plan for employees, which plan will be described in the Registration Statement;

         WHEREAS, concurrently with the consummation of the Merger, Sirius, certain stockholders of Easterly and certain shareholders of Sirius will enter into a registration rights agreement in the form

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attached hereto as Exhibit C (the " Registration Rights Agreement ") and each such stockholder of Easterly and shareholder of Sirius will enter into a lock-up agreement with Sirius in the form attached hereto as Exhibit D (the " Lock-Up Agreement ");

         WHEREAS , following the announcement of the Merger and the other Transactions, Sirius intends to market a private placement offering of Sirius Common Shares (or securities of Sirius convertible into Sirius Common Shares), which would close concurrently with the Merger and the other Transactions (the " PIPE ");

         WHEREAS, for U.S. federal income tax purposes, it is intended that the Merger shall qualify as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the " Code "); that this Agreement will constitute a "plan of reorganization" for purposes of Sections 354 and 361 of the Code; and that Sirius, Easterly and Merger Sub will each be a "party to the reorganization" within the meaning of Section 368(b) of the Code; and

         WHEREAS, Sirius, Easterly and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with the Merger and the other Transactions, and also to prescribe various conditions to the Merger.

         NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, Sirius, Easterly and Merger Sub agree as follows:


ARTICLE I

THE MERGER

        Section 1.1     The Merger .     

            (a)   At the Effective Time, Merger Sub shall be merged with and into Easterly (the " Merger ") in accordance with the Delaware General Corporation Law (the " DGCL ") and upon the terms set forth in this Agreement, whereupon the separate existence of Merger Sub shall cease and Easterly shall continue as the surviving company (the " Surviving Company "). As a result of the Merger, the Surviving Company shall become a wholly owned Subsidiary of Sirius. The Merger and other transactions contemplated by this Agreement are referred to herein as the " Transactions ."

            (b)   From and after the Effective Time, the Surviving Company shall possess all the rights, powers, and properties and be subject to all of the obligations, liabilities and duties of Easterly and Merger Sub, all as provided under the DGCL.

            (c)   Easterly, Sirius and Merger Sub agree that, if, prior to the filing of the Registration Statement or, so long as the consummation of the Transactions is not materially delayed as a result, after the filing of the Registration Statement, Sirius notifies Easterly in writing that the acquisition by Sirius of Easterly will be implemented through a merger of Easterly with and into Sirius (the " Direct Merger "), with Sirius continuing as the surviving company of such merger, then the parties shall amend this Agreement and the Ancillary Agreement and enter into such other agreements, in each case as necessary or desirable, to provide for the Direct Merger (in lieu of the Merger); provided , for the avoidance of doubt, that the Merger Consideration shall not change.


        Section 1.2
    Closing .     The closing of the Merger (the " Closing ") shall take place at the offices of Sidley Austin LLP, 787 Seventh Avenue New York, New York 10019, at 9:00 a.m. local time, as soon as practicable (but, subject to the satisfaction or, to the extent permitted hereunder, waiver of the applicable conditions set forth in Article VI , in any event, within three (3) Business Days) after satisfaction or, to the extent permitted hereunder, waiver of all applicable conditions set forth in Article VI (except for any conditions that by their nature can only be satisfied on the Closing Date, but subject to the satisfaction of such conditions or waiver by the party entitled to waive such conditions)

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or at such other time and place as Sirius and Easterly may agree. The date and time on which the Closing occurs is referred to herein as the " Closing Date ."


        Section 1.3
    Effective Time .     

            (a)   On the Closing Date, Easterly shall file a certificate of merger (the " Certificate of Merger ") with the Delaware Secretary of State in accordance with the relevant provisions of the DGCL and shall make all other filings or recordings required by the DGCL in connection with the Merger.

            (b)   The Merger shall become effective at the time and date shown on the Certificate of Merger (such time as the Merger becomes effective being the " Effective Time ").


        Section 1.4
    Certificate of Incorporation and Bylaws of the Surviving Company .     The Certificate of Incorporation and Bylaws of Merger Sub, each as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation and Bylaws of the Surviving Company until amended in accordance with the terms thereof and applicable Law.


        Section 1.5
    Directors and Officers of the Surviving Company .     From and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with applicable Law, (a) the directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Company and (b) the officers of Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Company.


ARTICLE II

EFFECT ON THE SHARE CAPITAL OR CAPITAL STOCK
OF THE CONSTITUENT ENTITIES; EXCHANGE OF CERTIFICATES

        Section 2.1     Effect on Capital Stock of Easterly and Merger Sub .     At the Effective Time, by virtue of the Merger and without any action on the part of Sirius, Easterly, Merger Sub or any holder of any shares of Easterly common stock, $0.0001 par value per share (" Easterly Common Stock "), or of a warrant to purchase shares of Easterly Common Stock issued pursuant to the Warrant Agreement (the " Warrant Agreement "), dated as of July 29, 2015, by and between Easterly and Continental Stock Transfer & Trust Company (an " Easterly Warrant "):

            (a)   (i) All shares of Easterly Common Stock that are held by Easterly as treasury stock or that are owned by Easterly, Sirius, Merger Sub or any wholly owned Subsidiary of Sirius or Easterly immediately prior to the Effective Time and (ii) all Surrendered Sponsor Shares (as defined in the Sponsor Letter), shall cease to be outstanding and shall be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor.

            (b)   Subject to Sections 2.1(a) , 2.1(d) , 2.2 and 2.3 , each share of Easterly Common Stock issued and outstanding immediately prior to the Effective Time (other than Redemption Shares) shall be converted into the right to receive that number of (or that fraction of) validly issued, fully paid and non-assessable Sirius Common Shares equal to the Exchange Ratio (together with cash in lieu of fractional shares of Sirius Common Shares as contemplated by Section 2.3 , the " Merger Consideration "). As used in this Agreement, the " Exchange Ratio " means a fraction (rounded to the nearest one thousandth) determined by dividing (i) the Estimated Easterly Cash Per Share by (ii) (x) 1.05 multiplied by (y) the Final Adjusted June 30 DBVPS, in each case as determined in accordance with this Section 2.1(b) and Section 2.1(g) .

            (c)   As of the Effective Time, all shares of Easterly Common Stock converted into the right to receive the Merger Consideration shall cease to be outstanding and shall cease to exist, and each holder of a certificate representing any such shares of Easterly Common Stock (an " Easterly Certificate ") or shares of Easterly Common Stock held in book entry form (" Easterly Book-Entry

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    Shares ") shall cease to have any rights with respect thereto, except the right to receive, in accordance with Section 2.1(b) , the Merger Consideration and any other amounts herein provided, upon surrender of such Easterly Certificate (in the case of any share represented by an Easterly Certificate), without interest.

            (d)   Each share of Easterly Common Stock issued and outstanding immediately prior to the Effective Time with respect to which an Easterly stockholder has validly exercised its redemption rights, and that shall be redeemed at the Effective Time, as provided for in Section 9.2 of the Easterly Charter (" Redemption Shares ") shall not be entitled to receive the Merger Consideration and shall be converted into the right to receive from Easterly, in cash, an amount per share calculated in accordance with Section 9.2 of the Easterly Charter. At or as promptly as practical after the Effective Time, Easterly shall make the cash payments required under Section 9.2 of the Easterly Charter in respect of each such Redemption Share. As of the Effective Time, all such Redemption Shares shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of an Easterly Certificate or Easterly Book-Entry Shares representing such Redemption Shares shall cease to have any rights with respect thereto, except the right to receive the cash payments from Easterly referred to in the immediately preceding sentence.

            (e)   Each share of Merger Sub common stock issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock, par value $0.01 per share, of the Surviving Company.

            (f)    At the Effective Time, each Easterly Warrant that is outstanding immediately prior to the Effective Time shall cease to represent a right to acquire shares of Easterly Common Stock and shall be converted, at the Effective Time, into a right to acquire Sirius Common Shares (a " Converted Warrant ") on the same contractual terms and conditions as were in effect immediately prior to the Effective Time under the terms of the Warrant Agreement except as provided for in this Section 2.1(f) . The number of Sirius Common Shares subject to each such Converted Warrant shall be equal to the number of shares of Easterly Common Stock subject to each such Easterly Warrant immediately prior to the Effective Time multiplied by the Exchange Ratio, and such Converted Warrant shall have an exercise price per share equal to the exercise price per share of Easterly Common Stock subject to such Easterly Warrant immediately prior to the Effective Time divided by the Exchange Ratio, in each case, pursuant to the Warrant Agreement. The parties shall cause the Warrant Agreement to be amended as of the Effective Time to the extent necessary to give effect to this Section 2.1(f) , including adding Sirius as a party thereto, such assignment, assumption and amendment agreement to be substantially in the form attached hereto as Exhibit E (the " Warrant Amendment ").

            (g)   Determination of Exchange Ratio.

                (i)  As promptly as practicable, and in any event prior to July 30, 2018, Sirius shall prepare and deliver to Easterly its good faith calculation of the June 30 Book Value (the " Proposed Book Value Schedule "), together with such supporting documentation that Easterly may reasonably request.

               (ii)  Within five (5) Business Days of the delivery of the Proposed Book Value Schedule, Easterly shall notify Sirius whether it accepts or disputes the accuracy of the Proposed Book Value Schedule. In the event that Easterly disputes the accuracy of the Proposed Book Value Schedule, Easterly shall notify Sirius in reasonable detail of those items and amounts as to which Easterly disagrees and shall set forth Easterly's calculation of such disputed amounts (a " Dispute Notice "), and Easterly shall be deemed to have agreed with all other items and amounts contained in the Proposed Book Value Schedule not so disputed. In the event that Easterly notifies Sirius that it accepts the Proposed Book Value Schedule or does not deliver a

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      Dispute Notice to Sirius during such five (5) Business Day period, Easterly, on behalf of itself and all holders of Easterly Common Stock, shall be deemed to have accepted the accuracy of the Proposed Book Value Schedule, and the calculations of the June 30 Book Value set forth therein shall be final, conclusive and binding upon the parties (such amount, the " Final June 30 Book Value ").

              (iii)  At least two (2) Business Days prior to the Closing Date (or such other time as may be mutually agreed between Sirius and Easterly), Sirius shall prepare and deliver to Easterly its good faith calculation of the Adjusted June 30 DBVPS (the " Proposed Adjusted June 30 DBVPS "), together with such supporting documentation that Easterly may reasonably request.

              (iv)  Within two (2) Business Days of the delivery of the Proposed Adjusted June 30 DBVPS, Easterly shall notify Sirius whether it accepts or disputes the accuracy of the Proposed Adjusted June 30 DBVPS. In the event that Easterly disputes the accuracy of the Proposed Adjusted June 30 DBVPS, Easterly shall provide Sirius with a Dispute Notice, and Easterly shall be deemed to have agreed with all other items and amounts contained in the Proposed Adjusted June 30 DBVPS not so disputed. In the event that Easterly notifies Sirius that it accepts the Proposed Adjusted June 30 DBVPS or does not deliver a Dispute Notice to Sirius during such two (2) Business Day period, Easterly, on behalf of itself and all holders of Easterly Common Stock, shall be deemed to have accepted the accuracy of the Proposed Adjusted June 30 DBVPS, and the calculations of the Adjusted June 30 DBVPS set forth therein shall be final, conclusive and binding upon the parties (such amount, the " Final Adjusted June 30 DBVPS ").

               (v)  If a Dispute Notice shall be timely delivered by Easterly pursuant to Section 2.1(g)(ii) or Section 2.1(g)(iv) above, then Sirius and Easterly shall forthwith jointly request that a mutually agreed upon nationally recognized registered independent public accounting firm or a nationally recognized independent valuation expert (in either case, the " Independent Firm "), make a binding determination only as to the items set forth in the Dispute Notice, in accordance with the terms of this Agreement. The Independent Firm will, under the terms of its engagement, be required to render its written decision with respect to such disputed items and amounts within four (4) Business Days from the date of referral. The Independent Firm shall consider only those items or amounts in the Proposed Book Value Schedule or the Proposed Adjusted June 30 DBVPS, as applicable, as to which Easterly and Sirius are in disagreement. The Independent Firm shall deliver to Easterly and Sirius a written report setting forth its adjustments, if any, to the Proposed Book Value Schedule or the Proposed Adjusted June 30 DBVPS, as applicable, based on the Independent Firm's determination with respect to the disputed items and amounts in accordance with this Agreement, and such report shall include the calculations supporting such adjustments; provided , that for each item as to which Easterly and Sirius are in disagreement, the Independent Firm shall assign a value for each such item no greater than the higher amount, and no less than the lower amount, calculated or proposed by Easterly or Sirius with respect to such item, as the case may be. Such report shall be final, conclusive and binding on the parties and shall constitute the Final June 30 Book Value or the Final Adjusted June 30 DBVPS, as applicable, and neither party nor any of their respective Affiliates, stockholders or Representatives may seek recourse to any courts, other tribunals or otherwise, other than to enforce the determination of the Independent Firm. The fees and expenses of the Independent Firm for purposes of this Section 2.1(g) shall be borne equally by the parties.

              (vi)  At least two (2) Business Days prior to the Closing Date (or such other time as may be mutually agreed between Sirius and Easterly), Easterly shall notify Sirius in writing of its good faith calculation of the Easterly Closing Outstanding Shares and the Estimated Easterly Cash Per Share, in each case as of immediately prior to the Effective Time, together with such

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      supporting documentation that Sirius may reasonably request. Using such amounts and the Adjusted June 30 DBVPS as finally determined pursuant to this Section 2.1(g) , Sirius shall then calculate the final Exchange Ratio.


        Section 2.2
    Certain Adjustments .     Notwithstanding anything in this Agreement to the contrary, if, from the date of this Agreement until the Effective Time, and subject to the terms of this Agreement, the issued Sirius Common Shares or the outstanding shares of Easterly Common Stock shall have been changed into a different number of shares or a different class by reason of any reclassification, share or stock split (including a reverse share or stock split), recapitalization, split-up, combination, exchange of shares, readjustment, or other similar transaction (for the avoidance of doubt, excluding the exercise of redemption rights by Easterly stockholders pursuant to Section 9.2 of the Easterly Charter), or a stock dividend or stock distribution thereon shall be declared with a record date within said period, the Merger Consideration, the Exchange Ratio, and any other similarly dependent items, as the case may be, shall be equitably adjusted to provide the holders of Easterly Common Stock the same economic effect as contemplated by this Agreement prior to such event.


        Section 2.3
    Fractional Shares .     

            (a)   Notwithstanding any other provision of this Agreement, no fractional shares of Sirius Common Shares shall be issued upon the conversion of Easterly Common Stock in the Merger, but in lieu thereof each holder of shares of Easterly Common Stock otherwise entitled to a fractional Sirius Common Share (after taking into account all Easterly Certificates and Easterly Book-Entry Shares delivered by such holder pursuant to Section 2.4 ) will be entitled to receive, from the Exchange Agent in accordance with the provisions of this Section 2.3 , a cash payment, without interest, in lieu of such fractional Sirius Common Share representing such holder's proportionate interest, if any, in the net proceeds from the sale by the Exchange Agent in one or more transactions of Sirius Common Shares equal to the excess of (i) the aggregate number of Sirius Common Shares to be delivered to the Exchange Agent by Sirius pursuant to Section 2.4(a) over (ii) the aggregate number of whole Sirius Common Shares to be distributed to the holders of Easterly Common Stock pursuant to Section 2.4(b) (such excess, the " Excess Shares "). The parties acknowledge that payment of the cash consideration in lieu of issuing fractional Sirius Common Shares is not separately "bargained-for consideration" but merely represents a mechanical rounding off for purposes of avoiding the expense and inconvenience to Sirius that would otherwise be caused by the issuance of fractional Sirius Common Shares. As soon as reasonably practicable after the Effective Time, the Exchange Agent, as agent for the former holders of Easterly Common Stock that would otherwise receive fractional Sirius Common Shares, shall sell the Excess Shares at then-prevailing prices on the NASDAQ in the manner provided herein.

            (b)   The sale of the Excess Shares by the Exchange Agent, as agent for the former holders of Easterly Common Stock that would otherwise receive fractional Sirius Common Shares, shall be executed on the NASDAQ through one or more member firms of the NASDAQ and shall be executed in round lots to the extent practicable. The net proceeds of any such sale or sales of Excess Shares to be distributed to the former holders of Easterly Common Stock shall be reduced by any and all commissions, transfer Taxes and other out-of-pocket transaction costs, as well as any expenses, of the Exchange Agent incurred in connection with such sale or sales. Until the net proceeds of such sale or sales have been distributed to the former holders of Easterly Common Stock, the Exchange Agent shall hold such net proceeds in trust for such holders that would otherwise receive fractional Sirius Common Shares (the " Common Shares Trust "). The Exchange Agent shall determine the portion of the Common Shares Trust to which each former holder of Easterly Common Stock shall be entitled, if any, by multiplying the amount of the aggregate proceeds comprising the Common Shares Trust by a fraction, the numerator of which is the amount of the fractional share interest to which such former holder of Easterly Common Stock

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    would otherwise be entitled and the denominator of which is the aggregate amount of fractional share interests to which all former holders of Easterly Common Stock would otherwise be entitled.

            (c)   As soon as reasonably practicable after the determination of the amount of cash, if any, to be paid to former holders of Easterly Common Stock in lieu of any fractional Sirius Common Shares, the Exchange Agent shall make available such amounts to such holders of Easterly Common Stock without interest, subject to and in accordance with Section 2.4 .


        Section 2.4
    Exchange of Certificates .     

            (a)   Prior to the Effective Time, Sirius shall deposit with a nationally recognized financial institution designated by Sirius and reasonably acceptable to Easterly (the " Exchange Agent "), for the benefit of the holders of shares of Easterly Common Stock, for exchange in accordance with this Article II , through the Exchange Agent, subject to Section 2.4(b)(ii) , certificates or evidence of book-entry shares representing the full number of Sirius Common Shares issuable pursuant to Section 2.1 in exchange for outstanding shares of Easterly Common Stock (including any fractional shares that would be issuable but for Section 2.3 , rounded to the nearest whole share). Sirius shall, after the Effective Time on the appropriate payment date, if applicable, provide or cause to be provided to the Exchange Agent any dividends or other distributions payable on such Sirius Common Shares pursuant to Section 2.4(c) (such Sirius Common Shares provided to the Exchange Agent, together with any dividends or other distributions with respect thereto, being hereinafter referred to as the " Exchange Fund "). Sirius shall cause the Exchange Agent to deliver the Sirius Common Shares and cash contemplated to be issued pursuant to Section 2.1 or Section 2.3 out of the Exchange Fund. The Exchange Fund shall not be used for any other purpose.

            (b)   Exchange Procedures.

              (i)     Certificates.     Sirius shall instruct the Exchange Agent to mail, as soon as reasonably practicable after the Effective Time, to each holder of record of an Easterly Certificate whose shares were converted into the right to receive the Merger Consideration (A) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Easterly Certificates shall pass, only upon delivery of the Easterly Certificates to the Exchange Agent and shall be in customary form and have such other provisions as are reasonably satisfactory to both of Easterly and Sirius) and (B) instructions for use in effecting the surrender of the Easterly Certificates in exchange for the Merger Consideration. Upon surrender of an Easterly Certificate for cancellation to the Exchange Agent or to such other agent or agents as may be appointed by Sirius, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the Exchange Agent, the holder of such Easterly Certificate shall be entitled to receive in exchange therefor, and Sirius shall cause the Exchange Agent to pay and deliver in exchange therefor as promptly as practicable (1) the number of whole Sirius Common Shares (which shall be in non-certificated book entry form unless determined otherwise by Sirius) representing, in the aggregate, the whole number of shares that such holder has the right to receive pursuant to Section 2.1(b) (after taking into account all shares then held by such holder), (2) any dividends or other distributions payable pursuant to Section 2.4(c)(i) and (3) cash in lieu of fractional shares of Sirius Common Shares payable pursuant to Section 2.3 , and the Easterly Certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of Easterly Common Stock that is not registered in the transfer records of Easterly, payment may be made and shares may be issued to a Person other than the Person in whose name the Easterly Certificate so surrendered is registered, if such Easterly Certificate or instrument of transfer shall be properly endorsed or otherwise be in proper form for transfer and the Person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a Person other than the registered holder of such Easterly Certificate or establish

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      to the satisfaction of Sirius that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 2.4 , each Easterly Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration into which the shares of Easterly Common Stock theretofore represented by such Easterly Certificate have been converted pursuant to Section 2.1(b) , dividends or other distributions payable pursuant to Section 2.4(c)(i) and cash in lieu of any fractional shares payable pursuant to Section 2.3 . No interest shall be paid or accrue on any cash payable upon surrender of any Easterly Certificate.

              (ii)     Book-Entry Shares.     Notwithstanding anything to the contrary contained in this Agreement, any holder of Easterly Book-Entry Shares shall not be required to deliver an Easterly Certificate or an executed letter of transmittal to the Exchange Agent to receive the Merger Consideration that such holder is entitled to receive pursuant to this Article II . In lieu thereof, each holder of record of one or more Easterly Book-Entry Shares whose shares of Easterly Common Stock were converted into the right to receive the Merger Consideration and any dividends or other distributions payable pursuant to Section 2.4(c)(ii) shall automatically upon the Effective Time (or, at any later time at which such Easterly Book-Entry shall be so converted) be entitled to receive, and Sirius shall cause the Exchange Agent to pay and deliver as promptly as practicable after the Effective Time, in respect of each share of Easterly Common Stock (A) the number of Sirius Common Shares (which shall be in uncertificated book-entry form unless otherwise determined by Sirius) representing, in the aggregate, the whole number of shares that such holder has the right to receive pursuant to this Section 2.4(b) , (B) any dividends or distributions payable pursuant to Section 2.4(c)(ii) and (C) cash in lieu of any fractional shares payable pursuant to Section 2.3 , and the Easterly Book-Entry Shares of such holder, as applicable, shall forthwith be canceled.

            (c)   Distributions with Respect to Unexchanged Shares.

              (i)     Certificates.     No dividends or other distributions with respect to Sirius Common Shares with a record date after the Effective Time shall be paid to the holder of any certificate formerly representing Easterly Common Stock, and no cash payment in lieu of fractional shares shall be paid to any such holder pursuant to Section 2.3 , until the surrender of such Easterly Certificate in accordance with this Article II . Subject to applicable Law, following surrender of any such Easterly Certificate, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the Exchange Agent, there shall be paid to the holder of Sirius Common Shares issued in exchange therefor, without interest, (A) at the time of such surrender, the amount of any cash payable in lieu of a fractional Sirius Common Share to which such holder is entitled pursuant to Section 2.3 and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole Sirius Common Shares to which such holder is entitled and (B) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time, but prior to such surrender and a payment date subsequent to such surrender payable with respect to such whole Sirius Common Shares.

              (ii)     Book-Entry Shares.     Holders of Easterly Book-Entry Shares who are entitled to receive Sirius Common Shares under this Article II shall be paid (A) at the time of payment and delivery of such Sirius Common Shares by the Exchange Agent under Section 2.4(b) , the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole Sirius Common Shares to which such holder is entitled, and the amount of any cash payable in lieu of a fractional Sirius Common Share to which such holder is entitled pursuant to Section 2.3 and (B) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time, but

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      prior to the time of such payment and delivery by the Exchange Agent under Section 2.4(b) and a payment date subsequent to the time of such payment and delivery by the Exchange Agent under Section 2.4(b) payable with respect to such Sirius Common Shares.

            (d)   The Merger Consideration issued (and paid) in accordance with the terms of this Article II upon the surrender of the Easterly Certificates (or, automatically, in the case of the Easterly Book-Entry Shares) shall be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to such shares of Easterly Common Stock (other than the right to receive the payments and deliveries contemplated by this Article II ). After the Effective Time there shall be no further registration of transfers on the stock or share transfer books of the Surviving Company of shares of Easterly Common Stock outstanding that were in issue immediately prior to the Effective Time. If, after the Effective Time, any Easterly Certificates formerly representing shares of Easterly Common Stock are presented to the Surviving Company or the Exchange Agent, for any reason, they shall be cancelled and exchanged as provided in this Article II .

            (e)   Any portion of the Exchange Fund that remains undistributed to the holders of Easterly Common Stock for six (6) months after the Effective Time shall be delivered to Sirius, upon demand, and any holder of Easterly Common Stock who has not theretofore complied with this Article II shall thereafter look only to Sirius for payment of its claim for the Merger Consideration and any dividends or distributions with respect to Sirius Common Shares as contemplated by Section 2.4(c) .

            (f)    None of Sirius, Merger Sub, Easterly or the Exchange Agent shall be liable to any Person in respect of any Sirius Common Shares (or dividends or distributions with respect thereto) or cash from the Exchange Fund (including any amounts delivered to Sirius in accordance with Section 2.4(e) ) properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

            (g)   In the event any Easterly Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Easterly Certificate to be lost, stolen or destroyed and, to the extent required by Sirius, the posting by such Person of a bond in reasonable amount as indemnity against any claim that may be made against it with respect to such Easterly Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Easterly Certificate the Sirius Common Shares and the cash, unpaid dividends or other distributions that would be payable or deliverable in respect thereof pursuant to this Agreement had such lost, stolen or destroyed Easterly Certificate been surrendered as provided in this Article II .

            (h)   The Exchange Agent shall invest any cash included in the Exchange Fund as directed by Sirius. Any interest and other income resulting from such investments shall be paid to Sirius.

            (i)    Each of Sirius, Easterly and the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any holder of Easterly Common Stock pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of state, local or foreign Tax Law. Any amount properly deducted or withheld pursuant to this Section 2.4(i) shall be treated as having been paid to the holder of Easterly Common Stock in respect of which such deduction or withholding was made. In the case of any amounts properly withheld from any payments not consisting entirely of cash, Sirius and the Exchange Agent, as applicable, shall be treated as though it withheld an appropriate amount of Sirius Common Shares otherwise payable pursuant to this Agreement to any holder of Easterly Common Stock, sold such Sirius Common Shares for an amount of cash equal to its fair market value at the time of such deemed sale and paid such cash proceeds to the holder of Easterly Common Stock in respect of which such deduction or withholding was made. Each of Sirius, Easterly and the Exchange Agent shall pay, or shall cause to be paid, all amounts so deducted or withheld to the appropriate taxing authority within the period required under applicable Law.

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        Section 2.5     Further Assurances .     At and after the Effective Time, the officers and directors of Sirius and the Surviving Company, as applicable, shall be authorized to execute and deliver, in the name and on behalf of Sirius, Easterly, the Surviving Company or Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of Sirius, Easterly, the Surviving Company or Merger Sub, any other actions and things necessary to vest, perfect or confirm of record or otherwise in Sirius or the Surviving Company any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by Sirius or the Surviving Company, as applicable, as a result of, or in connection with, the Transactions, including the Merger.


ARTICLE III

REPRESENTATIONS AND WARRANTIES OF EASTERLY

        The following representations and warranties by Easterly are qualified in their entirety by reference to the disclosures set forth in (a) the disclosure letter delivered by Easterly to Sirius simultaneously with the execution of this Agreement (the " Easterly Disclosure Letter ") and (b) the Easterly SEC Documents filed with the SEC after April 29, 2015 and prior to the date hereof (other than disclosures in the "Risk Factors" or "Forward Looking Statements" sections of any Easterly SEC Documents or any other similar disclosure in any Easterly SEC Documents to the extent that such disclosure is predictive or forward-looking in nature). Each disclosure set forth in the Easterly Disclosure Letter shall qualify the Section to which it corresponds; provided that (i) disclosure in any Section of such Easterly Disclosure Letter shall be deemed to be disclosed with respect to any other Section of this Agreement to the extent that it is reasonably apparent on the face of the Easterly Disclosure Letter that such disclosure is applicable to such other Section notwithstanding the omission of a reference or cross reference thereto and (ii) the mere inclusion of an item in such Easterly Disclosure Letter as an exception to a representation or warranty shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had, would have or would reasonably be expected to have a Material Adverse Effect on Easterly (an " Easterly Material Adverse Effect "). Subject to the foregoing, Easterly represents and warrants to Sirius and Merger Sub as follows:


        Section 3.1
    Corporate Organization .     Easterly is a corporation duly organized, validly existing and in good standing under the Laws of Delaware and has the requisite corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted. Easterly is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not, individually or in the aggregate, reasonably be expected to have an Easterly Material Adverse Effect. The copies of the amended and restated certificate of incorporation, as amended (the " Easterly Charter "), and bylaws (the " Easterly Bylaws ") of Easterly, as most recently filed with the Easterly SEC Documents prior to the date of this Agreement, are true, complete and correct copies of such documents as in effect as of the date of this Agreement.


        Section 3.2
    Capitalization .     

            (a)   The authorized capital stock of Easterly consists of 100,000,000 shares of Easterly Common Stock and 1,000,000 shares of preferred stock, par value $0.0001 per share (the " Easterly Preferred Stock ," and together with Easterly Common Stock, the " Easterly Capital Stock "). As of the date of this Agreement, there were 20,015,577 shares of Easterly Common Stock issued and outstanding and no shares of Easterly Preferred Stock issued and outstanding, 16,750,000 shares of Easterly Common Stock issuable upon the exercise of outstanding Easterly Warrants and 922,000 Easterly Warrants issuable upon conversion of the Convertible Promissory Note. Except as set forth in the preceding sentence, no shares of capital stock or other equity securities of Easterly are

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    issued, reserved for issuance or outstanding. All of the issued and outstanding shares of Easterly Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.

            (b)    Section 3.2(b) of the Easterly Disclosure Letter sets forth the number of issued and outstanding Easterly Warrants, the exercise prices with respect thereto and the number of shares of Easterly Common Stock into which such Easterly Warrants are exercisable. No Easterly Warrants are exercisable until after the consummation of a Business Combination as set forth in the Warrant Agreement. Except (i) as set forth in this Section 3.2(b) , (ii) as described in Section 3.2(b) of the Easterly Disclosure Letter and (iii) for rights of holders of Easterly Common Stock to redeem their shares of Easterly Common Stock into cash held in the Trust Account pursuant to the Easterly Charter, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which Easterly is a party or by which it is bound obligating Easterly to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of Easterly Common Stock or any other equity interests of Easterly or other voting securities of Easterly or obligating Easterly to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking or to redeem, purchase or otherwise acquire any of the foregoing, and Easterly has not granted any share appreciation rights or any other contractual rights the value of which is derived from the financial performance of Easterly or the value of Easterly Common Stock or any other equity interests of Easterly. There are no contractual obligations of Easterly pursuant to which Easterly could be required to register shares of Easterly Capital Stock or other securities under the Securities Act. There are no bonds, debentures, notes or other Indebtedness of Easterly having the right to vote (or convertible into, or exchange for, securities having the right to vote) on any matters on which stockholders of Easterly may vote. Easterly is not a party to any voting Contract with respect to the voting of any of its securities.

            (c)   Except for Solaris Merger Sub Inc., a Delaware corporation that has not engaged in any business activities or incurred any liabilities or obligations, Easterly does not have any Subsidiaries and does not own, directly or indirectly, any capital stock, membership, interest, partnership interest, joint venture interest or other interest in any Person.


        Section 3.3
    Authority; Execution and Delivery; Enforceability; State Takeover Statutes .     

            (a)   Easterly has full corporate power and authority to execute and deliver this Agreement and each Ancillary Agreement, as applicable, to perform and comply with each of its obligations under this Agreement and each Ancillary Agreement, as applicable, and, subject to the receipt of Easterly Stockholder Approval, to consummate the Transactions applicable to Easterly, including the Merger. The execution and delivery by Easterly of this Agreement and each Ancillary Agreement, as applicable, the performance and compliance by Easterly with each of its obligations herein and therein and the consummation by Easterly of the Transactions applicable to Easterly have been duly authorized by all necessary corporate action on the part of Easterly, subject, in the case of the Merger, to receipt of the Easterly Stockholder Approval. Easterly has duly executed and delivered this Agreement and each Ancillary Agreement, as applicable, and, assuming the due authorization, execution and delivery by Sirius and Merger Sub of this Agreement and each Ancillary Agreement (and by any other parties thereto), as applicable, this Agreement and each Ancillary Agreement, as applicable, constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as limited by Laws affecting the enforcement of creditors' rights generally and by general equitable principles.

            (b)   The Board of Directors of Easterly (the " Easterly Board "), at a meeting duly called and held, unanimously adopted resolutions (i) approving this Agreement and the consummation of the Transactions upon the terms and subject to the conditions set forth in this Agreement,

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    (ii) determining that the terms of the Agreement, the Merger and the other Transactions constitute a Business Combination and are fair to, and in the best interests of, Easterly and its stockholders, (iii) directing that this Agreement be submitted to the stockholders of Easterly for adoption, (iv) recommending that its stockholders adopt this Agreement and approve the Merger (the " Easterly Recommendation ") and (v) declaring that this Agreement is advisable. Such resolutions have not been subsequently rescinded, withdrawn or modified by the Easterly Board prior to the date hereof.

            (c)   Assuming that on the date of this Agreement neither Sirius nor any of its "affiliates" or "associates" is an "interested stockholder" of Easterly (each term, as defined in DGCL Section 203), such resolutions are sufficient to render inapplicable to this Agreement and the Merger the restrictions of Section 203 of the DGCL. No other "business combination," "control share acquisition," "fair price," "moratorium" or other anti-takeover Laws (collectively, " Takeover Laws ") apply to this Agreement or the Merger.


        Section 3.4
    Consents and Approvals; No Conflicts .     

            (a)   Except for (i) the filing with the Securities and Exchange Commission (the " SEC ") of the preliminary Proxy Statement, the Proxy Statement and the Registration Statement, (ii) the filing of the Certificate of Merger with the Secretary of State pursuant to the DGCL, (iii) the Easterly Stockholder Approval, (iv) filings, permits, authorizations, consents, notice to and approvals as may be required under, and other applicable requirements of, (A) the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the " Exchange Act "), (B) the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the " Securities Act "), (C) notice pursuant to the rules and regulations of the NASDAQ and (D) the Bermuda Monetary Authority, if applicable, and (v) such other consent, approval, waiver, license, permit, franchise, authorization or Order (" Consents ") of, or registration, declaration, notice, report, submission or other filing (" Filings ") with, any Governmental Entity (as defined below), the failure of which to obtain or make has not had and would not reasonably be expected to have, individually or in the aggregate, an Easterly Material Adverse Effect, no Consents of, or Filings with, any federal, state, or local court, administrative or regulatory agency or commission or other governmental authority or instrumentality, domestic or foreign (each a " Governmental Entity ") are necessary for the consummation by Easterly of the Transactions.

            (b)   Neither the execution and delivery of this Agreement or the Ancillary Agreements by Easterly nor the consummation by Easterly of the Transactions, nor compliance by Easterly with any of the terms or provisions hereof or thereof, will (i) conflict with or violate any provision of the Easterly Charter or Easterly Bylaws or (ii) assuming that the authorizations, consents and approvals referred to in Section 3.4(a) and the Easterly Stockholder Approval are duly obtained in accordance with the DGCL, (A) violate any (1) Law or (2) Order, in either case, applicable to Easterly or any of its properties or assets, or (B) violate, conflict with, result in the loss of any material benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of Easterly under, any of the terms, conditions or provisions of any note, bond, debenture, mortgage, indenture, deed of trust, license, lease, agreement or other contract, agreement, commitment instrument or obligation (each, including all amendments thereto, a " Contract ") to which Easterly is a party, or by which it or any of its properties or assets may be bound or affected, except, in the case of the foregoing clause (ii), as would not reasonably be expected to have, individually or in the aggregate, an Easterly Material Adverse Effect.

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        Section 3.5
    SEC Documents; Financial Statements; Undisclosed Liabilities .     

            (a)   Easterly has filed or furnished all reports, schedules, forms, statements, registration statements, prospectuses and other documents required to be filed or furnished by Easterly with the SEC under the Securities Act or the Exchange Act since April 29, 2015, together with any exhibits, amendments, restatements or supplements thereto, and will file or furnish all forms, reports, schedules, statements, registration statements, prospectuses and other documents, together with any exhibits, amendments, restatements or supplements thereto, required to be filed or furnished, as applicable, by it subsequent to the date hereof through and including the Closing Date, with the SEC (the " Easterly SEC Documents ").

            (b)   As of its respective filing date, and, if amended, as of the date of the last amendment prior to the date of this Agreement, each Easterly SEC Document complied in all material respects with the requirements of all applicable Laws, including the Exchange Act, the Securities Act and the Sarbanes-Oxley Act, and the rules and regulations thereunder, as the case may be, applicable to such Easterly SEC Document and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

            (c)   The consolidated financial statements of Easterly included in the Easterly SEC Documents (including, in each case, any notes or schedules thereto) and all related compilations, reviews and other reports issued by Easterly's accountants with respect thereto (the " Easterly SEC Financial Statements "), comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. The Easterly SEC Financial Statements fairly present, in all material respects, the financial condition and the results of operations, cash flows and changes in stockholders' equity of Easterly (on a consolidated basis) as of the respective dates of and for the periods referred to in the Easterly SEC Financial Statements, and were prepared in accordance with GAAP (except as otherwise noted therein) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto), subject, in the case of interim Easterly SEC Financial Statements, to normal year-end adjustments (which are not material in significance or amount) and the absence of notes. The books and records of Easterly are accurate and complete in all material respects, have been maintained in accordance with sound business practices and accurately present and reflect in all material respects all of the transactions and actions therein described and the Easterly SEC Financial Statements have been prepared, in all material respects, in accordance with such books and records. At the Closing, all such books and records will be in the possession of Easterly. No financial statements of any Person other than Easterly are required by GAAP to be included in the consolidated financial statements of Easterly.

            (d)   Easterly is in compliance in all material respects with (i) the applicable provisions of the Sarbanes-Oxley Act of 2002 and the related rules and regulations promulgated thereunder or under the Exchange Act (the " Sarbanes-Oxley Act ") and (ii) the applicable listing and corporate governance rules and regulations of the NASDAQ.

            (e)   Easterly has made available to Sirius true and complete copies of all written comment letters from the staff of the SEC received since April 29, 2015 relating to the Easterly SEC Documents and all written responses of Easterly thereto, which are otherwise publicly available on the SEC's EDGAR system. There are no outstanding or unresolved comments in comment letters received from the SEC staff with respect to any Easterly SEC Documents and none of the Easterly SEC Documents is the subject of ongoing SEC review. There are no internal investigations, any SEC inquiries or investigations or other governmental inquiries or investigations pending regarding any accounting practices of Easterly.

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            (f)    Easterly has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 and paragraph (e) of Rule 15d-15 under the Exchange Act) as required by Rules 13a-15 and 15d-15 under the Exchange Act. Easterly's disclosure controls and procedures are designed to ensure that all information (both financial and non-financial) required to be disclosed by Easterly in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such information is accumulated and communicated to Easterly's management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. Easterly's management has completed an assessment of the effectiveness of Easterly's disclosure controls and procedures and, to the extent required by applicable Law, presented in any applicable Easterly SEC Document, or any amendment thereto, its conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by such report or amendment based on such evaluation. Based on Easterly's management's most recently completed evaluation of Easterly's internal control over financial reporting, (i) Easterly had no significant deficiencies or material weaknesses in the design or operation of its internal control over financial reporting that would reasonably be expected to adversely affect Easterly's ability to record, process, summarize and report financial information and (ii) Easterly does not have Knowledge of any fraud, whether or not material, that involves management or other employees who have a significant role in Easterly's internal control over financial reporting.

            (g)   Easterly does not have any liabilities or obligations of any nature (whether absolute or contingent, asserted or unasserted, known or unknown, primary or secondary, direct or indirect, and whether or not accrued), except (i) as disclosed, reflected or reserved against in the most recent balance sheet included in the Easterly SEC Financial Statements or the notes thereto filed with the SEC prior to the date hereof, and (ii) for liabilities and obligations arising out of or in connection with this Agreement, the Merger or the other Transactions and disclosed prior to the date hereof to Sirius.


        Section 3.6
    Absence of Certain Changes or Events .     Since April 29, 2015, (a) Easterly has conducted its business in all material respects only in the ordinary course and in a manner consistent with past practice and (b) there has not been any event that, individually or in the aggregate, has had or would reasonably be expected to have an Easterly Material Adverse Effect.


        Section 3.7
    Information Supplied .     None of the information supplied or to be supplied by Easterly for inclusion or incorporation by reference in (a) the registration statement on Form F-4 or Form S-4 (as elected by Sirius) to be filed with the SEC by Sirius in connection with the Merger (the " Registration Statement ") will, at the time the Registration Statement is filed with the SEC, or at any time it is amended or supplemented or at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, (b) the Proxy Statement will, at the date it or any amendment or supplement thereto is filed with the SEC or mailed to holders of the shares of Easterly Common Stock or at the time of the Easterly Stockholders Meeting contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading or (c) the Warrant Offer Documents will, at the date they or any amendments or supplements thereto are filed with the SEC or mailed to holders of the Easterly Warrants or at the time of the closing of the Warrant Tender Offer contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading (except, in each case, that no representation or warranty is made by Easterly to such portions thereof that relate expressly to Sirius, Merger Sub or any of their Subsidiaries or to statements made or incorporated by

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reference therein based on information supplied by or on behalf of Sirius or Merger Sub for inclusion or incorporation by reference therein).


        Section 3.8
    Legal Proceedings .     There are no Proceedings pending, or to the Knowledge of Easterly, threatened against Easterly or any of its assets, rights or properties or any of the officers or directors of Easterly, except, in each case, for those that, individually or in the aggregate, have not had, and would not reasonably be expected to have, an Easterly Material Adverse Effect. Neither Easterly nor any of its properties, rights or assets is or are subject to any Order, except for those that, individually or in the aggregate, have not had, and would not reasonably be expected to have, an Easterly Material Adverse Effect.


        Section 3.9
    Compliance with Laws .     Except as would not reasonably be expected to have, individually or in the aggregate, an Easterly Material Adverse Effect, (a) Easterly is in compliance and has been in compliance with all Laws and Orders applicable to Easterly or any of its properties, rights or assets, and (b) Easterly has not received any written communication during the past year from a Governmental Entity that alleges that Easterly is not in compliance with any Law. Easterly holds, and has at all times held, all licenses, franchises, permits and authorizations necessary for the lawful conduct of its business and ownership of its properties, rights and assets under and pursuant to each (and has paid all fees and assessments due and payable in connection therewith), except where neither the cost of failure to hold nor the cost of obtaining and holding such license, franchise, permit or authorization (nor the failure to pay any fees or assessments) would, either individually or in the aggregate, reasonably be expected to have an Easterly Material Adverse Effect.


        Section 3.10
    No Employees or Benefit Plans .     

            (a)   Neither Easterly nor any ERISA Affiliates (as defined below) employs any individual as an employee or consultant or sponsors or maintains any Easterly Benefit Plan (as defined in the next sentence). For purposes hereof, " Easterly Benefit Plan " means any employee benefit plan including any "employee benefit plan," as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (" ERISA ") and each stock grant, stock purchase, stock option, severance, employment, change-in-control, fringe benefit, loan, bonus, incentive, sabbatical, medical, dental, vision, disability, cafeteria benefit, dependent care, welfare benefit, life insurance or accident insurance, retirement, supplemental retirement, deferred compensation or other compensation or benefit plan, agreement, program, policy or other arrangement, whether or not subject to ERISA, maintained, entered into or contributed to by Easterly or any of its ERISA Affiliates, or to which Easterly or any of its ERISA Affiliates is a party, whether written or oral, for the benefit of any present or former employee, consultant or director of Easterly (including their dependents or beneficiaries) or with respect to which Easterly or any of its ERISA Affiliates has any liability (contingent or otherwise), other than any schemes or arrangements mandated by a government outside of the United States. For purposes of this Agreement, " ERISA Affiliate " means, with respect to any entity, trade or business, any other entity, trade or business that is, or was at the relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the first entity, trade or business, or that is, or was at the relevant time, a member of the same "controlled group" as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.

            (b)   Except as otherwise contemplated under this Agreement or pursuant to the terms of the Easterly Benefit Plans which are included in the Easterly SEC Documents as of the date of this Agreement, neither the execution nor delivery of this Agreement nor the consummation of the Transactions shall, whether alone or in combination with any other event, result in (i) the accelerated vesting or payment of, or any (A) increase in (for any executive officer or director), or (B) material increase in (for any non-executive officer employee), any compensation to any present or former executive officer, director or non-executive officer employee, respectively, of Easterly or

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    (ii) the entitlement of any present or former executive officer or director of Easterly to severance or termination pay or benefits, or of any present or former non-executive officer employee of Easterly to material severance or termination pay or benefits.


        Section 3.11
    Properties .     Except as set forth in Section 3.11 of the Easterly Disclosure Letter , Easterly does not own or lease any real property or personal property. Except as set forth in Section 3.11 of the Easterly Disclosure Letter , there are no options or other Contracts under which Easterly has a right or obligation to acquire or lease any interest in real property or personal property. Easterly has good and valid title to, or a valid leasehold in, all of its property or assets, free and clear of any Liens, other than Permitted Liens.


        Section 3.12
    Taxes .     Easterly has timely filed (taking into account all applicable extensions) all material Tax Returns in all jurisdictions in which Tax Returns are required to be filed by it, and all such Tax Returns are true, correct, and complete in all material respects. Easterly is not the beneficiary of any extension of time within which to file any material Tax Return. All material amounts of Taxes (whether or not shown on any Tax Returns) that Easterly may be liable for have been fully and timely paid. Easterly has withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor, shareholder, independent contractor or other third party. Easterly has not granted any extension or waiver of the limitation period applicable to any material Tax that remains in effect. No deficiency with respect to a material amount of Taxes has been proposed, asserted or assessed against Easterly. There are no pending or threatened in writing disputes, claims, audits, examinations or other proceedings regarding any material Taxes of Easterly or the assets of Easterly. Easterly has not been informed in writing by any jurisdiction in which it has not filed Tax Returns that the jurisdiction believes that Easterly is or may be required to file any Tax Return that was not filed or may be subject to taxation in that jurisdiction. Easterly has provided Sirius true, correct, and complete copies of any, and requests for any, private letter ruling, closing agreements or gain recognition agreements and similar agreements with respect to Taxes of Easterly. There are no Liens for Taxes (except property Taxes not yet due and payable) on any of the assets of Easterly. Easterly is not a party to or bound by any Tax sharing, allocation or indemnification agreement or arrangement (other than any customary Tax indemnification provisions in commercial agreements or arrangements entered into in the ordinary course of business that are not primarily related to Taxes). Easterly (a) has not been a member of an affiliated group filing a consolidated federal income Tax Return and (b) has no liability for the Taxes of any Person (other than Easterly) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law), as a transferee or successor, by Contract or otherwise. Easterly has not been a "distributing corporation" or a "controlled corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code. Easterly has not participated in a "Reportable transaction" within the meaning of Treasury Regulations Section 1.6011-4(b) (or any similar provision of state, local or foreign Law). At no time has Easterly been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code. Easterly will not be required to include any material item of income in, or to exclude any material item of deduction from, taxable income in any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting, (ii) closing agreement, (iii) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local or foreign Law), (iv) installment sale, election under Section 108(i) or 965(h) of the Code, or open transaction disposition made on or prior to the Closing Date, or (v) prepaid amount received on or prior to the Closing Date. Easterly is not aware of any fact or circumstance that could reasonably be expected to prevent the Merger from qualifying as a "reorganization" within the meaning of Section 368(b) of the Code. Easterly has never been a United States shareholder (within the meaning of Section 951 of the Code) in any foreign corporation. For income Tax purposes, Easterly has always been treated as the sole owner of the assets of the Trust Account. Since the date of the Easterly SEC Financial Statements that were last made

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available to Sirius before the date hereof, Easterly has not incurred any Tax liability, engaged in any transaction or taken any other action, other than in the ordinary course of business. For purposes of the representations in this Section 3.12 , materiality shall be determined by reference to the assets of Easterly.


        Section 3.13
    Material Contracts .     

            (a)    Section 3.13 of the Easterly Disclosure Letter contains a complete and accurate list of all Material Contracts to which Easterly is a party in effect as of the date of this Agreement. Each such Material Contract has been delivered to, or made available for review by, Sirius and is a true and correct copy of such Material Contract (including all amendments thereto).

            (b)   (i) There is no breach or violation of or default by Easterly under any of such Material Contracts, except such breaches, violations and defaults as have been waived, and (ii) no event has occurred with respect to Easterly or, to the Knowledge of Easterly, with respect to a third party, which, with notice or lapse of time or both, would constitute a breach, violation or default, or give rise to a right of termination, modification, cancellation, foreclosure, imposition of a lien, prepayment or acceleration under any of such Material Contracts, except, in the case of clause (i) and (ii) above, as would not, individually or in the aggregate, reasonably be expected to have an Easterly Material Adverse Effect.

            (c)   Other than this Agreement, Easterly is not a party to any Contract providing for a Business Combination and each Contract to which Easterly was a party providing for a Business Combination has been terminated and is of no further force and effect.


        Section 3.14
    Intellectual Property .     Except for its corporate name, Easterly does not own, license or otherwise have any right, title or interest in any Intellectual Property.


        Section 3.15
    Indebtedness .     Except for the Convertible Promissory Note, Easterly does not have any Indebtedness.


        Section 3.16
    Broker's Fees .     Except for the fees of Citigroup Global Markets Inc., which have previously been disclosed to Sirius, neither Easterly nor any of its officers or directors on behalf of Easterly has employed any financial advisor, broker or finder or incurred any liability for any financial advisory fee, broker's fees, commissions or finder's fees in connection with any of the Transactions.


        Section 3.17
    Investment Company Act .     Easterly is not and has not been an "investment company" or a Person directly or indirectly "controlled" by or acting on behalf of an "investment company", in each case within the meaning of the Investment Company Act of 1940, as amended (the " Investment Company Act ").


        Section 3.18
    Stockholder Vote and Warrant Amendment .     The only vote of the holders of any class or series of Easterly Capital Stock necessary to approve this Agreement, the Merger and the other Transactions contemplated hereby and thereby is the adoption of this Agreement by the holders of a majority of the shares of Easterly Common Stock outstanding and entitled to vote thereon (the " Easterly Stockholder Approval "). The approval of the holders of the Easterly Warrants is not required to enter into the Warrant Amendment.


        Section 3.19
    Affiliate Transactions .     Except as set forth in Section 3.19 of the Easterly Disclosure Letter , there have been no transactions, agreements, arrangements or understandings between Easterly, on the one hand, and any Affiliates of Easterly or other Persons, on the other hand, that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act and that have not been so disclosed in the Easterly SEC Documents.


        Section 3.20
    Trust Account .     The Amended and Restated Investment Trust Agreement (the " Trust Agreement ") by and between Easterly and Continental Stock Transfer & Trust Company (the " Trustee "),

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dated as of as of October 13, 2015 and as amended by Amendment No. 1 to the Trust Agreement, dated as of August 1, 2017, Amendment No. 2 to the Trust Agreement, dated as of December 14, 2017, and Amendment No. 3 to the Trust Agreement, dated as of March 29, 2018, is valid, binding and in full force and effect and enforceable in accordance with its terms and has not been further amended or modified. There are no separate agreements, side letters, or other agreements or understandings (whether written or unwritten, express or implied) that would cause the description of the Trust Agreement in the Easterly SEC Documents to be inaccurate in any material respect or that would entitle any Person to any portion of the cash proceeds of the initial public offering of Easterly (the " IPO ") and private placements of its securities, substantially all of which proceeds have been deposited by the Trustee in a trust account (the " Trust Account ") pursuant to the Trust Agreement for the benefit of Easterly, certain of its stockholders and the underwriters of its IPO. As of the date of this Agreement, the Trust Account consists of no less than $154,000,000 held in cash. In accordance with the Trust Agreement, the Trust Account may be invested in United States "government securities" within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 days or less, or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act. Prior to the Closing, none of the funds held in the Trust Account may be released except (i) to pay income and franchise Taxes from any interest income earned in the Trust Account and (ii) to redeem shares of the Easterly Common Stock in accordance with the provisions of the Easterly Charter in connection with the Easterly Stockholder Meeting and the special meeting of Easterly stockholders to approve an amendment to the Easterly Charter to extend the date by which Easterly must consummate a Business Combination until November 30, 2018 and a related amendment to the Trust Agreement (the " Extension Amendments ").


        Section 3.21
    No Other Representations or Warranties .     Except for the representations and warranties expressly contained in this Article III or in any Ancillary Agreement, neither Easterly nor any of its Affiliates nor any Person acting on any of their behalf makes any other express or any implied representations or warranties with respect to (i) Easterly, any of its businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects or any other matter relating to Easterly or (ii) the accuracy or completeness of any documentation, forecasts, projections, estimates or other information provided by Easterly, any Affiliate of Easterly or any Person acting on any of their behalf to Sirius, any Affiliate of Sirius or any Person acting on any of their behalf.


ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SIRIUS AND MERGER SUB

        The following representations and warranties by Sirius and Merger Sub are qualified in their entirety by reference to the disclosures set forth in the disclosure letter delivered by Sirius to Easterly simultaneously with the execution of this Agreement (the " Sirius Disclosure Letter "). Each disclosure set forth in the Sirius Disclosure Letter shall qualify the Section to which it corresponds; provided , that (i) disclosure in any Section of the Sirius Disclosure Letter shall be deemed to be disclosed with respect to any other Section of this Agreement to the extent that it is reasonably apparent on the face of the Sirius Disclosure Letter that such disclosure is applicable to such other Section notwithstanding the omission of a reference or cross-reference thereto and (ii) the mere inclusion of an item in the Sirius Disclosure Letter as an exception to a representation or warranty shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had, would have or would reasonably be expected to have a Material Adverse Effect on Sirius and its Subsidiaries (a " Sirius Material Adverse Effect "). Subject to the foregoing, Sirius and Merger Sub jointly and severally represent and warrant to Easterly as follows:

         Section 4.1     Corporate Organization .    Each of Sirius and its Subsidiaries, including Merger Sub, is a company or other entity duly incorporated or organized, validly existing and, to the extent applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization and has the

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requisite corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted. Each of Sirius and its Subsidiaries, including Merger Sub, is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not, individually or in the aggregate, reasonably be expected to have a Sirius Material Adverse Effect. The copies of the certificate of incorporation, memorandum of association and bye-laws or equivalent constitutional documents of Sirius and Merger Sub have been furnished to Easterly, and are true, complete and correct copies of such documents as in effect as of the date of this Agreement.

         Section 4.2     Capitalization of Merger Sub .    

            (a)   Since its date of incorporation, Merger Sub has not carried on any business or conducted any operations other than the execution of this Agreement, the performance of its obligations hereunder and matters related thereto.

            (b)   The authorized share capital of Merger Sub consists of 1,000 shares of common stock, $1.00 par value per share, all of which have been duly authorized and validly issued, are fully paid and nonassessable and are owned directly by Sirius free and clear of any Liens.


        Section 4.3
    Sirius Capitalization .     

            (a)   The authorized share capital of Sirius consists of 500,000,000 Sirius Common Shares; and 100,000,000 preference shares of par value U.S.$0.01 each, of which 150,000 have been designated as Series A Preference Shares (" Sirius Preference Shares ," together with the Sirius Common Shares and Sirius Preference Shares, the " Sirius Capital Shares "). As of the date of this Agreement there are (i) 120,000,000 Sirius Common Shares issued and outstanding, (ii) 100,000 Series Preference Shares issued and outstanding, (iii) Sirius Common Shares reserved for issuance upon the settlement of outstanding rights to receive Sirius Common Shares under the Sirius Long-Term Incentive Plan (assuming maximum performance with respect to outstanding rights to receive Sirius Common Shares subject to performance-based vesting conditions) (" Sirius Equity Awards "), as further described in Section 4.3(a) of the Sirius Disclosure Letter , and (iv) Sirius Common Shares reserved for issuance upon conversion of the Sirius Preference Shares, as further described in Section 4.3(a) of the Sirius Disclosure Letter . Except as set forth in the preceding sentence, and for Sirius Common Shares issued in connection with the exercise or settlement of outstanding Sirius Equity Awards, and Sirius Equity Awards issued after the date of this Agreement, no shares or other equity securities of Sirius are issued or reserved for issuance as of the date of this Agreement. All of the issued Sirius Common Shares have been duly authorized and validly issued and are or will be fully paid, nonassessable and free of preemptive rights.

            (b)   Except as set forth in Section 4.3(a) , this Section 4.3(b) or in Section 4.3(a) of the Sirius Disclosure Letter and Sirius Equity Awards issued after the date of this Agreement, as of the date of this Agreement, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which Sirius is a party, or by which Sirius is bound, obligating Sirius to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares or other voting securities of Sirius or obligating Sirius to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking, or to redeem, purchase or otherwise acquire any of the foregoing, except for acquisitions or deemed acquisitions of Sirius Common Shares or other equity securities of Sirius in connection with the exercise or vesting of Sirius Equity Awards and required tax withholding in connection therewith. As of the date of this Agreement, there are no bonds, debentures, notes or other Indebtedness of Sirius having the right to vote (or convertible into, or exchange for, securities having the right to vote) on any matters on which shareholders of Sirius may vote.

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            (c)   Sirius owns, directly or indirectly, all of the issued shares of each of its Subsidiaries, and all of such shares are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. Except as set forth in Section 4.3(c) of the Sirius Disclosure Letter, neither Sirius nor any of its Subsidiaries is a party to any voting Contract with respect to the voting of any of its securities.

            (d)   Upon issuance, all Sirius Common Shares issued pursuant to Article II or upon exercise of the Converted Warrants shall be duly authorized and validly issued and free of preemptive rights.


        Section 4.4     Sirius Subsidiaries.     As of Closing, each Sirius Subsidiary will be duly organized, validly existing and, to the extent applicable, in good standing under the Laws of its jurisdiction of its organization, and will have all organizational power and authority to own, operate, lease and otherwise hold its assets and to carry on its business as it is now being conducted, and will be duly licensed or qualified to do business in each other jurisdiction in which it owns, operates, leases or otherwise holds assets, or conducts any business, so as to require such qualification, except where the lack of such power, authority, authorization, license or qualification would not, individually or in the aggregate, have a Sirius Material Adverse Effect.


        Section 4.5
    Authority; Execution and Delivery; Enforceability .     

            (a)   Each of Sirius and Merger Sub has full corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements, as applicable, to perform and comply with each of its obligations under this Agreement and the Ancillary Agreements, as applicable, and, to consummate the Transactions, including the Merger. The execution and delivery by each of Sirius and Merger Sub of this Agreement and the Ancillary Agreements, as applicable, the performance and compliance by Sirius and Merger Sub with each of its obligations herein and therein, and the consummation by it of the Transactions have been duly authorized by all necessary corporate action on the part of Sirius and Merger Sub, subject in the case of the Merger, to the approvals of Sirius, as sole stockholder of Merger Sub, which will be obtained by written consent after the execution hereof. Each of Sirius and Merger Sub has duly executed and delivered this Agreement and the Ancillary Agreements, as applicable, and, assuming the due authorization, execution and delivery by Easterly of this Agreement and the Ancillary Agreements, as applicable, this Agreement and the Ancillary Agreements, as applicable, constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as limited by Laws affecting the enforcement of creditors' rights generally and by general equitable principles.

            (b)   None of Sirius or Merger Sub nor any of their "affiliates" or "associates" is, as of the date of this Agreement, nor at any time during the last three (3) years has been, an "interested stockholder" of Easterly as defined in DGCL Section 203.

            (c)   The Board of Directors of Sirius (the " Sirius Board "), at a meeting duly called and held, unanimously adopted resolutions (i) approving this Agreement and the consummation of the Transactions upon the terms and subject to the conditions set forth in this Agreement, (ii) determining that the terms of the Merger and the other Transactions are fair to, and in the best interests of, Sirius and its shareholders, and (iii) declaring that this Agreement is advisable. Such resolutions have not been subsequently rescinded, withdrawn or modified by the Sirius Board prior to the date hereof.


        Section 4.6
    Consents and Approvals; No Conflicts .     

            (a)   Except for (i) the filing with the SEC of the Registration Statement, (ii) filings, permits, authorizations, consents, notice to and approvals as may be required under, and other applicable requirements of (A) the Exchange Act, (B) the Securities Act and (C) the rules and regulations of the NASDAQ, and (D) the Bermuda Monetary Authority, if applicable, and (iii) such other Consents or other Filings with, any Governmental Entity the failure of which to obtain or make

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    has not had and would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, no Consents of, or Filings with, any Governmental Entity are necessary for the consummation by Sirius of the Transactions.

            (b)   Neither the execution and delivery of this Agreement and the Ancillary Agreements, as applicable, by Sirius and Merger Sub nor the consummation by Sirius and Merger Sub of the Transactions nor compliance by Sirius and Merger Sub with any of the terms or provisions hereof, will (i) conflict with or violate any provision of the bye-laws of Sirius, Merger Sub, or any of the similar organizational documents of any of their Subsidiaries or (ii) assuming that the authorizations, consents and approvals referred to in Section 4.6(a) are duly obtained, (A) violate any (1) Law or (2) Order, in either case, applicable to Sirius, Merger Sub or any of their Subsidiaries or any of their respective properties or assets, or (B) violate, conflict with, result in the loss of any material benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of Sirius, Merger Sub or any of their Subsidiaries under, any of the terms, conditions or provisions of any Contract to which Sirius, Merger Sub or any of their Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound or affected, except, in the case of the foregoing clause (ii), as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect.


        Section 4.7
    Reports; Financial Statements; Undisclosed Liabilities .     

            (a)   Sirius has made available to Easterly true, complete and correct copies of (i) the audited consolidated financial statements of Sirius and its Subsidiaries as of and for the years ended December 31, 2017 and 2016, together with the report of the independent auditor of Sirius thereon, including, in each case, a balance sheet and statements of comprehensive income (loss), cash flows and retained earnings or shareholders' equity and related footnotes (the " Audited Financial Statements ") and (ii) the unaudited consolidated financial statements of Sirius and its Subsidiaries as of and for the three-month period ended March 31, 2018, including a balance sheet and statement of comprehensive income (loss), cash flows and retained earnings or shareholders' equity (the " Unaudited Financial Statements " and, together with the Audited Financial Statements, the " Financial Statements "). The Financial Statements (A) have been prepared in accordance with GAAP applied on a consistent basis (except as may be indicated in the notes thereto) and (B) present fairly in all material respects the financial position, results of operations, cash flows, and changes in stockholder's equity of Sirius and its Subsidiaries on a consolidated basis as of and for the respective periods indicated (subject, in each case with respect to the Unaudited Financial Statements, to the absence of footnotes and changes resulting from normal year-end adjustments).

            (b)   Sirius has made available to Easterly true, complete and correct copies of the audited statutory balance sheet and statutory results of operations and cash flows of each of the Reinsurance Subsidiaries, excluding any footnotes thereto, in each case, as of and for the years ended December 31, 2017 and December 31, 2016 (together, the " Statutory Statements "). The Statutory Statements (i) were prepared in accordance with applicable Law and SAP applied on a consistent basis during the periods presented and (ii) present fairly in all material respects the respective statutory financial position of the Reinsurance Subsidiaries at the respective dates thereof, and the regulatory results of operations and cash flows for the periods then ended (subject, in each case, to the absence of footnotes) and there are no permitted practices utilized in the preparation of the Statutory Statements that were not granted or otherwise permitted by the applicable Governmental Entity. All permitted practices utilized in the preparation of the Statutory Statements are described in Section 4.7(b) of the Sirius Disclosure Letter. Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect,

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    as of the date of this Agreement (A) no material weakness or significant deficiency has been asserted by any Governmental Entity with respect to any of the Statutory Statements and (B) no Governmental Entity has requested the refiling or amending of any Statutory Statement.

            (c)   Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, the Insurance Reserves stated in the Statutory Statements with respect to each of the Reinsurance Subsidiaries as of their respective dates were determined in all material respects in accordance with Law and generally accepted actuarial standards consistently applied (except as otherwise noted therein); provided , that this Section 4.7(c) shall not be construed as a representation or warranty (expressed or implied) with respect to the adequacy or sufficiency of the Insurance Reserves.

            (d)   Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, none of Sirius or its Subsidiaries is a party to, or has any commitment to become a party to, any off balance sheet partnership, joint venture or any similar Contract (including any Contract relating to any transaction or relationship between any of Sirius or the Subsidiaries, on the one hand, and shareholders or any of their Affiliates, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any "off balance sheet arrangements" (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the result, purpose or intended effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, any of Sirius or its Subsidiaries on their financial statements.

            (e)   Sirius does not have any liabilities or obligations of the kind required by GAAP to be included in a balance sheet, except (i) that, individually or in the aggregate, have not had, and would not reasonably be expected to have, a Sirius Material Adverse Effect, (ii) as disclosed, reflected or reserved against in the most recent balance sheet included in the Sirius Financial Statements or the notes thereto, (iii) for liabilities and obligations incurred in the ordinary course of business since the date of the most recent balance sheet included in the Sirius Financial Statements and (iv) for liabilities and obligations arising out of or in connection with this Agreement, the Ancillary Agreements, the Merger or the Transactions.


        Section 4.8
    Absence of Certain Changes or Events.     Since December 31, 2017, there has not been any event that, individually or in the aggregate, has had or would reasonably be expected to have a Sirius Material Adverse Effect.


        Section 4.9
    Information Supplied.     None of the information supplied or to be supplied by Sirius or Merger Sub for inclusion or incorporation by reference in (a) the Registration Statement will, at the time the Registration Statement is filed with the SEC, or at any time it is amended or supplemented or at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, (b) the Proxy Statement will, at the date it or any amendment or supplement is filed with the SEC or mailed to holders of Easterly Common Stock or at the time of the Easterly Stockholders Meeting, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading or (c) the Warrant Offer Documents will, at the date they or any amendments or supplements are filed with the SEC or mailed to holders of the shares of Easterly Warrants or at the time of the closing of the Warrant Tender Offer contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading (except, in each case, that no representation or warranty is made by Sirius or Merger Sub to such portions thereof that relate expressly to Easterly or to statements made therein based on information supplied by or on behalf of Easterly for inclusion or incorporation by reference therein).

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        Section 4.10
    Legal Proceedings.     There are no Proceedings pending, or to the Knowledge of Sirius, threatened against Sirius or any of its Subsidiaries or any of their respective assets, rights or properties or any of the officers or directors of Sirius, except, in each case, (i) pending or threatened Proceedings arising out of an insurance or reinsurance contract issued, assumed, reinsured or produced by Sirius or any of its Subsidiaries in the ordinary course of business that, individually or in the aggregate, have not had, and would not reasonably be expected to have, a Sirius Material Adverse Effect, and (ii) for those that, individually or in the aggregate, have not had, and would not reasonably be expected to have, a Sirius Material Adverse Effect. Neither Sirius nor any of its Subsidiaries nor any of their respective properties, rights or assets is or are subject to any Order, except for those that, individually or in the aggregate, have not had, and would not reasonably be expected to have, a Sirius Material Adverse Effect.


        Section 4.11
    Compliance with Laws.     Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, (a) Sirius and its Subsidiaries are in compliance and since December 31, 2015, have been in compliance with all Laws and Orders applicable to Sirius, any Sirius Subsidiary or any of their respective properties, rights or assets, and (b) neither Sirius nor any Sirius Subsidiary has received any written communication since December 31, 2015 from a Governmental Entity that alleges that Sirius or a Sirius Subsidiary is not in compliance with any Law. Sirius and each of its Subsidiaries hold, and have at all times since December 31, 2015, held, all licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to each (and have paid all fees and assessments due and payable in connection therewith), except where neither the cost of failure to hold nor the cost of obtaining and holding such license, franchise, permit or authorization (nor the failure to pay any fees or assessments) would, either individually or in the aggregate, reasonably be expected to have a Sirius Material Adverse Effect.


        Section 4.12
    Regulatory Reports.     Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, (a) since December 31, 2015, each of Sirius and its Subsidiaries has filed all material reports, registrations, documents, filings, statements and submissions together with any required amendments thereto, that it was required to file with the Bermuda Monetary Authority, the Bermuda Ministry of Finance or any other Governmental Entity (the " Sirius Reports "), and has paid all fees and assessments due and payable in connection therewith, (b) as of their respective filing dates, the Sirius Reports complied in all material respects with all statutes and applicable rules and regulations of the applicable Governmental Entities, as the case may be, (c) as of the date of this Agreement, each of Sirius and its Subsidiaries has complied with any subsequent information requests by any applicable Governmental Entity in respect of any Sirius Report, (d) no deficiency or violation has been asserted by a Governmental Entity with respect to any Sirius Report that has not either been resolved to the satisfaction of the applicable Governmental Entity prior to the date hereof or that Sirius is in the process of resolving as of the date of this Agreement and reasonably expects to resolve, and (e) except for normal examinations conducted by a Governmental Entity in the regular course of the business or as would not be material to Sirius and its Subsidiaries, taken as a whole, no Governmental Entity has initiated any proceeding or, to the Knowledge of Sirius, investigation into the business or operations of Sirius or any of its Subsidiaries since December 31, 2015.


        Section 4.13
    Employee Matters .     

            (a)   Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, no material liability under Title IV of ERISA has been incurred by Sirius or any of its ERISA Affiliates which has not been satisfied in full and no event has occurred and, to the Knowledge of Sirius, no condition exists that could reasonably be likely to result in Sirius or any of its ERISA Affiliates incurring a material liability under Title IV of ERISA. Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material

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    Adverse Effect, (i) no Sirius Benefit Plan (as defined below) is a defined benefit pension plan or is subject to Section 302 or Title IV of ERISA or Section 412 of the Code and (ii) no Sirius Benefit Plan is a multiemployer plan within the meaning of Section 3(37) of ERISA or a multiple employer welfare arrangement as defined in Section 3(40) or ERISA. For purposes hereof, " Sirius Benefit Plan " means any employee benefit plan including any "employee benefit plan," as defined in Section 3(3) of ERISA and each stock grant, share purchase, share option, severance, employment, change-in-control, fringe benefit, loan, bonus, incentive, sabbatical, medical, dental, vision, disability, cafeteria benefit, dependent care, welfare benefit, life insurance or accident insurance, retirement, supplemental retirement, deferred compensation or other compensation or benefit plan, agreement, program, policy or other arrangement, whether or not subject to ERISA, maintained, entered into or contributed to by Sirius or any of its ERISA Affiliates, or to which Sirius or any of its ERISA Affiliates is a party, whether written or oral, for the benefit of any present or former employee, consultant or director of Sirius or any of its Subsidiaries (including their dependents or beneficiaries) or with respect to which Sirius or any of its ERISA Affiliates has any liability (contingent or otherwise), other than any schemes or arrangements mandated by a government outside of the United States.

            (b)   Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, each Sirius Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the Internal Revenue Service and no Governmental Entity has notified Sirius that such determination or opinion letter will be revoked or will not be reissued.

            (c)   Each Sirius Benefit Plan has been maintained in compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations, including ERISA and the Code, which are applicable to such Sirius Benefit Plan, with such exceptions as would not be reasonably expected, individually or in the aggregate, to have a Sirius Material Adverse Effect. There are no pending or, to the Knowledge of Sirius, threatened Proceedings against any Sirius Benefit Plan, any fiduciary thereof, Sirius or any Subsidiary that could reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect. Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, to the Knowledge of Sirius, none of Sirius, any of its Subsidiaries, any officer of Sirius or of any Subsidiary or any of the Sirius Benefit Plans which are subject to ERISA, including any trusts created thereunder or any trustee or administrator thereof, has engaged in a "prohibited transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of the Code) or any other breach of fiduciary responsibility that could subject Sirius, any Subsidiary or any officer of Sirius or of any Subsidiary to any tax or penalty on prohibited transactions imposed by such Section 4975 of the Code or to any material liability under Section 502(i) or 502(1) of ERISA.

            (d)   Except in connection with any Non-US Sirius Benefit Plan (as defined below), there is no material current or projected liability in respect of post-employment or post-retirement health or medical or life insurance benefits for retired, former or current employees of Sirius or its Subsidiaries, except as required to avoid excise tax under Section 4980B of the Code, except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect.

            (e)   With respect to Sirius Benefit Plans that are subject to or governed by the Laws of any jurisdiction other than the United States (the " Non-US Sirius Benefit Plans "), except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, (i) all amounts required to be reserved under each book reserved Non-US Sirius Benefit Plan have been so reserved in accordance with GAAP and (ii) each Non-US Sirius Benefit Plan required to be registered with a Governmental Entity has been registered, has been maintained in good

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    standing with the appropriate Governmental Entities, has been maintained and operated in all respects in accordance with its terms and is in compliance with all applicable Laws.

            (f)    Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect and as otherwise contemplated under this Agreement or pursuant to the terms of the Sirius Benefit Plans which have been provided to Easterly as of the date of this Agreement, neither the execution nor delivery of this Agreement nor the consummation of the Transactions contemplated hereby shall, whether alone or in combination with any other event, result in (i) the accelerated vesting or payment of, or any increase in, any compensation to any present or former executive officer or director of Sirius or any of its Subsidiaries or (ii) the entitlement of any present or former executive officer or director of Sirius or any of its Subsidiaries to severance or termination pay or benefits.

            (g)   Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, (i) neither Sirius nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement, agreement with any works council, or labor Contract, (ii) no labor union, labor organization, works council, or group of employees of Sirius or any of its Subsidiaries has made a pending demand for recognition or certification, (iii) there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened in writing to be brought or filed with any labor relations tribunal or authority, (iv) neither Sirius nor any Subsidiary has engaged in any unfair labor practice with respect to any individuals employed by or otherwise performing services for Sirius or any of its Subsidiaries and (v) there is no labor strike, dispute, lockout, slowdown or stoppage pending or, to the Knowledge of Sirius, threatened against or affecting Sirius or any Subsidiary which is reasonably likely to materially interfere with the respective business activities of Sirius or any Subsidiary.

            (h)   Sirius and its Subsidiaries are and have been in compliance with all applicable Laws in respect of employment and employment practices including, without limitation, all Laws in respect of terms and conditions of employment, health and safety, wages and hours, child labor, immigration, employment discrimination, disability rights or benefits, equal opportunity, plant closures and layoffs, affirmative action, workers' compensation, labor relations and unemployment insurance, except for noncompliance as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect.


        Section 4.14
    Environmental Matters.     Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, Sirius and its Subsidiaries are in compliance, and at all times since December 31, 2015 have complied, with all applicable Laws (including common law), statutes, rules, regulations, orders, decrees, permits, authorizations or legal requirements of any Governmental Entity relating to: (a) the protection or restoration of the environment or natural resources, (b) the handling, storage, use, presence, disposal, release or threatened release of, or exposure to, any hazardous substance, or (c) noise, odor, wetlands, indoor air, pollution, contamination or any injury to Persons or property from exposure to any hazardous substance (collectively, " Environmental Laws "). There are no Proceedings pending or, to the Knowledge of Sirius, threatened against Sirius seeking to impose, or that could reasonably be expected to result in the imposition, on Sirius or any of its Subsidiaries of any liability or obligation arising under any Environmental Law, which liability or obligation would reasonably be expected to have, either individually or in the aggregate, a Sirius Material Adverse Effect.


        Section 4.15
    Properties.     Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect: (a) Sirius and each of its Subsidiaries has good, valid and marketable title to, or valid leasehold or sublease interests or other comparable Contract rights in or relating to all real property of Sirius and its Subsidiaries free and clear of all Liens, except for

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Permitted Liens; (b) Sirius and each of its Subsidiaries has complied with the terms of all leases of real property of Sirius and its Subsidiaries and all such leases are in full force and effect, enforceable in accordance with their terms against Sirius or any Subsidiary party thereto and, to the Knowledge of Sirius, the counterparties thereto; and (c) neither Sirius nor any of its Subsidiaries has received or provided any written notice of any event or occurrence that has resulted or would reasonably be expected to result (with or without the giving of notice, the lapse of time or both) in a default with respect to any such lease.


        Section 4.16
    Material Contracts.     (a) There is no breach or violation of or default by Sirius or any of its Subsidiaries under any such Material Contracts, except such breaches, violations and defaults as have been waived, and (b) no event has occurred with respect to Sirius or any of its Subsidiaries, or, to Sirius' Knowledge, with respect to a third party, which, with notice or lapse of time or both, would constitute a breach, violation or default, or give rise to a right of termination, modification, cancellation, foreclosure, imposition of a lien, prepayment or acceleration under any of such Material Contracts, except, in the case of clause (a) and (b) above, as would not, individually or in the aggregate, reasonably be expected to have a Sirius Material Adverse Effect.


        Section 4.17
    Taxes.     Except as would not reasonably be expected to have a Sirius Material Adverse Effect, (a) each of Sirius and its Subsidiaries has timely filed (taking into account all applicable extensions) all Tax Returns in all jurisdictions in which Tax Returns are required to be filed by it, (b) all such Tax Returns are true, correct, and complete in all respects, (c) all Taxes of Sirius and its Subsidiaries (whether or not shown on any Tax Returns) that are due have been fully and timely paid, (d) each of Sirius and its Subsidiaries has withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor, shareholder, independent contractor or other third party, (e) there are no Liens for Taxes (except Taxes not yet due and payable) on any of the assets of Sirius or any of its Subsidiaries, (f) there are no pending or threatened in writing disputes, claims, audits, examinations or other proceedings regarding any material Taxes of Sirius or its Subsidiaries or the assets of Sirius or its Subsidiaries and (g) no deficiency with respect to a material amount of Taxes has been proposed, asserted or assessed against Sirius or any of its Subsidiaries.


        Section 4.18
    Risk-Based Capital.     Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, there are no material disputes or issues outstanding between the relevant Reinsurance Subsidiary and any applicable Insurance Regulators having authority over such Reinsurance Subsidiary concerning the adequacy of such Reinsurance Subsidiary's regulatory capital resources.


        Section 4.19
    Insurance Regulatory Matters; Agreements with Regulators .     

            (a)   Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, (i) the Reinsurance Subsidiaries have filed all material reports, statements, registrations, filings or submissions required to be filed with any Insurance Regulator since January 1, 2017, and (ii) no material deficiencies have been asserted in writing by any Governmental Entity since January 1, 2017 with respect to any such reports, statements, registrations, filings and submissions that have not been cured or otherwise resolved or are no longer being pursued by such Governmental Entity. Since January 1, 2017, none of the Reinsurance Subsidiaries is or has been a "commercially domiciled insurer" under the Laws of any jurisdiction or is or has been otherwise treated as domiciled in a jurisdiction other than its jurisdiction of organization. Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, as of the date of this Agreement, neither Sirius nor any of its Subsidiaries is subject to any pending or, to the Knowledge of Sirius, threatened financial or market conduct examination or investigation by any Insurance Regulator.

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            (b)   Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, all forms of policies or contracts of insurance written by the Reinsurance Subsidiaries (collectively, " Policies ") in effect as of the date hereof have been, to the extent required under applicable Law, filed with or submitted to and not objected to by the relevant Governmental Entity within the period provided for objection.

            (c)   Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect and to the Knowledge of Sirius, each agent, broker, insurance intermediary or producer engaged on behalf of the Sirius Subsidiaries (each, a " Producer "), (i) complies with all applicable Laws regarding such Producer's authority to engage in the type of insurance activities in which such Producer is engaged on behalf of the Sirius Subsidiaries, (ii) is duly licensed or authorized (including, the marketing, sale or issuance of any policies) in each jurisdiction in which such Producer places or sells policies and (iii) is duly authorized and appointed by the applicable Sirius Subsidiary pursuant to applicable Laws.

            (d)   Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect or as required by applicable Laws or the byelaws or requirements of Lloyd's with respect to insurance and the reinsurance licenses maintained by the Sirius Subsidiaries, there is no written agreement, memorandum of understanding, commitment letter or similar undertaking binding on any Sirius Subsidiary, or order or direction by, or extraordinary supervisory letter or cease-and-desist order from, any Insurance Regulator binding on any Sirius Subsidiary that restricts materially the conduct of the business of the Sirius Subsidiaries or relates to their capital adequacy, credit or risk management policies or management. Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, no Sirius Subsidiary has adopted any policy, procedure or board resolution at the request of any Insurance Regulator that restricts materially the conduct of the business of such Sirius Subsidiary or relates to its capital adequacy, credit or risk management policies or management.


        Section 4.20
    Reinsurance Contracts.     Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, as of the date of this Agreement, each reinsurance or retrocession treaty or agreement to which any Reinsurance Subsidiary is the cedent relating to Sirius' 2018 or 2017 retrocession program and that is in force as of the date of this Agreement, other than any such treaty or agreement under which Sirius has gross ceded premiums (calculated in accordance with SAP) of $2,500,000 or less as of January 1, 2018 (the " Reinsurance Contracts ") constitutes a valid and binding agreement of the Reinsurance Subsidiary party thereto and, to the Knowledge of Sirius, each other party thereto, and is in full force and effect, except for such failures to be valid, binding or in full force and effect that are not material. The applicable Reinsurance Subsidiary has performed all material obligations required to be performed by it to date under the Reinsurance Contracts, and it is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder and, to the Knowledge of Sirius, no other party to any Reinsurance Contract is (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder, except for such noncompliance, breaches and defaults that, individually or in the aggregate, have not had and would not reasonably be expected to be have, individually or in the aggregate, a Sirius Material Adverse Effect. Except as would not reasonably be expected to have, individually or in the aggregate, a Sirius Material Adverse Effect, as of the date of this Agreement, none of Sirius and the Sirius Subsidiaries has received any notice of the intention of any party to terminate any Reinsurance Contract.


        Section 4.21
    Actuarial Reports.     Sirius has made available to Easterly true, correct and complete copies of all actuarial reports in Sirius' or the Reinsurance Subsidiaries' possession and prepared by the appointed actuary of the relevant Reinsurance Subsidiary on or after January 1, 2017 with respect to the Reinsurance Subsidiaries (including all material attachments, addenda, supplements and modifications thereto). To the Knowledge of Sirius, Sirius and the Sirius Subsidiaries have not

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intentionally withheld any information relevant to the preparation of any actuarial reports on or after January 1, 2017.


        Section 4.22
    Sirius Ratings.     As of the date of this Agreement, the financial strength of the Reinsurance Subsidiaries is rated "A" by A.M. Best Company, Inc. (" A.M. Best "), "A–" by Fitch Ratings (" Fitch "), and "A–" by Standard & Poor's Ratings Group, a division of the McGraw-Hill Companies, Inc. (" S&P "). As of the date of this Agreement, the financial strength rating outlooks are "under review with negative implications", "rating watch negative", and "stable" for A.M. Best, Fitch and S&P, respectively. As of the date of this Agreement, there are no conditions (financial or otherwise) imposed specifically on any of the Reinsurance Subsidiaries by A.M. Best, Fitch or S&P on retaining any currently held rating, except for such conditions that would not, individually or in the aggregate, reasonably be expected to have a Sirius Material Adverse Effect.


        Section 4.23
    Intellectual Property.     Except as would not reasonably be expected, individually or in the aggregate, to have a Sirius Material Adverse Effect, (a) Sirius and each of its Subsidiaries owns, free and clear of any material Liens, other than Permitted Liens, all Intellectual Property owned by such entity, (b) (i) Sirius and its Subsidiaries do not infringe, misappropriate or otherwise violate, the Intellectual Property rights of any Person, and (ii) no Person has asserted in writing to Sirius or any of its Subsidiaries, or brought any Proceeding alleging, that (A) Sirius or any of its Subsidiaries has infringed, misappropriated or otherwise violated any Intellectual Property right or By) that any Intellectual Property right of Sirius or any of its Subsidiaries is invalid or unenforceable, and (c) to the Knowledge of Sirius, no Person is infringing, misappropriating or otherwise violating any Intellectual Property right owned by and/or licensed to Sirius or its Subsidiaries.


        Section 4.24
    Insurance.     Except as would not reasonably be expected, individually or in the aggregate, to have a Sirius Material Adverse Effect, (a) all insurance policies with respect to the business and assets of Sirius and its Subsidiaries are in full force and effect, (b) neither Sirius nor any of its Subsidiaries is in breach or default, and neither Sirius nor any of its Subsidiaries has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification of any of such insurance policies, (c) Sirius and its Subsidiaries have not received any written notice of cancellation of any of such insurance policies and (d) all appropriate insurers under such insurance policies have been timely notified of all potentially insurable losses known to Sirius and pending Proceedings, and all appropriate actions have been taken to timely file all claims in respect of such insurable matters.


        Section 4.25
    Broker's Fees.     Neither Sirius nor any of its officers or directors, nor Merger Sub nor any of their officers or directors, on behalf of Sirius or Merger Sub, has employed any financial advisor, broker or finder in a manner that would result in any liability of Easterly for any financial advisory fee, broker's fees, commissions or finder's fees in connection with any of the Transactions.


        Section 4.26
    Affiliate Transactions.     Other than the Redemption Agreement, since December 31, 2016, there have been no transactions, agreements, arrangements, or understandings between Sirius, on the one hand, and any Affiliate of Sirius, on the other hand, other than any such arrangements entered into on reasonable market terms.


        Section 4.27
    Agreements with Regulatory Agencies.     Except as would not reasonably be expected, individually or in the aggregate, to have a Sirius Material Adverse Effect, neither Sirius nor any of its Subsidiaries is subject to any cease-and-desist or other similar order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any capital directive by, or since December 31, 2015, has adopted any extraordinary board resolutions at the request of, any Governmental Entity that currently restricts in any material respect the conduct of its business or that materially relates to its capital adequacy, its liquidity and funding policies and practices, its ability to pay dividends, its credit, risk management or compliance policies, its internal controls, its management,

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or its operations or business, nor has Sirius received any written notice from any Governmental Entity indicating that it intends to issue, order, or request any of the foregoing.


        Section 4.28
    No Other Representations or Warranties.     Except for the representations and warranties expressly contained in this Article IV , neither Sirius nor any of its Affiliates nor any Person acting on any of their behalf makes any other express or any implied representations or warranties with respect to (a) Sirius or any of its Subsidiaries, any of their businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects or any other matter relating to Sirius or its Subsidiaries or (b) the accuracy or completeness of any documentation, forecasts, projections, estimates or other information provided by Sirius, any Affiliate of Sirius or any Person acting on any of their behalf to Easterly, any Affiliate of Easterly or any Person acting on any of their behalf. Notwithstanding anything to the contrary in this Agreement or the other Ancillary Agreements, Easterly acknowledges and agrees that none of Sirius or any of its Affiliates makes any representation or warranty (express or implied), and nothing contained in this Agreement, the Ancillary Agreements or any other agreement, document or instrument to be delivered in connection with the Transactions is intended or shall be construed to be a representation or warranty (express or implied) of Sirius or any of its Affiliates, with respect to: (i) the adequacy or sufficiency of the reserves of Sirius or its Subsidiaries; (ii) the effect of the adequacy or sufficiency of the reserves of Sirius or its Subsidiaries on any "line item" or asset, liability or equity amount; or (iii) the future experience or profitability arising from the business of Sirius or its Subsidiaries or that the reserves of Sirius or its Subsidiaries have been or will be adequate or sufficient for the purposes for which they were established or that the reinsurance recoverables taken into account in determining the amount of such reserves will be collectible.


ARTICLE V

COVENANTS

        Section 5.1     Easterly Conduct of Businesses Prior to the Effective Time.     During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, Easterly shall, except to the extent that Sirius shall consent in advance in writing (which consent shall not be unreasonably withheld, conditioned or delayed), or as expressly required or permitted by this Agreement, or as set forth in Section 5.1 of the Easterly Disclosure Letter , or as required by applicable Law or a Governmental Entity of competent jurisdiction, carry on its business in the ordinary course consistent with past practice in all material respects and use commercially reasonable efforts to preserve intact its present business organization and advantageous business relationships. Without limiting the generality of the foregoing and except as expressly contemplated by this Agreement or as set forth in Section 5.1 of the Easterly Disclosure Letter or as required by applicable Law or a Governmental Entity of competent jurisdiction, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, without the prior written consent of Sirius (which consent shall not be unreasonably withheld, conditioned or delayed), Easterly shall not:

            (a)   incur any Indebtedness;

            (b)   (i) adjust, split, combine or reclassify any Easterly Capital Stock; (ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of Easterly Capital Stock, other than with respect to the Redemption Shares and the Warrant Tender Offer as expressly contemplated by this Agreement, pursuant to the Convertible Promissory Note and redemptions of Easterly Common Stock in connection with the Extension Amendments; or (iii) issue, sell or otherwise permit to become outstanding any additional shares of capital stock or securities convertible or exchangeable into, or exercisable for, any shares of its capital stock or any options, warrants, or other rights of any kind to acquire any shares of capital stock;

            (c)   sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties, business or assets to any individual, corporation or other entity;

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            (d)   acquire (whether by merger or consolidation, acquisition of stock or assets or otherwise) any other Person or business;

            (e)   (i) terminate, materially amend, renew or waive any material provision of, any Material Contract, other than normal renewals in the ordinary course of business, except for the Extension Amendments, or (ii) enter into any Contract that would constitute a Material Contract if it were in effect on the date of this Agreement;

            (f)    hire any employee or consultant or adopt any Easterly Benefit Plan;

            (g)   settle any material Proceeding;

            (h)   amend its certificate of incorporation, bylaws or comparable governing documents, except for the Extension Amendments;

            (i)    merge or consolidate itself with any other Person, or restructure, reorganize or completely or partially liquidate or dissolve;

            (j)    implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP, SAP or by applicable Laws;

            (k)   enter into any material new line of business;

            (l)    make, or commit to make, any capital expenditures;

            (m)  prepare or file any Tax Return inconsistent with prior practice, make, change or revoke any material Tax election, change an annual Tax accounting period, adopt or change any material Tax accounting method, file any amended Tax Return, enter into any closing (or similar) agreement with respect to Taxes, settle or compromise any Tax claim, audit, assessment or dispute or surrender any right to claim a refund, offset or any other reduction in Tax liability, request any ruling or similar guidance with respect to Taxes, or agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;

            (n)   take, or fail to take, any action that is intended to or would reasonably be expected to result in the failure of any of the conditions in Article VI to be satisfied; or

            (o)   agree to take, make any commitment to take, or adopt any resolutions of its Board of Directors or similar governing body in support of, any of the actions prohibited by this Section 5.1 .


        Section 5.2     Sirius Conduct of Businesses Prior to the Effective Time.     

            (a)   During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, Sirius agrees as to itself and each of its Subsidiaries, except as expressly required or permitted by this Agreement, as set forth in Section 5.2 of the Sirius Disclosure Letter or as required by applicable Law or a Governmental Entity of competent jurisdiction, (a) to carry on its business in the ordinary course consistent with past practice in all material respects and (b) not to take, or knowingly fail to take, any action that is intended to or would reasonably be expected to result in the failure of any of the conditions in Article VI to be satisfied. Without limiting the generality of the foregoing and except as expressly contemplated by this Agreement, except as set forth in Section 5.2 of the Sirius Disclosure Letter or as required by applicable Law or a Governmental Entity of competent jurisdiction, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, without the prior written consent of Easterly (which consent shall not be unreasonably withheld, conditioned or delayed), Sirius shall not: (i) adjust, split, combine or reclassify any Sirius Capital Shares; (ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any Sirius Capital Shares (except (A) dividends paid by any of the wholly-owned Subsidiaries of Sirius

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    to Sirius or any of its wholly-owned Subsidiaries, (B) the acceptance of Sirius Common Shares as payment for the exercise price of options or for withholding taxes incurred in connection with the exercise of options or the vesting or settlement of Sirius Equity Awards and dividend equivalents thereon, if any, in each case in accordance with past practice and the terms of the applicable award agreements), or (C) required dividends or distributions in respect of Sirius Preference Shares; or (iii) issue, sell or otherwise permit to become outstanding any additional shares of capital stock or securities convertible or exchangeable into, or exercisable for, any of its capital shares or any options, warrants, or other rights of any kind to acquire any shares of capital stock, except (A) to the extent such issuance or sale would otherwise be permitted under Section 5.4 , (B) for the issuance of Sirius Equity Awards and (C) pursuant to the exercise of Sirius Equity Awards or the settlement or vesting of Sirius Equity Awards in accordance with their terms.


        Section 5.3
    Preparation of the Registration Statement and the Proxy Statement; Easterly Stockholder Meeting.     

            (a)   As promptly as practicable, (i) Sirius and Easterly shall jointly prepare and Sirius and Easterly, as applicable, shall use their reasonable best efforts to file with the SEC by July 31, 2018 the Proxy Statement to be sent to the stockholders of Easterly relating to the Easterly Stockholders Meeting and (ii) Sirius shall prepare (with Easterly's cooperation) and use its reasonable best efforts to file with the SEC by July 31, 2018 the Registration Statement, in which the Proxy Statement will be included, in connection with the registration under the Securities Act of the Sirius Common Shares to be issued in the Merger and upon exercise of the Converted Warrants. Sirius shall use its reasonable best efforts to have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing (including by responding to comments of the SEC), and, prior to the effective date of the Registration Statement, Sirius shall take all action reasonably required (other than qualifying to do business in any jurisdiction in which it is not now so qualified or filing a general consent to service of process in any such jurisdiction) to be taken under any applicable state securities Laws in connection with the issuance of Sirius Common Shares. Easterly shall furnish all information as may be requested by Sirius in connection with any such action and the preparation, filing and distribution of the Registration Statement and the Proxy Statement. Easterly and Sirius will cause the Registration Statement to comply as to form in all material respects with the applicable provisions of the Securities Act, and Easterly will cause the Proxy Statement to comply as to form in all material respects with the Exchange Act. As promptly as practicable after the Registration Statement shall have become effective, Easterly shall use its reasonable best efforts to cause the Proxy Statement to be mailed to its stockholders, in accordance with applicable Law (including the DGCL and all applicable stock exchange requirements). No filing of, or amendment or supplement to, the Registration Statement will be made by Sirius, and no filing of, or amendment or supplement to, the Proxy Statement will be made by Sirius or Easterly, in each case without the other's prior consent (which shall not be unreasonably withheld, delayed or conditioned) and without providing the other party with a reasonable opportunity to review and comment thereon. If at any time prior to the Effective Time any information relating to Sirius or Easterly, or any of their respective Affiliates, directors or officers, should be discovered by Sirius or Easterly which should be set forth in an amendment or supplement to either the Registration Statement or the Proxy Statement, so that either such document would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, the party that discovers such information shall promptly notify the other parties hereto and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Law, disseminated to the stockholders of Easterly. Each party shall notify the other promptly of the time when the Registration Statement has become effective, of the issuance of any stop order or suspension of the qualification of the Sirius Common Shares issuable in connection with the Merger and upon

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    exercise of the Converted Warrants for offering or sale in any jurisdiction, or of the receipt of any comments from the SEC or the staff of the SEC and of any request by the SEC or the staff of the SEC for amendments or supplements to the Proxy Statement or the Registration Statement or for additional information and shall supply each other with copies of all written correspondence between it or any of its or its affiliates' directors, officers, members, employees, agents, advisors and other representatives (collectively, the " Representatives "), on the one hand, and the SEC or its staff, on the other hand, with respect to the Proxy Statement, the Registration Statement, the Merger or the other Transactions.

            (b)   Easterly shall, as soon as practicable following effectiveness of the Registration Statement, duly call, give notice of, convene and hold a meeting of its stockholders (the " Easterly Stockholders Meeting ") for the purpose of seeking the Easterly Stockholder Approval. Easterly shall, through the Easterly Board, make the Easterly Recommendation, include such Easterly Recommendation in the Proxy Statement, and use its reasonable best efforts to (i) solicit from its stockholders proxies in favor of the adoption of this Agreement and the Transactions, including the Merger and (ii) take all other action necessary or advisable to secure the Easterly Stockholder Approval. Neither the Easterly Board nor any committee thereof shall (i) withhold, withdraw or modify or qualify, or propose publicly to withhold, withdraw or modify or qualify, in a manner adverse to Sirius, the approval, determination of advisability, or recommendation by the Easterly Board or such committee of this Agreement, the Merger, and the other Transactions, (ii) make any other public statement in connection with the Easterly Stockholders Meeting by or on behalf of the Easterly Board that would reasonably be expected to have the same effect or (iii) approve, determine to be advisable, or recommend, or propose publicly to approve, determine to be advisable, or recommend, any Easterly Acquisition Proposal ((i), (ii) and (iii) being referred to as an " Easterly Adverse Recommendation Change ") or (iv) cause or permit Easterly to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, or other agreement relating to any Easterly Acquisition Proposal. Easterly shall not postpone or adjourn the Easterly Stockholders Meeting without the prior written consent of Sirius. Unless this Agreement is terminated in accordance with its terms, the obligations of the parties hereunder shall continue in full force and effect and Easterly shall submit this Agreement and the Transactions, including the Merger, for stockholder approval at the Easterly Stockholders Meeting.


        Section 5.4
    No Solicitation; No-Shop.     

            (a)   Sirius shall immediately cease any existing discussions and negotiations with any third parties conducted prior to the date hereof with respect to any Sirius Acquisition Proposal and shall not enter into any Contract with respect to any Sirius Acquisition Proposal until the earlier of the consummation of Merger and the other Transactions or the termination of this Agreement pursuant to Section 7.1 . Until the earlier of the consummation of the Merger and the other Transactions or the valid termination of this Agreement pursuant to Section 7.1, none of Sirius or any Sirius Subsidiary shall, nor shall Sirius or any Sirius Subsidiary direct any Affiliate or any of its or their Representatives to, (i) initiate, solicit, pursue, discuss or encourage any inquiries or the making of any proposal that constitutes a Sirius Acquisition Proposal, (ii) continue or engage in negotiations or discussions concerning, or provide any information to any Person relating to, any Sirius Acquisition Proposal other than information to any other Person that is traditionally provided in the regular course of business to third parties where Sirius and its Representatives have no reason to believe that such information may be utilized to evaluate any such Sirius Acquisition Proposal, or (iii) agree to, approve or recommend, or otherwise enter into any Contract with respect to, any Sirius Acquisition Proposal. Notwithstanding anything to the contrary contained herein, Easterly acknowledges and agrees that nothing in this Agreement shall prohibit or otherwise restrict Sirius from engaging in the PIPE, provided that shares sold in the PIPE

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    represent less than twenty-five percent (25%) in the aggregate of the fully diluted equity interests in Sirius, or engaging in any activities in connection therewith.

            (b)   Easterly shall immediately cease any existing discussions and negotiations with any third parties conducted prior to the date hereof with respect to any Easterly Acquisition Proposal and shall not enter into any Contract with respect to any Easterly Acquisition Proposal until the earlier of the consummation of the Transactions or the termination of this Agreement pursuant to Section 7.1 . Until the earlier of the consummation of the Transactions or the valid termination of this Agreement pursuant to Section 7.1 , Easterly shall not, directly or indirectly, through any Affiliate or any of its or their Representatives, directly or indirectly, (i) initiate, solicit, pursue, discuss or encourage any inquiries or the making of any proposal that constitutes an Easterly Acquisition Proposal, (ii) continue or engage in negotiations or discussions concerning, or provide any information to or request any information from any Person relating to, any Easterly Acquisition Proposal other than information to or from any other Person that is traditionally provided in the regular course of business to third parties where Easterly and its officers, directors and Affiliates have no reason to believe that such information may be utilized to evaluate any such Easterly Acquisition Proposal, or (iii) agree to, approve or recommend, or otherwise enter into any Contract with respect to, any Easterly Acquisition Proposal.

            (c)   For purposes of this Agreement:

                (i)  " Sirius Acquisition Proposal " means any proposal, Contract, offer or inquiry by any Person or group for or with respect to (regardless how structured) (A) the acquisition of ten percent (10%) or more of any class of the equity interests of Sirius or any Sirius Subsidiary pursuant to a merger, consolidation, dissolution, recapitalization, refinancing or otherwise, (B) a transaction pursuant to which Sirius or any Sirius Subsidiary issues or would issue, or such Person or group acquires or would acquire, ten percent (10%) or more of any class of the equity interests of Sirius or any Sirius Subsidiary or (C) a transaction pursuant to which such Person or group acquires or would acquire in any manner, directly or indirectly, any assets of Sirius or any Sirius Subsidiary thereof constituting fifty percent (50%) or more of the fair market value of the assets of Sirius and Sirius Subsidiaries taken as a whole.

               (ii)  " Easterly Acquisition Proposal " means any proposal, Contract, offer or inquiry by any Person or Persons for or with respect to (regardless how structured) (A) the acquisition of five percent (5%) or more of any class of the equity interests of another Person pursuant to a merger, consolidation, dissolution, recapitalization, refinancing or otherwise, (B) a transaction pursuant to which another Person issues or would issue, or Easterly, its stockholders or any of its Subsidiaries acquire or would acquire, five percent (5%) or more of any class of the equity interests of such other Person, (C) a transaction pursuant to which Easterly or any of its Subsidiaries acquires or would acquire in any manner, directly or indirectly, any assets of another Person constituting five percent (5%) or more of the fair market value of the assets of such other Person or (D) any other transaction that may constitute a Business Combination.


        Section 5.5
    Publicity.     The initial press release with respect to the execution of this Agreement shall be a joint press release reasonably acceptable to Sirius and Easterly. Thereafter, neither Sirius nor Easterly will issue any press release or make any statements which are public or are reasonably likely to become public to the extent relating to the Transactions without the other party's consent, not to be unreasonably withheld, conditioned or delayed, except as may be required by applicable Law or stock exchange rule and except with respect to the matters referred to and in accordance with Section 5.4 ; provided , however , that the foregoing shall not apply to any press release or other public statement to the extent containing only such information as was contained in a press release or other public statement previously issued or made in accordance with this Section 5.5 .

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        Section 5.6
    Notification of Certain Matters.     Each party shall give prompt notice to the other party if any of the following occur after the date of this Agreement: (a) receipt of any notice or other communication from any Governmental Entity, Lloyd's, the NASDAQ (or any other securities market) in connection with the Transactions; or (b) such party becoming aware of the occurrence of an event that would reasonably be expected to prevent or materially delay the consummation of the Transactions or that would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied; provided , that any failure to give notice in accordance with the foregoing shall not be deemed to constitute the failure of any condition set forth in Article VI , or otherwise constitute a breach of this Agreement by the party failing to give such notice, in each case unless the underlying fact, change, event or circumstance would independently result in a failure of the conditions set forth in Article VI to be satisfied.


        Section 5.7
    Access to Information.     

            (a)   Upon reasonable notice and subject to applicable Laws relating to the exchange of information, each party shall and shall cause each of its Subsidiaries to, afford to the officers, employees, accountants, counsel and other Representatives of the other party, during normal business hours during the period prior to the Effective Time, reasonable access to all of its and its Subsidiaries' properties, books, Contracts, commitments and records, and to its and its Subsidiaries' officers, employees, accountants, counsel and other Representatives and, during such period, each party shall, and shall cause its Subsidiaries to, promptly make available to the other party, subject, in the case of competitively sensitive information, to any customary "clean-room" arrangements agreed between the parties, (i) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal securities Laws and (ii) all other information concerning its business, properties and personnel as the other party may reasonably request. Each party shall use commercially reasonable efforts to minimize any interference with the other party's regular business operations during any such access.

            (b)   No investigation by any of the parties or their respective Representatives shall affect the representations, warranties, covenants or agreements of any other party set forth herein.

            (c)   This Section 5.7 shall not require either party or any of its Subsidiaries to permit any access, or to disclose any information, that in the reasonable, good faith judgment of such party would reasonably be expected to result in (i) any violation of any Contract or Law to which such party is a party or is subject or cause any privilege (including attorney-client privilege) which such party or any of its Subsidiaries would be entitled to assert to be undermined with respect to such information or violate or prejudice the rights of the other party's or its Subsidiaries' customers or (ii) if such party or any of its Subsidiaries, on the one hand, and the other party or any of its Subsidiaries, on the other hand, are adverse parties in a litigation, such information being reasonably pertinent thereto. The parties will use their reasonable best efforts to make appropriate substitute disclosure arrangements under circumstances in which the restrictions of clause (i) of the preceding sentence apply.

            (d)   The information provided pursuant to this Section 5.7 shall be used solely for the purpose of the Transactions contemplated hereby, and unless and until the Merger is consummated, such information shall be kept confidential by the recipient thereof in accordance with, and such recipient shall otherwise abide by and be subject to the terms and conditions of the Confidentiality Agreement. If this Agreement is terminated, Sirius and Easterly shall and shall cause each of their Representatives to, return or destroy (and certify destruction of) all information provided pursuant to this Section 5.7 .

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        Section 5.8
    Reasonable Best Efforts.     

            (a)   The parties hereto shall cooperate with each other and use their reasonable best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties and Governmental Entities and Lloyd's which are necessary or advisable to consummate the Merger and the other Transactions, and to comply with the terms and conditions of all such permits, consents, approvals and authorizations of all such Governmental Entities and Lloyd's. The parties shall cooperate with each other in connection therewith (including the furnishing of any information and any reasonable undertaking or commitments that may be required to obtain any such approvals). Each of Easterly and Sirius shall have the right to review in advance, and, to the extent practicable, each will consult the other on, in each case subject to applicable Laws relating to the exchange of information, all the information relating to Easterly or Sirius, as the case may be, and any of their respective Subsidiaries, which appears in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the Transactions contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto shall act reasonably and as promptly as practicable. Each party will provide the other with copies of any applications and all correspondence relating thereto prior to filing, other than any portions of material filed in connection therewith that contain competitively sensitive business or other proprietary information filed under a claim of confidentiality. The parties hereto agree that they will consult with each other with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties and Governmental Entities necessary or advisable to consummate the Transactions contemplated by this Agreement and each party will keep the other apprised of the status of matters relating to completion of the Transactions contemplated herein. Each party shall consult with the other in advance of any meeting or conference with any Governmental Entity or Lloyd's in connection with the Transactions contemplated by this Agreement. Each party shall each use its reasonable best efforts to (i) take all action reasonably necessary to ensure that no Takeover Law is or becomes applicable to any of the Transactions and (ii) if any Takeover Law becomes applicable to any of the Transactions, take all action to enable the Transactions to be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise minimize the effect of such Law on the Transactions.

            (b)   In furtherance and not in limitation of the foregoing, each of Easterly and Sirius shall use its reasonable best efforts to (i) avoid the entry of, or to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other Order, whether temporary, preliminary or permanent, that would restrain, prevent or delay the Closing, and (ii) avoid or eliminate each and every impediment so as to enable the Closing to occur as soon as possible, including proposing, negotiating, committing to and effecting, by consent decree, hold separate order, or otherwise, the sale, divestiture or disposition of businesses or assets of Easterly, Sirius and their respective Subsidiaries. Notwithstanding anything to the contrary in this Agreement, nothing contained in this Agreement shall require Easterly or Sirius or their respective Subsidiaries to take, or agree to take, any actions specified in this Section 5.8 that, individually or in the aggregate, would reasonably be expected to have a material and adverse effect on Sirius, any Sirius Subsidiary or Easterly (in any case, measured on a scale relative to Easterly, Sirius and any Sirius Subsidiary on a combined basis).

            (c)   This Section 5.8 shall not apply with respect to matters related to Tax (which shall be governed by Section 5.15 (Tax Matters).

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        Section 5.9
    Indemnification.     

            (a)   Sirius and Easterly agree that for a period of six years from the Effective Time, Sirius agrees that all agreements relating to exculpation, indemnification or advancement of expenses arising from, relating to, or otherwise in respect of, acts or omissions occurring at or prior to the Effective Time (including in connection with this Agreement or the Transactions or actions contemplated hereby) with the current or former directors or officers of Easterly or its Subsidiary (the "Indemnities") as provided in the certificates of incorporation and bylaws of Easterly and its Subsidiary and any indemnification or similar agreements, and all rights with respect thereto, shall survive the Merger and shall continue in full force and effect in accordance with their terms and shall not be amended, repealed or otherwise modified in a manner that would adversely affect the rights thereunder of the Indemnitees.

            (b)   In the event that either Sirius or the Surviving Company or any of its successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or the Surviving Company or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each case, Sirius shall, and shall cause the Surviving Company to, cause proper provision to be made so that such successor or assign shall expressly assume the obligations set forth in this Section 5.9 . This Section 5.9(b) shall not apply to any consolidation, merger, transfer or conveyance solely among Sirius and its direct and indirect Subsidiaries.

            (c)   For a period of six (6) years after the Effective Time, Sirius shall cause to be maintained in effect the current policies of directors' and officers' liability insurance maintained by Easterly ( provided , that Sirius may substitute therefor policies with a substantially comparable insurer of at least the same coverage and amounts containing terms and conditions which are no less advantageous to the insured) with respect to claims against the present and former directors and officers of Easterly or its Subsidiary arising from facts or events which occurred at or before the Effective Time (including the Merger and the other Transactions); provided , however , that Sirius shall not be obligated to expend, on an annual basis, an amount in excess of three hundred percent (300%) of the aggregate annual premium paid as of the date of this Agreement by Easterly for such insurance (the " Premium Cap "), and if such premiums for such insurance would at any time exceed the Premium Cap, then Sirius shall cause to be maintained policies of insurance which provide the maximum coverage available at an annual premium equal to the Premium Cap. In lieu of the foregoing, Easterly may obtain at or prior to the Effective Time a six-year "tail" policy under Easterly's existing directors and officers insurance policy providing equivalent coverage to that described in the preceding sentence.

            (d)   The provisions of this Section 5.9 are (i) intended to be for the benefit of, and shall be enforceable by, each Indemnitee, his or her heirs and his or her representatives and (ii) in addition to, and not in substitution for, any other rights to indemnification or contribution that any such individual may have under the certificates of incorporation and bylaws of Easterly or its Subsidiary in effect as of the date of this Agreement or in any Contract of Easterly or its Subsidiary in effect as of the date of this Agreement.

            (e)   Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors' and officers' insurance claims under any policy that is or has been in existence with respect to Easterly or its Subsidiary for any of their respective directors, officers or other employees, it being understood and agreed that the indemnification provided for in this Section 5.9 is not prior to or in substitution for any such claims under such policies.


        Section 5.10
    Control of Operations.     Notwithstanding anything else in this Agreement that may be deemed to the contrary, nothing in this Agreement shall, directly or indirectly, give any party control over any other party's operations, business or decision-making before the Effective Time, and control

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over all such matters shall remain in the hands of the relevant party, subject to the terms and conditions of this Agreement.


        Section 5.11
    Stock Exchange Listing .     Sirius shall use its reasonable best efforts to cause the Sirius Common Shares to be issued in connection with the Merger and upon exercise of the Converted Warrants to be listed on the NASDAQ, subject to official notice of issuance.


        Section 5.12
    Section 16 Matters .     Prior to the Effective Time, Easterly shall take all such steps as may be required to cause any dispositions of Easterly Capital Stock (including derivative securities with respect Easterly Capital Stock) resulting from the Transactions contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Easterly to be exempt under Rule 16b-3 promulgated under the Exchange Act.


        Section 5.13
    Trust Account .     

            (a)   As of the Effective Time, the obligations of Easterly to dissolve or liquidate within a specified time period as contained in the Easterly Charter will be terminated and Easterly shall have no obligation whatsoever to dissolve and liquidate the assets of Easterly by reason of the consummation of the Merger or otherwise, and no stockholder of Easterly shall be entitled to receive any amount from the Trust Account except with respect to such stockholder's Redemption Shares in accordance with Article II . At least forty-eight (48) hours prior to the Closing Date, Easterly shall provide notice to the Trustee in accordance with Section 1(i) of the Trust Agreement and shall deliver any other documents, opinions, or notices required to be delivered to the Trustee pursuant to the Trust Agreement and cause the Trustee on the Closing Date and prior to the Effective Time to, and the Trustee shall thereupon be obligated to, transfer all funds held in the Trust Account to Easterly and thereafter Easterly shall cause the Trust Account and the Trust Agreement to terminate.

            (b)   Immediately following Easterly's receipt of the funds held in the Trust Account on the Closing Date, and prior to the Effective Time, Easterly shall pay all liabilities and obligations of Easterly due and owing or incurred at or prior to the Effective Time using unrestricted cash and up to $2,000,000 from the Trust Account (and not, for the avoidance of doubt, any funds held in or released from the Trust Account in excess of $2,000,000) and, to the extent such unrestricted cash is not sufficient to discharge all such liabilities and obligations, such liabilities and obligations shall be paid by Sponsor pursuant to the Sponsor Letter; provided , that the $7,000,000 deferred underwriting fee payable to Citigroup Global Markets Inc. by Easterly shall be paid out of the funds released from the Trust Account.

            (c)   Easterly will promptly provide Sirius with notice of any redemptions of the Easterly Common Stock in connection with the Transactions, including name of the Easterly stockholder requesting redemption and the number of shares being requested to be redeemed. Upon written request by Sirius, provide to Sirius the most recent account statements of the Trust Account in Sirius's possession within five (5) Business Days of each such request.


        Section 5.14
    Warrant Tender Offer .     

            (a)   Prior to the Closing Date, if requested in writing by Sirius, Easterly shall commence (under the meaning of Rule 14d-2 under the Exchange Act) a tender offer (the "Warrant Tender Offer") pursuant to which it will offer to purchase up to such number of its issued and outstanding Easterly Warrants for such price in cash per each Public Warrant validly tendered and not properly withdrawn, in each case, as mutually agreed between Sirius and Easterly. The Warrant Tender Offer shall be conducted pursuant to the applicable tender offer rules under the Exchange Act and promulgated by the SEC. In connection therewith, Easterly shall prepare and file with the SEC under the Exchange Act, and with all other applicable regulatory bodies, a Schedule TO, which shall contain or shall incorporate by reference an offer to purchase and forms of the letter of

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    transmittal and such other required documents (collectively, the " Warrant Offer Documents ") for the purpose of conducting the Warrant Tender Offer. Sirius and its counsel shall be given a reasonable opportunity to review and comment on the Warrant Offer Documents prior to their filing with the SEC, and Easterly shall incorporate such comments to the extent reasonable.

            (b)   Sirius shall reasonably cooperate with the efforts of Easterly to conduct the Warrant Tender Offer, including (i) providing, as promptly as practicable upon request by Easterly, such information regarding Sirius, including a description of its management, businesses, operations and financial condition, as shall be reasonably requested by Easterly for inclusion in the Warrant Offer Documents and (ii) ensuring that such information is accurate in all material respects, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading (subject to the qualifications and limitations set forth in the materials provided by Sirius or that are included in such filings and/or mailings). Sirius shall make its directors, officers and employees available to the Purchaser and its counsel, as reasonably requested, in connection with the drafting of the Warrant Offer Documents.

            (c)   Easterly, with the assistance of Sirius as reasonably required with respect to information concerning Sirius, shall promptly respond to any SEC comments on the Warrant Offer Documents and shall otherwise use commercially reasonable efforts to complete the SEC review process as promptly as practicable. Easterly shall promptly disseminate the Warrant Offer Documents to the holders of the Easterly Warrants and subject to the other provisions of this Agreement and applicable Laws and SEC regulations, purchase the Easterly Warrants validly tendered and not properly withdrawn pursuant to the Warrant Tender Offer. Easterly may, without the consent of Sirius or Merger Sub, extend the Warrant Tender Offer for any period required by any rule, regulation or interpretation of the SEC or its staff applicable to the Warrant Tender Offer.

            (d)   Notwithstanding anything to the contrary herein or in any other document, none of the actions contemplated by this Section 5.14 , the completion of the SEC review process with respect to the Warrant Tender Offer or the consummation of the Warrant Tender Offer shall, directly or indirectly, constitute a condition to the obligations of Sirius and Merger Sub to consummate the Merger and the Transactions. The closing of the Warrant Tender Offer shall occur on the Closing Date at such time as shall be mutually agreed between Sirius and Easterly; provided , that the closing of the Warrant Tender Offer shall not occur prior to the Effective Time.


        Section 5.15
    Tax Matters     

            (a)   From the date hereof until the Closing Date, (i) Easterly shall provide Sirius with a draft copy of any income and other material Tax Returns at least 30 days prior to the due date for filing such Tax Return and shall not file such Tax Return without the consent of Sirius (which consent shall not be unreasonably withheld, conditioned or delayed). Such Tax Returns shall be prepared in accordance with past practices unless clearly required by Law, (ii) Easterly shall give Sirius and its advisors a reasonable opportunity to participate any in discussions with any Tax authority, and provide Sirius with draft copies of any materials intended to be submitted to any Tax authority reasonably in advance of such submission, and (iii) Sirius and Easterly shall cooperate in good faith with each other with respect to matters related to the Taxes of Easterly.

            (b)   Agreed Tax Treatment. For all tax purposes, Sirius and Easterly agree to treat the Promissory Note from Sirius to Easterly of up to $2,252,336.55 of principal amount, (i) as a collateral arrangement to secure the payment of a termination fee to Easterly in the event the Transactions do not close, which collateral shall be returned to Sirius if the Transactions close, and (ii) Sirius as the owner of the cash proceeds of such loan at all times, and to file all Tax Returns consistently therewith.

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        Section 5.16     Stockholder Litigation.     Easterly shall provide Sirius with prompt notice of and copies of all proceedings and correspondence relating to any Proceeding against Easterly, any of its Subsidiaries or any of their respective directors or officers by any stockholder of Easterly arising out of or relating to this Agreement or the Transactions. Easterly shall give due consideration to Sirius's advice with respect to such stockholder Proceeding and shall not settle or offer to settle any such Proceeding without the prior written consent of Sirius (which consent shall not be unreasonably withheld, conditioned or delayed).


ARTICLE VI

CONDITIONS TO THE MERGER

        Section 6.1     Conditions to Obligations of Each Party .     The obligations of Sirius, Merger Sub and Easterly to consummate the Merger and the other Transactions are subject to the satisfaction, at or prior to the Closing, of the following conditions (which may be waived, in whole or in part, to the extent permitted by Law, by Sirius, on behalf of itself and Merger Sub, and Easterly):

            (a)     Easterly Stockholder Approval.     Easterly shall have obtained the Easterly Stockholder Approval.

            (b)     Listing.     The Sirius Common Shares issuable pursuant to this Agreement and upon exercise of the Converted Warrants shall have been approved for listing on the NASDAQ, subject to official notice of issuance.

            (c)     Statutes and Injunctions.     No Order shall have been promulgated, entered, enforced, enacted or issued or shall be applicable to the Merger or other Transactions by any Governmental Entity which prohibits, restrains or makes illegal the consummation of the Merger or other Transactions and shall continue in effect.

            (d)     Registration Statement.     The Registration Statement shall have become effective under the Securities Act and shall not be the subject of any stop order, and no proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn.

            (e)     Other Regulatory Approvals.     All approvals, authorizations and consents of any other Governmental Entity required to consummate the Merger shall have been obtained and remain in full force and effect, and all statutory waiting periods relating to such approvals, authorizations and consents shall have expired or been terminated.

            (f)     Warrant Amendment.     The Warrant Amendment shall have been entered into by the parties thereto.

            (g)     Sponsor Letter.     The Sponsor Letter shall be in full force and effect.


        Section 6.2
    Conditions to Obligations of Sirius and Merger Sub to Effect the Merger.     The obligations of Sirius and Merger Sub to consummate the Merger and the other Transactions are subject to the satisfaction on or prior to the Closing Date of the following conditions (which may be waived in whole or in part by Sirius, on behalf of itself and Merger Sub):

            (a)     Representations and Warrants of Easterly.     The representations and warranties of Easterly set forth in this Agreement (except those representations and warranties set forth in the proviso below) shall be true and correct in all respects (without giving effect to any materiality or Easterly Material Adverse Effect qualifier therein), as of the date of this Agreement and as of the Closing Date as though made on or as of such date (or, in the case of representations and warranties that address matters only as of a particular date, as of such date), except to the extent that the failure of such representations and warranties to be true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to have an Easterly Material Adverse Effect;

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    provided that the representations and warranties of Easterly set forth in Section 3.2(a) , Section 3.3 and Section 3.6(b) shall be true and correct (other than, in the case of Section 3.2(a) , such failures to be true and correct as are de minimis ) as of the date of this Agreement and as of the Closing Date as though made on or as of such date (or, in the case of representations and warranties that address matters only as of a particular date, as of such date). Sirius and Merger Sub shall have received a certificate validly executed and signed on behalf of Easterly by its chief executive officer or chief financial officer certifying that this condition has been satisfied.

            (b)     Performance of Obligations of Easterly.     Easterly shall have performed or complied with all of the obligations, agreements and covenants required by this Agreement to be performed or complied with by it in all material respects and Sirius and Merger Sub shall have received a certificate validly executed and signed on behalf of Easterly by its chief executive officer or chief financial officer certifying that this condition has been satisfied.

            (c)     FIRPTA Tax Certification.     Easterly shall have delivered to Sirius dated as of the Closing Date, a statement in accordance with Treasury Regulation §§ 1.1445-2(c)(3) and 1.897-2(h) certifying that Easterly is not, and has not been, a "United States real property holding corporation" for purposes of Sections 897 and 1445 of the Code, with respect to which Sirius shall have no actual knowledge that such statement is false or receive a notice that the statement is false pursuant to Treasury Regulation § 1.1445-4 and (ii) the notification to the Internal Revenue Service described in Treasury Regulation § 1.897-2(h)(2) regarding delivery of the statement referred to in the preceding clause (i), signed by a responsible corporate officer of Easterly. Easterly acknowledges that Sirius may cause Easterly to file such notification with the Internal Revenue Service on or after the Closing Date.

            (d)     Registration Rights Agreement and Lock-Up Agreements.     Easterly shall deliver, or cause to be delivered, to Sirius a counterpart of each of the Registration Rights Agreement and each Lock-Up Agreement duly executed by Sponsor and each Permitted Transferee (as defined in the Sponsor Letter) (if any).

            (e)     Material Adverse Effect.     There has not been a Easterly Material Adverse Effect that is continuing.


        Section 6.3
    Conditions to Obligation of Easterly to Effect the Merger .     The obligation of Easterly to consummate the Merger and the other Transactions is subject to the satisfaction on or prior to the Closing Date of the following conditions (which may be waived in whole or in part by Easterly):

            (a)     Representations and Warrants of Sirius and Merger Sub.     The representations and warranties of Sirius and Merger Sub set forth in this Agreement (except those representations and warranties set forth in the proviso below) shall be true and correct in all respects (without giving effect to any materiality or Sirius Material Adverse Effect qualifier therein), as of the date of this Agreement and as of the Closing Date as though made on or as of such date (or, in the case of representations and warranties that address matters only as of a particular date, as of such date), except to the extent that the failure of such representations and warranties to be true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to have a Sirius Material Adverse Effect; provided , that the representations and warranties of Sirius set forth in Section 4.3(a) , Section 4.5 and Section 4.8 shall be true and correct (other than, in the case of Section 4.3(a) , such failures to be true and correct as are de minimis ) as of the date of this Agreement and as of the Closing Date as though made on or as of such date (or, in the case of representations and warranties that address matters only as of a particular date, as of such date). Easterly shall have received a certificate validly executed and signed on behalf of Sirius by its chief executive officer or chief financial officer certifying that this condition has been satisfied.

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            (b)     Performance of Obligations of Sirius and Merger Sub.     Sirius and Merger Sub shall have performed or complied with, as applicable, all of the obligations, agreements and covenants required by this Agreement to be performed or complied with by each of them in all material respects and Easterly shall have received a certificate validly executed and signed on behalf of Sirius by its chief executive officer or chief financial officer certifying that this condition has been satisfied.

            (c)     Registration Rights Agreement and Lock-Up Agreements.     Sirius shall deliver, or cause to be delivered, to Easterly a counterpart of the Registration Rights Agreement and each Lock-Up Agreement duly executed by the Sirius and the other Sirius shareholder party thereto (other than Sponsor and any Permitted Transferee).

            (d)     Material Adverse Effect.     There has not been a Sirius Material Adverse Effect that is continuing.


ARTICLE VII

TERMINATION

        Section 7.1     Termination .     Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be terminated and the Merger contemplated herein may be abandoned at any time prior to the Effective Time, whether before or after the Easterly Stockholder Approval:

            (a)   By the mutual written consent of Sirius and Easterly.

            (b)   By either of Easterly or Sirius:

                (i)  if any Governmental Entity of competent jurisdiction shall have issued an Order permanently restraining, enjoining or otherwise prohibiting the Transactions and such Order shall have become final and non-appealable or if any Governmental Entity that must grant a Consent required hereunder has denied approval of the Transactions and such denial has become final and non-appealable;

               (ii)  if the Transactions shall not have been consummated by November 30, 2018 (the " Outside Date "); provided , that the right to terminate this Agreement pursuant to this Section 7.1(b)(ii) shall not be available to Easterly or Sirius if its action or failure to act constitutes a material breach or violation of any of its covenants, agreements or other obligations hereunder and such material breach or violation has been the principal cause of or directly resulted in (A) the failure to satisfy the conditions to the obligations of the terminating party to consummate the Merger set forth in Article VI prior to the Outside Date or (B) the failure of the Closing to occur by the Outside Date; or

              (iii)  if the Easterly Stockholder Approval shall not have been obtained upon a vote taken thereon at the Easterly Stockholders Meeting duly convened therefor or at any adjournment or postponement thereof.

            (c)   By Easterly:

                (i)  if Sirius shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform, if occurring or continuing on the Closing Date, (A) would give rise to the failure of a condition set forth in Section 6.3(a) or Section 6.3(b) and (B) is not cured by the earlier of the Outside Date and thirty (30) calendar days following written notice of such breach to Sirius, or by its nature or timing is incapable of being cured during such period; provided , that Easterly is not then in material breach of any of its representations, warranties, covenants or agreements set forth in this Agreement; or

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               (ii)  within five (5) Business Days of receiving a Transaction Notice (as defined in Section 5.2 of the Sirius Disclosure Letter ).

            (d)   By Sirius:

                (i)  If the Extension Amendments are not approved by Easterly's stockholders on or prior to June 30, 2018;

               (ii)  if the Easterly Board or any committee makes, prior to receipt of the Easterly Stockholder Approval, an Easterly Adverse Recommendation Change or Easterly materially breaches its obligations under Section 5.3(b) or Section 5.4 ; or

              (iii)  if Easterly shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform, if occurring or continuing on the Closing Date, (A) would give rise to the failure of a condition set forth in Section 6.2(a) or Section 6.2(b) and (B) is not cured by the earlier of the Outside Date and thirty (30) calendar days following written notice of such breach to Easterly, or by its nature or timing is incapable of being cured during such period; provided , that Sirius is not then in material breach of any of its representations, warranties, covenants or agreements set forth in this Agreement.


        Section 7.2
    Effect of Termination .     In the event of the termination of this Agreement by either Sirius or Easterly as provided in Section 7.1 , written notice thereof shall be given by the terminating party to the other party specifying the provision hereof pursuant to which such termination is made. In the event of the termination of this Agreement pursuant to Section 7.1 , this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of Sirius, Merger Sub or Easterly, other than this Section 7.2 , Section 7.3 and Article VIII , which provisions shall survive such termination; provided , however , that nothing in this Section 7.2 shall relieve any party from liability for any fraud or Willful Breach. No termination of this Agreement shall affect the obligations of the parties contained in the Confidentiality Agreement, all of which obligations shall survive the termination of this Agreement in accordance with their terms.


        Section 7.3
    Expenses.     Except for (a) the filing or similar fees in connection with obtaining any required approvals of Governmental Entities, including any filing fees with respect to notification filings under the HSR Act, if any, or third parties, (b) the expenses in connection with the filing of the Registration Statement and printing and mailing the Proxy Statement, and (c) all SEC filing fees relating to the Transactions contemplated herein, which fees and expenses shall be borne, in the case of each of clauses (a)-(c), by Sirius, all fees and expenses incurred by the parties hereto shall be borne solely by the party that has incurred such fees and expenses.


        Section 7.4
    Procedure for Termination or Amendment .     A termination of this Agreement pursuant to Section 7.1 or an amendment or waiver of this Agreement pursuant to Section 8.1 or Section 8.2 shall, in order to be effective, require, in the case of Easterly, Sirius and Merger Sub, action by their respective Boards of Directors or a duly authorized committee thereof. Termination of this Agreement prior to the Effective Time shall not require the approval of the stockholders of Easterly or the shareholders of Sirius.


ARTICLE VIII

MISCELLANEOUS

        Section 8.1     Amendment and Modification .     Subject to applicable Law, this Agreement may be amended, modified and supplemented in any and all respects, whether before or after any vote of the stockholders of Easterly contemplated hereby, by written agreement of the parties hereto at any time prior to the Closing Date with respect to any of the terms contained herein; provided , however , that no

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amendment, modification or supplement of this Agreement shall be made following the adoption of this Agreement by the Easterly stockholders unless, to the extent required, approved by such stockholders.


        Section 8.2
    Extension; Waiver .     At any time prior to the Effective Time, the parties may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement or (c) waive compliance with any of the agreements or conditions contained in this Agreement. Except as required by applicable Law, no waiver of this Agreement shall require the approval of the shareholders or stockholders of Sirius or Easterly. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights, nor shall any single or partial exercise by any party to this Agreement of any of its rights under this Agreement preclude any other or further exercise of such rights or any other rights under this Agreement.


        Section 8.3
    Nonsurvival of Representations and Warranties .     None of the representations and warranties in this Agreement or in any schedule, instrument or other document delivered pursuant to this Agreement shall survive the Effective Time.


        Section 8.4
    Notices .     All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, by facsimile transmission (which is confirmed) or sent by an overnight courier service, such as Federal Express, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

            (a)   if to Sirius or Merger Sub, to:

        Sirius International Insurance Group, Ltd.
        14 Wesley Street, 5th Floor
        Hamilton HM11 Bermuda
        Attention: Gene Boxer
        Email: Gene.Boxer@siriusgroup.com

        with a copy (which shall not constitute notice) to:

        Sidley Austin LLP
        One South Dearborn Street
        Chicago, IL 60603
        Attention: Sean M. Keyvan
        Email: skeyvan@sidley.com
        Facsimile: (312) 853-7036

            (b)   if to Easterly, to:

        Easterly Acquisition Corp.
        375 Park Avenue, 21 st  Floor
        New York, NY 10152
        Attention: Avhsalom Kalichstein
        Telephone No: (646) 712-8300
        Facsimile: (646) 383-9413

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        with a copy (which shall not constitute notice) to:

        Hogan Lovells US LLP
        875 Third Avenue
        New York, NY 10022
        Attention: Alexander Johnson
        Telephone No.: (212) 918-3030
        Facsimile: (212) 918-3100


        Section 8.5
    Counterparts.     This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties (including by facsimile or via portable document format (.pdf)), it being understood that all parties need not sign the same counterpart.


        Section 8.6
    Entire Agreement; Third Party Beneficiaries .     This Agreement (including the Exhibits hereto and the documents and the instruments referred to herein), the Ancillary Agreements, the Confidentiality Agreement and any agreements entered into contemporaneously herewith: (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and (b) except as provided in Section 5.9 are not intended to confer upon any Person other than the parties hereto any rights or remedies.


        Section 8.7
    Severability.     If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and this Agreement shall be reformed, construed and enforced in such jurisdiction such that the invalid, illegal or unenforceable provision or portion thereof shall be interpreted to be only so broad as is enforceable.


        Section 8.8
    Specific Performance .     The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof, and, accordingly, that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof (including the parties' obligation to consummate the Merger) in the Court of Chancery of the State of Delaware or any court of the United States located in the State of Delaware without proof of actual damages or otherwise, in addition to any other remedy to which they are entitled at Law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at Law would be adequate and (b) any requirement under any Law to post security or a bond as a prerequisite to obtaining equitable relief.


        Section 8.9
    Assignment .     Neither this Agreement nor any of the rights, interests or obligations hereunder shall be directly or indirectly assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other parties, except that Merger Sub may assign, in its sole discretion, any or all of its rights, interests and obligations hereunder to any entity that is wholly owned, directly or indirectly, by Sirius; provided , that, no such assignment shall be permitted hereunder if such assignment would reasonably be expected to (a) materially prevent or delay the consummation of the Transactions or (b) result in any of the conditions to the Merger set forth in Article VI not being satisfied. This Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.


        Section 8.10
    Headings; Interpretation .     The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. "Include," "includes," and "including" shall be deemed to be

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followed by "without limitation" whether or not they are in fact followed by such words or words of like import. The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to "this Agreement" shall include the Sirius Disclosure Letter and the Easterly Disclosure Letter. The word "will" shall be construed to have the same meaning and effect as the word "shall." The words "made available," "delivered" or "provided" or terms of similar import, when used in the representations (including any attendant definitions) shall mean, in the case of Sirius, made available and delivered to Sirius and its Representatives prior to the date of this Agreement and, in the case of Easterly, made available to Easterly and its Representatives prior to the date of this Agreement in the electronic data room maintained by Sirius or delivered to Easterly and its Representatives. Unless otherwise specified, all references to "$" refer to United States dollars. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. All Exhibits and Schedules annexed hereto or referred to herein, and the Easterly Disclosure Letter and the Sirius Disclosure Letter, are hereby incorporated in and made a part of this Agreement as if set forth in full herein; provided , however , that the fact that any item of information is disclosed in either the Easterly Disclosure Letter or the Sirius Disclosure Letter to this Agreement shall not be construed to mean that such information is required to be disclosed by this Agreement. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any Contract, instrument or Law defined or referred to herein means such Contract, instrument or Law as from time to time amended, modified or supplemented, including (in the case of Contracts or instruments) by waiver or consent and (in the case of Laws) by succession of comparable successor Laws and references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns. This Agreement is the product of negotiations by the parties having the assistance of counsel and other advisers. It is the intention of the parties that this Agreement not be construed more strictly with regard to one party than with regard to the others.


        Section 8.11
    Governing Law .     This Agreement shall be governed and construed in accordance with the Laws of the State of Delaware without giving effect to the principles of conflicts of Law thereof or of any other jurisdiction.


        Section 8.12
    Exclusive Jurisdiction .     Each of the parties hereto (a) consents to submit itself, and hereby submits itself, to the personal jurisdiction of the Court of Chancery of the State of Delaware and any court of the United States located in the State of Delaware, in the event any dispute arises out of this Agreement or any of the Transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and agrees not to plead or claim any objection to the laying of venue in any such court or that any judicial proceeding in any such court has been brought in an inconvenient forum, (c) agrees that it will not bring any action relating to this Agreement or any of the Transactions in any court other than the Court of Chancery of the State of Delaware or, if under applicable Law exclusive jurisdiction is vested in the Federal courts, any court of the United States located in the State of Delaware and (d) consents to service of process being made through the notice procedures set forth in Section 8.4 .


        Section 8.13
    Trust Account Waiver .     Sirius acknowledges that Easterly is a blank check company with the powers and privileges to effect a Business Combination. Sirius further acknowledges that, as described in the prospectus dated July 29, 2015 (the " Prospectus "), substantially all of Easterly's assets consist of the cash proceeds of the IPO and private placements of its securities and substantially all of those proceeds have been deposited in the Trust Account for the benefit of Easterly, certain of its public stockholders and the underwriters of the IPO. Sirius acknowledges that it has been advised by Easterly that, except with respect to interest earned on the funds held in the Trust Account that may be released to Easterly to pay its franchise Tax, income Tax and similar obligations, the Trust Agreement

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provides that cash in the Trust Account may be disbursed only (a) if Easterly completes the transactions which constitute a Business Combination, then to those Persons and in such amounts as described in the Prospectus; and (b) if Easterly fails to complete a Business Combination within the allotted time period and liquidates, subject to the terms of the Trust Agreement, to Easterly in limited amounts to permit Easterly to pay the costs and expenses of its liquidation and dissolution, and then to Easterly's public stockholders. For and in consideration of Easterly entering into this Agreement, the receipt and sufficiency of which are hereby acknowledged, Sirius hereby irrevocably waives any right, title, interest or claim of any kind they have or may have in the future in or to any monies in the Trust Account except upon the Closing and the consummation of the Merger, and agrees not to seek recourse against the Trust Account or any funds distributed therefrom as a result of, or arising out of, this Agreement and any negotiations, Contracts or agreements with Easterly.


        Section 8.14
    WAIVER OF JURY TRIAL .     EACH OF THE PARTIES HERETO (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


        Section 8.15
    Definitions .     

            (a)   As used in this Agreement, the following terms and those set forth in the Index of Defined Terms, when used in this Agreement, and the Exhibits, Schedules, and other documents delivered in connection herewith, shall have the meanings specified in this Section 8.15 or on the corresponding page number of the Index of Defined Terms:

        " Adjusted June 30 DBVPS " means (i) the Final June 30 Book Value, (A) decreased by the $7,000,000 deferred underwriting fee payable to Citigroup Global Markets Inc. by Easterly, and (B) as adjusted to take into account the effect determined in accordance with GAAP of any conversion, restructuring or settlement of the Sirius Preference Shares held by IMG Acquisition Holdings, LLC, divided by (ii) the sum of (x) the fully diluted number of Sirius Common Shares outstanding as of June 30, 2018, (y) the number of Sirius Common Shares issuable upon conversion of the Sirius Preference Shares held by IMG Acquisition Holdings, LLC immediately prior to the Effective Time and (z) 593,000 Sirius Common Shares.

        " Affiliate " of any Person means another Person that directly or indirectly, through one or more intermediaries, Controls, is controlled by, or is under common Control with, such first Person.

        " Ancillary Agreements " mean the Registration Rights Agreement, the Lock-Up Agreements, the Warrant Amendment and the Sponsor Letter.

        " Business Combination " has the meaning specified in the Easterly Charter.

        " Business Day " means a day except a Saturday, a Sunday or other day on which the SEC or commercial banks in the County of New York or Bermuda are authorized or required by Law to be closed.

        " Confidentiality Agreement " means the confidentiality agreement, dated May 31, 2018, between Easterly and Sirius, as the same may be amended, supplemented or otherwise modified by the parties.

        " Control " has the meaning specified in Rule 405 under the Securities Act.

        " Convertible Promissory Note " means the Convertible Promissory Note, dated as of March 17, 2016, issued by Easterly to Sponsor.

        " Designated Investors " has the meaning specified in Section 8.15(a)(i) of the Sirius Disclosure Letter .

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        " Easterly Closing Outstanding Shares " means the number of shares of Easterly Common Stock issued and outstanding that were originally issued in the IPO less the Redemption Shares.

        " Estimated Easterly Cash Per Share " means the amount determined immediately prior to Closing equal to (i) the amount on deposit in the Trust Account plus accrued but unpaid dividends with respect to the funds in the Trust Account as of a date immediately prior to the Closing less amounts payable to redeem the Redemption Shares divided by (ii) the Easterly Closing Outstanding Shares.

        " GAAP " means generally accepted accounting principles in the United States.

        " HSR Act " means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

        " Indebtedness " means, without duplication, any obligations, contingent or otherwise, in respect of (i) the principal of and premium (if any) in respect of all indebtedness for borrowed money, including accrued interest and any cost associated with prepaying any such debt, (ii) capitalized lease obligations, (iii) letters of credit, (iv) the principal of and premium in respect of obligations evidenced by bonds, debentures, notes and similar instruments and all other obligations of a Person upon which interest is paid by such Person, including accrued interest, (v) the principal component of all obligations to pay the deferred and unpaid purchase price of property and equipment which have been delivered, (vi) negative balances in bank accounts, (vii) amounts in respect of checks in transit, (viii) net cash payment obligations under swaps, options, derivatives and other hedging agreements or arrangements that will be payable upon termination thereof (assuming they were terminated on the date of determination), (ix) all liabilities relating to securitization or factoring programs or arrangements, and (x) all Indebtedness of another Person referred to in clauses (i) through (ix) above guaranteed (including keep well arrangements) directly or indirectly, jointly or severally, in any manner, in each case, other than (A) deposits and (B) federal or other similar governmental funds borrowings.

        " Insurance Regulator " means any insurance supervisory department or officials having jurisdiction over any part of the operations, business, assets, liabilities, products and services of any of the Reinsurance Subsidiaries, including Lloyd's.

        " Insurance Reserves " means any reserves, funds or provisions for losses, claims, premiums, loss and loss adjustment expenses (including reserves for incurred but not reported losses and loss adjustment expenses) and other Liabilities in respect of the insurance or reinsurance contracts issued by the Reinsurance Subsidiaries.

        " Intellectual Property " means trademarks, service marks, brand names, internet domain names, logos, symbols, certification marks, trade dress and other indications of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application; patents, applications for patents (including divisions, continuations, continuations in part and renewal applications), all improvements thereto, and any renewals, extensions or reissues thereof, in any jurisdiction; trade secrets; copyrights and registrations or applications for registration of copyrights in any jurisdiction, and any renewals or extensions thereof.

        " Investment Assets " means any investment assets (whether or not required by GAAP or SAP to be reflected on a balance sheet) beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by Sirius or any Sirius Subsidiary, including bonds, notes, debentures, mortgage loans, real estate and all other instruments of indebtedness, stocks, partnership or joint venture interests and all other equity interests, certificates issued by or interests in trusts, derivatives and all other assets, in each case acquired for investment purposes, but excluding, for the avoidance of doubt, any equity securities of the Sirius Subsidiaries owned by Sirius or other Sirius Subsidiary.

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        " June 30 Book Value " means the book value of Sirius determined based on GAAP on a consolidated basis, as set forth in the final, Sirius Board approved, unaudited GAAP consolidated financial statements of Sirius for the six months ended June 30, 2018.

        " Knowledge " means the actual knowledge of the individuals set forth in Section 8.15(a)(i) of the Easterly Disclosure Letter , in the case of Easterly, or Section 8.15(a)(ii) of the Sirius Disclosure Letter , in the case of Sirius.

        " Laws " means, any United States, Bermuda, federal, state or local or any foreign law (in each case, statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, statute, regulation (domestic or foreign) or other similar requirement enacted, issued, adopted, promulgated, entered into or applied by a Governmental Entity.

        " Liens " means, any liens, charges, encumbrances, adverse rights or claims and security interests whatsoever, excluding restrictions imposed by securities Laws.

        " Lloyd's " means the Society and Corporation of Lloyd's incorporated under the Lloyd's Acts 1871 to 1982 (including the council constituted by the Lloyd's Act 1982 and any delegate or Person through whom the council is authorized to act)

        " Material Adverse Effect " means, with respect to Easterly, on the one hand, or Sirius, on the other hand, any event, change, effect, development, state of facts, condition, circumstance or occurrence that, individually or in the aggregate, (i) has or would be reasonably expected to have a material adverse effect on the business, results of operations, assets, liabilities or financial condition of such party and its Subsidiaries, taken as a whole, except to the extent such material adverse effect results from (A) any changes in regional or global economic conditions, including changes affecting credit, financial or capital markets or changes in interest rates or exchange rates, except to the extent that such changes in conditions have a greater adverse materially disproportionate effect on such party and its Subsidiaries, taken as a whole, relative to the adverse effect such changes have on others operating in the industries in which such party and any of its Subsidiaries operate, (B) any changes in conditions generally affecting any of the industries in which such party and its Subsidiaries operate, except to the extent that such changes in conditions have a greater adverse materially disproportionate effect on such party and its Subsidiaries, taken as a whole, relative to the adverse effect such changes have on others operating in such industries, (C) any decline in the market price or trading volume or credit rating of such party or the securities of such party (it being understood that the facts or occurrences giving rise to or contributing to such decline may be taken into account in determining whether there has been or would be a Material Adverse Effect), (D) any regulatory, legislative or political conditions, in each case in the United States or any other jurisdiction, except to the extent that such conditions have a greater adverse materially disproportionate effect on such party and its Subsidiaries, taken as a whole, relative to the adverse effect such changes have on others operating in the industries in which such party and any of its Subsidiaries operate, (E) any failure, in and of itself, by such party to meet any internal or external projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be taken into account in determining whether there has been or would be a Material Adverse Effect), (F) the execution and delivery of this Agreement or the public announcement, performance, pendency or consummation of the Merger or any of the other Transactions, including the impact thereof on the relationships, contractual or otherwise, of such party or any of its Subsidiaries with customers, employees, suppliers or other Persons or any litigation arising from this Agreement or the Transactions, (G) any change or prospective change in applicable Laws, regulation, GAAP or SAP (or authoritative interpretations thereof), (H) any geopolitical conditions, the outbreak or escalation of hostilities, any acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism, except to the extent that such conditions have a greater adverse materially disproportionate effect on such party and its Subsidiaries, taken as a whole,

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relative to the adverse effect such changes have on others operating in the industries in which such party and any of its Subsidiaries operate, (I) any action permitted or required to be taken pursuant to or in accordance with this Agreement or taken at the request of the other party or with the other party's express written consent or (J) volcanoes, tsunamis, pandemics, earthquakes, floods, storms, hurricanes, tornados or other natural disasters or acts of God, except to the extent that such conditions have a greater adverse materially disproportionate effect on such party and its Subsidiaries, taken as a whole, relative to the adverse effect such changes have on others operating in the industries in which such party and any of its Subsidiaries operate; or (ii) would prevent or materially delay the consummation by Easterly or Sirius, as applicable, of the Merger and the other Transactions on a timely basis.

        " Material Contracts " shall mean (i) with respect to Sirius or any of its Subsidiaries, (A) any Contract which contains a material non-compete or client or customer non-solicit requirement or any other provision that materially restricts the conduct of any line of business by Sirius or any of its Subsidiaries, (B) any Contract with or to a labor union or guild (including any collective bargaining agreement), (C) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other agreements, in each case relating to Indebtedness in excess of $15,000,000 (other than deposit liabilities, trade payables, and securities sold under repurchase agreements), (D) any Contract that grants any right of first refusal, right of first offer or similar right with respect to any material assets, rights or properties of Sirius or its Subsidiaries, taken as a whole, (E) any Contract that is a consulting agreement or data processing, software programming or licensing Contract involving the payment of more than $2,000,000 per annum (other than any such Contracts which are terminable by Sirius or its Subsidiaries on 60 days or less notice without any required payment or other conditions (other than the condition of notice)) and (F) any Contract relating to the disposition or acquisition, directly or indirectly (by merger or otherwise), by Sirius or any of its Subsidiaries of assets with a fair market value in excess of $10,000,000 as to which there are any material ongoing obligations of Sirius, other than the sale of loans or securities in the ordinary course; or (ii) with respect to Easterly, (A) any "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the Securities Act), whether or not filed by Easterly with the SEC, (B) any Contract relating to the disposition or acquisition, directly or indirectly (by merger or otherwise), by Easterly of assets, securities, or properties, (C) any Contract relating to the Trust Account or the assets thereof, (D) any Contract with any officer, director or Affiliate of Easterly or with any underwriter of the IPO or (E) any other Contract under which Easterly is obligated to make payment or incur costs in excess of $100,000 in any year.

        " NASDAQ " means The NASDAQ Stock Market.

        " Order " means any order, writ, injunction, decree, judgment, award, injunction, settlement or stipulation issued, promulgated, made, rendered or entered into by or with any Governmental Entity (in each case, whether temporary, preliminary or permanent).

        " Permitted Lien " means (i) any Liens for Taxes not yet due and payable or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been taken, (ii) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other similar liens, (iii) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation, (iv) gaps in the chain of title evident from the records of the relevant Governmental Entity maintaining such records, easements, rights-of-way, covenants, restrictions and other encumbrances of record as of the date of this Agreement, (v) easements, rights-of-way, covenants, restrictions and other encumbrances incurred in the ordinary course of business that, in the aggregate, are not material in amount and that do not, in any case, materially detract from the value or the use of the property subject thereto, (vi) statutory landlords' liens and liens granted to landlords under any lease, and (vii) any purchase money security interests, equipment leases or similar financing arrangements.

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        " Person " means any individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

        " Proceeding " means any suit, action, proceeding, arbitration, mediation, audit, hearing or, to the Knowledge of the Person in question, investigation or inquiry (in each case, whether civil, criminal, administrative, investigative, formal or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Entity.

        " Proxy Statement " means a proxy statement relating to the adoption and approval of this Agreement by Easterly's stockholders.

        " Reinsurance Subsidiaries " means the Subsidiaries set forth in Section 8.15(a)(iii) of the Sirius Disclosure Letter .

        " SAP " means, with respect to any Reinsurance Subsidiary, the statutory accounting practices prescribed or permitted by its domiciliary Insurance Regulator, including, if applicable, International Financial Reporting Standards.

        " Sirius Common Shares " means Sirius common shares of par value U.S.$0.01 each.

        " Sponsor " means Easterly Acquisition Sponsor, LLC, a Delaware limited liability company.

        " Subsidiary " when used with respect to any party means any company, corporation, partnership or other organization, whether incorporated or unincorporated, (i) of which at least a majority of the securities or other interests having by their terms voting power to elect a majority of the board of directors or others performing similar functions with respect to such company, corporation or other organization is directly or indirectly beneficially owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries, or (ii) that would be required to be consolidated in such party's financial statements under GAAP.

        " Tax Return " shall mean any return, report or statement filed or required to be filed with any Governmental Entity with respect to Taxes, including any information Tax Return required to be sent to any Person, any election, notification, appendix schedule or attachment thereto, and including any amendments thereof.

        " Taxes " shall mean (i) all taxes of any kind whatsoever imposed by any Governmental Entity, including those on or measured by or referred to as income, gross receipts, sales, use, ad valorem, excise, employment, escheat, withholding (with respect to amounts received or paid), franchise, profits, license, value added, property or windfall profits taxes, customs, duties or similar taxes, fees, assessments or charges of any kind whatsoever, (ii) any liability for the payment of amounts determined by reference to amounts described in clause (i) as a result of being or having been a member of any group of Persons that files, will file, or has filed Tax Returns on a combined, consolidated, unitary or similar basis, as a result of any obligation under any agreement or arrangement (including any tax sharing arrangement), as a result of being a transferee or successor, or by contract or otherwise, and (iii) in the case of each of the Taxes described under clause (i) and (ii), any interest and any penalties, additions to tax or additional amounts imposed by any Governmental Entity, domestic or foreign with respect thereto.

        " Willful Breach " means (i) with respect to any breach of a representation or warranty contained in this Agreement, a material breach of such representation or warranty that has been made with the Knowledge of the breaching party, (ii) with respect to any breaches or failures to perform any of the covenants or other agreements contained in this Agreement, a material breach, or failure to perform, that is a consequence of an act or omission undertaken by the breaching party with the Knowledge that the taking of, or failure to take, such act would, or would be reasonably expected to, cause a material breach of this Agreement and (iii) the failure by any party to consummate the Transactions when it is required to do so pursuant to this Agreement.

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        IN WITNESS WHEREOF, Sirius, Easterly, and Merger Sub have duly executed this Agreement, all as of the date first written above.

    SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

By:

 

/s/ ALLAN L. WATERS

        Name:   Allan L. Waters
        Title:   President & Chief Executive Officer

 

 

EASTERLY ACQUISITION CORP.

 

 

By:

 

/s/ AVSHALOM KALICHSTEIN

        Name:   Avshalom Kalichstein
        Title:   Chief Executive Officer

 

 

SIRIUS ACQUISITIONS HOLDING COMPANY III

 

 

By:

 

/s/ ROBERT P. KUEHN

        Name:   Robert P. Kuehn
        Title:   Secretary

[Signature Page to Agreement and Plan of Merger]


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Annex B

SPONSOR LETTER

June 23, 2018

Ladies and Gentlemen:

        Reference is made to that certain Agreement and Plan of Merger, dated as of date hereof (as it may be amended, supplemented or otherwise modified, the " Merger Agreement "), by and among Sirius International Insurance Group, Ltd., a Bermuda exempted company (" Sirius "), Easterly Acquisition Corp., a Delaware corporation (" Easterly "), and Sirius Acquisitions Holding Company III, a Delaware corporation and a wholly owned Subsidiary of Sirius (" Merger Sub "). All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Merger Agreement. This letter agreement (" Letter Agreement ") is being entered into by and among Easterly, Easterly Acquisition Sponsor, LLC, a Delaware limited liability company (" Easterly Sponsor "), and Sirius in connection with the Merger Agreement and the Transactions. This Letter Agreement represents the "Sponsor Letter" contemplated by the Merger Agreement.

        In consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Easterly, Easterly Sponsor and Sirius hereby agree as follows:

        1.     Share Cancellation .    Effective as of the Closing and contingent upon the consummation of the Merger, Easterly shall cancel, and Easterly Sponsor shall surrender 3,928,000 shares of Easterly Common Stock held by Easterly Sponsor (the " Surrendered Sponsor Shares "); provided that the number of Surrendered Sponsor Shares shall be (i) decreased by 0.50 of a share of Easterly Common Stock for every $100 that the sum of (A) cash in the Trust Account at the Closing plus (B) the proceeds of the PIPE (the sum of (A) and (B), the " Amount Raised ") is greater than $120,000,000 ( provided , that if the Amount Raised is greater than or equal to $150,000,000, then, solely with respect to any portion of the Amount Raised that is funded from the Designated Investors (the " Designated Investors Investment "), the number of Surrendered Sponsor Shares shall be decreased by 0.25 (in lieu of 0.50) of a share of Easterly Common Stock for every $100 of the Reduced Rate Amount (as defined below)), or (ii) increased by 0.50 of a share of Easterly Common Stock for every $100 that the Amount Raised is less than $120,000,000. The " Reduced Rate Amount " shall mean the lesser of (x) the Amount Raised minus $150,000,000 and (y) the Designated Investors Investment. For example, if the Amount Raised is $160,000,000, with the Designated Investors Investment equal to $20,000,000, then the Reduced Rate Amount shall equal $10,000,000 and the number of Surrendered Sponsor Shares shall equal 3,753,000 (calculated by subtracting from 3,928,000 an amount equal to the sum of (1) (x) $10,000,000 divided by $100 multiplied by (y) 0.25 and (2) (x) $30,000,000 divided by $100 multiplied by (y) 0.50). For another example, if the Amount Raised is $180,000,000, with the Designated Investors Investment equal to $20,000,000, then the Reduced Rate Amount shall equal $20,000,000 and the number of Surrendered Sponsor Shares shall equal 3,678,000 (calculated by subtracting from 3,928,000 an amount equal to the sum of (1) (x) $20,000,000 divided by $100 multiplied by (y) 0.25 and (2) (x) $40,000,000 divided by $100 multiplied by (y) 0.50). Notwithstanding any of the foregoing, the minimum number of Surrendered Sponsor Shares shall be 3,328,000 and the maximum number of Surrendered Sponsor Shares shall be 4,528,000. Upon the consummation of the Merger and the other Transactions, all the Surrendered Sponsor Shares shall cease to be outstanding and shall be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefore, all as set forth in this Letter Agreement and in the Merger Agreement.

        2.     Private Placement Warrants .    At the Closing, Easterly shall cancel, and Easterly Sponsor shall surrender, the 6,750,000 warrants to acquire Easterly Common Stock acquired by Easterly Sponsor in a private placement in connection with the IPO.

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        3.     Conditions to Effectiveness; Termination .    The provisions set forth in paragraphs 1, 2, 4 and 5 of this Letter Agreement shall take effect, and are conditioned in all respects, on the Closing of the Merger. In the event that the Merger Agreement is terminated in accordance with Section 7.1 thereof, this Letter Agreement shall terminate without any further action by Easterly, Easterly Sponsor or Sirius and shall be of no further force or effect. Notwithstanding the foregoing, nothing set forth in this Letter Agreement shall relieve any party hereto from liability, or otherwise limits the liability of any party hereto, for any breach of this Letter Agreement.

        4.     Payment Obligations of Easterly Sponsor .    Easterly Sponsor agrees to pay or reimburse Easterly or Sirius for all liabilities and obligations of Easterly due and owing or incurred at or prior to the Effective Time to the extent not paid by Easterly using unrestricted cash and up to $2,000,000 from the Trust Account pursuant to Section 5.13 of the Merger Agreement (for the avoidance of doubt, except for $2,000,000, no funds held in or released from the Trust Account shall be used to make such payments, provided , that the $7,000,000 deferred underwriting fee payable to Citigroup Global Markets Inc. by Easterly shall be paid out of the funds released from the Trust Account). Easterly agrees to provide to Sirius prior to the Closing Date a schedule describing in reasonable detail the liabilities and obligations of Easterly to be paid using such $2,000,000 from the Trust Account.

        5.     Convertible Promissory Note .    To the extent all amounts due and owing by Easterly to Easterly Sponsor under the Convertible Promissory Note will not be repaid in full at the Effective Time (using Easterly's unrestricted cash and up to $2,000,000 from the Trust Account, as permitted pursuant to paragraph 4 hereof and Section 5.13 of the Merger Agreement), Easterly Sponsor agrees to contribute to Easterly for no consideration, as a contribution to the capital of Easterly, effective immediately prior to the Effective Time, all amounts due and owing by Easterly to Easterly Sponsor under the Convertible Promissory Note. Easterly Sponsor and Easterly agree that, upon such contribution or upon such repayment in full, the Convertible Promissory Note shall terminate and be of no further force and effect.

        6.     Agreement to Vote; Irrevocable Proxy.     

            a.     Easterly Sponsor hereby agrees that, while this Letter Agreement is in effect, at any meeting of Easterly stockholders, however called, or any adjournment or postponement or written consent in lieu thereof, Easterly Sponsor shall be present (in person or by proxy) and vote (or cause to be voted) all of Easterly Sponsor's shares of Easterly Common Stock: (a) in favor of the approval and adoption of the Merger Agreement and the transactions contemplated thereby (including any motion to adjourn or postpone the Easterly Stockholders Meeting as required or permitted by the Merger Agreement); (b) against (i) any agreement or arrangement related to any Easterly Acquisition Proposal other than the Merger Agreement, (ii) any liquidation, dissolution, recapitalization, extraordinary dividend or other significant corporate reorganization of the Easterly, and (iii) any other action or transaction the consummation of which is intended, or could reasonably be expected, to impede, interfere with, delay, postpone, discourage or adversely affect the Merger or any other Transactions; and (c) in favor of any other matter necessary for consummation of the Merger and the other Transactions that is considered at any such meeting of stockholders, and in connection with the above to execute any documents reasonably requested by Sirius that are necessary or appropriate in order to effectuate the foregoing.

            b.     Solely with respect to the matters described in clause a. of this paragraph 6, while this Letter Agreement is in effect, Easterly Sponsor hereby irrevocably appoints Sirius (or any nominee of Sirius) as its attorney and proxy with full power of substitution and resubstitution, to the full extent of Easterly Sponsor's voting rights with respect to Easterly Sponsor's shares of Easterly Common Stock (which proxy is irrevocable and which appointment is coupled with an interest) to vote all of Easterly Sponsor's shares of Easterly Common Stock solely on the matters described in clause a. of this paragraph 6, and in accordance therewith. Easterly Sponsor hereby revokes any

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    proxies previously granted that would otherwise conflict with the proxy contemplated pursuant to this paragraph and agrees to execute any further agreement or form reasonably necessary or appropriate to confirm and effectuate the grant of the proxy contained herein. Such proxy shall automatically terminate upon the termination of this Letter Agreement.

            c.     Easterly Sponsor hereby agrees, while this Letter Agreement is in effect, that any shares of Easterly Common Stock acquired by Easterly Sponsor after the date hereof (including, without limitation, upon exercise of any Easterly Warrant) shall be subject to the terms of this Letter Agreement as though owned by Easterly Sponsor on the date hereof.

        7.     Representations and Warranties of Easterly Sponsor .    Easterly Sponsor hereby represents and warrants to Sirius as follows:

            a.     Power; Due Authorization; Binding Agreement.     Easterly Sponsor has full limited liability company power and authority to execute and deliver this Letter Agreement, to perform Easterly Sponsor's obligations hereunder and to consummate the transactions contemplated hereby. This Letter Agreement has been duly and validly executed and delivered by Easterly Sponsor and constitutes a valid and binding agreement of Easterly Sponsor, enforceable against Easterly Sponsor in accordance with its terms, except to the extent that enforceability may be subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors rights generally and to general principles of equity.

            b.     Ownership of Shares.     Easterly Sponsor is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of 4,928,000 shares of Easterly Common Stock, such shares are free and clear of any Lien and any other limitation or restriction (including any restriction on the right to vote or otherwise transfer such shares), except as provided hereunder, in the letter agreement dated as of July 29, 2015, by and among Easterly, Easterly Sponsor and the other parties thereto, or pursuant to any applicable restrictions on transfer under the Securities Act of 1933, as amended, and as of the date hereof, and Easterly Sponsor does not own, beneficially or otherwise, any other shares of Easterly Common Stock.

            c.     No Conflicts.     The execution and delivery of this Letter Agreement by Easterly Sponsor does not, and the performance of the terms of this Letter Agreement by Easterly Sponsor will not, (a) require Easterly Sponsor to obtain the consent or approval of, or make any filing with or notification to, any Governmental Entity, (b) require the consent or approval of any other Person pursuant to any agreement, obligation or instrument binding on Easterly Sponsor or Easterly Sponsor's properties or assets, (c) conflict with or violate any organizational document or law, rule, regulation, order, judgment or decree applicable to Easterly Sponsor or pursuant to which any of Easterly Sponsor's properties or assets are bound or (d) result in the imposition of any Lien on any asset of Easterly Sponsor.

            d.     Voting Power.     Easterly Sponsor has full voting power, full power of disposition, full power to issue instructions with respect to the matters set forth in this Letter Agreement and full power to agree to all of the matters set forth in this Letter Agreement, in each case with respect to all of Easterly Sponsor's shares of Easterly Common Stock. Such shares are not, with respect to the voting or transfer thereof, subject to any other agreement, including any voting agreement, stockholders agreement, irrevocable proxy or voting trust.

            e.     Reliance by Sirius.     Easterly Sponsor understands and acknowledges that Sirius is entering into the Merger Agreement in reliance upon Easterly Sponsor's execution and delivery of this Letter Agreement.

        8.     Restriction on Transfer .    Easterly Sponsor hereby agrees, while this Letter Agreement is in effect, at any time prior to the Outside Date, not to, other than as may be specifically required by a

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court order, (i) assign or otherwise dispose of (including, without limitation, by gift, merger, consolidation or reorganization), or enter into any contract, option or other agreement providing for the sale, transfer, pledge, encumbrance, assignment or other disposition of, or limitation on the voting rights of, any of Easterly Sponsor's shares of Easterly Common Stock (any such action, a " Transfer "), (ii) grant any proxies or powers of attorney (except as contemplated by paragraph 6 above), deposit any of Easterly Sponsor's shares of Easterly Common Stock into a voting trust or enter into a voting agreement with respect to any such shares, or (iii) take or permit any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or otherwise make any representation or warranty of Easterly Sponsor herein untrue or incorrect. Any attempted Transfer of the Easterly Sponsor's shares of Easterly Common Stock, or any interest therein, in violation of this paragraph shall be null and void. Easterly shall not register the transfer of any shares of Easterly Common Stock by Easterly Sponsor unless such transfer is made in accordance with the terms of this Letter Agreement. Notwithstanding the foregoing, Easterly Sponsor shall be permitted to enter into any contract, option or other agreement providing for a Transfer to another Person (a " Permitted Transferee ") if (A) such Transfer occurs at the Effective Time and does not effect a Transfer of any Sponsor Surrendered Shares and (B) the Permitted Transferee has agreed in writing (the form and substance of which is reasonably acceptable to Sirius) to be bound by the terms of this Letter Agreement.

        9.     No Solicitation .    Easterly Sponsor hereby agrees to comply with the obligations imposed on Easterly's Representatives pursuant to Section 5.4 of the Merger Agreement.

        10.     Miscellaneous .    

            a.     Nothing in this Letter Agreement shall limit or prevent Easterly Sponsor or its Affiliates from acting in his or her capacity as an officer or director of Easterly in accordance with his or her fiduciary duties.

            b.     This Letter Agreement may be amended only by a written instrument executed by Easterly, Easterly Sponsor and Sirius.

            c.     This Letter Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party shall be entitled to assign or delegate any of its rights or duties hereunder without first obtaining the express prior written consent of each other party hereto, such consent not to be unreasonably withheld.

            d.     This Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts entered into within the borders of such state and without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The parties (i) agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement shall be brought and enforced in United States District Court for the District of Delaware or any Delaware State court, and irrevocably submits to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waive any objection to such exclusive jurisdiction and venue or that such courts represent an inconvenient forum. EACH OF THE PARTIES HERETO (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

            e.     The parties agree that irreparable damage would occur in the event that any of the provisions of this Letter Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, Sirius shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to prevent breaches of this Letter Agreement and to

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    enforce specifically the terms and provisions of this Letter Agreement in the Delaware Court of Chancery, this being in addition to any other remedy to which Sirius is entitled at law or in equity. Easterly Sponsor hereby further waives any requirement under any law to post security as a prerequisite to obtaining equitable relief.

            f.      This Letter Agreement may be executed in multiple counterparts and by different parties hereto in separate counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which counterparts, when taken together, shall constitute but one and the same letter agreement. The exchange of copies of this Letter Agreement and of signature pages hereto by facsimile or electronic mail in portable document format shall constitute effective execution and delivery of this letter agreement. Signatures of the parties transmitted by facsimile or electronic mail in portable document format shall be deemed to be the parties' original signatures for all purposes.

[Remainder of page intentionally left blank.]

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        IN WITNESS WHEREOF, the undersigned have caused this Letter Agreement to be signed by its respective officer thereunto duly authorized, all as of the date first written above.

    EASTERLY ACQUISITION CORP.

 

 

By:

 

/s/ AVSHALOM KALICHSTEIN

        Name:   Avshalom Kalichstein
        Title:   Chief Executive Officer

 

 

EASTERLY ACQUISITION SPONSOR, LLC

 

 

By:

 

/s/ AVSHALOM KALICHSTEIN

        Name:   Avshalom Kalichstein
        Title:   Managing Director

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

By:

 

/s/ ALLAN L. WATERS

        Name:   Allan L. Waters
        Title:   President & Chief Executive Officer

[ Signature page to Sponsor Letter ]

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Annex C

FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER AND SPONSOR LETTER

        This First Amendment to Agreement and Plan of Merger and Sponsor Letter (this " Amendment ") is made and entered into as of August 29, 2018, by and among SIRIUS INTERNATIONAL INSURANCE GROUP, LTD., a Bermuda exempted company (" Sirius "), EASTERLY ACQUISITION CORP., a Delaware corporation (" Easterly "), SIRIUS ACQUISITIONS HOLDING COMPANY III, a Delaware corporation and a wholly owned Subsidiary of Sirius (" Merger Sub "), CM BERMUDA LTD., an exempted Bermuda limited liability company (" CMB "), and EASTERLY ACQUISITION SPONSOR, LLC, a Delaware limited liability company (" Sponsor "). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement and Plan of Merger, dated as of June 23, 2018 (the " Agreement "), by and among Sirius, Merger Sub and Easterly, prior to giving effect to this Amendment.


W I T N E S S E T H:

         WHEREAS , in connection ongoing discussions among Sirius, Easterly, Sponsor, CMB and potential investors in the PIPE, Sirius, Merger Sub, Easterly and Sponsor have agreed to make certain modifications to the Agreement and the Sponsor Letter, and CMB has agreed to become a party to the Agreement for the purposes set forth therein and herein;

         WHEREAS , in order to facilitate the closing of the transactions contemplated by the Agreement, the parties desire to amend the Agreement to, among other things, reflect such discussions and modifications; and

         WHEREAS , the parties to the Sponsor Letter desire to set forth their understanding regarding the $213,000,000 contemplated offering of Series B Preferred Shares and common shares of Sirius pursuant to those certain Subscription Agreements (the " Subscription Agreements ") dated on or about the date hereof, by and between Sirius and the investors party thereto.

         NOW THEREFORE , in consideration of the premises and agreements herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:


        Section 1.1.
    Amendments.     

            (a)   The last sentence of Section 2.1(b) is hereby amended and restated in its entirety to read as follows:

        "As used in this Agreement, the " Exchange Ratio " means a fraction determined by dividing (i) the Estimated Easterly Cash Per Share by (ii) (x) 1.05 multiplied by (y) the Estimated Adjusted September 30 DBVPS (or, if applicable, the Final Adjusted September 30 DBVPS), in each case as determined in accordance with this Section 2.1(b) and Section 2.1(g) ."

            (b)   Section 2.1(g) of the Agreement is hereby amended and restated in its entirety to read as follows:

        "(g) Determination of Exchange Ratio .

                  (i)  No later than five (5) Business Days after the date that the Registration Statement is declared effective (but if the Registration Statement is declared effective on or after September 30, 2018, then no earlier than October 5, 2018), Sirius shall prepare and deliver to Easterly its good faith estimates of the September 30 Book Value and the Adjusted September 30 DBVPS (the " Proposed Book Value Schedule "), together with such

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        supporting documentation that Easterly may reasonably request. The final, conclusive and binding estimates of September 30 Book Value and Adjusted September 30 DBVPS, as determined pursuant to this Section 2.1(g) , are referred to herein as the " Estimated September 30 Book Value " and " Estimated Adjusted September 30 DBVPS ," respectively.

                 (ii)  Within five (5) Business Days of the delivery of the Proposed Book Value Schedule, Easterly shall notify Sirius whether it accepts or disputes the accuracy of the Proposed Book Value Schedule. In the event that Easterly disputes the accuracy of the Proposed Book Value Schedule, Easterly shall notify Sirius in reasonable detail of those items and amounts as to which Easterly disagrees and shall set forth Easterly's calculation of such disputed amounts (a " Dispute Notice "), and Easterly shall be deemed to have agreed with all other items and amounts contained in the Proposed Book Value Schedule not so disputed. In the event that Easterly notifies Sirius that it accepts the Proposed Book Value Schedule or does not deliver a Dispute Notice to Sirius during such five (5) Business Day period, Easterly, on behalf of itself and all holders of Easterly Common Stock, shall be deemed to have accepted the accuracy of the Proposed Book Value Schedule, and the estimates of the September 30 Book Value and Adjusted September 30 DBVPS set forth therein shall be final, conclusive and binding upon the parties.

                (iii)  If a Dispute Notice shall be timely delivered by Easterly pursuant to Section 2.1(g)(ii) , then Sirius and Easterly shall forthwith jointly request that a mutually agreed upon nationally recognized independent accounting firm (the " Accounting Firm ") make a binding determination only as to the items set forth in the Dispute Notice, in accordance with the terms of this Agreement. The Accounting Firm will, under the terms of its engagement, be required to render its written decision with respect to such disputed items and amounts within four (4) Business Days from the date of referral. The Accounting Firm shall consider only those items or amounts in the Proposed Book Value Schedule as to which Easterly and Sirius are in disagreement. The Accounting Firm shall deliver to Easterly and Sirius a written report setting forth its adjustments, if any, to the Proposed Book Value Schedule based on the Accounting Firm's determination with respect to the disputed items and amounts in accordance with this Agreement, and such report shall include the calculations supporting such adjustments; provided , that for each item as to which Easterly and Sirius are in disagreement, the Accounting Firm shall assign a value for each such item no greater than the higher amount, and no less than the lower amount, calculated or proposed by Easterly or Sirius with respect to such item, as the case may be. Such report and the estimates of the September 30 Book Value and Adjusted September 30 DBVPS set forth therein shall be final, conclusive and binding on the parties, and neither party nor any of their respective Affiliates, stockholders or Representatives may seek recourse to any courts, other tribunals or otherwise, other than to enforce the determination of the Accounting Firm. The fees and expenses of the Accounting Firm for purposes of this Section 2.1(g) shall be borne equally by the parties.

                (iv)  At least two (2) Business Days prior to the Closing Date (or such other time as may be mutually agreed between Sirius and Easterly), Easterly shall notify Sirius in writing of its good faith calculation of the Easterly Closing Outstanding Shares and the Estimated Easterly Cash Per Share, in each case as of immediately prior to the Effective Time, together with such supporting documentation that Sirius may reasonably request. Using such amounts and the Estimated Adjusted September 30 DBVPS, Sirius shall then calculate the final Exchange Ratio; provided , however, that if the Final Adjusted September 30 DBVPS is determined pursuant to Section 2.1(h)(i) prior to the Closing

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        Date, then Sirius shall calculate the final Exchange Ratio using the Final Adjusted September 30 DBVPS (in lieu of the Estimated Adjusted September 30 DBVPS)."

            (c)   Section 2.1(h) of the Agreement shall be added after the end of Section 2.1(g) of the Agreement as follows:

        "(h) Post-Closing Adjustment .

                  (i)  Promptly after the date that Sirius files with the SEC its financial statements for the quarter ended September 30, 2018, Sirius shall prepare its good faith calculation of the September 30 Book Value and the Adjusted September 30 DBVPS based on such financial statements. Such calculation shall be submitted to Sirius's Audit Committee for review and approval. The calculations of September 30 Book Value and Adjusted September 30 DBVPS, as finally approved by Sirius's Audit Committee (the " Final September 30 Book Value " and " Final Adjusted September 30 DBVPS ," respectively), shall be final, conclusive and binding upon the parties.

                 (ii)  If, and only if, the Exchange Ratio is calculated at Closing using the Estimated Adjusted September 30 DBVPS and the Closing occurs, then, promptly after the determination of the Final Adjusted September 30 DBVPS pursuant to Section 2.1(h)(i) :

                  (A)  In the event that the Exchange Ratio, if calculated using the Final Adjusted September 30 DBVPS in lieu of the Estimated Adjusted September 30 DBVPS, would have been a higher number, then CMB shall at CMB's option either (1) surrender the CMB Surrendered Shares (as defined below) or (2) pay to Sirius an amount equal to the difference between the Final September 30 Book Value and the Estimated September 30 Book Value.

          " CMB Surrendered Shares " means the number of Sirius Common Shares equal to x in the following formula:

          Adjusted Post-Closing Ownership Percentage = (Actual Post-Closing CMB Shares– x ) / ((Actual Post-Closing CMB Shares– x ) + Actual Other Post-Closing Shares).

          " Actual Post-Closing CMB Shares " means the number of Sirius Common Shares owned by CMB immediately after giving effect to the redemption contemplated by the Redemption Agreement.

          " Actual Other Post-Closing Shares " means the sum of (i) the number of Sirius Common Shares issuable to Easterly stockholders at Closing pursuant to this Agreement and (ii) the number of Sirius Common Shares issued to investors in the PIPE or issuable to investors in the PIPE upon conversion of any convertible securities issued to such investors.

          " Adjusted Post-Closing CMB Shares " means 120,000,000 minus (i) the aggregate purchase price of the Sirius Common Shares redeemed pursuant to the Redemption Agreement divided by (ii) (A) 1.05 multiplied by (B) the Final Adjusted September 30 DBVPS.

          " Adjusted Post-Closing Ownership Percentage " means a fraction of which the numerator is (x) Adjusted Post-Closing CMB Shares and the denominator is (y) the Adjusted Total Post-Closing Shares.

          " Adjusted Total Post-Closing Shares " means the sum of (i) the Adjusted Post-Closing CMB Shares, (ii) (A) the aggregate purchase price of the Sirius Common Shares (or securities convertible into Sirius Common Shares) sold in the PIPE divided by

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          (B) (1) 1.05 multiplied by (2) the Final Adjusted September 30 DBVPS and (iii) the number of Sirius Common Shares that would have been issued to Easterly stockholders (including, for the avoidance of doubt, Sponsor) based on the Exchange Ratio calculated using the Final Adjusted September 30 DBVPS in lieu of the Estimated Adjusted September 30 DBVPS.

                  (B)  In the event that the Exchange Ratio, if calculated using the Final Adjusted September 30 DBVPS in lieu of the Estimated Adjusted September 30 DBVPS, would have been a lower number, then Sirius shall at Sirius's option either (1) issue to CMB the CMB Additional Shares (as defined below) or (2) pay to CMB an amount equal to the difference between Estimated September 30 Book Value and the Final September 30 Book Value.

          " CMB Additional Shares " means the number of Sirius Common Shares equal to x in the following formula:

          Adjusted Post-Closing Ownership Percentage = (Actual Post-Closing CMB Shares +  x ) / ((Actual Post-Closing CMB Shares +  x ) + Actual Other Post-Closing Shares)."

            (d)   The definition of "Adjusted June 30 DBVPS" in Section 8.15 of the Agreement is hereby deleted in its entirety, and the following definition is hereby added in alphabetical order in Section 8.15 of the Agreement (and each reference in the Agreement to "Adjusted June 30 DBVPS" shall be deemed to refer to "Adjusted September 30 DBVPS"):

        "" Adjusted September 30 DBVPS " means (i) the September 30 Book Value, (A) decreased by the $7,000,000 deferred underwriting fee payable to Citigroup Global Markets Inc. by Easterly, and (B) as adjusted to take into account the effect determined in accordance with GAAP of the redemption of the Sirius Preference Shares held by IMG Acquisition Holdings, LLC, divided by (ii) the sum of (x) the fully diluted number of Sirius Common Shares outstanding as of September 30, 2018 and (y) 593,000 Sirius Common Shares."

            (e)   The definition of "June 30 Book Value" in Section 8.15 of the Agreement is hereby deleted in its entirety, and the following definition is hereby added in alphabetical order in Section 8.15 of the Agreement (and each reference in the Agreement to "June 30 Book Value" shall be deemed to refer to "September 30 Book Value"):

        "" September 30 Book Value " means the book value of Sirius as of September 30, 2018 determined based on GAAP on a consolidated basis based on the final, Sirius Board approved, unaudited GAAP consolidated financial statements of Sirius for the nine months ended September 30, 2018."

            (f)    Section 2.5 of the form of Warrant Amendment attached as Exhibit E to the Agreement is hereby amended and restated as follows:

        "2.5 Warrant Price. The first sentence of Section 3.1 of the Existing Warrant Agreement is hereby deleted and replaced with the following:

        "Each whole Warrant shall, when countersigned by the Warrant Agent, entitle the Registered Holder thereof, subject to the provisions of such Warrant and of this Agreement, to purchase from the Company a fraction of a Common Share equal to the Exchange Ratio at the price per Common Share of (x) $11.50 divided by (y) the Exchange Ratio, subject to the adjustments provided in Section 4 hereof and in the last sentence of this Section 3.1.""

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        Section 1.2.
    Sponsor Letter.     

            (a)   For purposes of determining the Amount Raised under the Sponsor Letter, if the proceeds of the PIPE, including the proceeds from the Subscription Agreements, are less than $213,000,000 (other than as a result of an investor failing to fund its obligations in breach of its Subscription Agreement at a time when Sirius is not then in material breach of any of its representations, warranties, covenants or agreements set forth in such Subscription Agreement at the time of such investor's breach of such Subscription Agreement), then proceeds of the PIPE shall be deemed to be equal to $213,000,000 for purposes of determining the Amount Raised under the Sponsor Letter.

            (b)   The last two sentences in Section 1 of the Sponsor Letter are hereby amended and restated in their entirety as follows:

        "Notwithstanding any of the foregoing, the minimum number of Surrendered Sponsor Shares shall be 3,328,000 and the maximum number of Surrendered Sponsor Shares shall be 4,528,000; provided that, once the number of Surrendered Sponsor Shares is determined pursuant to the foregoing (including taking into account such minimum and maximum number of Surrendered Sponsor Shares), such number of Surrendered Sponsor Shares shall be subject to further adjustment (which, for the avoidance of doubt, may result in more than 4,528,000 Surrendered Sponsor Shares) as follows:

        In the event that the Net Economic Sale Price is less than $17.39, the number of Surrendered Sponsor Shares determined pursuant to the foregoing shall be increased by (i) if the Economic Shortfall Amount is equal to or greater than $1.75 million, the Economic Shortfall Shares or (ii) if the Economic Shortfall Amount is between $0 and $1.75 million, such number of shares of Easterly Common Stock (rounded to the nearest whole share) equal to (A) the Economic Shortfall Shares multiplied by (B) a fraction of which the Economic Shortfall Amount is the numerator and $1.75 million is the denominator.

        " Economic Shortfall Amount " means an amount equal to (i) $17.39 less the Net Economic Sale Price multiplied by (ii) the sum of (A) the number of Sirius Common Shares issuable to Easterly stockholders (other than Easterly Sponsor) at Closing pursuant to the Merger Agreement and (B) the number of Sirius Common Shares issued to investors in the PIPE or issuable to investors in the PIPE upon conversion of any convertible securities issued to such investors.

        " Economic Shortfall Shares " means such number of shares of Easterly Common Stock (rounded to the nearest whole share) equal to (i) (A) $500,000 divided by (B) (1) 1.05 multiplied by (2) the Estimated Adjusted September 30 DBVPS (if the final Exchange Ratio is calculated using the Estimated Adjusted September 30 DBVPS) or Final Adjusted September 30 DBVPS (if the final Exchange Ratio is calculated using the Final Adjusted September 30 DBVPS) divided by (ii) the Exchange Ratio.

        " Net Economic Sale Price " means (i) (A) Estimated Adjusted September 30 DBVPS (if the final Exchange Ratio is calculated using the Estimated Adjusted September 30 DBVPS) or Final Adjusted September 30 DBVPS (if the final Exchange Ratio is calculated using the Final Adjusted September 30 DBVPS) multiplied by (B) 1.05 less (ii) (A) $8.33 million divided by (B) the sum of (1) the number of Sirius Common Shares issuable to Easterly stockholders (other than Easterly Sponsor) at Closing pursuant to the Merger Agreement and (2) the number of Sirius Common Shares issued to investors in the PIPE or issuable to investors in the PIPE upon conversion of any convertible securities issued to such investors.

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        Upon the consummation of the Merger and the other Transactions, all the Surrendered Sponsor Shares shall cease to be outstanding and shall be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefore, all as set forth in this Letter Agreement and in the Merger Agreement."


        Section 1.3.
    Authorization.     Each party hereby represents to the other parties hereto that this Amendment has been duly authorized, executed and delivered by such and constitutes a valid and binding obligation of such party enforceable against such party in accordance with its terms.


        Section 1.4.
    Miscellaneous.     

            (a)   After giving effect to this Amendment, references in the Agreement to "this Agreement", "hereof", "hereunder" or words of like import referring to the Agreement shall be deemed to refer to the Agreement as amended by this Amendment and all references in the Company Disclosure Letter or the Parent Disclosure Letter to "the Agreement" shall be deemed to refer to the Agreement as amended by this Amendment, in each case, unless the context otherwise requires.

            (b)   Except as amended hereby, the Agreement and the Sponsor Letter shall remain in full force and effect. Nothing herein shall affect, modify or limit any waiver or consent granted by any party pursuant to the Agreement and the Sponsor Letter. This Amendment may be executed in counterparts which together shall constitute a single agreement.

            (c)   The provisions of Article VIII of the Agreement shall apply mutatis mutandis to this Amendment, and to the Agreement as modified by this Amendment, taken together as a single agreement, reflecting the terms as modified hereby.

[ Signature page follows. ]

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        IN WITNESS WHEREOF, each of the parties hereto have duly executed this Amendment, all as of the date first written above.

    SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

By:

 

/s/ ALLAN L. WATERS

        Name:   Allan L. Waters
        Title:   Chairman & CEO

 

 

SIRIUS ACQUISITIONS HOLDING COMPANY III

 

 

By:

 

/s/ ROBERT P. KUEHN

        Name:   Robert P. Kuehn
        Title:   Secretary

 

 

CM BERMUDA LTD.

 

 

By:

 

/s/ FENG LIAO

        Name:   Feng Liao
        Title:   Director

 

 

EASTERLY ACQUISITION CORP.

 

 

By:

 

/s/ AVSHALOM KALICHSTEIN

        Name:   Avshalom Kalichstein
        Title:   Chief Executive Officer

 

 

EASTERLY ACQUISITION SPONSOR, LLC

 

 

By:

 

/s/ AVSHALOM KALICHSTEIN

        Name:   Avshalom Kalichstein
        Title:   Managing Director

[ Signature Page to Amendment ]

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Annex D

         THIS PROMISSORY NOTE (THIS "NOTE") HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF REGISTRATION OF THE RESALE THEREOF UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.


EASTERLY ACQUISITION CORP.
PROMISSORY NOTE

Principal Amount: See Schedule A   Dated as of June 23, 2018
New York, New York

        This Promissory Note (this " Note ") is made by Easterly Acquisition Corp., a Delaware corporation (the " Maker "), to Sirius International Insurance Group, Ltd. (the " Payee "). The Maker promises to pay to the order of the Payee the principal balance as set forth on Schedule A hereto, which schedule shall be updated from time to time by the parties hereto to reflect all advances outstanding under this Note. All payments on this Note shall be made by check or wire transfer of immediately available funds or as otherwise determined by the Maker to such account as the Payee may from time to time designate by written notice in accordance with the provisions of this Note. Payee is under no obligation to make any advance or readvances pursuant to this Note.

             1.     Principal.     All unpaid principal and interest under this Note shall be due and payable upon the date (the " Maturity Date ") that Maker consummates its initial business combination (the " Business Combination ") and on which the cash in Maker's trust account established at the time of Maker's initial public offering (the " Trust Account ") is released to Maker. The principal on this Note including any investment income thereon shall be deposited in a separate account that is part of the Trust Account that shall be used as collateral to secure the repayment of the principal and interest on the Note to the Payee (the "Separate Account"). Any outstanding principal and interest amount under this Note may be prepaid at any time by the Maker, at its election and without penalty. Payee shall lend Maker an amount in cash (A) on July 1, 2018 equal to the product of (x) $0.03 and (y) the number of shares of Maker common stock, par value $0.0001 per share (" Common Stock "), outstanding as of such date, excluding the 5,000,000 shares owned by Easterly Acquisition Sponsor, LLC (the " Sponsor ") and the directors of Maker (the " Founder Shares "), (B) on August 1, 2018, equal to the product of (x) $0.03 and (y) the number of shares of Common Stock outstanding as of such date, excluding the Founder Shares, (C) on September 1, 2018, equal to the product of (x) $0.03 and (y) the number of shares of Common Stock outstanding as of such date, excluding the Founder Shares, (D) on October 1, 2018, equal to the product of (x) $0.03 and (y) the number of shares of Common Stock outstanding as of such date, excluding the Founder Shares, and (E) on November 1, 2018, equal to the product of (x) $0.03 and (y) the number of shares of Common Stock outstanding as of such date, excluding the Founder Shares; provided, however, that if the Business Combination occurs at any time prior to a funding date set forth in the preceding clauses (A) through (E), then any funding required by this Note shall be prorated through the date of the closing of the Business Combination and all future fundings shall not be required; provided, further, that if an amendment to Maker's amended and restated certificate of incorporation (as amended) to extend the date by which Maker must consummate a Business Combination until November 30, 2018 and a related amendment to the agreement governing the Trust Account are not approved by Maker's stockholders prior to June 30, 2018, then no fundings under this Note shall be required and this Note shall automatically terminate and be of no further force and effect immediately after such special meeting. Maker shall promptly deposit each funding

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    from Payee into the separate account that is part of the Trust Account that was established for the benefit of the holders of the Common Stock, excluding the Founder Shares.

             2.     Interest.     This Note shall bear interest in an amount equal to the income (if any) actually earned from investing the principal on the Note.

             3.     Application of Payments.     All payments shall be applied first to payment in full of any costs incurred in the collection of any amount due under this Note, including (without limitation) reasonable attorneys' fees and expenses, then to the payment in full of any late charges, then to the payment of interest and finally to the reduction of the unpaid principal balance of this Note.

             4.     Events of Default.     The occurrence of any of the following shall constitute an event of default (" Event of Default "):

              (a)    Failure to Make Required Payments .    Failure by Maker to pay the principal amount due pursuant to this Note within five (5) business days of the Maturity Date.

              (b)    Voluntary Bankruptcy, etc .    The commencement by Maker of a voluntary case under any applicable bankruptcy, insolvency, reorganization, rehabilitation or other similar law, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of Maker or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors, or the failure of Maker generally to pay its debts as such debts become due, or the taking of corporate action by Maker in furtherance of any of the foregoing.

              (c)    Involuntary Bankruptcy, etc .    The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of Maker in an involuntary case under any applicable bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Maker or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of sixty (60) consecutive days.

             5.     Remedies.

              (a)   Upon the occurrence of an Event of Default specified in Section 4(a) hereof, Payee may, by written notice to Maker, declare this Note to be due immediately and payable, whereupon the unpaid principal amount of this Note, and all other amounts payable thereunder, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the documents evidencing the same to the contrary notwithstanding.

              (b)   Upon the occurrence of an Event of Default specified in Sections 4(b) and 4(c), the unpaid principal balance of this Note, and all other sums payable with regard to this Note, shall automatically and immediately become due and payable, in all cases without any action on the part of Payee.

             6.     Representations of Maker.     The Maker hereby represents and warrants on and as of the date hereof that: (i) the Maker has the requisite power and authority to execute, deliver, and perform its obligations under this Note, and the Maker has taken all necessary action to authorize the same, and such execution, delivery, and performance do not violate or contravene, or result in a breach or violation of, or constitute a default under, its organizational documents or any law, regulation, agreement, writ, or order or contractual restriction, applicable to or binding upon it or any of its assets and will not result in any lien upon any assets of the Maker; and (ii) this Note has been duly executed and delivered, and constitutes the legal, valid, and binding obligation of the Maker, enforceable against the Maker in accordance with its terms, except as enforceability may be

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    limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally.

             7.     Waivers.     Maker and all endorsers and guarantors of, and sureties for, this Note waive presentment for payment, demand, notice of dishonor, protest, and notice of protest with regard to this Note, all errors, defects and imperfections in any proceedings instituted by Payee under the terms of this Note, and all benefits that might accrue to Maker by virtue of any present or future laws exempting any property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy or sale under execution, or providing for any stay of execution, exemption from civil process, or extension of time for payment; and Maker agrees that any real estate that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued hereon, may be sold upon any such writ in whole or in part in any order desired by Payee.

             8.     Unconditional Liability.     Maker hereby waives all notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note, and agrees that its liability shall be unconditional, without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee, and consents to any and all extensions of time, renewals, waivers, or modifications that may be granted by Payee with respect to the payment or other provisions of this Note, and agrees that additional makers, endorsers, guarantors, or sureties may become parties hereto without notice to Maker or affecting Maker's liability hereunder.

             9.     Notices.     All notices, statements or other documents which are required or contemplated by this Note shall be: (i) in writing and delivered personally or sent by first class registered or certified mail, overnight courier service or facsimile or electronic transmission to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address or fax number as may be designated in writing by such party and (iii) by electronic mail, to the electronic mail address most recently provided to such party or such other electronic mail address as may be designated in writing by such party. Any notice or other communication so transmitted shall be deemed to have been given on the day of delivery, if delivered personally, on the business day following receipt of written confirmation, if sent by facsimile or electronic transmission, one (1) business day after delivery to an overnight courier service or five (5) days after mailing if sent by mail.

             10.   Governing Law.    THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.

             11.   Submission to Jurisdiction.     Any legal action or proceeding with respect to this Note may be brought in the Court of Chancery of the State of Delaware and any court of the United States Located in the State of Delaware, and any appellate court from any thereof and, by execution and delivery of this Note, the Maker hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The Maker irrevocably consents to the service of process out of any of the aforementioned courts in any action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Maker at its address specified pursuant to Section 9 above, such service to become effective seven days after such mailing. Nothing herein shall affect the right of the Payee or any holder of this Note to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Maker in any other jurisdiction. The Maker hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Note brought in the courts referred to above and hereby further irrevocably waives and agrees not to plead or claim in

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    any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.

             12.   Severability.     Any provision contained in this Note that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

             13.   Trust Waiver.     Notwithstanding anything herein to the contrary, the Payee hereby waives any and all right, title, interest or claim of any kind (" Claim ") in or to any distribution of or from the trust account (other than the Separate Account in the event that the Business Combination consummates) established with the proceeds of the initial public offering of Maker (the " IPO (including the deferred underwriters discounts and commissions) and the proceeds from private placements of Maker's securities, which were deposited in the trust account, as described in greater detail in the registration statement and prospectus filed with the Securities and Exchange Commission in connection with the IPO on July 29, 2015, and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against the trust account (other than the Separate Account in the event that the Business Combination consummates) for any reason whatsoever.

             14.   Amendment; Waiver.     Any amendment hereto or waiver of any provision hereof may be made with, and only with, the written consent of the Maker and the Payee. Neither the failure nor delay on the part of the Payee to exercise any right, power or privilege under this Note and no course of dealing between the Maker and the Payee shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Note preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Payee would otherwise have. No notice to or demand on the Maker in any case shall entitle the Maker to any other or further notice or demand in similar or other circumstances or constitute a waiver of the right of the Payee to any other or further action in any circumstances without notice or demand.

             15.   Successors and Assigns.     Subject to the restrictions on transfer in Sections 16 and 17 below, the rights and obligations of the Maker and Payee hereunder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of any party hereto (by operation of law or otherwise) with the prior written consent of the other party hereto and any attempted assignment without the required consent shall be void.

             16.   Transfer of this Note.     With respect to any offer, sale or other disposition of this Note, Payee shall give written notice to Maker prior thereto, describing briefly the manner thereof, together with (i) except for a Permitted Transfer, in which case the requirements in this clause (i) shall not apply, a written opinion reasonably satisfactory to the Maker in form and substance from counsel reasonably satisfactory to the Maker to the effect that such offer, sale or other distribution may be effected without registration or qualification under any federal or state law then in effect and (ii) a written undertaking executed by the desired transferee reasonably satisfactory to the Maker in form and substance agreeing to be bound by the restrictions on transfer contained herein. Upon receiving such written notice, reasonably satisfactory opinion, or other evidence, and such written acknowledgement, the Maker, as promptly as practicable, shall notify Payee that Payee may sell or otherwise dispose of this Note, all in accordance with the terms of the notice delivered to the Maker. If a determination has been made pursuant to this Section 16 that the opinion of counsel for Payee, or other evidence, or the written acknowledgment from the desired transferee, is not reasonably satisfactory to the Maker, the Maker shall so notify Payee promptly after such

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    determination has been made. Each Note thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the Securities Act, unless in the opinion of counsel for the Maker such legend is not required in order to ensure compliance with the Securities Act. The Maker may issue stop transfer instructions to its transfer agent in connection with such restrictions. Subject to the foregoing, transfers of this Note shall be registered upon registration on the books maintained for such purpose by or on behalf of the Maker. Prior to presentation of this Note for registration of transfer, the Maker shall treat the registered holder hereof as the owner and holder of this Note for the purpose of receiving all payments of principal hereon and for all other purposes whatsoever, whether or not this Note shall be overdue and the Maker shall not be affected by notice to the contrary. For purposes hereof "Permitted Transfer" shall mean any transfer to Payee's officers or directors, any affiliates or family members of any of Payee's officers or directors, any members of Payee or their affiliates, or any affiliates of Payee.

             17.   Acknowledgment.     Payee is acquiring this Note for investment for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, any distribution thereof. Payee understands that the acquisition of this Note involves substantial risk. Payee has experience as an investor in securities of companies and acknowledges that it is able to fend for itself, can bear the economic risk of its investment in this Note, and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of this investment in this Note and protecting its own interests in connection with this investment.

             18.   Agreed Tax Treatment.     For all tax purposes, the Maker and the Payee agree to treat this Note (i) as a collateral arrangement to secure a payment of a termination fee to Trust Account and Maker in the event that the Business Combination is not consummated, which collateral shall be returned to Payee in the event that a Business Combination is consummated and (ii) Payee as the owner of the principal amount and investment income thereon at all times, and to file all Tax Returns consistently therewith.

             19.   Further Assurances.     At any time and from time to time, the Maker agrees that the Maker will cooperate with the Payee and will execute and deliver, or cause to be executed and delivered, all such further instruments and documents, and will take all such further actions, as the Payee may reasonably request in order to carry out the provisions and purposes of this Note.

[ Signature Page Follows ]

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         IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Note to be duly executed by the undersigned as of the day and year first above written.

            EASTERLY ACQUISITION CORP.

 

 

 

 

 

 

By:

 

/s/ AVSHALOM KALICHSTEIN

                Name:   Avshalom Kalichstein
                Title:   Chief Executive Officer

ACKNOWLEDGED AND AGREED
AS OF THE DATE FIRST WRITTEN ABOVE:

 

 

 

 

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

 

 

 

 

By:

 

/s/ ALLAN L. WATERS


 

 

 

 

 

 
    Name:   Allan L. Waters            
    Title:   President + Chief Executive Officer            

         [Signature page to Promissory Note]

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SCHEDULE A

        Subject to the terms and conditions set forth in this Note to which this schedule is attached, the principal balance due under this Note shall be set forth in the table below and shall be updated from time to time to reflect all advances and readvances outstanding under this Note.

Date
  Drawing   Principal Balance
July 1, 2018        
August 1, 2018        
September 1, 2018        
October 1, 2018        
November 1, 2018        

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Annex E

FORM OF
REGISTRATION RIGHTS AGREEMENT

        THIS REGISTRATION RIGHTS AGREEMENT (this " Agreement "), dated as of [     ·     ], 2018, is made and entered into by and among SIRIUS INTERNATIONAL INSURANCE GROUP, LTD., a Bermuda exempted company (the " Company "), CM BERMUDA LTD., an exempted Bermuda limited liability company (" CMB "), and EASTERLY ACQUISITION SPONSOR, LLC, a Delaware limited liability company (" Easterly Sponsor "; Easterly Sponsor, CMB and any Person who hereafter becomes a party to this Agreement pursuant to Section 5.2 of this Agreement, so long as each such Person holds any Registrable Securities (as defined below), a " Holder " and collectively the " Holders ").


RECITALS

         WHEREAS , pursuant to that certain Agreement and Plan of Merger (the " Merger Agreement "), dated as of June 23, 2018, by and among the Company, Easterly Acquisition Corp., a Delaware corporation (" Easterly "), and Sirius Acquisitions Holding Company III, a Delaware corporation and a wholly owned subsidiary of the Company (" Merger Sub "), as of the Effective Time (as defined in the Merger Agreement), Merger Sub merged with and into Easterly (the " Merger "), with Easterly being the surviving entity in the Merger and a wholly owned subsidiary of the Company;

         WHEREAS , immediately prior to the Effective Time of the Merger, after giving effect to the transactions contemplated by that certain Redemption Agreement (the " Redemption Agreement "), dated as of [     ·     ], 2018, by and between the Company and CMB, CMB was the holder of [     ·     ] common shares of the Company, par value $0.01 per share (the " Common Shares "), representing all of the issued and outstanding Common Shares;

         WHEREAS , immediately prior to the Effective Time of the Merger, Easterly Sponsor was the holder of [     ·     ] shares of common stock of Easterly, par value $0.0001 per share (the " Easterly Common Stock ");

         WHEREAS , pursuant to the Merger Agreement, at the Effective Time of the Merger, each issued and outstanding share of Easterly Common Stock (other than Redemption Shares (as defined in the Merger Agreement)) was converted into the right to receive newly issued Common Shares;

         WHEREAS , immediately following the Effective Time of the Merger, after giving effect to the transactions contemplated by the Redemption Agreement, CMB was the holder of [     ·     ] Common Shares (the " CMB Shares ") and Easterly Sponsor was the holder of [     ·     ] Common Shares (the " Easterly Sponsor Shares "); and

         WHEREAS , the Company and the Holders desire to enter into this Agreement in connection with the closing of the transactions contemplated by the Merger Agreement to grant the Holders certain registration rights with respect to certain securities of the Company, on the terms and conditions set forth in this Agreement.

         NOW , THEREFORE , in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

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ARTICLE I
DEFINITIONS

        1.1     Definitions.     The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:

        " Adverse Disclosure " shall mean any public disclosure of non-public information that the Company has a bona fide business purpose for not disclosing publicly, which disclosure, in the good faith judgment of the principal executive officer of the Company or the principal financial officer of the Company, after consultation with counsel to the Company, (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any Prospectus, in the light of the circumstances under which they were made) not misleading and (ii) would not be required to be made at such time if the Registration Statement or Prospectus were not being filed.

        " Agreement " shall have the meaning given in the Preamble.

        " Board " shall mean the Board of Directors of the Company.

        " CMB " shall have the meaning given in the Preamble and, for the avoidance of doubt, shall not include any other Holder of CMB Shares.

        " CMB Shares " shall have the meaning given in the Recitals hereto.

        " Commission " shall mean the U.S. Securities and Exchange Commission.

        " Common Shares " shall have the meaning given in the Recitals hereto.

        " Company " shall have the meaning given in the Preamble.

        " Demand Registration " shall have the meaning given in subsection 2.1.1 .

        " Easterly " shall have the meaning given in the Recitals hereto.

        " Easterly Common Stock " shall have the meaning given in the Recitals hereto.

        " Easterly Sponsor " shall have the meaning given in the Preamble.

        " Easterly Sponsor Shares " shall have the meaning given in the Recitals hereto.

        " Exchange Act " shall mean the U.S. Securities Exchange Act of 1934, as it may be amended from time to time.

        " Holders " shall have the meaning given in the Preamble.

        " Lock-Up Agreements " shall mean those certain letter agreements, dated as of [     ·     ], 2018, by and between the Company, on the one hand, and certain holders of the Common Shares of the Company, on the other hand, entered into pursuant to the Merger Agreement.

        " Lock-Up Period " shall mean the applicable lock-up periods for the Holders set forth in the Lock-Up Agreements.

        " Maximum Number of Securities " shall have the meaning given in subsection 2.1.4 .

        " Merger " shall have the meaning given in the Recitals hereto.

        " Merger Agreement " shall have the meaning given in the Recitals hereto.

        " Merger Sub " shall have the meaning given in the Recitals hereto.

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        " Misstatement " shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus or necessary to make the statements contained therein (in the case of any Prospectus, in the light of the circumstances under which they were made) not misleading.

        " Permitted Transferees " shall mean a Person to whom a Holder of Registrable Securities is permitted to transfer such Registrable Securities prior to the expiration of the applicable Lock-Up Period, under the Lock-Up Agreements and any other applicable agreement between such Holder and the Company, and to any transferee thereafter, in each case in compliance with Section 5.2 .

        " Person " shall mean a company, a corporation, an association, a partnership, a limited liability company, an organization, a joint venture, a trust or other legal entity, an individual, a government or political subdivision thereof or a governmental agency.

        " Piggyback Registration " shall have the meaning given in subsection 2.2.1 .

        " Pro Rata " shall have the meaning given in subsection 2.1.4 .

        " Prospectus " shall mean the prospectus (including any preliminary prospectus) included in any Registration Statement, as supplemented by any and all prospectus supplements (including preliminary prospectus supplements) and as amended by any and all post-effective amendments, and including all material incorporated by reference in such prospectus or prospectus supplement.

        " Redemption Agreement " shall have the meaning given in the Recitals hereto.

        " Registrable Security " shall mean (a) the CMB Shares, (b) the Easterly Sponsor Shares and (c) any other equity security of the Company issued or issuable with respect to any such Common Shares by way of a stock dividend or stock split or in connection with a combination of shares, distribution, recapitalization, merger, consolidation, reorganization or other similar event; provided , however , that, as to any particular Registrable Security held by any particular Holder, such securities shall cease to be Registrable Securities when: (A) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (B) such securities shall have been otherwise transferred, new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities by such Holder shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Rule 144 promulgated under the Securities Act (but without volume or manner of sale restrictions or limitations); or (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.

        " Registration " shall mean a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.

        " Registration Expenses " shall mean the Company's out-of-pocket expenses incident to a Registration, including, without limitation, the following:

            (A)  all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority) and any securities exchange on which the Common Shares are then listed;

            (B)  fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);

            (C)  printing, messenger, telephone and delivery expenses;

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            (D)  fees and disbursements of counsel for the Company;

            (E)  fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and

            (F)  if CMB is participating in such Registration, reasonable fees and expenses of one (1) legal counsel selected by CMB to represent its interests in connection with such Registration.

        " Registration Statement " shall mean any registration statement that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.

        " Securities Act " shall mean the U.S. Securities Act of 1933, as amended from time to time.

        " Shelf Registration " means a Registration Statement of the Company for an offering to be made on a delayed or continuous basis of Common Shares pursuant to Rule 415 under the Securities Act (or similar provisions then in effect).

        " Shelf Takedown " shall have the meaning given in Section 2.3 .

        " Shelf Takedown Notice " shall have the meaning given in Section 2.3 .

        " Underwriter " shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer's market-making activities.

        " Underwritten Offering " shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.

    " Underwritten Shelf Offering Requesting Holder " shall have the meaning given in Section 2.3 .


ARTICLE II
REGISTRATIONS

        2.1     Demand Registration .     

            2.1.1     Request for Registration .    Subject to the provisions of subsection 2.1.4 and Section 2.4 hereof, at any time and from time to time, CMB may make a written demand for Registration under the Securities Act of all or part of its Registrable Securities, which written demand shall describe the amount and type of securities to be included in such Registration and the intended method(s) of distribution thereof (such written demand a " Demand Registration "). The Company shall, as soon thereafter as practicable, but not more than thirty (30) days immediately after the Company's receipt of the Demand Registration, file a Registration Statement with respect to the Registration of all Registrable Securities requested by CMB pursuant such Demand Registration, and use its reasonable best efforts to cause such Registration Statement to become effective as soon as reasonably practicable thereafter. Under no circumstances shall the Company be obligated to effect more than an aggregate of two (2) Registrations in any consecutive 12-month period pursuant to a Demand Registration under this subsection 2.1.1 .

            2.1.2     Effective Registration.     Notwithstanding the provisions of subsection 2.1.1 above or any other part of this Agreement, a Registration pursuant to a Demand Registration shall not count as a Registration unless and until (i) the Registration Statement filed with the Commission with respect to such Registration has become effective, (ii) the Company has complied with all of its obligations under this Agreement with respect thereto and (iii) the earlier to occur of either all of the Registrable Securities requested by CMB to be registered in such Demand Registration have been sold or such Registration Statement has remained effective for a period of

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    sixty (60) consecutive days; provided , that if, after such Registration Statement has become effective, an offering of Registrable Securities in a Registration pursuant to a Demand Registration is subsequently interfered with by any stop order or injunction of the Commission, federal or state court or any other governmental agency, the Registration Statement with respect to such Registration shall not count as a Registration unless and until (i) such stop order or injunction is removed, rescinded or otherwise terminated and (ii) CMB thereafter affirmatively elects to continue with such Registration and accordingly notifies the Company in writing of such election no later than five (5) days after the Company notifies CMB of such removal, rescinding or termination.

            2.1.3     Underwritten Offering.     Subject to the provisions of subsection 2.1.4 and Section 2.4 hereof, if CMB so advises the Company as part of its Demand Registration or Shelf Takedown that the offering of the Registrable Securities pursuant to such Demand Registration or Shelf Takedown shall be in the form of an Underwritten Offering, then the right of any Holder to include its Registrable Securities in such Demand Registration or Shelf Takedown shall be conditioned upon such Holder's participation in such Underwritten Offering and the inclusion of such Holder's Registrable Securities in such Underwritten Offering to the extent provided herein. Each such Holder proposing to distribute Registrable Securities through an Underwritten Offering pursuant to this subsection 2.1.3 or subsection 2.2.1 shall (i) agree to sell its Registrable Securities on the basis provided in the applicable underwriting/sales arrangements and (ii) agree to complete and execute all questionnaires, powers of attorney, indemnities, underwriting/sales agreements and other documents reasonably required under the terms of such underwriting/sales arrangements; provided , however , that no Holder shall be required to make any representations or warranties to the Company or the Underwriters or other purchasers (other than representations and warranties regarding (1) such Holder's ownership of Registrable Securities to be transferred free and clear of all liens, claims and encumbrances created by such Holder, (2) such Holder's power and authority to effect such transfer, (3) such matters pertaining to such Holder's compliance with securities laws as reasonably may be requested and (4) such Holder's intended method of distribution) or to undertake any indemnification obligations to the Company with respect thereto, except as otherwise provided in Article IV hereof.

            2.1.4     Reduction of Underwritten Offering.     If the managing Underwriter or Underwriters in an Underwritten Offering pursuant to a Demand Registration or Shelf Takedown, in good faith, advises the Company in writing that the dollar amount or number of Registrable Securities that the Holders desire to sell, taken together with all other Common Shares or other equity securities that the Company desires to sell and the Common Shares, if any, as to which a Registration has been requested pursuant to separate written contractual piggy-back registration rights held by any other shareholders who desire to sell, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the " Maximum Number of Securities "), then the Company shall include in such Underwritten Offering: (i) first, the Registrable Securities of the Holders participating in such Underwritten Offering and the Common Shares or other equity securities of other Persons that the Company is obligated to register in a Registration pursuant to separate written contractual arrangements with such Persons (pro rata based on the respective number of Registrable Securities, Common Shares and other equity securities held by such Holders and other Persons and the aggregate number of Registrable Securities, Common Shares and other equity securities requested be included in such Underwritten Offering (such proportion is referred to herein as " Pro Rata ")) that can be sold without exceeding the Maximum Number of Securities; and (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Common Shares or other

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    equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities.

            2.1.5     Demand Registration Withdrawal.     A Holder may withdraw all or any portion of its Registrable Securities included in a Demand Registration from such Demand Registration at any time prior to the effectiveness of the applicable Registration Statement; provided that such withdrawal shall be irrevocable and, after making such withdrawal, a Holder shall no longer have any right to include Registrable Securities in the Demand Registration as to which such withdrawal was made. In the event that CMB notifies the Company that it is withdrawing all of its Registrable Securities from the Demand Registration, the Company shall cease all efforts to secure effectiveness of the applicable Registration Statement. Such registration nonetheless shall be deemed a Demand Registration for purposes of subsection 2.1.1 unless CMB shall have paid or reimbursed the Company for all reasonable and documented out-of-pocket fees and expenses incurred by the Company in connection with the withdrawn registration of such Registrable Securities.


        2.2
    Piggyback Registration .     

            2.2.1     Piggyback Rights.     If the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account and/or for the account of shareholders of the Company (including, without limitation, pursuant to Section 2.1 hereof), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company's existing security holders, (iii) for an offering of debt that is convertible into equity securities of the Company or (iv) for an employee stock purchase plan or dividend reinvestment plan, then the Company shall give written notice of such proposed filing to all of the Holders of Registrable Securities as soon as practicable but not less than ten (10) days before the anticipated filing date of such Registration Statement, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Holders of Registrable Securities the opportunity to register the sale of such number of Registrable Securities as such Holders may request in writing within five (5) days after receipt of such written notice (such Registration a " Piggyback Registration "). The Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and shall use its best efforts to cause the managing Underwriter or Underwriters of a proposed Underwritten Offering to permit the Registrable Securities requested by the Holders pursuant to this subsection 2.2.1 to be included in a Piggyback Registration on the same terms and conditions as any similar securities of the Company included in such Registration and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof.

            2.2.2     Reduction of Piggyback Registration.     If the managing Underwriter or Underwriters in an Underwritten Offering that is to be a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of the Common Shares that the Company desires to sell, taken together with (i) the Common Shares, if any, as to which Registration has been demanded pursuant to separate written contractual arrangements with Persons other than the Holders of Registrable Securities hereunder (ii) the Registrable Securities as to which registration has been requested pursuant Section 2.2 hereof, and (iii) the Common Shares, if any, as to which Registration has been requested pursuant to separate written contractual piggy-back registration rights of other shareholders of the Company, exceeds the Maximum Number of Securities, then the Company shall include in any such Registration (A) first, the Common Shares or other equity

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    securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1 hereof and the Common Shares, if any, as to which Registration has been requested pursuant to written contractual piggy-back registration rights of other shareholders of the Company, Pro Rata, which can be sold without exceeding the Maximum Number of Securities.

            2.2.3     Piggyback Registration Withdrawal .    Any Holder of Registrable Securities shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration. The Company (whether on its own good faith determination or as the result of a request for withdrawal by Persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this subsection 2.2.3 .

            2.2.4     Unlimited Piggyback Registration Rights.     For purposes of clarity, any Registration effected pursuant to Section 2.2 hereof shall not be counted as a Registration pursuant to a Demand Registration effected under Section 2.1 hereof.


        2.3
    Shelf Registrations.     At any time when the Company is permitted pursuant to the Securities Act to effect a Shelf Registration on Form F-4 (or similar short-form registration that may be available at such time), CMB may request, pursuant to its Demand Registration, that the Company effect the Demand Registration as a Shelf Registration. Notwithstanding anything else in this Agreement, CMB may not require the Company to effect more than one Shelf Registration with respect to CMB's Registrable Securities. CMB shall have the right to request that the Company cooperate in a shelf takedown at any time, including an Underwritten Offering, by delivering a written request thereof to the Company (" Shelf Takedown Notice ") stating that CMB intends to effect an offering of all or part of its Registrable Securities included in such Shelf Registration (a " Shelf Takedown "); provided that the Company shall not be required to effect more than two (2) Shelf Takedowns in any consecutive 12-month period. Each Shelf Takedown Notice shall specify the amount and type of Registrable Securities to be offered and sold in the Shelf Takedown and the intended method of distribution thereof. As soon as practicable thereafter, but not more than thirty (30) days thereafter, the Company shall take all actions reasonably required to enable such Registrable Securities to be offered and sold as contemplated by such Shelf Takedown Notice. CMB shall have the right to demand as part of its Shelf Takedown Notice an offering in the form of an Underwritten Offering, provided that the aggregate offering price for any such offering is at least $75,000,000 in the aggregate (or, if less, all of CMB's Registrable Securities). The Company shall, within ten (10) days of the Company's receipt from CMB of such Shelf Takedown Notice that includes a written demand for an Underwritten Offering, notify, in writing, all other Holders of Registrable Securities included in the Shelf Registration and such Holder who thereafter wishes to include all or a portion of such Holder's Registrable Securities in such Underwritten Offering pursuant to a Shelf Takedown (each such Holder, an " Underwritten Shelf Offering Requesting Holder ") shall so notify the Company, in writing, within five (5) days after the receipt by such Holder of the notice from the Company. Upon receipt by the Company of any such written notification from an Underwritten Shelf Offering Requesting Holder, such Holder shall be entitled to have its Registrable Securities included in the Underwritten Offering pursuant to the Shelf Takedown.

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        2.4
    Holder Information and Cooperation.     As a condition precedent to any Registration or Underwritten Offering hereunder, the Company may require each Holder as to which any Registration or Underwritten Offering is being effected to furnish to the Company such information regarding the distribution of such securities and such other information relating to such Holder, its ownership of Registrable Securities and other matters as the Company may from time to time reasonably request in writing. Each such Holder agrees to furnish such information to the Company and to cooperate with the Company as reasonably necessary to enable the Company to comply with the provisions of this Agreement.


        2.5
    Restrictions on Registration Rights.     Notwithstanding anything to the contrary contained in this Agreement, (i) the Company shall not be obligated to (but may, at its sole option) file a Registration Statement or effect an Underwritten Offering if any Registration Statement that has been previously filed with respect to a Registration pursuant to a Demand Registration has not yet become effective and has not been withdrawn, (ii) the Company shall not be obligated to (but may, at its sole option) effect any Demand Registration or Shelf Takedown within ninety (90) days after the closing of an Underwritten Offering and (iii) no Registration shall be effected or permitted and no Registration Statement shall become effective, with respect to any Registrable Securities held by any Holder, until after the expiration of the applicable Lock-Up Period.


        2.6
    Selection of Underwriter.     The Underwriter(s) for any Underwritten Offering completed as a Demand Registration or a Shelf Takedown shall be selected by CMB. The Underwriter(s) for any Underwritten Offering initiated pursuant to Section 2.2.1 shall be selected by the Company.


ARTICLE III
COMPANY PROCEDURES

        3.1     General Procedures.     If the Company is required to effect the Registration of Registrable Securities, the Company shall use its reasonable best efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall, as expeditiously as possible:

            3.1.1  prepare and file with the Commission a Registration Statement with respect to such Registrable Securities and use its reasonable best efforts to cause such Registration Statement to become effective and remain effective until all Registrable Securities covered by such Registration Statement have been sold;

            3.1.2  prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be requested by the Holders or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus;

            3.1.3  prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable Securities included in such Registration, and such Holders' legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holders;

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            3.1.4 prior to any public offering of Registrable Securities, use its reasonable best efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or "blue sky" laws of such jurisdictions in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may reasonably request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided , however , that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;

            3.1.5 cause all such Registrable Securities to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed;

            3.1.6 provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;

            3.1.7 advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;

            3.1.8 at least five (5) days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus, furnish a copy thereof to each seller of such Registrable Securities or its counsel;

            3.1.9 notify the Holders, at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;

            3.1.10  permit a representative of the Holders, the Underwriters, if any, and any attorney retained by such Holders or Underwriter to participate, at each such Person's own expense, in the preparation of the Registration Statement, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter or attorney in connection with the Registration; provided , however , that such representatives or Underwriters enter into a confidentiality agreement, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information;

            3.1.11  obtain a "comfort" letter for the benefit of the Underwriters from the Company's independent registered public accountants in the event of an Underwritten Offering, in customary form and covering such matters of the type customarily covered by "comfort" letters as the managing Underwriter and its counsel may reasonably request;

            3.1.12  on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion and negative assurance letter, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion and negative assurance letter is being given as the Underwriter may reasonably request and as are customarily included in such opinions and negative assurance letters;

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            3.1.13  in the event of any Underwritten Offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing Underwriter of such offering;

            3.1.14  make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company's first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

            3.1.15  if the Registration involves the Registration of Registrable Securities involving gross proceeds in excess of $75,000,000, use its reasonable efforts to make available senior executives of the Company to participate in customary "road show" presentations that may be reasonably requested by the Underwriter in any Underwritten Offering; and

            3.1.16  otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holders, in connection with such Registration.

        3.2     Registration Expenses.     The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters' commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of "Registration Expenses," all reasonable fees and expenses of any legal counsel representing the Holders.

        3.3     Requirements for Participation in Underwritten Offerings.     No Person may participate in any Underwritten Offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such Person (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Company and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary documents as may be reasonably required under the terms of such underwriting arrangements.

        3.4     Suspension of Sales; Adverse Disclosure.     Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until it is advised in writing by the Company that the use of the Prospectus may be resumed.

        If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would require the Company to make an Adverse Disclosure or would require the inclusion in such Registration Statement of financial statements that are unavailable to the Company without unreasonable efforts, the Company may, upon giving prompt written notice to the Holders, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement or any Prospectus for the shortest period of time, but in no event more than an aggregate of (90) days in any consecutive 12-month period, determined in good faith by the Company to be necessary for such purpose. In the event the Company exercises its rights under the preceding sentence, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities. The Company shall promptly notify the Holders of the expiration of any period during which it exercised its rights under this Section 3.4 .

        3.5     Information Requirements.     The Company covenants that it shall take such action as any Holder may reasonably request to the extent required from time to time to enable such Holder to sell

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Common Shares held by such Holder without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act, including providing any legal opinions. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.


ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION

        4.1     Indemnification .    

            4.1.1  The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers and directors and each Person who controls such Holder (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including without limitation reasonable attorneys' fees) resulting from any untrue or alleged untrue statement of material fact contained in any Registration Statement or Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus, in the light of the circumstances under which they were made) not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such Holder expressly for use therein. The Company shall indemnify the Underwriters, their officers and directors and each Person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder.

            4.1.2  In connection with any Registration Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the extent permitted by law, shall indemnify the Company, its directors and officers and agents and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including without limitation reasonable attorneys' fees) resulting from any untrue or alleged untrue statement of material fact contained in the Registration Statement or Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus, in the light of the circumstances under which they were made) not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Holder expressly for use therein; provided , however , that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each Person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Company.

            4.1.3  Any Person entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification ( provided that the failure to give prompt notice shall not impair any Person's right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (such consent not to be unreasonably withheld). An indemnifying party who elects not to assume the defense of a claim

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    shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party, with the advice of outside counsel, a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement 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.

            4.1.4  The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of Registrable Securities. The Company and each Holder of Registrable Securities participating in an offering also agrees to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company's or such Holder's indemnification is unavailable for any reason.

            4.1.5  If the indemnification provided under Section 4.1 hereof from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, such indemnifying party or indemnified party, and the indemnifying party's and indemnified party's relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided , however , that the liability of any Holder under this subsection 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in subsections 4.1.1 , 4.1.2 and 4.1.3 above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this subsection 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this subsection 4.1.5 . No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this subsection 4.1.5 from any Person who was not guilty of such fraudulent misrepresentation.


ARTICLE V
MISCELLANEOUS

        5.1     Notices .    Any notice or communication under this Agreement must be in writing and given by (i) deposit in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (ii) delivery in person or by courier service providing evidence of delivery, or (iii) transmission by hand delivery or electronic mail. Each notice or communication that is mailed, delivered or transmitted in the manner described above shall be deemed

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sufficiently given, served, sent and received, in the case of mailed notices, on the third business day following the date on which it is mailed and, in the case of notices delivered by courier service, hand delivery or electronic mail, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger) or at such time as delivery is refused by the addressee upon presentation. Any notice or communication to the Company under this Agreement must be addressed to the Company at 14 Wesley Street, 5th Floor, Hamilton HM11 Bermuda, Attention: Gene Boxer, Email: Gene.Boxer@siriusgroup.com. Any notice or communication to any Holder under this Agreement must be addressed to such Holder's address as found in the Company's books and records. Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective ten (10) days after delivery of such notice as provided in this Section 5.1 .

        5.2     Assignment; No Third Party Beneficiaries .    

            5.2.1  This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.

            5.2.2  No Holder may assign or delegate such Holder's rights, duties or obligations under this Agreement, in whole or in part, except in connection with a transfer of Registrable Securities by such Holder to a Permitted Transferee (but only if, as set forth in the definition thereof, such Person has agreed to become bound by the transfer restrictions set forth in the Lock-Up Agreements and, if applicable, any other applicable letter agreements). Notwithstanding the foregoing, CMB shall not assign any of the rights under Section 2.1 or 2.3 of this Agreement that solely for the benefit of CMB.

            5.2.3  This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the Holders, which shall include Permitted Transferees.

            5.2.4  This Agreement shall not confer any rights or benefits on any persons that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.2 hereof.

            5.2.5  No assignment by any party hereto of such party's rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (i) written notice of such assignment and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void.

        5.3     Counterparts.     This Agreement may be executed in multiple counterparts (including facsimile or PDF counterparts), each of which shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced.

        5.4     Governing Law; Venue; Waiver of Jury Trial.     NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS OF SUCH JURISDICTION. Any and all suits, legal actions or proceedings arising out of this Agreement shall be brought in the courts of the State of New York or the United States District Court for the Southern District of New York and each party to this Agreement hereby submits to and accepts the exclusive jurisdiction of such courts for the purpose of such suits, legal actions or proceedings. In any such suit, legal action or proceeding, each party to this Agreement

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waives personal service of any summons, complaint or other process and agrees that service thereof may be made by certified or registered mail directed to it pursuant to Section 5.1 . To the fullest extent permitted by law, each party hereto hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue or any such suit, legal action or proceeding in any such court and hereby further waives any claim that any such suit, legal action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

        5.5     Amendments and Modifications.     Upon the written consent of the Company and the Holders of at least a majority in interest of the Registrable Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided , however , that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in its capacity as a holder of the shares of capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.

        5.6     Entire Agreement; Third Party Beneficiaries.     This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and, except as provided in Section 4.1 hereof, is not intended to confer upon any Person other than the parties hereto any rights or remedies.

        5.7     Term.     This Agreement shall terminate upon the earlier of (i) the tenth (10th) anniversary of the date of this Agreement or (ii) the date as of which (A) all of the Registrable Securities have been sold pursuant to a Registration Statement (but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder) or (B) the Holders of all Registrable Securities are permitted to sell the Registrable Securities under Rule 144 (or any similar provision) under the Securities Act without limitation on the amount of securities sold or the manner of sale. The provisions of Section 3.2 and Article IV shall survive any termination.

[ Signature page follows ]

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         IN WITNESS WHEREOF , the undersigned have caused this Agreement to be executed as of the date first written above.

    COMPANY:

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD., a Bermuda exempted company

 

 

By:

 

  

        Name:    
        Title:    

 

 

HOLDERS:

 

 

CM BERMUDA LTD.,
an exempted Bermuda limited liability company

 

 

By:

 

  

        Name:    
        Title:    

 

 

EASTERLY ACQUISITION SPONSOR, LLC,
a Delaware limited liability company

 

 

By:

 

 

        Name:    
        Title:    

[ Signature page to Registration Rights Agreement ]

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Annex F

FORM OF LOCK-UP AGREEMENT

[     ·     ], 2018

Sirius International Insurance Group, Ltd.
14 Wesley Street, 5th Floor
Hamilton HM11 Bermuda

Re:     Business Combination

Ladies and Gentlemen:

        This letter (this " Letter Agreement ") is being delivered to you in accordance with the Agreement and Plan of Merger (the " Merger Agreement "), dated as of June 23, 2018, by and among Sirius International Insurance Group, Ltd., a Bermuda exempted company (the " Company "), Easterly Acquisition Corp., a Delaware corporation (" Easterly "), and Sirius Acquisitions Holding Company III, a Delaware corporation and a wholly owned subsidiary of the Company (" Merger Sub "), pursuant to which, as of the Effective Time (as defined in the Merger Agreement), Merger Sub will be merged with and into Easterly (the " Merger "), with Easterly being the surviving entity in the Merger and a wholly owned subsidiary of the Company, and each issued and outstanding share of common stock of Easterly, par value $0.0001 per share (other than Redemption Shares (as defined in the Merger Agreement)) will be converted into the right to receive newly issued common shares of the Company, par value $0.01 per share (the " Common Shares ").

        In order to induce the Company to proceed with the Merger and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby agrees with the Company as follows:

            1.     During the period commencing on the Effective Date of the Merger and ending 180 days after such date (the " Lock-Up Period "), the undersigned shall not, without the prior written consent of the Company (which consent may be withheld in its sole discretion), (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission (the " Commission ") promulgated thereunder, with respect to any Common Shares or any securities convertible into, or exercisable, or exchangeable for, Common Shares beneficially owned by the undersigned (within the meaning of the rules and regulations of the Commission), if any, whether now owned or hereafter acquired, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Common Shares or any securities convertible into, or exercisable, or exchangeable for, Common Shares beneficially owned by the undersigned (within the meaning of the rules and regulations of the Commission), if any, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction, including the filing of a registration statement, specified in clause (i) or (ii) (each such transaction, a " Transfer ").

            2.     The provisions set forth in paragraph 1 shall not restrict any Transfer (a) to the Company's officers or directors or any affiliates or family members of any of the Company's officers or directors; (b) in the case of an individual, transfers by gift to a member of the individual's immediate family, to a trust, the beneficiary of which is a member of the individual's immediate family or an affiliate of such person, or to a charitable organization; (c) in the case of an individual, transfers by virtue of laws of descent and distribution upon death of the individual;

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    (d) in the case of an individual, transfers pursuant to a qualified domestic relations order; (e) in the case of a corporation or other company, to an "affiliate," as such term is defined in Rule 501(a) under the Securities Act of 1933, as amended, or controlling stockholder or member; (f) in the case of a partnership, to a partner or affiliated partnership; (g) in the case of a trust, to its trustees, beneficiaries or settlors; (h) in the case of CM Bermuda Ltd., pursuant to the Redemption Agreement (as defined in the Merger Agreement); and (i) in the event of the Company's completion of a liquidation, merger, share exchange or other similar transaction which results in all of the Company's shareholders having the right to exchange their shares of Common Shares for cash, securities or other property; provided, however, that in the case of clauses (a) through (g), these permitted transferees must enter into a written agreement agreeing to be bound by the restrictions herein.

            3.     The undersigned has full right and power, without violating any agreement to which it is bound, to enter into this Letter Agreement.

            4.     This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Letter Agreement may not be changed, amended, modified or waived (other than to correct a typographical error) as to any particular provision, except by a written instrument executed by all parties hereto.

            5.     This Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The parties hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement shall be brought and enforced in the courts of New York City, in the State of New York, and irrevocably submit to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waive any objection to such exclusive jurisdiction and venue or that such courts represent an inconvenient forum.

            6.     Any notice, consent or request to be given in connection with any of the terms or provisions of this Letter Agreement shall be in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or facsimile transmission.

            7.     The undersigned hereby agrees and acknowledges that: (i) the Company would be irreparably injured in the event of a breach by the undersigned of his, her or its obligations under this Letter Agreement, (ii) monetary damages may not be an adequate remedy for such breach and (iii) the non-breaching party shall be entitled to injunctive relief, in addition to any other remedy that such party may have in law or in equity, in the event of such breach. Without limiting the foregoing, the Company, and any duly appointed transfer agent for the registration or transfer of the securities described herein, are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Letter Agreement.

            8.     This Letter Agreement shall terminate upon the expiration of the Lock-Up Period; provided, however, that this Letter Agreement shall earlier terminate in the event that the Merger is not consummated and closed by November 30, 2018.

[ Signature page follows ]

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            Sincerely,

 

 

 

 

 

 

[HOLDER]

 

 

 

 

 

 

By:

 



                Name:    
                Title:    

Acknowledged and Agreed,

 

 

 

 

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

 

 

 

 

By:

 




 

 

 

 

 

 
    Name:                
    Title:                

[Signature page to Lock-Up Agreement]

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Annex G

FORM OF WARRANT AMENDMENT

ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT

        This Assignment, Assumption and Amendment Agreement (this " Agreement ") is made as of [            ], 2018, by and among Easterly Acquisition Corp., a Delaware corporation (the " Company "), Sirius International Insurance Group, Ltd., a Bermuda exempted company (" Sirius "), and Continental Stock Transfer & Trust Company, a New York corporation (the " Warrant Agent ").

        WHEREAS, the Company and the Warrant Agent are parties to that certain Warrant Agreement, dated as of July 29, 2015, and filed with the United States Securities and Exchange Commission on August 10, 2015 (the " Existing Warrant Agreement ");

        WHEREAS, capitalized terms used herein, but not otherwise defined, shall have the meanings given to such terms in the Existing Warrant Agreement;

        WHEREAS, pursuant to the Existing Warrant Agreement, the Company issued (i) 6,750,000 warrants to the Sponsor (collectively, the " Private Placement Warrants ") to purchase shares of the Company's common stock, par value $0.0001 per share (" Common Stock ") simultaneously with the closing of the Offering, at a purchase price of $1.00 per Private Placement Warrant, with each Private Placement Warrant being exercisable for one share of Common Stock and with an exercise price of $11.50 per share, and (ii) 10,000,000 warrants to public investors in the Offering (the " Public Warrants " and together with the Private Placement Warrants, the " Warrants ") to purchase shares of Common Stock, with each Public Warrant being exercisable for one share of Common Stock and with an exercise price of $11.50 per share;

        WHEREAS, on June 23, 2018, that certain Agreement and Plan of Merger (the " Merger Agreement ") was entered into by and among Sirius, the Company and Sirius Acquisitions Holding Company III, a Delaware corporation and a wholly owned subsidiary of Sirius (" Merger Sub ");

        WHEREAS, all of the Warrants are governed by the Existing Warrant Agreement;

        WHEREAS, pursuant to the provisions of the Merger Agreement, Merger Sub will merge with and into the Company with the Company surviving such merger as a wholly owned subsidiary of Sirius (the " Merger "), and, as a result of the Merger, the holders of Common Stock of Easterly shall become holders of Sirius' common shares of par value U.S.$0.01 each (" Common Shares ");

        WHEREAS, upon consummation of the Merger, as provided in Section 4.4 of the Existing Warrant Agreement, the Public Warrants will no longer be exercisable for shares of Common Stock but instead will be exercisable (subject to the terms and conditions of the Existing Warrant Agreement as amended hereby) for Common Shares;

        WHEREAS, pursuant to Section 2 of that certain letter agreement, by and among the Company, Sponsor and Sirius, dated as of June 23, 2018 (the " Sponsor Letter "), upon consummation of the Merger the Private Placement Warrants will be cancelled;

        WHEREAS, the Board of Directors of the Company has determined that the consummation of the transactions contemplated by the Merger Agreement will constitute a Business Combination (as defined in Section 3.2 of the Existing Warrant Agreement);

        WHEREAS, in connection with the Merger, the Company desires to assign all of its right, title and interest in the Existing Warrant Agreement to Sirius and Sirius wishes to accept such assignment; and

        WHEREAS, Section 9.8 of the Existing Warrant Agreement provides that the Company and the Warrant Agent may amend the Existing Warrant Agreement without the consent of any Registered Holders for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective

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provision contained therein or adding or changing any other provisions with respect to matters or questions arising under the Existing Warrant Agreement as the Company and the Warrant Agent may deem necessary or desirable and that the Company and the Warrant Agent deem shall not adversely affect the interest of the Registered Holders.

        NOW, THEREFORE, in consideration of the mutual agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows.

        1.     Assignment and Assumption; Consent.     

        1.1     Assignment and Assumption.     The Company hereby assigns to Sirius all of the Company's right, title and interest in and to the Existing Warrant Agreement (as amended hereby) as of the Effective Time (as defined in the Merger Agreement). Sirius hereby assumes, and agrees to pay, perform, satisfy and discharge in full, as the same become due, all of the Company's liabilities and obligations under the Existing Warrant Agreement (as amended hereby) arising from and after the Effective Time.

        1.2     Consent.     The Warrant Agent hereby consents to the assignment of the Existing Warrant Agreement by the Company to Sirius pursuant to Section 1.1 hereof effective as of the Effective Time, and the assumption of the Existing Warrant Agreement by Sirius from the Company pursuant to Section 1.1 hereof effective as of the Effective Time, and to the continuation of the Existing Warrant Agreement in full force and effect from and after the Effective Time, subject at all times to the Existing Warrant Agreement (as amended hereby) and to all of the provisions, covenants, agreements, terms and conditions of the Existing Warrant Agreement and this Agreement.

        2.     Amendment of Existing Warrant Agreement.     The Company and the Warrant Agent hereby amend the Existing Warrant Agreement as provided in this Section 2 , effective as of the Effective Time, and acknowledge and agree that the amendments to the Existing Warrant Agreement set forth in this Section 2 are necessary or desirable and that such amendments do not adversely affect the interests of the Registered Holders.

        2.1     Preamble.     The preamble on page one of the Existing Warrant Agreement is hereby amended by deleting "Easterly Acquisition Corp., a Delaware corporation" and replacing it with "Sirius International Insurance Group, Ltd., a Bermuda exempted company limited". As a result thereof, all references to the "Company" in the Existing Warrant Agreement shall be references to Sirius International Insurance Group, Ltd. rather than Easterly Acquisition Corp.

        2.2     Recitals.     The recitals on page one of the Existing Warrant Agreement are hereby deleted and replaced in their entirety as follows:

            "WHEREAS, on July 29, 2015, Easterly Acquisition Corp. (" Easterly ") entered into that certain Sponsor Warrants Purchase Agreement (the " Private Placement Warrants Purchase Agreement ") with Easterly Acquisition Sponsor, LLC, a Delaware limited liability company (the " Sponsor "), pursuant to which the Sponsor agreed to purchase an aggregate of 6,250,000 warrants (or up to 6,925,000 warrants if the Over-allotment Option (as defined below) in connection with the Offering (as defined below) is exercised in full) simultaneously with the closing of the Offering bearing the legend set forth in Exhibit B hereto (the " Private Placement Warrants ") at a purchase price of one dollar ($1.00) per Private Placement Warrant;

            WHEREAS, pursuant to the Private Placement Warrants Purchase Agreement, in connection with the Offering (including the partial exercise by the underwriters of the Over-allotment Option in the Offering), the Sponsor purchased 6,750,000 Private Placement Warrants; and

            WHEREAS, on August 4, 2015, Easterly consummated an initial public offering of 20,000,000 units, including 2,000,000 units pursuant to the underwriters' partial exercise of their

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    over-allotment option (collectively, the " Offering "), each such unit comprised of one share of Common Stock (as defined below) and half of one Public Warrant (as defined below) (the " Units ") and, in connection therewith, issued and delivered 10,000,000 warrants to public investors in the Offering (the " Public Warrants " and, together with the Private Placement Warrants, the " Warrants "). Each whole Warrant entitled the holder thereof to purchase one share of common stock of Easterly, par value $0.0001 per share, (" Common Stock "), for $11.50 per share, subject to adjustment as described herein. Only whole warrants are exercisable. A holder of the Public Warrants will not be able to exercise any one-half of one Warrant unless it is combined with another one-half of one Warrant; and

            WHEREAS, Easterly filed with the Securities and Exchange Commission (the " Commission ") registration statements, No. 333-203975 and No. 333-205941, on Form S-1 (together, the " Registration Statement ") and prospectus (the " Prospectus "), for the registration, under the Securities Act of 1933, as amended (the " Securities Act "), of the Units, the Public Warrants and the shares of Common Stock included in the Units; and

            WHEREAS, the Company, Easterly and Sirius Acquisitions Holding Company III, a Delaware corporation and a wholly owned subsidiary of the Company (" Merger Sub ") are parties to that certain Agreement and Plan of Merger, dated as of June 23, 2018 (the " Merger Agreement "), which, among other things, provides for the merger of Merger Sub with and into Easterly with Easterly surviving such merger as a wholly owned subsidiary of the Company (the " Merger "), and, as a result of the Merger, the holders of Common Stock shall become holders of holders of the Company's common shares of par value U.S.$0.01 each (" Common Shares ") with each share of Common Stock exchanged for a fraction of a Common Share at the Exchange Ratio (as defined in the Merger Agreement); and

            WHEREAS, on [        ], 2018, Easterly, the Company and the Warrant Agent entered into an Assignment, Assumption and Amendment Agreement (the " Warrant Assumption Agreement "), pursuant to which Easterly assigned this Agreement to the Company and the Company assumed this Agreement from Easterly; and

            WHEREAS, pursuant to the Merger Agreement, the Warrant Assumption Agreement and Section 4.4 of this Agreement, effective as of the Effective Time (as defined in the Merger Agreement), Warrants will no longer be exercisable for shares of Common Stock but instead will be exercisable (subject to the terms and conditions of this Agreement) for Common Shares; and

            WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration, transfer, exchange, redemption and exercise of the Warrants; and

            WHEREAS, the Company desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and

            WHEREAS, all acts and things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned by or on behalf of the Warrant Agent, as provided herein, the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Agreement.

            NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:"

        2.3     Reference to Common Shares.     All references to "Common Stock" or "shares of Common Stock" in the Existing Warrant Agreement (including all Exhibits thereto) (except for the references in the amended and restated recitals set forth above in Section 2.2) shall mean "Common Shares".

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        2.4     Detachability of Warrants.     Section 2.4 of the Existing Warrant Agreement is hereby deleted and replaced with the following:

        "[INTENTIONALLY OMITTED]"

Except that the defined terms " Business Day " and " Over-allotment Option " set forth therein shall be retained for all purposes of the Existing Warrant Agreement.

        2.5     Warrant Price.     The first sentence of Section 3.1 of the Existing Warrant Agreement is hereby deleted and replaced with the following:

        "Each whole Warrant shall, when countersigned by the Warrant Agent, entitle the Registered Holder thereof, subject to the provisions of such Warrant and of this Agreement, to purchase from the Company a fraction of a Common Share equal to the Exchange Ratio at the price per Common Share of (x) $11.50 divided by (y) the Exchange Ratio, subject to the adjustments provided in Section 4 hereof and in the last sentence of this Section 3.1 ."

        2.6     Duration of Warrants.     Section 3.2 of the Existing Warrant Agreement is hereby deleted and replaced with the following:

            "3.2     Duration of Warrants .    A Warrant may be exercised only during the period (the " Exercise Period ") commencing on the date that is thirty (30) days after the consummation of the transactions contemplated by the Merger Agreement (a " Business Combination "), and terminating at 5:00 p.m., New York City time on the earlier to occur of: (x) the date that is five (5) years after the date on which the Business Combination is completed, (y) the liquidation of the Company, or (z) other than with respect to the Private Placement Warrants, the Redemption Date (as defined below) as provided in Section 6.2 hereof (the " Expiration Date "); provided , however , that the exercise of any Warrant shall be subject to the satisfaction of any applicable conditions, as set forth in subsection 3.3.2 below, with respect to an effective registration statement. Except with respect to the right to receive the Redemption Price (as defined below) in the event of a redemption (as set forth in Section 6 hereof), each Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights in respect thereof under this Agreement shall cease at 5:00 p.m. New York City time on the Expiration Date. The Company in its sole discretion may extend the duration of the Warrants by delaying the Expiration Date; provided , that the Company shall provide at least twenty (20) days prior written notice of any such extension to Registered Holders of the Warrants and, provided further that any such extension shall be identical in duration among all the Warrants."

        2.7     Issuance of shares of Common Stock on Exercise.     The third-to-last sentence of Section 3.3.2 of the Existing Warrant Agreement is hereby deleted.

        2.8     Redemption.     Section 6.1 of the Existing Warrant Agreement is hereby deleted and replaced with the following:

        "6.1     Redemption .    Subject to Section 6.4 hereof, not less than all of the outstanding Warrants may be redeemed, at the option of the Company, at any time while they are exercisable and prior to their expiration, at the office of the Warrant Agent, upon notice to the Registered Holders of the Warrants, as described in Section 6.2 below, at the price of $0.01 per Warrant (the " Redemption Price "), provided that the last sales price of a Common Share reported has been at least (x) $18.00 divided by (y) the Exchange Ratio, (subject to adjustment in compliance with Section 4 hereof), on each of twenty (20) trading days within the thirty (30) trading-day period ending on the third Business Day prior to the date on which notice of the redemption is given and provided that there is an effective registration statement covering the shares of Common Stock issuable upon exercise of the Warrants, and a current prospectus relating thereto, available throughout the 30-day Redemption Period (as

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defined in Section 6.2 below) or the Company has elected to require the exercise of the Warrants on a "cashless basis" pursuant to subsection 3.3.1 ."

        2.9     Notice.     The address for notices to the Company set forth in Section 9.2 of the Existing Warrant Agreement is hereby amended and restated in its entirety as follows:

      "Sirius International Insurance Group, Ltd.
      14 Wesley Street, 5th Floor
      Hamilton HM11 Bermuda
      Attention:    Gene Boxer
      Email:    Gene.Boxer@siriusgroup.com"

        3.     Miscellaneous Provisions.     

        3.1     Effectiveness of Warrant.     Each of the parties hereto acknowledges and agrees that the effectiveness of this Agreement shall be expressly subject to the occurrence of the Merger (as defined in the Merger Agreement) and shall automatically be terminated and shall be null and void if the Merger Agreement shall be terminated for any reason.

        3.2     Successors.     All the covenants and provisions of this Agreement by or for the benefit of Sirius or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns.

        3.3     Severability.     This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.

        3.4     Applicable Law.     The validity, interpretation and performance of this Agreement shall be governed in all respects by the laws of the State of New York, without giving effect to conflict of law principles that would result in the application of the substantive laws of another jurisdiction. The parties hereby agree that any action, proceeding or claim against a party arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. Each of the parties hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.

        3.5     Examination of the Warrant Agreement.     A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent in the Borough of Manhattan, City and State of New York, for inspection by the Registered Holder of any Warrant. The Warrant Agent may require any such holder to submit his Warrant for inspection by it.

        3.6     Counterparts.     This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

        3.7     Effect of Headings.     The section headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation thereof.

        3.8     Entire Agreement.     This Agreement and the Existing Warrant Agreement, as modified by this Agreement, constitutes the entire understanding of the parties and supersedes all prior agreements, understandings, arrangements, promises and commitments, whether written or oral, express or implied, relating to the subject matter hereof, and all such prior agreements, understandings, arrangements, promises and commitments are hereby canceled and terminated.

[Remainder of page intentionally left blank.]

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        IN WITNESS WHEREOF, Sirius, Easterly, and Merger Sub have duly executed this Agreement, all as of the date first written above.

    EASTERLY ACQUISITION CORP.

 

 

By:

 

 

        Name:    
        Title:    

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

By:

 

  

        Name:    
        Title:    

 

 

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

 

 

By:

 

  

        Name:    
        Title:    

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20.    Indemnification of Directors and Officers.

        Bye-law 52 of Sirius Group's bye-laws provides, among other things, that Sirius Group shall indemnify its directors and officers to the fullest extent possible, except as prohibited under the Companies Act. Specifically, bye-law 52.1 provides that Sirius Group's directors and officers, as well as their heirs, executors and administrators, shall, subject to the aforesaid Companies Act prohibitions described below, be indemnified by Sirius Group from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their heirs, executors or administrators, may incur or sustain by reason of any act done, concurred in or omitted in or about the execution of their duty, or supposed duty, or in their respective offices or trusts, and none of them shall be answerable for the acts, receipts, neglects or defaults of the others of them or for joining in any receipts for the sake of conformity, or for the acts of or the solvency or honesty of any bankers or other persons with whom any moneys or effect belonging to Sirius Group may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to Sirius Group shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in relation thereto.

        Bye-law 52.1 of Sirius Group's bye-laws further provides that, except with respect to matters involving fraud or dishonesty of Sirius Group's directors and officers, each shareholder agrees to waive any claim or right of action it might have, whether individually or by or in the right of Sirius Group, against any director or officer on account of any action taken by such director or officer, or the failure of such director or officer to take any action in the performance of his duties with or for Sirius Group.

        Section 98 of the Companies Act provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability which by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to Sirius Group.

        Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to section 281 of the Companies Act.

Item 21.    Exhibits and Financial Statement Schedules.

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Exhibit
Number
  Description
  3.3   Form of Certificate of Designation of Series B preference shares of Sirius International Insurance Group, Ltd.
        
  4.1 ** Specimen Common Share Certificate
        
  4.2 ** Specimen Public Warrant Certificate
        
  4.3 *** Warrant Agreement, dated July 29, 2015, between Continental Stock Transfer & Trust Company and Easterly Acquisition Corp.
        
  4.4 * Form of Assignment, Assumption and Amendment Agreement to Warrant Agreement among Easterly Acquisition Corp., Sirius International Insurance Group, Ltd. and Continental Stock Transfer & Trust Company
        
  4.5   Form of Private Placement Warrant Certificate
        
  5.1 ** Opinion of Conyers Dill & Pearman Limited as to the legality of the securities being registered
        
  10.1 * Form of Registration Rights Agreement among Sirius International Insurance Group, Ltd., CM Bermuda Ltd. and Easterly Acquisition Sponsor, LLC
        
  10.2   Form of Subscription Agreement among Sirius International Insurance Group, Ltd. and the investors named therein
        
  10.3 * Promissory Note, dated as of June 23, 2016, made by Easterly Acquisition Corp. in favor of Sirius International Insurance Group, Ltd.
        
  10.4 * Letter Agreement, dated as of June 23, 2018, among Easterly Acquisition Corp., Easterly Acquisition Sponsor, LLC and Sirius International Insurance Group, Ltd.
        
  10.5 * Form of Lock-up Agreement among CM Bermuda Ltd., Easterly Acquisition Sponsor, LLC and Sirius International Insurance Group, Ltd.
        
  10.6 *** Sirius International Insurance Group, Ltd. 2018 Omnibus Incentive Plan
        
  10.7 *** Amended and Restated Sirius Group Long Term Incentive Plan
        
  10.7.1 *** First Amendment to the Sirius Group Long Term Incentive Plan
        
  10.7.2   Second Amendment to the Sirius Group Long Term Incentive Plan
        
  10.8   Sirius Group Severance and Change in Control Plan
        
  10.9   Employment Agreement dated as of July 24, 2015 between Sirius International Insurance Group, Ltd. and Allan L. Waters
        
  10.10   Employment Agreement dated as of July 24, 2015 between Sirius International Försäkringsaktiebolag (publ) and Monica Cramér Manhem
        
  10.11   Form of Shareholders Agreement among Sirius International Insurance Group, Ltd., CM Bermuda Ltd. and the investors named therein
        
  10.12   Indenture, dated November 1, 2016, by and between Sirius International Group, Ltd. and The Bank of New York Mellon, as Trustee
        
  10.13   First Supplemental Indenture, dated November 1, 2016, by and between Sirius International Group, Ltd. and The Bank of New York Mellon, as Trustee, including form of 4.600% Senior Notes due 2026
 
   

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Exhibit
Number
  Description
  10.14   Subordinated Indenture, dated September 22, 2017, by and among Sirius International Group, Ltd., The Bank of New York Mellon, as Trustee, and The Bank of New York Mellon London Branch, as Paying Agent, including form of Floating Rate Callable Subordinated Notes due 2047
        
  10.15   Credit Agreement, dated as of February 8, 2018, by and among Sirius International Insurance Group, Ltd., as Parent, Sirius International Group, Ltd., as Borrower, certain subsidiaries of the Borrower from time to time party thereto, certain lenders from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative Agent
        
  10.16   First Amendment to the Credit Agreement, dated as of July 30, 2018, by and among Sirius International Insurance Group, Ltd., Sirius International Group, Ltd., certain subsidiaries of the Borrower party thereto, certain lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent
        
  21.1 *** Subsidiaries of Sirius International Insurance Group, Ltd.
        
  23.1   Consent of PricewaterhouseCoopers LLP
        
  23.2   Consent of Marcum LLP
        
  23.3 ** Consent of Conyers Dill & Pearman Limited (included in Exhibit 5.1)
        
  24.1   Power of Attorney (included on signature page to initial filing)
        
  99.1 ** Form of Proxy Card for Easterly Acquisition Corp. Stockholders

*
Attached as an annex to the proxy statement/prospectus contained herein.

**
To be filed by amendment.

***
Previously filed.

+
The exhibits and schedules to this Exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant hereby agrees to furnish a copy of any omitted schedules to the Commission upon request.

Item 22.    Undertakings.

        (a)   The undersigned registrant hereby undertakes:

            (1)   To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

                (i)  To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

               (ii)  To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;

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              (iii)  To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

            (2)   That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

            (3)   To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

            (4)   That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

                (i)  Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

               (ii)  Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

              (iii)  The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

              (iv)  Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

        (b)   The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        (c)   Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

            (1)   The undersigned registrant hereby undertakes as follows: That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this

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    registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form.

            (2)   The registrant undertakes that every prospectus (i) that is filed pursuant to paragraph (h)(1) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415 (§ 230.415 of this chapter), will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        (d)   The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

        (e)   The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Hamilton, Bermuda on September 10, 2018.

  Sirius International Insurance Group, Ltd.
(Registrant)

 

By:

 

/s/ ALLAN L. WATERS


      Name:   Allan L. Waters

      Title:   Chief Executive Officer


SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and the dates indicated:

Signatures
 
Title
 
Date

 

 

 

 

 

 

 
/s/ ALLAN L. WATERS

Allan L. Waters
  Chairman of the Board and Chief Executive Officer (Principal Executive Officer)   September 10, 2018

*

Kernan (Kip) V. Oberting

 

President, Chief Financial Officer and Director (Principal Financial Officer)

 

September 10, 2018

*

Ralph A. Salamone

 

President and Chief Executive Officer of Sirius Global Services, LLC (Principal Accounting Officer and Authorized Representative in the United States)

 

September 10, 2018

*

Monica Cramér Manhem

 

Chief Operating Officer of Sirius Group, President and Chief Executive Officer of Sirius International Insurance Corporation and Director

 

September 10, 2018

*

Laurence Liao

 

Director

 

September 10, 2018

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Signatures
 
Title
 
Date

 

 

 

 

 

 

 
*

Robert L. Friedman
  Director   September 10, 2018

*

Meyer (Sandy) Frucher

 

Director

 

September 10, 2018

*By:

 

/s/ ALLAN L. WATERS

Allan L. Waters
Attorney-in-Fact

 

 

 

 

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Exhibit 3.3

 

 

CERTIFICATE OF DESIGNATION
OF
SERIES B PREFERENCE SHARES
OF
SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

Sirius International Insurance Group, Ltd., a Bermuda exempted company limited by shares (the “ Company ”), hereby certifies that, pursuant to duly authorized resolutions of the Board of Directors of the Company adopted on [ · ], 2018, the creation of the Series B Preference Shares, with a par value of U.S.$0.01 per share (the “ Preference Shares ”), was authorized and the designations, preferences and privileges, voting, relative, participating, optional and other special rights, and qualifications, limitations and restrictions of the Preference Shares, in addition to those set forth in the Memorandum of Association and Bye-Laws of the Company, were fixed as follows:

 

Section 1.                                            Designation; Amount of Shares .  The designation of this series of Preference Shares shall be “Series B Preference Shares”, and the number of shares constituting this series shall be [ · ].  Each Preference Share shall be identical in all respects to every other Preference Share. Any Preference Shares cancelled by purchase or redemption, or otherwise acquired by the Company, will have the status of authorized but unissued Preference Shares and may be reissued as part of the same class or series or may be reclassified and reissued by the Board of Directors in the same manner as any other authorized and unissued shares and shall not be taken to have reduced the amount of the Company’s authorized share capital. The number of authorized Preference Shares may be reduced (but not below the number of Preference Shares then issued and outstanding) by further resolutions duly adopted by (i) the Board of Directors and (ii) the holders of Preference Shares and Common Shares voting together as a single class. No such reduction shall affect the due authorization of any issued and outstanding Preference Shares.

 

Section 2.                                            Definitions . As used herein with respect to the Preference Shares:

 

(a)                                  “Actual Liquidation” has the meaning assigned to such term in Section 5(a) .

 

(b)                                  “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

 

(c)                                   “Board of Directors” means the Board of Directors of the Company or, with respect to any action to be taken by the Board of Directors, any committee of the Board of Directors duly authorized to take such action.

 

(d)                                  “Business Day” means (i) a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City, New York, or Bermuda generally are authorized or obligated by law or executive order to close and (ii) for the purposes of determining the LIBOR only, a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which dealings in U.S. dollars are not carried on in the London interbank market.

 

1



 

(e)                                   “book value” means the Company’s consolidated book value calculated in accordance with U.S. generally accepted accounting principles, without any adjustments thereto resulting from the application of “push down accounting” by CMIG International or its Affiliates, but as adjusted to provide for the treatment of the Preference Shares as equity.

 

(f)                                    “Bye-Laws” means the amended and restated bye-laws of the Company, as they may be amended from time to time.

 

(g)                                   “Cashless Redemption” has the meaning assigned to such term in Section 6(f) .

 

(h)                                  “Certificate of Designation” means this Certificate of Designation relating to the Preference Shares, as it may be amended from time to time.

 

(i)                                      “CMIG International” means CMIG International Holding Pte. Ltd., a Singapore holding company, and its successors.

 

(j)                                     “Commission” means the Securities and Exchange Commission.

 

(k)                                  “Common Shares” means the common shares, par value U.S.$0.01 per share, of the Company, or any other class of shares resulting from successive changes or reclassifications of such common shares consisting solely of changes in par value, or as a result of a subdivision, combination, merger, amalgamation, consolidation or similar transaction in which the Company is a constituent company.

 

(l)                                      “Company” has the meaning assigned to such term in the preamble.

 

(m)                              “Conversion Election Notice” has the meaning assigned to such term in Section 7(b) .

 

(n)                                  “Conversion Price” means the Issue Price, subject to adjustment as applicable in accordance with Section 7(i)  and, for the avoidance of doubt, not subject to any adjustment for dividends or distributions, including Extraordinary Dividends, that have been paid in accordance with Section 4 .

 

(o)                                  “Conversion Ratio” has the meaning assigned to such term in Section 7(a) .

 

(p)                                  “Conversion Shares” means the Common Shares then issuable upon conversion of the Preference Shares in accordance with the terms of Section 7 .

 

(q)                                  “Designating Holders” has the meaning assigned to such term in Section 4(e)(ii) .

 

(r)                                     “Dividend Period” has the meaning assigned to such term in Section 4(b) .

 

(s)                                    “Dividend Record Date” has the meaning assigned to such term in Section 4(b) .

 

2



 

(t)                                     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(u)                                  “Extraordinary Dividends” means any dividend or distribution of cash to the holders of the Common Shares on account of such Common Shares (or other shares of the Company into which the Preference Shares are then convertible), which, when combined on a per share basis with the per share amounts of all other cash dividends and cash distributions paid on the Common Shares (or other shares of the Company into which the Preference Shares are then convertible) during the 365-day period ending on the date of declaration of such dividend or distribution (as adjusted to appropriately reflect any of the events referred to in Section 7(i)) exceeds $[ · ] per Common Share (and, for the avoidance of doubt, the amount of such excess).

 

(v)                                  “Independent Director” has the meaning assigned to such term in the Shareholders Agreement.

 

(w)                                “Issue Date” means [ · ], 2018.

 

(x)                                  “Issue Price” means $[ · ].

 

(y)                                  “Junior Shares” means any class or series of shares of the Company, including Common Shares, that ranks junior to the Preference Shares either as to the payment of dividends or as to the distribution of assets upon any liquidation, dissolution or winding-up of the Company and, for the avoidance of doubt, shall not include any indebtedness of the Company or shares accounted for as a liability of the Company.

 

(z)                                   “LIBOR” means, for any Dividend Period, the rate per annum for deposits in U.S. dollars for a period of three (3) months which appears on Bloomberg Screen US0003M Page (or any applicable successor page) as of 11:00 a.m. (London, England time) on the date two (2) Business Days before the commencement of such Dividend Period (herein, the “ LIBOR Determination Date ”). If no such offered rate exists or is unavailable, then such rate will be the arithmetic mean of the per annum rate of interest at which deposits of U.S. dollars in immediately available funds are offered at 11:00 a.m. (London, England time) on the date two (2) Business Days before the LIBOR Determination Date quoted by two (2) major financial institutions in the London interbank market for an interest period of three (3) months for an amount equal to the number of Preference Shares then outstanding multiplied by the Conversion Price, as selected by the Company in good faith. If LIBOR shall be less than zero, such rate shall be deemed zero for purposes of this Certificate of Designation.

 

Notwithstanding the foregoing, if (i) the Company determines in good faith that LIBOR has been discontinued, and such discontinuance is unlikely to be temporary, or that LIBOR is no longer being published, or (ii) the supervisor for the administrator of the London Interbank

 

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Offered Rate has made a public statement identifying a specific date after which the London Interbank Offered Rate shall no longer be used for determining interest rates for loans, then the holders of the Preference Shares and the Company will negotiate in good faith to (1) designate a substitute or successor reference rate, including any spread with respect thereto, taking into account general comparability to LIBOR, acceptance as a market-based benchmark interest rate and any other commercially reasonable adjustments or factors as such holders and the Company deem appropriate, and (2) determine any necessary changes to the business day convention and the LIBOR Determination Date to be used and any other relevant methodology for calculating the substitute or successor interest rate, including any adjustment factor needed to make such substitute or successor reference rate comparable to LIBOR, in a manner that is consistent with industry accepted practices for such substitute or successor reference rate. Any such designation and determination agreed to by the holders of a majority of the Preference Shares and the Company shall be final and conclusive absent manifest error, and the Company shall amend this Certificate of Designation as necessary to effectuate the substitute or successor reference rate. From the earlier of (A) the date that LIBOR has been discontinued or is no longer being published as described in clause (i) above and (B) the specific date referred to in clause (ii) above (such earlier date, the “ LIBOR Discontinuance Date ”) until the holders of the Preference Shares and the Company make such designation and determination, “LIBOR” shall be deemed to mean LIBOR in effect during the Dividend Period immediately preceding the LIBOR Discontinuance Date.

 

(aa)                           “Liquidation Price” means, with respect to any Preference Share, the Conversion Price, plus all unpaid, accrued and accumulated dividends on such Preference Share, less the amount of any Extraordinary Dividends per share that have been paid in accordance with Section 4 .

 

(bb)                           “Mandatory Conversion Event” has the meaning assigned to such term in Section 7(a) .

 

(cc)                             “Memorandum of Association” means the memorandum of association of the Company, as it may be amended from time to time.

 

(dd)                           “Optional Conversion Event” means a conversion of Preference Shares completed in accordance with Section 7(b) .

 

(ee)                             “Parity Shares” means any class of share capital or series of preference shares established by the Board of Directors in accordance with the terms hereof, if such class or series will rank pari passu to the Preference Shares as to dividend rights or rights upon liquidation, winding-up or dissolution of the Company, whether voluntary or involuntary and, for the avoidance of doubt, shall not include any indebtedness of the Company or shares to the extent treated as a liability by applicable rating agencies.

 

(ff)                               “Person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other similar entity, whether or not a legal entity.

 

(gg)                             “Preference Shares” has the meaning assigned to such term in the preamble.

 

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(hh)                           “Principal Operating Company” means Sirius Bermuda Insurance Company Ltd., Sirius International Insurance Corporation and Sirius America Insurance Company.

 

(ii)                                   “Public Float” means, as of any date of calculation, the number of Common Shares then outstanding (for the avoidance of doubt, excluding securities convertible into Common Shares), less (i) the number of outstanding Common Shares beneficially owned (without duplication) by the directors and executive officers of the Company and by CMIG International and its Affiliates (calculated in accordance with Section 13(d) of the Exchange Act), plus (ii) in the event of any calculation made pursuant to Section 6(f) , the number of Redemption Shares being issued and, in the event of any calculation made pursuant to Section 7(a) , the number of Conversion Shares being issued.

 

(jj)                                 “Quarterly Dividend Date” has the meaning assigned to such term in Section 4(b) .

 

(kk)                           “Redemption Date” has the meaning assigned to such term in Section 6(e) .

 

(ll)                                   “Redemption Event” has the meaning assigned to such term in Section 6(e) .

 

(mm)                   “Redemption Notice” has the meaning assigned to such term in Section 6(e) .

 

(nn)                           “Redemption Price” means, as of any time of calculation, a price per Preference Share equal to (1) the product of (i) 1.28 multiplied by (ii) (x) the book value of the Company, as set forth in the final, Board of Directors approved, consolidated financial statements of the Company for the quarterly period most recently ended for which such financial statements are available, divided by (y) the fully diluted number of Common Shares outstanding (calculated using the treasury stock method) as of the end of such period, in each case determined by the Board of Directors in good faith, plus all unpaid, accrued and accumulated dividends thereon, plus (2) the product of (i) 0.28 multiplied by (ii) the aggregate amount of any Extraordinary Dividends paid by the Company during the period that is (x) in the event such calculation is made on or prior to the second (2nd) anniversary of the Issue Date, the 365 days preceding the date of such calculation, or (y) in the event such calculation is made after the second (2nd) anniversary of the Issue Date, the 730 days preceding the date of such calculation.

 

(oo)                           “Redemption Shares” means the Common Shares then issuable upon redemption of the Preference Shares in accordance with the terms of Section 6 .

 

(pp)                           “Senior Shares” means any class of share capital or series of preference shares established by the Board of Directors in accordance with the terms hereof, if such class or series will rank senior to the Preference Shares as to dividend rights or rights upon liquidation, winding-up or dissolution of the Company, whether voluntary or involuntary and, for the avoidance of doubt, shall not include any indebtedness of the Company or shares to the extent treated as a liability by applicable rating agencies.

 

(qq)                           “set aside for payment” means, without any action other than the following, the recording by the Company in its accounting ledgers of any accounting or bookkeeping entry

 

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which indicates, pursuant to a declaration of a dividend or other distribution by the Board of Directors, the allocation of the funds to be so paid on any class or series of the Company’s shares; provided , that if any funds for any Junior Shares are placed in a separate account of the Company or delivered to a disbursing, paying or other similar agent, then “set aside for payment” with respect to the Preference Shares shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent.

 

(rr)                                 “Shareholders Agreement” means that certain Shareholders Agreement dated [ · ], 2018 among the Company and the holder(s) of the Preference Shares on the Issue Date.

 

(ss)                               “Subscription Agreements” mean those certain Subscription Agreements dated August 29, 2018 between the Company and the holder(s) of the Preference Shares on the Issue Date.

 

(tt)                                 “Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be a, or control any, managing director or general partner of such business entity (other than a corporation).  The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.

 

(uu)                           “Voting Shares” means the Common Shares, the Preference Shares and any other voting shares of the Company outstanding from time to time.

 

Section 3.                                            Ranking . The Preference Shares shall, with respect to dividend rights or the right to receive distributions upon liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, rank senior to all Junior Shares, including without limitation, the Common Shares.

 

Section 4.                                            Dividends .

 

(a)                                  Participating Dividends . In addition to any dividends accruing on the Preference Shares pursuant to Section 4(b) , in the event that any dividend on Common Shares or other Junior Shares is declared by the Board of Directors and paid by the Company other than a dividend payable solely in Common Shares, other Junior Shares or any other equity or equity equivalent securities of the Company (for the avoidance of doubt, such dividends to include Extraordinary Dividends), the holders of Preference Shares as of the record date established by the

 

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Board of Directors for such dividend on Common Shares or Junior Shares shall be entitled to receive (and the Company shall simultaneously declare and pay) a dividend on the Preference Shares on a pro rata basis with the Common Shares or other Junior Shares, as applicable, determined on an as-converted basis assuming all Preference Shares had been converted pursuant to Section 7 . The record date for any dividend payable pursuant to this Section 4(a)  shall be the record date for the applicable dividend on the Common Shares or other Junior Shares, and any such dividend shall be payable with respect to the Preference Shares to the holders to whom such Preference Shares are registered, as reflected on the Register of Members of the Company as of such record date.

 

(b)                                  Regular Dividends .  From and after the fifth (5th) anniversary of the Issue Date, the holders of Preference Shares shall then be entitled to receive, out of funds legally available for the payment of dividends under Bermuda law, cumulative dividends on each outstanding Preference Share, prior and in preference to any declaration, payment or decision to set aside funds for the payment of any dividend (other than dividends payable solely in Common Shares, other Junior Shares or any other equity or equity equivalent securities of the Company), at a per annum rate equal to the Conversion Price multiplied by LIBOR plus 4%, payable in cash quarterly in arrears on the last day of March, June, September and December of each year (each such date, a “ Quarterly Dividend Date ”).  Such dividends shall be paid out of funds legally available for the payment of dividends under Bermuda law, and shall accrue until paid, whether or not declared by the Board of Directors and whether or not there are funds legally available for the payment of dividends.  Dividends that are payable pursuant to this Section 4(b)  on Preference Shares on any Quarterly Dividend Date shall be payable to holders of record of such Preference Shares as they appear on the Register of Members of the Company at 5:00 p.m. (New York City time) on the immediately preceding March 15, June 15, September 15 and December 15 (each, a “ Dividend Record Date ”). The Dividend Record Dates shall apply regardless of whether a particular Dividend Record Date is a Business Day.  A dividend period (each, a “ Dividend Period ”) is the period from and including a Quarterly Dividend Date to, but excluding, the next Quarterly Dividend Date, except that the initial Dividend Period shall commence on and include the date of the fifth (5th) anniversary of the Issue Date and such initial Dividend Period shall end on and exclude the December 31, 2023 Quarterly Dividend Date.  Dividends payable on the Preference Shares shall be computed on the basis of a 365-day year and the actual number of days elapsed in any Dividend Period, rounding the resulting figure to the nearest cent (half a cent being rounded upwards). If any date on which dividends would otherwise be payable is not a Business Day, then the Quarterly Dividend Date shall be the next succeeding Business Day after the original Quarterly Dividend Date, and no additional dividends shall accumulate on the amount so payable as a result of the delay.

 

(c)                                   Priority of Dividends. So long as any Preference Shares remain outstanding, unless the full dividends on all outstanding Preference Shares have been paid or a sum sufficient for the payment thereof has been set aside for payment pursuant to Section 4(a)  or Section 4(b) , (i) no dividend shall be paid or declared on the Common Shares or any other Junior Shares (other than a dividend payable solely in Common Shares, other Junior Shares, or other any other equity or equity equivalent securities of the Company) and (ii) no other distribution may be declared or paid or set apart for payment upon the Common Shares or any other Junior Shares.

 

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(d)                                  Restrictions on Payment of Dividends . The Company shall not pay declare or pay dividends on the Preference Shares if the Company has reasonable grounds for believing that (1) it is, or would after the payment be, unable to pay its liabilities as they become due, or (2) the realizable value of the Company’s assets would thereby be less than its liabilities or (3) it is prohibited by then-applicable law from doing so.

 

(e)                                   Failure to Pay Dividends .

 

(i)                                      If the Company fails to declare and pay any dividend pursuant to Section 4(b) , the rate at which all dividends thereunder shall accrue (whether or not declared) shall increase to a per annum rate equal to the Conversion Price multiplied by LIBOR plus 6% until such time as the Company has declared and paid all such accrued dividends, and thereafter shall accrue at a per annum rate equal to the Conversion Price multiplied by LIBOR plus 4%.

 

(ii)                                   If the Company fails to declare and pay for four consecutive Dividend Periods dividends on the Preference Shares that are payable pursuant to Section 4(b)  (whether as a result of an event specified in Section 4(d)  or otherwise), thereafter and until such time as the Company has declared and paid all such accrued dividends, the holders of a majority of the Preference Shares entitled to the rights set forth in Section 2 of the Shareholders Agreement (the “ Designating Holders ”) shall be entitled to designate one director to the Board of Directors (in addition to any other rights to elect persons to the Board of Directors that the holders of Preference Shares may have), subject to the receipt or making by such holders of any regulatory approvals or regulatory filings under applicable laws.  For each additional Dividend Period for which dividends on the Preference Shares are not declared or paid pursuant to Section 4(b) , the Designating Holders shall be entitled to designate one additional director for appointment to the Board of Directors, subject to the receipt or making by such holders of any regulatory approvals or regulatory filings under applicable laws.   If at any time and from time to time, following the appointment of any such person(s) to the Board of Directors pursuant to this Section 4(e)(ii)  and the subsequent resignation of such person(s) pursuant to Section 4(e)(iii) , the Company fails to declare and pay for any Dividend Period dividends on the Preference Shares that are payable pursuant to Section 4(b)  (whether as a result of an event specified in Section 4(d)  or otherwise), such number of persons previously designated to the Board of Directors by the Designating Holders pursuant to this Section 4(e)(ii)  shall be re-appointed to the Board of Directors and the Designating Holders shall be entitled, for such Dividend Period and each subsequent Dividend Period for which dividends are not declared and paid, to designate one additional director for appointment to the Board of Directors, subject in each case to the receipt or making by such holders of any regulatory approvals or regulatory filings under applicable laws.

 

(iii)                                                        Promptly after receipt by the Company of notice by the Designating Holders designating a person or persons to the Board of Directors pursuant to Section 4(e)(ii)  (together with (1) an executed irrevocable letter of resignation in a form satisfactory to the Company pursuant to which such designee or designees shall resign from the Board of Directors effective as of the payment of the dividend for the next Dividend Period following the Dividend Period in which the Company remedies the failure to pay giving rise to such designee’s or designees’ appointment, (2) an executed and completed questionnaire for each such designee in the form customarily provided to directors of the Company and (3) any additional information about each such designee that the Company may reasonably request), the Board of Directors shall act to

 

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increase the size of the Board of Directors and to appoint such designee or designees to the Board of Directors; provided that, if the appointment of any such designee would cause the Board of Directors to be comprised of less than a majority of Independent Directors, then such designee shall be an Independent Director.

 

(f)                                    Unclaimed Dividends . Subject to applicable law, any dividend payment unclaimed for a period of six years from the date of declaration of such dividend shall be forfeited and shall revert to the Company, and the payment by the Board of Directors of any unclaimed dividend or other sum payable on or in respect of the share into a separate account will not make the Company a trustee thereof.

 

Section 5.                                            Liquidation Rights .

 

(a)                                  Voluntary or Involuntary Liquidation . In the event of any liquidation, dissolution or winding-up of the Company as a result of any bankruptcy, reorganization, or similar proceeding, or any foreclosure by creditors of the Company on all or substantially all assets of the Company, whether voluntary or involuntary (an “ Actual Liquidation ”), then the holders of the Preference Shares then outstanding shall be entitled to receive a liquidation preference in the amount of the Liquidation Price per Preference Share, before any distribution of assets is made to the holders of Common Shares or other Junior Shares, and thereafter, the holders of the Preference Shares then outstanding shall be entitled to receive an amount equal to (x) a pro rata portion ( pro rata with the Common Shares or other Junior Shares, as applicable, determined on a per share as-converted basis assuming all Preference Shares had been converted pursuant to Section 7 ), of any assets and funds of the Company available for distribution less (y) the Liquidation Price.

 

(b)                                  Notice of Liquidation .   In the event of an Actual Liquidation, the Company shall, within ten (10) days after the date the Board of Directors approves such Actual Liquidation, or no later than twenty (20) days after any shareholders’ meeting called to approve such Actual Liquidation, or within twenty (20) days after the commencement of any involuntary proceeding in respect of an Actual Liquidation, whichever is earlier, deliver to each holder of Preference Shares written notice of the proposed Actual Liquidation (a “ Liquidation Notice ”), which written notice shall describe the material terms and conditions of such Actual Liquidation, including a description of the equity securities, cash and property to be received by the holders of Preference Shares upon consummation of the proposed Actual Liquidation and the date of delivery thereof. If any material change in the facts set forth in the Liquidation Notice shall occur, the Company shall promptly deliver written notice of such material change to each holder of Preference Shares.

 

Section 6.                                            Optional and Mandatory Redemption .

 

(a)                                  Optional Redemption upon Change of Control .

 

(i)                                                              In connection with the consummation of any (i) merger, amalgamation, consolidation or similar transaction that would result in the inability of the holders of a majority of the Voting Shares immediately prior to such transaction to elect a majority of the members of the Board of Directors (or its equivalent) of the resulting entity or its parent company or (ii) sale or series of related sales of all or substantially all of the consolidated assets of the Company and its Subsidiaries to a third party on an arm’s length basis which is approved by a majority of the

 

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Independent Directors, but in each case excluding any such merger, amalgamation, consolidation, similar transaction with, or sale to, an Affiliate of the Company, including CMIG International or its Affiliates, or any entity which the Chief Executive Officer, Chief Financial Officer, General Counsel or any Independent Director of the Company has actual knowledge is a direct shareholder of CMIG International or China Minsheng Investment Co., Ltd., then the Company may redeem all then-outstanding Preference Shares for a price per Preference Share equal to the Redemption Price.  At the option of the Company, any Redemption Price payable pursuant to this Section 6(a)(i)  may be paid in Common Shares as described in Section 6(f) .

 

(ii)                                                           In connection with the consummation of any (i) merger, amalgamation, consolidation or similar transaction that would result in the inability of the holders of a majority of the Voting Shares immediately prior to such transaction to elect a majority of the members of the Board of Directors (or its equivalent) of the resulting entity or its parent company, (ii) transaction pursuant to which any Person or group (within the meaning set forth in Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder), other than CMIG International or any of its Affiliates, becomes the beneficial owner of more than twenty percent (20%) of the outstanding equity securities of the Company and such percentage exceeds the beneficial ownership percentage of CMIG International, whether directly or indirectly and whether by stock sale, asset sale, merger, amalgamation, consolidation or otherwise or (iii) sale or series of related sales of all or substantially all of the consolidated assets of the Company and its Subsidiaries, any holder of a Preference Share may require the Company to redeem all or a portion of such holder’s Preference Shares for a price per Preference Share equal to the Redemption Price.  At the option of the Company, any Redemption Price payable pursuant to this Section 6(a)(ii)  may be paid in Common Shares as described in Section 6(f) .

 

(b)                                  Optional Redemption upon Delisting Event . In the event the Common Shares are delisted from a securities exchange on which the Common Shares were then listed and the Company has not listed or applied to list the Common Shares on any other securities exchange, any holder of a Preference Share may require the Company to redeem all of such holder’s Preference Shares for a price per Preference Share equal to the Redemption Price.  At the option of the Company, any Redemption Price payable pursuant to this Section 6(b)  may be paid in Common Shares, with each Common Share representing payment of $1.00 (as divided by the Conversion Ratio) of the amount due in respect of such Redemption Price, such issuance having already been approved and authorized by the Board of Directors.

 

(c)                                   Optional Redemptions after Year Five . After the fifth (5th) anniversary of the Issue Date, (i) any holder of a Preference Share may require the Company to redeem all of such holder’s Preference Shares for a price per Preference Share equal to the Redemption Price and (ii) the Company may redeem all of the Preference Shares for a price per Preference Share equal to the Liquidation Price.  At the option of the Company, any Redemption Price or Liquidation Price payable pursuant to this Section 6(c)  may be paid in Common Shares as described in Section 6(f) .

 

(d)                                  Mandatory Redemption upon Involuntary Liquidation or Run-off of a Principal Operating Company .  In the event (i) of any involuntary liquidation, dissolution or winding-up of a Principal Operating Company as a result of any bankruptcy, reorganization or similar proceeding, (ii) of any involuntary supervision or run-off of any Principal Operating

 

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Company, (iii) of any foreclosure by creditors of any Principal Operating Company on all or substantially all assets of, or equity interests in, such Principal Operating Company or (iv) that the Principal Operating Companies are disapproved for writing any business globally from insurance or reinsurance intermediaries or direct cedants representing a majority of gross written premiums of the Principal Operating Companies in the aggregate (determined based on the aggregate gross written premiums of the Principal Operating Companies for the previous fiscal year), then the Company shall, subject to it not being prohibited by then-applicable law, redeem all then-outstanding Preference Shares for a price per Preference Share equal to the Liquidation Price.   At the option of the Company, any Liquidation Price payable pursuant to this Section 6(d)  may be paid in Common Shares with each Common Share representing payment of $1.00 (subject to adjustment for any subdivision (by any share split, recapitalization or otherwise) or combination (by combination, reverse share split or otherwise) of the Common Shares) of the amount due in respect of such Liquidation Price, such issuance having already been approved and authorized by the Board of Directors.

 

(e)                                   Redemption Event Notice . As promptly as practicable, but in no event later than twenty (20) days prior to any redemption event pursuant to Section 6(a)  and Section 6(c)  and in no event later than ten (10) days after any redemption event pursuant to Section 6(b)  and Section 6(d)  (each, a “ Redemption Event ”), the Company shall send written notice (a “ Redemption Notice ”) of the Redemption Event or anticipated Redemption Event, as applicable, to each holder of record of Preference Shares. Each Redemption Notice shall state:

 

(i)                                                         the date and a general description of the Redemption Event or anticipated Redemption Event, as applicable and the estimated Redemption Price or Liquidation Price, as applicable, payable in connection therewith;

 

(ii)                                                      the date, manner and place designated for surrender by the holder to the Company of his, her or its certificate or certificates representing the Preference Shares to be redeemed (such date, which shall be no earlier than (10) days after the date of the Redemption Notice and, in the case of a redemption pursuant to Section 6(a)(i)  or Section 6(a)(ii) , shall be before the effective date of the transaction described therein, the “ Redemption Date ”); and

 

(iii)                                                   that the holder is entitled to convert its Preferences Shares at its option pursuant to Section 7(b)  prior to the Redemption Date.

 

(f)                                    Payment of Redemption Amount .  In exchange for the surrender to the Company by the respective holders of Preference Shares of their certificate(s) and accompanying materials in accordance with Section 6(i)  below, the aggregate Redemption Price or Liquidation Price, as applicable, for the Preference Shares being redeemed shall be payable (i) in cash in immediately available funds to the applicable holders of the Preference Shares on the applicable Redemption Date, except to the extent prohibited by applicable Bermuda law, and/or (ii) at the Company’s option in the event of any redemption pursuant to Section 6(a) , Section 6(c)  or Section 6(d) , in Redemption Shares (a “ Cashless Redemption ”), pro rata  among the holders of such Preference Shares to be redeemed in proportion to the aggregate number of Preference Shares to be redeemed on the Redemption Date, but only to the extent that such Redemption Shares represent 15% or less of the Public Float.  In the event any Preference Share is redeemed pursuant to a Cashless Redemption, such Preference Share shall convert into that number of Common Shares as

 

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is determined by dividing (x) the Redemption Price or Liquidation Price, as applicable (in either case, plus any accrued and unpaid dividends) by (y) the greater of (I) $1.00 (as divided by the Conversion Ratio), and (II) the product of (A) 0.925 multiplied by (B) the daily volume weighted average price per Common Share as reported on the Nasdaq Stock Market (or any national securities exchange on which the Common Shares are then listed) for the trading days during a period of 30 consecutive days ending on the day prior to the date of the Redemption Notice; provided that such volume weighted average price shall exclude the effects of any purchase or sale of Common Shares by the Company, CMIG International or their respective Affiliates and any number of Common Shares which the Chief Executive Officer, Chief Financial Officer, General Counsel or any Independent Director of the Company has actual knowledge was purchased or sold by a direct shareholder of CMIG International or China Minsheng Investment Co., Ltd. during such period aggregating to more than 1% of the then-outstanding Common Shares.  In the event the Company has elected a Cashless Redemption and less than all of the Preference Shares being redeemed are permitted to be redeemed pursuant to the Cashless Redemption, then the Company shall pay the remainder of the Redemption Price or Liquidation Price, as applicable, (1) in cash in immediately available funds and/or (2) at the Company’s option, in Common Shares, with each Common Share representing payment of $1.00 (as divided by the Conversion Ratio) of the amount due in respect of such Redemption Price or Liquidation Price, as applicable, such issuance having already been approved and authorized by the Board of Directors. Any Cashless Redemption with respect to Section 6(a)(i)  or 6(a)(ii)  shall be made in Common Shares of the Company prior to the effective time of any such transaction described in Section 6(a)(i)  or 6(a)(ii) , which Common Shares of the Company shall be issued to the applicable holders of the Preference Shares prior to such effective time.

 

(g)                                   Insufficient Funds .  If on the Redemption Date, the assets of the Company legally available are insufficient to pay the full Redemption Price or Liquidation Price, as applicable, for the total number of Preference Shares to be redeemed, then the Company shall, subject to it not being prohibited by then-applicable law, (i) take all commercially appropriate action reasonably within its means to maximize the assets legally available for paying such amount, (ii) redeem out of all such assets legally available therefor on the Redemption Date the maximum possible number of Preference Shares that it can redeem on such date, pro rata  among the holders of such Preference Shares to be redeemed in proportion to the aggregate number of Preference Shares to be redeemed by each such holder on the Redemption Date, and (iii) pay any remainder of the Redemption Price or Liquidation Price in Common Shares as provided in this Section 6 .

 

(h)                                  Remedies for Nonpayment .

 

(i)                                                         If on the Redemption Date, all of the Preference Shares to be redeemed pursuant to a Redemption Notice are not redeemed in full by the Company by paying the entire Redemption Price or Liquidation Price, as applicable, until such Preference Shares are fully redeemed and the aggregate Redemption Price or Liquidation Price, as applicable, is paid in full, (i) all of the unredeemed Preference Shares shall remain outstanding and continue to have the rights, preferences and privileges expressed herein, including the accrual and accumulation of dividends thereon as provided in Section 4(a)  and Section 4(b)  and (ii) the Company shall owe an amount equal to (A) 125% of all amounts due pursuant to this Section 6 (including, without limitation, the aggregate Redemption Price or Liquidation Price, as applicable) that have not yet

 

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been paid plus (B) interest on such amount that shall accrue daily in arrears at a rate equal to twelve (12%) per annum, compounded quarterly.  For so long as such amounts are due and have not been paid in full, the Company shall not declare or pay any dividends on the Common Shares or any other Junior Shares.

 

(ii)                                                      If any Preference Shares to be redeemed pursuant to a Redemption Notice have not been redeemed in full by the Company by paying (in cash or Common Shares) all amounts due pursuant to Section 6(h)(i) , within ninety (90) days of when due, the Designating Holders shall be entitled to designate such number of persons for appointment to the Board of Directors that would represent at least fifty-one percent (51%) of the total number of directors comprising the Board of Directors (after giving effect to their appointments) (in addition to any other rights to elect persons to the Board of Directors that the holders of Preference Shares may have), subject to the receipt or making by such holders of any regulatory approvals or regulatory filings under applicable laws.  Promptly after receipt by the Company of notice by the Designating Holders designating such persons to the Board of Directors pursuant to this Section 6(h)(ii)  (together with, for each such designee (1) an executed irrevocable letter of resignation in a form satisfactory to the Company pursuant to which such designee shall resign from the Board of Directors effective concurrently with the remedy of the failure to pay giving rise to such designee’s appointment, (2) an executed and completed questionnaire in the form customarily provided to directors of the Company and (3) any additional information about such designee that the Company may reasonably request), the Board of Directors shall act to increase the size of the Board of Directors and to appoint such each such designee to the Board of Directors; provided that, if the appointment of any such designee would cause the Board of Directors to be comprised of less than a majority of Independent Directors (as defined in the Shareholders Agreement), then such designee shall be an Independent Director.

 

(i)                                      Surrender of Certificates . On or before the Redemption Date, each holder of Preference Shares shall surrender the certificate or certificates representing such Preference Shares to the Company, in the manner and place designated in the Redemption Notice, accompanied by duly executed instruments of transfer relating thereto, or, in the event the certificate or certificates are lost, stolen or missing, shall deliver an indemnity, in the manner and place designated in the Redemption Notice. Each surrendered certificate shall be canceled and retired and the Company; provided , that if less than all the Preference Shares represented by a surrendered certificate are redeemed, then a new share certificate representing the unredeemed Preference Shares shall be issued in the name of the applicable holder of record of the canceled share certificate.

 

(j)                                     Procedures for Cashless Redemption . In the event of any Cashless Redemption, upon the surrender of such certificate(s) and accompanying materials, the Company shall as promptly as practicable (but in any event within ten (10) days thereafter) cause the transfer agent for the Common Shares to deliver to the relevant holder a certificate or make a book entry notation in such holder’s name (or the name of such holder’s designee as stated in the written election) for the number of Common Shares to which such holder shall be entitled upon a Cashless Redemption of the applicable Preference Shares.

 

(k)                                  Rights Subsequent to Redemption . If on the Redemption Date, the Redemption Price or Liquidation Price, as applicable, is paid (or tendered for payment) for any of

 

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the Preference Shares to be redeemed on such Redemption Date, regardless of whether certificate(s) and accompanying materials have been surrendered pursuant to Section 6(i) , then on such date all rights of the holder in the Preference Shares so redeemed and paid or tendered, including any rights to dividends on such Preference Shares, shall cease, and such Preference Shares shall no longer be deemed issued and outstanding. Any redemption of Preference Shares under this Section 6 shall not be taken as reducing the amount of the Company’s authorized share capital.

 

Section 7.                                            Conversion .

 

(a)                                  Automatic Conversion . If (i) (x) the daily volume weighted average price per Common Share as reported on the Nasdaq Stock Market (or any national securities exchange on which the Common Shares are then listed) for the trading days during a period of 30 consecutive days ( provided that such volume weighted average price shall exclude the effects of any purchase or sale of Common Shares by the Company, CMIG International or their respective Affiliates and any number of Common Shares which the Chief Executive Officer, Chief Financial Officer, General Counsel or any Independent Director of the Company has actual knowledge was purchased or sold by a direct shareholder of CMIG International or China Minsheng Investment Co., Ltd. during such period aggregating to more than 1% of the then-outstanding Common Shares, plus (y) the aggregate per share amounts of all dividends and distributions paid on the Common Shares since the Issue Date (other than dividends or distributions payable in the form of Common Shares), in each case, subject to adjustment as applicable for any subdivision (by any share split, recapitalization or otherwise) or combination (by combination, reverse share split or otherwise) or dividend or distribution in the form of Common Shares, equals or exceeds an amount equal to 1.40 multiplied by the Conversion Price and (ii) on the last day of such period, the Conversion Shares represent 25% or less of the Public Float (the occurrence of clause (i) and (ii), the “ Mandatory Conversion Event ”), then, in accordance with and subject to Section 7(c) , each outstanding Preference Share shall convert into that number of Common Shares as is determined by dividing (x) the Issue Price by (y) the applicable Conversion Price then in effect (such ratio, the “ Conversion Ratio ”), and such holder shall be entitled to receive a sum in cash equal to any accrued and unpaid cash dividends as of the date of such Mandatory Conversion Event.  Notwithstanding the foregoing, if any proposed Qualified Sale Transaction (as such term is defined in the Shareholders Agreement) has been approved by a majority of the Independent Directors on the Board of Directors in accordance with Section 4(a) of the Shareholders Agreement, then no Mandatory Conversion Event shall occur during the period beginning from the date of such approval and ending on the date of consummation of such Qualified Sale Transaction or, if earlier, the date that the definitive agreement relating to such Qualified Sale Transaction is terminated, and the 30 consecutive day period calculated pursuant to Section 7(a)(i)(x)  shall not include any day within that period, but shall be tolled during the pendency of that period.

 

(b)                                  Optional Conversion .  At the option of any holder of Preference Shares, such holder may elect, by notice to the Company from time to time prior to the occurrence of any Mandatory Conversion Event (such notice, a “ Conversion Election Notice ”), to cause the Company to convert any or all of such holder’s Preference Shares into that number of Common Shares as is determined by multiplying the number of Preference Shares subject to such conversion by the Conversion Ratio then in effect on the date of the Conversion Election Notice, and such holder shall be entitled to receive a sum in cash equal to any accrued and unpaid cash dividends

 

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as of the date of the Optional Conversion Event.  The Conversion Election Notice shall specify the number of Preference Shares held by such holder that shall be converted, which shall be no fewer than 1,000 Preference Shares or all of such holder’s Preference Shares if less.

 

(c)                                   Procedures for Mandatory Conversion .  Within five (5) Business Days after the Mandatory Conversion Event, the Company shall send each holder of Preference Shares written notice of such event (the “ Mandatory Conversion Notice ”), which shall include a reasonably detailed explanation of the Company’s calculation of the number of Conversion Shares issuable pursuant thereto.  Within five (5) Business Days after receipt of the Mandatory Conversion Notice, any holder may send written notice to the Company of its objection to any of the Company’s calculations (an “ Objection Notice ”), and the Company and the holders of the Preference Shares shall work together in good faith to resolve such dispute within five (5) Business Days. If such dispute has not been resolved by the parties within such five (5) Business Days, the parties shall appoint an independent accounting firm mutually agreed by them to make a determination, which shall be conclusive and binding absent manifest or mathematical error.  No later than ten (10) Business Days after the date of the Mandatory Conversion Notice or, if any holder has delivered an Objection Notice, five (5) Business Days after such dispute has been resolved in accordance with the foregoing provisions (unless, after delivery of an Objection Notice the parties or such independent accounting firm have determined that a Mandatory Conversion Event has not occurred), each holder shall surrender to the Company the certificate or certificates representing the Preference Shares held by such holder accompanied by duly executed instrument of transfer relating thereto or, in the event the certificate or certificates are lost, stolen or missing, accompanied by an indemnity executed by the holder. Upon the surrender of such certificate(s) and accompanying materials, the Company shall as promptly as practicable (but in any event within ten (10) days thereafter) cause the transfer agent for the Common Shares to deliver to the relevant holder a certificate or make a book entry notation in such holder’s name (or the name of such holder’s designee as stated in the written election) for the number of Common Shares to which such holder shall be entitled upon conversion of the applicable Preference Shares.  Notwithstanding anything in this Certificate of Designation to the contrary, if the Company delivers a Mandatory Conversion Notice pursuant to this Section 7(c) , each holder shall be entitled to first exercise its conversion right pursuant to Section 7(b) , or at its option, its redemption right pursuant to Section 6 before any such conversion by the Company.

 

(d)                                  Procedures for Optional Conversion .  Within five (5) Business Days after a holder of Preference Shares delivers to the Company a Conversion Election Notice, the Company shall send such holder a reasonably detailed explanation of the Company’s calculation of the number of Conversion Shares issuable pursuant thereto.  Within five (5) Business Days after receipt of the Company’s calculation, such holder may send an Objection Notice, and the Company and such holder shall work together in good faith to resolve such dispute within five (5) Business Days. If such dispute has not been resolved by the parties within such five (5) Business Days, the parties shall appoint an independent accounting firm mutually agreed by them to make a determination, which shall be conclusive and binding absent manifest or mathematical error.  No later than ten (10) Business Days after the date of the Conversion Election Notice or, if such holder has delivered an Objection Notice, five (5) Business Days after such dispute has been resolved in accordance with the foregoing provisions, each holder shall surrender to the Company, in the manner and place designated by the Company, the certificate or certificates representing the Preference Shares held by such holder subject to such conversion accompanied by duly executed

 

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instrument of transfer relating thereto or, in the event the certificate or certificates are lost, stolen or missing, accompanied by an indemnity executed by the holder; provided , that if less than all the Preference Shares represented by a surrendered certificate are to be converted, then a new share certificate representing the remaining Preference Shares shall be issued in the name of the applicable holder of record of the canceled share certificate. Upon the surrender of such certificate(s) and accompanying materials, the Company shall as promptly as practicable (but in any event within ten (10) days thereafter) cause the transfer agent for the Common Shares to deliver to the relevant holder a certificate or make a book entry notation in such holder’s name (or the name of such holder’s designee as stated in the written election) for the number of Common Shares to which such holder shall be entitled upon conversion of the applicable Preference Shares.

 

(e)                                   Rights Subsequent to Conversion . All Preference Shares converted as provided in this Section 7 , regardless of whether certificate(s) and accompanying materials have been surrendered pursuant to Section 7(c)  or Section 7(d) , shall no longer be deemed outstanding as of the effective time of the applicable conversion and all rights with respect to such Preference Shares shall immediately cease and terminate as of such time (including, without limitation, any right of redemption pursuant to Section 6 ), other than the right of the holder to receive Common Shares and payment in lieu of any fraction of a Common Share in exchange therefor.

 

(f)                                    Limit on Conversion .

 

(i)                                                         Notwithstanding anything contained herein to the contrary, the Company shall not effect any Cashless Redemption pursuant to Section 6 or any conversion pursuant to this Section 7 with respect to any holder of Preference Shares to the extent that, after giving effect to such conversion, such holder (together with such holder’s affiliates and any other Person acting as a group together with such holder or any of such holder’s affiliates), would beneficially own in excess of 19.99% of the outstanding Common Shares, unless the Company obtains such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any national securities exchange on which the Common Shares are then listed) from the shareholders of the Company with respect to the issuance of Common Shares resulting in the beneficial ownership by such holder (and such holder’s affiliates and any other Persons acting as a group together with such holder or any of such holder’s affiliates) of in excess of 19.99% of the outstanding Common Shares. For purposes of the foregoing sentence, the number of Common Shares beneficially owned by such holder and its affiliates shall include the number of Conversion Shares represented by such holder’s and its affiliates’ Preference Shares, but shall exclude the number of Common Shares that would be issuable upon exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other securities of the Company or its Subsidiaries that would entitle the holder thereof to acquire at any time Common Shares) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by such holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 7(f) , beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  In addition, for purposes of this Section 7(f) , “group” has the meaning set forth in Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.   Any determination of whether the limitation contained in this Section 7(f)(i)  applies shall be in the sole discretion of the Company.

 

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(ii)                                                      In addition, notwithstanding anything contained herein to the contrary, the Company shall not effect any Cashless Redemption pursuant to Section 6 or any conversion pursuant to this Section 7 with respect to any holder of Preference Shares to the extent that such conversion and the resulting issuance of Common Shares requires any regulatory approval or regulatory filing under applicable insurance laws, unless such holder obtains such approval or makes such regulatory filing prior to any such conversion and issuance.  Any determination of whether the limitation contained in this Section 7(f)(ii)  applies shall be in the sole discretion of the Company.

 

(g)                                   No Charge or Payment . The issuance of certificates for Common Shares upon conversion of Preference Shares pursuant to Section 7 shall be made without payment of additional consideration by, or other charge to, the holder in respect thereof.

 

(h)                                  No Conversion after Redemption . From and after the occurrence of any Redemption Event with respect to any Preference Shares pursuant to Section 6 , the conversion rights described herein of the Preference Shares designated for redemption shall cease and be of no further force or effect, unless the Redemption Price or Liquidation Price, as applicable, is not fully paid on such redemption date, in which case the conversion rights for such Preference Shares shall continue until such price is paid in full.

 

(i)                                      Adjustment to Conversion Price and Number of Conversion Shares . In order to prevent dilution of the conversion rights granted under this Section 7 , the Conversion Price and the number of Conversion Shares issuable on conversion of the Preference Shares shall be subject to adjustment from time to time as provided in this Section 7(i) .

 

(i)                                                         If the Company shall, at any time or from time to time after the Issue Date, (A) pay a dividend or make any other distribution upon the Common Shares or other Junior Shares payable in Common Shares, other Junior Shares or any other equity or equity equivalent securities of the Company or (B) subdivide (by any share split, recapitalization or otherwise) its outstanding Common Shares into a greater number of shares, then the Conversion Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Conversion Shares issuable upon conversion of the Preference Shares shall be proportionately increased. If the Company at any time combines (by combination, reverse share split or otherwise) its outstanding Common Shares into a smaller number of shares, then the Conversion Price in effect immediately prior to such combination shall be proportionately increased and the number of Conversion Shares issuable upon conversion of the Preference Shares shall be proportionately decreased. Any adjustment under this Section 7(i)  shall be calculated in good faith by the Company and become effective at the close of business on the date the dividend, subdivision or combination becomes effective.  The Company may in its sole discretion, but shall not be required to, make such decreases in the Conversion Price, in addition to those required by this Section 7(i) , as the Company considers to be advisable in order to avoid or diminish any income tax to any holders any other class of shares of the Company resulting from any dividend or distribution of shares or issuance of rights or warrants to purchase or subscribe for shares or from any event treated as such for income tax purposes or for any other reason.

 

(ii)                                                      In the event of any (A) capital reorganization of the Company, (B) reclassification of the shares of the Company (other than a change in par value or as a result of a

 

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share dividend or subdivision, split-up or combination of shares), (C) consolidation, amalgamation or merger of the Company with or into another Person, (D) sale of all or substantially all of the Company’s consolidated assets to another Person or (E) other similar transaction (other than any such transaction covered by this Section 7(i) ) (each, a “ Fundamental Transaction ”), in each case which entitles the holders of Common Shares to receive (either directly or upon subsequent liquidation) shares, securities or assets with respect to or in exchange for Common Shares, then each Preference Share shall, immediately after such Fundamental Transaction, be exercisable for the kind and number of shares or other securities or assets of the Company or of the successor Person resulting from such Fundamental Transaction to which such Preference Share would have been entitled upon such Fundamental Transaction if the Preference Share had been converted in full immediately prior to the time of such Fundamental Transaction and acquired the applicable number of Conversion Shares then issuable hereunder as a result of such conversion; and, in such case, appropriate adjustment shall be made with respect to such holder’s rights under this Certificate of Designation to insure that the ranking and senior nature of the securities and the provisions of this Section 7 shall thereafter be applicable, as nearly as possible, to the Preference Shares in relation to any shares, securities or assets thereafter acquirable upon conversion of Preference Shares hereunder (including, in the case of any Fundamental Transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Conversion Price to the value per share for the Common Shares reflected by the terms of such Fundamental Transaction, and a corresponding immediate adjustment to the number of Conversion Shares acquirable upon conversion of the Preference Shares without regard to any limitations or restrictions on conversion, if the value so reflected is less than the Conversion Price in effect immediately prior to such Fundamental Transaction). The provisions of this Section 7(k)  shall similarly apply to successive Fundamental Transactions. The Company shall not effect any such Fundamental Transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, amalgamation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Certificate of Designation, the obligation to deliver to the holders of Preference Shares such shares, securities or assets which, in accordance with the foregoing provisions, such holders shall be entitled to receive upon conversion of the Preference Shares.

 

(j)                                     Notice of Adjustment .  As promptly as reasonably practicable following any adjustment of the Conversion Price, but in any event not later than thirty (30) days thereafter, the Company shall furnish to each holder of record of Preference Shares at the address specified for such holder in the books and records of the Company (or at such other address as may be provided to the Company in writing by such holder) a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

 

(k)                                  Other Notices . In the event: (i) that the Company shall take a record of the holders of its Common Shares (or other shares or securities at the time issuable upon conversion of the Preference Shares) for the purpose of entitling or enabling them to receive any dividend or other distribution upon the Common Shares payable in Common Shares, other Junior Shares or any other equity or equity equivalent securities of the Company, to vote at a meeting (or by written consent) or to receive any right to subscribe for or purchase any shares of any class or any other securities or (ii) of any Fundamental Transaction, the Company shall send or cause to be sent to

 

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each holder of record of Preference Shares in the books and records of the Company (or at such other address as may be provided to the Company in writing by such holder) at least thirty (30) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or right or action to be taken at such meeting or by written consent or (B) the effective date on which such Fundamental Transaction is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Shares (or such other capital stock or securities at the time issuable upon conversion of the Preference Shares) shall be entitled to exchange their Common Shares (or such other capital stock or securities) for securities or other property deliverable upon such Fundamental Transaction, and the amount per share and character of such exchange applicable to the Preference Shares and the Conversion Shares.

 

Section 8.                                            Voting Rights .

 

(a)                                  General . Each Preference Share shall have voting power equal to the number of Common Shares into which it is then convertible pursuant to Section 7 as of the record date of such vote or written consent or, if there is no specified record date, as of the date of such vote or written consent, and, except as otherwise provided herein or required by law, the Preference Shares and Common Shares shall vote together as a single class with respect to any and all matters presented to the shareholders of the Company for their action or consideration (whether at a meeting of shareholders of the Company, by written resolutions of shareholders of the Company in lieu of a meeting, or otherwise).

 

(b)                                  Voting on Variations of Rights . Notwithstanding the Bye-Laws, without the prior affirmative vote or written consent of the holders of at least a majority of the outstanding Preference Shares voting separately as a single class with one vote per Preference Share, the Company shall not (i) amend, alter or repeal the Memorandum of Association or Bye-Laws or any organizational documents of any Subsidiary of the Company, (ii) enter into any transaction with any related person (within the meaning of Item 404 of Regulation S-K), other than any such transaction contemplated by this Certificate of Designation, the Subscription Agreements or the Shareholders Agreement or any such transaction that is approved in accordance with the Company’s Related Person Transactions Policy or (iii) amend, alter or repeal the Company’s Related Person Transactions Policy, in each case, in a manner that would adversely affect the rights, preferences and powers of the holders of Preference Shares or Conversion Shares (it being understood that (x) any amendment, alteration or repeal of the Memorandum of Association or Bye-Laws of the Company in order to effect the provisions of this Certificate of Designation or (y) any amendment or alteration of the Company’s Related Person Transactions Policy in order to reflect the provisions of Item 404 of Regulation S-K as it may be amended by the Commission after the Issue Date shall not be deemed to adversely affect the rights, preference and powers of the holders of Preference Shares or Conversion Shares).

 

(c)                                   Termination of Voting Rights .  This Section 8 will not apply if, at or prior to the record date of such vote or written consent, all outstanding Preference Shares shall have been redeemed in accordance with Section 6 or converted into Common Shares in accordance with Section 7 .

 

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Section 9.                                            Amendments or Modifications; Waiver .

 

(a)                                  To the extent permitted by applicable law, the Board of Directors may modify the terms of this Certificate of Designation without the consent of any holder of Preference Shares for any of the following purposes:

 

(i)                                                         to evidence the succession of another person to the Company’s obligations;

 

(ii)                                                      to add to the covenants for the benefit of the holders of the Preference Shares or to surrender any of the Company’s rights or powers under the Preference Shares;

 

(iii)                                                   to cure any ambiguity to correct or supplement any provisions that may be inconsistent; provided that such action shall not adversely affect the interest of the holders of the Preference Shares; or

 

(iv)                                                  to make any other provision with respect to such matters or questions arising under this Certificate of Designation which the Company may deem desirable and which shall not adversely affect the interests of the holders of the Preference Shares, including with respect to the matters set forth in Section 2(z) .

 

(b)                                  Except as provided in Section 9(c) , this Certificate of Designation may be amended, modified or supplemented, and noncompliance in any particular instance with any provision of this Certificate of Designation or the Preference Shares may be waived, in each case with the affirmative vote or written consent of the holders of at least a majority of the Preference Shares then outstanding, including any modification occurring in connection with any merger, amalgamation or consolidation of the Company or otherwise.

 

(c)                                   The Board of Directors may, subject to the prior written consent or the affirmative vote of the holders of at least a majority of the Preference Shares, amend the terms of this Certificate of Designation or the rights, powers, preferences and privileges of the holders of the Preference Shares; provided , that no such amendment shall, without the consent of the holder of each outstanding Preference Share affected by the amendment:

 

(i)                                                         change any Quarterly Dividend Date;

 

(ii)                                                      reduce the rate of dividends payable pursuant to Section 4(b) ;

 

(iii)                                                   reduce the Redemption Price or Liquidation Price;

 

(iv)                                                  increase the Conversion Price or the Issue Price;

 

(v)                                                     change the place or currency of payment, which shall be in U.S. Dollars;

 

(vi)                                                  change the percentage of the Preference Shares whose holders must approve any amendment or modification; or

 

(vii)                                               impair the right to institute suit for the enforcement of this Certificate of Designation.

 

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Section 10.                                     Reservation of Shares; Status of Shares; Fractional Shares .

 

(a)                                  Reservation of Shares . The Company shall at all times when any Preference Shares are outstanding (i) reserve and keep available out of its authorized but unissued shares, solely for the purpose of issuance upon the conversion of the Preference Shares, such number of Common Shares that may be issuable from time to time upon the redemption of all outstanding Preference Shares pursuant to Section 6 or the conversion of all outstanding Preference Shares pursuant to Section 7 and (ii) authorize for issuance and take all actions necessary to cause the issuance of any such Common Shares issuable pursuant to Section 6 or Section 7 . The Company shall take all such actions (including but not limited to receiving any permissions or declarations of no objection from the Bermuda Monetary Authority) as may be necessary to assure that all such Common Shares may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which Common Shares may be listed (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance).

 

(b)                                  Status of Shares . All Common Shares issued hereunder by the Company shall be duly and validly issued, fully paid and nonassessable, free and clear of all taxes, liens, charges and encumbrances with respect to the issuance thereof (other than those arising under state or federal securities laws).

 

(c)                                   Fractional Shares . No fractional Common Shares will be issued hereunder. In lieu of any fractional shares that would otherwise be issuable, the Company shall pay the holder an amount of cash equal to the product of such fraction multiplied by the closing price of one Common Share as reported on the principal securities exchange for the Common Shares on the date of the applicable Cashless Redemption, Mandatory Conversion Event or Optional Conversion Event, as applicable.

 

Section 11.                                     Preemptive and Other Rights .

 

(a)                                  Except as set forth in this Section 11 , holders of the Preference Shares shall not have any rights of preemption whatsoever as to any securities of the Company, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.

 

(b)                                  If the Company proposes to issue and sell any Senior Shares or Parity Shares, in each case that are convertible into Common Shares, then the Company shall, by notice to each holder of Preference Shares, offer to sell to such holder (such offer, an “ Offer to Sell ”), on the same terms and conditions, such Senior Shares or Parity Shares on a pro rata basis in proportion to the percentage of Preference Shares held by such holder. The Offer to Sell shall include: (i) the date of the anticipated sale, which date shall be at least ten (10) Business Days after the Offer to Sell (the “ Sale Date ”), (ii) the terms of such Senior Shares or Parity Shares, (iii) the number or amount of such Senior Shares or Parity Shares being offered to such holder and (iv) the price per Senior Share or Parity Share (the “ Sale Price ”).  In order to accept the Offer to Sell, such holder shall notify the Company no later than 5:00 p.m. (New York City time) on the date that is nine (9) Business Days after the date of the Offer to Sell (the “ Offer Acceptance Notice ”).  A failure by such holder to accept the Offer to Sell within the specified time period or to pay the Sale

 

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Price to the Company in immediately available funds on the Sale Date shall in either case be deemed to constitute a rejection of such offer by such holder, and the Company may thereafter complete the issuance and sale of such Senior Shares or Parity Shares on the terms specified in the Offer to Sell without the participation of such holder.  If so indicated in its Offer Acceptance Notice, any accepting holder shall be entitled to purchase, on a pro rata basis with each other accepting holder of Preference Shares that so indicated, Senior Shares or Parity Shares subject to a rejected Offer to Sell.

 

(c)                                   Issuances of Senior Shares or Parity Shares .  From and after the Issue Date and other than the Preference Shares, the Company will not, without the prior written consent of the holders of a majority of the Preference Shares, issue any Senior Shares or Parity Shares if the aggregate gross proceeds of which (together with all other such Senior Shares and Parity Shares) equal or exceed $100 million.

 

(d)                                  Certain Other Rights and Protections .  In addition to the rights granted to the Preference Shares and the holders thereof pursuant to this Certificate of Designation, the Preference Shares shall be entitled to the benefits of any rights attaching to the Common Shares generally, including, without limitation, the right to participate in any rights offerings.

 

Section 12.                                     Miscellaneous .

 

(a)                                  Withholding Taxes . In the event that the Company or its agent determines that they are obligated to withhold or deduct any tax or other governmental charge under any applicable law on behalf of a holder of Preference Shares, notwithstanding anything else to the contrary herein, the Company or its agent shall be entitled, but not obligated, to deduct and withhold such amount by withholding any property (including, without limitation, Common Shares or cash) that would otherwise be delivered to or is owned by such holder, in each case in such amounts as is required to meet the withholding obligations, and shall also be entitled, but not obligated, to sell all or a portion of such withheld property by public or private sale in such amounts and in such manner as they deem necessary and practicable to pay such taxes and charges. Any amount or property withheld in accordance with this section shall be treated for all purposes of this Certificate of Designation as having been paid to the holder in respect of which such deduction and withholding was made.

 

(b)                                  Limitations on Transfer and Ownership . The holders of Preference Shares shall be subject to the limitations on transfer and ownership contained in the Subscription Agreements and the Bye-laws.

 

(c)                                   Information Rights .

 

(i)                                                    Within ten (10) days following the filing by the Company of any Form 10-Q or Form 10-K with the Commission, the Company shall deliver to each holder of Preference Shares its then-current calculation of the Conversion Price and the Redemption Price.

 

(ii)                                                 At the request of any holder of Preference Shares (which each holder may make up to four times per calendar year), the Company shall, within five (5) days of receipt of any such request, provide such holder with the calculation most recently delivered pursuant to Section 12(c)(i) .

 

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(iii)                                              In the event the Common Shares are delisted from a securities exchange on which the Common Shares were then listed and the Company has not listed or applied to list the Common Shares on any other securities exchange and is not otherwise voluntarily making filings with the SEC that would otherwise be required by Section 13(a) or 15(d) under the Exchange Act as if it were subject thereto, and for so long as the Common Shares are not then listed on a securities exchange, then the Company shall provide to each holder of Preference Shares:

 

(A)                 Within 60 days (or, with respect to the first three fiscal quarters after which the Company has elected (an “ Accounting Principles Election ”) to prepare and deliver financial statements in conformity with International Financial Reporting Standards (“ IFRS ”) or generally accepted accounting principles in the United Kingdom (“ UK GAAP ”), within 75 days) after the end of the first three fiscal quarters of each fiscal year (beginning with the first fiscal quarter ending after such event), an unaudited consolidated balance sheet of the Company and its Subsidiaries as of the close of such fiscal quarter and unaudited consolidated statements of income, retained earnings and cash flows, including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the corresponding period in the preceding fiscal year and prepared by the Company in accordance with generally accepted accounting principles in the United States (or, following an Accounting Principles Election, IFRS or UK GAAP);

 

(B)                 Within 120 days (or, with respect to the first fiscal year with respect to which an Accounting Principles Election is made, within 150 days) after the end of each fiscal year (beginning with the first fiscal year ending after such event), an audited consolidated balance sheet of the Company and its Subsidiaries as of the close of such fiscal year and audited consolidated statements of income, retained earnings and cash flows, including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the preceding fiscal year and prepared by the Company in accordance with generally accepted accounting principles in the United States (or, following an Accounting Principles Election, IFRS or UK GAAP); such annual financial statements shall be audited by an independent certified public accounting firm of recognized national standing, and accompanied by a report and opinion thereon by such certified public accountants prepared in accordance with generally accepted auditing standards that is not subject to any “going concern” or similar qualification or exception or any qualification as to the scope of such audit;

 

(C)                 Within ten (10) days following delivery to the members of the Board of Directors (or any committee thereof), any materials provided to the members of the Board of Directors (or any committee thereof); and

 

(D)                 If a holder of Preference Shares requests in writing information about the Company or its subsidiaries in order to comply with disclosure requirements under laws and regulations applicable to such holder (excluding any information with respect to taxes, which information rights shall be governed by the terms of the Subscription Agreement), the Company shall use its commercially reasonable efforts to provide such additional information to such holder as soon as practicable after such written request has been received;

 

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; provided that the Company need not provide any such financial statements, materials or other information to any Person that is engages in the insurance, reinsurance and insurance services business, or any Affiliate of the foregoing.

 

(d)                                  Other Rights .

 

(i)                                                    The Preference Shares shall not have any voting powers, preferences or relative, participating, optional or other special rights, or qualifications, limitations or restrictions other than as set forth in this Certificate of Designation, the Memorandum of Association, the Bye-laws, the Subscription Agreements or applicable law. For the avoidance of doubt, the Preference Shares shall not in any way give rise to any rights of set-off, recoupments or counterclaims against any claims and obligations of the Company to any Person in whose names the Preference Shares of such series are registered or any creditor of the Company.

 

(ii)                                                 Unless prohibited by Bermuda law, the Board of Directors shall evaluate in good faith the impact of each action taken by them with respect to any outstanding class of securities of the Company or the rights of the holders thereof, or any action taken by them with respect the holders of any outstanding class of securities of the Company, in each case on the holders of each class of securities of the Company before taking any such action.

 

(e)                                   Anti-Avoidance .  The Company shall not, without the prior written consent of Holders of a majority of the Preference Shares, take any voluntary action, by amendment to this Certificate of Designation or Bye-Laws or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, that would prohibit the Company from performing or that would conflict with the performance of any of the terms to be observed or performed hereunder by the Company, including with respect to Section 4 , Section 5 , Section 6 and Section 7 , but will at all times in good faith perform all of its obligations under this Certificate of Designation.

 

(f)                                    Record Holders . To the fullest extent permitted by applicable law, the Company may deem and treat the record holder of any Preference Shares as the true beneficial owner thereof for all purposes, and the Company shall not be affected by any notice to the contrary.

 

(g)                                   Calculation in Respect of Preference Shares . The Company will be responsible for making all calculations called for in respect of the Preference Shares, including, but not limited to, the determination of the Redemption Price and Liquidation Price and the dividends payable on the Preference Shares. Any calculations made in good faith and without mathematical or manifest error will be final and binding on holders of the Preference Shares. All calculations made pursuant to this Certificate of Designation shall be made pursuant to the nearest cent.  At the request of any holder of Preference Shares, the Company shall provide the basis of any such calculation prepared in respect of the Preference Shares and at the request of the holders of a majority of the Preference Shares, the Company shall have any such calculation reviewed by the Company’s accounting firm.

 

(h)                                  Severability . In the event any provision of this Certificate of Designation shall be invalid, unenforceable or illegal, then, to the fullest extent permitted by applicable law,

 

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the validity, enforceability and legality of the remaining provisions shall not in any way be affected or impaired thereby.

 

(i)                                      Dispute Resolution . NOTWITHSTANDING THE PLACE WHERE THIS CERTIFICATE OF DESIGNATION MAY BE EXECUTED OR DELIVERED, THE COMPANY AND EACH HOLDER OF PREFERENCE SHARES EXPRESSLY AGREE THAT THIS CERTIFICATE OF DESIGNATION AND THE PREFERENCE SHARES SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS OF SUCH JURISDICTION. Any and all suits, legal actions or proceedings arising out of this Certificate of Designation, the Preference Shares or the transactions contemplated hereby shall be brought in the courts of the State of New York or the United States District Court for the Southern District of New York and the Company and each holder hereby submit to and accept the exclusive jurisdiction of such courts for the purpose of such suits, legal actions or proceedings. In any such suit, legal action or proceeding, the Company and each holder waive personal service of any summons, complaint or other process and agree that service thereof may be made by certified or registered mail directed to it pursuant to Section 12(k) . To the fullest extent permitted by law, the Company and each holder hereby irrevocably waive any objection which it may now or hereafter have to the laying of venue or any such suit, legal action or proceeding in any such court and hereby further waive any claim that any such suit, legal action or proceeding brought in any such court has been brought in an inconvenient forum. THE COMPANY AND EACH HOLDER (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY IRREVOCABLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS CERTIFICATE OF DESIGNATION, THE PREFERENCE SHARES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(j)                                     Specific Performance .  The parties agree that irreparable damage is likely to occur and that the parties will not have an adequate remedy at law in the event that any of the provisions of this Certificate of Designation is not performed in accordance with its specific term or is otherwise breached or threatened to be breached.  It is accordingly agreed that the parties shall be entitled to injunctive relief, including, but not limited to, a temporary restraining order, preliminary injunction or permanent injunction, to prevent any breach or threatened breach of any payment obligation pursuant to this Certificate of Designation or to enforce specifically the terms and provisions of any payment obligation arising under this Certificate of Designation, this being in addition and without prejudice to any other remedy to which they are entitled at law or in equity.  Each party in advance agrees to waive any requirement for the securing of such remedy, including but not limited to the posting of a bond.

 

(k)                                  Notices .  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile (followed by reputable overnight courier service), e-mail (followed by reputable overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the other parties as follows:

 

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(i)                                                    if to a holder of Preference Shares, to the address of such holder set forth in the Register of Members of the Company.

 

(ii)                                                 if to the Company, to:

 

c/o Sirius International Insurance Group, Ltd.

14 Wesley Street, 5th Floor

Hamilton HM11 Bermuda

Attention: Gene Boxer
E-mail: Gene.Boxer@siriusgroup.com

 

or to such other address(es) as shall be furnished in writing by any such party to the other party hereto in accordance with the provisions of this Section 12(k) .

 

(l)                                      Legend .  Certificates representing the Preference Shares, the Redemption Shares and the Conversion Shares shall initially contain the following legends: “THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, PURSUANT TO REGISTRATION OR QUALIFICATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.

 

THE SECURITIES ARE SUBJECT TO AND HAVE NOT RECEIVED APPROVAL FROM EITHER THE BERMUDA MONETARY AUTHORITY OR THE REGISTRAR OF COMPANIES IN BERMUDA AND NO STATEMENT TO THE CONTRARY, EXPLICIT OR IMPLICIT IS AUTHORISED TO BE MADE IN THIS REGARD.  THE SECURITIES MAY BE OFFERED OR SOLD IN BERMUDA ONLY IN COMPLIANCE WITH THE PROVISIONS OF THE INVESTMENT BUSINESS ACT 2003 OF BERMUDA AND THE EXCHANGE CONTROL ACT 1972 OF BERMUDA AND REGULATIONS THEREUNDER.  IN ADDITION TO THE FOREGOING, NON-BERMUDIAN PERSONS MAY NOT CARRY ON OR ENGAGE IN ANY TRADE OR BUSINESS IN BERMUDA UNLESS SUCH PERSONS ARE AUTHORIZED TO DO SO UNDER APPLICABLE BERMUDA LEGISLATION.  ENGAGING IN THE ACTIVITY OF DISTRIBUTING OR MARKETING THIS DOCUMENT IN BERMUDA TO PERSONS IN BERMUDA MAY BE DEEMED TO BE CARRYING ON BUSINESS IN BERMUDA.”

 

(m)                              Certification .  The Preference Shares and the Conversion Shares may be issued in certificated form or in book-entry form.  To the extent that any Preference Shares or Conversion Shares are issued in book-entry form, references herein to “certificates” shall instead

 

26



 

refer to the book-entry notation relating to such shares, and references herein to any delivery of such certificates shall be disregarded.

 

*                                          *                                          *

 

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IN WITNESS WHEREOF , Sirius International Insurance Group, Ltd., a Bermuda exempted company, has caused this Certificate of Designation to be signed by Allan L. Waters, its Chief Executive Officer, and attested by Conyers Corporate Services (Bermuda) Limited, its Assistant Secretary, this      day of          , 2018.

 

 

 

By:

 

 

 

Attested:

 

 

 

By:

 

 

 

 

 

Assistant Secretary

 

 

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Exhibit 4.5

 

NEITHER THIS WARRANT, NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT (COLLECTIVELY, THE “SECURITIES”), HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, PURSUANT TO REGISTRATION OR QUALIFICATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.

 

THE SECURITIES ARE SUBJECT TO AND HAVE NOT RECEIVED APPROVAL FROM EITHER THE BERMUDA MONETARY AUTHORITY OR THE REGISTRAR OF COMPANIES IN BERMUDA AND NO STATEMENT TO THE CONTRARY, EXPLICIT OR IMPLICIT IS AUTHORISED TO BE MADE IN THIS REGARD.  THE SECURITIES MAY BE OFFERED OR SOLD IN BERMUDA ONLY IN COMPLIANCE WITH THE PROVISIONS OF THE INVESTMENT BUSINESS ACT 2003 OF BERMUDA AND THE EXCHANGE CONTROL ACT 1972 OF BERMUDA AND REGULATIONS THEREUNDER.  IN ADDITION TO THE FOREGOING, NON-BERMUDIAN PERSONS MAY NOT CARRY ON OR ENGAGE IN ANY TRADE OR BUSINESS IN BERMUDA UNLESS SUCH PERSONS ARE AUTHORIZED TO DO SO UNDER APPLICABLE BERMUDA LEGISLATION.  ENGAGING IN THE ACTIVITY OF DISTRIBUTING OR MARKETING THIS DOCUMENT IN BERMUDA TO PERSONS IN BERMUDA MAY BE DEEMED TO BE CARRYING ON BUSINESS IN BERMUDA.

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

WARRANT

 

Warrant No. 2018-[ · ]

Date of Issuance: [ · ], 2018

 

Sirius International Insurance Group, Ltd., a Bermuda exempted company (the “ Company ”), hereby certifies that, for value received, [ · ], or its registered assign (the “ Holder ”), is entitled to purchase from the Company [ · ] common shares (subject to Section 4(b)  and Section 4(c) , and as adjusted from time to time as provided in Section 9 ), par value $0.01 per share (the “ Common Shares ”), of the Company, at a price per Common Share equal to $[ · ], subject to adjustment from time to time pursuant to Section 9 (the “ Exercise Price ”), subject to the following terms and conditions:

 

1. Subscription Agreement . This Warrant is issued by the Company pursuant to that certain Subscription Agreement, dated [ · ], 2018 (the “ Subscription Agreement ”), by and between the Company and the Holder and is subject to, and the Company and the Holder shall be bound by, all of the applicable terms, conditions and provisions of the Subscription Agreement.

 

2. Registration of Warrant . The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “ Warrant Register ”), in the name of the record Holder hereof from time to time. The Company may deem and treat the Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

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3. Registration of Transfers . Subject to the Holder’s appropriate compliance with the restrictive legend on this Warrant, the Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment substantially in the form attached hereto as Attachment B duly completed and signed, to the Company at its address specified herein. Upon any such registration and transfer, a new Warrant to purchase Common Shares, in substantially the form of this Warrant (any such new Warrant, a “ New Warrant ”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

 

4. Exercise and Duration of Warrants .

 

(a) This Warrant shall be exercisable by the registered Holder at any time and from time to time after the Date of Issuance set forth above to and including the date that is five (5) years following the Date of Issuance set forth above (the “ Expiration Date ”). At 5:00 p.m., New York City time, on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value. The Company may not call or redeem all or any portion of this Warrant without the prior written consent of the Holder.

 

(b) Notwithstanding anything contained herein to the contrary, the Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, to the extent that, after giving effect to such exercise, the Holder (together with the Holder’s affiliates and any individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other similar entity, whether or not a legal entity (each, a “ Person ”) acting as a group together with the Holder or any of the Holder’s affiliates), would beneficially own in excess of 19.99% of the outstanding Common Shares, unless the Company obtains such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any national securities exchange on which the Common Shares are then listed) from the shareholders of the Company with respect to the issuance of Common Shares resulting in the beneficial ownership by the Holder (and such Holder’s affiliates and any other Persons acting as a group together with the Holder or any of the Holder’s affiliates) of in excess of 19.99% of the outstanding Common Shares. For purposes of the foregoing sentence, the number of Common Shares beneficially owned by the Holder and its affiliates shall include the number of Common Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Common Shares that would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other securities of the Company or its subsidiaries that would entitle the holder thereof to acquire at any time Common Shares) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 4(b) , beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and the rules and regulations promulgated thereunder.  In addition, for purposes of this Section 4(b) , “group” has the meaning set forth in Section 13(d) of the Exchange

 

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Act and the rules and regulations promulgated thereunder.  Any determination of whether the limitation contained in this Section 4(b)  applies shall be in the sole discretion of the Company.

 

(c) In addition, n otwithstanding anything contained herein to the contrary, the Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, to the extent that such exercise and the resulting issuance of Common Shares requires any regulatory approval or regulatory filing under applicable insurance laws, unless the Holder obtains such approval or makes such regulatory filing prior to any such exercise and issuance.  Any determination of whether the limitation contained in this Section 4(c)  applies shall be in the sole discretion of the Company.

 

5. Delivery of Common Shares .

 

(a) To effect exercises hereunder, the Holder shall not be required to physically surrender this Warrant unless the total number of Common Shares (as adjusted from time to time as provided in Section 9 ) represented by this Warrant is being exercised. Upon delivery of an Exercise Notice substantially in the form attached hereto as Attachment A (an “ Exercise Notice ”) to the Company at its address for notice determined as set forth herein, and upon payment of the Exercise Price multiplied by the number of Common Shares that the Holder intends to purchase hereunder, the Company shall promptly (but in no event later than five (5) trading days after the Date of Exercise (as defined below)) issue and deliver, or cause its transfer agent to issue and deliver, to the Holder a certificate for the Common Shares issuable upon such exercise, or at the Holder’s option deliver such Common Shares in book entry form, registered in the name of the Holder or its designee. A “ Date of Exercise ” means the date on which the Holder shall have delivered to the Company: (i) an Exercise Notice, appropriately completed and duly signed, and (ii) payment of the Exercise Price (by certified or official bank check, intra-bank account transfer or wire transfer) for the number of Common Shares so indicated by the Holder to be purchased.

 

(b) If by the fifth (5 th ) trading day after a Date of Exercise the Company fails to deliver the required number of Common Shares in the manner required pursuant to Section 5(a) , the Holder will have the right to rescind such exercise.

 

(c) The Company’s obligations to issue and deliver Common Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance that might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Common Shares. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Common Shares upon exercise of this Warrant as required pursuant to the terms hereof.

 

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6. Charges, Taxes and Expenses .

 

(a)                                                 Issuance and delivery of certificated or uncertificated Common Shares upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such shares, all of which taxes and expenses shall be paid by the Company; provided , however , that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the registration of any Common Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Common Shares upon exercise hereof.

 

(b)                                                 In the event that the Company or its agent determines that they are obligated to withhold or deduct any tax or other governmental charge under any applicable law on behalf of a Holder, notwithstanding anything else to the contrary herein, the Company or its agent shall be entitled, but not obligated, to deduct and withhold such amount by withholding any property (including, without limitation, Common Shares or cash) that would otherwise be delivered to or is owned by such Holder, in each case in such amounts as is required to meet the withholding obligations, and shall also be entitled, but not obligated, to sell all or a portion of such withheld property by public or private sale in such amounts and in such manner as they deem necessary and practicable to pay such taxes and charges. Any amount or property withheld in accordance with this section shall be treated for all purposes of this Warrant as having been paid to the Holder in respect of which such deduction and withholding was made.

 

7. Replacement of Warrant . If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a new warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which shall not include a surety bond), if requested. Applicants for a new warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If a new warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver this mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the new warrant.

 

8. Reservation of Common Shares . The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Shares, solely for the purpose of enabling it to issue Common Shares upon exercise of this Warrant as herein provided, the number of Common Shares that are then issuable and deliverable upon the exercise of this entire Warrant. The Company covenants and warrants that all Common Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be validly issued, fully paid and non-assessable and free and clear of any encumbrances, preemptive rights or restrictions (other than as provided in this Warrant, the Subscription Agreement or any restrictions on transfer generally imposed under applicable securities laws).

 

9. Certain Adjustments and Notices .

 

(a)  Stock Dividends and Splits . If the Company shall, at any time or from time to time after the Date of Issuance, (i) pay a dividend or make any other distribution upon the Common Shares payable in Common Shares or any other equity or equity equivalent securities of the

 

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Company or (ii) subdivide (by any share split, recapitalization or otherwise) its outstanding Common Shares into a greater number of shares, then the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Common Shares issuable upon exercise of this Warrant shall be proportionately increased. If the Company at any time combines (by combination, reverse share split or otherwise) its outstanding Common Shares into a smaller number of shares, then the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Common Shares issuable upon exercise of this Warrant shall be proportionately decreased. Any adjustment under this Section 9(a)  shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective. The Company may in its sole discretion, but shall not be required to, make such decreases in the Exercise Price, in addition to those required by this Section 9 , as the Company considers to be advisable in order to avoid or diminish any income tax to any holders of shares of any class of shares of the Company resulting from any dividend or distribution of shares or issuance of rights or warrants to purchase or subscribe for shares or from any event treated as such for income tax purposes or for any other reason. (b)  Fundamental Transaction . In the event of any (i) capital reorganization of the Company, (ii) reclassification of the shares of the Company (other than a change in par value or as a result of a share dividend or subdivision, split-up or combination of shares), (iii) consolidation, amalgamation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than any such transaction covered by Section 9(a) ) (each, a “ Fundamental Transaction ”), in each case which entitles the holders of Common Shares to receive (either directly or upon subsequent liquidation) shares, securities or assets with respect to or in exchange for Common Shares, then each Common Share issuable pursuant to this Warrant shall, immediately after such Fundamental Transaction, be exercisable for the kind and number of shares or other securities or assets of the Company or of the successor Person resulting from such Fundamental Transaction to which the Holder would have been entitled upon such Fundamental Transaction if this Warrant had been exercised in full immediately prior to the time of such Fundamental Transaction and acquired the applicable number of Common Shares then issuable hereunder as a result of such exercise; and, in such case, appropriate adjustment shall be made with respect to Holder’s rights under this Warrant to ensure that the provisions of this Section 9 shall thereafter be applicable, as nearly as possible, to the Common Shares issuable under this Warrant in relation to any shares, securities or assets thereafter acquirable upon exercise of this Warrant and issuance of the Common Shares hereunder (including, in the case of any Fundamental Transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Shares reflected by the terms of such Fundamental Transaction, and a corresponding immediate adjustment to the number of Common Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such Fundamental Transaction). The provisions of this Section 9(b)  shall similarly apply to successive Fundamental Transactions. The Company shall not effect any such Fundamental Transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such Fundamental Transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant, the obligation to deliver to the Holder such shares, securities or assets which, in accordance with the foregoing provisions, such Holders shall be entitled to receive upon exercise of this Warrant.

 

5



 

(c)  Extraordinary Dividends . If the Company shall, at any time or from time to time after the Date of Issuance, pay a dividend or make a distribution in cash, securities or other assets to the holders of the Common Shares on account of such Common Shares (or other shares of the Company for which the Warrant is then exercisable), other than (a) as described in Section 9(a)  or (b) Common Cash Dividends (as defined below) (any such non-excluded event being referred to herein as an “ Extraordinary Dividend ”), then the Exercise Price shall be decreased, effective immediately after the payment of such Extraordinary Dividend, by the amount of cash and/or the fair market value (as determined by the Board of Directors of the Company, in good faith) of any securities or other assets paid on one Common Share in respect of such Extraordinary Dividend. For purposes of this Section 9(c) , “ Common Cash Dividends ” means any cash dividend or cash distribution which, when combined on a per share basis with the per share amounts of all other cash dividends and cash distributions paid on the Common Shares (or other shares of the Company for which the Warrant is then exercisable) during the 365-day period ending on the date of declaration of such dividend or distribution (as adjusted to appropriately reflect any of the events referred to in other subsections of this Section 9 and excluding cash dividends or cash distributions that resulted in an adjustment to the Exercise Price or to the number of Common Shares issuable on exercise of this Warrant) does not exceed $[ · ] per Common Share (and, for the avoidance of doubt, the Extraordinary Dividend shall be the amount of such excess).

 

(d)  Notice of Adjustment . As promptly as reasonably practicable following any adjustment pursuant to Section 9 , but in any event not later than thirty (30) days thereafter, the Company shall furnish to each Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.  As promptly as reasonably practicable following the receipt by the Company of a written request by Holder, but in any event not later than 30 days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Common Shares or the amount, if any, of other shares, securities or assets then issuable to such holder upon exercise of this Warrant.

 

(e)  Other Notices .  In the event: (i) that the Company shall take a record of the holders of its Common Shares (or other shares or securities at the time issuable upon exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of any class or any other securities, or to receive any other security, (ii) of any Fundamental Transaction, or (iii) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company shall send or cause to be sent to each Holder at least thirty (30) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken at such meeting or by written consent or (B) the effective date on which such Fundamental Transaction, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Shares (or such other shares or securities at the time issuable upon exercise of this Warrant) shall be entitled to exchange their Common Shares (or

 

6



 

such other shares or securities) for securities or other property deliverable upon such Fundamental Transaction, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Common Shares issuable upon exercise of this Warrant.

 

10. No Fractional Shares . No fractional Common Shares will be issued in connection with any exercise of this Warrant. In lieu of any fractional shares that would otherwise be issuable, the Company shall pay the Holder an amount of cash equal to the product of such fraction multiplied by the closing price of one Common Share as reported on the principal trading market for the Common Shares on the Date of Exercise.

 

11. No Impairment . The Company shall not by any action including, without limitation, amending its certificate of incorporation, any reorganization, transfer of assets, consolidation, merger, amalgamation, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but shall at all times in good faith assist in the carrying out of all such terms and in the taking of all such action, as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company shall take all such action as may be necessary or appropriate in order that the Company may validly issue fully paid and non-assessable Common Shares upon the exercise of this Warrant at the then Exercise Price therefor.

 

12. No Rights as a Shareholder; Notice to Holder . Nothing contained in this Warrant shall be construed as conferring upon the Holder the right to vote or to consent or to receive notice as a shareholder in respect of any meeting of shareholders for the election of directors of the Company or any other matter, or any rights whatsoever as a shareholder of the Company.

 

13. Warrant Agent . The Company shall serve as warrant agent under this Warrant. Upon thirty (30) days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

 

14. Miscellaneous .

 

(a)  Notices . Any notice or communication required or permitted hereunder (including any Exercise Notice) shall be in writing and either delivered personally, emailed, telecopied, sent by overnight mail via a reputable overnight carrier, or sent by certified or registered mail, postage prepaid, and shall be deemed to be given and received (a) when so delivered personally, (b) upon receipt of an appropriate electronic answerback or confirmation when so delivered by telecopy (to such number specified below or another number or numbers as such person may subsequently designate by notice given hereunder), (c) when sent, with no mail undeliverable or other rejection notice, if sent by email, or (d) five (5) business days after the date of mailing to the address below or to such other address or addresses as such person may hereafter designate by notice given hereunder:

 

7



 

(ii) if to the Holder, to such address appearing on the Warrant Register (which shall initially be the facsimile number and email and street address set forth for the initial Holder in the Subscription Agreement);

 

(ii) if to the Company, to:

 

Sirius International Insurance Group, Ltd.

14 Wesley Street, 5th Floor

Hamilton HM11 Bermuda

Attention: Gene Boxer

Email:             Gene.Boxer@siriusgroup.com

 

with a copy to (which shall not constitute notice to the Company):

 

Sidley Austin LLP

One South Dearborn Street

Chicago, Illinois 60603

Attention:  Sean Keyvan

Email: skeyvan@sidley.com

 

or to such other address, facsimile number or email as the Company or the Holder may provide to the other in accordance with this Section 14(a) .

 

(b)  Assignment . Subject to the restrictions on transfer described herein, the rights and obligations of the Company and the Holder shall be binding upon, and inure to the benefit of, the successors, assigns, heirs, administrators and transferees of the parties. The Company shall not have the right, directly or indirectly, to assign or transfer this Warrant without the prior written consent of the Holder, which may be withheld in the Holder’s sole discretion, unless as part of a Fundamental Transaction.

 

(c)  No Third-Party Beneficiaries . Nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant.

 

(d)  Amendments; Waiver . This Warrant may be amended only in writing signed by the Company and the Holder. Any provision of this Warrant may be waived, but only if in writing by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Warrant shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

 

(e)  Governing Law . NOTWITHSTANDING THE PLACE WHERE THIS WARRANT MAY BE EXECUTED OR DELIVERED, THE COMPANY AND THE HOLDER EXPRESSLY AGREE THAT THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE

 

8



 

CONFLICT OF LAW PROVISIONS OF SUCH JURISDICTION. Any and all suits, legal actions or proceedings arising out of this Warrant shall be brought in the courts of the State of New York or the United States District Court for the Southern District of New York and the Company and the Holder hereby submit to and accept the exclusive jurisdiction of such courts for the purpose of such suits, legal actions or proceedings. In any such suit, legal action or proceeding, the Company and the Holder waive personal service of any summons, complaint or other process and agree that service thereof may be made by certified or registered mail directed to it pursuant to Section 14(a) . To the fullest extent permitted by law, the Company and the Holder hereby irrevocably waive any objection which it may now or hereafter have to the laying of venue or any such suit, legal action or proceeding in any such court and hereby further waive any claim that any such suit, legal action or proceeding brought in any such court has been brought in an inconvenient forum. THE COMPANY AND THE HOLDER (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY IRREVOCABLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(f)  Severability . If one or more provisions of this Warrant are held to be unenforceable under applicable law in any respect, such provision shall be excluded from this Warrant and the balance of this Warrant shall be construed and interpreted as if such provision were so excluded and shall be enforceable in accordance with its remaining terms.

 

* * * * *

 

9



 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

 

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

10


 

ATTACHMENT A

 

EXERCISE NOTICE

 

To Sirius International Insurance Group, Ltd.:

 

The undersigned hereby irrevocably elects to purchase common shares of Sirius International Insurance Group, Ltd. pursuant to Warrant No.      , originally issued on [ · ], 2018 (the “ Warrant ”). The undersigned elects to utilize the following manner of exercise:

 

Shares:

 

Full Exercise of Warrant

Partial Exercise of Warrant (in the amount of            Shares)

 

Exercise Price: $

 

Manner of Exercise:

 

Certified or Official Bank Check

Intra-Bank Account Transfer

Wire Transfer

 

[Please issue a new warrant for the unexercised portion of the attached Warrant in the name of the [undersigned]/[the undersigned’s nominee as is specified below].]

 

Date:

 

Full Name of Holder*:

 

Signature of Holder / Authorized Representative:

 

Name and Title of Authorized Representative†:

 

Additional Signature of Holder (if jointly held):

 

Social Security or Tax Identification Number:

 

Address of Holder:

 

 

 

Full Name of Nominee of Holder†:

 

Address of Nominee of Holder†:

 

 

 

 


*  Must conform in all respects to name of holder as specified on the face of the Warrant.

†  If applicable.

 

Attachment A - 1



 

ATTACHMENT B

 

FORM OF ASSIGNMENT

 

[ To be completed and signed only upon transfer of Warrant ]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                 the right represented by the attached Warrant to purchase                 Common Shares of Sirius International Insurance Group, Ltd. (the “ Company ”), to which the Warrant relates and appoints                 as attorney to transfer said right on the books of the Company with full power of substitution in the premises.

 

Date:

 

Full Name of Holder*:

 

Signature of Holder / Authorized Representative:

 

Name and Title of Authorized Representative†:

 

Additional Signature of Holder (if jointly held):

 

Address of Holder:

 

 

 

Full Name of Transferee:

 

Address of Transferee:

 

 

 

In the Presence of:

 

 


*  Must conform in all respects to name of holder as specified on the face of the Warrant.

†  If applicable.

 

Attachment B - 1




Exhibit 10.2

 

Execution Version

 

SUBSCRIPTION AGREEMENT

 

This SUBSCRIPTION AGREEMENT (this “ Subscription Agreement ”) is entered into this 29th day of August, 2018, by and between Sirius International Insurance Group, Ltd., a Bermuda exempted company limited by shares (the “ Issuer ”), and [ · ], a [ · ] (“ Subscriber ”).

 

WHEREAS, the Issuer is party to that certain Agreement and Plan of Merger, dated June 23, 2018, as amended by the First Amendment thereto dated August 29, 2018 (as it may be further amended or supplemented from time to time, the “ Merger Agreement ”), by and among Easterly Acquisition Corp. (“ Easterly ”), the Issuer and Sirius Acquisitions Holding Company III, a wholly owned subsidiary of the Issuer (“ Merger Sub ”), pursuant to which Merger Sub will be merged with and into Easterly, with Easterly surviving the merger as a wholly owned subsidiary of the Issuer, on the terms and subject to the conditions set forth therein (the “ Merger ”);

 

WHEREAS, in connection with the Merger, Subscriber desires to subscribe for and purchase from the Issuer up to that number of (i) common shares of the Issuer, par value $0.01 per share (the “ Common Shares ”), set forth on its signature page hereto (the “ Acquired Common Shares ”), (ii) Series B preference shares of the Issuer, par value $0.01 per share (the “ Preference Shares ”), set forth on its signature page hereto (the “ Acquired Preference Shares ”), and (iii) warrants to purchase Common Shares, each initially exercisable for one Common Share, set forth on its signature page hereto (the “ Acquired Warrants ” and, collectively with the Acquired Common Shares and Acquired Preference Shares, the  “ Acquired Securities ”; the Common Shares issuable upon conversion or redemption of the Acquired Preference Shares and exercise of the Acquired Warrants being collectively referred to as the “ Underlying Common Shares ”); and the Issuer desires to issue and sell to Subscriber the Acquired Securities in consideration of the payment of the Aggregate Purchase Price (as defined below) by or on behalf of Subscriber to the Issuer on or prior to the Closing (as defined below);

 

WHEREAS, the Acquired Preference Shares shall have the terms and conditions set forth in the form of certificate of designation attached hereto as Annex A (the “ Certificate of Designation ”);

 

WHEREAS, the Acquired Warrants shall have the terms and conditions set forth in the form of warrant attached hereto as Annex B (the “ Warrant ”); and

 

WHEREAS, as a condition to the Closing, the parties shall enter into the shareholders agreement in the form attached hereto as Annex C (the “ Shareholders Agreement ”).

 

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

 

1.                                       Subscription .

 

(a)                                  Subject to the terms and conditions hereof, Subscriber hereby agrees to subscribe for and purchase, and the Issuer hereby agrees to issue and sell to Subscriber, the Acquired Securities (subject to adjustment as set forth in Section 1(b) ) upon the payment of an aggregate amount (the “ Aggregate Purchase Price ”) equal to the product of (x) the sum of (1) the number

 



 

of Acquired Common Shares plus (2) the number of Acquired Preference Shares multiplied by (y) (a) 1.05 multiplied by (b) (1) the book value of the Issuer determined based on U.S. generally accepted accounting principles (“ GAAP ”) on a consolidated basis, as set forth in the final, Issuer board of directors approved, unaudited GAAP consolidated financial statements of the Issuer for the nine months ended September 30, 2018, (A) decreased by $7,000,000, and (B) as adjusted to take into account the effect determined in accordance with GAAP of the redemption of all outstanding Series A preference shares of the Issuer, divided by (2) the sum of (x) the fully diluted number of Common Shares outstanding as of September 30, 2018 and (y) 593,000 Common Shares, in each case determined by the board of directors of the Issuer in good faith, without, for the avoidance of doubt, any post-Closing adjustment that may be required pursuant to Section 2.1(h) of the Merger Agreement (the product of clause (a) and (b), the “ Per Share Purchase Price ”).

 

(b)                                  The Issuer may at its option reduce (on a pro rata basis as nearly as practicable) the number of Acquired Common Shares and Acquired Preference Shares (and the Aggregate Purchase Price shall be correspondingly reduced by the number of shares so reduced multiplied by the Per Share Purchase Price); provided, however , that in no event shall the Aggregate Purchase Price be reduced below $[ · ] and such reduction shall not reduce the amount of Acquired Warrants.

 

2.                                       Closing .

 

(a)                                  The closing of the transactions contemplated by this Subscription Agreement (the “ Closing ”) is contingent upon, and shall occur immediately following, the consummation of the Merger.  Not less than twelve (12) business days prior to the expected closing date of the Merger, the Issuer shall provide written notice to Subscriber (the “ Closing Notice ”) of such expected closing date and the Issuer’s good faith estimate of the number of Acquired Securities to be purchased by Subscriber at the Closing.  Not less than two (2) business days prior to the closing date of the Merger (such date, which shall be no earlier than the date specified in the Closing Notice, the “ Closing Date ”), the Issuer shall provide written notice to Subscriber of the Closing Date and the number of Acquired Securities to be purchased by Subscriber at the Closing (which number shall be no greater than the number specified in the Closing Notice). On the Closing Date, the Issuer shall deliver to Subscriber (i) the Acquired Common Shares in book entry form, the Acquired Preference Shares in book entry form and the Warrant representing the Acquired Warrants, in each case free and clear of any liens or other restrictions whatsoever (other than those arising under state or federal securities laws, the Certificate of Designation, the Warrant and the Shareholders Agreement), in the name of Subscriber (or its nominee in accordance with its delivery instructions) or a custodian designated by Subscriber, as applicable, and (ii) a copy of the irrevocable instruction letter delivered by the Issuer to the Issuer’s transfer agent (the “ Transfer Agent ”) directing the Transfer Agent to record Subscriber as the owner of the Acquired Common Shares on and as of the Closing Date.  Upon confirmation of delivery of such irrevocable instruction letter with respect to the Acquired Common Shares, book entry notation with respect to the Acquired Preference Shares and Warrant with respect to the Acquired Warrant Shares, Subscriber shall deliver to the Issuer the Aggregate Purchase Price for the Acquired Securities by wire transfer of U.S. dollars in immediately available funds to the account specified by the Issuer in the Closing Notice.

 

2



 

(b)                                  The Closing shall be subject to the conditions that, on the Closing Date:

 

(i)                                      the Issuer shall have obtained approval of The Nasdaq Stock Market (“ Nasdaq ”) to list the Acquired Common Shares and the Underlying Common Shares, subject to official notice of issuance;

 

(ii)                                   the Issuer shall have executed and delivered the Certificate of Designation and the Warrant;

 

(iii)                                the Issuer and each of the other parties thereto (other than Subscriber) shall have executed and delivered the Shareholders Agreement;

 

(iv)                               all representations and warranties of the Issuer and Subscriber contained in this Subscription Agreement shall be true and correct in all material respects (or, to the extent qualified by materiality or a similar qualifier, in all respects) as of the Closing Date (or, if expressly relating to an earlier date, then as of such date), and consummation of the Closing shall constitute a reaffirmation by each of the Issuer and Subscriber of each of the representations, warranties and agreements of each such party contained in this Subscription Agreement as of the Closing Date;

 

(v)                                  the Issuer shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing;

 

(vi)                               no governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal or otherwise preventing or prohibiting consummation of the transactions contemplated hereby, and no governmental authority shall have instituted or threatened a proceeding seeking to impose any such prevention or prohibition;

 

(vii)                            the Merger Agreement shall not have been amended after the date hereof to adversely affect Subscriber (it being agreed that any amendment not relating to the “Exchange Ratio” therein does not adversely affect subscriber);

 

(viii)                         the Merger shall have occurred; and

 

(ix)                               the Issuer’s Series A preference shares shall have been redeemed in full by the Issuer.

 

(c)                                   At or prior to the Closing, the parties hereto shall execute and deliver such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the transactions contemplated by this Subscription Agreement.

 

(d)                                  Notwithstanding anything in this Subscription Agreement to the contrary, the Issuer shall have no obligation to issue any of the Acquired Securities to any person who is a resident of a jurisdiction in which the issuance of Acquired Securities or Underlying Common

 

3



 

Shares to such person would constitute a violation of the securities, “blue sky” or other similar laws of such jurisdiction.

 

3.                                       Issuer Representations and Warranties .  The Issuer represents and warrants as of the date hereof and as of the Closing Date that:

 

(a)                                  The Issuer has been duly incorporated and is validly existing as an exempted company limited by shares and is in good standing under the laws of Bermuda, with company power and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Subscription Agreement. Each subsidiary of the Issuer has been duly incorporated or formed and is validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, except as would not reasonably be expected to have a material adverse effect on the business, properties, financial condition, shareholders’ equity or results of operations of the Issuer (a “ Material Adverse Effect ”).

 

(b)                                  The Acquired Securities have been duly authorized and, when issued and delivered to Subscriber against full payment for the Acquired Securities in accordance with the terms of this Subscription Agreement and duly registered, the Acquired Securities will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Issuer’s bye-laws or under the laws of Bermuda. The Underlying Common Shares have been duly authorized and reserved for issuance and, when issued and delivered to Subscriber against full payment therefore in accordance with the terms of the Certificate of Designations and the Warrant and duly registered, such Underlying Common Shares will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Issuer’s bye-laws or under the laws of Bermuda.

 

(c)                                   This Subscription Agreement has been duly authorized, executed and delivered by the Issuer and is enforceable against it in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.

 

(d)                                  The execution, delivery and performance of this Subscription Agreement (including compliance by the Issuer with all of the provisions hereof), the issuance and sale of the Acquired Securities and the consummation of the other transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Issuer pursuant to the terms of (i)  any material indenture, mortgage, deed of trust, loan agreement, lease, license or other material agreement or instrument to which the Issuer is a party or by which the Issuer is bound or to which any of the property or assets of the Issuer is subject, or affect the validity of the Acquired Securities or the legal authority of the Issuer to comply in all material respects with the terms of this Subscription Agreement; (ii) the organizational documents of the Issuer; or (iii) any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Issuer or any of its properties.

 

4



 

(e)                                   There are no securities or instruments issued by or to which the Issuer is a party containing anti-dilution or similar provisions that will be triggered by the issuance of (i) the Acquired Securities or the Underlying Common Shares that have not been or will not be validly waived on or prior to the Closing Date.

 

(f)                                    Other than the Issuer’s outstanding Series A preference shares (which will be redeemed in full prior to the Closing), there are no outstanding Senior Shares or Parity Shares (as such terms are defined in the Certificate of Designation).

 

(g)                                   The Issuer is not in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of (i) the organizational documents of the Issuer, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, permit, franchise or license to which the Issuer is now a party or by which the Issuer’s properties or assets are bound or (iii) any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Issuer or any of its properties, except, in the case of clauses (ii) and (iii), for defaults or violations that have not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.

 

(h)                                  The Issuer is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization or other person in connection with the execution, delivery and performance by the Issuer of this Subscription Agreement (including, without limitation, the issuance of the Acquired Securities or the Underlying Common Shares), other than (i) filings required by the Securities and Exchange Commission (the “ Commission ”), Nasdaq or the Financial Industry Regulatory Authority, (ii) filings required by applicable state securities or similar laws, (iii) the permissions of the Bermuda Monetary Authority in connection with the exchange control and requisite approvals/notifications required pursuant to the Insurance Act 1978, as amended and (iv) such consents, waivers, authorizations, orders, notices, filings or registrations as would not impair in any material respect the consummation of the transactions contemplated by this Subscription Agreement.

 

(i)                                      Assuming the accuracy of Subscriber’s representations and warranties set forth in Section 4 of this Subscription Agreement, no registration under the Securities Act of 1933, as amended (the “ Securities Act ”), is required for the offer and sale of the Acquired Securities by the Issuer to Subscriber.

 

(j)                                     Neither the Issuer nor any person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D of the Securities Act) in connection with any offer or sale of the Acquired Securities.

 

(k)                                  The Issuer has made available to Subscriber (including via the Commission’s EDGAR system) a copy of the preliminary joint proxy statement/prospectus that forms a part of the Issuer’s registration statement on Form S-4 (File No. 333-226620) (the “ Proxy Statement/Prospectus ”).  When filed, the Proxy Statement/Prospectus did not contain and, when amended, the Proxy Statement/Prospectus will not contain as of the date of such amendment with respect to those disclosures that are amended, any untrue statement of a material fact or any

 

5



 

omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided , that the Issuer makes no such representation or warranty with respect to any information in the Proxy Statement/Prospectus relating to Easterly, Easterly’s affiliates or the special meeting of Easterly’s stockholders.

 

(l)                                      Except for such matters as have not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, there is no (i) action, lawsuit, claim, suit, arbitration, hearing, examination or judicial or legal proceeding or investigation, whether civil, criminal or administrative, at law or in equity, or by or before any governmental authority pending, or, to the knowledge of the Issuer, threatened against the Issuer or (ii) judgment, decree, injunction, ruling or order of any governmental entity or arbitrator outstanding against the Issuer.

 

(m)                              The consolidated financial statements (including the related notes thereto) of the Issuer and its consolidated subsidiaries included in the Proxy Statement/Prospectus present fairly in all material respects the financial position of the entities to which they relate as of the dates indicated and the results of their operations and the changes in their cash flows for the periods specified; such financial statements have been prepared in conformity with GAAP applied on a consistent basis throughout the periods covered thereby, and the supporting schedules present fairly in all material respects the information required to be stated therein.  PricewaterhouseCoopers LLP, who has audited certain financial statements of the Issuer and its subsidiaries as set forth in the Proxy Statement/Prospectus is an independent registered public accounting firm with respect to the Issuer and its subsidiaries within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act.

 

(n)                                  Since the date of the most recent balance sheet of the Issuer included in the Proxy Statement/Prospectus (i) there has not been any material change in the share capital or long-term debt of the Issuer or any of its subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Issuer on any class of share capital, or any material adverse change, or any development involving a prospective material adverse change, in or affecting the business, properties, rights, assets, management, financial position, results of operations or prospects of the Issuer and its subsidiaries taken as a whole; (ii) neither the Issuer nor any of its subsidiaries has entered into any transaction or agreement that is material to the Issuer and its subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that is material to the Issuer and its subsidiaries taken as a whole; and (iii) neither the Issuer nor any of its subsidiaries has sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority, except in each case as otherwise disclosed in the Proxy Statement/Prospectus or as contemplated by this Subscription Agreement.

 

(o)                                  The Issuer is not, and immediately after giving effect to the issuance and sale of the Acquired Securities and the application of the proceeds thereof, will not be, required to register as an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder.

 

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(p)                                  Except for placement agent fees payable to Citigroup Global Markets Inc. (“ Citi ”) and Dowling & Partners Securities, LLC (“ D&P ” and, together with Citi, in their respective capacities as placement agents with respect to the issuance and sale of the Acquired Securities, the “ Placement Agents ”) at the Closing, the Issuer has not paid, and is not obligated to pay, any brokerage, finder’s or other fee or commission in connection with its issuance and sale of the Acquired Securities, including, for the avoidance of doubt, any fee or commission payable to any shareholder or affiliate of the Issuer.

 

(q)                                  The Issuer is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons, the Executive Order 13599 List, the Foreign Sanctions Evaders List, or the Sectoral Sanctions Identification List, each of which is administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“ OFAC ”) (collectively, the “ OFAC Lists ”); (ii) a person with whom a transaction is prohibited by Executive Order 13224, the BSA/Patriot Act, the Trading with the Enemy Act or the foreign asset control regulations of the United States Treasury Department; (iii) owned or controlled by, or acting on behalf of, a person, that is named on an OFAC List or a person under clause (ii); (iv) a person having its principal place of business or the majority of its business operations (measured by revenues) located in any country described in clause (ii); (v) organized, incorporated, established, located, resident or born in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States; (vi) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515; or (vii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank.  If the Issuer is a financial institution subject to the Bank Secrecy Act (31 U.S.C. section 5311 et seq.), as amended by the USA PATRIOT Act of 2001, and its implementing regulations (collectively, the “ BSA/PATRIOT Act ”), that the Issuer maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act.  To the extent required, the Issuer maintains policies and procedures reasonably designed to ensure compliance with OFAC-administered sanctions programs, including for the screening of its investors against the OFAC Lists.  The Issuer does not and will not, directly or indirectly, do business in or with Cuba or Venezuela, or with any agency or instrumentality of either of them, in each case in violation of U.S. federal law.

 

(r)                                     The section of the Proxy Statement/Prospectus entitled “Description of Sirius Group Share Capital” accurately sets forth the classes and numbers of equity securities of the Issuer outstanding as of that date.

 

(s)                                    The Issuer is treated as a corporation for U.S. federal income tax purposes.

 

4.                                       Subscriber Representations and Warranties .  Subscriber represents and warrants that:

 

(a)                                  Subscriber has been duly formed or incorporated and is validly existing in good standing under the laws of its jurisdiction of incorporation or formation, with power and authority to enter into, deliver and perform its obligations under this Subscription Agreement.

 

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(b)                                  This Subscription Agreement has been duly authorized, executed and delivered by Subscriber.  This Subscription Agreement is enforceable against Subscriber in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.

 

(c)                                   The execution, delivery and performance by Subscriber of this Subscription Agreement and the consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Subscriber or any of its subsidiaries pursuant to the terms of (i) any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Subscriber or any of its subsidiaries is a party or by which Subscriber or any of its subsidiaries is bound or to which any of the property or assets of Subscriber or any of its subsidiaries is subject, which would reasonably be expected to have a material adverse effect on the business, properties, financial condition, stockholders’ equity or results of operations of Subscriber and any of its subsidiaries, taken as a whole (a “ Subscriber Material Adverse Effect ”), or materially affect the legal authority of Subscriber to comply in all material respects with the terms of this Subscription Agreement; (ii) the organizational documents of Subscriber; or (iii) any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Subscriber or any of its subsidiaries or any of their respective properties that would reasonably be expected to have a Subscriber Material Adverse Effect or materially affect the legal authority of Subscriber to comply in all material respects with this Subscription Agreement.

 

(d)                                  Subscriber (i) is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) or an institutional “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) satisfying the applicable requirements set forth on Schedule A hereto, (ii) is acquiring the Acquired Securities only for its own account and not for the account of others, or if Subscriber is subscribing for the Acquired Securities as a fiduciary or agent for one or more investor accounts, each owner of such account is a qualified institutional buyer and Subscriber has full investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account, and (iii) is not acquiring the Acquired Securities with a view to, or for offer or sale in connection with, any distribution of the Acquired Securities or Underlying Common Shares in violation of the Securities Act (and shall provide the requested information on Schedule A hereto following the signature page hereto).  Subscriber is not an entity formed for the specific purpose of acquiring the Acquired Securities.

 

(e)                                   Subscriber understands that the Acquired Securities are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that neither the Acquired Securities nor the Underlying Common Shares have been registered under the Securities Act.  Subscriber understands that the Acquired Securities and Underlying Common Shares may not be resold, transferred, pledged or otherwise disposed of by Subscriber absent an effective registration statement under the Securities Act, except (i) to the Issuer or a subsidiary thereof, (ii) to non-U.S. persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act, (iii) pursuant to

 

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Rule 144 under the Securities Act, provided that all of the applicable conditions thereof have been met, or (iv) pursuant to another applicable exemption from the registration requirements of the Securities Act, and that any certificates or book-entry records representing the Acquired Securities and Underlying Common Shares shall contain a legend to such effect.  Subscriber acknowledges that the Acquired Securities and Underlying Common Shares will not be eligible for resale pursuant to Rule 144A promulgated under the Securities Act.  Subscriber understands and agrees that the Acquired Securities and Underlying Common Shares will be subject to transfer restrictions and, as a result of these transfer restrictions, Subscriber may not be able to readily resell the Acquired Securities or Underlying Common Shares and may be required to bear the financial risk of an investment in the Acquired Securities and Underlying Common Shares for an indefinite period of time.  Subscriber understands that it has been advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Acquired Securities or Underlying Common Shares.

 

(f)                                    Subscriber understands and agrees that Subscriber is purchasing the Acquired Securities directly from the Issuer.  Subscriber further acknowledges that there have been no representations, warranties, covenants and agreements made to Subscriber by the Issuer or any of its officers or directors, expressly or by implication, other than those representations, warranties, covenants and agreements expressly included in this Subscription Agreement.

 

(g)                                   Subscriber represents and warrants that its acquisition and holding of the Acquired Securities and Underlying Common Shares will not constitute or result in a non-exempt prohibited transaction under section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), section 4975 of the Internal Revenue Code of 1986, as amended (the “ Code ”), or any applicable similar law.

 

(h)                                  In making its decision to purchase the Acquired Securities, Subscriber represents that it has relied solely upon independent investigation made by Subscriber.  Subscriber acknowledges and agrees that Subscriber has received a copy of the Proxy Statement/Prospectus and the exhibits thereto and such other information as Subscriber deems necessary in order to make an investment decision with respect to the Acquired Securities, including with respect to the Issuer, Easterly and the Merger.  Subscriber acknowledges and agrees that the Proxy Statement/Prospectus has not as of the date hereof been reviewed by the Commission and that, in connection with any review by the Commission or any development after the date of filing thereof, the Issuer or Easterly may be required or opt to make changes to the information included therein, which changes may be material.  Subscriber has had the opportunity to retain, at its own expense, and relied upon, appropriate professional advice regarding the investment, tax and legal merits and consequences of purchasing and owning the Acquired Securities and Underlying Common Shares.  Subscriber represents and agrees that Subscriber and Subscriber’s professional advisor(s), if any, have had the full opportunity to ask such questions, receive such answers and obtain such information as Subscriber and such Subscriber’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Acquired Securities.

 

(i)                                      Subscriber became aware of this placement of the Acquired Securities solely by means of direct contact between Subscriber and the Issuer (or a Placement Agent on behalf of the Issuer), and the Acquired Securities were offered to Subscriber solely by direct contact between

 

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Subscriber and the Issuer.  Subscriber did not become aware of this placement of the Acquired Securities, nor were the Acquired Securities offered to Subscriber, by any other means.  Subscriber acknowledges that the Issuer represents and warrants that the Acquired Securities (i) were not offered by any form of general solicitation or general advertising and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws.

 

(j)                                     Subscriber acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Acquired Securities and Underlying Common Shares.  Subscriber has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Acquired Securities and Underlying Common Shares, and Subscriber has sought such accounting, legal and tax advice as Subscriber has considered necessary to make an informed investment decision.

 

(k)                                  Alone, or together with any professional advisor(s), Subscriber represents and acknowledges that Subscriber has adequately analyzed and fully considered the risks of an investment in the Acquired Securities and Underlying Common Shares and determined that the Acquired Securities are a suitable investment for Subscriber and that Subscriber is able at this time and in the foreseeable future to bear the economic risk of a total loss of Subscriber’s investment in the Issuer.  Subscriber acknowledges specifically that a possibility of total loss exists.

 

(l)                                      Subscriber understands and agrees that no federal or state agency has passed upon or endorsed the merits of the offering of the Acquired Securities or made any findings or determination as to the fairness of this investment.

 

(m)                              Subscriber represents and warrants that Subscriber is not (i) a person or entity named on the OFAC Lists; (ii) a person with whom a transaction is prohibited by Executive Order 13224, the BSA/Patriort Act, the Trading with the Enemy Act or the foreign asset control regulations of the United States Treasury Department; (iii) owned or controlled by, or acting on behalf of, a person, that is named on an OFAC List or a person under clause (ii); (iv) a person having its principal place of business or the majority of its business operations (measured by revenues) located in any country described in clause (ii); (v) organized, incorporated, established, located, resident or born in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States; (vi) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515; (vii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank or (viii) persons who are the target of financial sanctions listed in the Orders of Council in Schedule 1 to The International Sanctions Regulations 2013 of Bermuda.  Subscriber represents that if it is a financial institution subject to the BSA/PATRIOT Act, that Subscriber maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act.  Subscriber also represents that, to the extent required, it maintains policies and procedures reasonably designed to ensure compliance with OFAC-administered sanctions programs, including for the screening of its investors against the OFAC Lists.  Subscriber further represents and warrants that, to the extent required, it maintains policies and procedures reasonably designed to ensure that the funds held

 

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by Subscriber and used to purchase the Acquired Securities and Underlying Common Shares were legally derived.

 

(n)                                  If Subscriber is an employee benefit plan that is subject to Title I of ERISA, a plan, an individual retirement account or other arrangement that is subject to section 4975 of the Code or an employee benefit plan that is a governmental plan (as defined in section 3(32) of ERISA), a church plan (as defined in section 3(33) of ERISA), a non-U.S. plan (as described in section 4(b)(4) of ERISA) or other plan that is not subject to the foregoing but may be subject to provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code (collectively, “ Similar Laws ”), or an entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “ Plan ”), subject to the fiduciary or prohibited transaction provisions of ERISA or section 4975 of the Code, Subscriber represents and warrants that (i) neither Issuer nor any of its respective affiliates (the “ Transaction Parties ”) has acted as the Plan’s fiduciary, or has been relied on for advice, with respect to its decision to acquire and hold the Acquired Securities and Underlying Common Shares, and none of the Transaction Parties shall at any time be relied upon as the Plan’s fiduciary with respect to any decision to acquire, continue to hold or transfer the Acquired Securities or Underlying Common Shares; and (ii) acknowledges that none of the Transaction Parties is undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the Subscriber’s investment in the Acquired Securities or Underlying Common Shares.

 

(o)                                  Subscriber has, and at the Closing will have, sufficient funds to pay the Aggregate Purchase Price pursuant to Section 2(a) .

 

(p)                                  As of the date hereof, Subscriber does not own, directly or indirectly, any Common Shares or shares of common stock, warrants or units of Easterly.

 

(q)                                  Subscriber acknowledges that Citi is engaged by an affiliate of the Issuer and Easterly in connection with the Acquisition, served as an underwriter in Easterly’s initial public offering and provided related capital markets, investment banking and financial advisory services to Easterly, and is acting as co-Placement Agent with respect to the placement of Acquired Securities pursuant to this Subscription Agreement, for which Citi will receive customary compensation (including placement agent fees and a deferred underwriting discount) and (ii) waives any conflict of interest with respect to Citi serving in those roles on behalf of the Issuer, an affiliate of the Issuer and Easterly.

 

(r)                                     Subscriber acknowledges that the Issuer and its counsel, Sidley Austin LLP (“ Sidley ”), represent the interests of the Issuer and not those of Subscriber in any agreement (including this Subscription Agreement) to which the Issuer is a party.  Subscriber acknowledges that, while Sidley has confirmed that it does not represent Subscriber in connection with the subject matter of this Subscription Agreement, it may represent Subscriber (or its affiliates) in unrelated matters.

 

5.                                       Registration Rights .  The parties hereto and any other holder of Acquired Common Shares, Acquired Warrants, Acquired Preference Shares and Underlying Common Shares who agrees in writing to become bound by this Agreement, and each of their respective

 

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successors and permitted assignees, are collectively referred to herein as the “ Shareholders ” and each individually as a “ Shareholder .”

 

(a)                                  The Issuer agrees that, within thirty (30) calendar days after the consummation of the Merger (the “ Filing Date ”), the Issuer will file with the Commission (at the Issuer’s sole cost and expense) a registration statement registering the resale of the Acquired Common Shares, the Underlying Common Shares, the Acquired Preference Shares and the Acquired Warrants (the “ Registration Statement ”), and the Issuer shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) the ninetieth (90th) calendar day (or one hundred twentieth (120th) calendar day if the Commission notifies the Issuer that it will “review” the Registration Statement) following the Closing and (ii) the tenth (10th) business day after the date the Issuer is notified (orally or in writing, whichever is earlier) by the Commission that the Registration Statement will not be “reviewed” or will not be subject to further review (such earlier date, the “ Effectiveness Date ”); provided, however , that the Issuer’s obligations to include the Acquired Common Shares, Acquired Warrants, Acquired Preference Shares and Underlying Common Shares in the Registration Statement are contingent upon the Shareholder furnishing in writing to the Issuer such information regarding the Shareholder, the securities of the Issuer held by the Shareholder and the intended method of disposition of the Acquired Common Shares, Acquired Warrants, Acquired Preference Shares and Underlying Common Shares as shall be reasonably requested by the Issuer to effect the registration of the Acquired Common Shares, Acquired Warrants, Acquired Preference Shares and Underlying Common Shares, and the Shareholder shall execute such documents in connection with such registration as the Issuer may reasonably request that are customary of a selling stockholder in similar situations, including providing that the Issuer shall be entitled to postpone and suspend the effectiveness or use of the Registration Statement during any customary blackout or similar period or as permitted hereunder. For purposes of clarification, any failure by the Issuer to file the Registration Statement by the Filing Date or to effect such Registration Statement by the Effectiveness Date shall not otherwise relieve the Issuer of its obligations to file or effect the Registration Statement as set forth above in this Section 5 .

 

(b)                                  The Issuer further agrees that, in the event that (i) the Registration Statement has not been declared effective by the Commission by the Effectiveness Date, (ii) after such Registration Statement is declared effective by the Commission, (A) such Registration Statement ceases for any reason (including by reason of a stop order, or the Issuer’s failure to update the Registration Statement), to remain continuously effective as to all Acquired Common Shares and Underlying Common Shares for which it is required to be effective or (B) the Shareholder is not permitted to utilize the Registration Statement to resell the Acquired Common Shares, Acquired Warrants, Acquired Preference Shares or Underlying Common Shares (in each case of (A) and (B), (x) other than within the time period(s) permitted by this Subscription Agreement and (y) excluding by reason of a post-effective amendment required in connection with the Issuer’s filing of an amendment thereto (a “ Special Grace Period ”) (which Special Grace Period shall not be treated as a Registration Default (as defined below)), or (iii) after the date six (6) months following the Closing Date, and only in the event the Registration Statement is not effective or available to sell all Acquired Common Shares, Acquired Warrants, Acquired Preference Shares and Underlying Common Shares, the Issuer fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is not in compliance with Rule

 

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144(c)(1) (or Rule 144(i)(2), if applicable), as a result of which the Shareholders who are not affiliates of the Issuer are unable to sell the Acquired Common Shares and Underlying Common Shares without restriction under Rule 144 (or any successor thereto) (each such event referred to in clauses (i) through (iii), a “ Registration Default ” and, for purposes of such clauses, the date on which such Registration Default occurs, a “ Default Date ”), then in addition to any other rights the Shareholder may have hereunder or under applicable law, on each such Default Date and on each monthly anniversary of each such Default Date (if the applicable Registration Default shall not have been cured by such date) until the applicable Registration Default is cured, the Issuer shall pay to each Shareholder an amount in cash, as partial liquidated damages and not as a penalty (“ Liquidated Damages ”), equal to 0.5% of the Aggregate Purchase Price paid by Subscriber pursuant to this Subscription Agreement for any Acquired Common Shares , Acquired Warrants, Acquired Preference Shares or Underlying Common Shares held by the Shareholder on the Default Date; provided, however, that if the Shareholder fails to provide the Issuer with any information requested by the Issuer that is required to be provided in such Registration Statement with respect to the Shareholder as set forth herein, then, for purposes of this Section 5 , the Filing Date or Effectiveness Date, as applicable, for a Registration Statement with respect to the Shareholder shall be extended until two (2) business days following the date of receipt by the Issuer of such required information from the Shareholder; and in no event shall the Issuer be required hereunder to pay to the Shareholder pursuant to this Subscription Agreement an aggregate amount that exceeds 5.0% of the Aggregate Purchase Price paid by Subscriber for its Acquired Securities. The Liquidated Damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of a Registration Default, except in the case of the first Default Date. The Issuer shall deliver the cash payment to the Shareholder with respect to any Liquidated Damages by the fifth (5th) business day after the date payable. If the Issuer fails to pay said cash payment to the Shareholder in full by the fifth (5th) business day after the date payable, the Issuer will pay interest thereon at a rate of 5.0% per annum (or if such amount is not permitted under applicable law, such lesser maximum amount that is permitted to be paid by applicable law, and calculated on the basis of a year consisting of 360 days) to such Shareholder, accruing daily from the date such Liquidated Damages are due until such amounts, plus all such interest thereon, are paid in full. Notwithstanding the foregoing, nothing shall preclude any Shareholder from pursuing or obtaining any available remedies at law, specific performance or other equitable relief with respect to this Section 5 in accordance with applicable law. The parties agree that notwithstanding anything to the contrary herein, no Liquidated Damages shall be payable to the Shareholder with respect to any period during which all of such Shareholder’s Acquired Common Shares, Acquired Warrants, Acquired Preference Shares and Underlying Common Shares may be sold by the Shareholder without volume or manner of sale restrictions under Rule 144 and the Issuer is in compliance with the current public information requirements under Rule 144(c)(1) (or Rule 144(i)(2), if applicable).

 

(c)                                   Shelf Underwritten Offering Take-Down .  At any time within thirty (30) business after the date of a Mandatory Conversion Event as defined in the Certificate of Designation relating to the Preference Shares, any Shareholder or Shareholders may deliver a notice to the Issuer (a “ Take-Down Notice ”) stating that it intends to effect an underwritten offering of all or part of its or their Acquired Common Shares and Underlying Common Shares (together, “ Registrable Securities ”) included on the Registration Statement (a “ Shelf Underwritten Offering ”); provided that the Shareholders in the aggregate may deliver only one such Take-Down Notice.  Upon the Issuer’s receipt of a Take-Down Notice, the Issuer shall promptly

 

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deliver such Take-Down Notice to all other Shareholders included on the Registration Statement and permit each Shareholder to include its Registrable Securities in the Shelf Underwritten Offering if such Shareholder notifies the Issuer within five (5) business days after delivery of the Take-Down Notice to such Shareholder.  CMIG International Holding Pte. Ltd. (“ CMIG International ”) shall select the investment banking firm or firms to act as the underwriter or underwriters in connection with the Shelf Underwritten Offering.

 

(d)                                  Priority on Shelf Underwritten Offerings .  If the managing underwriter of the Shelf Underwritten Offering advises the Issuer and such Shareholders in writing (with a copy to each other person requesting to participate in such Shelf Underwritten Offering) that in its opinion the number of Common Shares which such Shareholders desire to sell, taken together with any registrable securities requested to be included in such Shelf Underwritten Offering by other persons with contractual rights to participate in such Shelf Underwritten Offering, exceeds the maximum number of securities which can be sold in such offering without materially and adversely affecting the marketability of such offering (the “ Maximum Number of Securities ”), the Issuer will include in such Shelf Underwritten Offering Common Shares pro rata based on the respective number of Registrable Securities and Common Shares held by such Shareholders and other persons and the aggregate number of Registrable Securities and Common Shares requested be included in such Shelf Underwritten Offering by such Shareholders and other persons, up to the Maximum Number of Securities.

 

(e)                                   In the case of the registration, qualification, exemption or compliance effected by the Issuer pursuant to this Subscription Agreement, the Issuer shall, upon reasonable request, inform the Shareholders as to the status of such registration, qualification, exemption and compliance. The Issuer shall:

 

(i)                                      except for such times as the Issuer is permitted hereunder to suspend the use of the prospectus forming part of a Registration Statement, use its commercially reasonable efforts to keep such registration, and any qualification, exemption or compliance under state securities laws which the Issuer determines to obtain, continuously effective with respect to the Shareholders, and to keep the Registration Statement free of any material misstatements or omissions, until the earlier of the following: (i) the Shareholders cease to hold any Acquired Common Shares, Underlying Common Shares, Acquired Warrants or Acquired Preference Shares or (ii)  the date all Acquired Common Shares, Underlying Common Shares, Acquired Warrants and Acquired Preference Shares held by the Shareholders may be sold without restriction under Rule 144, including without limitation, any volume and manner of sale restrictions which may be applicable to affiliates under Rule 144 and without the requirement for the Issuer to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable). The period of time during which the Issuer is required hereunder to keep a Registration Statement effective is referred to herein as the “ Registration Period ”;

 

(ii)                                   advise the Shareholder within five (5) business days:

 

(1)                                  when a Registration Statement or any amendment thereto has been filed with the Commission and when such Registration Statement or any post-effective amendment thereto has become effective;

 

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(2)                                  of any request by the Commission for amendments or supplements to any Registration Statement or the prospectus included therein or for additional information;

 

(3)                                  of the issuance by the Commission of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for such purpose;

 

(4)                                  of the receipt by the Issuer of any notification with respect to the suspension of the qualification of the Acquired Common Shares, Acquired Warrants, Acquired Preference Shares or Underlying Common Shares included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

 

(5)                                  subject to the provisions in this Subscription Agreement, of the occurrence of any event that requires the making of any changes in any Registration Statement or prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading.

 

Notwithstanding anything to the contrary set forth herein, the Issuer shall not, when so advising the Shareholders of such events, provide the Shareholders with any material, nonpublic information regarding the Issuer other than to the extent that providing notice to the Shareholders of the occurrence of the events listed in (1) through (5) above constitutes material, nonpublic information regarding the Issuer;

 

(iii)                                use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement as soon as reasonably practicable;

 

(iv)                               upon the occurrence of any event contemplated above, except for such times as the Issuer is permitted hereunder to suspend, and has suspended, the use of a prospectus forming part of a Registration Statement, the Issuer shall use its commercially reasonable efforts to as soon as reasonably practicable prepare a post-effective amendment to such Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to the Shareholders, such prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (and each Shareholder hereby agrees that (i) it will immediately discontinue offers and sales of the Acquired Common Shares, Acquired Warrants, Acquired Preference Shares and Underlying Common Shares under the Registration Statement (excluding, for the avoidance of doubt, sales conducted pursuant to Rule 144) until such Shareholders receive copies of a supplemental or amended prospectus that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Issuer that it may resume such offers and sales, and (ii) it will maintain the confidentiality of any information included in such written notice delivered by the Issuer unless otherwise required by law or subpoena); and

 

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(v)                                  use its commercially reasonable efforts to take all other steps necessary to effect the registration of the Acquired Common Shares, Acquired Warrants, Acquired Preference Shares and Underlying Common Shares contemplated hereby and to enable the Shareholders to sell the Acquired Common Shares and Underlying Common Shares under Rule 144.

 

(f)                                    Notwithstanding anything to the contrary in this Subscription Agreement, the Issuer shall be entitled to delay or postpone the effectiveness of the Registration Statement, and from time to time to require the Shareholder not to sell under the Registration Statement or to suspend the effectiveness thereof (including in connection with a Shelf Underwritten Offering), if the negotiation or consummation of a transaction by the Issuer or its subsidiaries is pending or an event has occurred, which negotiation, consummation or event the Issuer’s board of directors reasonably believes, upon the advice of legal counsel, would require additional disclosure by the Issuer in the Registration Statement of material information that the Issuer has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Registration Statement would be expected, in the reasonable determination of the Issuer’s board of directors, upon the advice of legal counsel, to cause the Registration Statement to fail to comply with applicable disclosure requirements (each such circumstance, a “ Suspension Event ”); provided , however , that the Issuer may not delay or suspend the Registration Statement on more than two occasions or for more than sixty (60) consecutive calendar days, or more than ninety (90) total calendar days, in each case during any twelve-month period. Upon receipt of any written notice from the Issuer of the happening of any Suspension Event during the period that the Registration Statement is effective or if as a result of a Suspension Event the Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the prospectus) not misleading, each of the Shareholders agrees that (i) it will immediately discontinue offers and sales of the Acquired Common Shares, Acquired Warrants, Acquired Preference Shares and Underlying Common Shares under the Registration Statement (excluding, for the avoidance of doubt, sales conducted pursuant to Rule 144) until such Shareholders receive copies of a supplemental or amended prospectus that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Issuer that it may resume such offers and sales, and (ii) it will maintain the confidentiality of any information included in such written notice delivered by the Issuer unless otherwise required by law or subpoena. If so directed by the Issuer, each such Shareholder will deliver to the Issuer or, in such Shareholder’s sole discretion destroy, all copies of the prospectus covering the Acquired Common Shares, Acquired Warrants, Acquired Preference Shares and Underlying Common Shares in each such Shareholder’s possession; provided, however , that this obligation to deliver or destroy all copies of the prospectus covering the Acquired Common Shares, Acquired Warrants, Acquired Preference Shares and Underlying Common Shares shall not apply (i) to the extent each such Shareholder is required to retain a copy of such prospectus (a) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (b) in accordance with a bona fide pre-existing document retention policy or (ii) to copies stored electronically on archival servers as a result of automatic data back-up.

 

(g)                                   Shareholders may deliver written notice (including via email in accordance with Section 9(m) ) (an “ Opt-Out Notice ”) to the Issuer requesting that such Shareholder not receive notices from the Issuer otherwise required by this Section 5 ; provided , however , that such

 

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Shareholder may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from such Shareholder (unless subsequently revoked), (i) the Issuer shall not deliver any such notices to such Shareholder and such Shareholder shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to such Shareholder’s intended use of an effective Registration Statement, such Shareholder will notify the Issuer in writing at least two (2) business days in advance of such intended use, and if a notice of a Suspension Event was previously delivered (or would have been delivered but for the provisions of this Section 5(g) ) and the related suspension period remains in effect, the Issuer will so notify such Shareholder, within one (1) business day of such Shareholder’s notification to the Issuer, by delivering to such Shareholder a copy of such previous notice of Suspension Event, and thereafter will provide such Shareholder with the related notice of the conclusion of such Suspension Event immediately upon its availability.

 

(h)                                  Prior to any public offering of the Acquired Common Shares, the Underlying Common Shares, the Acquired Preference Shares and the Acquired Warrants by the Shareholders pursuant to the Registration Statement, the Issuer shall use its commercially reasonable efforts to register or qualify (or seek an exemption from registration or qualification) or cooperate with the Shareholders and their counsel in connection with the registration or qualification of such securities for offer and sale under the securities laws of such jurisdictions as such counsel reasonably requests in writing on behalf of the Shareholders and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of such securities; provided, however , that the Issuer will not be required to qualify to do business or to qualify as a dealer in securities in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject.

 

(i)                                      Shelf Underwritten Offering Procedures .  In connection with any Shelf Underwritten Offering, the following provisions shall apply:

 

(i)                                      Certificates .  The Issuer shall cooperate with each Shareholder to facilitate the timely, in the case of beneficial interests in Registrable Securities held through a depositary, transfer of such equivalent Registrable Securities with an unrestricted CUSIP, or, in the case of certificated shares, preparation and delivery of certificates representing Registrable Securities to be sold pursuant to such Registration Statement free of any restrictive legends and registered in such names as such Shareholder may request in writing prior to sales of Registrable Securities pursuant to the Registration Statement.

 

(ii)                                   Agreements .  The Issuer shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as the Shareholders that hold a majority of the Registrable Securities being sold or the managing underwriters shall reasonably request in order to facilitate the disposition of Registrable Securities pursuant to the Registration Statement.

 

(iii)                                Legal Opinion; Certificates; Comfort Letter .  The Issuer, if requested by the managing underwriters in connection with the Shelf Underwritten Offering, shall cause (i) its counsel to deliver an opinion relating to the Registration Statement and the Registrable Securities, in customary form (and covering such matters of the type customarily covered by

 

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legal opinions of such nature) addressed to the managing underwriters, and dated the effective date of the closing of the Shelf Underwritten Offering; (ii) its officers to execute and deliver all customary documents and certificates; and (iii) its independent public accountants to provide a  “comfort” letter in customary form (and covering such matters of the type customarily covered by a “ comfort” letter).

 

(iv)                               Listing .  The Issuer shall use its commercially reasonable efforts to cause the Registrable Securities covered by the Registration Statement to be listed on each securities exchange, if any, on which the Common Shares are then listed.

 

(v)                                  Due Diligence .  For a reasonable period prior to the completion of the Shelf Underwritten Offering, the Issuer shall make available for inspection by any Shareholder or underwriter participating in any disposition pursuant to the Shelf Underwritten Offering, and any attorney, accountant or other agent retained by any such Shareholder or underwriter, all financial and other information and books and records, pertinent corporate documents and properties of the Issuer, and cause the Issuer’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such Shareholder, underwriter, attorney, accountant or agent in connection with the Shelf Underwritten Offering, as will be reasonably necessary in the judgment of such persons, to conduct a reasonable investigation within the meaning of the Securities Act; provided , however , that if requested by the Issuer, each Shareholder will enter into a confidentiality agreement with the Issuer prior to participating in the preparation of the prospectus supplement relating to the Shelf Underwritten Offering or the Issuer’s release or disclosure of confidential information to such Shareholder.

 

(vi)                               Participation .  No Shareholder may participate in any Shelf Underwritten Offering unless such Shareholder agrees to sell such Shareholder’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Shareholders entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s); provided that no Shareholder will be required to sell more than the number of Registrable Securities that such Shareholder has requested the Issuer to include in any Take-Down Notice).

 

(vii)                            Other Approvals .  The Issuer shall use its commercially reasonable efforts to obtain all other approvals, consents, exemptions or authorizations from such governmental agencies or authorities as may be necessary to enable the Shareholders and underwriters to consummate the disposition of the Registrable Securities.

 

(viii)                         FINRA .  The Issuer shall cooperate with each Shareholder and each underwriter participating in the disposition of such Registrable Securities and underwriters’ counsel in connection with any filings required to be made with FINRA.

 

(ix)                               Road Show .  If the Shelf Underwritten Offering is expected to generate gross proceeds in excess of $75,000,000, the Issuer shall cause the appropriate officers as are requested by a managing underwriter to participate in a “road show” or similar marketing effort being conducted by such underwriter with respect to the Shelf Underwritten Offering.

 

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(x)                                  Other Actions .  The Issuer shall use its commercially reasonable efforts to take all other actions necessary to effect the Shelf Underwritten Offering contemplated hereby.  As a condition precedent to any Shelf Underwritten Offering, the Issuer may require each Shareholder as to which the Shelf Underwritten Offering is being effected to furnish to the Issuer such information regarding the distribution of such Registrable Securities and such other information relating to such Shareholder, its ownership of Registrable Securities and other matters as the Issuer may from time to time reasonably request in writing. Each such Shareholder agrees to furnish such information to the Issuer and to cooperate with the Company as reasonably necessary to enable the Issuer to comply with the provisions of this Agreement.

 

(xi)                               Free Writing Prospectuses .  Each Shareholder agrees that, unless it obtains the prior consent of the Issuer and any managing underwriter, it will not make any offer relating to the Registrable Securities that would constitute an “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act (an “ Issuer Free Writing Prospectus ”), or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405 under the Securities Act, required to be filed with the Commission.

 

(j)                                     Registration Expenses .  As between the Company and the Shareholders, the Shareholders shall bear all fees and expenses (including underwriting discounts and commissions) incurred in connection with their participation in the Shelf Underwritten Offering.

 

(k)                                  Indemnification.

 

(i)                                      Indemnification by the Issuer .  The Issuer shall, notwithstanding termination of this Agreement, indemnify and hold harmless to the full extent permitted by applicable law, each of the Shareholders named in any Registration Statement filed pursuant to this Agreement and the officers and directors of such Shareholders and each person, if any, who controls such Shareholders within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any losses, claims, damages or liabilities, joint or several, to which such Shareholder or such other Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any preliminary, final or summary prospectus contained therein or furnished by the Issuer to any such Shareholder, or any Issuer Free Writing Prospectus related to such registration, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading and, in any such case, the Issuer shall promptly reimburse, upon receipt of reasonably detailed invoices therefor, such Shareholder for any legal or other out-of-pocket expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided , however , that the Issuer shall not be required to indemnify any such person pursuant to this Section 5(k)(i)  to the extent that any such loss, claim, damage or liability (or actions in respect thereof) arises out of or is based upon (a) fraud or dishonesty or an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, or preliminary, final or summary prospectus, or Issuer Free Writing Prospectus, or amendment or supplement thereto, that was furnished in writing to the Issuer by such person expressly for inclusion in the Registration Statement, or preliminary, final or summary

 

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prospectus, or Issuer Free Writing Prospectus, or amendment or supplement thereto, or (b) the use by any such person of a prospectus in violation of any stop order or other suspension of the Registration Statement of which the Issuer made the Shareholder or other holder of Registrable Securities aware.

 

(ii)                                   Indemnification by Shareholders .  Each Shareholder of Acquired Common Shares, Acquired Preference Shares, Acquired Warrants or Underlying Common Shares included in any Registration Statement filed pursuant to this Agreement shall, notwithstanding termination of this Agreement, severally and not jointly, (a) indemnify and hold harmless the Issuer, its officers and directors, each person, if any, who controls the Issuer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and all other Shareholders against any losses, claims, damages or liabilities to which the Issuer, its officers or directors, such controlling persons or such other Shareholders may become subject under the Securities Act, the Exchange Act, or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any preliminary, final or summary prospectus contained therein or furnished by the Issuer to any such Shareholder, or any Issuer Free Writing Prospectus related to such registration, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, 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 furnished in writing to the Issuer by such Shareholder expressly for inclusion in the Registration Statement, or preliminary, final or summary prospectus, or Issuer Free Writing Prospectus, or amendment or supplement thereto, and (b) promptly reimburse, upon receipt of reasonably detailed invoices therefor, the Issuer for any legal or other out-of-pocket expenses reasonably incurred by the Issuer in connection with investigating or defending any such action or claim as such expenses are incurred; provided , however , that no such Shareholder shall be required to undertake liability to any Person under this Section 5(k)(ii)  for any amounts in excess of the dollar amount of the net proceeds actually received by such Shareholder from the sale of such Shareholder’s Registrable Securities pursuant to such Registration Statement and such undertaking shall be several, not joint and several, among such Shareholders.

 

(iii)                                Indemnification Procedures .  Promptly after receipt by an indemnified party under Section 5(k)(i)  or 5(k)(ii)  of written notice of the commencement of any action or threat thereof, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or contemplated by this Section 5(k) , promptly notify such indemnifying party in writing of the commencement of such action or threat; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party unless and to the extent such indemnifying party is materially prejudiced by such failure.  In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of

 

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other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation; provided , that if any indemnified party shall have reasonably concluded, with the advice of outside counsel, that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party without such indemnified party’s prior written consent (but, without such consent, shall have the right to participate therein with counsel of its choice) and such indemnifying party shall reimburse such indemnified party and any Person controlling such indemnified party for that portion of the fees and expenses of any one counsel retained by the indemnified party which is reasonably related to the matters covered by the indemnity provided hereunder.  If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim.  Such indemnifying party shall not enter into any settlement with a party unless such settlement (a) includes an unconditional release of each indemnified party with respect to any and all claims against each indemnified party and (b) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party or commit any indemnified party to take or refrain from taking any action.  An indemnified party shall not enter into any settlement without the consent of the indemnifying party, which consent shall not be unreasonably withheld or delayed.

 

(iv)                               Contribution if Indemnification Against Public Policy .  The Issuer and each Shareholder agrees that, if for any reason the indemnification provisions contemplated by Section 5(k)(i)  or 5(k)(ii)  are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations.  The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 5(k)(iv)  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 account of the equitable considerations referred to in this Section 5(k)(iv) .  The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above shall be deemed to include any documented legal or other fees or out-of-pocket expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  Notwithstanding the foregoing, the liability of any Shareholder hereunder this Section 5(k)(iv)  shall be limited to the amount of net proceeds received by such Shareholder in the offering giving rise to such liability, less any amounts paid pursuant to Section 5(k)(ii) .  No person guilty

 

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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 5(k)(iv)  to contribute shall be several in proportion to the principal amount of Registrable Securities registered by them severally and not jointly.

 

(v)                                  Obligations Not Exclusive .  The obligations of the Shareholders contemplated by this Section 5(k) shall be in addition to any liability which the respective Shareholder may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Issuer and to each person, if any, who controls the Issuer within the meaning of the Securities Act.

 

6.                                       Agreements with Respect to Tax Matters .

 

(a)                                  For so long as Subscriber holds at least 25% of the Acquired Preference Shares, (i) the Issuer will, not more frequently than once a year, determine whether it reasonably believes that it is a passive foreign company (a “ PFIC ”) as defined in Section 1297 of the Internal Revenue Code of 1986, as amended (the “ Code ”), with respect to the preceding taxable year and will notify Subscriber of its determination within 30 days of being requested to do so, (ii) the Issuer shall use commercially reasonable efforts to provide Subscriber all information and documents that are reasonably requested and required for Subscriber or any of its underlying holders to make and maintain a qualified electing fund election pursuant to Section 1295 of the Code with respect to the Issuer and any PFIC in which the Issuer holds a direct or indirect controlling interest as soon as reasonably practicable following any request for such information by the Subscriber and (iii) the Issuer will not make an election to be treated as other than a corporation for U.S. federal income tax purposes.

 

(b)                                  The Issuer shall use commercially reasonable efforts to provide Subscriber with any information reasonably accessible to the Issuer that is reasonably requested by Subscriber for purposes of filing Subscriber’s or its direct or indirect equity holders’ U.S. federal, state and local tax returns (including any refund claims) within 30 days of being requested to do so by Subscriber. The Issuer and Subscriber shall use commercially reasonable efforts to provide at the request of the other any information in its possession that is reasonably requested by U.S. federal, state, local or non-U.S. tax purposes. Subscriber shall use commercially reasonable efforts to provide the Issuer information with respect to its direct, indirect and constructive owners of its equity that is reasonably accessible to Subscriber that Subscriber is not prohibited from providing ( provided that, if Subscriber is prohibited from providing the information, Subscriber shall use commercially reasonable efforts to separate such information that it is not prohibited from providing or provide the information in a way that does not violate the prohibition), and is reasonably requested by the Issuer for purposes of its tax affairs (including for purposes of complying with the Foreign Account Tax Compliance Act, the Common Reporting Standard and other information reporting requirements and determining the status of the Issuer as a controlled foreign corporation).

 

7.                                       Confidentiality .  For the purposes of this Section 7 , “Confidential Information” means information delivered to Subscriber by or on behalf of the Issuer in connection with the transactions contemplated by or otherwise pursuant to this Subscription Agreement, provided

 

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that such term does not include information that (a) was publicly known or otherwise known to Subscriber prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by Subscriber or any person acting on Subscriber’s behalf, or (c) otherwise becomes known to Subscriber other than through disclosure by the Issuer or any of its subsidiaries or from a person who is known by Subscriber to be bound by a confidentiality agreement or other obligation not to transmit such information to Subscriber.  Subscriber will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by Subscriber in good faith to protect confidential information of third parties delivered to Subscriber, provided that Subscriber may deliver or disclose Confidential Information to (i) its directors, officers, employees, agents, attorneys, trustees and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by the Acquired Securities), (ii) its auditors, financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with this Section 7 , (iii) any federal or state regulatory authority having jurisdiction over Subscriber, or (iv) any other person to which such delivery or disclosure may be necessary or appropriate (x) to effect compliance with any law, rule, regulation or order applicable to Subscriber, (y) in response to any subpoena or other legal process or (z) in connection with any litigation to which Subscriber is a party.  Each permitted transferee of Subscriber will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 7 as though it were named as Subscriber in this Subscription Agreement. Neither Subscriber nor any of its permitted transferees shall transact in any Acquired Securities or Underlying Common Shares while in possession of material non-public information involving the Issuer.

 

8.                                       Termination; Survival .  Except for Section 9 , which shall survive any termination hereunder, this Subscription Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earlier to occur of (a) such date and time as the Merger Agreement is terminated in accordance with its terms, (b) upon the mutual written agreement of each of the parties hereto to terminate this Subscription Agreement, (c) if any of the conditions to Closing set forth in Section 2 of this Subscription Agreement are not satisfied on or prior to the Closing and, as a result thereof, the transactions contemplated by this Subscription Agreement are not consummated at the Closing or (d) if the Merger has not been consummated by November 30, 2018; provided , that nothing herein shall relieve any party from liability for any willful breach hereof prior to the time of termination, and each party shall be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from such breach.  The Issuer shall promptly notify Subscriber of the termination of the Merger Agreement promptly after the termination thereof.  All the representations, warranties and agreements made by each party hereto, including the agreements set forth in Sections 5 , shall survive the Closing.

 

9.                                       Miscellaneous .

 

(a)                                  Subscriber acknowledges that the Issuer and others will rely on the acknowledgments, understandings, agreements, representations and warranties contained in this Subscription Agreement.  Prior to the Closing, Subscriber agrees to promptly notify the Issuer if any of the acknowledgments, understandings, agreements, representations and warranties set forth herein are no longer accurate in all material respects.

 

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(b)                                  Each of the Issuer and Subscriber is entitled to rely upon this Subscription Agreement and is irrevocably authorized to produce this Subscription Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

(c)                                   Each of the Issuer and Subscriber acknowledges and agrees that the Placement Agents shall be entitled to rely on their respective representations and warranties contained in Section 3 and Section 4 , respectively, of this Subscription Agreement as if such representations and warranties were being made to the Placement Agents.  Subscriber acknowledges that it is not relying on the Placement Agents or their respective affiliates with respect to (i) the legal, tax, economic and related considerations of an investment in the Acquired Securities and Underlying Common Shares, (ii) the accuracy or completeness of any documents or materials provided by the Issuer to Subscriber, or (iii) Subscriber’s decision to subscribe for and purchase the Acquired Securities.

 

(d)                                  Neither this Subscription Agreement nor any rights that may accrue to Subscriber hereunder (other than the Acquired Securities and Underlying Common Shares acquired hereunder, if any, and the rights set forth in Section 5 , which may be transferred to any transferee of Acquired Securities or Underlying Common Shares) may be transferred or assigned; provided that the rights and obligations herein may be assigned by Subscriber to any Affiliate of Subscriber.

 

(e)                                   The Issuer may request from Subscriber such additional information as the Issuer may deem necessary to evaluate the eligibility of Subscriber to acquire the Acquired Securities and Underlying Common Shares, and Subscriber shall provide such information as may be reasonably requested, to the extent readily available and to the extent consistent with its internal policies and procedures.

 

(f)                                    This Subscription Agreement may not be modified, waived or terminated except by an instrument in writing, signed by the party against whom enforcement of such modification, waiver, or termination is sought.

 

(g)                                   This Subscription Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof.

 

(h)                                  Except as otherwise provided herein, this Subscription Agreement shall be binding upon, and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

(i)                                      If any provision of this Subscription Agreement shall be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Subscription Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.

 

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(j)                                     This Subscription Agreement may be executed in two (2) or more counterparts (including by electronic means), all of which shall be considered one and the same agreement and shall become effective when signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

 

(k)                                  Subscriber shall pay all of its own expenses in connection with this Subscription Agreement and the transactions contemplated herein; provided that Issuer shall pay the reasonable and documented out-of-pocket fees and expenses of Subscriber (including the reasonable and documented fees of one counsel to Subscriber and each other purchaser of Preference Shares in an amount up to $100,000) or, in the event that the stockholders of Easterly do not approve the Merger, all reasonable and documented out-of-pocket expenses of Subscriber, in each case incurred in connection with this Subscription Agreement and the transactions contemplated herein.

 

(l)                                      Neither the Issuer nor CMIG International has entered into any agreements or side letters with any purchaser of Preference Shares or any of their respective Affiliates with respect to the matters contemplated hereby, other than subscription agreements in substantially the form hereof, the Certificate of Designation, the Warrant and the Shareholders Agreement. No other purchaser of Preference Shares will be given more favorable terms with respect to the matters contemplated hereby than the terms set forth herein.

 

(m)                              Any notice or communication required or permitted hereunder shall be in writing and either delivered personally, emailed, telecopied, sent by overnight mail via a reputable overnight carrier, or sent by certified or registered mail, postage prepaid, and shall be deemed to be given and received (a) when so delivered personally, (b) upon receipt of an appropriate electronic answerback or confirmation when so delivered by telecopy (to such number specified below or another number or numbers as such person may subsequently designate by notice given hereunder), (c) when sent, with no mail undeliverable or other rejection notice, if sent by email, or (d) five (5) business days after the date of mailing to the address below or to such other address or addresses as such person may hereafter designate by notice given hereunder:

 

(i)                                      if to Subscriber, to such address or addresses set forth on the signature page hereto;

 

(ii)                                   if to the Issuer, to:

 

Sirius International Insurance Group, Ltd.

14 Wesley Street, 5th Floor

Hamilton HM11 Bermuda

Attention: Gene Boxer

Email:             Gene.Boxer@siriusgroup.com

 

with a copy to (which shall not constitute notice to the Issuer):

 

Sidley Austin LLP
One South Dearborn
Chicago, Illinois 60603

 

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Attention: Sean Keyvan
Email: skeyvan@sidley.com

 

(n)                                  NOTWITHSTANDING THE PLACE WHERE THIS SUBSCRIPTION AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT THIS SUBSCRIPTION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS OF SUCH JURISDICTION. Any and all suits, legal actions or proceedings arising out of this Subscription Agreement shall be brought in the courts of the State of New York or the United States District Court for the Southern District of New York and each party to this Subscription Agreement hereby submits to and accepts the exclusive jurisdiction of such courts for the purpose of such suits, legal actions or proceedings. In any such suit, legal action or proceeding, each party to this Subscription Agreement waives personal service of any summons, complaint or other process and agrees that service thereof may be made by certified or registered mail directed to it pursuant to Section 9(m) . To the fullest extent permitted by law, each party hereto hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue or any such suit, legal action or proceeding in any such court and hereby further waives any claim that any such suit, legal action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(o)                                  As used herein, “business day” means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City, New York, or Bermuda generally are authorized or obligated by law or executive order to close; and “Affiliate” means, with respect to any person, any other person who, directly or indirectly, controls, is controlled by, or is under common control with such person.

 

[Signature pages follow.]

 

26



 

IN WITNESS WHEREOF , each of the Issuer and Subscriber has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date set forth below.

 

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

Date: [ · ], 2018

 

Signature Page to

Subscription Agreement

 



 

SUBSCRIBER:

 

 

 

 

 

Signature of Subscriber:

 

Signature of Joint Subscriber, if applicable:

 

 

 

By:

 

 

By:

 

Name:

 

Name:

Title:

 

Title:

 

 

 

Date: [ · ], 2018

 

 

 

 

 

Name of Subscriber:

 

Name of Joint Subscriber, if applicable:

 

 

 

 

 

 

(Please print. Please indicate name and
capacity of person signing above)

 

(Please Print. Please indicate name and
capacity of person signing above)

 

 

 

 

 

 

Name in which securities are to be registered
(if different)

 

 

 

 

 

Email Address:                       

 

 

 

 

 

If there are joint investors, please check one:

 

 

 

 

 

o Joint Tenants with Rights of Survivorship

 

 

 

 

 

o Tenants-in-Common

 

 

 

 

 

o Community Property

 

 

 

 

 

Subscriber’s EIN:                    

 

Joint Subscriber’s EIN:

 

 

 

Business Address-Street:

 

Mailing Address-Street (if different):

 

 

 

 

 

 

 

 

 

City, State, Zip:

 

City, State, Zip (if different):

 

 

 

Attn:

 

Attn:

 

 

 

Telephone No.:

 

Telephone No.:

 

 

 

Facsimile No.:

 

Facsimile No.:

 

Aggregate Number of Acquired Common Shares subscribed for:

 

Aggregate Number of Acquired Preference Shares subscribed for:

 

Aggregate Number of Acquired Warrants subscribed for:

 

Signature Page to

Subscription Agreement

 



 

You must pay the Aggregate Purchase Price by wire transfer of United States dollars in immediately available funds to the account specified by the Issuer in the Closing Notice.

 

Accepted and agreed,

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

Signature of Subscriber:

 

 

 

[                         ]

 

 

 

By:

 

 

Name:

 

Title:

 

 

Signature Page to

Subscription Agreement

 


 

SCHEDULE A
ELIGIBILITY REPRESENTATIONS OF SUBSCRIBER

 

A.                                     QUALIFIED INSTITUTIONAL BUYER STATUS
(Please check the applicable subparagraphs):

 

1.                                       o   We are a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act (a “QIB”)).

 

2.                                       o   We are subscribing for the Acquired Securities as a fiduciary or agent for one or more investor accounts, and each owner of such account is a QIB.

 

*** OR ***

 

B.                                     INSTITUTIONAL ACCREDITED INVESTOR STATUS
(Please check the applicable subparagraphs):

 

1.                                       o   We are an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) or an entity in which all of the equity holders are accredited investors within the meaning of Rule 501(a) under the Securities Act, and have marked and initialed the appropriate box on the following page indicating the provision under which we qualify as an “accredited investor.”

 

2.                                       o   We are not a natural person.

 

*** AND ***

 

C.                                     AFFILIATE STATUS
(Please check the applicable box)

 

SUBSCRIBER:

 

o                                     is:

 

o                                     is not:

 

an “affiliate” (as defined in Rule 144 under the Securities Act) of the Issuer or acting on behalf of an affiliate of the Issuer.

 

This page should be completed by Subscriber
and constitutes a part of the Subscription Agreement.

 

Schedule A - 1



 

Rule 501(a), in relevant part, states that an “accredited investor” shall mean any person who comes within any of the below listed categories, or who the issuer reasonably believes comes within any of the below listed categories, at the time of the sale of the securities to that person.  Subscriber has indicated, by marking and initialing the appropriate box below, the provision(s) below which apply to Subscriber and under which Subscriber accordingly qualifies as an “accredited investor.”

 

o   Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a) (5)(A) of the Securities Act whether acting in its individual or fiduciary capacity;

 

o   Any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934;

 

o   Any insurance company as defined in section 2(a)(13) of the Securities Act;

 

o   Any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act;

 

o   Any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958;

 

o   Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000;

 

o   Any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

 

o   Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;

 

o   Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; or

 

o   Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in § 230.506(b)(2)(ii).

 

Schedule A - 2




Exhibit 10.7.2

 

SECOND AMENDMENT TO THE
SIRIUS GROUP LONG TERM INCENTIVE PLAN

 

WHEREAS , Sirius International Insurance Group, Ltd., a Bermuda exempted company corporation (the “ Company ”), maintains the Sirius Group Long Term Incentive Plan (the “ Plan ”) under which the Compensation Committee (the “ Committee ”) of the Company’s Board of Directors (the “ Board ”) has the authority to grant performance units and performance shares to employees of the Company;

 

WHEREAS , the Board and Easterly Acquisition Corp. (“ Easterly ”) have each approved an Agreement and Plan of Merger, dated as of June 23, 2018, as amended on August 29, 2018, pursuant to which Easterly will become a wholly owned subsidiary of the Company, and the Company will become publicly traded on the Nasdaq Stock Market (the “ Business Combination ”);

 

WHEREAS, pursuant to Section 17 of the Plan and a resolution adopted by the Board, the Committee has the authority to amend the Plan as it shall deem advisable, provided that no amendment of the Plan shall adversely affect any right of any Participant with respect to any award previously granted without such Participant’s written consent; and

 

WHEREAS, the Board has previously deemed it to be in the best interest of the Company and its shareholders to amend the Plan to provide for the treatment of outstanding awards upon a qualifying termination of employment, as contemplated below.

 

NOW, THEREFORE, BE IT RESOLVED, that the Plan hereby is amended, effective as September 10, 2018, as follows:

 

1.                                       The first paragraph of Section 6(e) is hereby deleted and replaced with the following:

 

“e.                      Except as otherwise determined by the Committee or provided under Section 6(f), Performance Units shall be cancelled if the Participant’s continuous employment with the Company or its affiliates shall terminate for any reason prior to the end of the Award Period, except solely by reason of a period of Related Employment as defined in Section 9.”

 

2.                                       Sections 6(f) through 6(h) are renumbered as Sections 6(g) through 6(i), respectively, and the following new Section 6(f) is inserted after Section 6(e):

 

“f.                       If the Participant’s employment terminates other than pursuant to Section 6(g) and the Participant becomes entitled to “Severance Benefits” (as defined under the Sirius Group Severance and Change in Control Plan (the “Severance Plan”)), then solely for purposes of Section 6(e), the Participant shall be deemed to remain employed and continue to vest in the Performance Units until the Severance Period lapses (as provided under the Severance Plan), subject to attainment of the applicable performance conditions, as provided herein, at which time, Participant shall be deemed to have terminated employment.  Notwithstanding anything else provided

 

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under Section 6(g), this treatment of continued employment shall only provide for continued vesting under the Plan and shall not allow or provide for any Change in Control benefits under Section 6(g).”

 

3.                                       The first paragraph of Section 7(d) is hereby deleted and replaced with the following:

 

“d.                     Except as otherwise determined by the Committee or provided under Section 7(e), Performance Shares shall be cancelled if the Participant’s continuous employment with the Company or any of its subsidiaries shall terminate for any reason prior to the end of the Award Period, except by reason of a period of Related Employment as defined in Section 9.”

 

4.                                       Sections 7(e) through 7(h) are renumbered as Sections 7(f) through 7(i), respectively, and the following Section 7(e) is inserted after Section 7(d):

 

“e.                        If the Participant’s employment terminates other than pursuant to Section 7(f) and the Participant becomes entitled to “Severance Benefits” (as defined under the Severance Plan), then solely for purposes of Section 7(d), the Participant shall remain employed and continue to vest in the Performance Shares until the Severance Period lapses (as provided under the Severance Plan), subject to attainment of the applicable performance conditions, at which time, Participant shall be deemed to have terminated employment.  Notwithstanding anything else provided under Section 7(f), this treatment of continued employment shall only provide for continued vesting under the Plan and shall not allow or provide for any Change in Control benefits under Section 7(f).”

 

5.                                       The following Section 19 is hereby added following Section 18:

 

The severance benefits provided under the Plan are not meant to replace or supersede any severance benefits provided under the Severance Plan or any employment agreement, arrangement or award agreement or any other similar contractual arrangement (“Other Severance Benefits”) and the severance benefits provided under the Plan are not intended to result in any duplicative benefits to the Participant and the Plan shall be administered accordingly.  Accordingly, the Committee, in good faith, shall exercise its discretion and to the extent permitted under applicable law, equitably offset against the Participant’s severance benefits under the Plan against any other severance, termination, or similar benefits payable to the Participant by the Company with respect to the Other Severance Benefits or amounts paid to comply with, or satisfy liability under, the Worker Adjustment and Retraining Notification Act or any other foreign, federal, state, or local law requiring payments in connection with any termination of employment, plant shutdown, or workforce reduction, including, but not limited to, amounts paid in connection with paid leaves of absence, back pay, benefits, and other payments intended to satisfy such liability or alleged liability.  For the avoidance of doubt, this Section 19 is not meant to impinge or interfere with the Company’s ability to require Participant to follow or adhere to any steps or requirements under the Severance Plan or Other Severance Benefits to obtain

 

2



 

severance benefits contemplated thereunder (e.g., executing any releases, complying with any restrictive, etc.)

 

***

 

As amended by this amendment, the Plan is in all respects ratified and confirmed, and as so amended by this amendment, the Plan shall be read, taken and construed as one and the same instrument.

 

3



 

IN WITNESS WHEREOF , the Company has caused this instrument to be executed by its duly authorized agent on September 10, 2018.

 

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Allan Waters

 

 

Name:

Allan Waters

 

 

Title:

Chief Executive Officer

 

4




Exhibit 10.8

 

SIRIUS GROUP

 

SEVERANCE AND CHANGE IN CONTROL PLAN

 

(Effective September 10, 2018)

 

In order to advance the interests of Sirius International Insurance Group, Ltd., an exempted company organized and existing under the laws of Bermuda (the “ Company ”), and to encourage the attraction and retention of its key employees, the Compensation Committee of the Board of Directors (the “ Committee ”) of the Company has adopted the Sirius Group Severance and Change in Control Plan (as it may be amended pursuant to the terms hereof, this “ Plan ”).

 

SECTION 1.  Definitions .  For purposes of this Plan, the following terms shall have the meanings set forth below:

 

(a)  Accountants ” shall have the meaning set forth in Section 3(f) .

 

(b)  Accrued Rights ” shall have the meaning set forth in Section 3(a) .

 

(c)  Affiliate(s) ” shall mean any corporation, partnership, limited liability company, limited liability partnership, association, trust or other organization that directly or indirectly controls, is controlled by or is under common control with the Company.  For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power for the election of directors of the controlled entity or organization, or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities, by contract or otherwise.

 

(d)  Annual Base Salary ” shall mean, with respect to any Participant, such Participant’s annual rate of base salary in effect immediately prior to such Participant’s Termination Date (or, in the event of the Participant’s resignation for Good Reason, the annual rate of base salary in effect immediately prior to the condition giving rise to such resignation if such annual rate of base salary is higher than the annual rate of base salary in effect immediately prior to such Participant’s Termination Date).

 

(e)  Cause ” shall have the meaning set forth in any then applicable employment or other similar written agreement (including such similar term or concept, as determined by the Committee) between the Participant and the Company or an Affiliate.  If there is no such written agreement or if such agreement does not define “Cause,” then “Cause” shall mean (i) a material and continued failure of the Participant to perform Participant’s duties, other than due to death or Disability, which failure has continued for more than 30 days following written notice of such nonperformance from the Company; (ii) conviction of or pleading guilty or no contest to an act of fraud, embezzlement, or misappropriation of assets or property (tangible or intangible) of the Company or any Affiliate thereof; (iii) a material breach of the Restrictive Covenant Agreement; (iv) commission of a felony, including a plea of guilty or nolo contendere, or an indictment or written admission thereof; (v) gross negligence or willful misconduct in the performance by the Participant of his duties that is reasonably likely to have an adverse effect on the business,

 

1



 

reputation or financial condition of the Company or its Affiliates; or (vi) the Participant’s material violation of the material written policies of the Company (e.g., sexual harassment, data protection policy, etc.).

 

(f)  Change in Control ” shall have the same meaning as such term is defined under the Omnibus Plan, or any successor thereto.

 

(g)  CIC Severance Multiple ” shall be the multiple provided for in the Participation Agreement.

 

(h)  Claimant ” shall have the meaning set forth in Section 4(c) .

 

(i)  COBRA ” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time, or any successor statute thereto.

 

(j)  Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.

 

(k)  Disability ” shall mean, with respect to any U.S. Participant, such Participant becoming disabled under one of the Company’s long-term disability plans or becoming eligible for benefits from the Social Security Administration. For all non-U.S. Participants, disability shall mean the Participant is incapacitated for a period of at least 180 days by accident, sickness or other circumstance that renders such Participant mentally or physically incapable of performing the material duties and services required of the Participant in the Participant’s position with the Company on a full-time basis during such period.

 

(l)  Effective Date ” shall mean September 10, 2018 .

 

(m)  Employment ” shall mean employment with the Company or any Affiliate of the Company.  A Participant’s Employment shall be deemed to have continued notwithstanding a transfer of employment between the Company and any of its Affiliates, or between any two Affiliates.

 

(n)  ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor statute thereto.

 

(o)  Excise Tax ” shall have the meaning set forth in Section 3(f) .

 

(p)  Good Reason ” shall have the meaning set forth in any then applicable employment or other similar written agreement (including such similar term or concept, as determined by the Committee) between the Participant and the Company or an Affiliate.  If there is no such written agreement or if such agreement does not define “Good Reason,” then “Good Reason” shall mean the Participant has complied with the Good Reason Process (as defined below) following the occurrence of any of the following conditions (without Participant’s written consent or waiver): (i) a material diminution in the Participant’s responsibilities, authority or duties, unless such diminution is in connection with a Cause event; (ii) a diminution in the Participant’s Annual Base Salary or target annual bonus opportunity; (iii) during the 24-month period following a Change in Control, a material diminution in the regular target annual long term incentive

 

2



 

opportunity or the annual target long-term incentive award subsequently granted to the Participant in an amount less than the regular target opportunity, but in all cases disregarding the equity awards granted in connection with the Company’s going-public transaction in 2018 and other special cash or equity awards; (iv) a material change in the geographic location at which the Participant provides services to the Company; or (v) a material breach of any employment or other material agreement between the Company or one of its Affiliates and the Participant.  For purposes of this Agreement, “ Good Reason Process ” shall mean that (i) the Participant reasonably determines in good faith that a Good Reason condition has occurred; (ii) the Participant notifies the Company in writing of the occurrence of the Good Reason condition within 60 days of the Participant having actual or constructive knowledge of the occurrence of such condition; (iii) the Participant cooperates in good faith with the Company’s efforts, for a period not less than 30 days following such notice (the “ Cure Period ”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) the Participant terminates Participant’s Employment at least 10 days, but no more than 60 days, after the end of the Cure Period.  For the avoidance of doubt, if the Company cures the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

 

(q)  Omnibus Plan ” shall mean the Sirius International Insurance Group, Ltd. 2018 Omnibus Incentive Plan or any successor thereto.

 

(r)  Participant ” shall mean any employee of the Company (or one of its Affiliates) selected by the Plan Administrator in accordance with Section 2 who has entered into a Participation Agreement and otherwise meets the requirements of Section 2 .

 

(s)  Participation Agreement ” shall mean the written agreement evidencing participation under this Plan between the Company and the recipient of such award.

 

(t)  Payments ” shall have the meaning set forth in Section 3(f) .

 

(u)  Plan Administrator ” shall mean (i) the Committee with respect to any Participant who is subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and (ii) the Company’s Chief Executive Officer or such other person as may be designated by the Committee from time to time with respect to any Participant who is not subject to Section 16 of the Exchange Act.

 

(v)  Restrictive Covenant Agreement ” shall mean a restrictive covenant agreement in the form prescribed by the Company and signed by each participant as a condition to participation in this Plan.

 

(w)  Section 409A Payment shall have the meaning set forth in Section 5(d) .

 

(x)  Severance Benefits ” shall mean the severance benefits under Section 3(b)  and Section 3(c) .

 

(y)  Severance Period ” shall be the period of time provided for in the Participation Agreement.

 

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(z)  Target Bonus ” shall mean, with respect to any Participant, such Participant’s annual target bonus opportunity in effect immediately prior to such Participant’s Termination Date (or, in the event of the Participant’s resignation for Good Reason, the annual target bonus opportunity in effect immediately prior to the condition giving rise to such resignation if such annual target bonus opportunity is higher than the annual target bonus opportunity in effect immediately prior to such Participant’s Termination Date).

 

(aa)   “ Termination Date ” shall mean, with respect to any Participant, the effective date of such Participant’s termination of Employment, as determined in accordance with Section 5(d) .

 

SECTION 2.  Eligibility .  The Plan Administrator shall from time to time, in its sole discretion, select and designate in writing, which of the Company’s (including any of its Affiliates) employees are eligible to participate in this Plan and such employee shall become a Participant under this Plan conditioned upon accepting and executing a Participation Agreement and a Restrictive Covenant Agreement within 30 days after a Participation Agreement is delivered to such employee.

 

SECTION 3.  Compensation, Benefits and Effect of Termination of Employment .

 

(a)  Effect of Termination of Employment on Compensation and Accrued Rights .  Except as provided under Section 3(b)  or Section 3(c) , upon termination of a Participant’s Employment for any reason, all compensation and all benefits to the Participant shall terminate, provided that the Company shall pay the Participant the following benefits (collectively the “ Accrued Rights ”):

 

(i)  the earned but unpaid portion of the Participant’s Annual Base Salary through the Termination Date;

 

(ii)  any fully-vested annual, long-term, or other incentive award that relates to a completed fiscal year or performance period, as applicable, and is payable (but not yet paid) on or before the Termination Date, which shall be paid in accordance with the terms of such award;

 

(iii)  a lump-sum payment in respect of accrued but unused vacation days at the Participant’s per-business-day Annual Base Salary rate in effect as of the Termination Date; and

 

(iv)  any unpaid expense or other reimbursements due to the Participant.

 

(b)  Effect of Termination without Cause or Resignation for Good Reason .  Subject to Section 3(c) , Section 3(d) , and Section 3(e) , upon a Participant’s termination of Employment, which constitutes a termination by the Company without Cause or resignation for Good Reason, in addition to the Accrued Rights, the Company shall provide the Participant the following payments and benefits:

 

(i)  continued Annual Base Salary during the Severance Period payable in equal installments in accordance with the Company’s normal payroll practices, but no less frequently than monthly, which shall commence within 60 days following the Termination Date, except as provided under Section 5 ;

 

4



 

(ii)  with respect to any annual bonus award that relates to a completed fiscal year or performance period, as applicable, ending on or before the Termination Date but which has not yet been paid, the Participant shall be treated as meeting any relevant service condition and shall be paid the annual bonus award at such time as annual bonuses are payable generally to bonus-eligible employees, with such bonus calculated based on actual performance results;

 

(iii)  a pro rata annual bonus for the year of such termination of Employment based on the number of days the Participant was employed during the year of termination, which shall be calculated based on actual performance results with such pro rata annual bonus being paid to the Participant in the fiscal year next following the year in which the Participant’s Employment terminates, at the same time annual bonuses for such preceding year are paid to the Company’s other bonus eligible employees and in any event by no later than the 15th day of the third month following the close of such preceding year;

 

(iv)  during the Severance Period, if the Participant timely and properly elects health continuation coverage under COBRA, the Company shall reimburse the Participant for the difference between the monthly COBRA premium paid by the Participant, including any administrative fee and the monthly premium amount paid by similarly situated active Participants. Such reimbursement shall be paid to the Participant by the 10th of the month immediately following the month in which the Participant timely remits the premium payment; and

 

(v)  all outstanding equity compensation awards shall become vested to the extent provided under the terms of the applicable equity compensation plan or award agreement thereunder.

 

(c)  Effect of Termination without Cause and or Resignation for Good Reason Following a Change in Control .  Subject to Section 3(d)  and Section 3(e) , upon a Participant’s termination of Employment which constitutes a termination by the Company without Cause or a resignation for Good Reason and occurs within 24 months following the consummation of a Change in Control, in addition to the Accrued Rights, but in lieu of the Severance Benefits payable under Section 3(b) , the Company shall provide the Participant the following payments and benefits:

 

(i)  except as provided under Section 5 , a cash payment equal to the CIC Severance Multiple times the Participant’s Annual Base Salary, paid in a single lump sum within 60 days following the Termination Date;

 

(ii)  with respect to any annual bonus award that relates to a completed fiscal year or performance period, as applicable, ending on or before the Termination Date, but which has not yet been paid, the Participant shall be treated as meeting any relevant service condition and shall be paid the annual bonus award at such time as annual bonuses are payable generally to bonus-eligible employees, with such bonus calculated based on actual performance results;

 

(iii)  except as provided under Section 5 , a cash payment equal to a pro rata portion of the Participant’s Target Bonus, based on the number of days the Participant was

 

5



 

employed during the year of termination, which shall be paid in a single lump sum within 60 days following the Termination Date;

 

(iv)  except as provided under Section 5 , a cash payment equal to: (A) the CIC Severance Multiple times (B) 12 times (C) the difference between the monthly COBRA premium, which would have been paid by the Participant, including any administrative fee and the monthly premium amount paid by similarly situated active Participants; and

 

(v)  all outstanding equity compensation awards, except for those granted under the Sirius Group Long Term Incentive Plan, shall become fully vested (with the attainment or deemed attainment of any applicable performance conditions determined under the terms of the applicable equity compensation plan or award agreement thereunder).

 

(d)  Release of Claims .  The obligations of the Company and its Affiliates under this Section 3 (except upon such Participant’s death) shall be subject to such Participant’s execution, within 45 days after the Termination Date, of a general release and waiver substantially in a form prescribed by the Company, which has become irrevocable following any revocation period permitted by the Company.

 

(e)  Recoupment .  Notwithstanding any provisions in this Plan to the contrary, the Committee may, in its sole and absolute discretion, in the event of the Participant’s material breach of a material obligation of the Participant to the Company pursuant to any award or agreement between the Participant and the Company, including a material breach of the Restrictive Covenant Agreement or a determination that a Cause event has occurred, regardless of whether this determination happened prior to or following the Termination Date: (A) terminate the right of such Participant to receive any payment under this Section 3 , to the extent it has not been paid, (B) seek the recoupment of any payment paid to such Participant under this Section 3 , including through exercise rights of set-off, forfeiture or cancellation, to the full extent permitted by law, with respect to any other awards, benefits or payments otherwise due the Participant from the Company or any of its Affiliates, to the extent the Committee in its sole discretion deems appropriate after considering the relevant facts and circumstances.  Notwithstanding the foregoing, the Company will not have the right to terminate or recoup any portion of the Accrued Rights. Any termination and/or recoupment of a Participant’s benefits under this Plan shall be in addition and without prejudice to any other remedies that the Company might elect to assert.

 

(f)  Code Section 280G .  Except as provided for in any then applicable employment or other similar written agreement and notwithstanding anything to the contrary in this Plan, by participating in this Plan, each Participant expressly agrees that if it is determined that any benefits paid or payable under this Plan to a Participant would give rise to liability of the Participant for the excise tax imposed by Section 4999 of the Code or any successor provision (the “ Excise Tax ”), then the amount payable to the Participant (the total value of such amounts, the “ Payments ”) shall be reduced by the Company to the extent necessary so that no portion of the Payments is subject to the Excise Tax; provided , however , such reduction shall be made only if it results in the Participant retaining a greater amount of Payments on an after-tax basis (taking into account the Excise Tax and applicable federal, state, and local income and payroll taxes).  In the event Payments are required to be reduced pursuant to this Section 3(f) , then they shall be reduced in the following order of priority in a manner consistent with Section 409A of the Code: (i) first from cash benefits (ii) next from equity benefits, with benefits having later payments

 

6



 

dates being reduced first; and (iii) in the case of equity benefits having the same payments dates, pro-rata amongst all such benefits. The Committee shall, in its sole discretion, choose an independent public accounting firm or professional consulting services provider of national reputation and experience (the “ Accountants ”) to make in writing in good faith all calculations and determinations under this Section 3(f)  including the assumptions to be used in arriving at any calculations.  For purposes of making the calculations and determinations under this Section 3(f) , the Accountants may make reasonable assumptions and approximations concerning the application of Sections 280G and 4999 of the Code.  The Company shall furnish to the Accountants information and documents as the Accountants may reasonably request to make the calculations and determinations under this Section 3(f)  and shall bear all costs the Accountants incur in connection with any calculations contemplated hereby.

 

SECTION 4.  Administration of Plan; Claims Procedure .

 

(a)  General .  Except as specifically provided herein, this Plan shall be administered by the Plan Administrator.  The Plan Administrator may delegate any administrative duties, including, without limitation, duties with respect to the processing, review, investigation, approval and payment of benefits under this plan to designated individuals or committees.  The Plan Administrator shall be the “administrator” and a “named fiduciary” under this Plan for purposes of ERISA.

 

(b)  Interpretations and Variations .  The Plan Administrator shall have the duty and authority to interpret and construe, in its sole discretion, the terms of this Plan in regard to all questions of eligibility, the status and rights of Participants, and the manner, time and amount of any payment under this Plan.  The Plan Administrator or its representative shall decide any issues arising under this Plan, and the decision of the Plan Administrator shall be binding and conclusive on the Participants and the Company.  Any variations from this Plan may be made only by the Plan Administrator in its sole discretion.

 

(c)  Filing a Claim .  It is not normally necessary to file a claim in order to receive benefits under this Plan; however, if a Participant (the “ Claimant ”) feels he or she has been improperly denied benefits under this Plan, any claim for payment of such benefits shall be signed, dated and submitted to the Company in accordance with Section 8(a) .  All claims relating to this Plan must be filed within 90 days following the Participant’s Termination Date, unless the Plan Administrator otherwise specifies in writing.  The Plan Administrator shall then evaluate the claim and notify the Claimant of the approval or disapproval in accordance with the provisions of this Plan not later than 90 days after the Company’s receipt of such claim unless special circumstances require an extension of time for processing the claims.  If such an extension of time for processing is required, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial 90 day period which shall specify the special circumstances requiring an extension and the date by which a final decision will be reached (which date shall not be later than 180 days after the date on which the claim was filed).  If the Claimant does not provide all the necessary information for the Plan Administrator to process the claim, the Plan Administrator may request additional information and set deadlines for the Claimant to provide that information.

 

7



 

(d)  Notice of Initial Determination .  The Claimant shall be given a written notice in which the Claimant shall be advised as to whether the claim is granted or denied, in whole or in part.  If a claim is denied, in whole or in part, the Claimant shall be given written notice which shall contain (i) the specific reasons for the denial, (ii) specific references to pertinent Plan provisions on which the denial is based, (iii) a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary and (iv) an explanation of this Plan’s appeal procedures, which shall also include a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following a denial of the claim upon review.

 

(e)  Right to Appeal .  If a claim for payment of benefits under this Plan made in accordance with the procedures specified in this Plan is denied, in whole or in part, the Claimant shall have the right to request that the Plan Administrator review the denial, provided that the Claimant files a written request for review with the Plan Administrator within 60 days after the date on which the Claimant received written notification of the denial.  The Claimant may review or receive copies, upon request and free of charge, any documents, records or other information “relevant” (within the meaning of Department of Labor Regulation 2560.503-1(m)(8)) to the Claimant’s claim.  The Claimant may also submit written comments, documents, records and other information relating to his or her claim.

 

(f)  Review of Appeal .  In deciding a Claimant’s appeal, the Plan Administrator shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial review of the claim.  If the Claimant does not provide all the necessary information for the Plan Administrator to decide the appeal, the Plan Administrator may request additional information and set deadlines for the Claimant to provide that information.  Within 60 days after a request for review is received, the review shall be made and the Claimant shall be advised in writing of the decision on review, unless special circumstances require an extension of time for processing the review, in which case the Claimant shall be given a written notification within such initial 60 day period specifying the reasons for the extension and when such review shall be completed ( provided that such review shall be completed within 120 days after the date on which the request for review was filed).

 

(g)  Notice of Appeal Determination .  The decision on review shall be forwarded to the Claimant in writing and, in the case of a denial, shall include (i) specific reasons for the decision, (ii) specific references to the pertinent Plan provisions upon which the decision is based, (iii) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records or other information relevant to the Claimant’s claim and (iv) a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following a wholly or partially denied claim for benefits.  The Plan Administrator’s decision on review shall be final and binding on all persons for all purposes.  If a Claimant shall fail to file a request for review in accordance with the procedures herein outlined, such Claimant shall have no right to review and shall have no right to bring an action in any court, and the denial of the claim shall become final and binding on all persons for all purposes.  Any notice and decisions by the Plan Administrator under this Section 4 may be furnished electronically in accordance with Department of Labor Regulation 2520.104b-1(c)(i), (iii) and (iv).

 

8



 

(h)  Arbitration; Statute of Limitations .  No Claimant may bring any legal action to recover benefits under this Plan until he or she has exhausted the internal administrative claims and appeals process described above. No legal action may be commenced at all, unless commenced no later than one year following the issuance of a final decision on the claim for benefits, or the expiration of the appeal decision period if no decision is issued. This one-year statute of limitations on suits for all benefits available under this Plan shall apply in any forum where such legal action is initiated. Upon Claimant’s exhaustion of the provisions set forth above, any Claimant with a continuing dispute arising out of or relating to this Plan or the adoption, breach, termination or validity thereof, will be settled by binding arbitration by a panel of three arbitrators in accordance with the commercial arbitration rules of the American Arbitration Association.  The arbitration proceedings will be located in New York City, New York.  The arbitrators are not empowered to award damages in excess of compensatory damages and no party shall be entitled to any damages in excess of compensatory damages.  Judgment upon any arbitration award may be entered into any court having jurisdiction thereof and the parties consent to the jurisdiction of any court of competent jurisdiction located in the State of New York.  BY PARTICIPATING IN THIS PLAN, PARTICIPANT WAIVES ANY RIGHT THAT PARTICIPANT MAY HAVE TO A JURY TRIAL OR, EXCEPT AS EXPRESSLY PROVIDED HEREIN, A COURT TRIAL OF ANY CLAIM ALLEGED BY PARTICIPANT.

 

SECTION 5.  Section 409A Compliance; Changes in Law .

 

(a)  It is the intention of the Company that the provisions of this Plan comply with Section 409A of the Code, and all provisions of this Plan shall be construed and interpreted in a manner consistent with Section 409A of the Code.  The Company shall administer and operate this Plan in compliance with Section 409A of the Code and any rules, regulations or other guidance promulgated thereunder as in effect from time to time and in the event that the Company determines that any provision of this Plan does not comply with Section 409A of the Code or any such rules, regulations or guidance and that as a result any Participant may become subject to a tax under Section 409A of the Code, notwithstanding Section 8(l) , the Company shall have the discretion to amend or modify such provision to avoid the application of such tax, and in no event shall any Participant’s consent be required for such amendment or modification.  Notwithstanding any provision of this Plan to the contrary, each Participant shall be solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with amounts payable pursuant to this Plan (including any taxes arising under Section 409A of the Code), and the Company not shall have any obligation to indemnify or otherwise hold such Participant harmless from any or all of such taxes.

 

(b)  In the event that the Company determines that any provision of this Plan violates, or would result in any material liability (other than liabilities for the Severance Benefits) to the Company under, any law, regulation, rule or similar authority of any governmental agency the Company shall be entitled, notwithstanding Section 8(l) , to amend or modify such provision as the Company determines in its discretion to be necessary or desirable to avoid such violation or liability, and in no event shall any Participant’s consent be required for such amendment or modification.

 

9


 

(c)  The payments under this Plan are designated as separate payments for purposes of the short-term deferral rule under Treasury Regulation Section 1.409A-1(b)(4), the exemption for involuntary terminations under separation pay plans under Treasury Regulation Section 1.409A-1(b)(9)(iii), and the exemption for medical expense reimbursements under Treasury Regulation Section 1.409A-1(b)(9)(v)(B).  As a result, (A) payments that are made on or before the 15 th  day of the third month of the calendar year following the year that includes the Participant’s Termination Date, (B) any additional payments that are made on or before the last day of the second calendar year following the year of the Participant’s Termination Date and do not exceed the lesser of two times the Participant’s annual rate of pay in the year prior to his termination or two times the limit under Section 401(a)(17) of the Code then in effect, and (C) continued medical expense reimbursements during the applicable COBRA period, are exempt from the requirements of Section 409A of the Code.

 

(d)  To the extent any amounts under this Plan are payable by reference to a Participant’s termination of Employment, such term and similar terms shall be deemed to refer to such Participant’s “separation from service,” within the meaning of Section 409A of the Code.  Notwithstanding any other provision in this Plan, to the extent any payments hereunder constitute “nonqualified deferred compensation,” within the meaning of Section 409A of the Code (a “ Section 409A Payment ”), and the Participant is a specified employee, within the meaning of Treasury Regulation Section 1.409A-1(i), as determined by the Company in accordance with any method permitted under Section 409A of the Code, as of the date of the Participant’s separation from service, each such Section 409A Payment that is payable upon such Participant’s separation from service and would have been paid prior to the six-month anniversary of such Participant’s separation from service, shall be delayed until the earlier to occur of (i) the six-month anniversary of Participant’s separation from service and (ii) the date of Participant’s death.  Further, to the extent that any amount is a Section 409A Payment and such payment is conditioned upon Participant’s execution of a release and which is to be paid or provided during a designated period that begins in one taxable year and ends in a second taxable year, then such Section 409A Payment shall be paid or provided in the later of the two taxable years.

 

(e)  Any reimbursements payable to a Participant pursuant to this Plan or otherwise shall be paid to such Participant in no event later than the last day of the calendar year following the calendar year in which such Participant incurred the reimbursable expense.  Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year.  The right to any reimbursement or in-kind benefit pursuant to this Plan shall not be subject to liquidation or exchange for any other benefit.  Any tax gross-up payment payable to a Participant, whether under this Plan or otherwise, shall be paid to the Participant or to the applicable taxing authorities on the Participant’s behalf as soon as practicable after the related taxes are due, but in any event not later than the last day of the calendar year following the calendar year in which the related taxes are remitted to the taxing authorities.

 

SECTION 6.  Covenants.   Each Participant’s participation in this Plan is conditioned upon the Participant’s execution of a Restrictive Covenant Agreement within 30 days after a Participation Agreement is delivered to such Participant (or such later date as permitted by the

 

10



 

Plan Administrator).  If a Participant breaches any of the covenants in the Restrictive Covenant Agreement, including any non-competition, non-solicitation, non-disparagement or confidentiality covenants contained therein, (i) the Participant’s entitlement to Severance Benefits shall be null and void, (ii) all rights to receive or continue to receive  Severance Benefits shall thereupon cease and (iii) the Participant shall immediately repay to the Company all amounts theretofore paid to, and the value of all benefits theretofore received by, the Participant.  The foregoing shall not limit any other rights or remedies the Company may have existing in its favor, including injunctive relief.

 

SECTION 7.  Offset; No Mitigation .

 

(a)  The amount of a Participant’s payments under this Plan shall be reduced to the extent necessary to defray amounts owed by Participant due to unused expense account balances, overpayment of salary, awards or bonuses, advances or loans.

 

(b)  In no event shall any Participant be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Plan and, such amounts shall not be reduced whether or not the Participant obtains other employment.

 

SECTION 8.  Miscellaneous .

 

(a)  Notices .  Notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by overnight mail via a reputable overnight carrier, or sent by registered or certified mail, return receipt requested, postage prepaid (or in a foreign country such similar method), addressed as follows:

 

If to the Company:

 

Sirius International Insurance Group, Ltd.

 

 

14 Wesley Street, 5th Floor

 

 

Hamilton HM11 Bermuda

 

 

Attention: Group General Counsel

 

 

 

If to a Participant:

 

At the most recent address

 

 

on file with the Company

 

or to such other address as either party may furnish to the other in writing in accordance herewith, except that notices of changes of address shall be effective only upon receipt.

 

(b)  GOVERNING LAW .  THIS PLAN SHALL BE DEEMED TO BE MADE IN NEW YORK, AND, TO THE EXTENT NOT PREEMPTED BY ERISA OR OTHER FEDERAL LAW, THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS PLAN IN ALL RESPECTS SHALL BE GOVERNED BY THE LAWS OF NEW YORK WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.  By participating in this Plan, each Participant and the Company hereby irrevocably consent to, and agree not to object or assert any defense or challenge to, the jurisdiction and venue of the state and federal courts located in New York City, New York, and agree that any claim which, subject to Section 4 above, may be brought in a court of law or

 

11



 

equity may be brought in any such New York City, New York court.  To the extent benefits provided under Section 3(c)(v)  are subject to interpretation under Bermuda law due to the administration of the Omnibus Plan, then, if necessary and solely to the extent necessary to administer the Omnibus Plan, such governing law provision shall be deemed to supersede this Section 8(b) .

 

(c)  No Waiver .  No failure by the Company or a Participant at any time to give notice of any breach by the Company or a Participant, or to require compliance with, any condition or provision of this Plan shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

(d)  Severability .  If a court of competent jurisdiction determines that any provision of this Plan is invalid or unenforceable, then the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Plan, and all other provisions shall remain in full force and effect.

 

(e)  Withholding of Taxes and Other Employee Deductions .  The Company may withhold from any benefits and payments made pursuant to this Plan all federal, state, city and other taxes as may be required pursuant to any law or governmental regulation or ruling and all other normal employee deductions made with respect to the Company’s employees generally.

 

(f)  Headings .  The paragraph headings have been inserted for purposes of convenience and shall not be used for interpretive purposes.

 

(g)  Interpretations .  For purposes of this Plan, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation but rather shall be deemed to be followed by the words “without limitation”.  The term “or” is not exclusive.  The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.”  Wherever the context so requires, the masculine gender includes the feminine or neuter, and the singular number includes the plural and conversely.

 

(h)  Successors .  This Plan shall be binding upon and inure to the benefit of the Company and any successor of the Company, including without limitation any person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise and the Company shall require any such acquirer successor to assume this Plan and the obligations and liabilities contemplated thereunder, including, but not limited to the amendment and termination obligations contemplated under Section 8(l) .  Participants’ rights, benefits and obligations under this Plan are personal and shall not be voluntarily or involuntarily assigned, alienated, or transferred, whether by operation of law or otherwise, without the prior written consent of the Company.

 

(i)  Survival of Other Severance Benefits and Non-Duplication .  The Severance Benefits provided under this Plan are not meant to replace or supersede any severance benefits provided under any the Omnibus Plan, employment agreement, arrangement or award agreement or any other similar contractual arrangement (“ Other Severance Benefits ”) and the Severance Benefits provided under this Plan are not intended to result in any duplicative benefits to the Participant

 

12



 

and this Plan shall be administered accordingly.  Accordingly, the Committee, in good faith, shall exercise its discretion and to the extent permitted under applicable law, equitably offset against the Participant’s severance benefits under this Plan against any other severance, termination, or similar benefits payable to the Participant by the Company with respect to the Other Severance Benefits or amounts paid to comply with, or satisfy liability under, the Worker Adjustment and Retraining Notification Act or any other foreign, federal, state, or local law requiring payments in connection with any termination of Employment, plant shutdown, or workforce reduction, including, but not limited to, amounts paid in connection with paid leaves of absence, back pay, benefits, and other payments intended to satisfy such liability or alleged liability.  For the avoidance of doubt, this Section 8(i)  is not meant to impinge or interfere with the Company’s ability to require Participant to follow or adhere to any steps or requirements under this Plan or Other Severance Benefits to obtain severance benefits contemplated thereunder (e.g., executing any releases, complying with any restrictive covenants, etc.).

 

(j)  Deemed Resignations .  Any termination of a Participant’s Employment shall constitute an automatic resignation of such Participant as an officer of the Company and each Affiliate of the Company, an automatic resignation from the board of directors, if applicable, of the Company and each Affiliate of the Company and from the board of directors or similar governing body of any corporation, limited liability company or other entity in which the Company or any Affiliate holds an equity interest and with respect to which board or similar governing body such Participant serves as the Company’s or such Affiliate’s designee or other representative.

 

(k)  No Guarantee of Employment .  This Plan shall not be construed as creating any contract of employment between the Company and its Affiliates, on the one hand, and any Participant, on the other hand, nor shall this Plan be construed as restricting in any way the rights of the Company or any of its Affiliates to terminate the Employment of any Participant at any time and for any reason subject, however, to any rights of a Participant under this Plan.

 

(l)  Amendment and Termination of this Plan .  Except as specifically provided in Section 5 , the Committee may amend, modify or terminate this Plan at any time in its sole discretion;  provided , however , that (i) no such amendment, modification or termination will be effective unless each affected Participant has received written notice thereof at least 6 months prior to such amendment, modification or termination becoming effective and (ii) no such amendment, modification or termination may materially impair the rights of a Participant whose Termination Date previously occurred.  In addition, the Committee may not amend, modify or terminate this Plan after steps have been taken, and continue to be taken, that could lead to a Change in Control or within 24 months after a Change in Control without an impacted Participant’s written consent.  The failure of the Company or a Participant to insist upon strict adherence to any term of this Plan on any occasion shall not be considered as a waiver of the rights of the Company or such Participant or deprive the Company or such Participant of the right thereafter to insist upon strict adherence to that term or any other term of this Plan.  No failure or delay by the Company or any Participant in exercising any right or power hereunder will operate as a waiver thereof, nor will any single or partial exercise of any such right or power, or any abandonment of any steps to enforce such right or power, preclude any other or further exercise thereof or the exercise of any other right or power.

 

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SECTION 9.  Survival .  The provisions of this Plan, including Sections 3 , Section 4 , Section 5 , Section 6 , Section 7 and Section 8 shall survive and remain binding and enforceable, notwithstanding the expiration or termination of this Plan, the termination of a Participant’s Employment for any reason or any settlement of the financial rights and obligations arising from such Participant’s participation hereunder, to the extent necessary to preserve the intended benefits of such provisions.

 

* * * * * *

 

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IN WITNESS WHEREOF, the Company has caused this Plan to be executed on its behalf, to be effective as of the Effective Date .

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

 

 

 

/s/ Allan Waters

 

Allan Waters

 

Chief Executive Officer

 




Exhibit 10.9

 

EXECUTION COPY

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “ Agreement ”) is dated as of July 24, 2015, between Sirius International Insurance Group, Ltd., a Bermuda corporation (the “ Company ”), and Allan L. Waters (“ Executive ”).  All capitalized terms used but not defined herein shall have the meanings set forth in the Amended and Restated Sirius Group Long Term Incentive Plan as in effect on the date hereof (the “ Sirius LTIP ”), which is attached hereto as Exhibit A.

 

WHEREAS, the Company desires to employ Executive, and Executive desires to remain in such employment with the Company, subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth and other good and valuable consideration, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1.                                       Term .  The Company agrees to employ Executive, and Executive agrees to remain in the employ of the Company, subject to the terms and conditions of this Agreement, for the period commencing on the date hereof and ending upon the third anniversary of the date hereof (the “ Initial Term ”).  At the expiration of the Initial Term (and each succeeding one year term), the term will automatically extend for an additional 12 months unless either party gives written notice to the other party of its intention not to extend the Term at least 90 days prior to the end of the then current term (the Initial Term and each succeeding one year term, collectively the “ Term ”).  In the event that the Purchase Agreement is terminated in accordance with its terms prior to the closing of the transaction (the “ Closing ”) contemplated by the Stock Purchase Agreement (the “ Purchase Agreement ”), dated as of July 24, 2015, among Lone Tree Holdings Ltd., CM International Holding Pte. Ltd., CM Bermuda Limited and the Company, this Agreement shall be null and void ab initio.

 

2.                                       Position, Duties and Responsibilities .

 

(a)                                  During the Term, Executive shall serve as the President and Chief Executive Officer of the Company.  Executive’s principal work location shall be in the general Hanover, New Hampshire area.  During the portion of the Term prior to the Closing, Executive shall report directly to the Chief Executive Officer of WTM (as defined below), and thereafter Executive shall report directly to Laurence Feng Liao, sole Director, CM Bermuda Ltd. During the Term, Executive will oversee the day-to-day operations of the Company.

 

(b)                                  During the Term, Executive shall devote substantially all of his working time, attention and best efforts to the business of the Company and shall use his best efforts to perform faithfully and efficiently Executive’s duties and responsibilities as set forth herein.

 



 

3.                                       Compensation and Benefits .

 

(a)                                  Base Salary .  During the Term, Executive shall be paid an annual base salary (“ Base Salary ”) of not less than $500,000.  The Base Salary shall be payable in accordance with the Company’s regular payroll practices as then in effect.  During the Term, the Base Salary will be reviewed annually.

 

(b)                                  Bonus .  During the Term, Executive shall have an opportunity to earn a cash bonus (“ Annual Bonus ”) for each fiscal year during the Term targeted (“ Target Bonus ”) at not less than 50% of Executive’s Base Salary for such fiscal year.  The Annual Bonus actually paid for each such fiscal year as a percentage of Executive’s Target Bonus shall not be less than the overall Company bonus pool awarded as a percentage of the Company’s total annual target bonus pool for such fiscal year.  The Annual Bonus payable to Executive for any fiscal year shall be paid to him in the next following fiscal year at the same time annual bonuses for the preceding fiscal year are paid to the Company’s other bonus-eligible employees but in any event by no later than the 15th day of the third month following the close of such preceding fiscal year.

 

(c)                                   Long-Term Incentive Awards .  Executive currently has outstanding awards of Performance Units issued pursuant to the Sirius LTIP.  Executive also currently has outstanding awards of performance shares (“ Performance Shares ”) and restricted shares (“ Restricted Shares ”) issued pursuant to the White Mountains Long-Term Incentive Plan (as amended) (the “ WTM LTIP ”).  The number and principal terms of Executive’s existing awards under the Sirius LTIP and the WTM LTIP are set out in Exhibit B hereto.  Pursuant to the Sirius LTIP or a successor plan thereto (the WTM LTIP, Sirius LTIP and any such successor plan, an “ LTIP ”), Executive shall receive during the Term future annual awards of long-term incentives at an aggregate target payout value not less than the aggregate target payout value of awards granted to Executive in February 2015 pursuant to both the Sirius LTIP and the WTM LTIP.

 

(d)                                  Retirement, Savings and Welfare Plans .  During the Term, Executive shall be eligible to participate in the retirement, savings and welfare benefit plans, programs, policies and practices applicable to employees of the Company.

 

(e)                                   Vacation .  During the Term, Executive shall be entitled in accordance with Company policies to take twenty five (25) days of vacation per calendar year or such greater number provided under applicable Company policies.

 

(f)                                    Reimbursement of Expenses .  During the Term, the Company shall reimburse Executive for all reasonable expenses, including travel expenses, incurred by Executive in the performance of Executive’s duties hereunder that comply with the applicable policies of the Company, including the presentation of appropriate statements of such expenses.

 

4.                                       Termination of Employment During the Term .

 

(a)                                  Cause .  The Company may terminate Executive’s employment immediately during the Term for Cause.  For purposes of this Agreement, “ Cause ” means

 

2



 

(i) material and continued failure of Executive to perform Executive’s duties which failure has continued for more than 30 days following written notice of such non-performance from the Board of Directors of the Company; (ii) commission of an act of fraud, embezzlement, or misappropriation of assets or property (tangible or intangible) of the Company or any subsidiary or affiliate thereof; (iii) a material breach of the provisions set forth in Section 7 of this Agreement; (iv) commission of a felony, including a plea of guilty or nolo contendere, or an indictment or written admission thereof; or (v) gross negligence or willful misconduct in the performance by Executive of his duties that is reasonably likely to have an adverse effect on the business or reputation of the Company or its subsidiaries or affiliates.  Notwithstanding anything to the contrary in this Section 4(a), Cause shall not result from Executive’s death or Disability.

 

(b)                                  Death or Disability .  Executive’s employment during the Term shall terminate automatically upon Executive’s death.  The Company may terminate Executive’s employment during the Term for Disability as defined in Section 7 of the Sirius LTIP.

 

(c)                                   Termination Without Cause .  The Company may terminate Executive’s employment during the Term without Cause upon ten (10) days prior notice.  In addition, in the event that the Company exercises its right not to extend the Term pursuant to Section 1, the Company shall be deemed to have terminated Executive’s employment, and Executive’s employment shall so terminate, on the last day of the Term without Cause for all purposes of this Agreement.

 

(d)                                  Voluntary Termination .  Executive may terminate his employment during the Term for Good Reason (in accordance with Section 5(c)(vi)) or without Good Reason upon ninety (90) days prior notice.

 

(e)                                   Notice of Termination .  Any termination of Executive’s employment by either party during the Term shall be communicated by written notice given in accordance with Section 14.  The Term will expire upon any termination of employment pursuant to this Section 4.

 

5.                                       Obligations of the Company Upon Termination .  Following any termination of Executive’s employment during the Term, Executive shall not be otherwise compensated for the loss of employment or the loss of any rights or benefits under this Agreement or any other plans and programs, except as provided below:

 

(a)                                  In the event Executive’s employment is terminated for Cause pursuant to Section 4(a), Executive shall be entitled to receive (i) any unpaid Base Salary through his date of termination, (ii) payment for any accrued but unused vacation or other similar paid time-off, (iii) payment of any vested benefit payable under the Company’s employee benefit plans in accordance with the terms thereof, and (iv) reimbursement for any reasonable business expenses incurred prior to such termination for which Executive has complied with the Company’s reimbursement policies (collectively, the “ Accrued Rights ”).

 

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(b)                                  In the event Executive’s employment terminates pursuant to Section 4(b) due to Executive’s death or Disability, Executive (or his estate or representatives, as applicable) shall be entitled to receive:

 

(i)                                      The Accrued Rights.

 

(ii)                                   A pro rata Annual Bonus for the year in which such termination occurs based on the number of days Executive was employed during the year of termination, which shall be calculated based on actual performance through the end of such year and on the same basis as other bonus-eligible employees.  Such pro rata Annual Bonus shall be paid to Executive in the fiscal year next following the year in which his employment terminates, at the same time annual bonuses for such preceding year are paid to the Company’s other bonus-eligible employees but in any event by no later than the 15th day of the third month following the close of such preceding year.

 

(iii)                                With respect to any Eligible Award (as defined below) outstanding at the time of such termination, such award shall be treated in the manner described in Section 5(e) of the Sirius LTIP or Section 7(e)(i) of the WTM LTIP, as applicable, or to the extent granted under a successor plan thereto, shall be treated in a manner set forth in such plan.  For avoidance of doubt, in the case of any Eligible Award that becomes so payable in accordance with the provisions of the plans referred to in the preceding sentence, payment shall be made by no later than the 15th day of the third month following the end of the year in which such awards become earned based on the achievement of the applicable performance objectives.

 

(c)                                   In the event Executive’s employment is terminated by the Company without Cause pursuant to Section 4(c) or is terminated by Executive for Good Reason pursuant to Section 4(d) (in each case, other than due to death or Disability), Executive shall be entitled to receive:

 

(i)                                      The Accrued Rights.

 

(ii)                                   Subject to Executive’s executing and delivering (and not revoking) the Release as described in Section 8, (x) a lump sum cash payment equal to 100% of the then-current Base Salary, which shall be paid on the 60th day following such termination, and (y) an Annual Bonus (without pro ration for time) for the year in which such termination occurs, which shall be calculated based on actual performance through the end of such year and on the same basis as other bonus eligible employees except that such Annual Bonus shall not be less than the applicable Target Bonus for such fiscal year, and which shall be paid to Executive in the fiscal year next following the year in which his employment terminates, at the same time annual bonuses for the preceding fiscal year are paid to the Company’s other bonus-eligible employees, but in any event by no later than the 15th day of the third month following the close of such preceding fiscal year and no earlier than the 60th day following such termination.

 

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(iii)                                Subject to the occurrence of the Closing, payment of the Retention Bonuses (as defined in Section 7(g)), to the extent then unpaid, with the amount of such payment being determined in the same manner specified in the Purchase Agreement in the case of “Bonus Recipients” terminated without cause, and payable within 10 days of Executive’s termination of employment.

 

(iv)                               Continued employment under the Advisory Relationship pursuant to Section 6.

 

(v)                                  To the extent such termination occurs during the 24 month period following the Closing, and notwithstanding anything to the contrary in the applicable LTIP, Executive’s Pre-Closing Awards (as defined in Section 6(f)) shall be treated in the manner described in Section 5(f) of the Sirius LTIP as in effect on the date hereof or Section 7(f) of the WTM LTIP as in effect on the date hereof, as applicable, except that, notwithstanding anything in the Sirius LTIP or WTM LTIP to the contrary, the amounts payable to Executive with respect to such Pre-Closing Awards shall not be subject to pro ration for time or similar reduction; provided that the treatment described in this Section 5(c)(v) shall apply in lieu of the treatment described in Section 6(f); provided further , that in the event Executive’s employment terminates for Good Reason, (x) Executive’s Pre-Closing Awards shall only be treated as described in this Section 5(c)(v) to the extent Executive rejects continued employment under the Advisory Relationship pursuant to Section 6 and (y) in the event that Executive accepts (and does not reject) continued employment under the Advisory Relationship pursuant to Section 6, Executive’s Pre-Closing Awards shall be treated in the manner described in Section 6(f) in lieu of the treatment described in this Section 5(c)(v).  For avoidance of doubt, in the case of any of Executive’s Pre-Closing Awards that are to be treated in the manner described in Section 5(f) of the Sirius LTIP, any payment required to be made thereunder with respect to such awards shall be made by no later than the 15th day of the third month following the end of the year in which such awards become earned based on the achievement of the applicable performance objectives.

 

(vi)                               For purposes of this Agreement, “ Good Reason ” shall mean that Executive has complied with the Good Reason Process (as defined below) following the occurrence of any of the following events:  (i) a material diminution in Executive’s responsibilities, authority or duties without Executive’s written consent; (ii) a diminution in Executive’s Base Salary, Target Bonus or aggregate target payout level of annual long-term incentive awards, except for across-the-board base salary reductions based on the Company’s financial performance similarly affecting all or substantially all senior management employees of the Company; (iii) a material change in the geographic location at which Executive provides services to the Company without Executive’s written consent; or (iv) the material breach of this Agreement by the Company.  For purposes of this Agreement, “ Good Reason Process ” shall mean that (i) Executive reasonably determines in good faith that a “Good Reason” condition has occurred; (ii) Executive notifies the Company in writing of the occurrence of the Good

 

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Reason condition within 60 days of Executive having knowledge of the occurrence of such condition; (iii) Executive cooperates in good faith with the Company’s efforts, for a period not less than 30 days following such notice (the “ Cure Period ”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) Executive terminates Executive’s employment at least 10 days, but no more than 60 days, after the end of the Cure Period.  If the Company cures the Good Reason condition during the Cure Period, a Good Reason shall be deemed not to have occurred.

 

(d)                                  In the event Executive’s employment is terminated by Executive pursuant to Section 4(d) other than for Good Reason (or death or Disability), Executive shall be entitled to receive:

 

(i)                                      The Accrued Rights.

 

(ii)                                   To the extent such termination occurs as a result of Executive’s retirement following the second anniversary of the Closing with the prior consent of the Company (not to be unreasonably withheld, delayed or conditioned) (a “ Retirement ”), continued employment under the Advisory Relationship pursuant to Section 6.

 

6.                                       Advisory Relationship .

 

(a)                                  Commencement; Term .  Upon a termination of Executive’s employment during the Term (i) by the Company without Cause, (ii) by Executive for Good Reason or (iii) by Executive upon Retirement (a “ Qualifying Termination of Executive Services ”), subject to Executive’s executing and delivering (and not revoking) the Release as described in Section 8, the Company shall offer to hire and employ Executive, and Executive may agree to be employed and to perform, periodic advisory and transition services for the Company and its subsidiaries pursuant to this Section 6 (the “ Advisory Services ”).  The Advisory Services will include, among other things, advising senior executives of the Company and assisting with the transition of Executive’s executive duties to his successor.

 

(b)                                  Timing; Location .  The performance by Executive of the Advisory Services hereunder shall be at such times and at such locations as Executive and the Company may mutually agree from time to time, it being understood that Executive’s primary work location shall be his primary residence.

 

(c)                                   Advisory Period .  The term of the Advisory Services shall commence upon Executive’s Qualifying Termination of Executive Services and shall continue until the later of (i) the COBRA Bridge Date and (ii) the LTIP Earn Out Date, unless earlier terminated as provided in Section 6(d) below (such period, the “ Advisory Period ”).  For purposes of this Agreement, (i) “ COBRA Bridge Date ” shall mean the first date on which, if Executive began health insurance continuation coverage under the Company’s applicable health plans pursuant to COBRA on such date, Executive would be eligible for Medicare insurance coverage immediately following the expiration of such COBRA

 

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coverage and (ii) “ LTIP Earn Out Date ” shall mean the last date on which the Eligible Awards (as defined in Section 6(f)) are eligible to vest pursuant to Section 6(f) in accordance with their terms.  In the event that Executive does not execute and deliver the Release (or revokes the Release) required under Section 8, the Advisory Period shall terminate on the 60th day after Executive’s Qualifying Termination of Executive Services.

 

(d)                                  Termination .  The Advisory Period may be terminated (i) by the Company solely for Cause (as defined in Section 4(a)) or upon the material breach by Executive of his obligations under Section 7, (ii) due to Executive’s death or Disability (within the meaning of Section 4(b)) or (iii) by Executive for any reason (and shall be deemed to have terminated voluntarily upon his commencement of full-time employment with any employer other than the Company and its affiliates).

 

(e)                                   Compensation; Benefits .  During the Advisory Period, the Company shall pay Executive a salary in accordance with its regular payroll practices at an annual rate of thirty thousand dollars ($30,000) (the “ Advisory Salary ”).  During the Advisory Period, Executive shall not receive additional annual or long-term incentive opportunities or accrue additional paid vacation.  In addition to the Advisory Salary, the Company shall reimburse Executive for all reasonable and necessary expenses (including without limitation travel and meal expenses) incurred or paid by Executive during the Advisory Period, in connection with, or related to, the performance of the Advisory Services reasonably promptly after receipt of an itemization and documentation of such expenses.  During the portion of the Advisory Period ending on the COBRA Bridge Date, provided that Executive is not then eligible for coverage from another employer, Executive shall be entitled to receive health insurance coverage through the Company for himself and his eligible dependents to the same extent as then made available to other employees of the Company.  During such period, Executive will be responsible for an amount equal to all premium costs toward any insurance coverage elected by Executive for him and his eligible dependents.  The Company is hereby authorized to deduct from Executive’s compensation hereunder any amounts required to be withheld or deducted by law.  The health insurance coverage reimbursement under this Section 6(e) does not constitute a “COBRA event”, and upon termination or expiration of the Advisory Period, Executive shall have all available rights to elect COBRA continuation coverage, and Executive hereby agrees that he will be responsible for any and all premium costs applicable thereto and acknowledges that any COBRA continuation coverage is subject to the applicable plan’s eligibility and premium payment requirements.

 

(f)                                    Treatment of LTIP Awards .  In the event Executive has a Qualifying Termination of Executive Services and at such time holds Eligible Awards, such Eligible Awards shall be governed by this Section 6(f) during the Advisory Period.  The Eligible Awards shall not be terminated as a result of the termination of the Term and his employment as an executive.  Instead, during the Advisory Period, Executive’s service as an advisor shall be treated as continued employment for all purposes of the LTIPs and Executive shall continue to vest in such Eligible Awards on their regular schedule and be paid out in the same manner as other participants in such plans; provided that, should Executive materially breach his obligations to the Company under Section 7 of this

 

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Agreement, the Company may determine in its sole discretion to terminate for no consideration any Eligible Awards that are not fully vested at such time.  Upon a termination of the Advisory Period pursuant to Section 6(d), all then unvested Eligible Awards shall immediately terminate for no consideration, except that, in the event such termination is due to Executive’s death or Disability, the Eligible Awards will be treated in the manner described in Section 5(b)(iii).  For purposes of this Agreement, “ Eligible Award ” shall mean any award held by Executive as of his date of termination of employment that was granted or assumed by the Company under any LTIP (any such awards granted to Executive prior to the Closing, the “ Pre-Closing Awards ”; and any such awards granted to Executive thereafter, the “ Post-Closing Awards ”).  In the case of any Eligible Awards that become payable to executive under the LTIPs pursuant to this Section 6(f), payment shall be made by no later than the 15th day of the third month following the end of the year in which such awards become earned based on the achievement of the applicable performance objectives.

 

(g)                                   Work Requirements .  In exchange for the consideration described in Section 6(e) and 6(f), Executive will provide Advisory Services (i) during the portion of the Advisory Period ending on the LTIP Earn Out Date, equivalent to no more than 50% of Executive’s regular work hours as of the date hereof and (ii) during the remaining portion of the Advisory Period (if any), equivalent to no more than 5% of the Executive’s regular work hours as of the date hereof or such additional work hours (and compensation) as mutually agreed by the Company and Executive from time to time.

 

7.                                       Covenants .

 

(a)                                  Non Competition .  Executive agrees that during the Term and the Advisory Period (if any), and for a one year period following the later of the expiration of the Term and, if it commences, the Advisory Period (such period, the “ Restriction Period ”), he shall not, directly or indirectly, own any interest in, manage, control, finance, participate in, consult with, or render any services to any activity or business, for himself or any other person or entity, or affiliate, whether or not for remuneration, direct or indirect, contingent or otherwise, which (i) may result in a conflict of interest or otherwise adversely affect the proper discharge of Executive’s duties with and responsibilities to the Company hereunder or (ii) in any way competes with, or interferes with, any operation of the Company or any of its subsidiaries (the “ Company Group ”), provided that this provision shall not prohibit Executive from being a passive owner of not more that 1% of the outstanding stock of any company which is publically traded as long as Executive has no active participation in the business of such company.  Anything herein to the contrary notwithstanding, it shall not be a violation of this Section 7(a) for Executive to provide services to a subsidiary, division or affiliate of a business that competes with the Company Group provided that such subsidiary, division or affiliate is not itself engaged, directly or indirectly, in competition with the Company Group and Executive does not himself, directly or indirectly, provide services to, or have responsibilities regarding, such business that competes with the Company Group.

 

(b)                                  Non Solicitation .  Executive further agrees during the Restriction Period not to, directly or indirectly, for himself or for any other person or entity, or affiliate:

 

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(i) hire any employee of the Company Group or induce or attempt to induce any employee of the Company Group to leave the employ of the Company Group; (ii) hire any person who was an employee of the Company Group at any time during the twelve-month period preceding such hiring; or (iii) induce or attempt to induce any former, existing or prospective customer, supplier, licensee, lender, licensor or other business relation of the Company Group to cease doing business with the Company Group, or to reduce the level of business conducted with the Company Group.  Anything herein to the contrary notwithstanding, it shall not be a violation of this Section 7(b) if (x) Executive furnishes to a third party a reference as to any employee or former employee of the Company Group or (y) an entity with which Executive is associated hires or engages any employee of the Company Group provided Executive was not, directly or indirectly, involved in hiring or identifying such person as a potential recruit or assisting in the recruitment of such employee.

 

(c)                                   Confidential Information .

 

(i)                                      Executive shall use best efforts and diligence both during and after any employment with the Company, regardless of how, when or why such employment ends, to protect the confidential, trade secret and/or proprietary character of all Confidential Information (as defined below).  Executive shall not, directly or indirectly, use (for Executive’s benefit or for the benefit of any other person) or disclose any Confidential Information, except as may be necessary for the performance of Executive’s duties for the Company.  For purposes of this Agreement, “ Confidential Information ” means all information concerning trade secrets, knowhow, software, developments, inventions, processes, technology, designs, financial data, strategic business plans or any other proprietary or confidential information of any member of the Company Group, in any form or media, including any of the foregoing relating to research, operations, finances, current and proposed products and services, vendors, customers, advertising and marketing.  Executive understands that Confidential Information may or may not be labeled as such, and Executive shall treat all information that appears to be Confidential Information as confidential.

 

(ii)                                   Anything herein to the contrary notwithstanding, the restrictions of this Section 7(c) shall not apply (w) when disclosure is required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with apparent jurisdiction to order Executive to disclose or make accessible any information, provided that Executive shall have, to the extent permitted by applicable law, first provided the Company with reasonable notice of such potential disclosure and a reasonable opportunity to exercise any legal remedies available to the Company to limit such disclosure, (x) with respect to any other litigation, arbitration or mediation involving this Agreement, (y) as to Confidential Information that becomes generally known to the public or within the relevant trade or industry other than due to Executive’s violation of this Section 7(c) or (z) disclosing this Agreement to members of his immediate family and legal or financial advisers or the provisions of this Section 7 to any prospective or future employer.

 

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(iii)                                Upon termination of Executive’s employment with the Company for any reason, Executive shall promptly destroy, delete, or, if Executive is so notified in writing by the Company prior to such termination, return to the Company all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Executive’s possession or control at the time of such termination (including any of the foregoing stored or located in Executive’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information.  Anything to the contrary notwithstanding, nothing in this Section 7(c)(iii) shall prevent Executive from retaining a computer, papers and other materials of a personal nature, including personal diaries, calendars and Rolodexes, information relating to his compensation or relating to reimbursement of expenses, information that he reasonably believes may be needed for tax purposes, and copies of plans, programs and agreements relating to his compensation.  For the sake of clarity, if Executive retains a computer he shall delete any information contained therein that he is not permitted to retain under this Section 7(c)(iii).

 

(d)                                  Non-Disparagement .  During and after the Term and the Advisory Period (if any), regardless of how, when or why such employment ends, (i) Executive shall not make, either directly or indirectly, any oral or written negative, disparaging or adverse statements or representations of or concerning any member of the Company Group, any of their clients, customers or businesses, or any of their current or former officers, directors, employees or shareholders and (ii) Company Parties (as defined below) shall not make any oral or written negative, disparaging or adverse statements or representations of or concerning Executive; provided , however , that nothing herein shall prohibit (A) critical communications between Executive and the Company during the Term and any Advisory Period and in connection with Executive’s employment, (B) Executive or any Company Party from disclosing truthful information if legally required (whether by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) or (C) either party from acting in good faith to enforce such party’s rights under this Agreement.  For purposes of this Agreement, the term “ Company Parties ” shall mean the executive officers of the Company, acting in their capacity as representatives of the Company.

 

(e)                                   Intellectual Property .

 

(i)                                      If, prior to the date hereof, Executive has created, invented, designed, developed, contributed to or improved any works of authorship, inventions, intellectual property, materials, documents or other work product (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“ Works ”), either alone or with third parties by such employment (“ Prior Works ”), Executive hereby grants each member of the Company Group, to the extent of any rights he possesses therein, a perpetual, non-exclusive, royalty-free, worldwide, assignable, sublicensable license under all rights and intellectual property rights (including rights under patent, industrial property, copyright,

 

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trademark, trade secret, unfair competition and related laws) therein for all purposes in connection with the Company Group’s current and future business.

 

(ii)                                   If Executive creates, invents, designs, develops, contributes to or improves any Works, either alone or with third parties, at any time during Executive’s employment by the Company and within the scope of such employment (“ Company Works ”), Executive shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the extent he then possesses and to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to each member of the Company Group to the extent ownership of any such rights does not vest originally in a member of the Company Group.

 

(iii)                                Executive agrees to keep and maintain reasonable records of all Company Works.  The records will be available to and remain the sole property and intellectual property of the Company at all times.

 

(iv)                               Executive shall, to the extent reasonable, take all actions and execute all requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and Company Works.  If to the extent the Company is unable to secure Executive’s signature on any document for this purpose, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney in fact, to act for and on Executive’s behalf and stead to execute any documents and to do all other lawfully permitted acts in connection with the foregoing.

 

(v)                                  The provisions of this Section 7 shall survive the termination of Executive’s employment for any reason.

 

(f)                                    Specific Performance .  Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 7 would be inadequate and the Company would suffer irreparable damages as a result of such breach or threatened breach.  In recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company shall be entitled to seek equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available.

 

(g)                                   Consideration .  Executive acknowledges that, in connection with the Closing, (i) Executive will receive a transaction bonus within 10 business days after the Closing in accordance with the Purchase Agreement (the “ Transaction Bonus ”) as consideration for Executive’s significant services and efforts to White Mountains Insurance Group, Ltd. (“ WTM ”) and the Company provided during 2014 and 2015 and

 

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(ii) Executive will be eligible to receive two retention bonuses as provided in the Purchase Agreement (the “ Retention Bonuses ”), subject to his continued employment after the Closing through the twelve-month and twentieth-month anniversaries, respectively, of Closing (except as provided in Section 5), as consideration for his continued essential services to the Company and Executive’s agreement to be bound by the provisions of this Section 7.  Each Retention Bonus payable to Executive pursuant to the clause (ii) of the preceding sentence shall be paid to him as soon as practicable after the 12 or the 20 month anniversary of the Closing Date, respectively, but in any event no later than by December 31 of the year in which such anniversary occurs or, if later, by the 15th day if the third calendar month following the date of such anniversary, except as other wise provided in Section 5(c)(iii) above.  Exhibit C hereto sets forth the Company’s good faith estimate, as of the date hereof, of the amount of the Transaction Bonus and the Retention Bonuses.

 

8.                                       Release .  Executive shall not be entitled to receive any of the payments or benefits set forth in Section 5(c)(ii) or Section 6, as the case may be, unless Executive executes a release and waiver of claims in the form of Exhibit D hereto (the “ Release ”) in favor of the Company and certain other parties as set forth therein relating to all claims or liabilities of any kind relating to Executive’s employment with the Company or any of its affiliates and the termination of such employment as an executive, and, on or prior to the 55th day following Executive’s termination of employment pursuant to Section 4, the Release becomes effective and irrevocable in accordance with the terms thereof.

 

9.                                       Certain Additional Payments by the Company .

 

(a)                                  Notwithstanding anything in this Agreement to the contrary and subject to the terms and conditions of this Section 9, in the event that (i) Executive’s employment terminates without Cause pursuant to Section 4(c) or for Good Reason as described in Section 5(c)(vi) and (ii) it shall be determined that any Payment (as defined below) that is paid or payable to Executive would be subject to the Excise Tax (as defined below), Executive shall be entitled to receive an additional payment (an “ Additional Payment ”) in an amount such that, after payment by Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including any income and employment taxes and Excise Taxes imposed upon the Additional Payment, Executive retains an amount of the Additional Payment equal to the Excise Tax imposed upon such Payments.

 

(b)                                  Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when an Additional Payment is required, the amount of such Additional Payment and the assumptions to be utilized in arriving at such determination, shall be made in accordance with the terms of this Section 9 by a nationally recognized certified public accounting firm that shall be designated by the Company, subject to the approval of the Executive which shall not be unreasonably withheld (the “ Accounting Firm ”).  The Accounting Firm shall be a firm that has not, during the two years immediately preceding the date of its designation, performed any services for the Company, for CMI (as defined in the Purchase Agreement), or for their respective affiliates.  The Company shall direct the Accounting Firm to make such determinations, and to provide a written report of its determinations

 

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with detailed supporting calculations both to the Company and Executive by no later than 15 days prior to the date on which the first Payment payable to the Executive is scheduled to be made to him, and as necessary, by no later than 15 days prior to the date on which any subsequent Payment is scheduled to be made to him.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  Any Additional Payment, as determined pursuant to this Section 9, shall be paid by the Company to Executive, or to the applicable taxing authorities on his behalf, by no later than the date by which the Excise Tax and other taxes to which the Additional Payment relates are required to be remitted, and in no event later than the last day of the calendar year following the calendar year in which the applicable taxes are due.  If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall so indicate to Executive in writing.  Subject to any determinations subsequently made by the IRS or the courts as to the amount of Excise Tax payable with respect to any Payment, any determination by the Accounting Firm shall be binding upon the Company and Executive.  As a result of the uncertainty in the application of Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), at the time of the initial determination by the Accounting Firm hereunder, it is possible that Additional Payments that will not have been made by the Company should have been made (an “ Underpayment ”), consistent with the calculations required to be made hereunder.  In the event the Company exhausts its remedies pursuant to Section 9(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be paid by the Company to Executive, or to the applicable tax authorities on his behalf, by no later than the date by which the additional Excise Tax and other taxes to which such Additional Payment relates are required to be remitted, and in no event later than the last day of the calendar year following the calendar year in which the applicable taxes are due.

 

(c)                                   Executive shall notify the Company in writing of any written claim by the Internal Revenue Service that, if successful, would require the payment by the Company of an Additional Payment.  Such notification shall be given as soon as practicable, but no later than fifteen business days after Executive receives such claim in writing.  Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.  Executive shall not pay such claim without permitting the Company to contest such claim.  If the Company notifies Executive in writing prior to the expiration of such period that the Company desires to contest such claim, Executive shall:  (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim and (iv) permit the Company to control any proceedings relating to such claim; provided , however , that the Company shall bear and pay directly all costs and expenses (including additional income or other taxes, interest and penalties) incurred in connection with such contest, and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income or employment tax (including interest or penalties) imposed as a result of such representation and payment of costs and expenses.  Without limitation on the foregoing provisions of this Section 9(c), the Company shall

 

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control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either pay the tax claim on behalf of Executive and direct Executive to sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that (A) if the Company pays the tax claim on behalf of Executive and directs Executive to sue for a refund, the Company shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income or employment tax (including interest or penalties) imposed with respect to such payment and (B) if such contest results in any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due, such extension must be limited solely to such contested amount.  Furthermore, the Company’s control of the contest shall be limited to issues with respect to which the Additional Payment would be payable hereunder, and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.  Any indemnification payment to be made to Executive pursuant to this Section 9(c) shall be made to him by no later than the date by which the Excise Tax, income or employment taxes, interest or penalties to which the indemnification relates are due and payable to the applicable taxing authorities.

 

(d)                                  If, after the payment by the Company of any tax claim pursuant to Section 9(c), Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Company’s complying with the requirements of Section 9(c)) promptly pay to the Company the amount of such refund received (together with any interest paid or credited thereon after taxes applicable thereto).  If, after the payment by the Company of any tax claim pursuant to Section 9(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of the 30-day period after such determination, then the amount the Company paid in respect of such claim shall offset, to the extent thereof, the amount of Additional Payment required to be paid.

 

(e)                                   For purposes of this Agreement, (i) “ Excise Tax ” means the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such tax, and (ii) “ Payment ” means any payment, benefit or distribution (or other amount in the nature of compensation) provided by the Company, any of its affiliates or any other person, to or for the benefit of Executive, whether paid, payable, distributed, distributable or provided pursuant to this Agreement or otherwise, that constitutes a “parachute payment” within the meaning of Section 280G of the Code and the regulations issued thereunder.

 

10.                                Entire Agreement .  This Agreement contains the entire agreement of the parties with respect to the subject matter hereof, and except as otherwise set forth herein, supersedes all prior agreements, promises, covenants, arrangements, communications, representations and warranties between them, whether written or oral, with respect to the subject

 

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matter hereof.  For the sake of clarity, nothing in this paragraph is intended to negate or otherwise adversely affect your rights under compensation and benefit plans, programs and agreements at, or with, WTM and/or the Company including, without limitation, the LTIPs.

 

11.                                Assignment; Successors .

 

(a)                                  This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive, and any assignment in violation of this Agreement shall be void.  This Agreement shall inure to the benefit of and be enforceable by Executive’s heirs, successors, assigns and legal representatives.

 

(b)                                  This Agreement shall inure to the benefit of and be binding upon the Company, its successors and assigns.

 

(c)                                   The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

12.                                Withholding .  All payments to be made to Executive hereunder will be subject to all applicable required withholding of federal, state, local and foreign taxes, including income and employment taxes.

 

13.                                Cooperation .  For the period ending 60 months after the end of the Term or, if later, the end of the Advisory Period, Executive shall make himself available to assist the Company at mutually convenient times and places with respect to pending and future litigation, arbitrations, governmental investigations or other dispute resolutions relating to or in connection with matters that arose during Executive’s employment with the Company provided that in no event shall Executive be required under this Section 13 to provide cooperation that would be materially adverse to his legal interests or to act against the best interests of any new employer or new business venture in which he is a partner or active participant.  The Company will reimburse Executive for the reasonable expenses he may incur as a result of providing such assistance, including travel costs and legal fees to the extent Executive reasonably believes that separate representation is warranted, provided the Company receives proper documentation with respect to all such claimed expenses.  Executive’s entitlement to reimbursement of expenses, including legal fees, pursuant to this Section 13 shall in no way affect Executive’s right to be indemnified and/or advanced expenses in accordance with the Company’s corporate documents and/or in accordance with this Agreement provided he shall not be entitled to any duplication of reimbursements.  From and after the end of the Term, or, if later, the end of the Advisory Period, Executive shall be entitled to a fee of $1,500 per hour for furnishing such cooperation (including travel time required in connection with such cooperation) for up to ten hours and $3,000 per hour thereafter.  Executive shall submit to the Company a written request for the payment of any fees earned by him during any calendar month pursuant to the preceding sentence, accompanied with proper documentation of the number of hours spent by him, by no later than 30 days following the close of that month.  The fees payable to Executive for such month shall be paid to him as

 

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soon as practicable after, but in any event by no later than 30 days following, the date on which his written request was received by the Company.

 

14.                                Notices .  All documents, notices, requests, demands and other communications that are required or permitted to be delivered or given under this Agreement shall be in writing to (a) Sirius International Insurance Group Ltd., 5 Wesley St., Hamilton HR 11 Bermuda, Attention General Counsel, or (b) Executive, at the address for Executive most recently on file with the Company’s human resources department, and shall be deemed to have been duly delivered or given when received.

 

15.                                Amendment .  No provisions of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by the parties hereto.

 

16.                                No Waiver .  The provisions of this Agreement may be waived only in writing signed by the party or parties entitled to the benefit thereof.  A waiver or any breach or failure to enforce any provision of this Agreement shall not in any way affect, limit or waive a party’s rights hereunder at any time to enforce strict compliance thereafter with every provision of this Agreement.

 

17.                                Severability .  If any term, provision, covenant or condition of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable in any jurisdiction, then such provision, covenant or condition shall, as to such jurisdiction, be modified or restricted to the minimum extent necessary to make such provision valid, binding and enforceable, or, if such provision cannot be modified or restricted, then such provision shall, as to such jurisdiction, be deemed to be excised from this Agreement and any such invalidity, illegality or unenforceability with respect to such provision shall not invalidate or render unenforceable such provision in any other jurisdiction, and the remainder of the provisions hereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

 

18.                                Survival .  The rights and obligations of the Company and Executive under the provisions of this Agreement shall survive and remain binding and enforceable, notwithstanding any termination of Executive’s employment with the Company, to the extent necessary to preserve the intended benefits of such provisions.

 

19.                                Governing Law .  This Agreement and any disputes arising hereunder or related hereto (whether for breach of contract, tortious conduct or otherwise) shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflicts of law principles.

 

20.                                Jurisdiction .  Each party irrevocably agrees that any legal action, suit or proceeding against it arising out of or in connection with this Agreement or the transactions contemplated by this Agreement or disputes relating hereto (whether for breach of contract, tortious conduct or otherwise) shall be brought exclusively in New York, New York, and hereby irrevocably accepts and submits to the exclusive jurisdiction and venue of the aforesaid courts in personam, with respect to any such action, suit or proceeding.  The parties hereby waive, to

 

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the fullest extent permitted by applicable law, any objection that they now or hereafter have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding brought in such court.  The parties agree not to commence any action arising out of or relating to this Agreement in a forum other than the forum described in this Section 20.

 

21.                                Headings .  The headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions.

 

22.                                Counterparts .  This Agreement may be executed in two or more counterparts (including by facsimile of PDF), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  If any signature is delivered by facsimile transmission or by PDF, such signature shall create a valid and binding obligation of the party executing (or on whose behalf the signature is executed) with the same force and effect as if such facsimile or PDF signature were an original thereof.

 

23.                                Construction .  The headings in this Agreement are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.  As used in this Agreement, words such as “herein”, “hereinafter”, “hereby” and “hereunder”, and words of like import, refer to this Agreement, unless the context requires otherwise.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.

 

24.                                Section 409A of the Code .

 

(a)                                  It is intended that the provisions of this Agreement comply with, or be exempt from, the requirements of Section 409A of the Code and the regulations promulgated thereunder (“ Section 409A ”), and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.

 

(b)                                  Neither Executive nor any of his creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A) payable under this Agreement or under any other plan, policy, arrangement or agreement of or with the Company or any of its affiliates (this Agreement and such other plans, policies, arrangements and agreements, the “ Company Plans ”) to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment.  Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to Executive or for Executive’s benefit under any Company Plan may not be reduced by, or offset against, any amount owing by Executive to the Company or any of its affiliates.

 

(c)                                   If, at the time of Executive’s separation from service (within the meaning of Section 409A), (i) Executive is a “specified employee” (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time, to the extent the methodology so selected is permitted under Section 409A) and (ii) the Company shall make a good faith determination that an amount payable under the Company Plans constitutes deferred compensation (within the meaning of

 

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Section 409A and after taking into account all exemptions thereunder) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company shall not pay such amount on the otherwise scheduled payment date, but shall instead accumulate such amount and pay it, without interest, on the first business day after the expiration of such six-month period.  To the extent required by Section 409A, any payment or benefit that would be considered deferred compensation subject to, and not exempt from, Section 409A, payable or provided upon a termination of Executive’s employment, shall only be paid or provided to Executive upon his separation from service (within the meaning of Section 409A).

 

(d)                                  For purposes of Section 409A, each payment hereunder will be deemed to be a separate payment as permitted under Treasury Regulation Section 1.409A-2(b)(2)(iii).

 

(e)                                   Except as specifically permitted by Section 409A or as otherwise specifically set forth in this Agreement, the benefits and reimbursements provided to Executive under this Agreement and any Company Plan during any calendar year shall not affect the benefits and reimbursements to be provided to Executive under the relevant section of this Agreement or any Company Plan in any other calendar year, and the right to such benefits and reimbursements cannot be liquidated or exchanged for any other benefit and shall be provided in accordance with Treas. Reg. Section 1.409A-3(i)(1)(iv) or any successor thereto.  Further, in the case of reimbursement payments, reimbursement payments shall be made to Executive as soon as practicable following the date that the applicable expense is incurred, but in no event later than the last day of the calendar year following the calendar year in which the underlying expense is incurred.

 

(f)                                    To the extent necessary to qualify for the short-term deferral exception under Section 457A(d)(3)(B) of the Code, and subject to Section 409A, any Ineligible Compensation that is attributable to services performed by Executive for a “nonqualified entity” (within the meaning of Section 457A(b) of the Code, such entity a “ Nonqualified Entity ”), as adjusted for any earnings and losses attributable thereto, shall be paid to Executive no later than the last day of the 12th month after the end of the taxable year of such Nonqualified Entity during which Executive’s right to the payment of such Ineligible Compensation is no longer subject to a “substantial risk of forfeiture” within the meaning of Section 457A(d)(1) of the Code.  For purposes of this agreement, “ Ineligible Compensation ” means compensation relating to services performed for the benefit or on behalf of a Nonqualified Entity as determined by the Company in its sole discretion regardless of whether the cost of such compensation is actually borne by the Company.  To the extent Executive performs such services for a Nonqualified Entity, and any subsidiary or affiliate of the Company, the determination of what portion of such compensation shall be considered Ineligible Compensation shall also be made by the Company in its sole discretion.

 

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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first above written.

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

 

 

 

 

 

 

By:

/s/ Brian E. Kensil

 

 

Name:

Brian E. Kensil

 

 

Title:

CFO

 

 

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

 

By:

/s/ Allan L. Waters

 

 

Name:

Allan L. Waters

 

[ Signature Page to Allan Waters Employment Agreement ]

 




Exhibit 10.10

 

EXECUTION COPY

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “ Agreement ”) is dated as of July 24, 2015, between Sirius International Försäkringsaktiebolag (publ), Reg. No. 516401-8136, a Swedish corporation (the “ Company ”), and Monica Cramer Manhem, personal Swedish identity number 590702-0027 (“ Executive ”).  All capitalized terms used but not defined herein shall have the meanings set forth in the Amended and Restated Sirius Group Long Term Incentive Plan as in effect on the date hereof (the “ Sirius LTIP ”), which is attached hereto as Exhibit A.

 

WHEREAS, the Company desires to employ Executive, and Executive desires to remain in such employment with the Company, subject to the terms and conditions set forth herein, which shall replace the previous employment agreement, dated November 4, 2013 (the “ Former Employment Agreement ”) entered into between the parties, unless otherwise stated in this agreement.

 

NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth and other good and valuable consideration, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1.             Term .  The Company agrees to employ Executive, and Executive agrees to remain in the employment of the Company, subject to the terms and conditions of this Agreement, for the period commencing on the date hereof and ending upon the termination of Executive’s employment pursuant to Section 4 (the “ Term ”).  In the event that the Purchase Agreement is terminated in accordance with its terms prior to the closing of the transaction (the “ Closing ”) contemplated by the Stock Purchase Agreement (the “ Purchase Agreement ”), dated as of July 24, 2015, among Lone Tree Holdings Ltd., CM International Holding Pte. Ltd., CM Bermuda Limited and Sirius International Insurance Group, Ltd. (“ SIIG ”), this Agreement shall be null and void ab initio, and the Former Employment Agreement shall in such a case remain valid.

 

2.             Position, Duties and Responsibilities .

 

(a)        During the Term, Executive shall serve as President and Chief Executive Officer of the Company.  Executive’s principal work location shall be in Stockholm, Sweden.  During the Term, Executive shall report directly to the Board of Directors of the Company.  During the Term, Executive will oversee the day to day operations of the Company.

 

(b)        During the Term, Executive shall devote substantially all of her working time, attention and best efforts to the business of the Company and shall use her best efforts to perform faithfully and efficiently Executive’s duties and responsibilities as set forth herein.

 

(c)        The position shall be exempted from the Employment Protection Act (Sw:  anställningsskyddslagen) and collective bargaining agreements that apply within the Company, as Executive is in a managerial position.

 



 

3.             Compensation and Benefits.

 

(a)        Base Salary .  During the Term, Executive shall be paid an annual base salary (“ Base Salary ”) at an annual rate of not less than SEK 3,498,167.  The Base Salary shall be payable in accordance with the Company’s regular payroll practices as then in effect.  During the Term, the Base Salary will be reviewed annually.

 

(b)        Bonus .  During the Term, Executive shall have an opportunity to earn a cash bonus (“ Annual Bonus ”) for each fiscal year during the Term targeted (“ Target Bonus ”) at not less than 50% of Executive’s Base Salary for such fiscal year.  The Annual Bonus actually paid for each such fiscal year as a percentage of Executive’s Target Bonus shall not be less than the overall Company bonus pool awarded as a percentage of the Company’s total annual target bonus pool for such fiscal year.

 

(c)        Long-Term Incentive Awards .  Executive currently has outstanding awards of Performance Units issued pursuant to the Sirius LTIP.  Executive also currently has outstanding awards of performance shares (“ Performance Shares ”) and restricted shares (“ Restricted Shares ”) issued pursuant to the White Mountains Long-Term Incentive Plan (as amended) (the “ WTM LTIP ”).  The number and principal terms of Executive’s existing awards under the Sirius LTIP and the WTM LTIP are set out in Exhibit B hereto.  Pursuant to the Sirius LTIP or a successor plan thereto (the WTM LTIP, the Sirius LTIP and any such successor plan, an “ LTIP ”), Executive shall receive during the Term future annual awards of long-term incentives at an aggregate target payout value not less than the aggregate target payout value of awards granted to Executive in February 2015 pursuant to both the Sirius LTIP and the WTM LTIP.

 

(d)        Retirement, Savings and Welfare Plans .  During the Term, Executive shall be eligible to participate in the retirement, savings and welfare benefit plans as set out in Schedule 1 of the Former Employment Agreement.

 

(e)        Vacation .  During the Term, Executive shall be entitled in accordance with Company policies to take thirty-one (31) days of vacation per calendar year or such greater number provided under applicable Company policies.

 

(f)        Reimbursement of Expenses .  During the Term, the Company shall reimburse Executive for all reasonable expenses, including travel expenses, incurred by Executive in the performance of Executive’s duties hereunder that comply with the applicable policies of the Company, including the presentation of appropriate statements of such expenses.

 

(g)        The Executive is entitled to a Company car in accordance with the Company’s policy as applicable from time to time.

 

4.             Termination of Employment During the Term.

 

(a)        Cause .  The Company may terminate Executive’s employment immediately during the Term for Cause.  For purposes of this Agreement, “ Cause ” means (i) material and continued failure of Executive to perform Executive’s duties which

 

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failure has continued for more than 30 days following written notice of such non-performance from the Board of Directors of the Company; (ii) commission of an act of fraud, embezzlement, or misappropriation of assets or property (tangible or intangible) of the Company or any subsidiary or affiliate thereof; (iii) a material breach of the provisions set forth in Section 7 of this Agreement; (iv) commission of a felony, including a plea of guilty thereto; or (v) gross negligence or willful misconduct in the performance by Executive of her duties that is reasonably likely to have an adverse effect on the business or reputation of the Company or its subsidiaries or affiliates.  Notwithstanding anything to the contrary in this Section 4(a), Cause shall not result from Executive’s death or inability to provide services due to physical or mental illness, disability or similar condition.

 

(b)        Death .  Executive’s employment during the Term shall terminate automatically upon Executive’s death.

 

(c)        Termination Without Cause .  The Company may terminate Executive’s employment during the Term without Cause by observing a notice period of twelve (12) months.

 

(d)        Voluntary Termination .  Executive may terminate her employment during the Term with Good Reason (in accordance with Section 5(c)(vi)) or without Good Reason, in either case, by observing a notice period of twelve (12) months.

 

(e)        Notice of Termination .  Any termination of Executive’s employment by either party during the Term shall be communicated by written notice given in accordance with Section 14.  The Term will expire upon any termination of employment pursuant to this Section 4.

 

5.             Obligations of the Company Upon Termination .  Following any termination of Executive’s employment during the Term, Executive shall not be otherwise compensated for the loss of employment or the loss of any rights or benefits under this Agreement or any other plans and programs, except as provided below:

 

(a)        In the event Executive’s employment is terminated for Cause pursuant to Section 4(a), Executive shall be entitled to receive (i) any unpaid Base Salary through her date of termination, (ii) payment for any accrued but unused vacation or other similar paid time-off, (iii) payment of any vested benefit payable under the Company’s employee benefit plans in accordance with the terms thereof, and (iv) reimbursement for any reasonable business expenses incurred prior to such termination for which Executive has complied with the Company’s reimbursement policies (collectively, the “ Accrued Rights ”).

 

(b)        In the event Executive’s employment terminates pursuant to Section 4(b) due to Executive’s death, Executive (or her estate or representatives, as applicable) shall be entitled to receive:

 

(i)            The Accrued Rights.

 

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(ii)           A pro rata Annual Bonus for the year in which such termination occurs based on the number of days Executive was employed during the year of termination, which shall be calculated based on actual performance through the end of such year and on the same basis as other bonus-eligible employees and shall be paid at the same time as other bonus-eligible employees.

 

(iii)          With respect to any Eligible Award (as defined below) outstanding at the time of such termination, such award shall be treated in the manner described in Section 5(e) of the Sirius LTIP or Section 7(e)(i) of the WTM LTIP, as applicable, or to the extent granted under a successor plan thereto, shall be treated in a manner set forth in such plan.

 

(c)        In the event Executive’s employment is terminated by the Company without Cause pursuant to Section 4(c) or is terminated by Executive for Good Reason pursuant to Section 4(d) (in each case, other than due to death), Executive shall be entitled to receive:

 

(i)            The Accrued Rights.

 

(ii)           Subject to Executive’s executing and delivering (and not revoking) the Release as described in Section 8, (x) a lump-sum cash payment equal to 100% of the then-current Base Salary, which shall be paid on the 60th day following such termination, and (y) an Annual Bonus (without pro ration for time) for the year in which such termination occurs, which shall be calculated based on actual performance through the end of such year and on the same basis as other bonus eligible employees except that such Annual Bonus shall not be less than the applicable Target Bonus for such fiscal year, and which shall be paid at the same time as other bonus-eligible employees but no earlier than the 60th day following such termination.

 

(iii)          Subject to the occurrence of the Closing, payment of the Retention Bonuses (as defined in Section 7(f)), to the extent then unpaid, with the amount of such payment being determined in the same manner specified in the Purchase Agreement in the case of “Bonus Recipients” terminated without cause, and payable within 10 days of Executive’s termination of employment.

 

(iv)          Continued employment under the Advisory Relationship pursuant to Section 6.

 

(v)           To the extent such termination occurs during the 24 month period following the Closing, and notwithstanding anything to the contrary in the applicable LTIP, Executive’s Pre-Closing Awards (as defined in Section 6(f)) shall be treated in the manner described in Section 5(f) of the Sirius LTIP as in effect on the date hereof or Section 7(f) of the WTM LTIP as in effect on the date hereof, as applicable, except that, notwithstanding anything in the Sirius LTIP or WTM LTIP to the contrary, the amounts payable to Executive with respect to such Pre-Closing Awards shall not be subject to pro ration for time or

 

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similar reduction; provided that the treatment described in this Section 5(c)(v) shall apply in lieu of the treatment described in Section 6(f); provided further , that in the event Executive’s employment terminates for Good Reason, (x) Executive’s Pre-Closing Awards shall only be treated as described in this Section 5(c)(v) to the extent Executive rejects continued employment under the Advisory Relationship pursuant to Section 6 and (y) in the event that Executive accepts (and does not reject) continued employment under the Advisory Relationship pursuant to Section 6, Executive’s Pre-Closing Awards shall be treated in the manner described in Section 6(f) in lieu of the treatment described in this Section 5(c)(v).

 

(vi)          For purposes of this Agreement, “ Good Reason ” shall mean the occurrence of any of the following events:  (i) a material diminution in Executive’s responsibilities, authority or duties without Executive’s written consent; (ii) a diminution in Executive’s Base Salary, Target Bonus or aggregate target payout level of annual long-term incentive awards, except for across-the-board base salary reductions based on the Company’s financial performance similarly affecting all or substantially all senior management employees of the Company; (iii) a material change in the geographic location at which Executive provides services to the Company without Executive’s written consent; or (iv) the material breach of this Agreement by the Company.

 

(d)        In the event Executive’s employment is terminated by Executive pursuant to Section 4(d) other than for Good Reason (or death), Executive shall be entitled to receive:

 

(i)            The Accrued Rights.

 

(ii)           To the extent such termination occurs as a result of Executive’s retirement following the second anniversary of the Closing with the prior consent of the Company (not to be unreasonably withheld, delayed or conditioned) (a “ Retirement ”), continued employment under the Advisory Relationship pursuant to Section 6.

 

6.             Advisory Relationship .

 

(a)        Commencement; Term .  Upon a termination of Executive’s employment during the Term (i) by the Company without Cause, (ii) by Executive for Good Reason or (iii) by Executive upon Retirement (a “ Qualifying Termination of Executive Services ”), subject to Executive’s executing and delivering (and not revoking) the Release as described in Section 8, the Company shall offer to hire and employ Executive, and Executive may agree to be employed and to perform, periodic advisory and transition services for the Company and its subsidiaries pursuant to this Section 6 (the “ Advisory Services ”).  The Advisory Services will include, among other things, advising senior executives of the Company and assisting with the transition of Executive’s executive duties to her successor.

 

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(b)        Timing; Location .  The performance by Executive of the Advisory Services hereunder shall be at such times and at such locations as Executive and the Company may mutually agree from time to time, it being understood that Executive’s primary work location shall be her primary residence.

 

(c)        Advisory Period .  The term of the Advisory Services shall commence upon Executive’s Qualifying Termination of Executive Services and shall continue until the earlier of (i) the second anniversary of such Qualifying Termination of Executive Services and (ii) the LTIP Earn Out Date, unless earlier terminated as provided in Section 6(d) below (such period, the “ Advisory Period ”).  For purposes of this Agreement, “ LTIP Earn Out Date ” shall mean the last date on which the Eligible Awards (as defined in Section 6(f)) are eligible to vest pursuant to Section 6(f) in accordance with their terms.  In the event that Executive does not execute and deliver the Release (or revokes the Release) required under Section 8, the Advisory Period shall terminate on the 60th day after Executive’s Qualifying Termination of Executive Services.

 

(d)        Termination .  The Advisory Period may be terminated (i) by the Company solely for Cause (as defined in Section 4(a)) or upon the material breach by Executive of her obligations under Section 7, (ii) due to Executive’s death or (iii) by Executive for any reason (and shall be deemed to have terminated voluntarily upon her commencement of full-time employment with any employer other than the Company and its affiliates).

 

(e)        Compensation; Benefits .  During the Advisory Period, the Company shall pay Executive a salary in accordance with its regular payroll practices at an annual rate of thirty thousand dollars ($30,000) (the “ Advisory Salary ”).  During the Advisory Period, Executive shall not receive additional annual or long-term incentive opportunities or accrue additional paid vacation.  In addition to the Advisory Salary, the Company shall reimburse Executive for all reasonable and necessary expenses (including without limitation travel and meal expenses) incurred or paid by Executive during the Advisory Period, in connection with, or related to, the performance of the Advisory Services reasonably promptly after receipt of an itemization and documentation of such expenses.  During the Advisory Period, provided that Executive is not then eligible for coverage from another employer, Executive shall be entitled to receive health insurance coverage through the Company for himself and her eligible dependents to the same extent as then made available to other employees of the Company.  During such period, Executive will be responsible for an amount equal to all premium costs toward any insurance coverage elected by Executive for him and her eligible dependents.  The Company is hereby authorized to deduct from Executive’s compensation hereunder any amounts required to be withheld or deducted by law.

 

(f)        Treatment of LTIP Awards .  In the event Executive has a Qualifying Termination of Executive Services and at such time holds Eligible Awards, such Eligible Awards shall be governed by this Section 6(f) during the Advisory Period.  The Eligible Awards shall not be terminated as a result of the termination of the Term and her employment as an executive.  Instead, during the Advisory Period, Executive’s service as an advisor shall be treated as continued employment for all purposes of the LTIPs and Executive shall continue to vest in such Eligible Awards on their regular schedule and be

 

6



 

paid out in the same manner as other participants in such plans; provided that, should Executive materially breach her obligations to the Company under Section 7 of this Agreement, the Company may determine in its sole discretion to terminate for no consideration any Eligible Awards that are not fully vested at such time.  Upon a termination of the Advisory Period pursuant to Section 6(d), all then unvested Eligible Awards shall immediately terminate for no consideration, except that, in the event such termination is due to Executive’s death, the Eligible Awards will be treated in the manner described in Section 5(b)(iii).  For purposes of this Agreement, “ Eligible Award ” shall mean any award held by Executive as of her date of termination of employment that was granted or assumed by the Company under any LTIP (any such awards granted to Executive prior to the Closing, the “ Pre-Closing Awards ”; and any such awards granted to Executive thereafter, the “ Post-Closing Awards ”).

 

(g)        Work Requirements .  In exchange for the consideration described in Section 6(e) and 6(f), Executive will provide Advisory Services during the Advisory Period equivalent to no more than 50% of Executive’s regular work hours as of the date hereof or such additional work hours (and compensation) as mutually agreed by the Company and Executive from time to time.

 

7.             Covenants .

 

(a)        Non Competition .  Executive agrees that during the Term and the Advisory Period (if any), and for a six month period following the later of the expiration of the Term and, if it commences, the Advisory Period (such period, the “ Restriction Period ”; the portion of the Restriction Period occurring following the later of the expiration of the Term and the Advisory Period, the “ Additional Period ”), she shall not, directly or indirectly, own any interest in, manage, control, finance, participate in, consult with, or render any services to any activity or business, for himself or any other person or entity, or affiliate, whether or not for remuneration, direct or indirect, contingent or otherwise, which (i) may result in a conflict of interest or otherwise adversely affect the proper discharge of Executive’s duties with and responsibilities to the Company hereunder or (ii) in any way competes with, or interferes with, any operation of SIIG or any of its subsidiaries (the “ Company Group ”), provided that this provision shall not prohibit Executive from being a passive owner of not more that 1% of the outstanding stock of any company which is publically traded as long as Executive has no active participation in the business of such company.  Anything herein to the contrary notwithstanding, it shall not be a violation of this Section 7(a) for Executive to provide services to a subsidiary, division or affiliate of a business that competes with the Company Group provided that such subsidiary, division or affiliate is not itself engaged, directly or indirectly, in competition with the Company Group and Executive does not himself, directly or indirectly, provide services to, or have responsibilities regarding, such business that competes with the Company Group.

 

Subject to the exceptions stated below in this Section 7(a), the Company shall, as compensation for the inconvenience that this non-competition covenant causes Executive during the Additional Period, pay Executive during the Additional Period per month the difference between Executive’s Base Salary paid by the Company at the time of such

 

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termination of the employment and the (lower) salary which Executive earns from any new employment or proceeds of any business activity.  However, the compensation payable by the Company shall never exceed sixty (60) per cent of Executive’s monthly Base Salary at the time of such termination of the employment nor be paid during a period which exceeds the period of this non-competition covenant during the Additional Period.  For the avoidance of doubt, if Executive does not obtain a new employment or is not engaged in any business activity during the Additional Period, the Company shall pay Executive per month sixty (60) per cent of Executive’s monthly Base Salary at the time of such termination of the employment during the period of this non-competition covenant during the Additional Period.  Compensation according to this Section 7(a) shall not be paid in case of Executive’s breach of this non-competition covenant.

 

To enable the Company to calculate the appropriate compensation in accordance with this Section 7(a), Executive is obliged to inform the Company in writing of the level of Executive’s current salary from any new employment or proceeds of any business activity.  Such written information shall be provided to the General Counsel of the Company, or any person designated thereby, not later than on the 15th day of each month.  In the event such written information is not provided in accordance with this Section 7(a), the non-competition covenant shall still apply although the Company shall be released from the obligation to pay compensation for the month in question.

 

Compensation according to this Section 7(a) shall not be paid during any period for which Executive receives severance pay or other corresponding remuneration post-termination from the Company or where the employment is terminated (i) due to Executive’s retirement or (ii) by the Company due to Executive’s material breach of this Agreement.

 

In the event of either party’s termination of Executive’s employment and during such time as the non-competition covenant remains in force, the Company may, subject to one (1) month’s prior written notice, release Executive from the non-competition covenant.  In such event, the Company shall be released from the obligation to pay compensation in accordance with this Section 7(a).

 

(b)        Non Solicitation .  Executive further agrees during the Restriction Period not to, directly or indirectly, for himself or for any other person or entity, or affiliate:  (i) hire any employee of the Company Group or induce or attempt to induce any employee of the Company Group to leave the employ of the Company Group; (ii) hire any person who was an employee of the Company Group at any time during the twelvemonth period preceding such hiring; or (iii) induce or attempt to induce any former, existing or prospective customer, supplier, licensee, lender, licensor or other business relation of the Company Group to cease doing business with the Company Group, or to reduce the level of business conducted with the Company Group.  Anything herein to the contrary notwithstanding, it shall not be a violation of this Section 7(b) if (x) Executive furnishes to a third party a reference as to any employee or former employee of the Company Group or (y) an entity with which Executive is associated hires or engages any employee of the Company Group provided Executive was not,

 

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directly or indirectly, involved in hiring or identifying such person as a potential recruit or assisting in the recruitment of such employee.

 

(c)        Confidential Information .

 

(i)            Executive shall use best efforts and diligence both during and after any employment with the Company, regardless of how, when or why such employment ends, to protect the confidential, trade secret and/or proprietary character of all Confidential Information (as defined below).  Executive shall not, directly or indirectly, use (for Executive’s benefit or for the benefit of any other person) or disclose any Confidential Information, except as may be necessary for the performance of Executive’s duties for the Company.  For purposes of this Agreement, “ Confidential Information ” means all information concerning trade secrets, knowhow, software, developments, inventions, processes, technology, designs, financial data, strategic business plans or any other proprietary or confidential information of any member of the Company, Group, in any form or media, including any of the foregoing relating to research, operations, finances, current and proposed products and services, vendors, customers, advertising and marketing.  Executive understands that Confidential Information may or may not be labeled as such, and Executive shall treat all information that appears to be Confidential Information as confidential.

 

(ii)           Anything herein to the contrary notwithstanding, the restrictions of this Section 7(c) shall not apply (w) when disclosure is required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with apparent jurisdiction to order Executive to disclose or make accessible any information, provided that Executive shall have, to the extent permitted by applicable law, first provided the Company with reasonable notice of such potential disclosure and a reasonable opportunity to exercise any legal remedies available to the Company to limit such disclosure, (x) with respect to any other litigation, arbitration or mediation involving this Agreement, (y) as to Confidential Information that becomes generally known to the public or within the relevant trade or industry other than due to Executive’s violation of this Section 7(c) or (z) disclosing this Agreement to members of her immediate family and legal or financial advisers or the provisions of this Section 7 to any prospective or future employer.

 

(iii)          Upon termination of Executive’s employment with the Company for any reason, Executive shall promptly destroy, delete, or, if Executive is so notified in writing by the Company prior to such termination, return to the Company all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Executive’s possession or control at the time of such termination (including any of the foregoing stored or located in Executive’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information.  Anything to the contrary notwithstanding, nothing in this Section 7(c)(iii) shall prevent Executive from retaining a computer, papers and

 

9


 

other materials of a personal nature, including personal diaries, calendars and Rolodexes, information relating to her compensation or relating to reimbursement of expenses, information that she reasonably believes may be needed for tax purposes, and copies of plans, programs and agreements relating to her compensation.  For the sake of clarity, if Executive retains a computer she shall delete any information contained therein that she is not permitted to retain under this Section 7(c)(iii).

 

(d)        Non-Disparagement .  During and after the Term and the Advisory Period (if any), regardless of how, when or why such employment ends, (i) Executive shall not make, either directly or indirectly, any oral or written negative, disparaging or adverse statements or representations of or concerning any member of the Company Group, any of their clients, customers or businesses, or any of their current or former officers, directors, employees or shareholders and (ii) Company Parties (as defined below) shall not make any oral or written negative, disparaging or adverse statements or representations of or concerning Executive; provided , however , that nothing herein shall prohibit (A) critical communications between Executive and the Company during the Term and any Advisory Period and in connection with Executive’s employment, (B) Executive or any Company Party from disclosing truthful information if legally required (whether by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) or (C) either party from acting in good faith to enforce such party’s rights under this Agreement.  For purposes of this Agreement, the term “ Company Parties ” shall mean the executive officers of the Company, acting in their capacity as representatives of the Company.

 

(e)        Intellectual Property .

 

(i)            If, prior to the date hereof, Executive has created, invented, designed, developed, contributed to or improved any works of authorship, inventions, intellectual property, materials, documents or other work product (including, without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“ Works ”), either alone or with third parties by such employment (“ Prior Works ”), Executive hereby grants each member of the Company Group, to the extent of any rights she possesses therein, a perpetual, non-exclusive, royalty-free, worldwide, assignable, sublicensable license under all rights and intellectual property rights (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) therein for all purposes in connection with the Company Group’s current and future business.

 

(ii)           If Executive creates, invents, designs, develops, contributes to or improves any Works, either alone or with third parties, at any time during Executive’s employment by the Company and within the scope of such employment (“ Company Works ”), Executive shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the extent she then possesses and to the maximum extent permitted by

 

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applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to each member of the Company Group to the extent ownership of any such rights does not vest originally in a member of the Company Group.

 

(iii)          Executive agrees to keep and maintain reasonable records of all Company Works.  The records will be available to and remain the sole property and intellectual property of the Company at all times.

 

(iv)          Executive shall, to the extent reasonable, take all actions and execute all requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and Company Works.  If, to the extent the Company is unable to secure Executive’s signature on any document for this purpose, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney in fact, to act for and on Executive’s behalf and stead to execute any documents and to do all other lawfully permitted acts in connection with the foregoing.

 

(v)           The provisions of this Section 7 shall survive the termination of Executive’s employment for any reason.

 

(f)        [ Reserved .]

 

(g)        Consideration .  Executive acknowledges that, in connection with the Closing, (i) Executive will receive a transaction bonus within 10 business days after the Closing in accordance with the Purchase Agreement (the “ Transaction Bonus ”) as consideration for Executive’s significant services and efforts to White Mountains Insurance Group, Ltd. (“ WTM ”) and the Company provided during 2014 and 2015 and (ii) Executive will be eligible to receive two retention bonuses as provided in the Purchase Agreement (the “ Retention Bonuses ”), subject to her continued employment after the Closing through the twelve-month and twentieth-month anniversaries, respectively, of Closing (except as provided in Section 5), as consideration for her continued essential services to the Company and Executive’s agreement to be bound by the provisions of this Section 7.  Exhibit C hereto sets forth the Company’s good faith estimate, as of the date hereof, of the amount of the Transaction Bonus and the Retention Bonuses.

 

8.             Release .  Executive shall not be entitled to receive any of the payments or benefits set forth in Section 5(c)(ii) or Section 6, as the case may be, unless Executive executes a release and waiver of claims in the form of Exhibit D hereto (the “ Release ”) in favor of the Company and certain other parties as set forth therein relating to all claims or liabilities of any kind relating to Executive’s employment with the Company or any of its affiliates and the termination of such employment as an executive, and, on or prior to the 55th day following

 

11



 

Executive’s termination of employment pursuant to Section 4, the Release becomes effective and irrevocable in accordance with the terms thereof.

 

9.             [ Reserved .]

 

10.          Entire Agreement .  This Agreement contains the entire agreement of the parties with respect to the subject matter hereof, and except as otherwise set forth herein, supersedes all prior agreements, promises, covenants, arrangements, communications, representations and warranties between them, whether written or oral, with respect to the subject matter hereof.  For the sake of clarity, nothing in this paragraph is intended to negate or otherwise adversely affect your rights under compensation and benefit plans, programs and agreements at, or with, WTM and/or the Company including, without limitation, the LTIPs.

 

11.          Assignment; Successors .

 

(a)        This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive, and any assignment in violation of this Agreement shall be void.  This Agreement shall inure to the benefit of and be enforceable by Executive’s heirs, successors, assigns and legal representatives.

 

(b)        This Agreement shall inure to the benefit of and be binding upon the Company, its successors and assigns.

 

(c)        The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

12.          Withholding .  All payments to be made to Executive hereunder will be subject to all applicable required withholding of applicable taxes, including income taxes.

 

13.          [ Reserved .]

 

14.          Notices .  All documents, notices, requests, demands and other communications that are required or permitted to be delivered or given under this Agreement shall be in writing to the Company or at the address for Executive most recently on file with the Company’s human resources department, and shall be deemed to have been duly delivered or given when received.

 

15.          Amendment .  No provisions of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by the parties hereto.

 

16.          No Waiver .  The provisions of this Agreement may be waived only in writing signed by the party or parties entitled to the benefit thereof.  A waiver or any breach or failure to enforce any provision of this Agreement shall not in any way affect, limit or waive a

 

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party’s rights hereunder at any time to enforce strict compliance thereafter with every provision of this Agreement.

 

17.          Severability .  If any term, provision, covenant or condition of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable in any jurisdiction, then such provision, covenant or condition shall, as to such jurisdiction, be modified or restricted to the minimum extent necessary to make such provision valid, binding and enforceable, or, if such provision cannot be modified or restricted, then such provision shall, as to such jurisdiction, be deemed to be excised from this Agreement and any such invalidity, illegality or unenforceability with respect to such provision shall not invalidate or render unenforceable such provision in any other jurisdiction, and the remainder of the provisions hereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

 

18.          Survival .  The rights and obligations of the Company and Executive under the provisions of this Agreement shall survive and remain binding and enforceable, notwithstanding any termination of Executive’s employment with the Company, to the extent necessary to preserve the intended benefits of such provisions.

 

19.          Governing Law .  This Agreement and any disputes arising hereunder or related hereto (whether for breach of contract, tortious conduct or otherwise) shall be governed by and construed in accordance with the laws of Sweden.

 

20.          Jurisdiction .  Each party irrevocably agrees that any legal action, suit or proceeding against it arising out of or in connection with this Agreement or the transactions contemplated by this Agreement or disputes relating hereto (whether for breach of contract, tortious conduct or otherwise) shall be brought exclusively in Sweden, and hereby irrevocably accepts and submits to the exclusive jurisdiction and venue of the aforesaid courts in personam, with respect to any such action, suit or proceeding.  The parties hereby waive, to the fullest extent permitted by applicable law, any objection that they now or hereafter have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding brought in such court.  The parties agree not to commence any action arising out of or relating to this Agreement in a forum other than the forum described in this Section 19.

 

21.          Headings .  The headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions.

 

22.          Counterparts .  This Agreement may be executed in two or more counterparts (including by facsimile of PDF), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  If any signature is delivered by facsimile transmission or by PDF, such signature shall create a valid and binding obligation of the party executing (or on whose behalf the signature is executed) with the same force and effect as if such facsimile or PDF signature were an original thereof.

 

23.          Construction .  The headings in this Agreement are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.  As used in this Agreement, words such as “herein”, “hereinafter”, “hereby” and “hereunder”, and

 

13



 

words of like import, refer to this Agreement, unless the context requires otherwise.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.

 

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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first above written.

 

 

 

SIRIUS INTERNATIONAL

 

 

FÖRSÄKRINGSAKTIEBOLAG (PUBL)

 

 

 

 

 

By:

/s/ Allan L. Waters

 

 

 

Name:

Allan L. Waters

 

 

 

Title:

Chairman

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

By:

/s/ Monica Cramer Manhem

 

 

 

Name:

Monica Cramer Manhem

 

[ Signature Page to Monica Cramer Manhem Employment Agreement ]

 




Exhibit 10.11

 

SHAREHOLDERS AGREEMENT

 

THIS SHAREHOLDERS AGREEMENT (this “ Agreement ”), is made as of the [ · ] day of [ · ], 2018, by and among Sirius International Insurance Group, Ltd., a Bermuda exempted company limited by shares (the “ Company ”), CM Bermuda Ltd., a Bermuda holding company (“ CM Bermuda ”), [ · ], a [ · ] (“ [ · ] ”), [ · ], a [ · ] (“ [ · ] ”), [ · ], a [ · ] (“ [ · ] ”), and [ · ], a [ · ] (“ [ · ] ” and, collectively with [ · ], [ · ] and [ · ], the “ Initial Holders ”).

 

WHEREAS, the Company and the respective Initial Holders are parties to those certain Subscription Agreements, dated as of August 29, 2018 (the “ Subscription Agreements ”), pursuant to which the Initial Holders have agreed to purchase Common Shares (as defined below), Preference Shares (as defined below) and warrants to purchase Common Shares;

 

WHEREAS, as of the date hereof, CM Bermuda owns approximately [ · ]% of the Common Shares and, accordingly, can elect all of the members of the Company’s Board of Directors (the “ Board of Directors ”) and approve other matters submitted to the holders of the Common Shares; and

 

WHEREAS, as a condition to the consummation of the transactions contemplated by the Subscription Agreements, the parties have agreed to certain matters with respect to the governance of the Company and the voting of CM Bermuda’s Common Shares and certain other matters as set forth in this Agreement.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

Section 1.                                            Definitions .  For purposes of this Agreement:

 

(a)                                  “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

 

(b)                                  “Agreed Director” means an Independent Director mutually agreeable to CM Bermuda and Holders representing a majority of the Preference Shares; provided , that if CM Bermuda and the Holders have not identified an Agreed Director after negotiating in good faith for a period of sixty (60) days, then an Agreed Director means any Independent Director recommended for election by the Nominating and Governance Committee.

 

(c)                                   “Beneficial Owner,” “Beneficially Own” and “Beneficial Ownership” have the meanings given to those terms in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, and a Person’s beneficial ownership of securities will be calculated in accordance with the provisions of such Rule.

 

(d)                                  “Board of Directors” has the meaning assigned to such term in the recitals.

 

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(e)                                   “business day” means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City, New York, or Bermuda generally are authorized or obligated by law or executive order to close.

 

(f)                                    “CM Bermuda” has the meaning assigned to such term in the preamble.

 

(g)                                   “CMB Director” means Laurence Liao and any other individual Affiliated with CM Bermuda or its Affiliates who becomes a Director after the Issue Date.

 

(h)                                  “Common Shares” means the common shares, par value U.S.$0.01 per share, of the Company, or any other class of shares resulting from successive changes or reclassifications of such Common Shares consisting solely of changes in par value, or as a result of a subdivision, combination, merger, amalgamation, consolidation or similar transaction.

 

(i)                                      “Company” has the meaning assigned to such term in the preamble.

 

(j)                                     “Director” means a member of the Board of Directors or a nominee member of the Board of Directors, as the context requires.

 

(k)                                  “Equity Securities” means the Common Shares, the Preference Shares or any securities of the Company having voting rights in the election of the Board of Directors, or any securities evidencing an ownership interest in the Company, or any securities convertible into, exchangeable for or exercisable for any shares of the foregoing.

 

(l)                                      “Holders” means the Initial Holders and their respective successors and permitted assignees.

 

(m)                              “Independent Director” means an individual who qualifies as an “independent director” with respect to the Company and any parent or subsidiary of the Company within the meaning of Nasdaq Listing Rule 5605(a)(2) and within the meaning of Institutional Shareholder Services’ United States Proxy Voting Guidelines, in each case as amended, supplemented or replaced from time to time.

 

(n)                                  “Initial Holders” has the meaning assigned to such term in the preamble.

 

(o)                                  “Issue Date” means [ · ], 2018.

 

(p)                                  “Merger Agreement” means that certain Agreement and Plan of Merger, dated as of June 23, 2018, by and among Easterly Acquisition Corp., the Company and Sirius Acquisitions Holding Company III, a wholly owned subsidiary of the Company (as amended on August 29, 2018 and as it may be further amended from time to time).

 

(q)                                  “Nominating and Governance Committee” means the Nominating and Governance Committee of the Board of Directors.

 

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(r)                                     “Person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other similar entity, whether or not a legal entity.

 

(s)                                    “Preference Shares” means the Series B preference shares, par value of U.S.$0.01 per share, of the Company, or any other class of shares resulting from successive changes or reclassifications of such Preference Shares consisting solely of changes in par value, or as a result of a subdivision, combination, merger, amalgamation, consolidation or similar transaction.

 

(t)                                     “Qualified Sale Transaction” means (i) any merger, amalgamation, consolidation or similar transaction that results in the inability of the holders of a majority of the Voting Shares immediately prior to such transaction to elect a majority of the members of the Board of Directors (or its equivalent) (without giving effect to any rights to appoint members to the Board of Directors pursuant to Section 4(e) or Section 6(h)(ii) of the Certificate of Designation in respect of the Preference Shares) of the resulting entity or its parent company or (ii) any sale or transfer or related series of sales or transfers of all or substantially all of the Company’s and its subsidiaries’ consolidated assets, in each case where the per share value of the consideration received by the Company or by the shareholders of the Company in such merger, amalgamation, consolidation, similar transaction, sale or transfer (as  determined by the Board of Directors in good faith) is based on a valuation of the Company equal to or greater than (x) the Conversion Price (as defined in the Certificate of Designation in respect of the Preference Shares) multiplied by 1.675 less (y) the aggregate per share amounts of all dividends and distributions paid on the Common Shares since the Issue Date (other than dividends or distributions payable in the form of Common Shares), in each case, subject to adjustment as applicable for any subdivision (by any share split, recapitalization or otherwise) or combination (by combination, reverse share split or otherwise) or dividend or distribution in the form of Common Shares.

 

(u)                                  “Subscription Agreements” has the meaning assigned to such term in the recitals.

 

(v)                                  “Voting Shares” means the Common Shares, the Preference Shares and any other voting shares of the Company outstanding from time to time.

 

Section 2.                                            Election of Directors .

 

(a)                                  From the Issue Date until the third (3rd) anniversary of the Issue Date:

 

(i)                                      CM Bermuda shall, and shall cause each of its Affiliates that own Voting Shares at such time to, vote all of the Voting Shares then beneficially owned by them in favor of the election of that number of Independent Directors as is necessary to provide that at least a majority of the Board of Directors is comprised of Independent Directors or, to the extent that the foregoing does not result in a Board of Directors that is comprised of a majority of Independent Directors, then in favor of the election of each Independent Director until at least a majority of the Board of Directors is comprised of Independent Directors; and

 

(ii)                                   CM Bermuda shall not, and shall cause each of its Affiliates that own Voting Shares at such time not to, vote any of the Voting Shares then beneficially owned

 

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by them in favor of the removal of any Director (other than any CMB Director) other than for cause.

 

(b)                                  After the third (3rd) anniversary of the Issue Date and at any time following the Issue Date in the event of an increase to the size of the Board of Directors, CM Bermuda shall not, and shall cause each of its Affiliates that own Voting Shares at such time not to, cause any of the Voting Shares then beneficially owned by them to be voted in favor of the election of any Director not then serving on the Board of Directors (including any election to fill a vacancy then existing on the Board of Directors as a result of death, resignation, removal, expansion of the Board of Directors or otherwise) who is not an Agreed Director.

 

Section 3.                                            Repurchase or Redemption of CM Bermuda Shares .

 

(a)   If the Company agrees to repurchase or redeem any Equity Securities held by CM Bermuda or its Affiliates (other than (i) any open market repurchase or redemption, (ii) any repurchase or redemption contemplated by the Merger Agreement and (iii) as required by or necessary to fulfill the terms of any employment contract, benefit plan or similar arrangement with or for the benefit of one or more employees, directors or consultants) (a “ CMB Repurchase ”), then the Company shall, by notice to each Holder, offer to redeem from such Holder (such offer, an “ Offer to Repurchase ”), on the same terms and conditions, Common Shares (or shares of the Company then convertible into such Common Shares on as-converted basis, including the Preference Shares) held by such Holder on a pro rata basis in proportion, as nearly as practicable, to the respective beneficial ownership percentages of CM Bermuda and its Affiliates, in the aggregate, on the one hand, and such Holder, on the other, in each case as of the date of such offer.

 

(b)    The Offer to Repurchase shall include: (i) the date of the anticipated Repurchase (the “ Repurchase Date ”), which date shall be at least five (5) business days after the Offer to Repurchase, (ii) the number of Equity Securities being repurchased pursuant to the CMB Repurchase, (iii) the number of Common Shares (or shares of the Company then convertible into Common Shares, including the Preference Shares) held by such Holder that the Company will repurchase on the Repurchase Date if so elected by such Holder, (iv) the repurchase price per Common Share (or share of the Company then convertible into a Common Share, including the Preference Shares) (the “ Repurchase Price ”) and (v) the manner and place designated for surrender by the Holder to the Company of its certificate or certificates representing the Common Shares (or shares of the Company then convertible into Common Shares, including the Preference Shares) to be repurchased.  In order to accept the Offer to Repurchase, in whole but not in part, each Holder shall notify the Company no later than 5:00 p.m. (New York City time) on the date that is three (3) business days after the date of the Offer to Repurchase (the “ Offer Acceptance Notice ”).  A failure by a Holder to accept the Offer to Repurchase within the specified time period shall be deemed to constitute a rejection of such offer by such Holder, and the Company may thereafter complete the CMB Repurchase on the terms specified in the Offer to Repurchase without the participation of such Holder.

 

(c)    On or before the Repurchase Date, each Holder shall surrender the certificate or certificates representing the Common Shares (or shares of the Company then convertible into Common Shares, including the Preference Shares) specified in the Offer Acceptance Notice to the Company, in the manner and place designated in the Offer to Repurchase accompanied by duly

 

4



 

executed instruments of transfer relating thereto, or, in the event the certificate or certificates are lost, stolen or missing, shall deliver an indemnity, in the manner and place designated in the Offer to Repurchase.  Each surrendered certificate shall be canceled and retired; provided , that if less than all the shares of the Company represented by a surrendered certificate are repurchased, then a new share certificate representing the remaining shares of the Company shall be issued in the name of the applicable holder of record of the canceled share certificate.

 

(d)    In exchange for the surrender to the Company by the Holder of its certificate(s) and accompanying materials in accordance with Section 3(c)  above, and subject to the substantially concurrent completion of the CMB Repurchase on the Repurchase Date on the terms specified in the Offer to Repurchase, the aggregate Repurchase Price for the Common Shares (or shares of the Company then convertible into Common Shares, including the Preference Shares) being repurchased shall be payable in cash in immediately available funds to such Holder on Repurchase Date.

 

Section 4.                                            Certain Undertakings by CM Bermuda and its Affiliates and the Company .

 

(a)                            From and after the first (1st) anniversary of the Issue Date, if any Qualified Sale Transaction is approved by a majority of the Independent Directors on the Board of Directors and by the affirmative vote of holders of at least 80% of the Voting Shares (excluding Voting Shares beneficially owned by CM Bermuda or its Affiliates), then CM Bermuda shall, and shall cause each of its Affiliates that own Voting Shares at such time to, cause all of the Voting Shares then beneficially owned by them to be voted in favor of such Qualified Sale Transaction concurrently with the vote of such holders.

 

(b)                            CM Bermuda shall, and shall cause each of its Affiliates that own Voting Shares at such time to, cause all of the Voting Shares then beneficially owned by them to be voted against (i) any merger, amalgamation, consolidation or similar transaction involving the Company or any of its subsidiaries or to which the Company or any of its subsidiaries is a party or (ii) any sale or transfer or related series of sales or transfers of all or substantially all of the Company’s and its subsidiaries’ consolidated assets, in each case where the per share value of the consideration received by CM Bermuda or its Affiliates in such transaction in respect of the Equity Securities held by any of them is greater than the per share value of the consideration received by any other holder of the same class of Equity Securities.

 

(c)                             To the fullest extent permitted by law, the Company shall not enter into (i) any merger, amalgamation, consolidation or similar transaction involving the Company or any of its subsidiaries or to which the Company or any of its subsidiaries is a party or (ii) any sale or transfer or related series of sales or transfers of all or substantially all of the Company’s and its subsidiaries’ consolidated assets, in each case where the per share value of the consideration received by CM Bermuda or its Affiliates in such transaction in respect of any securities of the Company held by any of them is greater than the per share value of the consideration received by any other holder of the same class of securities in the Company.

 

(d)                            If at any time and from time to time the Company desires or is required to issue Common Shares to satisfy any obligations pursuant to Section 6 or Section 7 of the Certificate of Designation in respect of the Preference Shares, and any approval of the holders of Voting Shares

 

5



 

is required in connection therewith, then CM Bermuda shall, and shall cause each of its Affiliates that own Voting Shares at such time to, cause all of the Voting Shares then beneficially owned by them to be voted in favor of any such issuance of Common Shares.

 

Section 5.                                            Termination of Rights .  The rights set forth in Section 2 , Section 3 , Section 4 and Section 7(f)  shall terminate as to any Holder at the time that such Holder and its Affiliates cease to beneficially own any Preference Shares.  The rights set forth in Section 2 shall terminate as to all Holders at such time as the Holders and their respective Affiliates and permitted assigns in accordance with Section 7(a)(i)  cease to collectively beneficially own at least twenty-five percent (25%) of the aggregate number of Preference Shares issued and outstanding on the Issue Date.  This Agreement shall terminate and be of no further force or effect (except Section 6 and Section 7(i) , which shall survive and remain in full force and effect) at such time that fewer than twenty-five (25%) of the aggregate number of Preference Shares issued and outstanding on the Issue Date are outstanding.

 

Section 6.                                            Confidentiality .  For the purposes of this Section 6 , “Confidential Information” means information delivered to any Holder by or on behalf of the Company in connection with the transactions contemplated by or otherwise pursuant to this Agreement, provided that such term does not include information that (a) was publicly known or otherwise known to such Holder prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by any Holder or any person acting on any Holder’s behalf, or (c) otherwise becomes known to such Holder other than through disclosure by the Company or any of its subsidiaries or from a person who is known by such Holder to be bound by a confidentiality agreement or other obligation not to transmit such information to such Holder.  Each Holder will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Holder in good faith to protect confidential information of third parties delivered to such Holder, provided that any Holder may deliver or disclose Confidential Information to (i) its directors, officers, employees, agents, attorneys, trustees and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by the Preference Shares), (ii) its auditors, financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with this Section 6 , (iii) any federal or state regulatory authority having jurisdiction over such Holder, or (iv) any other person to which such delivery or disclosure may be necessary or appropriate (x) to effect compliance with any law, rule, regulation or order applicable to such Holder, (y) in response to any subpoena or other legal process or (z) in connection with any litigation to which such Holder is a party.  Each Holder will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 6 as though it were named as an Initial Holder in this Agreement. No Holder shall transact in any Preference Shares or Common Shares while in possession of material non-public information involving the Company.

 

Section 7.                                            Miscellaneous .

 

(a)                                  Successors and Assigns .  Nothing in this Agreement, express or implied, is intended to confer upon any Person (including any holder of Preference Shares not party hereto) other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.  This Agreement and the rights provided to Holders hereunder shall not be assignable by any Holder

 

6



 

without the prior written consent of the Company, except that (i) any Holder may assign its rights under this Agreement to an Affiliate of such Holder, an Initial Holder or an Affiliate of an Initial Holder in connection with a transfer of all or any portion of such Holder’s Preference Shares to such Affiliate, Initial Holder or Affiliate of an Initial Holder and (ii) any Holder may assign its rights under this Agreement (other than the rights set forth in Section 2 and the definition of “Agreed Director”, which may not be assigned without the prior written approval of the Company, which approval may be withheld in its sole discretion), to any Person in connection with a transfer of all or any portion of such Holder’s Preference Shares to such Person.  If CM Bermuda transfers any Voting Shares or Equity Securities held by it to an Affiliate, such Affiliate shall agree to be bound by the terms and conditions of this Agreement pursuant to a joinder agreement.  CM Bermuda and any Affiliate that owns Voting Shares shall be bound by the terms of this Agreement so long as CM Bermuda or such Affiliate, as applicable, owns any Voting Shares.  Any purported assignment in violation of this  Section 7(a)  shall be void and of no effect.

 

(b)                                  Certain Additional Undertakings .  Neither the Company nor, so long as any of them own Voting Shares, CM Bermuda or any of its Affiliates shall enter into any agreement or arrangement that would prevent it from fulfilling its obligations under this Agreement.

 

(c)                                   Counterparts .  This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g. , www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

(d)                                  Titles and Subtitles .  The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

 

(e)                                   Notices .  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile (followed by reputable overnight courier service), e-mail (followed by reputable overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the other parties as follows:

 

(i)                                      if to CM Bermuda or any Holder, to the address of such Person set forth in the Register of Members of the Company.

 

(ii)                                   if to the Company, to:

 

c/o Sirius International Insurance Group, Ltd.

14 Wesley Street, 5th Floor

Hamilton HM11 Bermuda

Attention: Gene Boxer
E-mail: Gene.Boxer@siriusgroup.com

 

or to such other address(es) as shall be furnished in writing by any such party to the other party hereto in accordance with the provisions of this Section 7(e) .

 

7



 

(f)                                    Amendments and Waivers .  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company, CM Bermuda and the Holders; provided , that the Holders acting as a group may in their sole discretion waive the compliance of CM Bermuda or any of its Affiliates with any of the provisions hereof (but, for the avoidance of doubt, not any of its rights hereunder); and provided, further , that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party.

 

(g)                                   Severability .  In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

 

(h)                                  Entire Agreement .  This Agreement constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.

 

(i)                                      Dispute Resolution . NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS OF SUCH JURISDICTION. Any and all suits, legal actions or proceedings arising out of this Agreement shall be brought in the courts of the State of New York or the United States District Court for the Southern District of New York and each party to this Agreement hereby submits to and accepts the exclusive jurisdiction of such courts for the purpose of such suits, legal actions or proceedings. In any such suit, legal action or proceeding, each party to this Agreement waives personal service of any summons, complaint or other process and agrees that service thereof may be made by certified or registered mail directed to it pursuant to Section 7(e) . To the fullest extent permitted by law, each party hereto hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue or any such suit, legal action or proceeding in any such court and hereby further waives any claim that any such suit, legal action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(j)                                     Specific Performance .  The parties agree that irreparable damage is likely to occur and that the parties will not have an adequate remedy at law in the event that any of the provisions of this Agreement is not performed in accordance with its specific term or is otherwise breached or threatened to be breached.  It is accordingly agreed that the parties shall be entitled to injunctive

 

8



 

relief, including, but not limited to, a temporary restraining order, preliminary injunction or permanent injunction, to prevent any breach or threatened breach of any obligation pursuant to this Agreement or to enforce specifically the terms and provisions of any obligation arising under this Agreement, this being in addition and without prejudice to any other remedy to which they are entitled at law or in equity.  Each party in advance agrees to waive any requirement for the securing of such remedy, including but not limited to the posting of a bond.

 

(k)                                  Delays or Omissions .  No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

[Signature pages follow.]

 

9



 

IN WITNESS WHEREOF , the parties have executed this Shareholders Agreement as of the date first written above.

 

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

CM BERMUDA LTD.

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

[INITIAL HOLDER]

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

[INITIAL HOLDER]

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

[INITIAL HOLDER]

 

 

 

 

By:

 

 

Name:

 

Title:

 



 

 

[INITIAL HOLDER]

 

 

 

 

By:

 

 

Name:

 

Title:

 


 



Exhibit 10.12

 

Execution Version

 

SIRIUS INTERNATIONAL GROUP, LTD.
as Issuer

 

to

 

THE BANK OF NEW YORK MELLON
as Trustee

 


 

INDENTURE

 

Dated as of November 1, 2016

 

SENIOR DEBT SECURITIES

 


 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE 1 DEFINITIONS

1

 

 

 

Section 1.1

Certain Terms Defined

1

 

 

 

ARTICLE 2 SECURITY FORMS

9

 

 

 

Section 2.1

Forms Generally

9

 

 

 

Section 2.2

Form of Legends

10

 

 

 

Section 2.3

Form of Trustee’s Certificate of Authentication

11

 

 

 

Section 2.4

Form of Trustee’s Certificate of Authentication by an Authenticating Agent

11

 

 

 

Section 2.5

Securities Issuable in the Form of Global Securities

12

 

 

 

ARTICLE 3 THE SECURITIES

13

 

 

 

Section 3.1

Amount Unlimited: Issuable in Series

13

 

 

 

Section 3.2

Form and Denominations

15

 

 

 

Section 3.3

Authentication, Dating and Delivery of Securities

15

 

 

 

Section 3.4

Execution of Securities

17

 

 

 

Section 3.5

Certificate of Authentication

17

 

 

 

Section 3.6

Registration, Registration of Transfer and Exchange

17

 

 

 

Section 3.7

Additional Provisions Related to Transfer and Exchange of Securities

19

 

 

 

Section 3.8

Mutilated, Destroyed, Lost and Stolen Securities

21

 

 

 

Section 3.9

Payment of Interest and Certain Additional Amounts; Interest Rights and Certain Additional Amounts Preserved

22

 

 

 

Section 3.10

Cancellation of Securities: Destruction Thereof

23

 

 

 

Section 3.11

Temporary Securities

23

 

 

 

Section 3.12

Computation of Interest

23

 

 

 

Section 3.13

CUSIP Numbers

24

 

 

 

Section 3.14

Company Orders

24

 

 

 

ARTICLE 4 COVENANTS OF THE COMPANY

24

 

 

 

Section 4.1

Payment of Securities

24

 

 

 

Section 4.2

Offices or Agency

24

 

 

 

Section 4.3

Money for Securities Payments to Be Held in Trust

25

 

 

 

Section 4.4

Additional Amounts

26

 

 

 

Section 4.5

Redemption for Tax Purposes

28

 

 

 

Section 4.6

Limitation on Liens on Stock of Subsidiaries

28

 

 

 

Section 4.7

[Reserved]

29

 

 

 

Section 4.8

Delivery of Financial Information

29

 

 

 

Section 4.9

Delivery of Rule 144A Information

30

 

 

 

Section 4.10

Corporate Existence

30

 

i



 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

Section 4.11

Waiver of Certain Covenants

31

 

 

 

Section 4.12

Certificates to Trustee

31

 

 

 

Section 4.13

Calculation of Original Issue Discount

31

 

 

 

ARTICLE 5 HOLDER LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

31

 

 

 

Section 5.1

Company to Furnish Trustee Information as to Names and Addresses of Holders

31

 

 

 

Section 5.2

Preservation and Disclosure of Holder Lists

31

 

 

 

Section 5.3

[Reserved]

32

 

 

 

Section 5.4

Reports by the Trustee

32

 

 

 

ARTICLE 6 REMEDIES OF THE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT

32

 

 

 

Section 6.1

Event of Default Defined; Acceleration of Maturity; Waiver of Default

32

 

 

 

Section 6.2

Collection of Indebtedness by Trustee; Trustee May Prove Debt

34

 

 

 

Section 6.3

Application of Proceeds

35

 

 

 

Section 6.4

Suits for Enforcement

36

 

 

 

Section 6.5

Restoration of Rights on Abandonment of Proceedings

36

 

 

 

Section 6.6

Limitations on Suits by Holders

37

 

 

 

Section 6.7

Unconditional Right of Holders to Institute Certain Suits

37

 

 

 

Section 6.8

Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default

37

 

 

 

Section 6.9

Control by Holders of Securities

38

 

 

 

Section 6.10

Waiver of Past Defaults

38

 

 

 

Section 6.11

Trustee to Give Notice of Default, But May Withhold in Certain Circumstances

38

 

 

 

Section 6.12

Right of Court to Require Filing of Undertaking to Pay Costs

39

 

 

 

Section 6.13

Waiver of Usury, Stay or Extension Laws

39

 

 

 

Section 6.14

Delay or Omission Not Waiver

39

 

 

 

ARTICLE 7 CONCERNING THE TRUSTEE

39

 

 

 

Section 7.1

Duties and Responsibilities of the Trustee; During Default; Prior to Default

39

 

 

 

Section 7.2

Certain Rights of the Trustee

40

 

 

 

Section 7.3

Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof

42

 

 

 

Section 7.4

Trustee and Agents May Hold Securities; Collections, etc.

42

 

 

 

Section 7.5

Moneys Held by Trustee

43

 

 

 

Section 7.6

Compensation and Indemnification of Trustee and Its Prior Claim

43

 

 

 

Section 7.7

Right of Trustee to Rely on Officer’s Certificate, etc.

43

 

 

 

Section 7.8

Qualification of Trustee; Conflicting Interests

44

 

 

 

Section 7.9

Persons Eligible for Appointment as Trustee

44

 

 

 

Section 7.10

Resignation and Removal; Appointment of Successor Trustee

44

 

ii



 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

Section 7.11

Acceptance of Appointment by Successor Trustee

45

 

 

 

Section 7.12

Merger, Conversion, Consolidation or Succession to Business of Trustee

46

 

 

 

Section 7.13

Preferential Collection of Claims Against the Company

46

 

 

 

Section 7.14

Authenticating Agent

46

 

 

 

ARTICLE 8 CONCERNING THE HOLDERS OF SECURITIES

48

 

 

 

Section 8.1

Action by Holders

48

 

 

 

Section 8.2

Proof of Execution of Instruments by Holders of Securities

48

 

 

 

Section 8.3

Holders to Be Treated as Owners

48

 

 

 

Section 8.4

Right of Revocation of Action Taken

49

 

 

 

ARTICLE 9 HOLDERS’ MEETINGS

49

 

 

 

Section 9.1

Purposes of Meetings

49

 

 

 

Section 9.2

Call of Meetings by Trustee

50

 

 

 

Section 9.3

Call of Meetings by the Company or Holders

50

 

 

 

Section 9.4

Qualifications for Voting

50

 

 

 

Section 9.5

Regulations

50

 

 

 

Section 9.6

Voting

51

 

 

 

Section 9.7

No Delay of Rights by Reason of Meeting

51

 

 

 

ARTICLE 10 SUPPLEMENTAL INDENTURES

51

 

 

 

Section 10.1

Supplemental Indentures Without Consent of Holders

51

 

 

 

Section 10.2

Supplemental Indentures With Consent of Holders

53

 

 

 

Section 10.3

Notice of Supplemental Indenture

54

 

 

 

Section 10.4

Effect of Supplemental Indenture

55

 

 

 

Section 10.5

Documents to Be Given to Trustee

55

 

 

 

Section 10.6

Notation on Securities in Respect of Supplemental Indentures

55

 

 

 

ARTICLE 11 CONSOLIDATION, AMALGAMATION, MERGER, SALE OR CONVEYANCE

55

 

 

 

Section 11.1

Company May Consolidate, Etc., Only on Certain Terms

55

 

 

 

Section 11.2

Opinion of Counsel

56

 

 

 

Section 11.3

Successor Person Substituted

56

 

 

 

ARTICLE 12 SATISFACTION AND DISCHARGE OF INDENTURE, UNCLAIMED MONEYS

56

 

 

 

Section 12.1

Satisfaction and Discharge of Securities of Any Series

56

 

 

 

Section 12.2

Defeasance and Covenant Defeasance

58

 

 

 

Section 12.3

Application of Trust Money

61

 

 

 

Section 12.4

Repayment of Moneys Held by Paying Agent

61

 

 

 

Section 12.5

Return of Unclaimed Moneys Held by Trustee and Paying Agent

61

 

iii



 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

ARTICLE 13 MISCELLANEOUS PROVISIONS

62

 

 

 

Section 13.1

Incorporators, Shareholders, Officers and Directors of the Company Exempt from Individual Liability

62

 

 

 

Section 13.2

Provisions of Indenture for the Sole Benefit of Parties and Holders

62

 

 

 

Section 13.3

Successors and Assigns of the Company Bound by Indenture

62

 

 

 

Section 13.4

Notices to Holders; Waiver

62

 

 

 

Section 13.5

Addresses for Notices

63

 

 

 

Section 13.6

Officer’s Certificates and Opinions of Counsel; Statements to Be Contained Therein

63

 

 

 

Section 13.7

Separability Clause

64

 

 

 

Section 13.8

Legal Holidays

64

 

 

 

Section 13.9

Conflict of Any Provision of Indenture with Trust Indenture Act

65

 

 

 

Section 13.10

Governing Law

65

 

 

 

Section 13.11

Judgment Currency

65

 

 

 

Section 13.12

No Security Interest Created

65

 

 

 

Section 13.13

Submission to Jurisdiction

66

 

 

 

Section 13.14

Counterparts

66

 

 

 

Section 13.15

Effect of Headings

66

 

 

 

Section 13.16

U.S.A. Patriot Act

67

 

 

 

Section 13.17

Waiver of Jury Trial

67

 

 

 

Section 13.18

FATCA

67

 

 

 

ARTICLE 14 REDEMPTION OF SECURITIES

67

 

 

 

Section 14.1

Applicability of Article

67

 

 

 

Section 14.2

Notice of Redemption; Selection of Securities

67

 

 

 

Section 14.3

Payment of Securities Called for Redemption

69

 

 

 

ARTICLE 15 SINKING FUNDS

69

 

 

 

Section 15.1

Applicability of Article

69

 

 

 

Section 15.2

Satisfaction of Mandatory Sinking Fund Payment with Securities

70

 

 

 

Section 15.3

Redemption of Securities for Sinking Fund

70

 

EXHIBITS

 

EXHIBIT A — FORM OF CERTIFICATE OF TRANSFER

 

iv


 

INDENTURE, dated as of November 1, 2016, by and between Sirius International Group, Ltd., a Bermuda exempted company (the “ Company ”) and The Bank of New York Mellon, a New York banking corporation, not in its individual capacity but solely as Trustee (together with its successors and assigns, in such capacity, the “ Trustee ”).

 

RECITALS OF THE COMPANY

 

The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its notes, debentures or other evidence of unsecured indebtedness (the “ Securities ”), to be issued in one or more series, authenticated and delivered, as in this Indenture provided.

 

All things necessary have been done to make this Indenture a valid and legally binding agreement of the Company, in accordance with its terms.

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

For and in consideration of the premises and the purchase of the Securities by the Persons acquiring the same, it is mutually covenanted and agreed, for the equal and proportionate benefit of each other and all Holders of the Securities or of the Securities of any series, without giving any priority of any one Security or series over any other, except as otherwise expressly provided herein, as follows:

 

ARTICLE 1
DEFINITIONS

 

Section 1.1                                     Certain Terms Defined .

 

The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture, including any indenture supplemental hereto, have the respective meanings specified in this Section.  The words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.  All references herein to “Articles” or other subdivisions are to the corresponding Articles or other subdivisions of this Indenture.  The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular.  All accounting terms not otherwise defined herein have the respective meanings assigned to them in accordance with GAAP (as defined below).

 

Additional Amounts ” means any additional amounts which are required hereby or by any Security, under circumstances specified herein or therein, to be paid by the Company in respect of certain taxes, assessments or other governmental charges imposed on Holders specified therein and which are owing to such Holders.

 

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

 

Agent ” means any Securities Registrar, Paying Agent, or Securities Custodian.

 

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Annual Financials ” has the meaning specified in Section 4.8.

 

Applicable Premium Deficit ” has the meaning stated in Section 12.1(a) of this Indenture.

 

Applicable Procedures ” means, with respect to any payment, tender, redemption, transfer or exchange of or for beneficial interests in any Global Security, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such payment, tender, redemption, transfer or exchange.

 

Authenticating Agent ” means, with respect to any series of Securities, any authenticating agent appointed by the Trustee with the consent of the Company, with respect to that series of Securities, pursuant to Section 7.14.

 

Authorized Newspaper ” means a newspaper or financial journal printed in the English language, customarily published at least once a day, and customarily published for at least five days in each calendar week, whether or not published on days that are legal holidays and of general circulation; or, in the alternative, shall mean such form of communication as may have come into general use for the dissemination of information of import similar to that of the information specified to be published by the provisions hereof.  Whenever successive publications are required or authorized to be made in Authorized Newspapers, the successive publications may be made (unless otherwise expressly provided herein) in the same or different newspapers meeting the foregoing requirements and in each case on any Business Day and at the expense of the Company.  In case, by reason of the suspension of publication of any Authorized Newspaper, or for any other cause, it shall be impractical without unreasonable expense to make publication of any notice in an Authorized Newspaper as required by this Indenture, then such method of publication or notification as shall be made with the approval of the Trustee shall be deemed the equivalent of the required publication of such notice in an Authorized Newspaper.

 

Board of Directors ” means the board of directors of the Company and any committee of such Board of Directors or Officer duly authorized to act with respect to a particular matter on behalf of the Board of Directors.

 

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

 

Business Day ” means, with respect to any Place of Payment or other location, each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which the Trustee or banking institutions in such Place of Payment or other location are authorized or obligated by law, regulation or executive order to close, except as may be otherwise specified as contemplated by Section 3.1.

 

Capitalized Lease Obligation ” means an obligation under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP.

 

Capital Stock ” of any Person means any and all share capital, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including preferred stock, but excluding any debt securities convertible into such equity.

 

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Clearstream ” means Clearstream Banking, S.A.

 

Commission ” means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the date on which this Indenture was originally executed such Commission is not existing and performing the duties assigned to it under the Securities Act on such date of original execution, then the body performing such duties at such time.

 

Company ” means the Person named as the “Company” in the first paragraph of this instrument, and, subject to Article 1.1, its successors and assigns.

 

Company Reques t” or “ Company Order ” means a written order or request signed in the name of the Company by any two Officers and delivered to the Trustee.

 

Corporate Trust Office ” means the office of the Trustee at which at any particular time its corporate trust business in respect of this Indenture shall be principally administered, which office, on the date of original execution of this Indenture, is located at 101 Barclay Street, New York, New York 10286, Attention:  Corporate Trust Services, or at any other time at such other address as the Trustee may designate from time to time by notice in writing to the parties hereto, or at the principal corporate trust office of any successor trustee as to which such successor trustee may notify the parties hereto in writing.

 

Corporation ” includes corporations, limited liability companies, incorporated associations, companies and business trusts.

 

Definitive Security ” means a certificated Security executed by the Company and authenticated by the Trustee pursuant to Section 3.7(c), 3.8 or 3.11, substantially in the form of the corresponding Global Security, except that such Security shall not bear the Global Security Legend and shall not have the “Schedule of Exchanges of Interests in the Global Security” attached thereto.

 

Depository ” means, with respect to the Securities of any series or any Tranche thereof, which, in accordance with the determination of the Company, will be issued in whole or in part in the form of one or more Global Securities, The Depository Trust Company, New York, New York (“ DTC ”), another clearing agency or any successor registered under the Exchange Act, or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant to Section 3.1.  If at any time there is more than one such Person, “ Depository ” as used with respect to the Securities of any such series or Tranche thereof means the Depository with respect to the Securities of that series or Tranche.

 

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

 

Event of Default ” means any event or condition specified as such in Section 6.1.

 

Exchange Act ” means the United States Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, in each case as amended from time to time.

 

Euroclear ” means Euroclear Bank, S.A./N.V., as operator of the Euroclear system.

 

FATCA ” has the meaning specified in Section 4.4(e).

 

Foreign Currency ” means any currency, currency unit or composite currency, including, without limitation, the euro, issued by the government of one or more countries other than the United States of America or by any recognized confederation or association of such governments.

 

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GAAP ” means (i) the generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (“ U.S. GAAP ”), and as are applicable to the financial statements of the Company as of the date of any computation required hereunder or (ii) if elected by the Company by written notice (the “ IFRS Election ”) to the Trustee, the International Financial Reporting Standards issued by the International Accounting Standards Board (“ IFRS ”), and as are applicable to the financial statements of the Company as of the date of any computation required hereunder.  Upon such IFRS Election, references to GAAP shall thereafter be constructed to mean (a) for prior periods, U.S. GAAP and (b) periods beginning on and after the date specified in such notice, IFRS.

 

Global Security ” means, with respect to all or any part of any series of Securities, a Security executed by the Company and authenticated and delivered by the Trustee to the Depository or pursuant to the Depository’s instruction, all in accordance with this Indenture and pursuant to a Company Order, which shall be registered in the name of the Depository or its nominee and the ownership of which will be registered in a “book-entry” or other system maintained by the Depository.

 

Global Security Legend ” has the meaning specified in Section 2.2(b).

 

Government Obligations ” means securities which are (1) direct obligations of the United States for the payment of which its full faith and credit is pledged or (2) obligations of an entity controlled or supervised by and acting as an agency or instrumentality of the United States the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States which, in the case of clauses (1) or (2), are not callable or redeemable at the option of the issuer or issuers thereof, and will also include a depository receipt issued by a bank or trust company as custodian with respect to any such Government Obligation or a specific payment of interest on or principal of or any Additional Amounts or any other amount with respect to any such Government Obligation held by such custodian for the account of the holder of such depository receipt; provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian with respect to the Government Obligation or the specific payment of interest on or principal of or any other amount with respect to the Government Obligation evidenced by such depository receipt.

 

Holder ” means, with respect to a Security, the Person in whose name such Security is registered in the Securities Register (which terms, in the case of a Global Security, mean the Depository, notwithstanding that the Depository maintains a “book-entry” or other system for identification of ownership in respect of such Global Security).

 

The term “ include ” (and other forms of such term) means “include, without limitation”.

 

Indebtedness ” means, with respect to any Person, at the time of determination (without duplication):

 

(1)                                  the principal of and any premium and interest on

 

(a)                                  indebtedness of such Person for money borrowed or

 

(b)                                  indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable;

 

(2)                                  all Capitalized Lease Obligations of such Person;

 

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(3)                                  all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business not past due based on customary practice in the trade);

 

(4)                                  all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than any obligations described in (1) through (3) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the fifth Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit);

 

(5)                                  all obligations of the types referred to in any of clauses (1) through (4) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable as obligor, guarantor or otherwise, the amount thereof being deemed to be the lesser of the stated recourse, if limited, and the amount of the obligations or dividends of the other Person;

 

(6)                                  all obligations of the types referred to in any of clauses (1) through (5) of other Persons secured by any mortgage, pledge, lien, security interest or other encumbrance on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured; and

 

(7)                                  any amendments, modifications, refundings, renewals or extensions of any indebtedness or obligation described as Indebtedness in any of clauses (1) through (6) above.

 

Indenture ” means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented, and includes the forms and terms of particular series of Securities established as contemplated hereunder.

 

Indirect Participant ” means a Person who holds a beneficial interest in a Global Security through a Participant.

 

The term “ interest ” means, with respect to any Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity means interest payable after Maturity and, when used with respect to a Security which provides for the payment of Additional Amounts pursuant to Section 4.4, includes such Additional Amounts.

 

Interest Payment Date ” means, with respect to any Security, the Stated Maturity of an installment of interest on such Security.

 

Judgment Currency ” has the meaning specified in Section 13.11.

 

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

 

New York Banking Day ” has the meaning specified in Section 13.11.

 

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Non-U.S. Person ” means a Person who is not a U.S. person as defined in Regulation S.

 

Notice of Default ” has the meaning specified in Section 6.1(c).

 

Officer ” means the chairman of the board, the vice chairman of the board, the president, any vice president, the treasurer, any assistant treasurer, the controller, the secretary, any assistant controller, any assistant secretary, the principal executive officer, the principal financial officer, the principal accounting officer or the chief operating officer of the Company.

 

Officer’s Certificate ” means a certificate signed by one or more Officers (as applicable) of the Company and delivered to the Trustee, except as otherwise specifically set forth herein.

 

Opinion of Counsel ” means a written opinion of counsel, who may be an employee or officer of or counsel for the Company, or other counsel reasonably acceptable to the Trustee (it being agreed and acknowledged that Willkie Farr & Gallagher LLP is acceptable to the Trustee to provide such opinion).

 

Original Issue Discount Security ” means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration with respect thereto pursuant to Section 6.1.

 

Outstanding ” means, with reference to Securities as of the date of determination, all Securities authenticated and delivered under this Indenture, except:

 

(a)                                  Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

 

(b)                                  Securities, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been irrevocably deposited in trust with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside, segregated and held in trust by the Company for the Holders of such Securities (if the Company shall act as its own Paying Agent) or for the payment of which Government Obligations shall have been irrevocably deposited in trust with the Trustee in accordance with Article 12; provided that, if such Securities, or portions thereof, are to be redeemed prior to the Stated Maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice;

 

(c)                                   any such Security with respect to which the Company has effected defeasance pursuant to the terms hereof, except to the extent provided in Section 12.2; and

 

(d)                                  Securities in substitution for which other Securities shall have been authenticated and delivered, or which shall have been paid, pursuant to the terms of Section 3.8 (except with respect to any such Security as to which proof reasonably satisfactory to the Trustee and the Company is presented that such Security is held by a Person in whose hands such Security is a legal, valid and binding obligation of the Company).

 

In determining whether Holders of the requisite principal amount of Outstanding Securities of any or all series have made or given any request, demand, authorization, direction, notice, consent or waiver hereunder, or are present to constitute a quorum at a meeting of Holders of Securities, (i) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration with respect thereto pursuant to Section 6.1 and

 

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(ii) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor, shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in making such a determination or relying upon any such quorum, consent or vote, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded.  Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the reasonable satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor.  In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice.

 

Participant ” means, with respect to the Depository, Euroclear or Clearstream, a Person who has an account with the Depository, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream).

 

Paying Agent ” means any Person authorized by the Company to pay the principal of, premium (if any) or interest on or any Additional Amounts with respect to any Securities on behalf of the Company, which initially shall be the Trustee.

 

Periodic Offering ” means an offering of Securities of a series from time to time, any or all of the specific terms of which Securities, which may be in one or more Tranches, including the rate or rates of interest thereon, the Stated Maturity or Maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents from time to time subsequent to the initial request for authentication and delivery of such Securities by the Trustee, all as contemplated in Section 3.1.

 

Person ” means any individual, corporation, limited liability company, partnership, limited liability partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

 

Place of Payment ” means, with respect to any Security, the place or places where the principal of, premium (if any) and interest on and any Additional Amounts with respect to such Security are payable as specified pursuant to Section 3.1.

 

Predecessor Security ” of any particular Security means every previous Security evidencing all or a portion of the same Indebtedness as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.8 in lieu of a lost, destroyed, mutilated or stolen Security shall be deemed to evidence the same debt as the lost, destroyed, mutilated or stolen Security.

 

Private Placement Legend ” has the meaning specified in Section 2.2(a).

 

QIB ” means a “qualified institutional buyer”, as defined in Rule 144A.

 

Quarterly Financials ” has the meaning specified in Section 4.8.

 

Redemption Date ” means, with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture.

 

Redemption Price ” means, with respect to any Security or portion thereof to be redeemed, the price at which it is to be redeemed pursuant to this Indenture.

 

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Regular Record Date ” for the interest payable on any Interest Payment Date on a Security means the date specified for that purpose pursuant to Section 3.1 or as specified in Section 3.9.

 

Regulation S ” means Regulation S under the Securities Act (including any successor regulation thereto) as may be amended from time to time.

 

Regulation S Global Security ” has the meaning specified in Section 2.1.

 

Relevant Tax Jurisdiction ” has the meaning specified in Section 4.4.

 

Required Currency ” has the meaning specified in Section 13.11.

 

Resale Restriction Termination Date ” means (i) with respect to any 144A Global Security, the date that is one year (or such other period as may hereafter be provided under Rule 144 under the Securities Act or any successor provision thereto as permitting the resale by non-affiliates of Restricted Securities (as defined in Rule 144(a)(3) under the Securities Act) without restriction) after the later of the original issue date in respect of such Security and the last date on which the Company or any Affiliate of the Company was the owner of such Security (or any Predecessor Security thereto) or (ii) with respect to any Regulation S Global Security, the last day of the distribution compliance period specified in Rule 903 of Regulation S (if applicable).

 

Responsible Officer ” means, with respect to the Trustee, any officer assigned to the Corporate Trust Office having direct responsibility for the administration of this Indenture, and also, with respect to a particular matter, any other officer, to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

 

Restricted Security ” means any Security (or beneficial interest therein) not originally issued and sold in a transaction registered under the Securities Act, until such time as:  (i) such Security (or beneficial interest therein) has been transferred in a transaction registered under the Securities Act; (ii) the Resale Restriction Termination Date therefor has passed; or (iii) the Private Placement Legend therefor has otherwise been removed pursuant to Section 3.7(d) hereof or, in the case of a beneficial interest in a Global Security, such beneficial interest has been exchanged for an interest in a Global Security not bearing a Private Placement Legend.

 

Rule 144 ” means Rule 144 under the Securities Act (including any successor regulation thereto) as may be amended from time to time.

 

Rule 144A ” means Rule 144A under the Securities Act (including any successor regulation thereto) as may be amended from time to time.

 

Rule 144A Global Security ” has the meaning specified in Section 2.1.

 

Rule 144A Information ” means such information as is specified pursuant to paragraph (d)(4) of Rule 144A (or any successor provision thereto), as such provisions (or successor provision) may be amended from time to time.

 

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

 

Securities Custodian ” means the Trustee as custodian with respect to the Global Securities or any successor entity thereto.

 

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Securities Register ” and “ Securities Registrar ”:  See Section 3.6.

 

Security ” or “ Securities ” has the meaning stated in the recitals of this Indenture.

 

Special Record Date ” for the payment of any defaulted interest means a date fixed pursuant to Section 3.9.

 

Stated Maturity ” means, with respect to any Security or any installment of principal thereof or interest thereon or any Additional Amounts with respect thereto, the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is, or such Additional Amounts are, due and payable (without regard to any provisions for redemption, prepayment, acceleration, purchase or extension).

 

Subsidiary ” means, in respect of any Person, any Corporation, limited or general partnership or other business entity of which at the time of determination more than 50% of the voting power of the shares of its Capital Stock or other interests (including partnership and limited liability company interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person.

 

Tranche ” means a group of Securities which (a) are of the same series and (b) are identical except as to principal amount and/or date of issuance.

 

Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended, as in force at the date as of which this Indenture was executed, except as provided in Section 10.1(o); provided , however , that in the event that such Act is amended after such date, “ Trust Indenture Act ” means, to the extent required by such amendment, the Trust Indenture Act of 1939 as so amended,

 

Trustee ” means the Person identified as “Trustee” in the first paragraph hereof until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

 

United States ,” except as otherwise provided in or pursuant to this Indenture or any Board Resolution, Company Order or Company Request, means the United States of America (including the states thereof and the District of Columbia), its territories and possessions and other areas subject to its jurisdiction.

 

ARTICLE 2
SECURITY FORMS

 

Section 2.1                                     Forms Generally .

 

The Securities of each series shall be in substantially such form as shall be established pursuant to Section 3.1, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or any indenture supplemental hereto, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as the Company may reasonably deem appropriate and as are not contrary to the provisions of this Indenture, or as may be required to comply with any law or with any rules made pursuant thereto or with any rules of any securities exchange or of any automated quotation system, or to conform to usage, all as determined by the Officers executing such Securities, as conclusively evidenced by their execution of the Securities.

 

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Any Securities originally offered and sold to QIBs in reliance on Rule 144A will be issued in the form of one or more permanent Global Securities substantially in the form set forth in the applicable supplemental indenture corresponding to the relevant series (each, a “ Rule 144A Global Security ”).  Each Rule 144A Global Security will be deposited with or on behalf of, and registered in the name of, the Depository or its nominee, and will be issued in an initial denomination equal to the outstanding principal amount of the Securities of the relevant series or Tranche initially sold in reliance on Rule 144A.

 

Any Securities originally offered and sold outside the United States in reliance on Regulation S will be issued in the form of one or more permanent Global Securities substantially in the form set forth in the applicable supplemental indenture corresponding to the relevant series (each, a “ Regulation S Global Security ”).  Each Regulation S Global Security will be deposited with or on behalf of, and registered in the name of, the Depository or its nominee, and will be issued in an initial denomination equal to the outstanding principal amount of the Securities of the relevant series or Tranche initially sold in reliance on Regulation S.

 

The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream, or any successor documents, will be applicable to transfers of beneficial interests in any Global Security that is held by Participants through Euroclear or Clearstream.

 

Section 2.2                                     Form of Legends .

 

The Definitive Securities shall be prepared by the Company and shall be printed, lithographed or engraved on steel-engraved borders, or may be produced in any other manner, all as determined by the Officers executing such Securities, as conclusively evidenced by their execution of such Securities, subject to the rules of any securities exchange or automated quotation system on which such Securities are listed or quoted and (with respect to Global Securities) to the rules of the Depository.

 

(a)                                  Private Placement Legend .  Each Global Security and each Definitive Security of any series (and all Securities of the same series issued in exchange therefor or substitution thereof) shall bear the legend set forth below (the “ Private Placement Legend ”) on the face thereof until the Private Placement Legend is removed or not required in accordance with Section 3.7(d):

 

“THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.  THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THE SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO A PERSON WHO IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) BUYING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING RULE 144 IF

 

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AVAILABLE (AND BASED UPON AN OPINION OF COUNSEL, IF THE ISSUER SO REQUESTS), (4) TO THE ISSUER OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.  NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY.”

 

(b)                                  Global Security Legend .  Each Global Security of any series shall bear the legend set forth below (the “ Global Security Legend ”) on the face thereof:

 

“UNLESS AND UNTIL THIS SECURITY IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO SIRIUS INTERNATIONAL GROUP, LTD.  OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

 

Section 2.3                                     Form of Trustee’s Certificate of Authentication .

 

The Trustee’s Certificate of Authentication on all Securities shall be in substantially the following form:

 

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

 

 

The Bank of New York Mellon, as Trustee

 

 

 

 

 

 

 

By:

 

 

Authorized Signatory

 

Section 2.4                                     Form of Trustee’s Certificate of Authentication by an Authenticating Agent .

 

If at any time there shall be an Authenticating Agent appointed with respect to any series of Securities, then the Trustee’s Certificate of Authentication by such Authenticating Agent on all Securities of each such series shall be in substantially the following form:

 

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The Bank of New York Mellon, as Trustee

 

 

 

 

 

By [NAME OF AUTHENTICATING AGENT],

 

Authenticating Agent

 

 

 

 

 

 

 

By:

 

 

 

Authorized Signatory

 

Section 2.5                                     Securities Issuable in the Form of Global Securities .

 

(a)                                  If the Company shall establish pursuant to Section 3.1 that the Securities of a particular series are to be issued in whole or in part as one or more Global Securities, then the Company shall execute, and the Trustee shall, in accordance with Section 3.3 and the Company Order deliver to the Trustee thereunder, authenticate and make available for delivery, one or more Global Securities, each of which (i) shall represent an aggregate principal amount equal to the aggregate principal amount of the Outstanding Securities of such series to be represented by such Global Security and may also provide that the aggregate amount of Outstanding Securities represented thereby may from time to time be increased or reduced to reflect exchanges, (ii) shall be registered in the name of the Depository or its nominee, (iii) shall be delivered by the Trustee to the Depository or pursuant to the Depository’s instruction and (iv) shall bear the Global Security Legend.

 

(b)                                  Participants shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depository, or its custodian, or under such Global Securities.  The Depository may be treated by the Company, any other obligor upon the Securities, the Trustee and any agent of any of them as the absolute owner of the Global Securities for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Company, any other obligor upon the Securities, the Trustee or any agent of any of them from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Participants, the Applicable Procedures or the operation of customary practices of the Depositary governing the exercise of the rights of a beneficial owner of any Security.  The Holder of a Global Security may grant proxies and otherwise authorize any Person, including Participants and Persons that may hold interests through Participants, to take any action that a Holder is entitled to take under this Indenture or the Securities.

 

(c)                                   Any endorsement of a Global Security to reflect the amount of any increase or decrease in the aggregate principal amount of Outstanding Securities represented thereby will be made by the Securities Registrar or the Securities Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 3.7 hereof, in accordance with the provisions thereof.

 

(d)                                  The Company initially appoints the Trustee to act as the Securities Registrar and Paying Agent and to act as Securities Custodian with respect to the Global Securities.  The Company has entered

 

(e)                                   into a letter of representations with the Depositary in the form provided by the Depositary and the Trustee and each Agent is hereby authorized to act in accordance with such letter and Applicable Procedures.

 

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ARTICLE 3
THE SECURITIES

 

Section 3.1                                     Amount Unlimited:  Issuable in Series .

 

The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.

 

The Securities may be issued from time to time in one or more series.  With respect to the Securities of any particular series, there shall be established in, or pursuant to the authority granted in, a resolution of the Company’s Board of Directors, and set forth in an Officer’s Certificate of the Company, or established in one or more indentures supplemental hereto prior to the issuance of Securities to be endorsed thereon of a series:

 

(a)                                  the form of the Securities of the series;

 

(b)                                  the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities);

 

(c)                                   any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 3.6, Section 3.7, Section 3.8, Section 3.11 or Section 14.3);

 

(d)                                  the date or dates on which the Securities of the series may be issued;

 

(e)                                   the date or dates, which may be serial, on which the principal of, and premium (if any) on the Securities of the series are payable;

 

(f)                                    the rate or rates, or the method of determination thereof, at which the Securities of the series shall bear interest; any formulary or other method or other means by which any such rate or rates shall be determined, by reference to an index or other fact or event ascertainable outside this Indenture or otherwise; the date or dates from which such interest shall accrue and the method or methods, if any, by which such date or dates are to be determined, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date, if other than as set forth in Section 3.9, for the determination of Holders to whom interest is payable, for the determination of Holders to whom interest is payable, whether and under what circumstances Additional Amounts (in addition to those set forth in Section 4.4) on such Securities or any of them shall be payable, the notice, if any, to Holders regarding the determination of interest on a floating rate Security, and the manner of giving such notice, and the basis upon which interest shall be calculated if other than that of a 360-day year of twelve 30-day months;

 

(g)                                   the place or places where the principal of, premium (if any) and interest on or any Additional Amounts, if any, with respect to such Securities of the series shall be payable (if other than as provided in Section 4.2);

 

(h)                                  the provisions, if any, establishing the price or prices at which, the date or dates on which, the period or periods within which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company, pursuant to any sinking fund or otherwise;

 

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(i)                                      the obligation, if any, of the Company to redeem, purchase or repay Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which, the date or dates on which, and the period or periods within which, and the terms and conditions upon which, Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation and any provisions for the remarketing of such Securities so redeemed or purchased;

 

(j)                                     if other than denominations of $2,000 or any integral multiple of $1,000 in excess thereof, the denominations in which Securities of the series shall be issuable;

 

(k)                                  whether the Securities of the series are to be issued as Original Issue Discount Securities and, if so, the amount of the discount with respect thereto;

 

(l)                                      if other than the principal amount thereof, the portion of the principal amount of the Securities of the series which shall be payable upon declaration of acceleration with respect thereto pursuant to Section 6.1 or payable in bankruptcy pursuant to Section 6.2;

 

(m)                              any Events of Default or restrictive covenants provided for with respect to the Securities of the series, if other than as set forth in Section 6.1, Article 4 and Article 11;

 

(n)                                  in case the Securities of the series do not bear interest, the applicable dates for the purpose of Section 5.1;

 

(o)                                  whether the Securities of the series will bear any form of special interest;

 

(p)                                  whether either or both of Section 12.2(b) relating to defeasance or Section 12.2(c) relating to covenant defeasance shall not be applicable to the Securities of such series, or any covenants in addition to those specified in Section 12.2(c) relating to the Securities of such series which shall be subject to covenant defeasance, and any deletions from, or modifications or additions to, the provisions of Article 12 in respect of the Securities of such series;

 

(q)                                  any trustees, paying agents, securities custodians, transfer agents or registrars with respect to the Securities of the series;

 

(r)                                     whether the Securities of the series are issuable in whole or in part as one or more Global Securities and, in such case, the identity of the Depository for such Global Security or Global Securities;

 

(s)                                    any restrictions on transfer with respect to the Securities of the series and any legend reflecting such restrictions to be placed on such Securities;

 

(t)                                     if the amount of payment of principal of, premium (if any) or interest on or Additional Amounts, if any, with respect to such Securities of the series may be determined with reference to an index, formula or other method, and, if so, the terms and conditions upon which and the manner in which such amounts shall be determined;

 

(u)                                  any exceptions to Section 13.8 or in the definition of “Business Day” with respect to the Securities of the series;

 

(v)                                  if other than U.S. dollars, the Foreign Currency in which the Securities of such series shall be denominated and in which payments of principal of, premium (if any) or interest on or Additional Amounts with respect to such Securities shall or may be payable;

 

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(w)                                if the principal of, premium (if any) or interest on or any Additional Amounts with respect to any of such Securities are to be payable, at the election of the Company or a Holder thereof or otherwise, in Dollars or in a Foreign Currency other than that in which such Securities are stated to be payable, the date or dates on which, the period or periods within which, and the other terms and conditions upon which, such election may be made, and the time and manner of determining the exchange rate between the currency in which such Securities are stated to be payable and the currency in which such Securities or any of them are to be paid pursuant to such election, and any deletions from or modifications of or additions to the terms of this Indenture to provide for or to facilitate the issuance of Securities denominated or payable, at the election of the Company or a Holder thereof or otherwise, in a Foreign Currency; and

 

(x)                                  any other terms of the series and any other modifications or additions to this Indenture in respect of such Securities (which terms shall not be contrary to the provisions of this Indenture).

 

With respect to Securities of a series subject to a Periodic Offering, such resolution of the Board of Directors or indenture supplemental hereto may provide general terms or parameters and may provide that the specific terms of particular Securities, and the Persons authorized to determine such terms or parameters, may be determined in accordance with or pursuant to the Company Order referred to in Section 3.3.

 

All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in, or pursuant to the authority granted in, such resolution of the Board of Directors or in any such indenture supplemental hereto.

 

Anything herein to the contrary notwithstanding, the Trustee shall be under no obligation to authenticate and deliver Securities of any series the terms of which, established as contemplated by this Section, would affect the rights, duties, obligations, liabilities or immunities of the Trustee under this Indenture.

 

Section 3.2                                     Form and Denominations .

 

In the absence of any specification pursuant to Section 3.1 with respect to the Securities of any series, the Securities of such series shall be issuable in fully registered form, without coupons, in denominations of $2,000 or any integral multiple of $1,000 in excess thereof.

 

Section 3.3                                     Authentication, Dating and Delivery of Securities .

 

At any time and from time to time after the original execution and delivery of this Indenture, the Company may deliver Securities of any series, executed by the Company to the Trustee for authentication.  Except as otherwise provided in this Article, the Trustee shall thereupon authenticate and make available for delivery, or cause to be authenticated and delivered, said Securities upon receipt of a Company Order, without any further action by the Company; provided , however , that the Trustee shall authenticate and make available for delivery Securities of such series for original issue from time to time in the aggregate principal amount established for such series pursuant to such procedures, reasonably acceptable to such recipients, as may be specified from time to time by a Company Order.  The maturity dates, original issue dates, interest rates and any other terms of the Securities of such series shall be determined by or pursuant to such Company Order and procedures.

 

In authenticating such Securities and accepting the responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, prior to the initial authentication of such Securities, and (subject to Section 7.1) shall be fully protected in relying upon:

 

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(a)                                  a Board Resolution of the Company relating thereto;

 

(b)                                  an Officer’s Certificate of the Company or an executed supplemental indenture setting forth the terms of such Securities as provided in Section 3.1;

 

(c)                                   an Officer’s Certificate of the Company which shall state that all conditions precedent provided for in this Indenture relating to the issuance of such Securities have been complied with, and that no Event of Default with respect to any series of Securities has occurred and is continuing; and

 

(d)                                  an Opinion of Counsel, which shall state:

 

(i)                                      that the form and the terms of such Securities have been duly authorized by the Company and have been established in conformity with the provisions of this Indenture; and

 

(ii)                                   that this Indenture and such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, arrangement, fraudulent conveyance, fraudulent transfer and other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

 

Notwithstanding the provisions of Section 3.1 and of the immediately preceding paragraph, with respect to Securities of a series subject to a Periodic Offering, the Trustee shall be entitled to receive the Officer’s Certificate of the Company otherwise required pursuant to Section 3.3(c) and the Opinion of Counsel required by this Section 3.3(d) only once at or prior to the time of the first authentication and delivery of such Securities ( provided that such Officer’s Certificate and Opinion of Counsel each address the authentication and delivery of all such Securities) and that, in lieu of the opinions described in clause (ii) above, Counsel may opine that:

 

(x)                                  when the terms of such Securities shall have been established pursuant to a Company Order or Orders or pursuant to such procedures as may be specified from time to time by a Company Order or Orders, all as contemplated by and in accordance with the instrument or instruments delivered pursuant to clause (i) above, such terms will have been duly authorized by the Company and will have been established in conformity with the provisions of this Indenture; and

 

(y)                                  when such Securities shall have been authenticated and delivered by the Trustee in accordance with this Indenture and the Company Order or Orders or the specified procedures referred to in paragraph (x) above and issued and delivered by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, such Securities will constitute valid obligations of the Company enforceable against the Company in accordance with their terms except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforcement of creditors rights generally and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

 

With respect to Securities of a series subject to a Periodic Offering, the Trustee may conclusively rely, as to the authorization by the Company of any of such Securities, the forms and terms thereof, the validity thereof and the compliance of the authentication and delivery thereof with the terms and

 

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conditions of this Indenture, upon the Opinion or Opinions of Counsel, the Officer’s Certificate of the Company and the certificates and other documents delivered pursuant to this Section 3.3 at or prior to the time of the first authentication and delivery of Securities of such series until any of such opinions, certificates or other documents have been superseded or revoked or expire by their terms; provided , however , that any request by the Company to the Trustee to authenticate and deliver Securities of such series shall constitute a representation and warranty by the Company that as of the date of such request the statements made in the most recent Officer’s Certificate of the Company delivered pursuant to Section 3.3(c) are true and correct as if made on and as of the date thereof.

 

The Trustee shall have the right to decline to authenticate and make available for delivery any Securities under this Section if the Trustee, being advised by counsel reasonably acceptable to the Trustee, determines that such action would be contrary to the provisions hereof or would expose the Trustee to personal liability.

 

Each Security shall be dated the date of its authentication, except as otherwise provided pursuant to Section 3.1 with respect to the series of which such Security is a part and except that any substitute Security under Section 3.8 shall be dated so that neither gain nor loss in interest shall result from any mutilation, destruction, loss or theft of the relevant Predecessor Security.

 

Section 3.4                                     Execution of Securities .

 

The Securities shall be signed in the name of and on behalf of the Company by any two Officers, which may, but need not, be attested, and need not bear its seal.  Such signatures may be the manual or facsimile signatures of such Officers.

 

In case any Officer of the Company who shall have signed any of the Securities shall cease to be such Officer before the Security so signed shall be authenticated and delivered by or on behalf of the Trustee or disposed of by the Company, such Securities nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Securities had not ceased to be such Officer of the Company; and any Security may be signed on behalf of the Company by such Persons as, at the actual date of the original execution of such Security, shall be the proper Officers of the Company, although at the date of the original execution and delivery of this Indenture, or at the date of such Security, any such Person was not such an Officer.

 

Section 3.5                                     Certificate of Authentication .

 

No Security shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form hereinbefore recited, executed by or on behalf of the Trustee by manual signature.  Such certificate by or on behalf of the Trustee upon any Security executed by the Company shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture.

 

Section 3.6                                     Registration, Registration of Transfer and Exchange .

 

Subject to the conditions set forth below and Section 3.7), Securities of any series may be exchanged for a like aggregate principal amount of Securities of the same series and having the same terms but in other authorized denominations.  Securities to be exchanged shall be surrendered at the offices or agencies to be maintained for such purposes as provided in Section 4.2, and the Company shall execute and the Trustee or any Authenticating Agent, upon receipt of a Company Order, shall

 

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authenticate and make available for delivery in exchange therefor the Security or Securities which the Holder making the exchange shall be entitled to receive.

 

The Company shall keep or cause to be kept, at one of said offices or agencies maintained pursuant to Section 4.2, a register for each series of Securities issued hereunder (hereinafter collectively referred to as the “ Securities Register ”) in which, subject to such reasonable regulations as it may prescribe, the Company shall, subject to the provisions of Section 3.7, provide for the registration of Securities of such series and shall register the transfer of Securities of such series as in this Article provided.  The Securities Register shall be in written form or in any other form capable of being converted into written form within a reasonable time.  The Trustee is hereby appointed as the initial “ Securities Registrar ” for the purpose of registering Securities and registering transfers of Securities as herein provided.  Subject to the provisions of Section 3.7, upon surrender for registration of transfer of any Security of any series at any such office or agency, the Company shall execute and the Trustee or any Authenticating Agent, upon receipt of a Company Order, shall authenticate and make available for delivery in the name of transferee or transferees a new Security or Securities of the same series for an equal aggregate principal amount.

 

The Company shall have the right to remove and replace from time to time the Securities Registrar for any series of Securities; provided that no such removal or replacement shall be effective until a successor Securities Registrar with respect to such series of Securities shall have been appointed by the Company and shall have accepted such appointment by the Company.  In the event that the Trustee shall not be or shall cease to be Securities Registrar with respect to a series of Securities, it shall have the right to examine the Security Register for such series at all reasonable times.  There shall be only one Security Register for each series of Securities.

 

All Securities presented for registration of transfer or for exchange, redemption or payment shall (if so required by the Company or the Securities Registrar) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form reasonably satisfactory to the Company and the Securities Registrar duly executed by, the Holder thereof or his attorney duly authorized in writing.

 

Each Security issued upon registration of transfer or exchange of Securities pursuant to this Section shall be the valid obligation of the Company, evidencing the same indebtedness and entitled to the same benefits under this Indenture as the Security or Securities surrendered upon registration of such transfer or exchange.

 

No service charge shall be made for any registration of transfer or exchange of Securities, but the Company or the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 3.11, Section 10.6 or Section 14.3 not involving any transfer.

 

Neither the Company, the Trustee nor the Securities Registrar shall be required (a) to issue, exchange or register the transfer of any Securities of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of such series and ending at the close of business on the day of such mailing, or (b) to exchange or register the transfer of any Securities selected, called or being called for redemption except, in the case of any Security to be redeemed in part, the portion thereof not to be redeemed.

 

All certifications, certificates and Opinions of Counsel required to be submitted to the Securities Registrar pursuant to this Article 3 to effect a registration of transfer or exchange may be submitted by electronic transmission.

 

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Neither the Trustee nor any agent of the Trustee shall have any responsibility for any actions taken or not taken by the Depository.

 

Neither the Trustee nor the Securities Registrar shall have any responsibility or obligation to any Participant or Indirect Participant or any other Person with respect to the accuracy of the books or records, or the acts or omissions, of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any Participant or indirect Participant or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Securities.  All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case of a Global Security).  The rights of beneficial owners in any Global Security shall be exercised only through the Depository subject to the customary procedures of the Depository.  The Trustee and the Securities Registrar may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its Participants or Indirect Participants.

 

Neither the Trustee nor the Securities Registrar shall have any obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Participants or Indirect Participants in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

 

Section 3.7                                     Additional Provisions Related to Transfer and Exchange of Securities .

 

(a)                                  Transfer and Exchange of Global Securities .  A Global Security may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.  Global Securities may be exchanged or replaced, in whole or in part, as provided in this Section 3.7 and Section 3.8 hereof.  Every Security authenticated and delivered in exchange for, or in lieu of, a Global Security or any portion thereof, pursuant to this Section 3.7 or Section 3.8 or 3.11 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Security.  A Global Security may not be exchanged for another Security other than as provided in this Section 3.7(a) and Section 3.7(c) hereof; however , beneficial interests in a Global Security may be transferred and exchanged as provided in Section 3.7(b) hereof.

 

(b)                                  Transfer and Exchange of Beneficial Interests in Global Securities .  The transfer and exchange of beneficial interests in Global Securities will be effected through the Depository in accordance with the provisions of this Indenture and the Applicable Procedures.  Beneficial interests in any Global Security will be subject to restrictions on transfer to the extent required by applicable law, including the Securities Act, applicable securities laws of any state of the United States or any other jurisdiction.  Transfers of beneficial interests in Global Securities that are Restricted Securities also will require compliance with either subparagraph (i) or (ii) below:

 

(i)                                      Transfer of Beneficial Interests in the Same Global Security .  Beneficial interests in any Global Security that is a Restricted Security may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Global Security in accordance with the transfer restrictions set forth in the Private Placement Legend.  No written orders or instructions shall be required to be delivered to the Securities Registrar to effect the transfers described in this Section 3.7(b)(i).

 

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(ii)                                   Other Transfers and Exchanges of Beneficial Interests in Restricted Global Securities .

 

(A)                                If the owner of a beneficial interest in a Rule 144A Global Security that is a Restricted Security wishes to transfer such interest (or a portion thereof) to a Non-U.S. Person pursuant to Regulations S, then upon receipt by the Trustee of (i) instructions from the Holder of the Rule 144A Global Security directing the Trustee to credit or cause to be credited a beneficial interest in the Regulation S Global Security equal to the principal amount of the beneficial interest in the Rule 144A Global Security to be transferred and (ii) a certificate from the transferor in the form of Exhibit A, including the certifications in item (2) thereof, the Trustee shall, subject to the rules and procedures of the Depository, instruct the Depository to increase the Regulation S Global Security and decrease the Rule 144A Global Security by the amount so transferred.

 

(B)                                If the owner of a beneficial interest in a Regulation S Global Security that is a Restricted Security wishes to transfer such interest (or a portion thereof) to a QIB pursuant to Rule 144A, then upon receipt by the Trustee of (i) instructions from the Holder of the Regulation S Global Security directing the Trustee to credit or cause to be credited a beneficial interest in the Rule 144A Global Security equal to the principal amount of the beneficial interest in the Regulation S Global Security to be transferred and (ii) a certificate from the transferor in the form of Exhibit A, including the certifications in item (1) thereof, the Trustee shall, subject to the rules and procedures of the Depository, instruct the Depository to increase the Rule 144A Global Security and decrease the Regulation S Global Security by the amount so transferred.

 

(C)                                Any transfer of Restricted Securities not described under Section 3.7(b)(i) above or subsection (A) or (B) above, shall be made only upon receipt by the Trustee of such opinions of counsel, certificates and/or other information required by and reasonably satisfactory to it and the Company in order to ensure compliance with the Securities Act or in accordance with subsection (d) below, including a certificate from the transferor in the form of Exhibit A, including the certifications in item (3) thereof.

 

(c)                                   Exchange for Definitive Securities .

 

(i)                                      Except as provided below, owners of beneficial interests in Global Securities will not be entitled to receive Definitive Securities.  Definitive Securities shall be transferred to all beneficial owners in a Global Security if at any time (A) (i) the Depository for Securities of a series or Tranche thereof notifies the Company that it is unwilling or unable to continue as Depository for Securities of such series or Tranche, or (ii) the Depository ceases to be a clearing agency registered under the Exchange Act, and in each case a successor Depository is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, as the case may be, or (B) there shall have occurred and be continuing an Event of Default with respect to such Global Security.

 

(ii)                                   In connection with the transfer of an entire Global Security to beneficial owners pursuant to this Section 3.7(c), such Global Security shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall, upon receipt of a Company Order, authenticate and deliver to each beneficial owner identified by the Depositary in exchange for its beneficial interest in such Global Security, an equal aggregate principal amount of Definitive Securities of authorized denominations.  Any Definitive Security delivered in

 

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exchange for an interest in a Global Security pursuant to this Section 3.7(c) shall bear the Private Placement Legend.

 

(d)                                  Private Placement Legend .  Upon the transfer, exchange or replacement of Securities not bearing the Private Placement Legend, the Security Registrar shall deliver Securities that do not bear the Private Placement Legend.  Upon the transfer, exchange or replacement of any Security bearing a Private Placement Legend, the Trustee shall deliver only a Security that bears a Private Placement Legend unless:

 

(i)                                      (such Security (or beneficial interest) is transferred pursuant to an effective registration statement;

 

(ii)                                   such Security (or beneficial interest) is transferred, replaced or exchanged after the Resale Restriction Termination Date therefor; or

 

(iii)                                in connection with such transfer, exchange or replacement, the Trustee shall have received an opinion of counsel and other evidence reasonably satisfactory to it and the Company to the effect that neither such Private Placement Legend nor the related restrictions on transfer are required in order to maintain compliance with the Securities Act.

 

(e)                                   Cancellation and/or Adjustment of Global Securities .  At such time as all beneficial interests in a particular Global Security have been exchanged for Definitive Securities or a particular Global Security has been redeemed, repurchased or canceled in whole and not in part, each such Global Security will be returned to or retained and canceled by the Trustee in accordance with Section 3.10 hereof.  At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security or for Definitive Securities, the principal amount of Securities represented by such Global Security will be reduced accordingly and an endorsement will be made on such Global Security by the Trustee or by the Securities Custodian at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security, such other Global Security will be increased accordingly and an endorsement will be made on such Global Security by the Trustee or by the Securities Custodian at the direction of the Trustee to reflect such increase.

 

Section 3.8                                     Mutilated, Destroyed, Lost and Stolen Securities .

 

In case any temporary Security or Definitive Security shall become mutilated (whether by defacement or otherwise) or be destroyed, lost or stolen, and in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall, except as otherwise provided in this Section, execute, and upon a Company Request, the Trustee, upon receipt of a Company Order, shall authenticate and make available for delivery, a new Security of the same series, tenor and principal amount and bearing a number, letter or other distinguishing symbol not contemporaneously outstanding, in exchange and substitution for the mutilated Security, or in lieu of and in substitution for the Security so destroyed, lost or stolen.  In every case the applicant for a substituted Security shall furnish to the Company and to the Trustee and any agent of the Company or the Trustee such security or indemnity as may be reasonably required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee and any agent of the Company or the Trustee evidence to their reasonable satisfaction of the destruction, loss or theft of such Security and of the ownership thereof.

 

Upon the issuance of any substitute Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in

 

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relation thereto and any other expenses (including the fees and expenses of the Trustee or any Authenticating Agent) connected therewith.

 

In case any Security which has matured or is about to mature or has been called for redemption in full shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Security).  In every case, the applicant for such payment shall furnish to the Company and to the Trustee and any agent of the Company or the Trustee such security or indemnity as any of them may reasonably require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee and any agent of the Company or the Trustee evidence to their reasonable satisfaction of the destruction, loss or theft of such Security and of the ownership thereof.

 

Every substitute Security of any series issued pursuant to the provisions of this Section by virtue of the fact that any such Security is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Securities of such series, duly authenticated and delivered hereunder.

 

Section 3.9                                     Payment of Interest and Certain Additional Amounts; Interest Rights and Certain Additional Amounts Preserved .

 

The Holder of any Securities at the close of business on the Regular Record Date with respect to any Interest Payment Date shall be entitled to receive the interest and any Additional Amounts payable on such Interest Payment Date notwithstanding the cancellation of such Securities upon any registration of transfer or exchange subsequent to the Regular Record Date and prior to such Interest Payment Date, and, if provided for in the Board Resolution or supplemental indenture pursuant to Section 3.1, in the case of a Security issued between a Regular Record Date and the initial Interest Payment Date relating to such Regular Record Date, interest for the period beginning on the date of issue and ending on such initial Interest Payment Date shall be paid to the Person to whom such Security shall have been originally issued.  Except as otherwise specified as contemplated by Section 3.1, for Securities of a particular series the term “ Regular Record Date ” as used in this Section with respect to any Interest Payment Date shall mean the close of business on the last day of the calendar month preceding such Interest Payment Date if such Interest Payment Date is the fifteenth day of a calendar month and shall mean the close of business on the fifteenth day of the calendar month preceding such Interest Payment Date if such Interest Payment Date is the first day of a calendar month, whether or not such day shall be a Business Day.  At the option of the Company, payment of interest on any Security may be made by check mailed to the address of the Person entitled thereto (which shall be the Depository in the case of Global Securities) as such address shall appear in the Securities Register.

 

If and to the extent the Company shall default in the payment of the interest due or any Additional Amounts on such Interest Payment Date in respect of any Securities, such defaulted interest shall be paid by the Company at its election in each case, as provided in clause (a) or (b) below:

 

(a)                                  The Company may make payment of any defaulted interest to the Holder of Securities at the close of business on a “ Special Record Date ” established by the Company by notice given by mail, by or on behalf of the Company, to such Holder not less than 15 days preceding such Special Record Date, such Special Record Date to be not less than 10 days preceding the date for payment of such defaulted interest.

 

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

 

Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of, or in exchange for, or in lieu of, any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

 

Section 3.10                              Cancellation of Securities:  Destruction Thereof .

 

All Securities surrendered for payment, redemption, registration of transfer or exchange, or for credit against any payment in respect of a sinking or analogous fund, shall, if surrendered to the Company or any Paying Agent or any Securities Registrar, be delivered to the Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled by it, and no Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture.  The Trustee shall dispose of such cancelled Securities in accordance with its customary procedures.  If the Company shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancellation.

 

Section 3.11                              Temporary Securities .

 

Pending the preparation by the Company of Definitive Securities of any series, the Company may execute and the Trustee shall, upon receipt of a Company Order, authenticate and make available for delivery in the manner provided in Section 3.3, temporary Securities for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee).  temporary Securities of any series shall be issuable in any authorized denomination, and substantially in the form of the Definitive Securities of such series in lieu of which they are issued but with such omissions, insertions and variations as may be appropriate for temporary Securities as may be determined by the Company with the concurrence of the Trustee.  Temporary Securities may contain such reference to any provisions of this Indenture as may be appropriate.  Every temporary Security shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the Definitive Securities.  Without unreasonable delay the Company shall execute and shall furnish Definitive Securities of such series and thereupon temporary Securities of such series may be surrendered in exchange therefor without charge at the Corporate Trust Office of the Trustee, and the Trustee, upon receipt of a Company Order, shall authenticate and make available for delivery in exchange for such temporary Securities an equal aggregate principal amount of Definitive Securities of the same series.  Such exchange shall be made by the Company at its own expense and without any charge therefor except that in case of any such exchange involving any registration of transfer the Company or the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto.  Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as Definitive Securities of such series authenticated and delivered hereunder.

 

Section 3.12                              Computation of Interest .

 

Except as otherwise specified as contemplated by Section 3.1 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months.

 

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Section 3.13                              CUSIP Numbers .

 

The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or on such notice and that reliance may he placed only on the other identification numbers printed on the Securities.  The Company shall promptly notify the Trustee in writing of any change of “CUSIP” numbers.

 

Section 3.14                              Company Orders .

 

Whenever, pursuant to this Article 3 or otherwise in this Indenture, the Trustee, any Authenticating Agent, any Securities Registrar, or any other Person, is to take an action or omit from taking an action “upon receipt of a Company Order” (or words of similar import), the Company agrees to promptly deliver such Company Order to the appropriate Person,

 

ARTICLE 4
COVENANTS OF THE COMPANY

 

The Company covenants and agrees for the benefit of each series of Securities (except to the extent that any series of Securities is excluded from the benefits of any of such covenants pursuant to Section 3.1(m)) that on and after the date of original execution of this Indenture and so long as any of the Securities of such series remain Outstanding:

 

Section 4.1                                     Payment of Securities .

 

The Company will duly and punctually pay or cause to be paid the principal of, premium (if any) and interest on, and any Additional Amounts with respect to the Securities of such series at the place or places, at the respective times and in the manner provided in such Securities and in the Indenture.  Principal, premium, if any, interest and any Additional Amounts shall be considered paid on the date due if the Paying Agent, if other than the Company or one of its Subsidiaries, holds as of 12:00 noon Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, interest and any Additional Amounts then due.  The Company shall be responsible for making calculations called for under the Securities, including but not limited to determination of Redemption Price, premium, if any, and any Additional Amounts or other amounts payable on the Securities.  The Company will make the calculations in good faith and, absent manifest error, its calculations will be final and binding on the Holders.  The Company will, provide a schedule of its calculations to the Trustee when requested by the Trustee, and the Trustee is entitled to rely conclusively on the accuracy of the Company’s calculations without independent verification.  The Trustee shall forward the Company’s calculations to any Holder of the Securities upon the written request of such Holder.

 

Section 4.2                                     Offices or Agency .

 

So long as any of the Securities remain Outstanding, the Company will maintain an office or agency where such Securities may be presented or surrendered for payment, where such Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of such Securities and this Indenture may be served, which office or agency shall initially be the Corporate Trust Office of the Trustee.  The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency.  If at any time the Company shall fail to maintain such required office or agency or shall fail to furnish the Trustee with the required

 

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information with respect thereto, presentations, surrenders, notices and demands in respect of Securities may be made or served at the Corporate Trust Office of the Trustee and the corporate trust office of any Authenticating Agent appointed hereunder; and the Company hereby appoints the Trustee and any Authenticating Agent appointed hereunder its agents to receive all such presentations, surrenders, notices and demands.

 

The Company may also from time to time designate one or more other offices or agencies (in or outside The City of New York) where the Securities of one or more series, or any Tranche thereof may be presented or surrendered for any or all of such purposes, and may from time to time rescind such designation.  The Company will promptly notify the Trustee in writing of any such designation or rescission thereof.

 

Section 4.3                                     Money for Securities Payments to Be Held in Trust .

 

If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it shall, on or before each due date of the principal of, premium (if any) or interest on or Additional Amounts with respect to any of the Securities of such series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum in the currency or currencies, currency unit or units or composite currency or currencies in which the Securities of such series are payable (except as otherwise specified pursuant to Section 3.1 for the Securities of such series) sufficient to pay the principal or any premium, interest or Additional Amounts so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and shall promptly notify the Trustee in writing of its action or failure so to act.

 

Whenever the Company shall have one or more Paying Agents for any series of Securities, it shall, on or prior to each due date of the principal of, premium (if any) or interest on or any Additional Amounts with respect to any Securities of such series, deposit with any Paying Agent a sum (in the currency or currencies, currency unit or units or composite currency or currencies described in the preceding paragraph) sufficient to pay the principal, premium (if any) or interest or Additional Amounts so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee in writing of its action or failure so to act.

 

The Company shall cause each Paying Agent for any series of Securities other than the Trustee or the Company to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent shall:

 

(a)                                  hold all sums held by it for the payment of the principal of, premium (if any) or interest on or any Additional Amounts with respect to Securities of such series or Tranche in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as provided in or pursuant to this Indenture;

 

(b)                                  give the Trustee written notice of any default by the Company (or any other obligor upon the Securities of such series) in the making of any payment of principal of, premium (if any) or interest on or any Additional Amounts with respect to the Securities of such series; and

 

(c)                                   at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

 

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the

 

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Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same terms as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums.

 

Any money deposited with the Trustee or any Paying Agent, or then held by the Company in trust for the payment of the principal of (and premium, if any) or interest on or any Additional Amounts with respect to any Security of any series, and remaining unclaimed for two years after such principal (and premium, if any), interest or Additional Amounts (if any) has become due and payable shall be paid to the Company on Company Request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease.

 

Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Section 12.3, Section 12.4 and Section 12.5.

 

Section 4.4                                     Additional Amounts .

 

If any taxes, assessments or other governmental charges are imposed by the jurisdiction where the Company or any of its successors (a “ Payor ”), is organized or otherwise considered to be a resident for tax purposes or any political organization or governmental authority thereof or therein having the power to tax (the “ Relevant Tax Jurisdiction ”), in respect of any payments under the Securities, the Payor will pay to each Holder of the Securities, to the extent it may lawfully do so, such Additional Amounts as may be necessary in order that the net amounts paid to such Holder will be not less than the amount specified in such Securities to which such Holder is entitled; provided, however, the Payor will not be required to make any payment of Additional Amounts for or on account of:

 

(a)                                  any tax, assessment or other governmental charge which would not have been imposed but for (1) the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Holder, if such Holder is an estate, trust, partnership, limited liability company or corporation) and the Relevant Tax Jurisdiction (other than by reason of the mere ownership of, or receipt of payment under, the Securities) including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been present or engaged in trade or business therein or having or having had a permanent establishment therein, (2) the presentation of a Security (where presentation is required) for payment on a date more than 30 days after (x) the date on which such payment became due and payable or (y) the date on which payment thereof is duly provided for, whichever occurs later or (3) the presentation of a Security in the Relevant Tax Jurisdiction unless such Securities could not have been presented for payment elsewhere;

 

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

 

(c)                                   any tax, assessment or other governmental charge which is payable otherwise than by withholding from payment of (or in respect of) principal of, premium, if any, or any interest on, the Securities;

 

(d)                                  any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure by the Holder or the beneficial owner of such Security to comply with a request of the Payor addressed to the Holder (1) to provide information, documents or other evidence concerning the

 

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nationality, residence or identity of the Holder or such beneficial owner or (2) to make any declaration or other similar claim or satisfy any information or reporting requirement, in each case, which is required by a statute, treaty, regulation or administrative practice of the Relevant Tax Jurisdiction as a precondition to exemption from all or part of such tax, assessment or other governmental charge;

 

(e)                                   any withholding or deduction that is imposed on a payment pursuant to Sections 1471 through 1474 of the Code and related Treasury regulations and pronouncements (the Foreign Account Tax Compliance Act, or “ FATCA ”) or any successor provisions and any regulations or official law, agreement or interpretations thereof implementing an intergovernmental approach thereto; or

 

(f)                                    any combination of the above

 

nor will Additional Amounts be paid with respect to any payment of the principal of, or any premium, or interest on, any Securities to any Holder who is a fiduciary or partnership or limited liability company or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of the Relevant Tax Jurisdiction to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or limited liability company or beneficial owner who would not have been entitled to such Additional Amounts had it been the Holder of such Securities.

 

Whenever in this Indenture there is mentioned, in any context, the payment of the principal of or any premium, interest or any other amounts on, or in respect of, any Security of any series or the net proceeds received on the sale or exchange of any Security of any series, such mention shall be deemed to include mention of the payment of Additional Amounts provided by the terms of such series established hereby or pursuant hereto to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to such terms, and express mention of the payment of Additional Amounts (if applicable) in any provision hereof shall not be construed as excluding the payment of Additional Amounts in those provisions hereof where such express mention is not made.

 

Except as otherwise provided in or pursuant to this Indenture or the related Board Resolution of the applicable series, at least 10 days prior to the first Interest Payment Date with respect to a series of Securities (or if the Securities of such series shall not bear interest prior to Maturity, the first day on which a payment of principal is made), and at least 10 days prior to each date of payment of principal or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers’ Certificate, the Payor shall furnish to the Trustee and the principal Paying Agent or Paying Agents, if other than the Trustee, an Officers’ Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of and premium, if any, interest or any other amounts on the Securities of such series shall be made to Holders of Securities of such series without withholding for or on account of any tax, fee, duty, assessment or other governmental charge described in this Section 4.4.  If any such withholding shall be required, then such Officers’ Certificate shall specify by taxing jurisdiction the amount, if any, required to be withheld on such payments to such Holders of Securities and the Payor agrees to pay to the Trustee or such Paying Agent the Additional Amounts required by this Section 4.4.  The Payor will provide the Trustee with the official acknowledgment of the relevant tax authority (or, if such acknowledgment is not available, a certified copy thereof) evidencing the payment of any withholding taxes by the Payor and copies of such documentation will be made available to the Holders of the Securities or the Paying Agent, as applicable, upon written request therefor.  The Payor covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers’ Certificate furnished pursuant to this Section 4.4.

 

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Section 4.5                                     Redemption for Tax Purposes .

 

The Company will be entitled to redeem the Securities at its option, at any time, for cash, in whole but not in part, upon not less than 30 nor more than 60 days’ prior written notice, at 100% of the principal amount thereof, plus any accrued but unpaid interest to, but not including, the Redemption Date (subject to the right of holders of record on the relevant record date, whether or not a business day, to receive interest due on the relevant interest payment date), in the event that the Payor has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the Securities, any Additional Amounts as a result of (i) a change in or an amendment to the laws (including any regulations promulgated thereunder) of a Relevant Tax Jurisdiction, which change or amendment is announced after the date of the offering memorandum relating to the Securities or (ii) any change in or amendment to any official position regarding the application or interpretation of such laws or regulations, which change or amendment is announced after the date of the offering memorandum relating to the Securities, and, in each case, the Payor cannot avoid such obligation by taking reasonable measures available to it.

 

Before any notice of redemption of the Securities is delivered to the Holder as described above, the Company will deliver to the Trustee, at least 30 days before the date set for redemption, in each case, an Officers’ Certificate and an opinion of counsel stating that the Payor has or will become obligated to pay Additional Amounts as a result of a change in tax laws or regulations or the application or interpretation of such laws or regulations.

 

If the Company elects to redeem the Securities under this provision it will give written notice of such election to the Trustee.  If the Company elects to redeem the Securities under this provision it will also mail a notice of redemption at least 30 days but no more than 60 days before the Redemption Date to each Holder of the Securities to be redeemed.  Unless the Company defaults in the payment of the Redemption Price, on and after the Redemption Date, interest will cease to accrue on the Securities or portions thereof called for redemption.  Any such redemption will be subject to Article 14 hereof.

 

Section 4.6                                     Limitation on Liens on Stock of Subsidiaries .

 

So long as any Securities are Outstanding, the Company will not, and will not permit any of its Subsidiaries to, create, assume, incur, guarantee or otherwise permit to exist any Indebtedness secured by any mortgage, pledge, lien, security interest or other encumbrance upon any shares of Capital Stock of any Subsidiary of the Company (whether such shares of Capital Stock are now owned or hereafter acquired) without effectively providing concurrently that the Securities (and, if the Company so elects, any other Indebtedness of the Company that is not subordinate to the Securities and with respect to which the governing instruments require, or pursuant to which the Company is otherwise obligated, to provide such security) will be secured equally and ratably with such Indebtedness for at least the time period such other Indebtedness is so secured subject to the following exceptions:

 

(a)                                  with respect to any series of Securities, any Lien existing on the date of issuance of the first security in such series;

 

(b)                                  liens on stock or Indebtedness of entities at the time they become Subsidiaries or existing upon stock or Indebtedness of a Subsidiary at the time of acquisition of such stock or Indebtedness;

 

(c)                                   liens upon property of entities existing at the time they become Subsidiaries;

 

(d)                                  liens existing on properties when acquired, or incurred to finance the purchase price or construction thereof;

 

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(e)                                   liens to extend, renew or replace any liens referred to above;

 

(f)                                    liens relating to sale and leaseback transactions;

 

(g)                                   liens in favor of the Company or one or more Subsidiaries granted by the Company or a Subsidiary to secure any intercompany obligations;

 

(h)                                  mechanics’, landlords’ and similar liens;

 

(i)                                      liens arising out of legal proceedings being contested in good faith;

 

(j)                                     liens for taxes not yet due, or being contested in good faith;

 

(k)                                  easements and similar liens not impairing the use or value of the property involved;

 

(l)                                      pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation;

 

(m)                              pledges or deposits to secure performance of letters of credit, bids, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(n)                                  any interest or title of a lessor under any lease entered into in the ordinary course of business;

 

(o)                                  liens on assets of any Subsidiary securing (1) short-term Indebtedness incurred to provide short-term liquidity to facilitate claims payments in the event of catastrophes; (2) Indebtedness incurred in the ordinary course of its business or in securing insurance-related obligations (that do not constitute Indebtedness) and letters of credit issued for the account of any such Subsidiary in the ordinary course of its business or in securing insurance-related obligations (that do not constitute Indebtedness) or (3) insurance-related obligations (that do not constitute Indebtedness); and

 

(p)                                  liens otherwise prohibited by this covenant, securing Indebtedness, if the aggregate amount of all debt then outstanding secured by such lien and all similar liens (excluding liens otherwise permitted hereunder) does not exceed 20% of the total consolidated shareholders’ equity (less good will) of the Company (as derived from the most recently prepared quarterly consolidated balance sheet of the Company and its Subsidiaries prepared in accordance with GAAP as of the relevant date of determination).

 

Section 4.7                                     [Reserved] .

 

Section 4.8                                     Delivery of Financial Information .

 

Unless the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will, at its expense:

 

(a)                                  furnish to the Trustee, within 60 days after the last day of each fiscal quarter of each fiscal year of the Company (other than the fourth such fiscal quarter in any fiscal year), financial statements (which shall be as of and for the portion of the fiscal year then ended and prepared in accordance with GAAP (the “ Quarterly Financials ”); such financial statements are to include the Company’s consolidated balance sheet as of the end of such fiscal quarter and its consolidated statement

 

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of income, changes in shareholders equity and cash flows for the portion of the fiscal year then ended (or such other types of financial information or financial statements as at the time are specified by GAAP), setting forth in comparative form the corresponding figures as of the end of, and for the corresponding portion of, the preceding fiscal year, all prepared in accordance with GAAP; and such financials may be subject to customary year-end adjustments, with footnote and schedule disclosure abbreviated or omitted;

 

(b)                                  furnish to the Trustee, within 120 days after the last day of each fiscal year, the Company’s consolidated balance sheet as of the end of such fiscal year and its consolidated statement of income, changes in shareholders equity and cash flows for such fiscal year (or such other types of financial statements as at the time are specified by GAAP) (the “ Annual Financials ”), setting forth in comparative form the corresponding figures as of the end of and for the preceding fiscal year, all prepared in accordance with GAAP and accompanied by an audit report of a firm of independent public accountants of recognized international standing selected by the Company; and

 

(c)                                   upon written certification from any Person that is a Holder of Securities or any beneficial owner of an interest in a Global Security (which request must be provided as set forth in Section 13.5 hereof and must indicate whether the Person making such request is a Holder or beneficial owner of Securities), promptly deliver to such Holder or beneficial owner, as the case may be, by mailing or otherwise providing electronically to such Holder or beneficial owner or by posting on a website or by any online data system a copy of the financial information or financial statements then most recently provided to the Trustee pursuant to subparagraph (1) or (2) above, as the case may be, and thereafter, unless otherwise expressly stated in such request, deliver to such Holder or beneficial owner, as the case may be, a copy of all subsequent financial information and financial statements provided to the Trustee pursuant to subparagraphs (1) and (2) above (such financial information and financial statements to be delivered to such Holder or beneficial owner as promptly as practicable following the delivery thereof to the Trustee) unless such request is revoked by such Holder or beneficial owner by notice to the Company delivered as provided herein or until such time as the Company shall have reasonably determined that such Person is no longer a Holder or beneficial owner of Securities.

 

(d)                                  Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such documents shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on an Officers’ Certificate or certificates delivered pursuant to Section 4.12).

 

Section 4.9                                     Delivery of Rule 144A Information .

 

So long as the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will prepare and will furnish to any Holder of Securities, any beneficial owner of an interest in a Global Security and any prospective purchaser or other prospective transferee of Securities designated by a Holder of Securities or a beneficial owner of an interest in a Global Security, promptly upon request and at the expense of the Company, the financial statements and other information specified in Rule 144A(d)(4) (or any successor provision thereto) under the Securities Act, in each case to the extent necessary to permit the resale or other transfer of Securities by such Holder or beneficial owner to be made in compliance with Rule 144A under the Securities Act.

 

Section 4.10                              Corporate Existence .

 

Subject to Article 11, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence and rights (charter and statutory); provided, however, that the foregoing shall not obligate the Company to preserve any such right if the Board of Directors

 

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shall reasonably determine that the preservation thereof is no longer desirable in the conduct of its business and that the loss thereof is not disadvantageous in any material respect to any Holder.

 

Section 4.11                              Waiver of Certain Covenants .

 

The Company may omit in any particular instance to comply with any term, provision or condition set forth in Section 4.6, Section 4.7 or Section 4.8 with respect to the Securities of any series if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series, by act of such Holders, either shall waive such compliance in such instance or generally shall have waived compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.

 

Section 4.12                              Certificates to Trustee .

 

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

 

Section 4.13                              Calculation of Original Issue Discount .

 

The Company shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of original issue discount (including daily rates and accrual periods) accrued on any Outstanding Original Issue Discount Securities as of the end of such year that is required to be reported and (ii) such other specific information relating to such original issue discount as may then be relevant under the Internal Revenue Code of 1986, as amended from time to time.

 

ARTICLE 5
HOLDER LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE

 

Section 5.1                                     Company to Furnish Trustee Information as to Names and Addresses of Holders .

 

The Company covenants and agrees that it will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of the Securities of each series semiannually and not later than June 30 and December 31 in each year, and at such other times as the Trustee may request in writing, which list shall be as of a date no more than 15 days prior to the date such information is so furnished; provided that, if and so long as the Trustee shall be the Securities Registrar for such series, such list shall not be required to be furnished.

 

Section 5.2                                     Preservation and Disclosure of Holder Lists .

 

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders of Securities.  If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in writing at least five (5) Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders of Securities.

 

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The rights of Holders of the Securities of any series to communicate with other Holders of Securities of such series with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act (as if the provisions of the Trust Indenture Act applied to this Indenture).

 

Section 5.3                                     [Reserved] .

 

Section 5.4                                     Reports by the Trustee .

 

(a)                                  If this Indenture has been qualified under the Trust Indenture Act with respect to a particular series of Securities, the Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act, if applicable, at the times and in the manner provided pursuant thereto.  If required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within sixty days after each May 15 following the date of this Indenture deliver to Holders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a).

 

(b)                                  A copy of each such report shall, at the time of such transmission to the Holders of any series, be furnished to the Company and be filed by the Trustee with each stock exchange upon which the Securities of such series are listed and also with the Commission.  The Company agrees to notify the Trustee promptly when and as the Securities of any series become admitted to trading on any national securities exchange.

 

ARTICLE 6
REMEDIES OF THE TRUSTEE AND HOLDERS
ON EVENT OF DEFAULT

 

Section 6.1                                     Event of Default Defined; Acceleration of Maturity; Waiver of Default .

 

Event of Default ”, with respect to the Securities of any series, wherever used herein, means each one of the following events which shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), unless it is either inapplicable to a particular series or it is specifically deleted or modified in the applicable resolution of the Board of Directors or in the supplemental indenture under which such series of Securities is issued, as the case may be, as contemplated by Section 3.1:

 

(a)                                  default in the payment of any interest on any of the Securities of such series, or any Additional Amounts payable with respect thereto, as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or

 

(b)                                  default in the payment of the principal of or premium (if any) on any of the Securities of such series as, or any Additional Amounts payable with respect thereto, and when the same shall become due and payable at Maturity, upon any redemption, by declaration of acceleration or otherwise; or

 

(c)                                   failure in the performance or breach of any other covenant or warranty of the Company in respect of the Securities of such series or in the Indenture, and continuance of such default for a period of 60 days after there has been given, by registered or certified mail, or overnight courier guaranteeing next day delivery, to the Company by the Trustee, or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of all series affected thereby, a written notice

 

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specifying such default and requiring it to be remedied and stating that such notice is a “ Notice of Default ” hereunder; or

 

(d)                                  default in the payment at maturity of Indebtedness of the Company in excess of $50,000,000 (or its equivalent in any other currency or currencies) or if any event of default as defined in any mortgage, indenture or instrument under which there may be issued, or by which there may be secured or evidenced, any Indebtedness of the Company, (other than Indebtedness that is non-recourse) shall happen and shall result in the acceleration of more than $50,000,000 (or its equivalent in any other currency or currencies) in principal amount of such Indebtedness (after giving effect to any applicable grace period) and such default shall not be cured or waived or such acceleration shall not be rescinded or annulled within a period of 30 days after there shall have been given, by registered or certified mail, or overnight courier guaranteeing next day delivery, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of such series, a written notice specifying such default or event of default and requiring the Company to cause such default to be cured or waived or to cause such acceleration to be rescinded or annulled or to cause such Indebtedness to be discharged and stating that such notice is a Notice of Default hereunder;

 

(e)                                   a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company in an involuntary case under any applicable bankruptcy, insolvency, rehabilitation, or other similar law now or hereafter in effect, or, under any such law, (i) appointing a receiver, liquidator, assignee, custodian, trustee rehabilitator, or sequestrator (or similar official) of the Company or for any substantial part of its property or (ii) ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or

 

(f)                                    the Company shall commence a voluntary case under any applicable bankruptcy, insolvency, rehabilitation, or other similar law now or hereafter in effect, or, under any such law, (i) consent to the entry of an order for relief in an involuntary case under any such law, (ii) consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, rehabilitator, or sequestrator (or similar official) of the Company or for any substantial part of its property, or (iii) make any general assignment for the benefit of creditors; or

 

If an Event of Default described in clause (a), (b), (c) or (d), above occurs and is continuing with respect to Securities of any series at the time Outstanding, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of such series then Outstanding, by notice in writing to the Company (and to the Trustee if given by Holders), may declare the entire principal (or, if the Securities of such series are Original Issue Discount Securities, such portion of the principal as may be specified in the terms of such series) and premium (if any) of all Securities of such series and the interest accrued thereon  to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable.

 

If any Event of Default described in clause (e) or (f) above occurs and is continuing, all unpaid principal of the Securities then Outstanding of that series and premium (if any) and the interest accrued thereon shall ipso facto become and be immediately due and payable without declaration, presentment, demand or notice of any kind by the Trustee or any Holder of Securities of that series.

 

The foregoing provisions, however, are subject to the condition that if, at any time after a declaration of acceleration with respect to the Securities of any series has been made and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest and any Additional Amounts with respect to all the Securities of such series (or

 

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upon all the Securities, as the case may be) and the principal of (and premium, if any, on) any and all Securities of such series (or of all the Securities, as the case may be) which shall have become due otherwise than by acceleration, and if any and all Events of Default under the Indenture, other than the nonpayment of the principal of and premium (if any), accrued interest on and any Additional Amounts with respect to Securities of such series which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein, then and in every such case the Holders of a majority in aggregate principal amount of the Securities of such series (each series voting as a separate class), or of all the Securities (voting as a single class), as the case may be, then Outstanding, by written notice to the Company and to the Trustee, may waive all defaults with respect to that series (or with respect to all the Securities, as the case may be) and rescind and annul such acceleration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon.

 

For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Security shall have been accelerated and declared or become due and payable pursuant to the provisions hereof, then, from and after such acceleration, unless such acceleration has been rescinded and annulled, the principal amount of such Original Issue Discount Security shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Security.

 

Section 6.2                                     Collection of Indebtedness by Trustee; Trustee May Prove Debt .

 

The Company covenants that (a) in case default shall be made in the payment of any installment of interest on or any Additional Amounts with respect to any of the Securities of any series when such interest shall have become due and payable, and such default shall have continued for a period of 30 days or (b) in case default shall be made in the payment of all or any part of the principal of or premium (if any) on any Securities of any series or any Additional Amounts with respect thereto when the same shall have become due and payable, whether upon Stated Maturity of the Securities of such series or upon any redemption or by acceleration or otherwise, then upon demand of the Trustee for such series, the Company will pay to the Trustee for the benefit of the Holder of any such Security the whole amount that then shall have become due and payable on any such Security for the principal, premium (if any) and interest on, with interest upon the overdue principal and premium (if any) and Additional Amounts.

 

In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Company or other obligor upon such Securities and collect in the manner provided by law out of the property of the Company or other obligor upon such Securities, wherever situated, the moneys adjudged or decreed to be payable.

 

The Trustee shall be entitled and empowered, either in its own name as trustee of an express trust, or as attorney-in-fact for the Holders of any of the Securities, or in both such capacities, to file such proof of debt, amendment of proof of debt, claim, petition or other document as may be necessary or advisable in order to have the claims of the Trustee and of the Holders of Securities allowed in any receivership, insolvency, rehabilitation, bankruptcy, liquidation, readjustment, reorganization or other similar proceedings, or any judicial proceedings, relative to the Company or any other obligor on the Securities or its creditors or its property.  The Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors’ committee or other similar committee.

 

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The Trustee is hereby irrevocably appointed (and the successive respective Holders of the Securities, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) the true and lawful attorney-in-fact of the respective Holders of the Securities, with authority to make or file in the respective names of the Holders of the Securities any proof of debt, amendment of proof of debt, claim, petition or other document in any such proceedings and to receive payment of any sums becoming distributable on account thereof, and to execute any other papers and documents and do and perform any and all acts and things for and on behalf of such Holders of the Securities as may be necessary or advisable in the opinion of the Trustee in order to have the respective claims of the Holders of the Securities against the Company or any other obligor on the Securities and/or its property allowed in any such proceedings, and to receive payment of or on account of such claims; provided, however, that nothing herein contained shall be deemed to authorize or empower the Trustee to consent to or accept or adopt, on behalf of any Holder of Securities, any plan of reorganization or readjustment of the Company or any other obligor on the Securities or, by other action of any character in any such proceeding, to waive or change in any way any right of any Holder of any Security, even though it may otherwise be entitled so to do under any present or future law, all such power or authorization being hereby expressly denied.

 

All rights of action and of asserting claims under this Indenture or under any of the Securities may be enforced by the Trustee without the possession of any of the Securities or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the reasonable expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Securities in respect of which such action was taken.

 

In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to represent all the Holders of the Securities in respect of which such action was taken, and it shall not be necessary to make any Holders of such Securities parties to any such proceedings.

 

Section 6.3                                     Application of Proceeds .

 

Any property or moneys collected by the Trustee pursuant to this Article or distributable in respect of the Company’s obligations under this Indenture after an Event of Default in respect of any series of the Securities, together with any other sums held by the Trustee (as such) hereunder (other than sums held in trust for the benefit of the Holders of particular Securities), shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal, premium (if any), interest or Additional Amounts, upon presentation (except in respect of

 

Subdivision First below) of the several Securities in respect of which moneys have been collected and stamping (or otherwise noting) thereon the payment, or issuing Securities of such series in reduced principal amounts in exchange for the presented Securities of like series if only partially paid, or upon surrender thereof if fully paid:

 

FIRST:  To the payment of costs and expenses applicable to such series in respect of which moneys have been collected, including reasonable compensation to the Trustee and each predecessor Trustee and their respective agents and attorneys and of all expenses and liabilities reasonably incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of its negligence or willful misconduct, and all other amounts due to the Trustee or any predecessor Trustee pursuant to Section 7.6;

 

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SECOND:  In case the principal of the Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest and any Additional Amounts on the Securities of such series in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee), so far as it may be enforceable under applicable law, upon the overdue installments of interest and any Additional Amounts, such payments to be made ratably to the Persons entitled thereto, without discrimination or preference;

 

THIRD:  In case the principal of the Securities of such series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for principal and premium (if any) and interest and any Additional Amounts, with interest upon the overdue principal and premium (if any); and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such principal, premium (if any) and interest, without preference or priority of principal and premium (if any) over interest, or of interest, if any, and any Additional Amounts without preference or priority of principal and premium, if any, over interest or any Additional Amounts, or of interest or any Additional Amounts, if any, over principal and premium (if any) or of any installment of interest over any other installment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such principal, premium (if any) and accrued and unpaid interest (if any); and

 

FOURTH:  To the payment of the remainder, if any, to the Company, as the case may be, or as a court of competent jurisdiction may direct in writing.

 

The Trustee may fix a record date and payment date for any payment to Holders of Securities pursuant to this Section 6.3.

 

Section 6.4                                     Suits for Enforcement .

 

In case an Event of Default with respect to Securities of any series has occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

 

Section 6.5                                     Restoration of Rights on Abandonment of Proceedings .

 

In case the Trustee or any Holder shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee or such Holder, then and in every such case (subject to the binding effect of any determination made in such proceedings) the Company and the Trustee and each of the Holders shall be restored severally and respectively to their former positions and rights hereunder, and (subject as aforesaid) all rights, remedies and powers of the Company, the Trustee and the Holders shall continue as though no such proceedings had been instituted.

 

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Section 6.6                                     Limitations on Suits by Holders .

 

No Holder of any Security of any series shall have any right by virtue or by availing of any provision of this Indenture to institute an action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless (a) such Holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof, as hereinbefore provided, (b) the Holders of not less than 25% in aggregate principal amount of the Securities of such series then Outstanding shall have made written request upon the Trustee to institute such action or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such security or indemnity satisfactory to it against any loss, liability or expense, (c) the Trustee for 60 days after its receipt of such notice, request and offer of security and indemnity shall have failed to institute any such action or proceeding and (d) the Holders of a majority in principal amount of the outstanding Securities have not given the trustee a direction inconsistent with such request within such 60-day period pursuant to Section 6.9; it being understood and intended, and being expressly covenanted by the taker and Holder of every Security with every other taker and Holder of any Security and with the Trustee, that no one or more Holders of Securities of any series shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder of Securities, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of such series.  For the protection and enforcement of the provisions of this Section, each and every Holder of Securities of any series and the Trustee shall be entitled to such relief as can be given either at law or in equity.

 

Section 6.7                                     Unconditional Right of Holders to Institute Certain Suits .

 

Nothing contained in this Indenture or in the Securities of any series shall affect or impair the obligation of the Company, which is unconditional and absolute, to pay the principal of, and premium (if any) and interest, on, and any Additional Amounts with respect to, the Securities of such series at the respective places, at the respective times, at the respective rates, in the respective amounts and in the coin or currency therein and herein prescribed, or affect or impair the right of action, which is also absolute and unconditional, of any Holder of any Security to institute suit to enforce such payment at the respective due dates expressed in such Security, or upon redemption, by declaration, repayment or otherwise as herein provided without reference to, or the consent of, the Trustee or the Holder of any other Security, unless such Holder consents thereto.

 

Section 6.8                                     Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default .

 

Except as provided in Section 6.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holder of any Security is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

No delay or omission of the Trustee or of any Holder of any Security of any series to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and, every power and remedy given by this Indenture or by law to the Trustee or to the Holder of any Security may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holder of such Security.

 

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Section 6.9                                     Control by Holders of Securities .

 

The Holders of a majority in aggregate principal amount of the Securities of each series affected (with each series voting as a separate class) at the time Outstanding shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Securities of such series by this Indenture; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture, and provided , further , that (subject to the provisions of Section 7.1) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shall reasonably determine that the action or proceeding so directed may not lawfully be taken or if the Trustee shall reasonably determine that the action or proceedings so directed would expose the Trustee to personal liability or would be contrary to the provisions hereof, or if the Trustee in good faith shall so determine that the actions or forebearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of the Securities of all series so affected not joining in the giving of said direction, it being understood that (subject to Section 7.1) the Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Holders.

 

As between the Trustee and the Holders of the Securities, nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction or directions by Holders.

 

Section 6.10                              Waiver of Past Defaults .

 

Subject to Section 6.1, the Holders of not less than a majority in principal amount of the Outstanding Securities of any series on behalf of the Holders of all the Securities of such series may waive any past default hereunder with respect to such series and its consequences, except a default:

 

(1)                                  in the payment of the principal of, premium (if any) or interest on, or any Additional Amounts with respect to, any Security of such series, or

 

(2)                                  in respect of a covenant or provision hereof which under Article 10 cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected.

 

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

 

Section 6.11                              Trustee to Give Notice of Default, But May Withhold in Certain Circumstances .

 

The Trustee shall transmit to the Holders of any series, as the names and addresses of such Holders appear on the Security Register, notice by mail of all defaults known to a Responsible Officer of the Trustee which have occurred with respect to such series, such notice to be transmitted within 90 days after a Responsible Officer of the Trustee shall have knowledge thereof, as provided in Section 7.2(i), unless such defaults shall have been cured or waived before the giving of such notice (the term “default” or “defaults” for the purposes of this Section being hereby defined to mean any event or condition which is, or with notice or lapse of time or both would become, an Event of Default); provided that, except in the case of default in the payment of the principal of, premium (if any) or interest on, or any Additional Amounts with respect to, any of the Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of such series.

 

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Section 6.12                              Right of Court to Require Filing of Undertaking to Pay Costs .

 

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

 

Section 6.13                              Waiver of Usury, Stay or Extension Laws .

 

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

 

Section 6.14                              Delay or Omission Not Waiver .

 

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

 

ARTICLE 7
CONCERNING THE TRUSTEE

 

Section 7.1                                     Duties and Responsibilities of the Trustee; During Default; Prior to Default .

 

With respect to the Holders of any series of Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Securities of that series and after the curing or waiving of all Events of Default which may have occurred with respect to such series, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture.  In case an Event  of Default with respect to the Securities of a series has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

 

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No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

 

(a)                                  prior to the occurrence of an Event of Default with respect to the Securities of such series and after the curing or waiving of all such Events of Default with respect to such series which may have occurred:

 

(i)                                      the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

(ii)                                   in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein);

 

(b)                                  the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved in a court of competent jurisdiction in a final and non-appealable decision that the Trustee was negligent in ascertaining the pertinent facts; and

 

(c)                                   the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of Securities pursuant to Section 6.9 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture.

 

None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it.  The Trustee shall not be required to give any bond or surety in respect of the performance of its powers or duties hereunder.

 

Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to this Section 7.1.

 

Section 7.2                                     Certain Rights of the Trustee .

 

Subject to Section 7.1:

 

(a)                                  the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, Officer’s Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document (whether in original or facsimile form) reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties;

 

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(b)                                  any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Company Order, Company Request, or an Officer’s Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the secretary or any assistant secretary of the Company;

 

(c)                                   the Trustee may consult with counsel and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

 

(d)                                  the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred therein or thereby;

 

(e)                                   the Trustee shall not be liable for any action taken or omitted by it in good faith and reasonably believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture;

 

(f)                                    prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Securities of all series affected then Outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require indemnity or security satisfactory to it against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Company or, if paid by the Trustee or any predecessor Trustee, shall be repaid by the Company upon demand;

 

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

 

(h)                                  the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, or inquire as to the performance by the Company of any of its covenants in this Indenture, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine during reasonable hours and upon reasonable notice the books, records and premises of the Company, or both, personally or by agent or attorney;

 

(i)                                      the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has received written notice of any event which is in fact such a default or Event of Default given by the Company or by the Holders of at least 25% of the aggregate principal amount of the Securities and is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture;

 

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(j)                                     the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be compensated, reimbursed, and indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, whether as Agent or otherwise, and each agent, custodian and other Person authorized to act hereunder;

 

(k)                                  in no event shall the Trustee be responsible or liable for special, indirect, punitive, or consequential loss or damage of any kind whatsoever (including, without limitation, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action;

 

(l)                                      the Trustee may request that the Company deliver an Officer’s Certificate setting forth the names of individuals and/or titles of Officers authorized at such time to take specified actions pursuant to this Indenture, which Officer’s Certificate may be signed by any Person authorized to sign an Officer’s Certificate, including any Person specified as so authorized in any such certificate previously delivered and not superseded;

 

(m)                              the permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty unless so specified herein; and

 

(n)                                  in no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

Section 7.3                                     Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof .

 

The recitals contained herein and in the Securities, except the certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its obligations hereunder.  The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Securities and shall not be responsible for any statement in any document in connection with the sale or distribution of the Securities.  The Trustee shall not be accountable for the use or application by the Company of any of the Securities or of the proceeds thereof or funds received and disbursed in accordance with the Indenture.

 

Section 7.4                                     Trustee and Agents May Hold Securities; Collections, etc.

 

The Trustee, any Paying Agent, Securities Registrar, Securities Custodian, Authenticating Agent or any agent of the Company or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not the Trustee or such agent, and, subject to Section 7.8 and Section 7.13, if operative, may otherwise deal with the Company and receive, collect, hold and retain collections from the Company with the same rights it would have if it were not the Trustee, Paying Agent, Securities Registrar, Authenticating Agent or such agent.

 

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Section 7.5                                     Moneys Held by Trustee .

 

Subject to the provisions of Section 12.3, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law.  The Trustee shall have no liability for interest on money it receives and holds in trust except as specifically agreed in writing with the Company.

 

Section 7.6                                     Compensation and Indemnification of Trustee and Its Prior Claim .

 

The Company covenants and agrees to pay the Trustee from time to time, and the Trustee shall be entitled to, such compensation as the Company and the Trustee may from time to time agree in writing for all services rendered by the Trustee hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Company covenants and agrees to pay or reimburse the Trustee and each predecessor trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other Persons not regularly in its employ) except any such expense, disbursement or advance as shall be attributable to its negligence or willful misconduct.  The Company also covenants to indemnify the Trustee and its officers, directors, employees and agents and each predecessor trustee for, and hold it harmless against, any loss, liability, damage, claims (whether asserted by the Company or any Holder or any other Person) or expense, including taxes (other than taxes measured by the income of the Trustee or otherwise applicable to the Trustee for operations outside the scope of this Indenture) incurred without negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and the performance of its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in connection with the exercise or performance of any of its powers or duties hereunder except to the extent that any such loss, liability, damage, claims or expense shall be attributable to the Trustee’s negligence or willful misconduct.  The obligations of the Company under this Section to compensate and indemnify the Trustee and each predecessor trustee and to pay or reimburse the Trustee and each predecessor trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture and resignation or removal of the Trustee.  Such additional indebtedness shall be a lien prior to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities.  When the Trustee incurs expenses after the occurrence of an Event of Default specified in Section 6.1 (d) and (e) with respect to the Company, the expenses are intended to constitute expenses of administration under the United States Bankruptcy Code (Title 11 of the United States Code) or any other similar law for the relief of debtors.  “Trustee” for the purposes of this Section 7.6 shall include any predecessor Trustee and the Trustee in each of its capacities hereunder and each agent, custodian and other Person employed to act hereunder; provided , however , that the negligence or willful misconduct of any Trustee hereunder shall not affect the rights of any other Trustee hereunder.

 

Section 7.7                                     Right of Trustee to Rely on Officer’s Certificate, etc.

 

Subject to Section 7.1 and Section 7.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by an Officer’s Certificate, Board Resolution or Opinion of Counsel delivered to the Trustee, and such

 

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certificate shall be full warrant to the Trustee for any action taken, suffered or omitted by it in good faith under the provisions of this Indenture.

 

Section 7.8                                     Qualification of Trustee; Conflicting Interests .

 

If the Trustee for the Securities of any series has or shall acquire any “conflicting interest,” as defined in the Trust Indenture Act, it shall, within 90 days after ascertaining that it has such conflicting interest, and if the default, as defined in the Trust Indenture Act, to which such conflicting interest relates has not been cured or waived or otherwise eliminated before the end of such 90-day period, the Trustee shall, either eliminate such conflicting interest or resign in the manner and with the effect specified in the Trust Indenture Act and this Indenture.  To the extent permitted by the Trust Indenture Act, the Trustee shall not be deemed to have a conflicting interest with respect to any other indenture of the Company or Securities of any series by virtue of being a trustee under this Indenture with respect to any particular series of Securities.

 

Section 7.9                                     Persons Eligible for Appointment as Trustee .

 

There shall at all times be a Trustee hereunder for each series of Securities, which shall be at all times either:

 

(a)                                  a corporation organized and doing business under the laws of the United States of America or of any State or territory or the District of Columbia, authorized under such laws to exercise corporate trust powers and subject to supervision or examination by Federal, State, territory or District of Columbia authority; or

 

(b)                                  a corporation or other Person organized and doing business under the laws of a foreign government, authorized under such laws to exercise corporate trust powers, and subject to supervision or examination by authority of such foreign government or a political subdivision thereof substantially equivalent to supervision or examination applicable to United States institutional trustees.

 

In the case of either clause (a) or clause (b) above having a combined capital and surplus of at least $50,000,000.  If such corporation publishes reports of condition at least annually, pursuant to law or to requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 7.9, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  If at any time the Trustee for the Securities of any series shall cease to be eligible in accordance with the provisions of this Section 7.9, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.  Neither the Company nor any Person directly or indirectly controlling, controlled by, or under common control with the Company shall serve as Trustee for the Securities of any series issued hereunder.

 

Section 7.10                              Resignation and Removal; Appointment of Successor Trustee .

 

(a)                                  The Trustee, or any trustee or trustees hereafter appointed, may at any time resign by giving at least 30 days written notice of resignation to the Company and by mailing notice thereof by first-class mail to Holders of the Securities at their last addresses as they shall appear on the Security Register.  Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee or trustees by written instrument in duplicate, executed by authority of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees.  If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning Trustee may petition at the expense

 

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of the Company any court of competent jurisdiction for the appointment of a successor trustee, or any Holder who has been a bona fide Holder of a Security or Securities for at least six months may, subject to the provisions of Section 6.12, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee.  Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.

 

(b)                                  In case at any time any of the following shall occur:

 

(i)                                      the Trustee shall fail to comply with the provisions of Section 7.8 hereof with respect to any series of Securities after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security or Securities for at least six months unless the Trustee’s duty to resign is stayed in accordance with the provisions of Section 31.0(b) of the Trust Indenture Act; or

 

(ii)                                   the Trustee shall cease to be eligible in accordance with the provisions of Section 7.9 and shall fail to resign after written request therefor by the Company or by any Holder; or the Trustee shall become incapable of acting with respect to any series of Securities, or shall be adjudged a bankrupt or insolvent; or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any case, the Company may remove the Trustee (after giving the Trustee 30 days written notice of such removal) and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 6.12, any Holder who has been a bona fide Holder of a Security or Securities for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee.  Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.

 

(c)                                   The Holders of a majority in aggregate principal amount of the Securities at the time Outstanding may at any time remove the Trustee and appoint a successor trustee by delivering to the Trustee so removed, to the successor trustee so appointed, to the Company the evidence provided for in Section 8.1 of the action in that regard taken by the Holders.

 

(d)                                  No resignation or removal of the Trustee and no appointment of a successor trustee pursuant to any of the provisions of this Section 7.10 shall become effective until acceptance of appointment by the successor trustee as provided in Section 7.11.

 

Section 7.11                              Acceptance of Appointment by Successor Trustee .

 

Any successor trustee appointed as provided in Section 7.10 shall execute, acknowledge and deliver to the Company and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee hereunder; but nevertheless, on the written request of the Company or of the successor trustee, upon payment of all amounts due to the Trustee under Section 7.6, the Trustee ceasing to act shall, subject to Section 12.5, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations.  Upon request of any successor trustee, the Company shall execute any and all instruments in

 

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writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers.  Any Trustee ceasing to act, shall, nevertheless, retain a prior lien upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 7.6.

 

No successor trustee shall accept appointment as provided in this Section 7.11 unless at the time of such acceptance such successor trustee shall be qualified under the provisions of Section 7.8 and eligible under the provisions of Section 7.9.

 

Upon acceptance of appointment by any successor trustee as provided in this Section 7.11, the Company shall mail notice thereof by first-class mail to the Holders of Securities at their last addresses as they shall appear on the Security Register, If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 7.10.  If the Company fails to mail such notice within 10 days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Company.

 

Section 7.12                              Merger, Conversion, Consolidation or Succession to Business of Trustee .

 

Any corporation in which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to substantially all of the corporate trust business of the Trustee, shall be the successor of the trustee hereunder, provided that such corporation shall be qualified under the provisions of Section 7.8 and eligible under the provisions of Section 7.9, without the execution or filing of any paper or any further act (including the giving of any notice to Holders) on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

 

In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Securities or in this Indenture provided for the certificate of authentication of the Trustee.

 

Section 7.13                              Preferential Collection of Claims Against the Company .

 

If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act, if such act shall then be applicable to this Indenture, regarding the collection of claims against the Company (or any such other obligor), excluding any creditor relationship listed in Trust Indenture Act Section 311(b).

 

Section 7.14                              Authenticating Agent .

 

The Trustee, with the consent of the Company, may appoint an authenticating agent (the “ Authenticating Agent ”) to act as its agent on its behalf and subject to its direction in connection with the authentication and delivery of Securities.  Securities authenticated by such Authenticating Agent shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by such Trustee.  Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or to the Trustee’s Certificate of Authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and

 

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a Certificate of Authentication executed on behalf of such Trustee by such Authenticating Agent.  Such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States of America or of any State or of the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by Federal, State or District of Columbia authority.

 

Any corporation into which any Authenticating Agent may be merged or converted, or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency business of any Authenticating Agent, shall continue to be the Authenticating Agent without the execution or tiling of any paper or any further act on the part of the Trustee or such Authenticating Agent.

 

Any Authenticating Agent may at any time, and if it shall cease to be eligible shall, resign by giving written notice of resignation to the Trustee and to the Company.  The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company.  Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 7.14, the Trustee shall upon Company Request appoint a successor Authenticating Agent, and the Company shall provide notice of such appointment to all Holders of Securities in the manner and to the extent provided in Section 13.4.  Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent herein.  The Company agrees to pay or to cause to be paid to the Authenticating Agent from time to time reasonable compensation for its services.  The Authenticating Agent shall have no responsibility or liability for any action taken by it as such in good faith at the direction of the Trustee.

 

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ARTICLE 8
CONCERNING THE HOLDERS OF SECURITIES

 

Section 8.1                                     Action by Holders .

 

Whenever in this Indenture it is provided that the Holders of a specified percentage in aggregate principal amount of the Securities of any series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action) the fact that at the time of taking any such action the Holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by Holders in Person or by agent or proxy appointed in writing, or (b) by the record of Holders voting in favor thereof at any meeting of such Holders duly called and held in accordance with the provisions of Article 9, or (c) by a combination of such instrument or instruments and any such record of such a meeting of Holders.  The Company may (but shall not be required to) set a record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture, which record date shall be the later of 10 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee pursuant to Section 5.1 of this Indenture prior to such solicitation.  If a record date is fixed, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to take such action by vote or consent or to revoke any vote or consent previously given, whether or not such Persons continue to be Holders after such record date.

 

Section 8.2                                     Proof of Execution of Instruments by Holders of Securities .

 

Subject to Section 7.1, Section 7.2 and Section 9.5, the execution of any instrument by a Holder of a Security or his agent or proxy may be proved in any reasonable manner that the Trustee reasonably deems sufficient, including, without limitation, in the following manner:

 

The fact and date of the execution by any such Person of any instrument may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds, that the Person executing such instrument acknowledged to him the execution thereof, or by an affidavit or written statement of a witness to such execution.  Where such execution is by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, as the case may be, or by any other Person acting in a representative capacity, such certificate, affidavit or written statement shall also constitute sufficient proof of his authority.

 

The ownership of Securities shall be proved by the Securities Register or by a certificate of the Securities Registrar.

 

The record of any Holders’ meeting shall be proved in the manner provided in Section 9.6.

 

Section 8.3                                     Holders to Be Treated as Owners .

 

The Company, the Trustee and any agent of the Company or the Trustee may deem and treat the Person in whose name any Security shall be registered upon the Security Register as the absolute owner of such Security (notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of principal of, premium (if any) and (subject to Section 3.6 and Section 3.9) interest (if any) on, such Security, and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.  All such payments so made to any Holder for the time being, shall be

 

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valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon such Security.

 

None of the Company, the Trustee or any agent of the Company or the Trustee shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interest of a Global Security, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interest.  Notwithstanding the foregoing, with respect to any Global Security, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by any Depository (or its nominee), as a Holder, with respect to such Global Security or impair, as between such Depository and owners of beneficial interests in such Global Security, the operation of customary practices governing the exercise of the right of such Depository (or its nominee) as holder of such Global Security.

 

Section 8.4                                     Right of Revocation of Action Taken .

 

At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.1, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action, any Holder of a Security, the number, letter or other distinguishing symbol of which is shown by the evidence to be included in the Securities the Holders of which have consented to such action, may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Security.  Except as aforesaid, any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Security or such other Security.  Any action taken by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the Holders of all the Securities affected by such action.

 

ARTICLE 9
HOLDERS’ MEETINGS

 

Section 9.1                                     Purposes of Meetings .

 

A meeting of Holders of Securities of any or all series may be called at any time and from time to time pursuant to the provisions of this Article for any of the following purposes:

 

(a)                                  (a)                                  to give any notice to the Company or to the Trustee for the Securities of such series, or to give any directions to the Trustee, or to consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by Holders pursuant to any of the provisions of Article 6;

 

(b)                                  to remove the Trustee and nominate a successor Trustee pursuant to the provisions of Article 7;

 

(c)                                   to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 10.2; or

 

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(d)                                  to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Securities of any one or more or all series, as the case may be, under any other provision of this Indenture or under applicable law,

 

Section 9.2                                     Call of Meetings by Trustee .

 

The Trustee may at any time call a meeting of Holders of Securities to take any action specified in Section 9.1, to be held at such time and at such place in the Borough of Manhattan, The City of New York, or such other Place of Payment, as the Trustee shall determine.  Notice of every meeting of the Holders of Securities, setting forth the time and the place of such meeting, and in general terms the action proposed to be taken at such meeting, shall be given to Holders of Securities of the particular series in the manner and to the extent provided in Section 13.4.  Such notice shall be given not less than 20 nor more than 90 days prior to the date fixed for the meeting.

 

Section 9.3                                     Call of Meetings by the Company or Holders .

 

In case at any time the Company pursuant to a resolution of its Board of Directors, or the Holders of at least 10% in aggregate principal amount of the Outstanding Securities of any or all series, as the case may be, shall have requested the Trustee to call a meeting of Holders of Securities of any or all series, as the case may be, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee for such series shall not have given the notice of such meeting within 20 days after receipt of such request, then the Company or such Holders may determine the time and the place in the Borough of Manhattan or other Place of Payment for such meeting and may call such meeting to take any action authorized in Section 9.1, by giving notice thereof as provided in Section 9.2.

 

Section 9.4                                     Qualifications for Voting .

 

To be entitled to vote at any meeting of Holders a Person shall be (a) a Holder of one or more outstanding Securities with respect to which such meeting is being held or (b) a Person appointed by an instrument in writing as proxy by such Holder.  The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.

 

Section 9.5                                     Regulations .

 

Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of the Securities in regard to proof of the holding of Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit.

 

The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 9.3, in which case the Company or the Holders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman.  A permanent chairman and a permanent secretary of the meeting shall be elected by majority vote of the meeting.

 

Subject to the definition of “ Outstanding ”, at any meeting each Holder of Securities with respect to which such meeting is being held or proxy therefor shall be entitled to one vote for each $1,000 principal amount (in the case of Original Issue Discount Securities, such principal amount to be

 

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determined as provided in the definition of “ Outstanding ”) of Securities held or represented by him; provided , however , that no vote shall be cast or counted at any meeting in respect of any such Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding.  The chairman of the meeting shall have no right to vote other than by virtue of Securities held by him or instruments in writing aforesaid duly designating him as the Person to vote on behalf of other Holders.  At any meeting of Holders, the presence of Persons holding or representing Securities with respect to which such meeting is being held in an aggregate principal amount sufficient to take action on the business for the transaction of which such meeting was called shall constitute a quorum, but, if less than a quorum is present, the Persons holding or representing a majority in aggregate principal amount of such Securities represented at the meeting may adjourn such meeting with the same effect, for all intents and purposes, as though a quorum had been present.  Any meeting of Holders of Securities with respect to which a meeting was duly called pursuant to the provisions of Section 9.2 or Section 9.3 may be adjourned from time to time by Persons holding or representing a majority in aggregate principal amount of such Securities represented at the meeting, present, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.

 

Section 9.6                                     Voting .

 

The vote upon any resolution submitted to any meeting of Holders of Securities with respect to which such meeting is being held shall be by written ballots on which shall be subscribed the signatures of such Holders or of their representatives by proxy and the serial number or numbers of the Securities held or represented by them.  The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting.  A record in duplicate of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 9.2.  The record shall show the serial numbers of the Securities voting in favor of or against any resolution.  The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee.

 

Any record so signed and verified shall be conclusive evidence of the matters therein stated.

 

Section 9.7                                     No Delay of Rights by Reason of Meeting .

 

Nothing in this Article contained shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Holders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders under any of the provisions of this Indenture or of the Securities of any series.

 

ARTICLE 10
SUPPLEMENTAL INDENTURES

 

Section 10.1                              Supplemental Indentures Without Consent of Holders .

 

Without the consent of any Holders of Securities, the Company, when authorized by a resolution of its Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as in

 

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force at the date of the execution thereof, if the Trust Indenture Act shall then be applicable to the Indenture) for one or more of the following purposes:

 

(a)                                  to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Securities any property or assets;

 

(b)                                  to evidence the succession of another Person to the Company, or successive successions, and the assumption by the successor Person of the covenants, agreements and obligations of the Company, as the case may be, under this Indenture and the Securities, in each case in compliance with this Indenture;

 

(c)                                   to add to the covenants of the Company such further covenants, restrictions, conditions or provisions as the Board of Directors shall consider to be for the protection of the Holders of any series of Securities or Tranche thereof, or to surrender any right or power herein conferred upon the Company, and to make the occurrence and continuance of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of such series to waive such an Event of Default;

 

(d)                                  to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture;

 

(e)                                   to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture as the Board of Directors may deem necessary or desirable and which shall not materially adversely affect the interests of the Holders of any Securities;

 

(f)                                    to establish the form or terms of Securities of any series as permitted by Section 3.1;

 

(g)                                   to provide for the issuance under this Indenture of Securities in coupon form (including Securities registrable as to principal only), to provide for interchangeability thereof with Securities in registered form of the same series and to make all appropriate changes for such purpose, or to permit or facilitate the issuance of Securities of any series in uncertificated form provided any such action shall not adversely affect the interests of the Holders of Outstanding Securities of any series in any material respect;

 

(h)                                  to add to, delete from or revise the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue, authentication and delivery of Securities, as herein set forth;

 

(i)                                      to add any additional Events of Default with respect to all or any series of Securities (as shall be specified in such supplemental indenture);

 

(j)                                     to add any guarantees with respect to all or any series of Securities (as shall be specified in such supplemental indenture);

 

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(k)                                  to supplement any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the defeasance and discharge of any series of Securities pursuant to Article 12, provided that any such action shall not adversely affect the interests of any Holder of an Outstanding Security of such series or any other Outstanding Security in any material respect;

 

(l)                                      to provide for the issuance under this Indenture of Securities denominated or payable in currency other than Dollars and to make all appropriate changes for such purpose;

 

(m)                              to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities, pursuant to Section 7.11, or to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee;

 

(n)                                  to modify any restrictions on and procedures for resales of Securities of any series that is not registered pursuant to the Securities Act to reflect any change in applicable law or regulation (or the  interpretation thereof) or in practices relating to the resale or transfer of restricted securities generally and to modify any legends placed on such Securities to reflect such restrictions and procedures;

 

(o)                                  to add to or change or eliminate any provision of this Indenture as shall be necessary or desirable to conform to permitted provisions of the Trust Indenture Act as at the time in effect, if the Trust Indenture Act shall then be applicable to the Indenture, provided that such action shall not materially adversely affect the interests of the Holders of the Securities of any series;

 

(p)                                  to add any co-obligors with respect to all or any Securities of any series (as shall be specified in such supplemental indenture);

 

(q)                                  to conform this Indenture or the Securities to the description thereof in the related offering memorandum or offering document; and

 

(r)                                     otherwise to amend or supplement any of the provisions of this Indenture or in any supplemental indenture; provided , however , that no such amendment or supplement shall adversely affect the interests of the Holders of any Securities then Outstanding.

 

The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations, which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

 

Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Securities at the time Outstanding, notwithstanding any of the provisions of Section 10.2.

 

Section 10.2                              Supplemental Indentures With Consent of Holders .

 

With the consent (evidenced as provided in Article 8) of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of all series affected by such supplemental indenture (voting as one class), the Company, when authorized by a resolution of its Board of Directors, and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as in force at the

 

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date of execution thereof, if the Trust Indenture Act shall then be applicable to the Indenture) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of each such series; provided that no such supplemental indenture shall (a) change the Stated Maturity of the principal of, premium (if any) or installment of interest on or any Additional Amounts on any Security of such series, or reduce the principal amount thereof (or modify the calculation of such principal amount) or rate of interest thereon (or modify the calculation of such rate), or any Additional Amounts with respect to, or any premium payable on redemption thereof or otherwise, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration with respect thereto pursuant to Section 6.1 or the amount thereof provable in bankruptcy pursuant to Section 6.2, or change the redemption provisions, or change the Place of Payment for or the coin or currency in which the principal, premium (if any) or interest on or any Additional Amounts on any Security of such series is payable, or adversely impair or affect the right of any Holder to institute suit for the enforcement of any payment on or after the Stated Maturity of the Securities of such series (or payment thereof or, if the Securities provide therefor, any right of redemption or repayment at the option of the Holder, without the consent of the Holder of each Security of such series so affected; or (b) reduce the aforesaid percentage of the principal amount of Securities Outstanding of such series, the consent of the Holders of which is required for any such supplemental indenture or any waiver of any obligations of the Company under this Indenture, without the consent of the Holders of each Security of such series so affected, or reduce the requirements for quorum on voting; or (c) modify any of the provisions in this Section, Section 6.10 or Section 4.11, except to increase any such percentage vote required or to provide that certain other provisions of this Indenture cannot be modified without the consent of the Holder of each Outstanding Security thereby.

 

Upon the request of the Company, accompanied by Board Resolutions authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Holders as aforesaid and other documents, if any, required by Section 8.1, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

 

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

 

A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.

 

Section 10.3                              Notice of Supplemental Indenture .

 

Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of Section 10.2, the Company shall mail a notice thereof by first-class mail to the Holders of Securities of each series affected thereby at their addresses as they shall appear on the Security Register, setting forth in general terms the substance of such supplemental indenture.  Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

 

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Section 10.4                              Effect of Supplemental Indenture .

 

Upon the execution of any supplemental indenture pursuant to the provisions of this Article, this Indenture shall be and be deemed to be modified and amended in accordance therewith, but only with regard to the Securities of each series affected by such supplemental indenture, and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Holders of any Securities of such series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes with regard to the Securities of such series.

 

Section 10.5                              Documents to Be Given to Trustee .

 

The Trustee, subject to the provisions of Section 7.1 and Section 7.2, shall be provided with, in addition to the documents required by Section 13.6, an Officer’s Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article complies with the applicable provisions of this Indenture and is authorized or permitted by this Indenture and that such supplemental indenture is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to customary exceptions.

 

Section 10.6                              Notation on Securities in Respect of Supplemental Indentures .

 

Securities of any series affected by any supplemental indenture which are authenticated and delivered after the execution of such supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Company and the Trustee as to any matter provided for in such supplemental indenture.  If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Company, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company and such Securities may be authenticated by the Trustee and delivered in exchange for the Securities of such series then Outstanding.

 

ARTICLE 11
CONSOLIDATION, AMALGAMATION, MERGER, SALE OR CONVEYANCE

 

Section 11.1                              Company May Consolidate, Etc., Only on Certain Terms .

 

As long as the Securities are Outstanding, the Company shall not consolidate or amalgamate with or merge into any other Person (whether or not affiliated with the Company), or convey, transfer, sell, assign, lease or otherwise dispose of all or substantially all of the Company’s properties and assets as an entirety, in one or more related transactions, to any other Person, and the Company shall not permit any other Person (whether or not affiliated with the Company) to consolidate with or amalgamate or merge into the Company or convey, transfer, sell, assign, lease or otherwise dispose of its properties and assets substantially as an entirety to the Company, in each ease in one or more related transactions, unless:

 

(i)                                      (a) the Company is the surviving entity or (b) the Person formed by the consolidation or into which the Company is merged or the Person to which the Company’s properties and assets are so conveyed, transferred, sold, assigned or leased, (1) is a corporation, partnership or limited liability company organized or existing under the laws of the United States, any state of the United States, the District of Columbia, Bermuda, Sweden, the United Kingdom, Singapore or any country that is, as of the date hereof, a member of the Organization of Economic Cooperation and Development or the European Union and (2) expressly assumes by supplemental indenture the due and punctual payment of the principal of, premium (if any) and

 

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interest on and any Additional Amounts with respect to all the Securities and the performance of every obligation in this Indenture and the Outstanding Securities on the part of the Company to be performed or observed; and

 

(ii)                                   immediately after giving effect to the transaction, no Event of Default, and no event that, after notice or lapse of time or both, would become an Event of Default, will have occurred and be continuing.

 

Section 11.2                              Opinion of Counsel .

 

Either the Company, as the case may be, or the successor Person shall deliver to the Trustee prior to the proposed transaction(s) covered by Section 11.1 an Officer’s Certificate and an Opinion of Counsel stating that the transaction(s) and such supplemental indenture are authorized and permitted by this Indenture and that all conditions precedent to the consummation of the transaction(s) under this Indenture have been met.

 

Section 11.3                              Successor Person Substituted .

 

Upon any consolidation or amalgamation by the Company with or merger of the Company into any other Person or any conveyance, transfer, sale, assignment, lease or other disposition of all or substantially all of the property and assets of the Company in accordance with Section 11.1, the successor Person formed by such consolidation or amalgamation or into which the Company is merged or the successor Person or affiliated group of Persons to which such conveyance, transfer, sale, assignment, lease or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person or Persons had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person or Persons shall be relieved of all obligations and covenants under this Indenture and the Securities and in the event of such conveyance or transfer, except in the case of a lease, any such predecessor Person may be dissolved and liquidated.

 

ARTICLE 12
SATISFACTION AND DISCHARGE OF INDENTURE,
UNCLAIMED MONEYS

 

Section 12.1                              Satisfaction and Discharge of Securities of Any Series .

 

The Company shall be deemed to have satisfied and discharged this Indenture with respect to the entire indebtedness on all the Outstanding Securities of any particular series, and the Trustee, at the expense of the Company and upon Company Request, shall execute proper instruments acknowledging such satisfaction and discharge, when

 

(a)                                  either:

 

(i)                                      all Outstanding Securities of such series theretofore authenticated and delivered (other than (1) any Securities of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.8 and (2) Outstanding Securities of such series for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 12.4) have been delivered to the Trustee for cancellation; or

 

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(ii)                                   all Outstanding Securities of such series described in sub-clause (i) above (other than the Securities referred to in the parenthetical phrase thereof) not theretofore delivered to the Trustee for cancellation:

 

(x)                                  have become due and payable;

 

(y)                                  will become due and payable at their Stated Maturity within one year; or

 

(z)                                   if redeemable at the option of the Company or pursuant to the operation of a sinking fund, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company; and

 

(A)                                the Company has irrevocably deposited or caused to be irrevocably deposited with the Trustee as trust funds in trust an amount (except as otherwise specified pursuant to Section 3.1 for the Securities of such series) sufficient to pay and discharge the entire indebtedness on all such Outstanding Securities of such series, not therefore delivered to the Trustee for cancellation, including the principal of, premium (if any) and interest on, and any Additional Amounts with respect to such Securities, to the date of such deposit (in the case of Securities which have become due and payable) or to the Maturity thereof, as the case may be;

 

(B)                                the Company has irrevocably deposited or caused to be irrevocably deposited with the Trustee as obligations in trust such amount of Government Obligations as will, in a written opinion of independent public accountants delivered to the Trustee, together with the predetermined and certain income to accrue thereon (without consideration of any reinvestment thereof), be sufficient to pay and discharge when due the entire indebtedness on all such Outstanding Securities of such series for unpaid principal (and premium, if any) and interest on, and any Additional Amounts to the date of such deposit (in the case of Securities which have become due and payable) or Maturity thereof, as the case may be; provided , however , that upon any redemption that requires the payment of a premium, the amount deposited shall be sufficient for purposes of this Section 12.1 to the extent that an amount is deposited with the Trustee equal to the premium calculated as of the date of the notice of redemption, with any deficit on the date of redemption (any such amount, the “ Applicable Premium Deficit ”) only required to be deposited with the Trustee on or prior to the date of redemption (it being understood that any defeasance shall be subject to the condition subsequent that such deficit is in fact paid).  Any Applicable Premium Deficit shall be set forth in an Officer’s Certificate delivered to the Trustee simultaneously with the deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be applied toward such redemption;

 

(b)                                  the Company has paid or caused to be paid all other sums payable with respect to the Outstanding Securities of such series including all fees due to the Trustee under Section 7.6;

 

(c)                                   (the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each certifying that all conditions precedent herein provided for relating to the due satisfaction

 

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and discharge of this Indenture with respect to the entire indebtedness on all Outstanding Securities of any such series have been complied with; and

 

(d)                                  if the Securities of such series are not to become due and payable at their Stated Maturity within one year of the date of such deposit or are not to be called for redemption within one year of the date of such deposit under arrangements satisfactory to the Trustee as of the date of such deposit, then the Company shall have given, not later than the date of such deposit, notice of such deposit to the Holders of the Securities of such series.

 

Upon the satisfaction of the conditions set forth in this Section 12.1 with respect to all the Outstanding Securities of any series, the terms and conditions with respect thereto set forth in this Indenture shall no longer be binding upon, or applicable to, the Company; provided , however , that the Company shall not be discharged from (a) any obligations under Section 7.6 and Section 7.10 and (b) any obligations under Section 3.6, Section 3.8, Section 3.9, Section 3.11, Section 4.2, Section 4.3, Section 4.9, Section 4.10, Section 5.1, and Section 12.3 and (c) any obligations under Section 4.4, with respect to the payment of any Additional Amounts, if any, (but only to the extent that the Additional Amounts payable with respect to any Outstanding Securities of such series exceed the amount deposited in respect of such Additional Amounts pursuant to Section 12.1(a)(ii)); and provided , further , that in the event a petition for relief under the Federal Bankruptcy Code or a successor statute is filed with respect to the Company within 91 days after the deposit, this Indenture with respect to the entire indebtedness on all Securities of such series shall not be discharged, and in such event the Trustee shall return such deposited funds or obligations as it is then holding to the Company upon Company Request.

 

Section 12.2                              Defeasance and Covenant Defeasance .

 

(a)                                  Unless pursuant to Section 3.1, either or both of (i) defeasance of the Securities of or within a series under clause (b) of this Section 12.2 shall not be applicable with respect to the Securities of such series or (ii) covenant defeasance of the Securities of or within a series under clause (c) of this Section 12.2 shall not be applicable with respect to the Securities of such series, then such provisions, together with the other provisions of this Section 12.2 (with such modifications thereto as may be specified pursuant to Section 3.1 with respect to any Securities), shall be applicable to such Securities and the Company may at its option by Board Resolutions, at any time, with respect to such Securities, elect to have Section 12.2(b) or Section 12.2(c) be applied to such Outstanding Securities upon compliance with the conditions set forth below in this Section 12.2.

 

(b)                                  Upon the Company’s exercise of the above option applicable to this Section 12.2(b) with respect to any Securities of or within a series, the Company shall be deemed to have been discharged from its respective obligations with respect to such Outstanding Securities on the date the conditions set forth in clause (d) of this Section 12.2 are satisfied (hereinafter, “defeasance”).  For this purpose, such defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by such Outstanding Securities which shall thereafter be deemed to be “Outstanding” only for the purposes of clause (c) of this Section 12.2 and the other Sections of this Indenture referred to in clauses (i) and (ii) below, and to have satisfied all of its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder:  (i) the rights of Holders of such Outstanding Securities, solely from the trust fund described in clause (d) of this Section 12.2 and as more fully set forth in such clause, to receive payments in respect of the principal of, premium (if any) and interest on, and Additional Amounts, if any, with respect to such Securities when such payments are due; (ii) the obligations of the Company and the Trustee with respect to such Securities under Section 3.6, Section 3.8, Section 3.9, Section 3.11, Section 4.2, Section 4.3, Section 4.9, Section 4.10, Section 5.1 and Section 12.3 and with

 

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respect to the payment of Additional Amounts, if any, on such Securities as contemplated by Section 4.4 (but only to the extent that the Additional Amounts payable with respect to such Securities exceed the amount deposited in respect of such Additional Amounts pursuant to Section 12.2(d)(i) below); (iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder including, without limitation, the compensation, reimbursement and indemnities provided in Section 7.6 herein; and (iv) this Section 12.2.  The Company may exercise its option under this Section 12.2(b) notwithstanding the prior exercise of its option under clause (c) of this Section 12.2 with respect to such Securities,

 

(c)                                   Upon the Company’s exercise of the option to have this Section 12.2(c) apply with respect to any Securities of or within a series, the Company shall, to the extent specified pursuant to Section 3.1, be released from its obligations under any covenant applicable to such Securities, and such covenants shall cease to be applicable to such Securities on and after the date the conditions set forth in clause (d) of this Section 12.2 are satisfied (hereinafter, “covenant defeasance”), and such Securities shall thereafter be deemed to be not “Outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with any such covenant or obligation, but shall continue to be deemed “Outstanding” for all other purposes hereunder.  For this purpose, such covenant defeasance means that, with respect to such Outstanding Securities, the Company may omit to comply with, and shall have no liability in respect of, any term, condition or limitation set forth in any such Section or such other covenant or obligation, whether directly or indirectly, by reason of any reference elsewhere herein to any such Section or such other covenant or obligation or by reason of reference in any such Section or such other covenant to any other provision herein or in any other document and such omission to comply shall not constitute a default or an Event of Default under  Section 6.1 but, except as specified above, the remainder of this Indenture and such Securities shall be unaffected thereby.

 

(d)                                  The following shall be the conditions to application of clause (b) or (c) of this Section 12.2 to any Outstanding Securities of or within a series:

 

(i)                                      The Company shall irrevocably have deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (1) an amount in Dollars or (2) Government Obligations applicable to such Securities which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment with respect to such Securities, money in an amount, or (3) a combination thereof, in any case, in an amount, sufficient, without consideration of any reinvestment of such principal and interest, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee to pay and discharge, (y) the principal of, premium (if any) and interest on, and any Additional Amounts with respect to such Securities (based upon applicable law as in effect on the date of such deposit), such Outstanding Securities at the Stated Maturity or Redemption Date of such principal or installment of principal or premium or interest and (z) any mandatory sinking fund payments or analogous payments applicable with respect to such Outstanding Securities on the days on which such payments are due and payable in accordance with the terms of this Indenture and of such Securities and, if applicable, shall have made irrevocable arrangements satisfactory to the Trustee for the redemption of any Securities to be redeemed at the option of the Company in connection with such deposit.

 

(ii)                                   No Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to such Securities shall have occurred and be continuing on the date of such deposit (after giving effect thereto) and, with respect to defeasance only, no

 

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event described in Section 6.1(d) or (e) at any time during the period ending on the 91st day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period).

 

(iii)                                Such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company is a party or by which it is bound.

 

(iv)                               In the case of an election under clause (b) of this Section 12.2, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from the Internal Revenue Service a letter ruling, or there has been published by the Internal Revenue Service a Revenue Ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of such Outstanding Securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred.

 

(v)                                  In the case of an election under clause (c) of this Section 12.2, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such Outstanding Securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred.

 

(vi)                               With respect to defeasance only, the Company shall have delivered to the Trustee an Officer’s Certificate as to solvency and the absence of any intent of preferring the Holders over any other creditors of the Company.

 

(vii)                            The Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each certifying that all conditions precedent to the defeasance or covenant defeasance under clause (b) or (c) of this Section 12.2 (as the case may be) have been complied with.

 

(viii)                         Notwithstanding any other provisions of this Section 12.2(d), such defeasance or covenant defeasance shall be effected in compliance with any additional or substitute terms, conditions or limitations which may be imposed on the Company in connection therewith pursuant to Section 3.1.

 

(e)                                   Unless otherwise specified in or pursuant to this Indenture, if, after a deposit referred to in Section 12.2(d)(i) has been made, the Holder of a Security in respect of which such deposit was made is entitled to, and does, elect pursuant to Section 3.1 or the terms of such Security to receive payment in a currency other than that in which the deposit pursuant to Section 12.2(d)(i) has been made in respect of such Security, the indebtedness represented by such Security shall be deemed to have been, and will be, fully discharged and satisfied through the payment of the principal of, premium (if any) and interest on, and Additional Amounts, if any, with respect to such Security as the same becomes due out of the proceeds yielded by converting (from time to time as specified below in the case of any such election) the amount or other property deposited in respect of such Security into the currency in which such Security becomes payable as a result of such election based on the applicable market exchange rate for such currency in effect on the second Business Day prior to each payment date.

 

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The Company shall pay and indemnify the Trustee (or other qualifying trustee, collectively for purposes of this Section 12.2(e) and Section 12.3, the “ Trustee ”) against any tax, fee or other charge, imposed on or assessed against the Government Obligations deposited pursuant to this Section 12.2 or the principal or interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of such Outstanding Securities.

 

Anything in this Section 12.2 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request, any money or Government Obligations (or other property and any proceeds therefrom) held by it as provided in clause (d) of this Section 12.2 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect a defeasance or covenant defeasance, as applicable, in accordance with this Section 12.2.

 

Section 12.3                              Application of Trust Money .

 

All money and obligations deposited with the Trustee pursuant to Section 12.1 or Section 12.2 shall be held irrevocably in trust.  Such money and obligations shall be applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal of, premium (if any) and interest on the Securities for the payment of which such money and obligations have been deposited with the Trustee.  If Securities of any series are to be redeemed prior to their Stated Maturity, whether pursuant to any optional redemption provisions or in accordance with any mandatory or optional sinking fund requirement, the Company shall give the required notice of redemption or shall make such arrangements as are reasonably satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company.

 

Section 12.4                              Repayment of Moneys Held by Paying Agent .

 

In connection with the satisfaction and discharge of this Indenture with respect to Securities of any series, all moneys with respect to such series then held by any Paying Agent (and not required for such satisfaction and discharge) shall, upon demand of the Company, be repaid to it or paid to the Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

 

Section 12.5                              Return of Unclaimed Moneys Held by Trustee and Paying Agent .

 

Any moneys deposited with or paid to the Trustee or any Paying Agent for the payment of the principal of, premium (if any) or interest on, Securities of any series and which shall not be applied but shall remain unclaimed by the Holders of Securities of such series for two years after the date upon which such payment shall have become due and payable, shall be repaid to the Company by the Trustee on demand; and the Holder of any of such Securities entitled to receive such payment shall thereafter look only to the Company for the payment thereof; provided , however , that the Company or the Trustee, before making any such repayment, shall at the expense of the Company cause to be published once a week for two successive weeks (in each case on any day of the week) in an Authorized Newspaper, or mail to each Holder, or both, a notice that said moneys have not been so applied and that after a date named therein any unclaimed balance of said moneys then remaining will be returned to the Company.

 

If the Trustee or Paying Agent is unable to apply any money in accordance with Section 12.3 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under this Indenture and the

 

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Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.1 or Section 12.2 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 12.3:  provided , however , that if the Company makes any payment of interest on or principal of, or premium (if any) on, or any Additional Amounts, with respect to any Security following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent.

 

ARTICLE 13
MISCELLANEOUS PROVISIONS

 

Section 13.1                              Incorporators, Shareholders, Officers and Directors of the Company Exempt from Individual Liability .

 

No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Security, or for any claim based thereon or otherwise in respect thereof, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such, or against any past, present or future shareholders, officer or director, as such, of the Company or of any successor, either directly or through the Company or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, shareholders, officers or directors, as such, of the Company, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any Security or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, shareholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any Security or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Security.

 

Section 13.2                              Provisions of Indenture for the Sole Benefit of Parties and Holders .

 

Nothing in this Indenture or in the Securities, expressed or implied, shall give or be construed to give to any Person, other than the parties hereto and their successors and the Holders of the Securities, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and the Holders of the Securities.

 

Section 13.3                              Successors and Assigns of the Company Bound by Indenture .

 

All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Company shall bind their respective successors and assigns, whether so expressed or not.

 

Section 13.4                              Notices to Holders; Waiver .

 

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed by first-class mail, postage prepaid, to such Holders as their names and addresses appear on the Securities Register within the time prescribed.  Where this Indenture provides for notice of any event to a Holder of a Global Security, such notice shall be sufficiently given if given to the Depositary for such Note (or its designee), pursuant to its

 

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Applicable Procedures, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice.

 

Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance on such waiver.  In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed to any particular Holder, shall affect the sufficiency of such notice with respect to other Holders, and any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given.  In the case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.  In case by reason of the suspension of publication of any Authorized Newspapers or by reason of any other cause it shall be impracticable to publish any notice to Holders otherwise required or permitted under this Indenture, then such notification as shall be given with the approval of the Trustee shall constitute sufficient notice to such Holders for every purpose hereunder.

 

The Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by unsecured e-mail, pdf, facsimile transmission or other similar unsecured electronic methods, provided, however, that the Trustee shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing.  If the Company elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling.  The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction.  The Company agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties.

 

Section 13.5                              Addresses for Notices .

 

Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Securities of any series on the Company may be given or served by registered mail, or overnight courier guaranteeing next day delivery, addressed (until another address is filed by the Company with the Trustee) as follows:  to the Company, at 140 Broadway, 32nd Floor, New York, New York 10005, (fax:  (212) 312-2512); Attention:  General Counsel, and a copy to Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY, 10019; Attention:  Gregory B. Astrachan and Matthew B. Stern.  Any notice, direction, request or demand by the Company or any Holders of Securities of any series to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if received at the Corporate Trust Office of such Trustee.

 

Section 13.6                              Officer’s Certificates and Opinions of Counsel; Statements to Be Contained Therein .

 

Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officer’s Certificate certifying that all conditions precedent (including any covenants compliance with which constitutes a

 

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condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including any covenants compliance with which constitutes a condition precedent) have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished.

 

Each certificate or opinion provided for in this Indenture (other than annual certificates provided pursuant to Section 4.12) and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the Person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.

 

Any certificate, statement or opinion of an Officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.  Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, information with respect to which is in the possession of the Company, as the case may be, upon the certificate, statement or opinion of or representations by an Officer or Officers of the Company unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous,

 

Any certificate, statement or opinion of an Officer of the Company or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Company, unless such Officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.

 

Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent.

 

Section 13.7                              Separability Clause .

 

In case any provision of this Indenture or of the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

Section 13.8                              Legal Holidays .

 

In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day in any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities, other than a provision in Securities of any series, or any Tranche thereof, or in the indenture supplemental hereto, Board Resolution of the Company or Officer’s Certificate of the Company that establishes the teens of the Securities of such series or Tranche, which

 

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specifically states that such provision shall apply in lieu of this Section) payment of principal of, premium (if any) and interest on, need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, to such Business Day.

 

Section 13.9                              Conflict of Any Provision of Indenture with Trust Indenture Act .

 

If this Indenture has been qualified under the Trust Indenture Act with respect to a particular series of Securities, if and to the extent that any provision of this Indenture limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such act to be a part of and govern this Indenture, the latter provision shall control.  If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the former provision shall control.

 

Section 13.10                       Governing Law .

 

This Indenture and each Security shall be deemed to be a contract governed by and construed in accordance with the laws of the State of New York without regard to conflicts of law principles thereof that would result in the application of the laws of another jurisdiction.

 

Section 13.11                       Judgment Currency .

 

The Company agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of, or premium or interest, if any, or Additional Amounts on the Securities of any series (the “ Required Currency ”) into a currency in which a judgment will be rendered (the “Judgment Currency”), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in the City of New York the requisite amount of the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which a final unappealable judgment is given and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with clause (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture.  For purposes of the foregoing, “New York Banking Day” means any day except a Saturday, Sunday or a legal holiday in The City of New York or a day on which banking institutions in The City of New York are authorized or obligated by law, regulation or executive order to be closed.

 

Section 13.12                       No Security Interest Created .

 

Nothing in this Indenture or in any Securities, express or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect in any jurisdiction where property of the Company or its respective Subsidiaries is or may be located.

 

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Section 13.13                       Submission to Jurisdiction .

 

The Company agrees that any legal suit, action or proceeding instituted against the Company, or both, as the case may be in relation to any matter arising under this Indenture or the Securities appertaining thereto may be brought in any United States Federal or New York State court sitting in the Borough of Manhattan, The City of New York, New York to the extent that such court has subject matter jurisdiction over the controversy, and, by execution and delivery of this Indenture, the Company hereby irrevocably submits to, generally and unconditionally, the personal jurisdiction of the aforesaid courts, acknowledges their competence and irrevocably agrees to be bound by any judgment rendered in such proceeding.  The Company also irrevocably and unconditionally waives for the benefit of the Trustee and the Holders of the Securities any objection to the venue of a proceeding in any such court and any immunity from legal process (whether through service or notice, attachment prior to judgment, attachment in the aid of execution, execution or otherwise) in respect of this Indenture.  The Company hereby irrevocably designates and appoints for the benefit of the Trustee and the Holders of the Securities for the term of this Indenture Sirius America Insurance Company, 140 Broadway, 32nd Floor, New York, New York 10005, (fax:  (212) 312-2512); Attention:  General Counsel, and a copy to Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY, 10019; Attention:  Gregory B. Astrachan and Matthew B. Stern as its agent to receive on its behalf service of all process, brought against it with respect to any such proceeding in any such court in The City of New York, such service being hereby acknowledged by the Company to be effective and binding service on it in every respect whether or not the Company shall then be doing or shall have at any time done business in New York.  The Company further agrees that such appointment of Sirius America shall be irrevocable and that Sirius America shall maintain an office in New York City so long as any of the Securities or the obligations of the Company hereunder remain outstanding or until the appointment of a successor by the Company and such successor’s acceptance of such appointment.  Upon such acceptance, the Company shall notify the Trustee in writing of the name and address of such successor.  The Company further agrees for the benefit of the Trustee and the Holders of the Securities to take any and all action, including the execution and filing of any and all such documents and instruments as may be necessary to continue the designation and appointment of such agent in full force and effect, so long as any of the Securities or the obligations of the Company hereunder shall be outstanding.  The Trustee shall not be obligated and shall have no responsibility with respect to any failure of the Company to take any such action.  Nothing herein shall affect the right to serve process in any other manner permitted by any law or limit the right of the Trustee or any Holder to institute proceedings against the Company or both in the courts of any other jurisdiction or jurisdictions.

 

Section 13.14                       Counterparts .

 

This Indenture may be executed in any number of counterparts, and on separate counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.  The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 13.15                       Effect of Headings .

 

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the interpretation hereof.

 

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Section 13.16                       U.S.A. Patriot Act .

 

The Company acknowledges that in accordance with Section 326 of the U.S.A. PATRIOT Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each Person or legal entity that establishes a relationship or opens an account with the Trustee.  The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. PATRIOT Act.

 

Section 13.17                       Waiver of Jury Trial .

 

EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.

 

Section 13.18                       FATCA .

 

The Company agrees (i) to provide the Trustee with such reasonable information as it has in its possession to enable the Trustee to determine whether any payments pursuant to the Indenture are subject to the withholding requirements described in Section 1471(b) of the US Internal Revenue Code of 1986 (the “ Code ”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code and any regulations, or agreements thereunder or official interpretations thereof (“ Applicable Law ”), and (ii) that the Trustee shall be entitled to make any withholding or deduction from payments under the Indenture to the extent necessary to comply with Applicable Law, for which the Trustee shall not have any liability.

 

ARTICLE 14
REDEMPTION OF SECURITIES

 

Section 14.1                              Applicability of Article .

 

The provisions of this Article shall be applicable to the Securities of any series which are redeemable before their Stated Maturity except as otherwise specified as contemplated by Section 3.1 for Securities of such series.

 

Section 14.2                              Notice of Redemption; Selection of Securities .

 

In case the Company shall desire to exercise the right to redeem all or, as the case may be, any part of the Securities of any series in accordance with their terms, it shall fix a Redemption Date and shall provide notice of such redemption at least 45 days prior to such Redemption Date to the Trustee (unless a shorter notice shall be satisfactory to the Trustee), and at least 30 days but no more than 60 days prior to such Redemption Date to the Holders of Securities of such series so to be redeemed as a whole or in part in the manner provided in Section 13.4, unless a different period is specified in the Securities to be redeemed.  At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense; provided , however , that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date (unless a shorter period shall be satisfactory to the Trustee), an Officer’s Certificate requesting that the Trustee give such notice together with the notice to be given setting forth the information to be stated therein as provided in this Section.  The notice provided in the manner herein specified shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.  In any case, failure to give such notice or any defect in the notice to the

 

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Holder of any Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security of such series.

 

Each such notice of redemption shall specify the Redemption Date, the Redemption Price (or manner of calculation if not then known), the CUSIP or other comparable number, the Place or Places of Payment, that the Securities of such series are being redeemed at the option of the Company pursuant to provisions contained in the terms of the Securities of such series or in a supplemental indenture establishing such series, if such be the case, together with a brief statement of the facts permitting such redemption, that payment will be made upon presentation and surrender of the applicable Securities at the Place or Places of Payment, that the Redemption Price together with any interest accrued and Additional Amounts to the Redemption Date will be paid as specified in said notice, and that on and after said Redemption Date any interest thereon or on the portions thereof to be redeemed will cease to accrue unless the Company defaults, and any information that is required to be included therein by the Depository.  If the Redemption Price is not known at the time such notice is to be given, the actual Redemption Price, calculated as described in the terms of the Securities, will be set forth in an Officer’s Certificate delivered to the Trustee no later than two Business Days prior to the Redemption Date.

 

If fewer than all the Securities of any series are to be redeemed the notice of redemption shall specify the numbers of the Securities of such series to be redeemed and the Trustee will select the Securities to be redeemed on a pro rata basis, by lot to the extent practicable or by such other method in accordance with the applicable procedures of the Depository.  In case any Security of any series is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the Redemption Date, upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued, or, in the case of Securities providing appropriate space for such notation, at the option of the Holders the Trustee, in lieu of delivering a new Security or Securities as aforesaid, may make a notation on such Security of the payment of the redeemed portion thereof

 

On or before noon Eastern Time on the Redemption Date with respect to the Securities of any series stated in the notice of redemption given as provided in this Section 14.2, the Company will deposit with the Trustee or with one or more Paying Agents an amount of money (except as otherwise specified as contemplated by Section 3.1 for the Securities of such series or if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 4.3) sufficient to redeem on such Redemption Date all the Securities or portions thereof so called for redemption at the applicable Redemption Price, together with accrued interest on and Additional Amounts with respect thereto, to such Redemption Date.

 

If fewer than all the Securities of any series, or any Tranche thereof, are to be redeemed, the Company shall give notice of redemption to the Trustee not less than 60 days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), as to the aggregate principal amount of Securities to be redeemed.

 

If the Trustee shall use “CUSIP” numbers in notices as a convenience to Holders, then any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.  The Company will promptly notify the Trustee in writing of any change in the “CUSIP” numbers.

 

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The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.

 

Section 14.3                              Payment of Securities Called for Redemption .

 

If notice of redemption has been given as above provided and the Company has deposited, on or before the Redemption Date, with the Trustee (and/or having irrevocably directed the Trustee to apply, from money held by it available to be used for the redemption of Securities) an amount in cash sufficient to redeem all of the Securities to be redeemed, the Securities or portions of Securities of the series specified in such notice shall become due and payable on the Redemption Date, and at the place or places stated in such notice at the applicable Redemption Price, together with any interest accrued to such Redemption Date, and on and after said Redemption Date any interest on the Securities or portion of Securities of any series so called for redemption shall cease to accrue.  On presentation and surrender of such Securities at a Place of Payment in such notice specified, such Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with any interest accrued and Additional Amounts to the Redemption Date, except that if such Redemption Date is an Interest Payment Date, interest shall be paid as provided in Section 3.9.

 

Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to or on the order of the Holder thereof, at the expense of the Company, a new Security or Securities of such series, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented.

 

If a Security in global form is so surrendered, the Company shall execute, and the Trustee shall authenticate and deliver to the Depository for such Security in global form as shall be specified in the Company Order with respect thereto to the Trustee, without service charge, a new Security in global form in a denomination equal to and in exchange for the unredeemed portion of the principal of the Security in global form so surrendered.

 

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

 

ARTICLE 15
SINKING FUNDS

 

Section 15.1                              Applicability of Article .

 

The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 3.1 for Securities of such series.

 

The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a “mandatory sinking fund payment”, and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an “optional sinking fund payment”.

 

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Section 15.2                              Satisfaction of Mandatory Sinking Fund Payment with Securities .

 

In lieu of making all or any part of any mandatory sinking fund payment with respect to any Securities of a series in cash, the Company may at its option, at any time but not less than 45 days prior to the date on which such sinking fund payment is due, deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired by the Company except Securities of such series which have been redeemed through the application of mandatory sinking fund payments pursuant to the terms of the Securities of such series, accompanied by a Company Order instructing the Trustee to credit such obligations and stating that the Securities of such series were originally issued by the Company by way of bona fide sale or other negotiation for value; provided that such Securities have not been previously so credited.  Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the mandatory sinking fund and the amount of such mandatory sinking fund payment shall be reduced accordingly.

 

Section 15.3                              Redemption of Securities for Sinking Fund .

 

Not less than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee a certificate signed by any Officer specifying the amount of the next ensuing sinking fund payment for such series pursuant to the terms of such series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of such series pursuant to Section 15.2 and whether the Company intends to exercise its rights to make a permitted optional sinking fund payment with respect to such series.  Such certificate shall be irrevocable and upon its delivery the Company shall be obligated to make the cash payment or payments therein referred to, if any, on or before the next succeeding sinking fund payment date.  In the case of the failure of the Company to deliver such certificate (or to deliver the Securities, if any, specified in such certificate within the time period specified in Section 15.2), unless otherwise agreed by the Trustee, the sinking fund payment due on the next succeeding sinking fund payment date for such series shall be paid entirely in cash and shall be sufficient to redeem the principal amount of the Securities of such series subject to a mandatory sinking fund payment without the right to deliver or credit Securities as provided in Section 15.2 and without the right to make any optional sinking fund payment, if any, with respect to such series.

 

Any sinking fund payment or payments (mandatory or optional) made in cash plus any unused balance of any preceding sinking fund payments made with respect to the Securities of any particular series shall be applied by the Trustee (or by the Company if the Company is acting as its own Paying Agent) on the sinking fund payment date on which such payment is made (or, if such payment is made before a sinking fund payment date, on the sinking fund payment date following the date of such payment) to the redemption of Securities of such series at the Redemption Price specified in such Securities with respect to the sinking fund together with accrued interest to the applicable Redemption Date, any sinking fund moneys not so applied or allocated by the Trustee (or by the Company if the Company is acting as its own Paying Agent) to the redemption of Securities shall be added to the next sinking fund payment received by the Trustee (or if the Company is acting as its own.  Paying Agent, segregated and held in trust as provided in Section 4.3) for such series and, together with such payment (or such amount so segregated) shall be applied in accordance with the provisions of this Section 15.3.  Any and all sinking fund moneys with respect to the Securities of any particular series held by the Trustee (or if the Company is acting as its own Paying Agent, segregated and held in trust as provided in Section 4.3) on the last sinking fund payment date with respect to Securities of such series and not held for the payment or redemption of particular Securities of such series shall be applied by the Trustee (or by the Company if the Company is acting as its own Paying Agent), together with other moneys, if necessary, to be deposited (or segregated) sufficient for the purpose, to the payment of the principal of the Securities of such series at Maturity.

 

70



 

The Trustee shall select or cause to be selected the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 14.2 and the Company shall cause notice of the redemption thereof to be given in the manner provided in Section 14.2 except that the notice of redemption shall also state that the Securities are being redeemed by operation of the sinking fund and whether the sinking fund payment is mandatory or optional, or both, as the case may be.  Such notice having been duly given, the redemption of the Securities shall be made upon the terms and in the manner stated in Section 14.3.

 

On or before each sinking fund payment date, the Company shall pay to the Trustee (or, if the Company is acting as its own Paying Agent, will segregate and hold in trust as provided in Section 4.3) in cash a sum equal to the principal and any interest accrued to the Redemption Date for Securities or portions thereof to be redeemed on such sinking fund payment date pursuant to this Section.

 

Neither the Trustee nor the Company shall redeem any Securities of a series with sinking fund moneys or mail any notice of redemption of Securities of such series by operation of the sinking fund for such series during the continuance of a default in payment of interest on any Securities of such series or of any Event of Default (other than an Event of Default occurring as a consequence of this paragraph) with respect to the Securities of such series, except that if the notice of redemption shall have been provided in accordance with the provisions hereof, the Trustee (or the Company if the Company is acting as its own Paying Agent) shall redeem such Securities if cash sufficient for that purpose shall be deposited with the Trustee (or segregated by the Company) for that purpose in accordance with the terms of this Article.  Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur and any moneys thereafter paid into such sinking fund shall, during the continuance of such default or Event of Default, be held as security for the payment of the Securities of such series; provided , however , that in case such Event of Default or default shall have been cured or waived as provided herein, such moneys shall thereafter be applied on the next sinking fund payment date for the Securities of such series on which such moneys may be applied pursuant to the provisions of this Section.

 

[The remainder of this page is intentionally left blank.]

 

71



 

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

 

 

 

SIRIUS INTERNATIONAL GROUP, LTD.,

 

as Issuer

 

 

 

 

 

 

 

By:

/s/ Kernan V. Oberting

 

 

Name: Kernan V. Oberting

 

 

Title: Chief Financial Officer

 

 

 

THE BANK OF NEW YORK MELLON,

 

as Trustee

 

 

 

 

 

 

 

By:

/s/ Laurence J. O’Brien

 

 

Name: Laurence J. O’Brien

 

 

Title: Vice President

 

[ Signature Page to Indenture ]

 


 

EXHIBIT A
FORM OF CERTIFICATE OF TRANSFER

 

Sirius International Group, Ltd
140 Broadway, 32nd Floor
New York, New York 10005

 

The Bank of New York Mellon,
as Trustee and Securities Registrar
101 Barclay Street
New York, New York 10286

 

Re:                              [ ]% Senior Securities due 20[ ]

 

Reference is hereby made to the Indenture, dated as of November 1, 2016 (as amended and supplemented from time to time, the “ Indenture ”), between Sirius International Group, Ltd. (the “ Company ”) as issuer, and The Bank of New York Mellon, as trustee (the “ Trustee ”).  Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

 

, (the “ Transferor ”) owns and proposes to transfer the Security[ies] or interest in such Security[ies] specified in Annex A hereto, in the principal amount of $      in such Security[ies] or interests (the “ Transfer ”), to       (the “ Transferee ”), as further specified in Annex A hereto.  In connection with the Transfer, the Transferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1.  o   Check if Transferee will take delivery of a beneficial interest in the Rule 144A Global Security pursuant to Rule 144A The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the “ Securities Act ”), and, accordingly, the Transferor hereby further certifies that the beneficial interest is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in compliance with any applicable securities laws of any state of the United States or any other jurisdiction.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Rule 144A Global Security and in the Indenture and the Securities Act.

 

2.  o   Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Security pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 of Regulation S and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, (iii) the transaction is not part of a plan or

 



 

scheme to evade the registration requirements of the Securities Act, (iv) if the transfer is made during the distribution compliance period specified in Rule 903 of Regulation S and the provisions of Rule 904(b)(1) or Rule 904(b)(2) of Regulation S are applicable thereto, the Transferor confirms that such transfer has been made in accordance with the applicable provisions of Rule 904(b)(I) or Rule 904(b)(2), as the case may be and (v) the Transferor is the beneficial owner of the Securities being Transferred.  Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Security and in the Indenture and the Securities Act.

 

3.  o   Check and complete if Transferee will take delivery of a beneficial interest pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Global Securities and pursuant to and in accordance with the Securities Act and any applicable securities laws of any state of the United States and any other jurisdiction, and accordingly the Transferor hereby further certifies that (check one):

 

(a)                                  o   such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;

 

or

 

(b)                                  o   such Transfer is being effected to the Company or a subsidiary thereof;

 

or

 

(c)                                   o   such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act.

 



 

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.  You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby

 

 

[Insert Name of Transferor]

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Dated:

 

 

 

 



 

ANNEX A TO CERTIFICATE OF TRANSFER

 

1.                                       The Transferor owns and proposes to transfer the following:

 

[CHECK ONE]

 

o a beneficial interest in the:

 

(i)                                      o   Rule 144A Global Security (CUSIP                              ), or

 

(ii)                                   o Regulation S Global Security (CUSIP                        ),

 

2.                                       After the Transfer the Transferee will hold:

 

[CHECK ONE]

 

o a beneficial interest in the:

 

(i)                                      o                                     Rule 144A Global Security (CUSIP                 ), or

 

(ii)                                   o                                     Regulation S Global Security (CUSIP                 ), or

 

(ii)                                   o                                     a Definitive Security;

 

in accordance with the terms of the Indenture

 




Exhibit 10.13

 

FIRST SUPPLEMENTAL INDENTURE

 

BY AND BETWEEN

 

SIRIUS INTERNATIONAL GROUP, LTD.,
as Issuer

 

AND

 

THE BANK OF NEW YORK MELLON,
as Trustee

 

DATED AS OF NOVEMBER 1, 2016

 

4.600% SENIOR NOTES DUE 2026

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS

1

 

 

 

Section 1.1

Definitions

1

 

 

 

ARTICLE II GENERAL TERMS AND CONDITIONS OF THE NOTES

3

 

 

 

Section 2.1

Title

3

 

 

 

Section 2.2

Principal Amount

3

 

 

 

Section 2.3

Principal Payment Date

3

 

 

 

Section 2.4

Interest and Interest Rates

3

 

 

 

Section 2.5

Form, Currency and Denominations

4

 

 

 

Section 2.6

Ranking

4

 

 

 

Section 2.7

Optional Redemption

4

 

 

 

Section 2.8

Redemption for Tax Reasons

5

 

 

 

Section 2.9

Conditions to Redemption

6

 

 

 

Section 2.10

Global and Certificated Securities

6

 

 

 

Section 2.11

Miscellaneous

6

 

 

 

ARTICLE III MISCELLANEOUS PROVISIONS

6

 

 

 

Section 3.1

Ratification and Incorporation of Indenture

6

 

 

 

Section 3.2

Counterparts

7

 

 

 

Section 3.3

Governing Law

7

 

 

 

Section 3.4

Headings

7

 

 

 

Section 3.5

Concerning the Trustee

7

 

Exhibit A:                                          Form of 4.600% Senior Note due 2026

 

i



 

FIRST SUPPLEMENTAL INDENTURE

 

This First Supplemental Indenture, dated as of November 1, 2016 (the “ Supplemental Indenture ”), to the Indenture, dated as of November 1, 2016 (the “ Indenture ”), by and between Sirius International Group, Ltd., a Bermuda exempted company (the “ Company ”) and The Bank of New York Mellon, a New York banking corporation, not in its individual capacity but solely as Trustee (together with its successors and assigns, in such capacity, the “ Trustee ”) is effective upon the execution and delivery hereof by the parties hereto.

 

RECITALS

 

WHEREAS, the Company has heretofore executed and delivered to the Trustee the Indenture providing for the issuance from time to time of the Company’s notes, debentures or other evidences of its unsecured indebtedness (the “ Securities ”), unlimited as to principal amount;

 

WHEREAS, Section 3.1 of the Indenture provides that, with respect to any series of Securities to be authenticated and delivered under the Indenture, the terms of such series of Securities shall be established by (i) a resolution of the Company’s Board of Directors and set forth in an Officer’s Certificate of the Company or (ii) one or more indentures supplemental to the Indenture;

 

WHEREAS, the Company desires to create, under the Indenture, a series of Securities to be known as its 4.600% Senior Notes due 2026 (the “ Notes ”), the form and substance of the Notes and the terms, provisions and conditions thereof to be set forth as provided in the Indenture and this Supplemental Indenture; and

 

WHEREAS, all conditions necessary to authorize the execution and delivery of this Supplemental Indenture and to make it a valid and binding obligation of the Company in accordance with its terms, and to make each of the Notes, when executed by the Company and authenticated and delivered by the Trustee, the valid and binding obligations of the Company, have been done or performed.

 

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

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1                                     Definitions .

 

Capitalized terms used herein without definition shall have the respective meanings assigned such terms in the Indenture.

 

“Comparable Treasury Issue” means the U.S.  Treasury security selected by the Premium Calculation Agent as having a maturity comparable to the term remaining from such Redemption Date to the Maturity Date (the “ Remaining Life ”) that would be utilized, at the time of selection

 



 

and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life.

 

“Comparable Treasury Price” means, with respect to such Redemption Date, (i) the average of five Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii), if the Premium Calculation Agent obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Premium Calculation Agent” means, an investment banking institution of national standing appointed by the Company.

 

“Reference Treasury Dealer” means (i) each of Citigroup Global Markets Inc., J.P.  Morgan Securities LLC and Wells Fargo Securities, LLC, and their respective successors; provided, however, that if any of the foregoing cease to be primary U.S.  Government securities dealers in the United States of America (a “ Primary Treasury Dealer ”), the Company will substitute therefor another Primary Treasury Dealer; (ii) a Primary Treasury Dealer selected by AMTD Asset Management Limited, or its successor; (iii) a Primary Treasury Dealer selected by The Hongkong and Shanghai Banking Corporation Limited, or its successor; and (iv) any two other Primary Treasury Dealer(s) selected by the Premium Calculation Agent after consultation with the Company.

 

“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Premium Calculation Agent, of the bid and ask prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Premium Calculation Agent by such Reference Treasury Dealer at 5:00 p.m.  (New York City time) on the third Business Day preceding such Redemption Date.

 

“Relevant Regulator” means the BMA (or any successor which carries on the role of regulator of financial services companies generally in Bermuda); and

 

“Relevant Rules” means the Insurance Act and any other legislation, rules or regulations of Bermuda or of the BMA from time to time (including, but not limited to, the Bermuda Insurance (Eligible Capital) Rules 2012, as amended) relating to the characteristics, features or criteria of own funds or capital resources and which are, at such time, applicable to the Company.

 

“Treasury Rate” means, with respect to any Redemption Date (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S.  Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the maturity date for the Notes, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month); or, (ii) if the release referred to

 

2



 

above (or any successor release) is not published during the immediately preceding week or does not contain the yields referred to above, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.  The Treasury Rate will be calculated on the third Business Day preceding such Redemption Date.

 

ARTICLE II

 

GENERAL TERMS AND CONDITIONS OF THE NOTES

 

There is hereby established a new series of Securities under the Indenture with the following terms:

 

Section 2.1                                     Title .

 

The title of the series is “4.600% Senior Notes due 2026”.

 

Section 2.2                                     Principal Amount .

 

There are to be issued by the Company, and authenticated and delivered by the Trustee on the date hereof, the Notes which shall initially be limited to the aggregate principal amount of $400,000,000, and such principal amount of Notes may be increased from time to time pursuant to Section 3.1 of the Indenture.  All Notes need not be issued on the same date and such series may be reopened at any time, without the consent of any Holder, for issuances of additional Notes, unlimited in principal amount, upon delivery by the Company to the Trustee of either a resolution of the Company’s Board of Directors and set forth in an Officer’s Certificate of the Company or an indenture supplemental to the Indenture, setting forth the original issuance date of such additional Notes; provided, however, that the additional Notes are fungible with the previously issued Notes for United States federal income tax purposes.  The terms of any such additional Notes will be identical (except as to denomination, the date from which interest shall accrue, the issue price and the first Interest Payment Date) to the terms of the Notes initially issued, authenticated and delivered on the date hereof Any such additional Notes will, together with the previously issued Notes, constitute a single series of Securities under the Indenture.

 

Section 2.3                                     Principal Payment Date .

 

The principal amounts of the Notes outstanding (together with any accrued and unpaid interest) shall be payable in a single installment on November 1, 2026, which date shall be the Stated Maturity of the Notes.

 

Section 2.4                                     Interest and Interest Rates .

 

The rate of interest on the each Note shall be 4.600% per annum, accruing from and including the original date of issuance, payable semi-annually in arrears on May 1 and November 1 of each year commencing May 1, 2017 (each such date, an “ Interest Payment Date ”) until the principal thereof shall have become due and payable, and until the principal thereof is paid or duly provided for.  The amount of interest payable on any Interest Payment Date shall be computed on

 

3



 

the basis of a 360-day year of twelve 30-day months.  The interest installment so payable in respect of any Note, and punctually paid or duly provided for, on any Interest Payment Date (including the Maturity Date) will, as provided in the Indenture, be paid to the person in whose name such Note is registered at the close of business on April 15 or October 15, as the case may be, next preceding each Interest Payment Date (each such date, a “ Regular Record Date ”).  Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest established by notice given by or on behalf of the Company to the Holders of Notes not less than 15 days prior to such Special Record Date, such Special Record Date to be not less than 10 days prior to the date for payment of such defaulted interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Notes shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Indenture.

 

Section 2.5                                     Form, Currency and Denominations .

 

The Notes will be issued in substantially the form set forth in Exhibit A hereto, which shall include the Private Placement Legend until the Notes are no longer outstanding.  The Notes shall be issued in fully registered form, without coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof.  The Depository with respect to the Notes shall be The Depository Trust Company, New York, New York.

 

Section 2.6                                     Ranking .

 

The Notes will represent the Company’s direct, unsecured obligations and will rank equally in right of payment with all the Company’s existing and future unsecured debt obligations that are not, by their terms, expressly subordinated in right of payment to the Notes.

 

Section 2.7                                     Optional Redemption .

 

(a)                                  At any time prior to August 1, 2026, the Notes will be redeemable at the option of the Company, in whole or in part, at any time or from time to time, at a “make-whole” Redemption Price equal to the greater of (i) 100% of the principal amount of the Notes being redeemed on the Redemption Date and (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Notes being redeemed (not including any portion of any payments of interest accrued to the Redemption Date) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below), as determined by the Premium Calculation Agent (as defined below) plus 45 basis points, plus in each case, accrued and unpaid interest on the Notes to the Redemption Date.  Any such redemption will be subject to Section 2.9 herein and Article 14 of the Indenture.

 

(b)                                  On and after August 1, 2026, the Notes will be redeemable, in whole or in part, at the option of the Company, at a Redemption Price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest up to but excluding the Redemption Date.  Any such redemption will be subject to Article 14 of the Indenture.

 

4



 

(c)                                   The election of the Company to redeem any Notes shall be set forth in an Officer’s Certificate which states that such election has been duly authorized by all requisite corporate action on the part of the Company delivered to the Trustee at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee).  Notice of any redemption will be mailed or sent in accordance with applicable DTC procedures at least 30 days but no more than 60 days before the Redemption Date to each Holder of the Notes to be redeemed.  If less than all of the Notes are to be redeemed, and the Notes are global securities, the Notes to be redeemed will be selected by DTC in accordance with its standard procedures.  If less than all of the Notes are to be redeemed and the Notes are not global securities, the Trustee will select the Notes to be redeemed in whole or in part on a pro rata basis, by lot or by any other method the Trustee, in its sole discretion, deems fair and appropriate, in accordance with methods generally used at the time of selection by indenture trustees in similar circumstances, subject to applicable DTC procedures with respect to the Global Securities.  Unless the Company defaults in payment of the Redemption Price, interest will cease to accrue on the Notes or portions thereof called for redemption on and after the Redemption Date.  On or before the Redemption Date, the Company shall deposit with the Paying Agent (or the Trustee) money sufficient to pay the Redemption Price of the Notes being redeemed.

 

(d)                                  The Notes will not have a sinking fund.

 

Section 2.8                                     Redemption for Tax Reasons .

 

Solely for purposes of the Notes and not for purposes of any other Securities, Section 4.5 of the Indenture is hereby amended and restated in its entirety as follows:

 

The Company will be entitled to redeem the Notes at its option, at any time, for cash, in whole but not in part, upon not less than 30 nor more than 60 days’ prior written notice, at 100% of the principal amount thereof, plus any accrued but unpaid interest to, but not including, the Redemption Date (subject to the right of holders of record on the relevant record date, whether or not a business day, to receive interest due on the relevant interest payment date), in the event that the Payor has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the Notes, any Additional Amounts as a result of (i) a change in or an amendment to the laws (including any regulations promulgated thereunder) of a Relevant Tax Jurisdiction, which change or amendment is announced after the date of the offering memorandum relating to the Notes or (ii) any change in or amendment to any official position regarding the application or interpretation of such laws or regulations, which change or amendment is announced after the date of the offering memorandum relating to the Notes, and, in each case, the Payor cannot avoid such obligation by taking reasonable measures available to it.

 

Before any notice of redemption of the Notes is delivered to the Holder as described above, the Company will deliver to the Trustee, at least 30 days before the date set for redemption, in each case, an Officers’ Certificate and an opinion of counsel stating that the Payor has or will become obligated to pay Additional Amounts as a result of a change in tax laws or regulations or the application or interpretation of such laws or regulations.

 

If the Company elects to redeem the Notes under this provision it will give written notice of such election to the Trustee.  If the Company elects to redeem the Notes under this provision it

 

5



 

will also mail a notice of redemption at least 30 days but no more than 60 days before the Redemption Date to each Holder of the Notes to be redeemed.  Unless the Company defaults in the payment of the Redemption Price, on and after the Redemption Date, interest will cease to accrue on the Notes or portions thereof called for redemption.  Any such redemption will be subject to Section 2.9 herein and Article 14 of the Indenture.

 

Section 2.9                                     Conditions to Redemption .

 

Any redemption of the Notes that is within five years following the date of this Supplemental Indenture is subject to the Company having obtained the consent or non-objection of the Relevant Regulator (if then required by the Relevant Rules).  A certificate signed by two Officers of the Company confirming such compliance delivered to the Trustee will be conclusive and sufficient evidence thereof and will be binding on the Holders of Notes.

 

Section 2.10                              Global and Certificated Securities .

 

(a)                                  The Notes will be issued in the form of one or more Rule 144A Global Securities or Regulation S Global Securities registered in the name of the Depository or its nominee.  Except under the circumstances set forth in Section 3.7 of the Indenture, the Global Securities will not be exchangeable for, and will not otherwise be issuable as, Notes in definitive form.  Owners of beneficial interests in such a Global Security will not be considered the registered owners or Holders of Notes for any purpose.

 

(b)                                  Except as set forth in the Indenture, no Global Security representing a Note shall be exchangeable, except for another Global Security of like denomination and tenor to be registered in the name of the Depository or its nominee or to a successor Depository or its nominee.  Payment of principal of, premium (if any) or interest on, and any Additional Amounts, in respect of any Note in global form shall be made to the registered Holder thereof .

 

Section 2.11                              Miscellaneous .

 

The Company is not obligated to redeem or purchase any Notes pursuant to any sinking fund or analogous provision.  The amount of payments of principal with respect to the Notes shall not be determined with reference to an index, formula or other method or methods.  No Notes are issuable upon the exercise of warrants.  Each of Section 12.2(b) of the Indenture relating to defeasance and Section 12.2(c) of the Indenture relating to covenant defeasance shall be applicable to the Notes.  The Trustee shall initially serve as Paying Agent, Securities Custodian, and Securities Registrar for the Notes.

 

ARTICLE III

 

MISCELLANEOUS PROVISIONS

 

Section 3.1                                     Ratification and Incorporation of Indenture .

 

As supplemented hereby, the Indenture is in all respects ratified and confirmed, and the Indenture as supplemented by this Supplemental Indenture shall be read, taken and construed as one and the same instrument.

 

6



 

Section 3.2                                     Counterparts .

 

This Supplemental Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.  The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 3.3                                     Governing Law .

 

This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York without regard to conflicts of law principles thereof that would result in the application of the laws of another jurisdiction.

 

Section 3.4                                     Headings .

 

The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

 

Section 3.5                                     Concerning the Trustee .

 

The Trustee shall not be responsible for and makes no representation as to the validity, sufficiency or adequacy of this Supplemental Indenture or the Notes, and it shall not be responsible for any statement of the Company in this Supplemental Indenture.  The Trustee makes no representations with respect to the effectiveness or adequacy of this Supplemental Indenture or the notes.  All of the provisions contained in the Indenture in respect of the rights, privileges, immunities, powers, and duties of the Trustee shall be applicable in respect of this Supplemental Indenture as fully and with like force and effect as though fully set forth in full herein.

 

[ The remainder of this page is intentionally left blank .]

 

7



 

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

 

 

SIRIUS INTERNATIONAL GROUP, LTD.,

 

as Issuer

 

 

 

 

 

 

 

By:

/s/ Kernan V. Oberting

 

 

Name: Kernan V. Oberting

 

 

Title: Chief Financial Officer

 

 

 

THE BANK OF NEW YORK MELLON,

 

as Trustee

 

 

 

 

 

 

 

By:

/s/ Laurence J. O’Brien

 

 

Name: Laurence J. O’Brien

 

 

Title: Vice President

 

[Signature Page to Supplemental Indenture]

 


 

EXHIBIT A

 

FORM OF 4.600% SENIOR NOTE DUE 2026

 

THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.  THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THE SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO A PERSON WHO IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) BUYING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) OUTSIDE THE UNITED STATES TO A NON-U.S.  PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING RULE 144 IF AVAILABLE (AND BASED UPON AN OPINION OF COUNSEL, IF THE ISSUER SO REQUESTS), (4) TO THE ISSUER OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.  NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY.

 

[UNLESS AND UNTIL THIS SECURITY IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.  OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.  OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR

 

A- 1



 

VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](1)

 


(1)  Insert in Global Security.

 

A- 2



 

SIRIUS INTERNATIONAL GROUP, LTD.

 

4.600% SENIOR NOTES DUE 2026

 

No. [ · ]

CUSIP No.:

[82968F AA2 (144A)]

 

 

G8201F AA7 (Regulation S)]

 

 

 

 

ISIN:

[US82968FAA21 (144A)]

 

 

[USG8201FAA78 (Regulation S)]

 

 

 

 

Common Code:

[151458378 (144A)]

 

 

[151458360 (Regulation S)]

 

 

 

Principal Amount:

$400,000,000

 

 

Original Issue Date:

November 1, 2016

 

 

Maturity Date:

November 1, 2026

 

 

Interest Rate:

4.600% per annum

 

 

Interest Payment Dates:

Semi-annually in arrears on May 1 and November 1, commencing May 1, 2017

 

 

Regular Record Dates:

April 15 or October 15, as the case may be, immediately preceding each Interest Payment Date

 

 

Authorized Denomination:

$2,000 or any integral multiple of $1,000 in excess thereof

 

SIRIUS INTERNATIONAL GROUP, LTD., a Bermuda exempted company (the “ Company ”, which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the Principal Amount shown above[, as revised by the Schedule of Exchanges of Interests in the Global Security attached hereto,](2) on the Maturity Date shown above, and to pay interest thereon from and including the Original Issue Date shown above, computed on the basis of a 360-day year consisting of twelve 30-day months semi-annually in arrears on May 1 and November 1 of each year (each an “ Interest Payment Date ”), beginning on May 1, 2017, at the rate shown above, until the principal hereof is paid or duly provided for.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date (including the Maturity Date) will, as provided in the Indenture, be paid to the Person in whose name this Note is registered at the close of business on the Regular Record Date as specified above next preceding each Interest Payment Date.  Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such

 


(2)  Insert in Global Security.

 

A- 3



 

defaulted interest established by notice given by or on behalf of the Company to the Holders of Notes not less than 15 days prior to such Special Record Date, such Special Record Date to be not less than 10 days prior to the date for payment of such defaulted interest, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Notes shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Indenture.

 

Payment of the principal of, premium, (if any) and interest due on the Maturity Date of this Note shall be made upon surrender of this Note at the Corporate Trust Office of the Trustee.  The principal of, premium (if any) and interest on this Note shall be paid in Dollars.  Payments of principal of, premium (if any) and interest on the Notes will be made, subject to such surrender where applicable, at the option of the Company, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer to an account maintained by the payee with a bank located in the United States.

 

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

 

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

 

A- 4



 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

CERTIFICATE OF AUTHENTICATION

 

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

 

 

THE BANK OF NEW YORK MELLON, as Trustee

 

 

 

 

 

 

 

By:

 

 

 

Authorized Signatory

 

A- 5



 

(Reverse Side of Note)

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

4.600% SENIOR NOTES DUE 2026

 

This security is one of a duly authorized issue of debt securities of the Company (hereinafter called the “ Securities ”), all issued or to be issued under and pursuant to an Indenture, dated as of November 1, 2016 (the “ Indenture ”), by and between the Company and The Bank of New York Mellon, as trustee (the “ Trustee ,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto relating to this security (including, without limitation, the First Supplemental Indenture, dated as of November 1, 2016, by and between the Company and the Trustee (the “ First Supplemental Indenture ”) reference is hereby made for a statement of the respective rights, limitation of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities issued thereunder and of the terms upon which said Securities are, and are to be, authenticated and delivered.  The Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest at different rates and may otherwise vary as provided in the Indenture or any indenture supplemental thereto.  This security is one of a series designated on the face as 4.600% Senior Notes due 2026 (the “ Notes ”), initially limited in aggregate principal amount to $[400,000,000], subject to increase as provided in Section 3.1 of the Indenture and Section 2.2 of the First Supplemental Indenture.  Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Indenture.

 

[While this Note is represented by one or more global notes registered in the name of DTC or its nominee, the Company will cause payments of principal of, premium (if any) and interest on this Note to be made to DTC or its nominee, as the case may be, by wire transfer to the extent, in the funds and in the manner required by agreements with, or regulations or procedures prescribed from time to time by, DTC or its nominee, and otherwise in accordance with such agreements, regulations and procedures.] [While this Note is represented by one or more certificated notes registered in the name of its holder, the Company will cause payments of principal of, premium (if any) and interest on this Note to be made to such holder at such address or to such account as such holder shall have instructed the Company.]

 

At any time prior to August 1, 2026, the Notes will be redeemable at the option of the Company, in whole or in part, at any time or from time to time, at a “make-whole” Redemption Price equal to the greater of (i) 100% of the principal amount of the Notes being redeemed on the date of such redemption (the “ Redemption Date ”) and (ii) the sum of the present values of the remaining scheduled payments of principal of and interest on the Notes being redeemed (not including any portion of any payments of interest accrued to the Redemption Date) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below), as determined by the Premium Calculation Agent (as defined below) plus 45 basis points, plus in each case, accrued and unpaid interest on the Notes to the Redemption Date.  Any such redemption will be subject to the conditions herein and Article 14 of the Indenture.

 

A- 6



 

On and after August 1, 2026, the Notes will be redeemable, in whole or in part, at the option of the Company, at a Redemption Price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest up to but excluding the Redemption Date.  Any such redemption will be subject to Article 14 of the Indenture.

 

Notice of any redemption will be mailed or sent in accordance with applicable DTC procedures at least 30 days but no more than 60 days before the Redemption Date to each Holder of the Notes to be redeemed.  If less than all of the Notes are to be redeemed, and the Notes are global securities, the Notes to be redeemed will be selected by DTC in accordance with its standard procedures.  If less than all the Notes are to be redeemed and the Notes are not global securities, the Trustee will select the Notes to be redeemed in whole or in part on a pro rata basis, by lot or by any other method the Trustee, in its sole discretion, deems fair and appropriate, in accordance with methods generally used at the time of selection by indenture trustees in similar circumstances, subject to applicable DTC procedures with respect to Global Securities.  Unless the Company defaults in payment of the Redemption Price, interest will cease to accrue on the Notes or portions thereof called for redemption on and after the Redemption Date.  On or before the Redemption Date, the Company shall deposit with the Paying Agent (or the Trustee) money sufficient to pay the Redemption Price of the Notes being redeemed.

 

“Comparable Treasury Issue” means the U.S.  Treasury security selected by the Premium Calculation Agent as having a maturity comparable to the term remaining from such Redemption Date to the Maturity Date (the “Remaining Life”) that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life.

 

“Comparable Treasury Price” means, with respect to such Redemption Date, (i) the average of five Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii), if the Premium Calculation Agent obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Premium Calculation Agent” means, an investment banking institution of national standing appointed by the Company.

 

“Reference Treasury Dealer” means (i) each of Citigroup Global Markets Inc., J.P.  Morgan Securities LLC and Wells Fargo Securities, LLC, and their respective successors; provided, however, that if any of the foregoing cease to be primary U.S.  Government securities dealers in the United States of America (a “Primary Treasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer; (ii) a Primary Treasury Dealer selected by AMTD Asset Management Limited, or its successor; (iii) a Primary Treasury Dealer selected by The Hongkong and Shanghai Banking Corporation Limited, or its successor; and (iv) any two other Primary Treasury Dealer(s) selected by the Premium Calculation Agent after consultation with the Company.

 

“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Premium Calculation Agent, of the bid and ask prices for the Comparable Treasury Issue (expressed in each case as a percentage

 

A- 7



 

of its principal amount) quoted in writing to the Premium Calculation Agent by such Reference Treasury Dealer at 5:00 p.m.  (New York City time) on the third Business Day preceding such Redemption Date.

 

“Treasury Rate” means, with respect to any Redemption Date (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S.  Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the maturity date for the Notes, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month); or, (ii) if the release referred to above (or any successor release) is not published during the immediately preceding week or does not contain the yields referred to above, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.  The Treasury Rate will be calculated on the third Business Day preceding such Redemption Date.

 

The Notes will not have a sinking fund.

 

The Company will be entitled to redeem the Notes at its option, at any time, for cash, in whole but not in part, upon not less than 30 nor more than 60 days’ prior written notice, at 100% of the principal amount thereof, plus any accrued but unpaid interest to, but not including, the Redemption Date (subject to the right of holders of record on the relevant record date, whether or not a business day, to receive interest due on the relevant interest payment date), in the event that the Payor has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the Notes, any Additional Amounts as a result of (i) a change in or an amendment to the laws (including any regulations promulgated thereunder) of a Relevant Tax Jurisdiction, which change or amendment is announced after the date of the offering memorandum relating to the Notes or (ii) any change in or amendment to any official position regarding the application or interpretation of such laws or regulations, which change or amendment is announced after the date of the offering memorandum relating to the Notes, and, in each case, the Payor cannot avoid such obligation by taking reasonable measures available to it.

 

Before any notice of redemption of the Notes is delivered to the Holder as described above, the Company will deliver to the Trustee, at least 30 days before the date set for redemption, in each case, an Officers’ Certificate and an opinion of counsel stating that the Payor has or will become obligated to pay Additional Amounts as a result of a change in tax laws or regulations or the application or interpretation of such laws or regulations.

 

If the Company elects to redeem the Notes for tax reasons, it will give written notice of such election to the Trustee.  If the Company elects to redeem the Notes under this provision it will also mail a notice of redemption at least 30 days but no more than 60 days before the Redemption Date to each Holder of the Notes to be redeemed.  Unless the Company defaults in

 

A- 8



 

the payment of the Redemption Price, on and after the Redemption Date, interest will cease to accrue on the Notes or portions thereof called for redemption.  Any such redemption for tax reasons will be subject to the conditions herein and Article 14 of the Indenture.

 

Any redemption of the Notes that is within five years following the issuance date of the Notes is subject to the Company having obtained the consent or non-objection of the Relevant Regulator (if then required by the Relevant Rules).  A certificate signed by two Officers of the Company confirming such compliance delivered to the Trustee will be conclusive and sufficient evidence thereof and will be binding on the Holders of Notes.  For purposes of these conditions:

 

“Relevant Regulator” means the BMA (or any successor which carries on the role of regulator of financial services companies generally in Bermuda); and

 

“Relevant Rules” means the Insurance Act and any other legislation, rules or regulations of Bermuda or of the BMA from time to time (including, but not limited to, the Bermuda Insurance (Eligible Capital) Rules 2012, as amended) relating to the characteristics, features or criteria of own funds or capital resources and which are, at such time, applicable to the Company.

 

The Indenture also contains provisions for defeasance at any time of the entire indebtedness of the Notes or of certain restrictive covenants with respect to the Notes, in each case upon compliance with certain conditions set forth in the Indenture.

 

If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Notes at the time Outstanding affected thereby.  The Indenture also contains provisions permitting the Holders of not less than a majority in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

 

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

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company

 

A- 9



 

and the Security Registrar and duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and of like tenor and for the same aggregate principal amount, will be issued to the designated transferee or transferees.  No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge or certain other expenses payable in connection therewith.

 

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

 

The Notes are issuable only in registered form without coupons in denominations of $2,000 and any integral multiple of $1,000 in excess thereof.  As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same upon surrender of the Note or Notes to be exchanged at the office or agency of the Company.

 

This Note shall be governed by, and construed in accordance with, the laws of the State of New York without regard to conflicts of law principles thereof that would result in the application of the laws of another jurisdiction.

 

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused “CUSIP” numbers to be printed on the Notes as a convenience to the Holders.  No representation is made as to the correctness or accuracy of such CUSIP numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed hereon.

 

A- 10



 

ABBREVIATIONS

 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM - as tenants in common

 

UNIF GIFT MIN ACT - Uniform Gifts to Minors Act

 

TEN ENT - as tenants by the entireties

 

JT TEN - as joint tenants with rights of survivorship and not as tenants in common

 

Additional abbreviations may also be used though not on the above list.

 

A- 11



 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY*

 

The initial outstanding principal amount of this Global Security is $[400,000,000].  The following exchanges of a part of this Global Security for an interest in another Global Security or for a certificated Security, or exchanges of a part of another Global Security or certificated Security for an interest in this Global Security have been made:

 

Date of Exchange

 

Amount of
decrease in
Principal
Amount of this
Global Security

 

Amount of
increase in
Principal
Amount of this
Global Security

 

Principal
Amount of this
Global Security
following such
decrease (or
increase)

 

Signature of
authorized
officer of
Trustee or
Securities
Custodian

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


* This schedule should be included only if the Security is issued in global form.

 

A- 12




Exhibit 10.14

 

Execution Version

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

as the Issuer

 

THE BANK OF NEW YORK MELLON

 

as Trustee, Registrar and Transfer Agent

 

and

 

THE BANK OF NEW YORK MELLON ACTING THROUGH ITS LONDON BRANCH

 

as Paying Agent and Calculation Agent

 


 

SUBORDINATED INDENTURE

 

Dated as of September 22, 2017

 


 

Floating Rate Callable Subordinated Notes Due 2047

 


 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

 

 

 

Section 1.01.

Definitions

1

Section 1.02.

Rules of Construction

14

 

 

 

ARTICLE 2

THE SUBORDINATED NOTES

 

Section 2.01.

Form and Dating

15

Section 2.02.

Payment of Interest

16

Section 2.03.

Arrears of Interest

18

Section 2.04.

Initial Amount of Subordinated Notes

18

Section 2.05.

No Sinking Fund

19

Section 2.06.

Execution and Authentication

19

Section 2.07.

Registrar, Transfer Agent and Paying Agent

20

Section 2.08.

Holder Lists

26

Section 2.09.

Transfer and Exchange

26

Section 2.10.

Replacement Subordinated Notes

30

Section 2.11.

Outstanding Subordinated Notes

30

Section 2.12.

Treasury Subordinated Notes

31

Section 2.13.

Temporary Subordinated Notes

31

Section 2.14.

Cancellation; Purchases

31

Section 2.15.

No Rights of Set-off

31

Section 2.16.

ISIN or Common Code Number

32

Section 2.17.

Agents

32

 

 

 

ARTICLE 3

REDEMPTION AND PREPAYMENT

 

 

 

Section 3.01.

Final Redemption

32

Section 3.02.

Optional Redemption

33

Section 3.03.

Specified Event Redemption of Subordinated Notes

34

Section 3.04.

Variation and Substitution of the Subordinated Notes

35

Section 3.05.

Conditions to Redemption

36

Section 3.06.

Election to Redeem; Notices to Trustee

37

Section 3.07.

Selection of Subordinated Notes to Be Redeemed

37

Section 3.08.

Notice of Redemption

38

Section 3.09.

Effect of Notice of Redemption

39

Section 3.10.

Deposit of Redemption

39

Section 3.11.

Notes Payable on Redemption Date

39

 



 

TABLE OF CONTENTS (cont’d)

 

 

 

Page

 

 

 

ARTICLE 4

COVENANTS

 

 

 

Section 4.01.

Payment of Subordinated Notes

40

Section 4.02.

Additional Amounts Applicable to the Subordinated Notes

40

Section 4.03.

Maintenance of Office or Agency

42

Section 4.04.

Money for Subordinated Notes; Payments to be Held in Trust

42

Section 4.05.

Deferral of Distributions in the Event of Regulatory Breach

43

Section 4.06.

Reports

44

Section 4.07.

Compliance Certificates

45

Section 4.08.

Taxes

45

Section 4.09.

Tax Treatment of Subordinated Notes

46

Section 4.10.

Stay, Extension and Usury Laws

46

Section 4.11.

Corporate Existence

46

 

 

 

ARTICLE 5

SUCCESSORS

 

 

 

Section 5.01.

Consolidation, Amalgamation, Merger or Sale of Assets

46

Section 5.02.

Successor Corporation Substituted

47

 

 

 

ARTICLE 6

DEFAULTS AND REMEDIES

 

 

 

Section 6.01.

No Events of Default

47

Section 6.02.

Acceleration

47

Section 6.03.

Notice of Defaults

48

Section 6.04.

Other Remedies

48

Section 6.05.

Control by Majority

49

Section 6.06.

Limitation on Suits

49

Section 6.07.

Rights of Holders to Receive Payment

50

Section 6.08.

Collection Suit by Trustee

50

Section 6.09.

Trustee May File Proofs of Claim

50

Section 6.10.

Undertaking for Costs

51

Section 6.11.

Restoration of Rights and Remedies

51

Section 6.12.

Rights and Remedies Cumulative

51

Section 6.13.

Delay or Omission Not Waiver

51

Section 6.14.

Priorities

51

 

 

 

ARTICLE 7

TRUSTEE

 

 

 

Section 7.01.

Duties of Trustee

52

Section 7.02.

Rights of Trustee

53

Section 7.03.

Individual Rights of Trustee

56

 

ii



 

TABLE OF CONTENTS (cont’d)

 

 

 

Page

 

 

 

Section 7.04.

Trustee Not Responsible for Recitals, Disposition of Subordinated Notes or Application of Proceeds Thereof

56

Section 7.05.

Compensation and Indemnity

56

Section 7.06.

Resignation and Removal of Trustee; Replacement of Trustee

57

Section 7.07.

Successor Trustee by Merger, etc.

58

Section 7.08.

Eligibility; Disqualification

58

Section 7.09.

Rights of Trustee and Agents to Receive Fees, Expenses and Indemnities

58

 

 

 

ARTICLE 8

MODIFICATION AND WAIVER

 

 

 

Section 8.01.

Amendment and Modification with Consent of Applicable Supervisor

59

Section 8.02.

With Consent of Holders

59

Section 8.03.

Without Consent of Holders

60

Section 8.04.

Revocation and Effect of Consents

61

Section 8.05.

Notation on or Exchange of Subordinated Notes

61

Section 8.06.

Trustee to Sign Amendments, etc.

61

 

 

 

ARTICLE 9

SATISFACTION AND DISCHARGE

 

 

 

Section 9.01.

Satisfaction and Discharge

62

Section 9.02.

Application of Trust Money

63

 

 

 

ARTICLE 10

SUBORDINATION

 

 

 

Section 10.01.

Agreement to Subordinate

63

Section 10.02.

Default on Senior Indebtedness

64

Section 10.03.

Liquidation; Dissolution; Bankruptcy

65

Section 10.04.

Subrogation

66

Section 10.05.

Trustee to Effectuate Subordination

67

Section 10.06.

Notice by the Issuer

67

Section 10.07.

Rights of the Trustee; Holders of Senior Indebtedness

68

Section 10.08.

Subordination May Not be Impaired

68

Section 10.09.

Article Applicable to Paying Agents

68

Section 10.10.

Defeasance of This Article

69

Section 10.11.

Subordination Language to be Included in Subordinated Notes

69

Section 10.12.

Trustee Not Fiduciary for Holders of Senior Indebtedness

69

 

 

 

ARTICLE 11

ADDITIONAL SUBORDINATION UNDER APPLICABLE SUPERVISORY REGULATIONS

 

 

 

Section 11.01.

Subordination of the Subordinated Notes

69

Section 11.02.

No Encumbrances

70

 

iii



 

TABLE OF CONTENTS (cont’d)

 

 

 

Page

 

 

 

ARTICLE 12

MISCELLANEOUS

 

 

 

Section 12.01.

Notices

70

Section 12.02.

Certificate and Opinion as to Conditions Precedent

72

Section 12.03.

Statements Required in Certificate or Opinion

72

Section 12.04.

Rules by Trustee and Agents

73

Section 12.05.

Agent for Service; Submission to Jurisdiction; Waiver of Immunities

73

Section 12.06.

No Personal Liability of Directors, Officers, Authorized Signatories, Employees and Shareholders

73

Section 12.07.

Governing Law

74

Section 12.08.

Waiver of Jury Trial

74

Section 12.09.

No Adverse Interpretation of Other Agreements

74

Section 12.10.

Successors

74

Section 12.11.

Severability

75

Section 12.12.

Counterpart Originals

75

Section 12.13.

Table of Contents, Headings, etc.

75

Section 12.14.

Indemnification of Judgment Currency

75

Section 12.15.

Prescription

75

Section 12.16.

No Security Interest Created

75

Section 12.17.

U.S.A. Patriot Act

76

Section 12.18.

FATCA

76

Section 12.19.

Prior Agreements

76

 

iv


 

SUBORDINATED INDENTURE dated as of September 22, 2017 (the “ Indenture ”) among Sirius International Group, Ltd., a company organized and existing under the laws of Bermuda, as issuer (the “ Issuer ”), having its principal executive office at 14 Wesley Street, Hamilton HM 11, Bermuda, The Bank of New York Mellon, as Trustee (the “ Trustee ”), Registrar and Transfer Agent and The Bank of New York Mellon acting through its London Branch, as Paying Agent and Calculation Agent.

 

W I T N E S E T H:

 

WHEREAS, for its lawful corporate purposes, the Issuer has duly authorized the issue of SEK 2,750,000,000 aggregate principal amount of Floating Rate Callable Subordinated Notes (the “ Subordinated Notes ”) and in order to provide the terms and conditions upon which the Subordinated Notes are to be authenticated, issued and delivered, the Issuer has duly authorized the execution and delivery of this Indenture;

 

WHEREAS, the form of the Subordinated Notes and the certificate of authentication to be borne by the Subordinated Notes are to be substantially in the forms hereinafter provided for; and

 

WHEREAS, all acts and things necessary to make the Subordinated Notes, when executed by the Issuer and authenticated and delivered by the Trustee or a duly authorized Authenticating Agent, the valid, binding and legal obligations of the Issuer, and to constitute a valid agreement according to its terms, have been done and performed, and the execution of this Indenture and the issue hereunder of the Subordinated Notes have in all respects been duly authorized.

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

That in order to declare the terms and conditions upon which the Subordinated Notes are, and are to be, authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Subordinated Notes by the Holders thereof, each party agrees for the benefit of the other parties and the Issuer and Trustee agree for the equal and proportionate benefit of the respective Holders from time to time of the Subordinated Notes (except as otherwise provided below), as follows:

 

ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01.  Definitions.

 

Additional Amounts ” has the meaning specified under Section 4.02.

 

Additional Amounts Event ” means, with respect to the Subordinated Notes, if an opinion of a recognized independent tax counsel has been delivered to the Trustee stating that the Issuer has or will become obligated to pay Additional Amounts on the Subordinated Notes as a result of any change in or amendment to the laws (or any rules or regulations thereunder) of any Taxing Jurisdiction, or as a result of any change in or amendment to an official interpretation or application of any such laws, rules or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decisions or regulatory determination), which change or amendment becomes

 



 

effective on or after the Issue Date, and that obligation cannot be avoided by the Issuer taking such reasonable measures it (acting in good faith) deems appropriate.

 

Additional Notes ” means additional Subordinated Notes (other than the Initial Notes) issued from time to time under this Indenture in accordance with Section 2.04 and Section 2.06.

 

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

 

Agent ” means any Registrar, co-registrar, Transfer Agent, Authenticating Agent, Paying Agent, additional Paying Agent or Calculation Agent.

 

Applicable Procedures ” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of Euroclear and Clearstream that apply to such transfer or exchange.

 

Applicable STIBOR Rate ” means the interest rate determined as follows:

 

(i)                                      On the Interest Determination Date, the Calculation Agent will determine the Applicable STIBOR Rate which shall be the rate for deposits in Swedish krona having a maturity of three months commencing on the Interest Determination Date that appears on the Reuters Screen STIBOR Page as of 11:00 a.m., Stockholm time, on such Interest Determination Date.

 

Reuters Screen STIBOR Page ” means the display designated under the heading “FIXINGS” on the “SIDE” page on Reuters (or such other page of Reuters as may replace such page or of equivalent service or any successor service for the purpose of displaying Stockholm interbank offered rates for krona-denominated deposits of major banks). If the Applicable STIBOR on such Interest Determination Date does not appear on the Reuters Screen STIBOR Page, the Applicable STIBOR Rate will be determined as set forth in (ii) below.

 

(ii)                                   With respect to an Interest Determination Date for which the Applicable STIBOR Rate does not appear on the Reuters Screen STIBOR Page as set forth in (i) above, the Applicable STIBOR Rate will be determined on the basis of the rates at which deposits in Swedish krona are offered by four major banks in the Stockholm interbank market selected by the Issuer on the advice of an investment bank of international repute (the “ Reference Banks ”) at approximately 11:00 a.m., Stockholm time, on such Interest Determination Date to prime banks in the Stockholm interbank market having a maturity of three months, and in a principal amount equal to an amount that is representative for a single transaction in such market at such time. The Issuer will request the principal Stockholm office of each of such Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the Applicable STIBOR Rate on such Interest Determination Date will be the arithmetic mean (rounded upwards) of such quotations. If

 

2



 

fewer than two quotations are provided, the Applicable STIBOR on such Interest Determination Date will be determined as at the preceding Interest Determination Date (save in respect of the first Interest Period following the Issue Date, in which case the Interest Rate shall be equal to 3.582%).

 

Applicable Supervisor ” means the BMA or, should the BMA no longer have primary supervisory authority with respect to prudential matters in relation to the Regulatory Group, the regulatory authority that has such primary supervisory authority.

 

Applicable Supervisory Regulations ” means any of the Bermuda Group Rules, Solvency II or such other insurance supervisory laws, rules and regulations relating to group supervision or the supervision of single insurance entities, as in each case are then being applied to the Regulatory Group by the Applicable Supervisor, and which, for the avoidance of doubt, shall initially mean the Bermuda Group Rules until such time when the BMA ceases to be the Applicable Supervisor.

 

Arrears of Interest ” has the meaning specified under Section 2.03(a).

 

Assets ” means the Issuer’s total assets as of the date of the latest published audited financial statements of the Issuer as would appear on an unconsolidated balance sheet of the Issuer prepared in accordance with GAAP (as defined in Section 4.06(b)) (including, but for the avoidance of doubt, shares or other investments in subsidiaries howsoever termed under GAAP), but adjusted for subsequent events in such manner as the person or persons giving the Officer’s Certificate as to the Solvency of the Issuer contemplated by the definition of “ Insolvency Event ” or, if the Issuer is in a winding-up, its liquidator may determine.

 

Authorized Signatory ” means, with respect to any Person, any person that the board of directors of such Person shall designate for purposes of fulfilling the role of officer under this Indenture.

 

Bankruptcy Law ” means Title 11, United States Bankruptcy Code of 1978, as now and hereafter in effect, or any successor statute, or the laws of any other jurisdiction or any political subdivision thereof relating to bankruptcy, insolvency, receivership, winding up, liquidation, reorganization or relief of debtors, or any similar foreign law (including, without limitation the United Kingdom) relating to bankruptcy, insolvency, receivership, winding up, liquidation, reorganization or relief of debtors or any amendments to, succession to or change in any such law.

 

Bermuda Group Rules ” means the Bermuda Group Solvency Standards, together with the Bermuda Group Supervision Rules, as those rules and regulations may be amended or replaced from time to time.

 

Bermuda Group Solvency Standards ” means the Bermuda Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Rules 2011, as those rules and regulations may be amended or replaced from time to time.

 

Bermuda Group Supervision Rules ” means the Bermuda Insurance (Group Supervision) Rules 2011, as those rules and regulations may be amended or replaced from time to time.

 

3



 

Blockage Period ” has the meaning specified under Section 10.02.

 

BMA ” means the Bermuda Monetary Authority (or any successor regulatory authority).

 

Board of Directors ” when used with reference to the Issuer means either the board of directors of the Issuer or any duly authorized committee of such board duly authorized to act hereunder.

 

Board Resolution ” means a copy of a resolution, certified by the secretary or an assistant secretary of the Issuer to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, delivered to the Trustee.

 

Book-Entry Interest ” means a beneficial interest in a Global Note held by or through a Participant.

 

Business Day ” means each Monday, Tuesday, Wednesday, Thursday or Friday (i) that is not a day on which banking institutions in New York, Stockholm or London are authorized or obligated by law, regulation or executive order to close and (ii) on which the Trans-European Automated Realtime Gross Settlement Express Transfer system, or the TARGET2 system, or any successor thereto, operates.

 

Calculation Agent ” means The Bank of New York Mellon acting through its London Branch.

 

Capital Contribution Securities ” means any subordinated and undated debt instruments of the Issuer which are recognized as “Tier 1 Capital” of the Issuer or the Regulatory Group (whether on a solo, group or consolidated basis) by the Applicable Supervisor under the Applicable Supervisory Rules (or, if the Applicable Supervisory Rules are amended so as to no longer refer to Tier 1 Capital in this respect, the nearest corresponding concept).

 

Clearstream ” means Clearstream Banking, société anonyme (or any successor securities clearing agency).

 

Code ” shall mean the US internal Revenue Code of 1986, as amended.

 

Company Request ” or “ Company Order ” means a written request or order signed in the name of the Issuer by any two Officers and delivered to the Trustee.

 

Compulsory Interest Payment Date ” means each Interest Payment Date other than during a Mandatory Deferral Period during the six months immediately prior to which:

 

(i)                                      a declaration or payment of any distribution or dividend or other payment (including payment in relation to redemption or repurchase) on or in respect of any Junior Obligations or Parity Obligations has been made by the Issuer or any other Person; or

 

(ii)                                   the Issuer, directly or indirectly, redeemed, repurchased or acquired any Junior Obligations or Parity Obligations (with the exception of any repurchases in

 

4



 

connection with stock options or ownership programs for management or employees that are made in the normal course of business),

 

provided that, it shall not be a Compulsory Interest Payment Date solely by virtue of any payment on any Parity Obligations the terms of which do not allow the issuer of the relevant securities to defer, pass on or eliminate the relevant payment.

 

Conditions to Redemption ” has the meaning specified under Section 3.05.

 

continuing ” means, with respect to an Issuer Winding-Up Event, that the Issuer Winding-Up Order has not been rescinded.

 

Default Notice ” has the meaning specified under Section 10.02.

 

Definitive Registered Note ” means a certificated Subordinated Note registered in the name of the Holder thereof and issued in accordance with Section 2.01(d), substantially in the form of Exhibit A hereto except that such Subordinated Note shall not bear the Global Note Legend and shall not have the “Schedule of Increases and Decreases in Global Note” attached thereto.

 

Depositary ” has the meaning specified under Section 2.01(c).

 

ECR ” means the enhanced capital and surplus requirement applicable to the Regulatory Group and as defined in the Insurance Act (or any successor or equivalent solvency capital requirement applicable to the Regulatory Group under the Bermuda Group Rules).

 

Euroclear ” shall mean Euroclear Bank S.A./N.V. (or any successor securities clearing agency), as operator of the Euroclear system.

 

FATCA Withholding Tax ” shall mean any withholding or deduction pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any regulations or agreements thereunder or official interpretations thereof) or any intergovernmental agreement between the United States and another jurisdiction facilitating the implementation thereof (or any law implementing such an intergovernmental agreement).

 

Final Maturity Date ” with respect to the Subordinated Notes means:

 

(i)                                      if, on the applicable Scheduled Maturity Date, the applicable Conditions to Redemption are satisfied and would continue to be satisfied if such final redemption payment were made or no such Conditions to Redemption apply, the applicable Scheduled Maturity Date; or

 

(ii)                                   otherwise, following the applicable Scheduled Maturity Date, on the earlier of (a) the date falling 10 Business Days after the applicable Conditions to Redemption are satisfied and would continue to be satisfied if the final redemption payment were made (so long as such conditions continue to be so satisfied on such 10th Business Day) and (b) any Issuer Winding-Up Order.

 

5



 

GAAP ” has the meaning specified under Section 4.06(b).

 

Global Note ” means the global note certificate which will represent the Subordinated Notes.

 

Global Note Legend ” means the legend set forth in Section 2.09(f), which is required to be placed on all Global Notes issued under this Indenture.

 

guarantee ” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise).

 

Holder ” means a Person in whose name a Subordinated Note is registered.

 

IFRS ” has the meaning specified under Section 4.06(b).

 

IFRS Election ” has the meaning specified under Section 4.06(b).

 

Indirect Participant ” means a Person who holds a Book-Entry Interest in a Global Note through a Participant.

 

Initial Notes ” means the SEK 2,750,000,000 aggregate principal amount of Subordinated Notes issued under this Indenture on the Issue Date.

 

Insolvency Event ” means, with respect to the Subordinated Notes, if, as of the Relevant Date, the Issuer, as applicable, is not, or after making an applicable payment on the Subordinated Notes would not be, Solvent. For this purpose, the Issuer will be “ Solvent ” if (i) it is able to pay its debts to all its creditors (other than those whose claims rank, or are expressed to rank, junior to, the claims of the Holders of the Subordinated Notes) as they fall due and (ii) its Assets exceed its Liabilities (or exceed its Liabilities by any minimum margin or percentage in respect of solvency required under Applicable Supervisory Regulations). An Officer’s Certificate relating to the Subordinated Notes as to the Solvency of the Issuer shall, in the absence of manifest error, be treated and accepted by the Trustee, the Holders of the Subordinated Notes and all other interested parties as correct and sufficient evidence thereof, shall be final and binding on such parties, and the Trustee shall be entitled to rely on such Officer’s Certificate with respect to the Subordinated Notes without any liability to any Person.

 

Insolvent Insurer Winding-Up ” means, if the Applicable Supervisory Regulations are Solvency II: the winding-up of any regulated insurance or reinsurance company in the Regulatory Group; or the appointment of an administrator of any regulated insurance or reinsurance company in the Regulatory Group, in each case where the Issuer has determined, acting reasonably, that all Policyholder Claims of the policyholders of that regulated insurance or reinsurance company may or will not be met.

 

6



 

Interest Determination Date ” means, with respect to any Interest Period, the second Business Day prior to the relevant Interest Period.

 

Interest Payment Date ” means March 22, June 22, September 22 and December 22 of each year from December 22, 2017, to (and including) the Final Maturity Date, provided that if any Interest Payment Date would otherwise fall on a day that is not a Business Day, it shall be postponed to the next succeeding Business Day unless the next succeeding Business Day is in the next succeeding calendar month, in which case such Interest Payment Date shall be the immediately preceding Business Day.

 

Interest Payment Record Date ” means with respect to any Interest Payment Date, the date that is 15 days prior to such Interest Payment Date.

 

Interest Period ” means the period from (and including) the Issue Date to (but excluding) the first Interest Payment Date and each period thereafter from (and including) each Interest Payment Date to (but excluding) the next following Interest Payment Date.

 

Interest Rate ” means the sum of (i) the Applicable STIBOR Rate for the relevant Interest Period, plus (ii) the applicable Margin.

 

Irish Stock Exchange ” means Irish Stock Exchange plc.

 

Issue Date ” means September 22, 2017.

 

Issuer Winding-Up Event ” with respect to the Subordinated Notes will occur only upon the occurrence of an Issuer Winding-Up Order.

 

Issuer Winding-Up Order ” will occur if:

 

(i)                                      at any time an order is made, or an effective resolution is passed, for the winding-up of the Issuer (except, in any such case, a solvent winding-up solely for the purpose of a reconstruction, merger or amalgamation or the substitution in place of the Issuer of a successor in business of the Issuer, the terms of which reconstruction, merger amalgamation or substitution (A) have previously been approved in writing by the Trustee or by Holders of a majority in aggregate principal amount of the outstanding Subordinated Notes and (B) do not provide that the Subordinated Notes or any amount in respect thereof shall thereby become payable); or

 

(ii)                                   an administrator of the Issuer is appointed and such administrator gives notice that it intends to declare and distribute a dividend.

 

Judgment Currency ” has the meaning specified under Section 12.14.

 

Junior Obligations ” means:

 

(i)                                      all classes of share capital, preference share capital and Capital Contribution Securities of the Issuer; and

 

7



 

(ii)                                   subordinated obligations of the Issuer ranking or expressed to rank junior to the Subordinated Notes.

 

Liabilities ” means the Issuer’s total liabilities as of the date of the latest published audited financial statements of the Issuer as would appear on an unconsolidated balance sheet of the Issuer prepared in accordance with GAAP (as defined in Section 4.06(b), but adjusted for subsequent events in such manner as the person or persons giving the Officer’s Certificate as to the Solvency of the Issuer contemplated by the definition of “ Insolvency Event ” or, if the Issuer is in a winding-up, its liquidator may determine.

 

Lien ” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

 

Main Securities Market ” means the main securities market of the Irish Stock Exchange.

 

Mandatory Deferral Event ” shall occur upon the occurrence of a Solvency Capital Event or an Insolvency Event, or any other event the occurrence of which would require the Issuer to defer payment of interest on the Subordinated Notes under Applicable Supervisory Regulations on the basis that the Subordinated Notes are intended to qualify as Tier 2 Capital (including, for the avoidance of doubt, if the Applicable Supervisory Regulations are Solvency II, the Issuer or the Regulatory Group, as applicable, not meeting the Solvency II Minimum Capital Requirement) unless otherwise permitted by the Applicable Supervisor. (For the avoidance of doubt, it shall not be a Mandatory Deferral Event if, in view of other facts and circumstances then subsisting, the payment of interest need not be deferred under Applicable Supervisory Regulations in order that the Subordinated Notes qualify as Tier 2 Capital, including, if the Applicable Supervisory Regulations are Solvency II, in circumstances where: (i) the Applicable Supervisor has exceptionally waived the deferral of interest payments, (ii) such interest payments do not further weaken the solvency position of the Issuer and (iii) the Solvency II Minimum Capital Requirement is complied with immediately after such interest payments are made.)

 

Mandatory Deferral Period ” has the meaning specified under Section 2.02(d).

 

Margin ” means for the Subordinated Notes (x) 4.00 per cent. per annum for each Interest Period to (but excluding) September 22, 2027; and (y) 4.25 per cent. per annum thereafter (from and including September 22, 2027).

 

Notes Documents ” means the Subordinated Notes and this Indenture.

 

Officer ” means the chairman of the Board of Directors, the vice chairman of the Board of Directors, the president, any vice president, the treasurer, any assistant treasurer, the controller, the secretary, any assistant controller, any assistant secretary, the principal executive officer, the principal financial officer, the principal accounting officer or the chief operating officer of the Issuer.

 

8



 

Officer’s Certificate ” means a certificate signed on behalf of the Issuer by one Officer of the Issuer that meets the requirements of Section 12.03 and delivered to the Trustee.

 

Official List ” means the official list of the Irish Stock Exchange.

 

Opinion of Counsel ” means a written opinion from legal counsel who may (except as otherwise provided herein) be counsel to the Issuer and who shall be reasonably satisfactory to the Trustee. The opinion must contain the statements required by Section 12.03.

 

Optional Deferral Period ” has the meaning specified under Section 2.02(c).

 

Parity Obligations ” means subordinated obligations of the Issuer which constitute, or would but for any applicable limitation on the amount of such capital, constitute Tier 2 Capital and any other obligations ranking or expressed to rank pari passu with the Subordinated Notes.

 

Participant ” means, with respect to the Depositary, a Person who has an account with the Depositary.

 

Person ” means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, limited liability company or government or other entity.

 

Policyholder Claims ” means claims of policyholders or beneficiaries under policies of insurance (including policies issued by the Issuer (if any)) in a winding-up, liquidation or administration of the Regulatory Group to the extent that those claims relate to any amounts to which the Regulatory Group is, or may become, liable to a policyholder pursuant to a contract of insurance, including all amounts to which policyholders are entitled under applicable legislation or rules relating to the winding-up or administration of insurance companies to reflect any right to receive, or expectation of receiving, benefits which such policyholders may have.

 

Prospectus ” means the prospectus dated September 19, 2017, relating to the listing of the Subordinated Notes.

 

Qualifying Equivalent Securities ” has the meaning specified under Section 3.04(d).

 

Rating Methodology Event ” will occur with respect to the Subordinated Notes, if, as a consequence of a change in, or clarification to, the rating methodology (or the interpretation thereof) of Standard & Poor’s Rating Services or Fitch Ratings Inc. or any respective successor, which change or clarification becomes effective on or after the Issue Date, the capital treatment of the Subordinated Notes for the Issuer or its subsidiaries or the Regulatory Group is amended in a way that is reasonably determined by the Issuer to be materially unfavorable to the Issuer or its subsidiaries or the Regulatory Group.

 

Redemption Price ” when used with respect to the Subordinated Notes to be redeemed, means the price at which such Subordinated Notes are to be redeemed pursuant to this Indenture.

 

Regulation S ” means Regulation S promulgated under the U.S. Securities Act.

 

9



 

Regulation S Legend ” means the legend set forth in Section 2.09(f) to be placed on all Subordinated Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.

 

Regulatory Event ” will occur with respect to the Subordinated Notes, if, as a consequence of a change in, or clarification to, the Applicable Supervisory Regulations by the Applicable Supervisor, the Subordinated Notes (in whole or in part) will not or will no longer qualify as Tier 2 Capital, as reasonably determined by the Issuer.

 

Regulatory Group ” means all subsidiaries of the Issuer from time to time that are regulated insurance or reinsurance companies (or part of such regulatory group) pursuant to the Applicable Supervisory Regulations, and such other entities (including, if applicable, the Issuer and any direct or indirect parent company of the Issuer) that may be construed as part of such regulatory group by the Applicable Supervisor under the Applicable Supervisory Regulations, taken as a whole (and, for the avoidance of doubt, shall initially be construed as including the Issuer and Sirius International Insurance Group, Ltd.).

 

Relevant Date ” means, in respect of any payment of Additional Amounts, the date on which such payment first becomes due and payable, but if the full amount of the moneys payable has not been received by the Paying Agent on or prior to such due date, it means the first date on which, the full amount of such moneys having been so received and being available for payment to Holders of the Subordinated Notes, notice to that effect shall have been duly given to the Holders of the Subordinated Notes.

 

Responsible Officer ” when used with respect to the Trustee, means any officer assigned to the Corporate Trust Division — Corporate Finance Unit (or any successor division or unit) of the Trustee located at the Trust Office of the Trustee, who shall have direct responsibility for the administration of this Indenture, and for the purposes of Section 6.03 and Section 7.01(c)(2) shall also include any other officer of the Trustee to whom any corporate trust matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

 

SEC ” means the Securities and Exchange Commission.

 

Senior Creditors ” means any creditors of the Issuer who are unsubordinated creditors of the Issuer and preferred claimants of the Regulatory Group (including all Policyholder Claims), as well as any other creditors to whose claims the Subordinated Notes must be subordinated under Applicable Supervisory Regulations so as to permit the Subordinated Notes to qualify as Tier 2 Capital.

 

Senior Indebtedness ” means, with respect to the Issuer,

 

(i)                                      the principal (including redemption payments), premium, if any, interest and other payment obligations in respect of (A) the Issuer’s indebtedness for money borrowed and (B) the Issuer’s indebtedness evidenced by securities, debentures, bonds, notes or other similar instruments issued by the Issuer, including any such securities issued under any deed, indenture or other instrument to which the Issuer is a party (including, for the avoidance of doubt, deeds, indentures or other instruments pursuant to which senior debt securities have been or may be issued);

 

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(ii)                                   all of the Issuer’s capital lease obligations;

 

(iii)                                all of the Issuer’s obligations issued or assumed as the deferred purchase price of property, all of the Issuer’s conditional sale obligations, all of the Issuer’s hedging agreements and agreements of a similar nature thereto and all of the Issuer’s agreements relating to any such agreements, and all obligations of the Issuer under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business);

 

(iv)                               all of the Issuer’s obligations for reimbursement on any letter of credit, banker’s acceptance, security purchase facility or similar credit transaction;

 

(v)                                  all obligations of the type referred to in clauses (i) through (iv) above of other Persons for the payment of which the Issuer is responsible or liable as obligor, guarantor or otherwise;

 

(vi)                               all obligations of the type referred to in clauses (i) through (v) above of other Persons secured by any Lien on any of the Issuer’s property or asset (whether or not such obligation is assumed by the Issuer); and

 

(vii)                            any deferrals, amendments, renewals, extensions, modifications and refundings of all obligations of the type referred to in clauses (i) through (vi) above, in each case whether or not contingent and whether outstanding at the date hereof or thereafter incurred;

 

except, in each case, for the Subordinated Notes and any such other indebtedness or deferral, amendment, renewal, extension, modification or refunding that contains express terms, or is issued under a deed, indenture or other instrument that contains express terms, providing that it is subordinate to or ranks equal with the Subordinated Notes.

 

Such Senior Indebtedness shall continue to be Senior Indebtedness and be entitled to the benefits of the subordination provisions of this Indenture irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness and notwithstanding that no express written subordination agreement may have been entered into between the holders of such Senior Indebtedness and the Trustee or any of the Holders.

 

Solvency Capital Event ” means the Issuer or the Regulatory Group, as applicable, not meeting the Solvency Capital Requirement.

 

Solvency Capital Requirement ” means: if the Applicable Supervisory Regulations are the Bermuda Group Rules, the ECR; if the Applicable Supervisory Regulations are Solvency II, the Solvency Capital Requirement of the Issuer or the Solvency Capital Requirement of the Regulatory Group referred to in Solvency II; or any other requirement to maintain assets applicable to the Issuer or in respect of the Regulatory Group, as applicable, pursuant to the Applicable Supervisory Regulations.

 

Solvency II ” means the Solvency II Directive and any implementing measures adopted pursuant to the Solvency II Directive including, without limitation, the Solvency II Regulation (for

 

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the avoidance of doubt, whether implemented by way of regulation or by further directives or otherwise).

 

Solvency II Directive ” means Directive 2009/138/EC of the European Union (as amended) on the taking-up and pursuit of the business of insurance and reinsurance (Solvency II) and transposed by member states of the European Economic Area pursuant to Article 309 of Directive 2009/138/EC.

 

Solvency II Minimum Capital Requirement ” means, if the Applicable Supervisory Regulations are Solvency II (or the Applicable Supervisory Regulations otherwise establish a minimum capital requirement that differs from the Solvency Capital Requirement), the Minimum Capital Requirement of the Issuer, the Minimum Capital Requirement of the Insurer Group or the group Minimum Solvency Capital Requirement referred to in, or any other minimum capital requirement howsoever described in, Solvency II (or, as applicable, in such other Applicable Supervisory Regulations).

 

Solvency II Regulation ” means Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II);

 

Specified Event ” means, with respect to the Subordinated Notes, the occurrence of any of an Additional Amounts Event, a Tax Event, a Rating Methodology Event or a Regulatory Event.

 

Specified Event Redemption ” has the meaning specified under Section 3.03.

 

Stated Maturity ” means, with respect to any installment of principal on the Subordinated Notes, the date on which the payment of principal was scheduled to be paid in the Notes Documents as of the Issue Date or as of the date of incurrence thereof, and will not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.

 

Subordinated Notes ” has the meaning given to it in the preamble to this Indenture. The Initial Notes and the Additional Notes shall be treated as a single class for all purposes under this Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase, except as otherwise provided in this Indenture, and unless the context otherwise requires, all references to the Subordinated Notes shall include the Initial Notes and any Additional Notes.

 

Subsidiary ” means, in respect of any Person, any corporation, limited or general partnership or other business entity of which at the time of determination more than 50% of the voting power of the shares of its capital stock or other interests (including partnership and limited liability company interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person.

 

Swedish Government Obligations ” means any security that is a direct obligation of, or obligation guaranteed by, the Kingdom of Sweden, and the payment for which the Kingdom of Sweden pledges its full faith and credit.

 

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Tax ” means any tax, duty, levy, impost, assessment or other governmental charge (including penalties and interest related thereto and any other additions thereto, and, for the avoidance of doubt, including any withholding or deduction for or on account of Tax (and “ Taxes ” and “ Taxation ” shall be construed to have corresponding meanings)).

 

Tax Event ” will occur with respect to the Subordinated Notes if an opinion of a recognized independent tax counsel has been delivered to the Trustee stating that, as a result of any change in or amendment to the laws (or any rules or regulations thereunder) of any Taxing Jurisdiction, or as a result of any change in or amendment to an official interpretation or application of any such laws, rules or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decisions or regulatory determination), which change or amendment becomes effective on or after the Issue Date of the Subordinated Notes, interest payable by the Issuer in respect of the Subordinated Notes is no longer, or within 90 days of the date of the opinion will no longer be, fully deductible by the Issuer for income tax purposes in the applicable jurisdiction (to the extent that such interest was so deductible as of the time of such Tax Event), and that non-deductibility cannot be avoided by the Issuer, as applicable, taking such reasonable measures it (acting in good faith) deems appropriate.

 

Taxing Jurisdiction ” means Bermuda, or any political subdivision thereof, or any authority or agency therein having the power to tax, or any other jurisdiction from or through which the Issuer makes a payment on the Subordinated Notes or in which the Issuer generally becomes subject to taxation, or any jurisdiction in which a successor of the Issuer is incorporated.

 

Tier 2 Capital ” means (i) if the Applicable Supervisory Regulations are the Bermuda Group Rules, “Tier 2 Ancillary Capital” as set out in the Bermuda Group Supervision Rules of the Issuer or the Regulatory Group (whether on a solo, group or consolidated basis) (or, if the Bermuda Group Supervision Rules are amended so as to no longer refer to Tier 2 Ancillary Capital in this respect, the nearest corresponding concept (if any) under the Bermuda Group Supervision Rules, as amended); (ii) if the Applicable Supervisory Regulations are Solvency II, capital which is treated as “Tier 2 Capital” of the Issuer or the Regulatory Group (whether on a solo, group or consolidated basis) by the Applicable Supervisor under Solvency II; and otherwise, capital which is treated as the nearest corresponding concept to “Tier 2 Ancillary Capital” under the Bermuda Group Supervision Rules and “Tier 2 Capital” under Solvency II of the Issuer or the Regulatory Group (whether on a solo, group or consolidated basis) by the Applicable Supervisor under the Applicable Supervisory Regulations.

 

Trustee ” means The Bank of New York Mellon in its capacity as trustee under this Indenture until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

 

Trust Office of the Trustee ” means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date of the execution of this Indenture is the address specified in Section 12.01 or such other address as to which the Trustee may designate from time to time by notice to the Issuer, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Issuer).

 

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

 

U . S . GAAP ” has the meaning specified under Section 4.06(b).

 

U . S . Securities Act ” means the U.S. Securities Act of 1933, as amended.

 

Section 1.02.  Rules of Construction.

 

Unless the context otherwise requires:

 

(1)                                  a term has the meaning assigned to it;

 

(2)                                  an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(3)                                  “or” is not exclusive;

 

(4)                                  words in the singular include the plural, and in the plural include the singular;

 

(5)                                  “will” shall be interpreted to express a command;

 

(6)                                  provisions apply to successive events and transactions;

 

(7)                                  references to sections of or rules under applicable laws or regulations will be deemed to include substitute, replacement of successor sections or rules as may be adopted from time to time;

 

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

 

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

 

(10)                           words importing any gender include all genders;

 

(11)                           references to “writing” include printing, typing, lithography and other means of reproducing words in a visible form; and

 

(12)                           the words “including,” “includes” and “include” shall be deemed to be followed by the words “without limitation.”

 

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ARTICLE 2
THE SUBORDINATED NOTES

 

Section 2.01.  Form and Dating.

 

(a)           General .  The Subordinated Notes and the Trustee’s certificate of authentication will be substantially in the form of Exhibit A hereto. The Subordinated Notes may have notations, legends or endorsements required by law, stock exchange rule or usage and as provided herein. The Issuer shall approve the form of the Subordinated Notes and any notation, legend or endorsement thereon. Each Subordinated Note will be dated the date of its authentication. The terms and provisions contained in the Subordinated Notes will constitute, and are hereby expressly made, a part of this Indenture, and the Issuer and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision in the Subordinated Notes conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

 

(b)           Global Notes .  Subordinated Notes issued in global form will be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Increases and Decreases in Global Note” attached thereto). Each Global Note will represent such of the outstanding Subordinated Notes as will be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Subordinated Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Subordinated Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions and purchases and cancellations. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Subordinated Notes represented thereby will be made by the Trustee, the Depositary or the Paying Agent, in accordance with instructions given by the Holder thereof as required by Section 2.09.

 

(c)           The Subordinated Notes, on original issuance, shall be issued in the form of one or more fully registered Global Notes and deposited with The Bank of New York Mellon, London Branch, as common depository for of Clearstream and Euroclear (the “ Depositary ”). The Global Notes will be registered in the name of the Depositary or its nominee until a successor Depositary, if any, becomes the Depositary pursuant to this Indenture and thereafter Depositary shall mean or include each Person who is then a Depositary hereunder. The interest in the Global Notes held through the Depositary shall be delivered by the Trustee to the Depositary or a custodian appointed by the Depositary and the Depositary shall credit the accounts of Euroclear and Clearstream.

 

(d)           If (1) the Depositary or any successor to the Depositary is at any time unwilling or unable to continue as a Depositary and a successor depositary is not appointed by the Issuer within 90 days, or (2) either Euroclear or Clearstream, or a successor clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention to permanently cease business or does in fact do so, the Issuer will issue individual definitive notes in registered form in exchange for the Global Notes. Upon receipt of such notice from the Depositary or a Holder, as the case may be, the Issuer will use its best efforts to make arrangements with the Depositary for the exchange of interests in the Global Notes for individual Definitive Registered Notes and cause the requested individual Definitive Registered Notes to be executed and delivered to the Registrar in sufficient quantities and

 

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authenticated by or on behalf of the Registrar for delivery to Holders. Persons exchanging interests in a Global Note for individual Definitive Registered Notes will be required to provide the Registrar, through the relevant clearing system, with written instruction and other information required by the Issuer and the Registrar to complete, execute and deliver such individual Definitive Registered Notes. In all cases, individual Definitive Registered Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by the relevant clearing system. Individual Definitive Registered Notes will not be eligible for clearing and settlement through Euroclear or Clearstream.

 

(e)           Book-Entry Provisions .  The Applicable Procedures shall be applicable to Book-Entry Interests in the Global Note that are held by Participants through the Depositary, Euroclear or Clearstream.

 

(f)            Denomination .  The Subordinated Notes initially will be limited to SEK 2,750,000,000 aggregate principal amount. The Subordinated Notes will be issued in fully registered form, without coupons, in minimum denominations of SEK 2,000,000 and integral multiples of SEK 1,000,000 in excess thereof.

 

Section 2.02.  Payment of Interest.

 

(a)           The Subordinated Notes will bear interest from (and including) the Issue Date to, but excluding, the Final Maturity Date or earlier redemption of the Subordinated Notes as provided in this Indenture, as the case may be, at the Interest Rate, payable quarterly in arrears on each Interest Payment Date to the Persons in whose name the Subordinated Notes were registered at the close of business on the applicable Interest Payment Record Date, subject to deferral in accordance with Section 2.02(c) and Section 2.02(d). On the Final Maturity Date or earlier date of redemption, the Issuer will pay accrued and unpaid interest from the most recent date to which interest has been paid or provided for. If the Final Maturity Date falls on a day that is not a Business Day, the payment of interest and principal will be made on the next succeeding Business Day, and no interest will accrue for the period from and after the Final Maturity Date.

 

(b)           Principal and interest will be payable, and the Subordinated Notes will be transferable or exchangeable, at the office or offices or agency maintained by the Issuer for this purpose. All payment obligations under the Subordinated Notes will be payable in Swedish krona.

 

(c)           So long as no Mandatory Deferral Event has occurred and is continuing and the relevant Interest Payment Date is not a Compulsory Interest Payment Date, the Issuer may defer interest payments on the Subordinated Notes, from time to time, for one or more periods (each, an “ Optional Deferral Period ”). Any such accrued interest, the payment of which is so deferred, so long as such interest remains unpaid, will constitute Arrears of Interest on the Subordinated Notes and will be subject to Section 2.03. Prior to an Optional Deferral Period, the Issuer will be required to provide to the Trustee an Officer’s Certificate identifying the beginning of the Optional Deferral Period and shall notify the Holders of the Subordinated Notes at least five Business Days before the first Interest Payment Date during the Optional Deferral Period. The Issuer may pay at any time all or any portion of the interest accrued to that point during an Optional Deferral Period and upon payment by the Issuer in full of all interest accrued during an Optional Deferral Period, the

 

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Optional Deferral Period shall be deemed to terminate. Any Optional Deferral Period shall also be deemed terminated on any Interest Payment Date that is a Compulsory Interest Payment Date.

 

(d)           If, as of any Interest Payment Date, a Mandatory Deferral Event has occurred and is continuing or would occur if payment of interest accrued on the Subordinated Notes were made on such Interest Payment Date, the Issuer shall be required to defer payment of all (and not less than all) of the interest accrued on the Subordinated Notes as of such Interest Payment Date (a “ Mandatory Deferral Period ”). Any such accrued interest, the payment of which is so deferred, so long as such interest remains unpaid, will constitute Arrears of Interest on the Subordinated Notes and will be subject to Section 2.03. Prior to a Mandatory Deferral Period, the Issuer shall provide to the Trustee an Officer’s Certificate identifying the beginning of the Mandatory Deferral Period and shall notify the Holders of the Subordinated Notes at least five Business Days before the first Interest Payment Date during the Mandatory Deferral Period unless the Mandatory Deferral Event occurs within such five Business Day period, in which case the Issuer shall so notify the Holders promptly following the occurrence of such Mandatory Deferral Event.

 

(e)           Notwithstanding any other provision in the Subordinated Notes or this Indenture, the deferral of any payment of interest on the Subordinated Notes on any Interest Payment Date in accordance with this section will not constitute an Issuer Winding-Up Event under this Indenture or the Subordinated Notes and will not give Holders of the Subordinated Notes or the Trustee any right to accelerate repayment of the Subordinated Notes.

 

(f)            Interest on the Subordinated Notes will be calculable on the basis of a day count fraction equal to the actual number of days elapsed in the relevant Interest Period divided by 360.

 

(g)           The amount of interest for each day that the Subordinated Notes are outstanding (the “ Daily Interest Amount ”) will be calculated by dividing the Interest Rate in effect for such day by 360 and multiplying the result by the principal amount of the Subordinated Notes. The amount of interest to be paid on the Subordinated Notes for any Interest Period will be calculated by adding the Daily Interest Amounts for each day in such Interest Period.

 

(h)           The Interest Rate and amount of interest to be paid on the Subordinated Notes for each Interest Period will be determined by the Calculation Agent. The Calculation Agent will, upon the request of any Holder of the Subordinated Notes, provide the interest rate then in effect during any Interest Period with respect to the Subordinated Notes, and shall notify the Issuer of the Interest Rate for each such Interest Period on the relevant Interest Determination Date. All calculations made by the Calculation Agent shall in the absence of manifest error be conclusive for all purposes and binding on the Issuer and the Holders of the Subordinated Notes. So long as the Applicable STIBOR Rate is required to be determined with respect to the Subordinated Notes, there will at all times be a Calculation Agent. In the event that any then acting Calculation Agent shall be unable or unwilling to act, or that such Calculation Agent shall fail to duly establish the Applicable STIBOR Rate for any Interest Period, or that the Issuer proposes to remove such Calculation Agent, the Issuer shall appoint itself or another Person which is a bank, trust company, investment banking firm or other financial institution to act as the Calculation Agent.

 

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Section 2.03.  Arrears of Interest.

 

(a)           Any interest in respect of the Subordinated Notes not paid on an Interest Payment Date, together with any interest in respect of the Subordinated Notes not paid on an earlier Interest Payment Date will, so long as the same remains unpaid, constitute “ Arrears of Interest ” in respect of the Subordinated Notes. Arrears of Interest shall not themselves bear interest. Arrears of Interest on the Subordinated Notes will remain payable for so long as it remains unpaid. Any reference in this Indenture or the Subordinated Notes to principal, premium or interest in respect of the Subordinated Notes, any redemption amount and any other amounts in the nature of principal shall be deemed also to refer to any Arrears of Interest applicable to the Subordinated Notes that may be payable under this Indenture, and the express mention of the payment of Arrears of Interest applicable to the Subordinated Notes (if applicable) in any provision hereof shall not be construed as excluding Arrears of Interest applicable to the Subordinated Notes in those provisions hereof where such express mention is not made.

 

(b)           So long as no Mandatory Deferral Event has occurred and is continuing (or unless otherwise permitted by the Applicable Supervisor), at the Issuer’s option, Arrears of Interest on the Subordinated Notes may be paid in whole or in part to the Persons in whose names the Subordinated Notes are registered as of the close of business on the 15th calendar day (whether or not such date is a Business Day) immediately preceding the date on which payment of such Arrears of Interest is to be made, at any time upon the expiration of not more than 15 nor less than five Business Days’ written notice to the Trustee, the Paying Agent and the Holders of the Subordinated Notes to such effect (which written notice shall specify the amount of such Arrears of Interest).

 

(c)           If not previously paid, Arrears of Interest with respect to the Subordinated Notes shall become due and payable, and shall be paid in whole (and not in part), on the earliest of:

 

(1)           so long as no Mandatory Deferral Event has occurred and is continuing, the next Interest Payment Date for the Subordinated Notes that does not occur during an Optional Deferral Period or that is a Compulsory Interest Payment Date; or

 

(2)           the redemption date of the Subordinated Notes in accordance with Article 3; or

 

(3)           the date on which an Issuer Winding-Up Order occurs; or

 

(4)           the Final Maturity Date for the Subordinated Notes;

 

provided , that in the event of there being Arrears of Interest on the Final Maturity Date, such Arrears of Interest shall be paid before any repayment of principal.

 

Section 2.04.  Initial Amount of Subordinated Notes.

 

(a)           The Subordinated Notes will initially be issued in the aggregate principal amount of SEK 2,750,000,000. The Subordinated Notes, may upon execution of this Indenture, be executed by the Issuer and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Subordinated Notes in accordance with a Company Order.

 

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(b)           The Issuer may issue from time to time, without giving notice to or seeking the consent of the Holders of the Subordinated Notes, issue additional notes (“ Additional Notes ”) having the same ranking and the same interest rate, maturity and other terms as the Subordinated Notes (except for the initial public offering price, first Interest Payment Date (if applicable) and the Issue Date). Any such Additional Notes having such similar terms, together with the Subordinated Notes, will constitute a single class for all purposes under this Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase with the Initial Notes; provided that if such Additional Notes are not (i) issued pursuant to a “qualified reopening” of the original series, (ii) treated as part of the same “issue” of debt instruments as the original series or (iii) issued with no more than a de minimis amount of original discount, in each case for U.S. federal income tax purposes, such Additional Notes will have a separate ISIN number or other identifier.

 

(c)           Whenever it is proposed to create and issue any Additional Notes, the Issuer shall give to the Trustee not less than five Business Days’ notice in writing of its intention so to do stating the amount of Additional Notes (including a range of amounts if the transaction has not yet priced) proposed to be created and issued.

 

Section 2.05.  No Sinking Fund.

 

The Subordinated Notes do not have the benefit of any mandatory redemption or sinking fund obligation and are not redeemable at the option of the Holders.

 

Section 2.06.  Execution and Authentication.

 

The Subordinated Notes shall be executed on behalf of the Issuer by any two Officers. The signature of any of these individuals on the Subordinated Notes may be manual, facsimile or electronic (including “.pdf” format).

 

Subordinated Notes bearing the manual, facsimile or electronic (including “.pdf” format) signatures of individuals who were at any time the proper officers of the Issuer shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Subordinated Notes or did not hold such offices at the date of such Subordinated Notes.

 

A Subordinated Note will not be valid until authenticated by the manual, facsimile or electronic (including “.pdf” format) signature of the Trustee. The signature will be conclusive evidence that the Subordinated Note has been authenticated under this Indenture. Notwithstanding the foregoing, if any Subordinated Note shall have been authenticated and delivered hereunder but never issued and sold by the Issuer, the Issuer shall deliver such Subordinated Note to the Registrar for cancellation pursuant to Section 2.14, and for all purposes of this Indenture such Subordinated Note shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

 

The Trustee will, upon receipt of a written order of the Issuer signed by an authorized representative (an “ Authentication Order ”), authenticate Subordinated Notes for original issue that may be validly issued under this Indenture, including any Additional Notes as provided in Section 2.04.

 

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The Trustee may appoint an authenticating agent acceptable to the Issuer to authenticate Subordinated Notes (the “ Authenticating Agent ”). Each such appointment shall be evidenced by an instrument signed by a Responsible Officer, a copy of which shall be furnished to the Issuer. Unless limited by the terms of such appointment, the Authenticating Agent may authenticate Subordinated Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. The Authenticating Agent has the same rights as an Agent to deal with Holders or an Affiliate of the Issuer.

 

Section 2.07.  Registrar, Transfer Agent and Paying Agent.

 

(a)           The Issuer will maintain one or more paying agents (each, a “ Paying Agent ”) for the Subordinated Notes. The initial Paying Agent will be The Bank of New York Mellon acting through its London Branch (the “ Paying Agent ”) and The Bank of New York Mellon acting through its London Branch hereby accepts such appointment.

 

(b)           The Issuer will also maintain one or more registrars (each, a “ Registrar ”) for the registration of the Subordinated Notes and of their transfer or exchange for so long as the Subordinated Notes are listed on the Official List and its rules so require.

 

(c)           The Issuer will maintain a transfer agent (each, a “ Transfer Agent ”). The Issuer hereby appoints the Trustee as the initial Registrar and the Trustee hereby accepts such appointment. The Issuer hereby appoints the Trustee as the initial Transfer Agent and the Trustee hereby accepts such appointment. Each Transfer Agent shall perform the functions of a transfer

 

(d)           Upon notice to the Trustee, the Issuer may change the Paying Agents, the Registrars or the Transfer Agents without prior notice to the Holders. For so long as the Subordinated Notes are listed on the Official List of the Irish Stock Exchange and admitted to trading on the Main Securities Market and the rules and regulations of the Irish Stock Exchange so require, the Issuer will publish a notice of any change of Paying Agent, Registrar or Transfer Agent in the manner permitted by such rules and regulations, on the official website of the Irish Stock Exchange (www.ise.ie) in accordance with Section 12.01.

 

(e)           None of the Trustee or any Agent shall have any responsibility or obligation to any beneficial owner in a Global Note, a Participant or other Person with respect to the accuracy of the records of the Depositary or its nominee or of any Participant, with respect to any ownership interest in the Subordinated Notes or with respect to the delivery to any Participant, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Subordinated Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Subordinated Notes and this Indenture shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of the Global Note). The rights of beneficial owners in the Global Note shall be exercised only through the Depositary subject to the applicable procedures. The Trustee and each Agent shall be entitled to rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners. The Trustee and each Agent shall be entitled to deal with the Depositary and any nominee thereof, that is the registered holder of any Global Note for all purposes of this Indenture relating to such Global Note (including the

 

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payment of principal, premium, if any, and interest and additional amounts, if any, and the giving of instructions or directions by or to the owner or holder of a beneficial ownership interest in such Subordinated Notes) as the sole holder of such Global Note and shall have no obligations to the beneficial owners thereof. None of the Trustee or any Agent shall have any responsibility or liability for any acts or omissions of the Depositary with respect to such Global Note, for the records of any such depositary, including records in respect of beneficial ownership interests in respect of any such Global Note, for any transactions between the Depositary and any Participant or between or among the Depositary, any such Participant and/or holder or owner of a beneficial interest in such Global Note, or for any transfers of beneficial interests in any such Global Note.

 

Notwithstanding the foregoing, with respect to any Global Note, nothing herein shall prevent the Issuer, the Trustee, any Agent or any agent of the Issuer or the Trustee from giving effect to any written certification, proxy or other authorization furnished by any Depositary (or its nominee), as a Holder with respect to such Global Note or shall impair, as between such Depositary and owners of beneficial interests in such Global Note, the operation of customary practices governing the exercise of the rights of such Depositary (or its nominee) as Holder of such Global Note.

 

(f)            Pursuant to and in accordance with Section 7.02(i), in connection with acting hereunder, the Paying Agent shall be entitled to the rights, privileges, protections, immunities and benefits given to the Trustee in this Indenture and otherwise. For the avoidance of doubt, the provisions of Section 7.05 shall apply to the Paying Agent mutatis mutandi s. The following terms and conditions in this Section 2.07(f) shall apply to the Paying Agent in connection with its acting hereunder. In the event of a conflict between the terms and conditions of this Section 2.07(f) and the terms and conditions in the indenture, including the rights, privileges, protections, immunities and benefits given to the Paying Agent by virtue of Section 7.02(i), the provisions of this Section 2.07(f) shall control.

 

In order to provide for all payments due on the Subordinated Notes as the same shall become due, the Issuer shall cause to be paid to the Paying Agent, no later than 10:00 a.m. London time one Business Day prior to the due date for the payment of each Subordinated Note, at such bank as the Paying Agent shall previously have notified to the Issuer, immediately available funds sufficient to meet all payments due on such Subordinated Notes.

 

The Issuer hereby authorizes and directs the Paying Agent, from the amounts paid to it pursuant to this Section 2.07(f), to make or cause to be made all payments on the Subordinated Notes in accordance with the terms thereof. Such payments shall be made to the Holder or Holders of Subordinated Notes in accordance with the terms of the Subordinated Notes, the provisions contained in this Indenture, and the procedures of Euroclear and Clearstream. All interest payments in respect of the Subordinated Notes will be made by the Paying Agent on the relevant interest payment date (as set forth in the Subordinated Note) to the Holders in whose names the Subordinated Notes are registered at the close of business (in New York City) on the record date specified in the Subordinated Notes next preceding the interest payment date or such other date as is provided in the Subordinated Notes. So long as the Subordinated Notes are represented by a single global certificate and registered in the name of the Depositary or another common depository for Euroclear and Clearstream, or a nominee of the Depositary or such other common

 

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depository all interest payments on the Subordinated Notes shall be made by the Paying Agent by wire transfer of immediately available funds in SEK to such Holder.

 

The Paying Agent will pay the principal amount of each Subordinated Note and premium, if any, on the applicable maturity date or upon any redemption date with respect thereto, together with accrued and unpaid interest due at maturity or such redemption date, if any, upon presentation and surrender of such Subordinated Note on or after the maturity date or redemption date thereof to the Paying Agent, or as specified in the Subordinated Notes.

 

If for any reason the amounts received by the Paying Agent are insufficient to satisfy all claims in respect of all payments then due on the Subordinated Notes, the Paying Agent shall forthwith notify the Issuer, and the Paying Agent shall not be obligated to pay any such claims until the Paying Agent has received the full amount of the monies then due and payable in respect of such Subordinated Notes. If, however, the Paying Agent in its sole discretion shall make payment on the Subordinated Notes on their maturity or redemption, or payments of interest or such other payments when otherwise due (it being understood that the Paying Agent shall have no obligation whatsoever to make any such payment) and the amount which should have been received is not received on such date, the Issuer agrees forthwith on demand to pay, or procure the payment of, to the Paying Agent, in addition to the amount which should have been paid hereunder, interest thereon from the day following the date when the amount unpaid should have been received under this Indenture to the date when such amount is actually received (inclusive) at a rate equal to the cost of the Paying Agent of funding such amount, as certified by the Paying Agent and expressed as a rate per annum.

 

The Paying Agent hereby agrees that:

 

(1)           it will hold all sums held by it as Paying Agent for the payment of the principal of or premium, if any, or interest on the Subordinated Notes in trust for the benefit of the Holders of the Subordinated Notes entitled thereto, or for the benefit of the Trustee, as the case may be, until such sums shall be paid out to such Holders or otherwise as provided below and in this Indenture;

 

(2)           it will promptly give the Trustee notice of: (x) an Issuer deposit for the payment of principal of or premium, if any, or interest on the Subordinated Notes, (y) any failure by the Issuer in the making of any deposit for the payment of principal of or premium, if any, or interest on the Subordinated Notes that shall have become payable, and (z) any default by the Issuer in making any payment of the principal of or premium, if any, or interest on the Subordinated Notes where the same shall be due and payable as provided in the Subordinated Notes; and

 

(3)           at any time after an Issuer Winding-Up Event shall have occurred, the Paying Agent shall, if so required by notice in writing given by the Trustee to the Paying Agent: (y) thereafter, until otherwise instructed by the Trustee, act as agent of the Trustee under the terms of the Indenture; and/or (z) deliver all Subordinated Notes and all sums, documents and records held by the Paying Agent in respect of the Subordinated Notes to the Trustee or as the Trustee shall direct in such notice; provided that such notice shall be

 

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deemed not to apply to any document or record which the Paying Agent is obligated not to release by any applicable law or regulation.

 

Notwithstanding the foregoing:

 

(4)           if any Subordinated Note is presented or surrendered for payment to the Paying Agent and the Paying Agent has delivered a replacement therefor or has been notified that the same has been replaced, the Paying Agent shall as soon as is reasonably practicable notify the Issuer in writing of such presentation or surrender and shall not make payment against the same until it is so instructed by the Issuer and has received the amount to be so paid; and

 

(5)           the Paying Agent shall cancel each Subordinated Note against surrender of which it has made full payment and shall deliver each Subordinated Note so cancelled by it to the Trustee.

 

In no event, shall the Paying Agent be obligated to make any payments hereunder if it has not received the full amount of any payment.

 

General

 

In acting under this Indenture, the Paying Agent shall not (a) be under any fiduciary duty towards any Person, (b) be responsible for or liable in respect of the authorization, validity or legality of any Subordinated Note amount paid by it hereunder (except to the extent that any such liability is determined by a court of competent jurisdiction to have been resulted from the Paying Agent’s negligence or wilful misconduct), (c) be under any obligation towards any Person other than the Trustee and Issuer or (d) assume any relationship of agency or trust for or with any Holder.

 

The Paying Agent shall be entitled to treat the registered Holder of any Subordinated Note as the absolute owner of such Subordinated Note for all purposes and make payments thereon accordingly.

 

The Paying Agent may exercise any of its rights or duties hereunder by or through agents or attorneys, and shall not be responsible for any misconduct thereof, provided such agent or attorney has been appointed with due care. Each such agent making any payment on the Subordinated Notes shall be a United States person (as defined in Section 7701(a)(30) of the Code) that is a “financial institution” within the meaning of Treasury Regulation Section 1.1441-1(c)(5) and a U.S. financial institution within the meaning of Treasury Regulation Section 1.1471-1(b)(136).

 

The Paying Agent shall not exercise any lien, right of set-off or similar claim against any Holder of a Subordinated Note in respect of moneys payable by it under this Indenture; however, should the Paying Agent elect to make a payment pursuant to this Section 2.07(f), it shall be entitled to appropriate for its own account out of the funds received by it under this Section 2.07(f) an amount equal to the amount so paid by it.

 

The Paying Agent may (at the expense of the Issuer) consult, on any matter concerning its duties hereunder, any legal adviser or other expert selected by it, and the Paying Agent shall not

 

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be liable in respect of anything done, or omitted to be done in good faith in accordance with that adviser’s opinion. At any time, the Paying Agent may apply to any duly authorized representative of the Issuer for a written instruction, and shall not be liable for an action lawfully taken or omitted to be taken in accordance with such instruction. Notwithstanding anything to the contrary herein, in no event shall the Paying Agent be entitled to reimbursement of the expenses of such legal adviser or expert with respect to any matter arising from the Paying Agent’s negligence or wilful misconduct. The Paying Agent shall promptly notify the Issuer of any action taken or omitted by the Paying Agent in reliance upon such advice.

 

The Paying Agent shall be entitled to rely, and shall not be liable in respect of anything done or suffered by it in reliance, on any notice, document, communication or information reasonably believed in good faith by it to be genuine and given by the proper parties.

 

The Paying Agent shall be obligated to perform only such duties as are specifically set forth herein and in the Subordinated Notes, and no implied duties or obligations shall be read into this Indenture or the Subordinated Notes against the Paying Agent.

 

The Paying Agent shall not be liable to account to the Issuer for any interest or other amounts in respect of funds received by it from the Issuer. Money held by the Paying Agent need not be segregated except as required by law.

 

No provision of this Indenture or the Subordinated Notes shall require the Paying Agent to risk or expend its own funds, or to take any action which in its reasonable judgment would result in any expense or liability accruing to it.

 

In no event will the Paying Agent be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, severe loss or severe malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Paying Agent will use best reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

The Paying Agent shall have no duty to inquire as to the performance of the covenants of the Issuer, nor shall it be charged with knowledge of any default under the Indenture.

 

In no event shall the Paying Agent be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to loss of business, goodwill, opportunity or profit of any kind) of the Issuer or any other Person (or, in each case, any successor thereto), even if the Paying Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

The Paying Agent, its officers, directors, employees and shareholders may become the owners of, or acquire any interest in, the Subordinated Notes, with the same rights that it or they would have if it were not the Paying Agent, and may engage or be interested in any financial or other transaction with the Issuer as freely as if it were not the Paying Agent.

 

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The Paying Agent shall retain the right not to act and shall not be held liable for refusing to act unless it has received clear and reasonable documentation which complies with the terms of this Indenture.

 

The Issuer will supply the Paying Agent with the names and specimen signatures of its authorized persons as soon as practicable after the date hereof.

 

The Paying Agent shall be entitled to take any action or to refuse to take any action which the Paying Agent regards as necessary for the Paying Agent to comply with any applicable law, regulation, fiscal requirement, court order, or the rules, operating procedures or market practice of any relevant stock exchange or other market or clearing system.

 

Change of Paying Agent

 

Resignation or Removal of Paying Agent. Any time, other than on a day during the thirty (30) day period preceding any payment date for Issuer’s Subordinated Notes, the Paying Agent may resign by giving at least thirty (30) days’ prior written notice to Issuer; and the Paying Agent’s agency shall be terminated and its duties shall cease upon expiration of such thirty (30) days or such lesser period of time as shall be mutually agreeable to Paying Agent and Issuer. At any time, following at least thirty (30) days’ prior written notice (or such lesser period of time as shall be mutually agreeable to the Paying Agent and the Issuer) from the Issuer, the Paying Agent may be removed from its agency. Such removal shall become effective upon the expiration of the thirty (30) day or agreed lesser time period (provided that any such removal shall be immediate in case the Paying Agent shall be adjudicated bankrupt or insolvent), and upon payment to the Paying Agent of all amounts payable to it in connection with its agency. In such event, following payment of its fees and expenses, the Paying Agent shall deliver to the Issuer, or to the Issuer’s designated representative, all Subordinated Notes (if any) and cash (if any) belonging to the Issuer and, at the Issuer’s expense, shall furnish to the Issuer, or to the Issuer’s designated representative, such information regarding the status of the Issuer’s outstanding Subordinated Notes reasonably requested by the Issuer.

 

Any Person into which a Paying Agent may be merged or consolidated or any Person resulting from any merger or consolidation to which such Paying Agent is a party or any Person to which such Paying Agent shall sell or otherwise transfer all or substantially all of its corporate trust or agency assets or business shall on the date on which such merger, consolidation or transfer becomes effective become the successor to such Paying Agent under this Indenture without the execution or filing of any paper or any further act on the part of the parties hereto.

 

U.S. Tax Forms

 

The Paying Agent shall deliver to the Issuer two properly completed and executed originals of IRS Form W-9 (or appropriate successor form) upon entering into this Indenture (and from time to time thereafter upon reasonable request of the Issuer). The Paying Agent agrees that if any form or certification that it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification promptly or promptly notify the Issuer in writing of its legal inability to do so.

 

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Any agent appointed pursuant to this Section 2.07(f) hereof making any payment on the Subordinated Notes shall deliver to the Issuer two properly completed and executed originals of IRS Form W-9 (or appropriate successor form) upon such appointment (and from time to time thereafter upon reasonable request of the Issuer).

 

The terms of this caption “U.S. Tax Forms” shall survive the termination of this Indenture.

 

FATCA

 

Notwithstanding any other provision of this Indenture or the Subordinated Notes, the Paying Agent shall be entitled to make a deduction or withholding (including the deduction of FATCA Withholding Tax) from any payment which it makes under this Indenture for or on account of any present or future taxes, duties or charges if and to the extent so required by any applicable law and any current or future regulations or agreements thereunder or official interpretations thereof or any law implementing an intergovernmental approach thereto or by virtue of the relevant holder failing to satisfy any certification or other requirements in respect of the Subordinated Notes, in which event the Paying Agent shall make such payment after such withholding or deduction has been made and shall account to the relevant authorities for the amount so withheld or deducted, and the Paying Agent shall have no obligation to gross up any payment hereunder or pay any additional amount as a result of such withholding tax. In addition, the Issuer agrees to provide the Paying Agent tax-information about holders or the transactions contemplated hereby (including any modification to the terms of such transactions), to the extent such information is directly available to the Company, so that the Paying Agent can determine whether it has tax-related obligations under applicable law.

 

Section 2.08.  Holder Lists.

 

The Registrar will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders. If the Trustee or the Paying Agent is not the Registrar, the Issuer will or cause the Registrar to furnish to the Trustee (but only if the Trustee so requires) and each Paying Agent at least seven Business Days before each interest payment date and at such other times as the Trustee or the Paying Agent may request in writing, a list of the names and addresses of the Holders in such form and as of such date as the Trustee or the Paying Agent may reasonably require.

 

Section 2.09.  Transfer and Exchange.

 

(a)           The Subordinated Notes may be surrendered for registration, transfer or exchange at the office of the Registrar. Also, all notices or demands to or upon the Issuer in respect to the Subordinated Notes and this Indenture may be served on the issuer at the office of the Registrar.

 

(b)           Upon surrender for registration of transfer of any Subordinated Note to the Registrar, and satisfaction of the requirements for such transfer set forth in this Section 2.09, the Issuer shall execute, and the Trustee or an Authenticating Agent shall, upon receipt of a written order from the Issuer, authenticate and deliver, in the name of the designated transferee or transferees, one or more new Subordinated Notes of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture. Subordinated Notes may be exchanged for other Subordinated Notes of any authorized

 

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denominations and of a like aggregate principal amount, upon surrender of the Subordinated Notes to be exchanged at any such office or agency maintained by the Issuer pursuant to Section 2.07. Whenever any Subordinated Notes are so surrendered for exchange, the Issuer shall execute, and the Trustee or an Authenticating Agent shall, upon receipt of a written order from the Issuer, authenticate and deliver, the Subordinated Notes that the Holder making the exchange is entitled to receive, bearing registration numbers not contemporaneously outstanding.

 

All Subordinated Notes presented or surrendered for registration of transfer or for exchange, repurchase or redemption shall (if so required by the Issuer, the Trustee or the Registrar) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and duly executed by the Holder thereof or its attorney-in-fact duly authorized in writing.

 

No service charge will be made by the Issuer or the Registrar to a Holder of a Book-Entry Interest in a Global Note, a Holder of a Global Note for any registration, transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any stamp duty, stamp duty reserve, documentary or other similar tax or governmental charge that may be imposed in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Section 2.13, Section 3.07 and Section 4.02).

 

The Issuer and the Registrar shall not be required (A) to register the transfer of or to exchange any Subordinated Note subject to redemption, (B) to register the transfer of a Subordinated Note other than in amounts of SEK 2,000,000 or an integral multiple of SEK 1,000,000 in excess thereof or (C) All Subordinated Notes issued upon any registration of transfer or exchange of Subordinated Notes in accordance with this Indenture shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture as the Subordinated Notes surrendered upon such registration of transfer or exchange.

 

(c)           The transfer and exchange of Book-Entry Interests shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures.

 

In connection with all transfers and exchanges of Book-Entry Interests (other than transfers of Book-Entry Interests in connection with which the transferor takes delivery thereof in the form of a Book-Entry Interest in the same Global Note), the Transfer Agent (copied to the Trustee and Registrar) must receive: (i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to debit from the transferor a Book-Entry Interest in an amount equal to the Book-Entry Interest to be transferred or exchanged; (ii) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a Book-Entry Interest in another Global Note in an amount equal to the Book-Entry Interest to be transferred or exchanged; and (iii) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited or debited with such increase or decrease, if applicable.

 

(d)           A Global Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee

 

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of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

 

(e)           Certificated Notes . Notwithstanding Section 2.01(d), upon the issuance of certificated notes substantially in the form of Exhibit A hereto, Holders will be able to transfer certificated notes substantially in the form of Exhibit A hereto at the specified office of the Registrar or any Paying Agent or Transfer Agent upon the surrender of such certificated notes, together with the form of transfer endorsed thereon duly completed and executed, and otherwise in accordance with the provisions of this Indenture. In the case of a transfer of only a part of a certificated note, a new certificated note substantially in the form of Exhibit A hereto will be issued to the transferee at such specified office in respect of the part transferred and a further new certificated note in respect of the balance of the holding not transferred will be issued to the transferor.

 

(f)            Every Subordinated Note (including the Book-Entry Interests in Global Notes) shall be subject to the restrictions on transfer in the Regulation S Legend set forth below, and the Holder of each such Subordinated Note, by such Holder’s acceptance thereof, agrees to be bound by all such restrictions on transfer.

 

Each Subordinated Note (including each Global Note) shall bear a legend in substantially the following form on the face thereof (the “ Regulation S Legend ”):

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR PARTICIPATION THEREIN, PRIOR TO THE DATE (THE “ RESALE RESTRICTION TERMINATION DATE ”) THAT IS 40 DAYS AFTER THE LATER OF THE ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) PURSUANT TO AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT OF EACH OF THE ISSUER, THE REGISTRAR AND THE TRUSTEE, PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C) OR (D), TO REQUIRE DELIVERY OF A CERTIFICATE, OPINION OF COUNSEL OR OTHER INFORMATION SATISFACTORY TO IT. BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON

 

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AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.

 

AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “U.S. PERSON” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE REGISTRAR TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING.

 

THE RIGHTS ATTACHING TO THIS SECURITY ARE AS SPECIFIED IN THE INDENTURE.

 

Each Global Note shall bear a legend in substantially the following form on the face thereof (the “ Global Note Legend ”):

 

THIS SECURITY IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY NAMED BELOW OR A NOMINEE OF THE DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED HEREIN AND IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THIS SECURITY AND THE INDENTURE. THE REGISTERED HOLDER HEREOF MAY BE TREATED BY THE ISSUER, THE TRUSTEE, THE AGENTS AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.

 

(g)           All Global Notes may be exchanged or replaced, in whole or in part, as provided in Section 2.09(d), Section 2.10 and Section 2.13. A Global Note may not be exchanged for another Subordinated Note other than as provided in this Section 2.09. Book-Entry Interests in a Global Note may be transferred and exchanged as provided in Section 2.09(c) or Section 2.09(d).

 

(h)           The Trustee, any Agent and the Issuer may deem and treat the Person in whose name any Subordinated Note is registered as the absolute owner of such Subordinated Note for the purpose of receiving payment of principal of and interest on the Subordinated Notes and for all other purposes, and none of the Trustee, any Agent or the Issuer shall be affected by notice to the contrary.

 

(i)            All certifications, certificates and Opinions of Counsel required to be submitted to the Issuer, the Trustee or the Registrar pursuant to this Section 2.09 to effect a registration of transfer or exchange may be submitted by facsimile (to be followed by an original (or originals) to the Trustee upon its reasonable request).

 

(j)            None of the Trustee, any Agent or the Issuer shall have any obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under

 

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this Indenture or under applicable law with respect to any transfer of any interest in any Subordinated Note (including any transfers between or among Participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

 

Section 2.10.  Replacement Subordinated Notes.

 

(a)           If any mutilated Subordinated Note is surrendered to the Registrar, the Trustee or the Issuer and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Subordinated Note, the Issuer will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Subordinated Note if the Trustee’s requirements are met. If required by the Trustee or the Issuer, an indemnity and/or security must be supplied by the Holder that is sufficient and satisfactory in the judgment of the Trustee and the Issuers to protect the Issuer, the Trustee, any Agent and any Authenticating Agent from any loss that any of them may suffer if a Subordinated Note is replaced. The Issuer and the Trustee may charge for its expenses in replacing a Subordinated Note, including properly incurred fees and expenses of counsel.

 

(b)           Every replacement Subordinated Note is an additional obligation of the Issuer and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Subordinated Notes duly issued hereunder.

 

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

 

Section 2.11.  Outstanding Subordinated Notes.

 

(a)           The Subordinated Notes outstanding at any time are all the Subordinated Notes authenticated by the Trustee except for those canceled by the Registrar, those delivered to the Registrar for cancellation, those reductions in the interest in a Global Note effected by the Trustee, Depositary or Paying Agent in accordance with the provisions hereof, and those described in this Section 2.11 as not outstanding. Except as set forth in Section 2.12, a Subordinated Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Subordinated Note; however, Subordinated Notes held by the Issuer or a Subsidiary of the Issuer shall not be deemed to be outstanding for purposes of Section 3.02.

 

(b)           If a Subordinated Note is replaced pursuant to Section 2.10, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Subordinated Note is held by a protected purchaser.

 

(c)           If the principal amount of any Subordinated Note is considered paid under Section 4.01, it ceases to be outstanding and interest on it ceases to accrue.

 

(d)           If a Paying Agent (other than the Issuer, a Subsidiary of the Issuer or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay

 

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Subordinated Notes payable on that date, then on and after that date such Subordinated Notes will be deemed to be no longer outstanding and will cease to accrue interest.

 

Section 2.12.  Treasury Subordinated Notes.

 

In determining whether the Holders of the required principal amount of Subordinated Notes have concurred in any direction, waiver or consent, Subordinated Notes owned by the Issuer or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Subordinated Notes that the Trustee knows are so owned will be so disregarded.

 

Section 2.13.  Temporary Subordinated Notes.

 

(a)           Until certificates representing Subordinated Notes are ready for delivery, the Issuer may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Subordinated Notes. Temporary Subordinated Notes will be substantially in the form of certificated notes, which are substantially in the form of Exhibit A hereto, but may have variations that the Issuer considers appropriate for temporary Subordinated Notes and as may be reasonably acceptable to the Trustee.

 

(b)           Holders of temporary Subordinated Notes will be entitled to all of the benefits of this Indenture.

 

Section 2.14.  Cancellation; Purchases.

 

(a)           The Issuer at any time may deliver Subordinated Notes to the Registrar for cancellation. The Trustee, each Paying Agent and any Transfer Agent will forward to the Registrar any Subordinated Notes surrendered to them for registration of transfer, exchange or payment. The Registrar and no one else will cancel all Subordinated Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and will dispose of canceled Subordinated Notes (subject to the record retention requirement of the U.S. Exchange Act). Certification of the disposal of all canceled Subordinated Notes will be delivered to the Issuer by the Registrar following a written request from the Issuer. The Issuer may not issue new Subordinated Notes to replace Subordinated Notes that it has paid or that have been delivered to the Registrar for cancellation.

 

(b)           The Issuer may, in its sole discretion, at any time, subject to compliance with the Applicable Supervisory Regulations, purchase the Subordinated Notes for cancellation in the open market or otherwise at any price; provided that such purchase is permitted only if the applicable Conditions to Redemption in Section 3.05 and the limitations relating to optional deferral of interest in Section 2.02(c) have been satisfied with respect to such purchase.

 

Section 2.15.  No Rights of Set-off.

 

The Subordinated Notes will not in any way give rise to any rights of set-off, recoupments or counterclaims against any claims and obligations of the Issuer or any of its subsidiaries in the

 

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Regulatory Group or to any Person in whose names the Subordinated Notes are registered or any creditor of the Issuer or any of its subsidiaries in the Regulatory Group.

 

Section 2.16.  ISIN or Common Code Number.

 

The Issuer in issuing the Subordinated Notes may use an “ISIN” or “Common Code” number and, if so, such ISIN or Common Code number shall be included in notices of redemption or exchange as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness or accuracy of the ISIN or Common Code number printed in the notice or on the Subordinated Notes, and that reliance may be placed only on the other identification numbers printed on the Subordinated Notes, and any such redemption or exchange shall not be affected by any defect in or omission of such numbers.

 

The Issuer will promptly notify the Trustee and the Paying Agent in writing of any change in the ISIN or Common Code number.

 

Section 2.17.  Agents.

 

(a)           Actions of Agents .  The rights, powers, duties and obligations and actions of each Agent under this Indenture are several and not joint or joint and several.

 

(b)           Agents of Trustee .  The Issuer and the Agents acknowledge and agree that in the case of an Issuer Winding-Up Event or the failure of the Issuer to comply with any term or condition under the Subordinated Notes or this Indenture, the Trustee may, by notice in writing to the Issuer and the Agents, require that the Agents act as agents of, and take instructions exclusively from, the Trustee.

 

(c)           The Agents shall hold all funds as bankers subject to the terms of this Indenture and as a result, such money need not be held in accordance with the rules established by the Financial Conduct Authority in its Handbook of rules and guidance from time to time in relation to client money.

 

(d)           The Agents shall be entitled to make payments net of any taxes or other sums required by any applicable law to be withheld or deducted.

 

(e)           Except as expressly provided in this Section 2.17, the Agents shall not have any relationship of agency or trust with any party other than the Issuer.

 

ARTICLE 3
REDEMPTION AND PREPAYMENT

 

Section 3.01.  Final Redemption.

 

(a)           Unless previously redeemed or purchased and canceled, the Subordinated Notes will become finally due and payable, and will be redeemed, on the Final Maturity Date for the Subordinated Notes at a Redemption Price equal to the principal amount thereof, together with accrued and unpaid interest (including Arrears of Interest) on the Subordinated Notes to, but excluding, the Final Maturity Date, and any Additional Amounts thereon.

 

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(b)           The Issuer shall notify the Trustee and the Holders of the Subordinated Notes in writing not less than 10 Business Days prior to the applicable Scheduled Maturity Date (or as soon as reasonably practicable if the applicable Conditions to Redemption are no longer satisfied as of a date less than 10 Business Days prior to the applicable Scheduled Maturity Date) if the applicable Conditions to Redemption will not be satisfied on the applicable Scheduled Maturity Date, which written notice shall state the cause of the failure to satisfy such conditions, and the redemption of the Subordinated Notes shall be deferred until such time as the applicable Conditions to Redemption are satisfied. In such event, the Issuer shall further notify the Trustee and the Holders of the Subordinated Notes in writing not more than 5 Business Days following the satisfaction of the applicable Conditions to Redemption that such conditions have been satisfied and stating the date that final payment on the Subordinated Notes will occur, which shall be the 10th Business Day following the date such conditions were satisfied. If at any time following the date of such written notice and prior to the stated redemption date the applicable Conditions to Redemption are no longer satisfied, the above notice provisions shall again apply.

 

Section 3.02.  Optional Redemption.

 

(a)           Beginning on September 22, 2022 and provided that the applicable Conditions to Redemption have been satisfied and will continue to be satisfied if the optional redemption payment were made on the Subordinated Notes, the Subordinated Notes may be redeemed, in whole at any time or in part from time to time, at the Issuer’s option, at a Redemption Price equal to accrued and unpaid interest (including Arrears of Interest) on the principal amount of Subordinated Notes being redeemed to, but excluding, the redemption date, and any Additional Amounts thereon, plus 100% of the principal amount of the Subordinated Notes to be redeemed.

 

(b)           Notice of any optional redemption will be mailed at least 30 days but not more than 60 days before the date of redemption to each Holder of the Subordinated Notes to be redeemed. The Issuer shall notify the Trustee and the Holders of the Subordinated Notes in writing not less than 10 Business Days prior to the applicable redemption date (or as soon as reasonably practicable if the applicable Conditions to Redemption are no longer satisfied as of a date less than 10 Business Days prior to the applicable redemption date) if the applicable Conditions to Redemption will not be satisfied on the applicable redemption date, which written notice shall state the cause of the failure to satisfy such conditions, and the redemption shall be deferred until such time as the applicable Conditions to Redemption are satisfied. In such event, the Issuer shall further notify the Trustee and the Holders of the Subordinated Notes in writing not more than 5 Business Days following the satisfaction of the applicable Conditions to Redemption that such conditions have been satisfied and stating the new redemption date for the Subordinated Notes, which shall be the 10th Business Day following the date such conditions were satisfied. If at any time following the date of such written notice and prior to the new redemption date the applicable Conditions to Redemption are no longer satisfied, the above notice provisions shall again apply.

 

(c)           Unless the Issuer defaults in payment of the Redemption Price (including, for this purpose, a non-payment in the event the applicable Conditions to Redemption have not been satisfied), on and after the redemption date, interest will cease to accrue on the Subordinated Notes or portions thereof called for redemption. In the event the Subordinated Notes are called for redemption, neither the Issuer nor the Trustee will be required to register the transfer of or exchange the Subordinated Notes to be redeemed during a period beginning at the opening of

 

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business 15 days before the day of the mailing of a notice of redemption and ending at the close of business on the day of such mailing.

 

Section 3.03.  Specified Event Redemption of Subordinated Notes.

 

(a)           The Subordinated Notes may be redeemed at the Issuer’s option and sole discretion, in whole, but not in part, within 90 days following the occurrence of a Specified Event (a “ Specified Event Redemption ”); provided that, at the time of such Specified Event Redemption, the applicable Conditions to Redemption are satisfied and will continue to be satisfied after the redemption payment is made and, if not so satisfied, such Specified Event Redemption will be deferred until such time as the Conditions to Redemption are satisfied. The Subordinated Notes will be redeemed at a Redemption Price equal to the principal amount thereof, together with accrued and unpaid interest (including Arrears of Interest) on the Subordinated Notes being redeemed to, but excluding, the redemption date, and any Additional Amounts thereon.

 

(b)           Notice of any Specified Event Redemption will be mailed at least 30 days but not more than 60 days before the redemption date to the Trustee and each Holder of Subordinated Notes to be redeemed at its registered address (which notice will be irrevocable). The Issuer shall notify the Trustee and the Holders of the Subordinated Notes in writing not less than 10 Business Days prior to the applicable redemption date (or as soon as reasonably practicable if the applicable Conditions to Redemption are no longer satisfied as of a date less than 10 Business Days prior to the applicable redemption date) if the applicable Conditions to Redemption will not be satisfied on the applicable redemption date, which written notice shall state the cause of the failure to satisfy such conditions, and the Specified Event Redemption shall be deferred until such time as the applicable Conditions to Redemption are satisfied. In such event, the Issuer shall further notify the Trustee and the Holders of the Subordinated Notes in writing not more than 5 Business Days following the satisfaction of the applicable Conditions to Redemption that such conditions have been satisfied and stating the new redemption date for the Subordinated Notes, which shall be the 10th Business Day following the date such conditions were satisfied. If at any time following the date of such written notice and prior to the new redemption date the applicable Conditions to Redemption are no longer satisfied, the above notice provisions shall again apply.

 

(c)           Such notice shall state the specified redemption date, the facts establishing the right of the Issuer to redeem the Subordinated Notes, and that all outstanding Subordinated Notes shall be redeemed at the applicable Redemption Price on the redemption date automatically and without any further action by the Holders of the Subordinated Notes.

 

(d)           Unless the Issuer defaults in the payment of the Redemption Price (including, for this purpose, a non-payment in the event the applicable Conditions to Redemption have not been satisfied), on and after the redemption date, interest will cease to accrue on the Subordinated Notes to be redeemed. In the event the Subordinated Notes are called for redemption, neither the Issuer nor the Trustee will be required to register the transfer of or exchange the Subordinated Notes to be redeemed during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption and ending at the close of business on the day of such mailing.

 

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Section 3.04.  Variation and Substitution of the Subordinated Notes.

 

(a)           If a Specified Event occurs, the Issuer may, as an alternative to redemption of the Subordinated Notes, at any time, without the consent of any Holder, by means of a supplemental indenture, vary any term or condition of the Subordinated Notes or substitute all (but not less than all) of the Subordinated Notes for other Subordinated Notes, so that the varied Subordinated Notes or the substituted Subordinated Notes, as the case may be, become Qualifying Equivalent Securities.

 

(b)           The principal amount of the Qualifying Equivalent Securities to be received by Holders in substitution shall be equal to the principal amount of the Subordinated Notes.

 

(c)           Any variation or substitution of the Subordinated Notes is subject to the Issuer’s prior notification to the Holders by no more than 60 nor less than 30 calendar days’ prior notice (which notice shall be irrevocable and shall specify the date fixed for such variation or substitution) in accordance with the notice provisions in Section 3.08 and to:

 

(1)           the Issuer being in compliance with the Applicable Supervisory Regulations on the date of such variation or substitution, and such variation or substitution not resulting directly or indirectly in a breach of such Applicable Supervisory Regulations; and

 

(2)           the Issuer complying with the rules of any stock exchange (or any other relevant authority) on which the Subordinated Notes are listed or admitted to trading.

 

(d)           “ Qualifying Equivalent Securities ” means securities which have terms not materially less favorable to the Holders than the Subordinated Notes, as reasonably determined by the Issuer, and which:

 

(1)           contain terms which comply with then current requirements in relation to Tier 2 Capital under the Applicable Supervisory Regulations;

 

(2)           contain terms providing for the same interest rate and Interest Payment Dates from time to time applying to the Subordinated Notes;

 

(3)           contain new terms providing for mandatory deferral of payments of interest and/or principal only if such terms are not materially less favorable to the Holders than the mandatory deferral provisions contained in Section 2.02(d);

 

(4)           rank senior to or have the same ranking as the Subordinated Notes;

 

(5)           preserve the obligations (including the obligations arising from the exercise of any right) of the Issuer as to redemption of the Subordinated Notes, including (without limitation) as to timing of, and amounts payable upon such redemption;

 

(6)           do not contain terms providing for loss absorption through principal write-down or conversion to ordinary shares; and

 

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(7)           preserve any rights under the Conditions to Redemption to any accrued interest and Arrears of Interest, and any existing rights to other amounts payable under the Subordinated Notes which has accrued to Holders and not been paid.

 

Section 3.05.  Conditions to Redemption.

 

(a)           The “ Conditions to Redemption ” are satisfied on any day with respect to a scheduled redemption (including the applicable Scheduled Maturity Date and the applicable Final Maturity Date) or a planned purchase of the Subordinated Notes, if:

 

(1)           the redemption or purchase of the Subordinated Notes would not result in, or accelerate the occurrence of, an Insolvency Event;

 

(2)           the Solvency Capital Requirement is complied with after the redemption or purchase of the Subordinated Notes;

 

(3)           prior to September 22, 2022 (as well as any subsequent date where such consent is required), the Applicable Supervisor has given, and not withdrawn by such date, its prior consent to the redemption of the Subordinated Notes and the payment of accrued and unpaid interest and Arrears of Interest (if any) and any Additional Amounts thereon or to the purchase of the Subordinated Notes; and

 

(4)           any further conditions to such redemption or purchase under Applicable Supervisory Regulations on the basis that the Subordinated Notes are intended to qualify as Tier 2 Capital (including, for the avoidance of doubt, if the Applicable Supervisory Regulations are Solvency II, that no Insolvent Insurer Winding-Up has occurred and is continuing and that the Solvency II Minimum Capital Requirement is complied with after the redemption or purchase of the Subordinated Notes), or as have otherwise been imposed by the Applicable Supervisor, have, in each case, been complied with.,

 

but only, in the case of (1) through (3) above, to the extent the satisfaction of such condition(s) is required under Applicable Supervisory Regulations so as to permit the Subordinated Notes to qualify as Tier 2 Capital, and, in all cases, unless otherwise permitted by the Applicable Supervisor.

 

(b)           In the event that the Subordinated Notes are not redeemed as a result of a failure to satisfy the Conditions to Redemption, interest on the Subordinated Notes will continue to accrue and be paid on each Interest Payment Date (subject to Section 2.03) until the first date on which final payment on the Subordinated Notes may be made as described above under Section 3.01, at which time the Subordinated Notes will become due and payable, and will be finally redeemed at the principal amount of the Subordinated Notes, together with accrued and unpaid interest (including any Arrears of Interest) and any Additional Amounts thereon in the manner and subject to the conditions stated above.

 

(c)           Notwithstanding any other provision in the Subordinated Notes or this Indenture, in the event of non-payment on a scheduled redemption date resulting from a failure to satisfy the applicable Conditions to Redemption in accordance with this Section 3.05, the Subordinated Notes to be redeemed will not become due and payable on such date, and such non-payment will not

 

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constitute an Issuer Winding-Up Event under this Indenture or the Subordinated Notes and will not give Holders of the Subordinated Notes or the Trustee any right to accelerate repayment of the Subordinated Notes.

 

(d)           An Officer’s Certificate relating to the Subordinated Notes in connection with any redemption under this Article 3 certifying that (i) the applicable Conditions to Redemption have not been met or would not be met if the final redemption payment for the Subordinated Notes were made, or (ii) the applicable Conditions to Redemption have been met and would continue to be met if the final redemption payment for the Subordinated Notes were made or no such Conditions to Redemption apply shall, in the absence of manifest error, be treated and accepted by the Issuer, the Trustee, the Holders of the Subordinated Notes and all other interested parties as correct and sufficient evidence thereof, shall be final and binding on such parties, and the Trustee shall be entitled to rely on such Officer’s Certificate without liability to any Person.

 

Section 3.06.  Election to Redeem; Notices to Trustee.

 

The election of the Issuer to redeem any Subordinated Notes shall be evidenced by a Board Resolution. In case of any redemption at the election of the Issuer of less than all the Subordinated Notes pursuant to Section 3.02, the Issuer shall, not less than 10 days prior to the redemption date fixed by the Issuer (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such redemption date and of the principal amount of Subordinated Notes to be redeemed, such notice to be accompanied by a written statement signed by an authorized officer of the Issuer stating that no defaults in the payment of interest or Issuer Winding-Up Event with respect to Subordinated Notes has occurred (which have not been waived or cured). In the case of any redemption of Subordinated Notes prior to the expiration of any restriction on such redemption provided in the terms of the Subordinated Notes or elsewhere in this Indenture, the Issuer shall furnish the Trustee an Officer’s Certificate setting forth:

 

(1)           the clause of this Indenture pursuant to which the redemption shall occur;

 

(2)           the redemption date and the record date;

 

(3)           the principal amount of Subordinated Notes to be redeemed;

 

(4)           the Redemption Price; and

 

(5)           the ISIN and Common Code numbers.

 

Section 3.07.  Selection of Subordinated Notes to Be Redeemed.

 

If less than all of the Subordinated Notes are to be redeemed, such Subordinated Notes to be redeemed shall be selected by the Trustee, by a method the Trustee deems fair and appropriate subject to the customary procedures of Clearstream and Euroclear. Neither the Paying Agent nor the Registrar shall be liable for selections made in accordance with this Section 3.07.

 

Notices of purchase or redemption will be given to each Holder pursuant to Section 3.08 and Section 12.01.

 

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No Subordinated Notes of SEK 2,000,000 or less will be purchased or redeemed in part.

 

Section 3.08.  Notice of Redemption.

 

(a)           At least 30 days but not more than 60 days before a redemption date, the Issuer will mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Subordinated Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a satisfaction and discharge of this Indenture pursuant to Article 9. If the Subordinated Notes are at such time listed on the Official List of the Irish Stock Exchange, the Issuer shall inform the Irish Stock Exchange of the principal amount of the Subordinated Notes that have not been redeemed in connection with any optional redemption.

 

(b)           The notice will identify the Subordinated Notes to be redeemed and will state:

 

(1)           the redemption date and the record date;

 

(2)           the Redemption Price and accrued and unpaid interest (including Arrears of Interest), if any, and Additional Amounts, if any, to be paid;

 

(3)           if any Global Note is being redeemed in part, the portion of the principal amount of such Global Note to be redeemed and that, after the redemption date upon surrender of such Global Note, the principal amount thereof will be decreased by the portion thereof redeemed pursuant thereto;

 

(4)           if any Definitive Registered Note is being redeemed in part, the portion of the principal amount of such Subordinated Note to be redeemed, and that, after the redemption date, upon surrender of such Subordinated Note, a new Definitive Registered Note or Definitive Registered Notes in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Definitive Registered Note;

 

(5)           the name and address of the Paying Agent(s) to which the Subordinated Notes are to be surrendered for redemption;

 

(6)           that Subordinated Notes called for redemption must be surrendered to the relevant Paying Agent to collect the Redemption Price, accrued and unpaid interest (including Arrears of Interest), if any, and Additional Amounts, if any;

 

(7)           that, unless the Issuer defaults in making such redemption payment, accrued and unpaid interest (including Arrears of Interest) and Additional Amounts, if any, on Subordinated Notes called for redemption ceases to accrue on and after the redemption date;

 

(8)           the paragraph of the Subordinated Notes and/or section of this Indenture pursuant to which the Subordinated Notes called for redemption are being redeemed; and

 

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(9)           that no representation is made as to the correctness or accuracy of the ISIN and Common Code numbers listed in such notice or printed on the Subordinated Notes.

 

At the Issuer’s request, the Paying Agent will give the notice of redemption in the Issuer’s name and at its expense; provided, however, that the Issuer has delivered to the Paying Agent, at least 45 days prior to the redemption date (unless a shorter notice shall be satisfactory to the Trustee), an Officer’s Certificate requesting that the Paying Agent give such notice and setting forth the information to be stated in such notice as provided in Section 3.06.

 

(c)           For Subordinated Notes that are represented by Global Note held on behalf of the Depositary any notice to be given to Holders under this Indenture may be given by delivery of the relevant notices to the Depositary for communication to entitled account holders in substitution for the aforesaid mailing. So long as any Subordinated Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Main Securities Market and the rules and regulations of the Irish Stock Exchange so require, any such notice to the Holders shall also be published by the Issuer in the manner permitted by such rules on the official website of the Irish Stock Exchange (www.ise.ie), and, in connection with any redemption, the Issuer will notify the Irish Stock Exchange of any change in the principal amount of Subordinated Notes outstanding.

 

Section 3.09.  Effect of Notice of Redemption.

 

A redemption and notice may, at the Issuer’s discretion, be subject to the satisfaction of one or more conditions precedent.

 

Section 3.10.  Deposit of Redemption.

 

On or prior to 10:00 a.m. London time one Business Day prior to any redemption date, the Issuer will deposit with the Paying Agent money an amount of money, in funds immediately available on the due date, sufficient to pay the Redemption Price, and (except if the redemption date shall be an Interest Payment Date) accrued and unpaid interest (including Arrears of Interest) and Additional Amounts, if any, on all Subordinated Notes to be redeemed or purchased on that date. The Paying Agent will promptly return to the Issuer any money deposited with the Paying Agent by the Issuer in excess of the amounts necessary to pay the redemption or purchase price of, accrued and unpaid interest (including Arrears of Interest) and Additional Amounts, if any, on all Subordinated Notes to be redeemed or purchased.

 

Section 3.11.  Notes Payable on Redemption Date.

 

If the Issuer complies with Section 3.10, notice of redemption having been given as aforesaid, the Subordinated Notes so to be redeemed shall, on the redemption date, become due and payable at the Redemption Price therein specified together with accrued interest thereon, if any, and from and after such date (unless the Issuer shall default in the payment of the Redemption Price and accrued interest) such Subordinated Notes shall cease to bear interest. If a Subordinated Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Subordinated Note was registered at the close of business on such record date. If any Subordinated Note called for redemption is not so paid upon surrender for redemption because of the failure of the Issuer to comply with Section 3.10, interest shall be paid on the unpaid principal, from the

 

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redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Subordinated Notes and in Section 4.01.

 

ARTICLE 4
COVENANTS

 

Section 4.01.  Payment of Subordinated Notes.

 

The Issuer will pay or cause to be paid the principal of, premium on, if any, accrued and unpaid interest (including Arrears of Interest) and Additional Amounts, if any, on, the Subordinated Notes on the dates and in the manner provided in the Subordinated Notes and this Indenture. Principal, premium, if any, accrued and unpaid interest (including Arrears of Interest) and Additional Amounts, if any, will be considered paid on the date due if the Paying Agent, if other than the Issuer or a Subsidiary of the Issuer, holds as of 10:00 a.m. (London time) one Business Day prior to the due date money deposited by the Issuer in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and accrued and unpaid interest (including Arrears of Interest) and Additional Amounts, if any, then due. If the Issuer or any of the Issuer’s Subsidiaries acts as Paying Agent, principal, premium, if any, accrued and unpaid interest (including Arrears of Interest) and Additional Amounts, if any, shall be considered paid on the due date if the entity acting as Paying Agent complies with Section 4.04. Subject to actual receipt of such funds as provided by this Section 4.01 by the designated Paying Agent, such Paying Agent shall make payments on the Subordinated Notes in accordance with the provisions of this Indenture.

 

Section 4.02.  Additional Amounts Applicable to the Subordinated Notes.

 

(a)           All amounts payable (whether in respect of principal, interest or otherwise) in respect of the Subordinated Notes will be made free and clear of and without withholding or deduction for or on account of any present or future taxes, duties, levies, assessments or governmental charges (including interest, penalties and any liabilities with respect thereto) of whatever nature imposed or levied by or on behalf of any Taxing Jurisdiction, unless the withholding or deduction of such taxes, duties, levies, assessments or governmental charges is required by law. In that event, the Issuer will pay, or cause to be paid, such additional amounts on the Subordinated Notes as may be necessary in order that the net amounts receivable by a Holder of the Subordinated Notes after such withholding or deduction (including any withholding or deduction from such payment of additional amounts) shall equal the respective amounts that would have been receivable by such Holder of the Subordinated Notes had no such withholding or deduction been required (“ Additional Amounts ”), except that no such Additional Amounts shall be payable on the Subordinated Notes in relation to any payment (including a payment made in connection with a redemption) in respect of any of the Subordinated Notes:

 

(1)           to a Holder or a beneficial owner that would be able to avoid such withholding or deduction by complying with such Holder or beneficial owner’s statutory requirements or by making a declaration of non-residence or similar claim for exemption (including a claim under an applicable double taxation treaty) but, in either case, fails to do so, or is liable for such taxes, duties, levies, assessments or governmental charges in

 

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respect of such Subordinated Note by reason of such Holder or beneficial owner having some connection with (including, without limitation, being a citizen of, being incorporated or engaged in a trade or business in, or having a residence or principal place of business in) the Taxing Jurisdiction, other than (A) the mere holding of such Subordinated Notes; (B) the receipt of principal, interest or other amount in respect of such Subordinated Notes; or (C) the mere enforcement of rights with respect to such Subordinated Notes;

 

(2)           presented for payment more than 30 days after the Relevant Date, except to the extent that the relevant Holder would have been entitled to such Additional Amounts on presenting the same for payment on or before the expiration of such period of 30 days;

 

(3)           to a fiduciary, a partnership or Person who is not the beneficial owner of the Subordinated Note, if and to the extent that, as a result of an applicable tax treaty, no Additional Amounts would have been payable had the beneficiary, partner or beneficial owner owned the Subordinated Note directly;

 

(4)           on account of any inheritance, gift, estate, personal property, stamp, sales or transfer or similar taxes, duties, levies, assessments or similar governmental charges;

 

(5)           on account of any taxes, duties, levies, assessments or governmental charges that are payable otherwise than by withholding from payments in respect of such Subordinated Notes;

 

(6)           any taxes that are withheld or deducted pursuant to sections 1471 through 1474 of the Code, any current or future regulations thereunder, official interpretations thereof, or agreements (including any intergovernmental agreement or any laws, rules or practices implementing such intergovernmental agreement) entered into in connection therewith; or

 

(7)           any combination of items (1) through (6) above.

 

(b)           In the event that payments in respect of the Subordinated Notes are subject to withholding or deduction for or on account of any taxes, the Issuer will (i) make any required withholding or deduction and (ii) remit the full amount deducted or withheld to the relevant Taxing Jurisdiction in accordance with applicable law. The Issuer will use commercially reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any taxes so deducted or withheld from each relevant Taxing Jurisdiction imposing such taxes and will use commercially reasonable efforts to provide or make available such certified copies (or other documentary evidence establishing the payment of such taxes) to each Holder.

 

(c)           Any reference in this Indenture or the Subordinated Notes to principal, premium or interest in respect of the Subordinated Notes, any redemption amount and any other amounts in the nature of principal shall be deemed also to refer to any Additional Amounts applicable to the Subordinated Notes that may be payable under this Indenture, and the express mention of the payment of Additional Amounts applicable to the Subordinated Notes (if applicable) in any provision hereof shall not be construed as excluding Additional Amounts applicable to the Subordinated Notes in those provisions hereof where such express mention is not made.

 

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(d)           Except as otherwise provided in or pursuant to this Indenture, if the Subordinated Notes require the payment of Additional Amounts, at least 30 days prior to each date on which any payments under or with respect to the Subordinated Notes are due and payable (unless such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, in which case it shall be promptly thereafter) the Issuer or its designee shall furnish to the Trustee, the Registrar and the Paying Agent an Officer’s Certificate stating the fact that such Additional Amounts will be payable, the amounts so payable, and any other information to enable the Trustee or such Paying Agent to pay such Additional Amounts to Holders on the payment date.

 

(e)           The Issuer will pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies that arise in any jurisdiction from the execution, delivery or registration of the Subordinated Notes or any other document or instrument referred to therein (other than a transfer of the Subordinated Notes) or the receipt of any payments with respect to the Subordinated Notes, excluding any such taxes, charges or similar levies imposed by any jurisdiction outside the Taxing Jurisdictions in which a Paying Agent is located, other than those resulting from, or required to be paid in connection with, the enforcement of the Subordinated Notes, this Indenture or any other such document or instrument following the occurrence of any Issuer Winding-Up Event with respect to the Subordinated Notes, as applicable.

 

Section 4.03.  Maintenance of Office or Agency.

 

(a)           The Issuer will maintain the offices and agencies specified in Section 2.07. The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Trust Office of the Trustee.

 

(b)           The Issuer may also from time to time designate one or more other offices or agencies where the Subordinated Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission will in any manner relieve the Issuer of its obligation to maintain an office or agency in the City of London for such purposes. The Issuer will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

 

(c)           The Issuer hereby designates the Trust Office of the Trustee (the address of which is specified in Section 12.01) as one such office or agency of the Issuer in accordance with Section 2.07.

 

Section 4.04.  Money for Subordinated Notes; Payments to be Held in Trust.

 

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

 

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(b)           The Issuer will cause each Paying Agent for the Subordinated Notes other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 4.04, that such Paying Agent will:

 

(1)           hold all sums held by it for the payment on the principal of (and premium, if any) or interest on the Subordinated Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;

 

(2)           give the Trustee notice of any default by the Issuer in the making of any payment of principal (and premium, if any) or interest on the Subordinated Notes; and

 

(3)           at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

 

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

 

(d)           Any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust for the payment of the principal of (and premium, if any) or interest on any the Subordinated Notes and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Issuer on Company Request, or (if then held by the Issuer) shall be discharged from such trust; and the Holder of the Subordinated Notes shall thereafter, as an unsecured general creditor, look, only to the Issuer for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, shall at the expense of the Issuer cause to be mailed or published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the City, County and State of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such mailing or publication, any unclaimed balance of such money then remaining will be repaid to the Issuer.

 

(e)           The Issuer shall have no obligation to make payment of principal of (or premium, if any) or interest on the Subordinated Notes in immediately available funds, except that if the Issuer shall have received original payment for Subordinated Notes in immediately available funds it shall make available immediately available funds for payment of the principal of the Subordinated Notes.

 

Section 4.05.  Deferral of Distributions in the Event of Regulatory Breach.

 

For so long as the Regulatory Group is in breach of any applicable Solvency Capital Requirement or Minimum Capital Requirement, there will be no distributions nor payments made

 

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pursuant to the Subordinated Notes, and such payments will be deferred until such time as the applicable breach is rectified.

 

Section 4.06.  Reports.

 

(a)           For so long as any Subordinated Notes are outstanding, unless (i) the Issuer becomes subject to the reporting requirements of Section 13 or 15(d) of the U.S. Exchange Act (as amended), or (ii) the Issuer’s common shares are admitted to trading on a regulated market within the meaning of Article 4(1) of the European Markets in Financial Instruments Directive, it will, at its expense:

 

(1)           furnish to the Trustee, within 60 days after the last day of each fiscal quarter of each fiscal year (other than the fourth such fiscal quarter in any fiscal year), unaudited financial statements (which shall be as of and for the portion of the fiscal year then ended and prepared in accordance with GAAP; such financial statements are to include the Issuer’s consolidated balance sheet as of the end of such fiscal quarter and its consolidated statement of income, changes in shareholders equity and cash flows for the portion of the fiscal year then ended (or such other types of financial information or financial statements as at the time are specified by GAAP), setting forth in comparative form the corresponding figures as of the end of, and for the corresponding portion of, the preceding fiscal year, all prepared in accordance with GAAP; and such financials may be subject to customary year-end adjustments, with footnote and schedule disclosure abbreviated or omitted;

 

(2)           furnish to the trustee, within 120 days after the last day of each fiscal year, the Issuer’s consolidated balance sheet as of the end of such fiscal year and its consolidated statement of income, changes in shareholders equity and cash flows for such fiscal year (or such other types of financial statements as at the time are specified by GAAP), setting forth in comparative form the corresponding figures as of the end of and for the preceding fiscal year, all prepared in accordance with GAAP and accompanied by an audit report of a firm of independent public accountants of recognized international standing selected by the Issuer; and

 

(3)           upon written certification from any Person that is a Holder of Subordinated Notes or any beneficial owner of an interest in a global note certificate (which request must be provided as set forth in this Indenture and must indicate whether the Person making such request is a Holder or beneficial owner of Subordinated Notes), promptly deliver to such Holder or beneficial owner, as the case may be, by mailing or otherwise providing electronically to such Holder or beneficial owner or by posting on a website or by any online data system a copy of the financial information or financial statements then most recently provided to the Trustee pursuant to subparagraph (1) or (2) above, as the case may be, and thereafter, unless otherwise expressly stated in such request, deliver to such Holder or beneficial owner, as the case may be, a copy of all subsequent financial information and financial statements provided to the Trustee pursuant to subparagraphs (1) and (2) above (such financial information and financial statements to be delivered to such Holder or beneficial owner as promptly as practicable following the delivery thereof to the Trustee) unless such request is revoked by such Holder or beneficial owner by notice to the Issuer delivered as provided in this Indenture or until such time as the Issuer shall have reasonably

 

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determined that such Person is no longer a Holder or beneficial owner of Subordinated Notes.

 

(b)           For purposes of (1), (2) and (3) above, the term “ GAAP ” means (i) the generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (“ U . S . GAAP ”), and as are applicable to the financial statements of the Issuer as of the date of any computation required hereunder or (ii) if elected by the Issuer by written notice (the “ IFRS Election ”) to the Trustee, the International Financial Reporting Standards issued by the International Accounting Standards Board (“ IFRS ”), and as are applicable to the financial statements of the Issuer as of the date of any computation required hereunder. Upon such IFRS Election, references to GAAP shall thereafter be constructed to mean (a) for prior periods, U.S. GAAP and (b) periods beginning on and after the date specified in such notice, IFRS.

 

Section 4.07.  Compliance Certificates.

 

(a)           The Issuer will deliver to the Trustee, within 120 days after the end of each fiscal year, commencing September 22, 2017, an Officer’s Certificate from an Officer who shall be the principal executive officer, principal financial officer or principal accounting officer of the Issuer as to his knowledge of the Issuer’s compliance with all conditions and covenants under this Indenture and, in the event of any noncompliance, specifying such noncompliance and the nature and status thereof and stating that to such signing Officer’s knowledge no default, Issuer Winding-Up Event or any failure by the Issuer to comply with any term or condition under the Subordinated Notes has occurred and is continuing (or, if a default or any Issuer Winding-Up Event has occurred and is continuing, describing all such defaults or any Issuer Winding-Up Event of which he has knowledge and what action the Issuer is taking or proposes to take with respect thereto). For the purposes of this Section 4.07, such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture.

 

(b)           The Issuer will deliver to the Trustee, promptly upon becoming aware of (i) any default in the performance or observance of any covenant, agreement or condition contained in this Indenture, or (ii) any default or any Issuer Winding-Up Event, an Officer’s Certificate specifying with particularity such default or Issuer Winding-Up Event and further stating what action the Issuer has taken, is taking or proposes to take with respect thereto.

 

(c)           Any notice required to be given under this Section 4.07 shall be delivered to a Responsible Officer of the Trustee at the Trust Office of the Trustee.

 

Section 4.08.  Taxes.

 

The Issuer will pay, and will cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders; provided, in each case, that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor.

 

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Section 4.09.  Tax Treatment of Subordinated Notes.

 

The Issuer and each Holder, by purchasing the Subordinated Notes, agrees to treat the Subordinated Notes as indebtedness for U.S. federal income tax purposes, except as otherwise required by applicable law.

 

Section 4.10.  Stay, Extension and Usury Laws.

 

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

 

Section 4.11.  Corporate Existence.

 

Subject to Article 5, the Issuer shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises; provided, however, that the Issuer shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Issuer and that the loss thereof is not disadvantageous in any material respect to the Holders.

 

ARTICLE 5
SUCCESSORS

 

Section 5.01.  Consolidation, Amalgamation, Merger or Sale of Assets.

 

As long as the Subordinated Notes are outstanding, the Issuer may not (1) consolidate or amalgamate with or merge into any Person, or convey, transfer, sell, assign, lease or otherwise dispose of all or substantially all of the Issuer’s properties and assets as an entirety, in one or more related transactions, to any Person or (2) permit any Person to consolidate with or amalgamate or merge into the Issuer or convey, transfer, sell, assign, lease or otherwise dispose of its properties and assets substantially as an entirety to the Issuer, in each case in one or more related transactions, unless:

 

(a)           (1) the Issuer is the surviving entity; or (2) the Person formed by the consolidation or amalgamation or into which the Issuer is merged or the Person to which the Issuer’s properties and assets are so conveyed, transferred, sold, assigned, leased or disposed of, (i) is a corporation, partnership or limited liability company organized or existing under the laws of the United States, any state of the United States, the District of Columbia, Bermuda, Sweden, the United Kingdom, Singapore or any country that is, as of the date of this Indenture, a member of the Organisation for Economic Cooperation and Development or the European Union and (ii) expressly assumed by supplemental indenture the payment of all amounts due on the Subordinated Notes and the

 

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performance of every obligation in this Indenture and the Subordinated Notes to be performed or observed;

 

(b)           immediately after giving effect to the transaction, no Issuer Winding-Up Event, and no event that, after notice or lapse of time or both, would become an Issuer Winding-Up Event, will have occurred and be continuing; and

 

(c)           the Issuer has delivered an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that such transaction and any supplemental indenture required in connection with such transaction complies with the applicable provisions of this Indenture.

 

Section 5.02.  Successor Corporation Substituted.

 

Upon any consolidation or amalgamation by the Issuer with or merger of the Issuer into any Person, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the properties or assets of the Issuer in accordance with Section 5.01 the successor Person formed by such consolidation or amalgamation or into or with which the Issuer is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, amalgamation, merger, sale, assignment, transfer, lease, conveyance or other disposition, the provisions of this Indenture referring to the “Issuer” shall refer instead to the successor Person and not to the Issuer or the Issuer), and may exercise every right and power of the Issuer or the Issuer, as applicable, under this Indenture with the same effect as if such successor Person had been named as the Issuer or the Issuer herein.

 

ARTICLE 6
DEFAULTS AND REMEDIES

 

Section 6.01.  No Events of Default.

 

There are no events of default under this Indenture with respect to the Subordinated Notes and no breach of this Indenture or the Subordinated Notes shall constitute an event of default.

 

Section 6.02.  Acceleration.

 

If an Issuer Winding-Up Event occurs, the entire principal amount of the Subordinated Notes, together with accrued and unpaid interest (including Arrears of Interest) and any Additional Amounts thereon, will automatically become due and payable without any declaration or other action on the part of the Trustee or any Holder of the Subordinated Notes; provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Subordinated Notes may rescind an acceleration and its consequences. The right of acceleration only applies upon the occurrence of an Issuer Winding-Up Event. Any failure to pay interest on the Subordinated Notes when due as a result of a Mandatory Deferral Event or to pay principal of the Subordinated Notes when due as a result of any of the applicable Conditions to Redemption not being satisfied shall not constitute an Issuer Winding-Up Event under this Indenture or the Subordinated Notes.

 

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Section 6.03.  Notice of Defaults.

 

The Trustee shall give Holders notice of an Issuer Winding-Up Event or of any failure of the Issuer to comply with any term or condition under the Subordinated Notes or this Indenture within 90 days after it becomes actually known to a Responsible Officer of the Trustee; provided, however, that the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders.

 

Section 6.04.  Other Remedies.

 

(a)           The Trustee may, at its discretion and without further notice, institute such proceedings or take such steps or actions against the Issuer as it may think fit to enforce any term or condition binding on the Issuer under the Subordinated Notes or this Indenture (other than any payment obligation of the Issuer under or arising from the Subordinated Notes or this Indenture, including any payment of damages awarded for breach of any obligations thereunder) but in no event shall the Issuer, by virtue of the institution of any such proceedings or the taking of such steps or actions be obliged to pay any sum or sums, in cash or otherwise, sooner than the same would otherwise have been payable by it under the terms of the Subordinated Notes. Nothing in this paragraph shall, however, (i) prevent the Trustee from proving in any winding-up or administration of the Issuer and/or claiming in any liquidation of the Issuer in respect of any payment obligation of the Issuer, in each case where such payment obligation arises from the Subordinated Notes or this Indenture (including, without limitation, payment of any principal, interest (including Arrears of Interest) and any Additional Amounts in respect of the Subordinated Notes or any payment of damages awarded for breach of any obligations under the Subordinated Notes or this Indenture), or (ii) impair the right of any Holder to receive payment of principal of, or interest (including Arrears of Interest) and any Additional Amounts on such Holder’s Subordinated Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Subordinated Notes. For the avoidance of doubt, the Trustee will in no circumstances be required to take any such action prior to an Issuer Winding-Up Event unless directed by a majority of holders pursuant to Section 6.05.

 

(b)           The Trustee may maintain a proceeding even if it does not possess any of the Subordinated Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Issuer Winding-Up Event shall not impair the right or remedy or constitute a waiver of or acquiescence in the Issuer Winding-Up Event. Subject to the provisions of this Indenture relating to the duties of the Trustee, in the case of an Issuer Winding-Up Event or any failure of the Issuer to comply with any term or condition under the Subordinated Notes or this Indenture occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any Holders unless such Holders have offered to the Trustee, and the Trustee has received, indemnity and/or security (including by way of pre-funding) satisfactory to it against any loss, liability, cost or expense. All remedies are cumulative to the extent permitted by law.

 

(c)           Notwithstanding anything to the contrary contained in this Indenture, upon the occurrence and continuation any Specified Event or Mandatory Deferral Event, the Holders of the

 

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Subordinated Notes shall have no right to direct or instruct the Trustee to take any action against the Issuer with respect to or as a result of such event, and the Trustee shall have no duties, obligations or responsibilities under this Indenture or under the Subordinated Notes, and shall not be required to take any directions or instructions from Holders of the Subordinated Notes, with respect to or as a result of such event and shall incur no liability for any action it takes or abstains from taking with respect thereto.

 

Section 6.05.  Control by Majority.

 

Holders of a majority in aggregate principal amount of the then outstanding Subordinated Notes may direct the time, method and place of conducting any proceeding for exercising any remedy or power available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee, in its sole discretion determines may be unduly prejudicial to the rights of other Holders of Subordinated Notes or that may involve the Trustee in personal liability.

 

Section 6.06.  Limitation on Suits.

 

Except (subject to Article 8) to enforce the right to receive payment of principal, premium, if any, or interest or Additional Amounts when due, no Holder may pursue any remedy with respect to this Indenture or the Subordinated Notes unless:

 

(1)           such Holder has previously given the Trustee notice that an Issuer Winding-Up Event is continuing;

 

(2)           Holders of at least 25% in aggregate principal amount of the then outstanding Subordinated Notes make a written request to the Trustee to pursue the remedy;

 

(3)           such Holders have offered the Trustee, and the Trustee has received, security (including by way of pre-funding) and/or indemnity satisfactory to it against any loss, liability or expense;

 

(4)           the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security (including by way of pre-funding) and/or indemnity by way of pre-funding; and

 

(5)           Holders of a majority in aggregate principal amount of the then outstanding Subordinated Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

 

A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder, and the Trustee shall not have an obligation to ascertain whether Holders’ actions are unduly prejudicial to other Holders.

 

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Section 6.07.  Rights of Holders to Receive Payment.

 

Except as otherwise expressly set forth in this Indenture, the right of any Holder to receive payment of principal of, premium on, if any, accrued and unpaid interest (including Arrears of Interest) or Additional Amounts, if any, on the Subordinated Notes, on or after the respective due dates expressed in the Subordinated Notes (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder other than as provided for in Section 8.03.

 

Section 6.08.  Collection Suit by Trustee.

 

If an Issuer Winding-Up Event occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuer for the whole amount of principal of, premium on, if any, accrued and unpaid interest (including Arrears of Interest) and Additional Amounts, if any, remaining unpaid on, the Subordinated Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any amounts due to the Trustee under Section 7.05.

 

Section 6.09.  Trustee May File Proofs of Claim.

 

The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the properly incurred compensation, costs, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Issuer (or any other obligor upon the Subordinated Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the compensation, costs, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.05. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amount due the Trustee under Section 7.05 out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Subordinated Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

 

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Section 6.10.  Undertaking for Costs.

 

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.10 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Subordinated Notes.

 

Section 6.11.  Restoration of Rights and Remedies.

 

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

 

Section 6.12.  Rights and Remedies Cumulative.

 

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Subordinated Notes in Section 2.10, no right or remedy herein conferred upon or to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

Section 6.13.  Delay or Omission Not Waiver.

 

No delay or omission of the Trustee or any Holder to exercise any right or remedy accruing upon any Issuer Winding-Up Event or any failure of the Issuer to comply with any term or condition under the Subordinated Notes or this Indenture shall impair any such right or remedy or constitute a waiver of any such Issuer Winding-Up Event or any such failure of the Issuer to comply with any term or condition under the Subordinated Notes or this Indenture or an acquiescence therein. Every right and remedy given by this Article 6 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

 

Section 6.14.  Priorities.

 

If the Trustee collects any money pursuant to this Article 6 or, if after an Issuer Winding-Up Event, any money or other property is distributable in respect of the Issuer’s obligations under this Indenture, the Trustee shall pay out the money or distribute the money or other property in the following order:

 

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First : to the Trustee and each of the Agents (including any predecessor trustee or agent), their agents and attorneys for amounts due under Section 7.05 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

 

Second : to Holders for amounts due and unpaid on the Subordinated Notes for principal, premium and Additional Amounts, if any, and accrued and unpaid interest (including Arrears of Interest), ratably, without preference or priority of any kind, according to the amounts due and payable on the Subordinated Notes for principal, premium and Additional Amounts, if any, and accrued and unpaid interest (including Arrears of Interest), respectively; and

 

Third : to the Issuer or to such party as a court of competent jurisdiction shall direct.

 

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.14.

 

ARTICLE 7
TRUSTEE

 

Section 7.01.  Duties of Trustee.

 

(a)           If an Issuer Winding-Up Event under Article 6 shall occur (and shall not be cured) under this Indenture and is actually known to a Responsible Officer of the Trustee, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in such exercise as a prudent person would exercise or use under the circumstances in the conduct of his own affairs.

 

(b)           Except during the continuance of an Issuer Winding-Up Event:

 

(1)           the duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

(2)           in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee will examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts, statements, opinions or conclusions stated therein) and shall be entitled to seek advice from legal counsel in relation thereto.

 

(c)           The Trustee may not be relieved from liabilities for its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct, except that:

 

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(1)           this Section 7.01(c) does not limit the effect of Section 7.01(b) or Section 7.01(e);

 

(2)           the Trustee will not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

 

(3)           the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.02 or Section 6.05.

 

(d)           Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to this Section 7.01.

 

(e)           No provision of this Indenture will require the Trustee to expend or risk its own funds or otherwise incur any liability. The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holder, unless such Holder has offered to the Trustee, and the Trustee has received, security and/or indemnity (including by way of pre-funding) satisfactory to it against any loss, liability, cost or expense.

 

(f)            The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

 

(g)           The Trustee shall not be deemed to have notice or any knowledge of any matter (including without limitation any default, any Insolvency Event, Specified Event, Mandatory Deferral Event or any Issuer Winding-Up Event) unless written notice thereof is received by a Responsible Officer of the Trustee at the Trust Office of the Trustee and such notice clearly references the Subordinated Notes, the Issuer and this Indenture.

 

Section 7.02.  Rights of Trustee.

 

(a)           The Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document (whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate or verify any fact or matter stated in the document.

 

(b)           Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel. The Trustee may consult with counsel or other professional advisors and the written advice of such counsel, professional advisor or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

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(c)           The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

 

(d)           The Trustee will not be liable for any action it takes, suffers or omits to take in good faith that it believes to be authorized or within the discretion, rights or powers conferred upon it by this Indenture.

 

(e)           Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer will be sufficient if signed by an Officer of the Issuer.

 

(f)            The Trustee will not be under any obligation to exercise any of its rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity and/or security satisfactory to it against the losses, liabilities, costs and expenses that might be incurred by it in compliance with such request or direction.

 

(g)           The Trustee shall have no duty to monitor or inquire as to the performance of the covenants of the Issuer. Delivery of reports, information and documents to the Trustee under Section 4.06 is for informational purposes only and the Trustee’s receipt of the foregoing shall not constitute actual or constructive knowledge or notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of their covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates). The Trustee shall have no duty to examine any such reports, information and documents and its sole duty shall be to maintain them in its files and to make them available to Holders during business hours upon reasonable advance request.

 

(h)           The Trustee shall not have any obligation or duty to monitor, determine or inquire as to compliance, and shall not be responsible or liable for compliance with restrictions on transfer, exchange, redemption, purchase or repurchase, as applicable, of minimum denominations imposed under this Indenture or under applicable law or regulation with respect to any transfer, exchange, redemption, purchase or repurchase, as applicable, of any interest in any Subordinated Notes.

 

(i)            The rights, privileges, protections, immunities and benefits given to the Trustee, including its right to be indemnified and/or secured to its satisfaction, are extended to, and shall be enforceable by the Trustee in each of its capacities hereunder and by each agent (including the Agents), custodian and other Person employed to act hereunder. Absent willful misconduct or negligence, no Agent shall be liable for acting in good faith on instructions believed by it to be genuine and from the proper party.

 

(j)            In the event the Trustee receives inconsistent or conflicting requests and indemnity or security from two or more groups of Holders, each representing less than a majority in aggregate principal amount of the Subordinated Notes then outstanding, pursuant to the provisions of this Indenture, the Trustee, in its sole discretion, may determine what action, if any, will be taken and shall not incur any liability for its failure to act until such inconsistency or conflict is, in its opinion, resolved.

 

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(k)           In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused, directly or indirectly, by circumstances beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

(l)            The Trustee is not required to give any bond or surety with respect to the performance or its duties or the exercise of its powers under this Indenture or the Subordinated Notes.

 

(m)          The permissive right of the Trustee to take the actions permitted by this Indenture shall not be construed as an obligation or duty to do so.

 

(n)           The Trustee will not be liable to any Person if prevented or delayed in performing any of its obligations or discretionary functions under this Indenture by reason of any present or future law applicable to it, by any governmental or regulatory authority or by any circumstances beyond its control.

 

(o)           The Trustee shall not be liable for any special, indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to loss of business, goodwill, opportunity or profit of any kind) of the Issuer or any other Person (or, in each case, any successor thereto), even if advised of it in advance and even if foreseeable.

 

(p)           The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit at the sole cost of the Issuer, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer personally or by agent or attorney.

 

(q)           The Trustee may request that the Issuer deliver an Officer’s Certificate setting forth the names of the individuals and/or titles of officers, directors, managers, and Authorized Signatories authorized at such time to take specified actions pursuant to this Indenture, which Officer’s Certificate may be signed by any person authorized to sign an Officer’s Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

 

(r)            No provision of this Indenture shall require the Trustee to do anything which, in its opinion, may be illegal or contrary to applicable law or regulation.

 

(s)            The Trustee may refrain from taking any action in any jurisdiction if the taking of such action in that jurisdiction would, in its opinion, based upon legal advice in the relevant jurisdiction, be contrary to any law of that jurisdiction or, to the extent applicable, the State of New York.

 

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(t)            The Trustee may retain professional advisors to assist it in performing its duties under this Indenture. The Trustee may consult with such professional advisors or with counsel, and the advice or opinion of such professional advisors or counsel with respect to legal or other matters relating to this Indenture and the Subordinated Notes shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

 

(u)           The Trustee may assume without inquiry in the absence of actual knowledge and written notification or information that the Issuer is duly complying with their obligations contained in this Indenture required to be performed and observed by them.

 

Section 7.03.  Individual Rights of Trustee.

 

The Trustee in its individual or any other capacity may become the owner or pledgee of Subordinated Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Section 7.08.

 

Section 7.04.  Trustee Not Responsible for Recitals, Disposition of Subordinated Notes or Application of Proceeds Thereof.

 

The recitals contained herein and in the Subordinated Notes, except the certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same, except that the Trustee represents that it is duly authorized to execute and deliver this indenture, authenticate the Subordinated Notes and perform its obligations hereunder. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Subordinated Notes and shall not be responsible for any statement in any document in connection with the sale or distribution of the Subordinated Notes. The Trustee shall not be accountable for the use or application by the Issuer of any of the Subordinated Notes or of the proceeds thereof or funds received and disbursed in accordance with this Indenture.

 

Section 7.05.  Compensation and Indemnity.

 

The Issuer covenants and agrees to pay the Trustee from time to time and the Trustee shall be entitled to, such compensation as the Issuer and the Trustee may from time to time agree in writing for all services rendered by the Trustee hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Issuer covenants and agrees to pay or reimburse the Trustee and each predecessor trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as shall be attributable to its negligence or willful misconduct. The Issuer also covenants to indemnify the Trustee and its officers, directors, employees and agents and each predecessor trustee for, and hold it harmless against, any loss, liability, damage, claim (whether asserted by the Issuer or any Holder or any other Person) or expense, including taxes (other than taxes measured by the income of the

 

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Trustee or otherwise applicable to the Trustee for operations outside the scope of this Indenture) incurred without negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and the performance of its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in connection with the exercise or performance of any of its powers or duties hereunder except to the extent that any such loss, liability, damage, claim or expense shall be attributable to the Trustee’s negligence or willful misconduct. The obligations of the Issuer under this Section 7.05 to compensate and indemnify the Trustee and each predecessor trustee and to pay or reimburse the Trustee and each predecessor trustee for expenses, disbursements and advances shall survive the satisfaction and discharge of this Indenture and resignation or removal of the Trustee. To secure the Issuer’s payment obligations in this Section 7.05, the Trustee will have a Lien prior to the Subordinated Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal of, premium on, if any, accrued and unpaid interest (including Arrears of Interest) or Additional Amounts, if any, on, particular Subordinated Notes. Such Lien will survive the satisfaction and discharge of this Indenture and resignation or removal of the Trustee. When the Trustee incurs expenses after the occurrence of an Issuer Winding-Up Event, the expenses are intended to constitute expenses of administration under Bankruptcy Law. “Trustee” for the purposes of this Section 7.05 shall include any predecessor Trustee and the Trustee in each of its capacities hereunder and each Agent; provided, however, that the negligence or willful misconduct of any Trustee hereunder shall not affect the rights of any other Trustee hereunder.

 

Section 7.06.  Resignation and Removal of Trustee; Replacement of Trustee.

 

(a)           The Trustee may resign at any time without cause and be discharged from the trust hereby created by so notifying the Issuer in writing.

 

(b)           The Holders of a majority in aggregate principal amount of the then outstanding Subordinated Notes may remove the Trustee upon 30 days’ notice to the Trustee and the Issuer in writing and may appoint a successor Trustee.

 

(c)           The Issuer may remove the Trustee with or without cause if the Issuer so notifies the Trustee 30 days in advance and if no default occurs or is continuing during the 30 day period. The Issuer may also remove the Trustee if:

 

(1)           the Trustee fails to comply with Section 7.08;

 

(2)           the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

 

(3)           a custodian or public officer takes charge of the Trustee or its property; or

 

(4)           the Trustee becomes incapable of acting.

 

(d)           If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer will promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then

 

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outstanding Subordinated Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.

 

(e)           If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, (i) the retiring Trustee, the Issuer, or the Holders of at least 10% in aggregate principal amount of the then outstanding Subordinated Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee or (ii) the retiring Trustee may appoint a successor Trustee at any time prior to the date on which a successor Trustee takes office; provided that such appointment shall be reasonably satisfactory to the Issuer.

 

(f)            If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.08, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

(g)           A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.06.

 

(h)           A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee will mail a notice of its succession to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.05. Notwithstanding replacement of the Trustee pursuant to this Section 7.06, the Issuer’s obligations under Section 7.05 will continue for the benefit of the retiring Trustee.

 

Section 7.07.  Successor Trustee by Merger, etc.

 

If the Trustee consolidates, amalgamates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another Person, the successor Person without any further act will be the successor Trustee.

 

Section 7.08.  Eligibility; Disqualification.

 

There will at all times be a Trustee hereunder that is a Person organized and doing business under the laws of the United States, or any state thereof, or England and Wales that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by U.K. or U.S. federal or state authorities and which is generally recognized as a Person which customarily performs such corporate trustee roles and provides such corporate trustee services in transactions similar in nature to the offering of the Subordinated Notes as described in the Prospectus.

 

Section 7.09.  Rights of Trustee and Agents to Receive Fees, Expenses and Indemnities.

 

Notwithstanding anything to the contrary in this Indenture, the rights of the Trustee and any Agent to receive payment of its fees and expenses pursuant to Section 7.05, its right to

 

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indemnification pursuant to Section 7.05 and Section 12.14, its lien provided for in Section 7.05 and its rights to have money or other property applied to it pursuant to Section 6.14 on the respective due dates therefor, or to bring suit for enforcement of any such payments or lien on or after such respective dates shall not be impaired by the occurrence of any event under this Indenture, including but not limited to any Mandatory Deferral Event, Issuer Winding-Up Event or Specified Event, and all such rights shall survive any Issuer Winding-Up Event and are not subject to the subordination provisions applicable to the Subordinated Notes pursuant to Article 10 or Section 11.01.

 

ARTICLE 8
MODIFICATION AND WAIVER

 

Section 8.01.  Amendment and Modification with Consent of Applicable Supervisor.

 

Any amendment or modification to this Indenture or the Subordinated Notes shall require the prior consent of the Applicable Supervisor, if such consent is then required, and any amendment or modification made or purported to be made without such consent shall be void. Further, the Issuer, when authorized by Board Resolutions, and the Trustee, at any time and from time to time, may amend or supplement the provisions of Article 11 without the consent of any Holder to the extent determined reasonably necessary to comply with, or satisfy, regulations or requirements of the Applicable Supervisor relating to the Subordinated Notes, as determined by the senior management of the Issuer in good faith.

 

Section 8.02.  With Consent of Holders.

 

(a)           Subject to Section 8.03, the Issuer, when authorized by a Board Resolution, and the Trustee may modify, amend and/or supplement this Indenture and the Subordinated Notes with the consent of the Holders of not less than a majority in principal amount of the outstanding Subordinated Notes (voting as a single class); provided , however, that such modification, amendment or supplement may not, without the consent of each Holder of the Subordinated Notes:

 

(1)           change the Stated Maturity of the principal of or any premium or any installment of interest with respect to the Subordinated Notes;

 

(2)           reduce the principal amount of, or the rate of interest on or any premium payable upon the redemption of, the Subordinated Notes, or change the Issuer’s obligation to pay Additional Amounts;

 

(3)           change the currency of payment of principal of or interest on the Subordinated Notes;

 

(4)           change the redemption provisions, if any, of any Subordinated Notes in any manner adverse to the Holders of such Subordinated Notes;

 

(5)           impair the right to institute suit for the enforcement of any payment on or with respect to the Subordinated Notes;

 

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(6)           reduce the above-stated percentage of Holders of the Subordinated Notes necessary to modify or amend this Indenture;

 

(7)           modify the subordination provisions of this Indenture in a manner adverse to the Holders of such Subordinated Notes then outstanding; or

 

(8)           modify the foregoing requirements or reduce the percentage of outstanding Subordinated Notes necessary to waive any covenant or past default.

 

(b)           Holders of not less than a majority in principal amount of the outstanding Subordinated Notes (voting as a single class) may waive certain past defaults and may waive compliance by the Issuer with any provision of this Indenture relating to such Subordinated Notes (subject to the immediately preceding sentence); provided, however, that:

 

(1)           without the consent of each Holder of Subordinated Notes, no waiver may be made of a default in the payment of the principal of or interest on any Subordinated Note or in respect of a covenant or provision of this Indenture that expressly states that it cannot be modified or amended without the consent of each Holder; and

 

(2)           only the Holders of a majority in principal amount of Subordinated Notes may waive compliance with a provision of this Indenture.

 

(c)           The consent of the Holders under this Section 8.03Section 8.02 is not necessary to approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such consent approves the substance of the proposed amendment, supplement or waiver.

 

Section 8.03.  Without Consent of Holders.

 

(a)           The Issuer, when authorized by a Board Resolution, and the Trustee may amend or supplement this Indenture or waive any provision of the same and the Subordinated Notes without the consent of any Holders of Subordinated Notes for one or more of the following purposes:

 

(1)           to cure any ambiguity, mistake or omission, or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture;

 

(2)           to make any change that does not, in the good faith opinion of the Board of Directors, as evidenced by an Officer’s Certificate and an Opinion of Counsel to that effect, adversely affect the interests of Holders of such Subordinated Notes in any material respect, provided that any amendment or supplement conforming this Indenture to the terms described in the Prospectus (including any supplement thereto) pursuant to which they were initially sold shall be deemed not to adversely affect the interests of Holders of such Subordinated Notes;

 

(3)           to evidence the succession of another Person to the Issuer, or successive successions, and the assumption by the successor Person of the covenants, agreements and obligations of the Issuer, as the case may be, under this Indenture and the Subordinated Notes, in each case in compliance with this Indenture;

 

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(4)           to add covenants that would benefit the Holders of such Subordinated Notes or to surrender any rights or powers the Issuer has under this Indenture;

 

(5)           to provide any security for or guarantees of such Subordinated Notes;

 

(6)           to add events of default with respect to such Subordinated Notes; or

 

(7)           to evidence and provide for the acceptance of appointment by a successor trustee with respect to the Subordinated Notes and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts under this Indenture by more than one trustee, pursuant to the requirements of this Indenture;

 

(8)           to evidence any variation or substitution of the Subordinated Notes in accordance with Section 3.04(a) of this Indenture in a supplemental indenture.

 

Section 8.04.  Revocation and Effect of Consents.

 

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Subordinated Note or portion of a Subordinated Note that evidences the same debt as the consenting Holder’s Subordinated Note, even if notation of the consent is not made on any Subordinated Note. However, any such Holder or subsequent Holder may revoke the consent as to its Subordinated Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

 

Section 8.05.  Notation on or Exchange of Subordinated Notes.

 

The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Subordinated Note thereafter authenticated. The Issuer in exchange for all Subordinated Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Subordinated Notes that reflect the amendment, supplement or waiver.

 

Failure to make the appropriate notation or issue a new Subordinated Note will not affect the validity and effect of such amendment, supplement or waiver.

 

Section 8.06.  Trustee to Sign Amendments, etc.

 

The Trustee will sign any amended or supplemental indenture authorized pursuant to this Article 8 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Issuer may not sign an amended or supplemental indenture until the Board of Directors of the Issuer approves it. In executing any amended or supplemental indenture, the Trustee will be entitled to receive and (subject to Section 7.01) will be fully protected in relying upon, in addition to the documents required by Section 12.03, an Officer’s Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture and that such amended or supplemental indenture is

 

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the legal, valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, subject to customary exceptions.

 

ARTICLE 9
SATISFACTION AND DISCHARGE

 

Section 9.01.  Satisfaction and Discharge.

 

This Indenture shall cease to be of further effect with respect to the Subordinated Notes (except as to (i) any surviving rights of registration of transfer or exchange of Subordinated Notes herein expressly provided for, (ii) rights hereunder of Holders to receive payments of principal of, and premium, if any, and interest on, Subordinated Notes, and other rights, duties and obligations of the Holders as beneficiaries hereof with respect to the amounts, if any, so deposited with the Trustee and (iii) the rights, obligations and immunities of the Trustee hereunder), and the Trustee, upon Company Request and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect the Subordinated Notes, when:

 

(1)           all Subordinated Notes that have not been delivered to the Registrar for cancellation (i) have become due and payable, (ii) will become due and payable at their Stated Maturity within one year or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer, in the case of (i), (ii) or (iii) has irrevocably deposited or caused to be deposited with the Trustee, or such other entity designated by the Trustee for this purpose, as trust funds in trust solely for the benefit of the Holders, (x) money in cash in Swedish krona in an amount, (y) Swedish Government Obligations which through the payment of interest and principal in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment referred to in this subparagraph, money in an amount, or (iii) a combination thereof, sufficient, without reinvestment, in the opinion of a nationally recognized investment banking firm or firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee (which shall not be subject to the requirements of Section 12.03), to pay and discharge the entire indebtedness on such Subordinated Notes not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any), accrued and unpaid interest (including Arrears of Interest) and Additional Amounts, if any, to the date of such deposit (in the case of Subordinated Notes which have become due and payable) or to the Stated Maturity or redemption date, as the case may be;

 

(2)           the Issuer has paid or caused to be paid all sums payable by it under this Indenture; and

 

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

 

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Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant this Section 9.01, Section 9.02 will survive. In addition, nothing in this Section 9.01 will be deemed to discharge those provisions of Section 7.05 that, by their terms, survive the satisfaction and discharge of this Indenture.

 

Section 9.02.  Application of Trust Money.

 

(a)           All money deposited and Swedish Government Obligations with the Trustee or such other entity designated by the Trustee for this purpose pursuant to Section 9.01 shall be held in trust and applied by it, in accordance with the provisions of the Subordinated Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal of, premium on, if any, accrued and unpaid interest (including Arrears of Interest) and Additional Amounts, if any, for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

 

(b)           If the Trustee or Paying Agent is unable to apply any money or Swedish Government Obligations, as applicable, in accordance with Section 9.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s obligations under this Indenture and the Subordinated Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 9.01; provided that if the Issuer has made any payment of principal of, premium on, if any, accrued and unpaid interest (including Arrears of Interest) and Additional Amounts, if any, on, the Subordinated Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of the Subordinated Notes to receive such payment from the money or Swedish Government Obligations by the Trustee or Paying Agent.

 

ARTICLE 10
SUBORDINATION

 

Section 10.01.  Agreement to Subordinate.

 

(a)           The Issuer covenants and agrees, and each Holder of Subordinated Notes issued hereunder by such Holder’s acceptance thereof (and each beneficial owner by accepting a Book-Entry Interest) likewise covenants and agrees, that all Subordinated Notes shall be issued subject to the provisions of this Article 10; and each Holder of Subordinated Notes, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions.

 

(b)           The payment by the Issuer of the principal of, and interest on, the Subordinated Notes issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and junior in right of payment to the prior payment in full of all Senior Indebtedness of the Issuer, whether outstanding at the date of this Indenture or thereafter incurred, and pari passu with all of the Issuer’s future debt that by its terms ranks equally in right of payment with the Subordinated Notes upon a winding up of the Issuer.

 

(c)           No provision of this Article 10 shall prevent the occurrence of any default hereunder.

 

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Section 10.02.  Default on Senior Indebtedness.

 

(a)           If any default occurs and is continuing in the payment when due, whether at maturity, upon any redemption, by declaration or otherwise, of any principal of, interest on, unpaid drawings for letters of credit issued in respect of, or regularly accruing fees with respect to, any Senior Indebtedness, no payment of any kind or character shall be made by the Issuer or any other Person on the Issuer’s behalf with respect to any principal of, interest on or other amounts owing in respect of the Subordinated Notes or to acquire any of the Subordinated Notes for cash, property or otherwise.

 

(b)           If any other event of default occurs and is continuing with respect to any Senior Indebtedness, as such event of default is defined in the instrument creating or evidencing such Senior Indebtedness, permitting the holders of such Senior Indebtedness then outstanding to accelerate the maturity thereof and if the representative (as defined in the applicable instrument creating or evidencing such Senior Indebtedness) for the respective issue of Senior Indebtedness gives written notice of the event of default to the Trustee (a “ Default Notice ”), then, unless and until all events of default have been cured or waived or have ceased to exist or the Trustee receives notice from the representative for the respective issue of Senior Indebtedness terminating the Blockage Period (as defined below), during the 179 days after the delivery of such Default Notice (the “ Blockage Period ”), neither the Issuer nor any other Person on the Issuer’s behalf shall:

 

(1)           make any payment of any kind or character with respect to any principal of, interest on or other amounts owing in respect of the Subordinated Notes; or

 

(2)           acquire any of the Subordinated Notes for cash, property or otherwise.

 

(c)           Notwithstanding anything herein to the contrary, in no event will a Blockage Period extend beyond 179 days from the date the payment on the Subordinated Notes was due and only one such Blockage Period may be commenced within any 360 consecutive days. No event of default which existed or was continuing on the date of the commencement of any Blockage Period with respect to the Senior Indebtedness shall be, or be made, the basis for commencement of a second Blockage Period by the representative of such Senior Indebtedness whether or not within a period of 360 consecutive days unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any financial covenants for a period commencing after the date of commencement of such Blockage Period that, in either case, would give rise to an event of default pursuant to any provisions under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose).

 

(d)           In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding paragraph of this Section 10.02, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Issuer, to the extent necessary to pay such Senior Indebtedness in full, in cash, after giving effect to any concurrent

 

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payment or distribution to or for the benefit of the holders of such Senior Indebtedness, before any payment or distribution is made to the Holders or to the Trustee.

 

(e)           This Indenture does not restrict the amount of the Issuer’s or the applicable Issuer’s Subsidiaries’ Senior Indebtedness or other indebtedness. As a result of the foregoing provisions, in the event of the Issuer’s insolvency, Holders of the Subordinated Notes may recover ratably less than the Issuer’s general creditors.

 

Section 10.03.  Liquidation; Dissolution; Bankruptcy.

 

(a)           Upon any payment or distribution of assets of any kind or character, whether in cash, property or securities, to creditors upon any total or partial liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Issuer or its property, whether voluntary or involuntary, all principal of, interest on and all other amounts due or to become due shall be paid, first, to all Senior Indebtedness in full in cash, or such payment duly provided for to the satisfaction of the holders of Senior Indebtedness, before any payment or distribution of any kind or character is made on account of any principal of, interest on or other amounts owing in respect of the Subordinated Notes, or for the acquisition of any of the Subordinated Notes for cash, property or otherwise, before any payment or distribution is made to the Holders or to the Trustee.

 

(b)           In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall be received by the Trustee before all Senior Indebtedness of the Issuer is paid in full, or provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of such Senior Indebtedness or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Issuer, to the extent necessary to pay such Senior Indebtedness in full, in cash, after giving effect to any concurrent payment or distribution to or for the benefit of the holders of such Senior Indebtedness, before any payment or distribution is made to the Holders or to the Trustee.

 

(c)           For purposes of this Article 10, the words “cash, property or securities” shall not be deemed to include shares of stock of the Issuer as reorganized or readjusted, or securities of the Issuer or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article 10 with respect to the Subordinated Notes to the payment of all Senior Indebtedness of the Issuer that may at the time be outstanding; provided, however, that (i) such Senior Indebtedness is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of such Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. The amalgamation or consolidation of the Issuer with, or the merger of the Issuer into, another Person or the liquidation or dissolution of the Issuer following the conveyance or transfer of its properties or assets substantially as an entirety, to another Person upon the terms and conditions provided for in Article 5 of this Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 10.03 if such

 

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other Person shall, as part of such amalgamation, consolidation, merger, conveyance or transfer, comply with the conditions stated in Article 5 of this Indenture. Nothing in Section 10.01, Section 10.02 or in this Section 10.03 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.14 or Section 7.05 of this Indenture.

 

(d)           If the Trustee or any Holder of Subordinated Notes does not file a proper claim or proof of debt in the form required in any proceeding referred to above prior to 30 days before the expiration of the time to file such claim in such proceeding, then the holder of any Senior Indebtedness is hereby authorized, and has the right, to file an appropriate claim or claims for or on behalf of such Holder of Subordinated Notes.

 

Section 10.04.  Subrogation.

 

(a)           Subject to the payment in full of all Senior Indebtedness of the Issuer then outstanding, the rights of the Holders shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Issuer applicable to such Senior Indebtedness until the principal of and interest on the Subordinated Notes shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the Holders or the Trustee would be entitled except for the provisions of this Article 10, and no payment over pursuant to the provisions of this Article 10 to or for the benefit of the holders of such Senior Indebtedness by Holders or the Trustee, shall, as between the Issuer, its creditors other than holders of Senior Indebtedness of the Issuer, and the Holders, be deemed to be a payment by the Issuer to or on account of such Senior Indebtedness. It is understood that the provisions of this Article 10 are and are intended solely for the purposes of defining the relative rights of the Holders, on the one hand, and the holders of such Senior Indebtedness, on the other hand.

 

(b)           Nothing contained in this Article 10 or elsewhere in this Indenture or in the Subordinated Notes is intended to or shall impair, as between the Issuer, its creditors other than the holders of Senior Indebtedness of the Issuer, and the Holders, the obligation of the Issuer, which is absolute and unconditional, to pay to the Holders the principal of and interest on the Subordinated Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Issuer other than the holders of Senior Indebtedness of the Issuer nor shall anything herein or therein prevent the Trustee or any Holder of Subordinated Notes from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 10 of the holders of such Senior Indebtedness in respect of cash, property or securities of the Issuer received upon the exercise of any such remedy.

 

(c)           Upon any payment or distribution of assets of the Issuer referred to in this Article 10, the Trustee of this Indenture, and the Holders shall be entitled to rely conclusively upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding-up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person making such payment or distribution, delivered to the Trustee or the Holders, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of Senior Indebtedness and other indebtedness of the

 

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Issuer the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10.

 

Section 10.05.  Trustee to Effectuate Subordination.

 

Each Holder of Subordinated Notes by such Holder’s acceptance thereof authorizes and directs the Trustee on such Holder’s behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article 10 and appoints the Trustee such Holder’s attorney-in-fact for any and all such purposes.

 

Section 10.06.  Notice by the Issuer.

 

(a)           The Issuer shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Issuer that would prohibit the making of any payment of monies to or by the Trustee in respect of the Subordinated Notes pursuant to the provisions of this Article 10. Notwithstanding the provisions of this Article 10 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of monies to or by the Trustee in respect of the Subordinated Notes pursuant to the provisions of this Article 10, or the taking of any other action by the Trustee, unless and until a Responsible Officer of the Trustee shall have received at the Trust Office of the Trustee written notice thereof from the Issuer or a Holder or Holders of Senior Indebtedness or from any representative or trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 7.01 of this Indenture, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 10.06 at least three Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of or interest on any Subordinated Notes), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which such money was received, and shall not be affected by any notice to the contrary that may be received by it within three Business Days prior to such date.

 

(b)           The Trustee, subject to the provisions of Section 7.01 of this Indenture, shall be entitled to conclusively rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness of the Issuer (or a trustee or representative on behalf of such holder), to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee or representative on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of such Senior Indebtedness to participate in any payment or distribution pursuant to this Article 10, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article 10 and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

 

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Section 10.07.  Rights of the Trustee; Holders of Senior Indebtedness.

 

(a)           The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article 10 in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.

 

(b)           With respect to the holders of Senior Indebtedness of the Issuer, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article 10 and no implied covenants or obligations with respect to the holders of such Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and the Trustee shall not be liable to any holder of such Senior Indebtedness if it shall pay over or deliver to Holders, the Issuer or any other Person money or assets to which any holder of such Senior Indebtedness shall be entitled by virtue of this Article 10 or otherwise.

 

Section 10.08.  Subordination May Not be Impaired.

 

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

 

(b)           Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness of the Issuer may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders, without incurring responsibility to the Holders and without impairing or releasing the subordination provided in this Article 10 or the obligations hereunder of the Holders to the holders of such Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing the same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release any Person liable in any manner for the collection of such Senior Indebtedness; and (iv) exercise or refrain from exercising or waive any rights against the Issuer and any other Person.

 

(c)           Each present and future holder of Senior Indebtedness shall be entitled to the benefit of the provisions of this Article 10 notwithstanding that such holder is not a party to this Indenture.

 

Section 10.09.  Article Applicable to Paying Agents.

 

In case at any time any Paying Agent other than the Trustee shall have been appointed by the Issuer and be then acting hereunder, the term “Trustee” as used in this Article 10 shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article 10 in addition to or in place of the Trustee; provided, however, that this

 

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Section 10.09 shall not apply to the Issuer or any Affiliate of the Issuer if it or such Affiliate acts as Paying Agent.

 

Section 10.10.  Defeasance of This Article.

 

Notwithstanding anything contained herein to the contrary, payments from cash or the proceeds of Swedish Government Obligations held in trust under Article 9 hereof by the Trustee (or other qualifying trustee) and which were deposited in accordance with the terms of Article 9 hereof and not in violation of Section 10.02 hereof for the payment of principal of and interest on the Subordinated Notes shall not be subordinated to the prior payment of any Senior Indebtedness or subject to the restrictions set forth in this Article 10, and none of the Trustee or any Holders shall be obligated to pay over any such amount to the Issuer or any holder of Senior Indebtedness or any other creditor of the Issuer.

 

Section 10.11.  Subordination Language to be Included in Subordinated Notes.

 

Each Subordinated Note shall contain a subordination provision which will be substantially in the following form:

 

“The Subordinated Notes are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full of all Senior Indebtedness (as defined in the Indenture). Each Holder by accepting a Subordinated Note agrees to such subordination and authorizes the Trustee to give it affect.”

 

Section 10.12.  Trustee Not Fiduciary for Holders of Senior Indebtedness.

 

The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if the Trustee shall mistakenly pay over or distribute to Holders of Subordinated Notes or to the Issuer or to any other Person cash, property, securities, or other assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article 10 or otherwise. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article 10 and no implied covenants or obligations with respect to holders of Senior Indebtedness shall be read into this Indenture against the Trustee.

 

ARTICLE 11
ADDITIONAL SUBORDINATION UNDER APPLICABLE SUPERVISORY
REGULATIONS

 

The following provisions have been included to reflect requirements set by the BMA relating to the issuance and terms of the Subordinated Notes and are subject in all respects to the provisions under Section 12.07.

 

Section 11.01.  Subordination of the Subordinated Notes.

 

The Issuer covenants and agrees, and each Holder of Subordinated Notes issued hereunder by such Holder’s acceptance thereof (and each beneficial owner by accepting a Book-Entry Interest) likewise covenants and agrees that the Subordinated Notes shall be subordinated to the

 

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claims of all Senior Creditors on the terms and to the minimum extent necessary under the Applicable Supervisory Regulations (whether they be the Bermuda Group Rules, Solvency II or otherwise) as in effect from time to time so as to permit the Subordinated Notes to qualify as Tier 2 Capital. The subordination provisions of this Section 11.01 shall be given effect prior to the application of the subordination provisions of Article 10 set forth above.

 

Section 11.02.  No Encumbrances.

 

By purchasing the Subordinated Notes, each Holder of such Subordinated Notes shall also be deemed to agree and acknowledge that no security of any kind is, or will at any time be, provided by the Issuer or any of its respective affiliates to secure the rights of Holders of the Subordinated Notes.

 

ARTICLE 12
MISCELLANEOUS

 

Section 12.01.  Notices.

 

Any notice or communication by the Issuer, the Trustee, the Registrar, the Transfer Agent, the Calculation Agent or the Paying Agent to the others is duly given if in writing and delivered in Person or by first class mail (registered or certified, return receipt requested), email, facsimile transmission or overnight air courier guaranteeing next day delivery, to the others’ address:

 

If to the Issuer:

 

Sirius International Group, Ltd.
c/p Sirius Global Services, LLC
140 Broadway
32nd Floor
New York, New York 10005
Fax: 001 (212) 312-2526
Attention: General Counsel

 

With a copy to (which copy shall be delivered as an accommodation and shall not be required to be delivered in satisfaction of any requirement hereof):

 

Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Fax: 212-728-8111
Attention:  Gregory B. Astrachan and Matthew B. Stern

 

If to the Trustee, Registrar or Transfer Agent:

 

The Bank of New York Mellon
101 Barclay Street, 7W
New York, NY 10286

 

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Fax: 212-815-5704
Attention:  Corporate Trust Division — Corporate Finance Unit

 

If to the Paying Agent or Calculation Agent:

 

The Bank of New York Mellon acting through its London Branch
One Canada Square
London E14 5AL
Fax: 00-44-1202 689601
Attention: Corporate Trust Administration

 

The Issuer, the Trustee, the Paying Agent, the Registrar, the Transfer Agent or the Calculation Agent, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

 

All notices and communications (other than those sent to Holders) will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery; except in the case of notices or communications given to the Trustee or any Agent, which shall be effective only upon receipt at the Trust Office of the Trustee or its address listed in this Section 12.01, as applicable.

 

In no event shall the Trustee, the Paying Agent, the Transfer Agent, the Registrar, or the Calculation Agent be liable for any losses arising out of receiving or transmitting any data from the Issuer or any party via any non-secured method of transmission or communication, such as, but without limitation, by facsimile. The parties hereto accept that some methods of communication are not secure and the Trustee, the Paying Agent, the Transfer Agent, the Registrar and the Calculation Agent shall incur no liability for receiving instructions via any such non-secured method. The Issuer shall use all reasonable endeavors to ensure that instructions transmitted to the Trustee, the Paying Agent, the Transfer Agent, the Registrar or the Calculation Agent pursuant to this Indenture are complete and correct. Any instructions shall be conclusively deemed to be valid instructions from the Issuer or proper Person of the Issuer to the Trustee, the Paying Agent, the Transfer Agent, the Registrar or the Calculation Agent for the purposes of this Indenture.

 

All notices to the Holders (while any Subordinated Notes are represented by one or more Global Note) shall be delivered to the Depositary as applicable for communication to entitled account holders. So long as the Subordinated Notes are listed on the Official List of the Irish Stock Exchange and admitted to trading on the Main Securities Market and the rules and regulations of the Irish Stock Exchange so require, all notices to Holders will also be published by the Issuer on the website of the Irish Stock Exchange (www.ise.ie).

 

Notices given by publication will be deemed given on the first date on which publication is made. Notices delivered to the Depositary will be deemed given on the date when delivered. Notices given by first class mail, postage paid, will be deemed given five calendar days after mailing whether or not the addressee receives it.

 

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Other than with respect to the Trustee and the Agents, if a notice or communication is mailed or published in the manner provided in this Section 12.01 within the time prescribed, it is duly given, whether or not the addressee receives it.

 

If the Issuer mails a notice or communication to Holders, it will mail a copy to the Trustee and each Agent at the same time.

 

Section 12.02.  Certificate and Opinion as to Conditions Precedent.

 

Upon any request or application by the Issuer to the Trustee to take any action under this Indenture, the Issuer shall furnish to the Trustee:

 

(1)           an Officer’s Certificate (which must include the statements set forth in Section 12.03) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; provided, however, that no such Officer’s Certificate shall be delivered with respect to the authentication and delivery of any Subordinated Notes on the date hereof; and

 

(2)           an Opinion of Counsel (which must include the statements set forth in Section 12.03) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been complied with; provided, however, that no such Opinion of Counsel shall be delivered with respect to the authentication and delivery of any Subordinated Notes on the date hereof.

 

Section 12.03.  Statements Required in Certificate or Opinion.

 

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

 

(1)           a statement that the Person making such certificate or opinion has read such covenant or condition;

 

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

 

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

 

(4)           a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.

 

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Section 12.04.  Rules by Trustee and Agents.

 

The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

 

Section 12.05.  Agent for Service; Submission to Jurisdiction; Waiver of Immunities.

 

The Issuer and the Trustee each agree that any legal suit, action or proceeding instituted against the Issuer in relation to any matter arising under this Indenture or the Subordinated Notes may be brought in any United States Federal or New York State court sitting in the Borough of Manhattan, The City of New York, New York to the extent that such court has subject matter jurisdiction over the controversy, and, by execution and delivery of this Indenture, the Issuer hereby irrevocably submits to, generally and unconditionally, the personal jurisdiction of the aforesaid courts, acknowledges their competence and irrevocably agrees to be bound by any judgment rendered in such proceeding. The Issuer also irrevocably and unconditionally waives for the benefit of the Trustee and the Holders of the Subordinated Notes any objection to the venue of a proceeding in any such court and any immunity from legal process (whether through service or notice, attachment prior to judgment, attachment in the aid of execution, execution or otherwise) in respect of this Indenture. The Issuer hereby irrevocably designates and appoints for the benefit of the Trustee and the Holders of the Subordinated Notes for the term of this Indenture Sirius America Insurance Company, 140 Broadway, 32nd Floor, New York, New York 10005, (fax: (212) 312-2512); Attention: General Counsel, and a copy to Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY, 10019; Attention: Gregory B. Astrachan and Matthew B. Stern as its agent to receive on its behalf service of all process, brought against it with respect to any such proceeding in any such court in The City of New York, such service being hereby acknowledged by the Issuer to be effective and binding service on it in every respect whether or not the Issuer shall then be doing or shall have at any time done business in New York. The Issuer further agrees that such appointment of Sirius America shall be irrevocable and that Sirius America shall maintain an office in New York City so long as any of the Subordinated Notes or the obligations of the Issuer hereunder remain outstanding or until the appointment of a successor by the Issuer and such successor’s acceptance of such appointment. Upon such acceptance, the Issuer shall notify the Trustee in writing of the name and address of such successor. The Issuer further agrees for the benefit of the Trustee and the Holders of the Subordinated Notes to take any and all action, including the execution and filing of any and all such documents and instruments as may be necessary to continue the designation and appointment of such agent in full force and effect, so long as any of the Subordinated Notes or the obligations of the Issuer hereunder shall be outstanding. The Trustee shall not be obligated and shall have no responsibility with respect to any failure of the Issuer to take any such action. Nothing herein shall affect the right to serve process in any other manner permitted by any law or limit the right of the Trustee or any Holder to institute proceedings against the Issuer in the courts of any other jurisdiction or jurisdictions.

 

Section 12.06.  No Personal Liability of Directors, Officers, Authorized Signatories, Employees and Shareholders.

 

No director, officer, employee, Authorized Signatory, incorporator or shareholder of the Issuer, as such, will have any liability for any obligations of the Issuer under the Subordinated

 

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Notes, this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Subordinated Notes by accepting a Subordinated Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Subordinated Notes. The waiver may not be effective to waive liabilities under applicable securities laws.

 

Section 12.07.  Governing Law.

 

THIS INDENTURE AND EACH SUBORDINATED NOTE SHALL (OTHER THAN SECTION 4.05 AND ARTICLE 11 OF THIS INDENTURE) BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW OR ANY SUCCESSOR TO SUCH STATUTE) WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE. SECTION 4.05 AND ARTICLE 11 OF THIS INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF BERMUDA (OR IN THE EVENT THAT THE APPLICABLE SUPERVISOR IS BASED IN A JURISDICTION OTHER THAN BERMUDA, UNDER THE LAWS OF THAT JURISDICTION). EXCEPT THAT THE RIGHT OF THE TRUSTEE TO RECEIVE ITS FEES, EXPENSES AND INDEMNIFICATION PURSUANT TO Section 7.05, AND ITS LIEN PROVIDED FOR IN SUCH SECTION, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

Section 12.08.  Waiver of Jury Trial.

 

To the fullest extent permitted by applicable law, each of the Issuer, the Trustee and each Holder of a Subordinated Note by its acceptance thereof waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Indenture, the Subordinated Notes or the transactions contemplated thereby.

 

Section 12.09.  No Adverse Interpretation of Other Agreements.

 

Nothing in this Indenture or in the Subordinated Notes, expressed or implied, shall give or be construed to give to any Person, other than the parties hereto and their successors and the Holders of the Subordinated Notes, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and the Holders of the Subordinated Notes.

 

Without limiting the generality of the foregoing, this Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuer, the Issuer or its subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

 

Section 12.10.  Successors.

 

All agreements of the Issuer in this Indenture and the Subordinated Notes will bind its successors and assigns, whether so expressed or not. All agreements of the Trustee in this Indenture will bind its successors and assigns, whether so expressed or not.

 

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Section 12.11.  Severability.

 

In case any provision in this Indenture or in the Subordinated Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.

 

Section 12.12.  Counterpart Originals.

 

The parties may sign any number of copies of this Indenture. Each signed copy will be an original, but all of them together represent the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or electronic (i.e., “.pdf” or “.tif”) transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or electronic (i.e., “.pdf” or “.tif”) transmission shall be deemed to be their original signatures for all purposes.

 

Section 12.13.  Table of Contents, Headings, etc.

 

The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof.

 

Section 12.14.  Indemnification of Judgment Currency.

 

The Issuer will indemnify the Trustee and each Holder of the Subordinated Notes to the fullest extent permitted by applicable law against any loss incurred by the Trustee or any such Holder, as applicable, as a result of any judgment or order being given or made for any amount due under such Subordinated Notes and the judgment or order being expressed and paid in a currency (the “ Judgment Currency ”) other than Swedish krona and as a result of any variation as between (i) the rate of exchange at which the Swedish krona is converted into the Judgment Currency for the purpose of the judgment or order and (ii) the spot rate of exchange in The City of New York at which the Trustee or such Holder, as applicable, on the date that payment is made pursuant to the judgment or order is able to purchase Swedish krona in the amount of the Judgment Currency actually received by the Trustee or such Holder.

 

Section 12.15.  Prescription.

 

Claims against the Issuer for the payment of principal or Additional Amounts, if any, on the Subordinated Notes will be prescribed ten years after the applicable due date for payment thereof. Claims against the Issuer for the payment of interest on the Subordinated Notes will be prescribed five years after the applicable due date for payment of interest.

 

Section 12.16.  No Security Interest Created.

 

Nothing in this Indenture or in any Subordinated Notes, express or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect in any jurisdiction where property of the Issuer or its respective Subsidiaries is or may be located.

 

75



 

Section 12.17.  U.S.A. Patriot Act.

 

The Issuer acknowledges that in accordance with Section 326 of the U.S.A. PATRIOT Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each Person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. PATRIOT Act.

 

Section 12.18.  FATCA.

 

The Issuer agrees (i) to provide the Trustee with such reasonable information as it has in its possession to enable the Trustee to determine whether any payments pursuant to this Indenture are subject to the withholding requirements described in Section 1471(b) of the Code, or otherwise imposed pursuant to Sections 1471 through 1474 of the Code and any regulations, or agreements thereunder or official interpretations thereof (“ Applicable Law ”), and (ii) that the Trustee shall be entitled to make any withholding or deduction from payments under this Indenture to the extent necessary to comply with Applicable Law, for which the Trustee shall not have any liability.

 

Section 12.19.  Prior Agreements.

 

This Indenture supersedes all prior agreements and understandings (whether written or oral) between the parties with respect to the subject matter hereof.

 

[ Signatures on following page ]

 

76



 

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

 

 

SIRIUS INTERNATIONAL GROUP, LTD.,

 

as Issuer

 

 

 

 

 

 

By

/s/ Kernan V. Oberting

 

Name:

Kernan V. Oberting

 

Title:

Chief Financial Officer

 

[Signature Page to the Floating Rate Notes Indenture]

 



 

THE BANK OF NEW YORK MELLON, as Trustee, Registrar and Transfer Agent

 

 

 

By

/s/ Laurence J. O’Brien

 

Name:

Laurence J. O’Brien

 

Title:

Vice President

 

[Signature Page to the Floating Rate Notes Indenture]

 



 

THE BANK OF NEW YORK MELLON ACTING THROUGH ITS LONDON BRANCH, as Paying Agent and Calculation Agent

 

 

 

By

/s/ Thomas Vanson

 

Name:

Thomas Vanson

 

Title:

Authorised Signatory

 

[Signature Page to the Floating Rate Notes Indenture]

 


 

EXHIBIT A

 

[FORM OF FACE OF SUBORDINATED NOTE]

 

[THIS SECURITY IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY NAMED BELOW OR A NOMINEE OF THE DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED HEREIN AND IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THIS SECURITY AND THE INDENTURE. THE REGISTERED HOLDER HEREOF MAY BE TREATED BY THE ISSUER, THE TRUSTEE, THE AGENTS AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.](1)

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR PARTICIPATION THEREIN, PRIOR TO THE DATE (THE “ RESALE RESTRICTION TERMINATION DATE ”) THAT IS 40 DAYS AFTER THE LATER OF THE ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) PURSUANT TO AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT OF EACH OF THE ISSUER, THE REGISTRAR AND THE TRUSTEE, PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C) OR (D), TO REQUIRE DELIVERY OF A CERTIFICATE, OPINION OF COUNSEL OR OTHER INFORMATION SATISFACTORY TO IT. BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S.

 


(1)  Global Note legend.  Include bracketed language in Global Note only.

 

A- 1



 

PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.

 

AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “U.S. PERSON” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE REGISTRAR TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING.

 

THE RIGHTS ATTACHING TO THIS SECURITY ARE AS SPECIFIED IN THE INDENTURE.

 

A- 2



 

SIRIUS INTERNATIONAL GROUP, LTD.
Floating Rate Callable Subordinated Notes Due 2047

 

No. [        ]

$[               ]

 

[Common Code:                 ]

 

ISIN:                 

 

SIRIUS INTERNATIONAL GROUP, LTD., a company organized under the laws of Bermuda (herein called the “ Issuer ,” which term includes any successor corporation or other entity under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to [           ], as common depositary for Clearstream Banking société anonyme and Euroclear Bank SA/NV, or its registered assigns, or its registered assigns, the principal sum of [           ] Swedish krona, [as revised by the Schedule of Increases and Decreases in Global Note attached hereto,](2) on [           ], 2047 (the “ Scheduled Maturity Date ”) and interest thereon as set forth below.

 

Terms used but not defined in this Subordinated Note shall have the meanings assigned to them in the subordinated indenture dated September 22, 2017 (as such may be amended from time to time, the “ Indenture ”).

 

The Subordinated Notes will bear interest from (and including the Issue Date) to, but excluding, the Final Maturity Date or earlier redemption of the Subordinated Notes as provided in the Indenture, as the case may be, at the Interest Rate, payable quarterly in arrears on each Interest Payment Date to the Persons in whose name the Subordinated Notes were registered at the close of business on the applicable Interest Payment Record Date. On the Final Maturity Date or earlier date of redemption, the Issuer will pay accrued and unpaid interest from the most recent date to which interest has been paid or provided for. If the Final Maturity Date falls on a day that is not a Business Day, the payment of interest and principal will be made on the next succeeding Business Day, and no interest will accrue for the period from and after the Final Maturity Date.

 

The payment of interest on this Subordinated Note is subject to deferral in accordance with Sections 2.02(c) and 2.02(d) of the Indenture. If, as of the Scheduled Maturity Date, the Conditions to Redemption have not been satisfied, final redemption of this Subordinated Note shall be deferred until the Final Maturity Date, pursuant to the redemption provisions of the Indenture.

 

Principal and interest will be payable, and the Subordinated Notes will be transferable or exchangeable, at the office or offices or agency maintained by the Issuer for this purpose, provided, however, that any payment to the Depositary or its nominee shall be paid by wire transfer in immediately available funds in accordance with the wire transfer instruction supplied by the Depositary or its nominee from time to time to the Paying Agent. All payment obligations under the Subordinated Notes will be payable in Swedish krona. Interest on the

 


(2)  Include bracketed language in a Global Note only.

 

A- 3



 

Subordinated Notes will be calculable on the basis of a day-count fraction equal to the actual number of days elapsed in the relevant Interest Period divided by 360.

 

Reference is made to the further provisions of this Subordinated Note set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

 

This Subordinated Note shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with and governed by the laws of said State applicable to contracts entered into and to be performed in such State.

 

This Subordinated Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or a duly authorized Authenticating Agent under the Indenture.

 

[Remainder of page intentionally left blank]

 

A- 4



 

IN WITNESS WHEREOF, the Issuer has caused this Subordinated Note to be duly executed.

 

 

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

Dated:

 

 

 

 

 

 

 

 

CERTIFICATE OF AUTHENTICATION:

 

 

THE BANK OF NEW YORK MELLON, certifies that this is one of the Subordinated Notes described in the within-named Indenture.

 

 

 

 

By:

 

 

 

 

Authorized Officer

 

 

 

A- 5



 

[FORM OF REVERSE OF SUBORDINATED NOTE]

 

SIRIUS INTERNATIONAL GROUP, LTD.
Floating Rate Callable Subordinated Notes Due 2047

 

This Subordinated Note is one of a duly authorized issue of Subordinated Notes of the Issuer, designated as its Floating Rate Callable Subordinated Notes Due 2047 (the “ Subordinated Notes ”), initially issued in the aggregate principal amount of SEK 2,750,000,000, all issued or to be issued under and pursuant to the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer and the Holders of the Subordinated Notes, and of the terms upon which the Subordinated Notes are, and are to be, authenticated and delivered. In the event of a conflict between the terms of this Subordinated Note and the terms of the Indenture, the terms of the Indenture shall control. Additional Notes may be issued in an unlimited aggregate principal amount, subject to certain conditions specified in the Indenture.

 

The Subordinated Notes are issuable only in registered form without coupons, in denominations of SEK 2,000,000 and any integral multiples of SEK 1,000,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Subordinated Notes so issued are exchangeable for a like aggregate principal amount of Subordinated Notes of a different authorized denomination, as requested by the Holder surrendering the same.

 

Beginning on September 22, 2022, and provided that the applicable Conditions to Redemption have been satisfied and would continue to be satisfied if the optional redemption payment were made on the Subordinated Notes, the Subordinated Notes may be redeemed, in whole at any time or in part from time to time, at the Issuer’s option, at a Redemption Price equal to accrued and unpaid interest (including Arrears of Interest) on the principal amount of Subordinated Notes being redeemed to, but excluding, the redemption date, and any Additional Amounts thereon, plus 100% of the principal amount of the Subordinated Notes to be redeemed.

 

The Subordinated Notes may be redeemed at the Issuer’s option and sole discretion, in whole but not in part, within 90 days following the occurrence of a Specified Event; provided that, at the time of such Specified Event Redemption, the applicable Conditions to Redemption are satisfied and would continue to be satisfied after the redemption payment is made and, if not so satisfied, such Specified Event Redemption will be deferred until such time as the Conditions to Redemption are satisfied. The Subordinated Notes will be redeemed at a Redemption Price equal to the principal amount thereof, together with accrued and unpaid interest (including Arrears of Interest) on the Subordinated Notes being redeemed to, but excluding, the Redemption Date, and any Additional Amounts thereon.

 

If a Specified Event occurs, the Issuer may, as an alternative to redemption of the Subordinated Notes, at any time, without the consent of any Holder, vary any term or condition of the Subordinated Notes or substitute all (but not less than all) of the Subordinated Notes for other Subordinated Notes, so that the varied Subordinated Notes or the substituted Subordinated Notes, as the case may be, become Qualifying Equivalent Securities.

 

A- 6



 

For so long as the Regulatory Group is in breach of any applicable Solvency Capital Requirement or Minimum Capital Requirement, there will be no distributions nor payments made pursuant to the Subordinated Notes, and such payments will be deferred until such time as the applicable breach is rectified.

 

The Subordinated Notes do not have the benefit of any mandatory redemption or sinking fund obligation and are not redeemable at the option of the Holders.

 

The Subordinated Notes are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full of all Senior Indebtedness. Each Holder by accepting a Subordinated Note agrees to such subordination and authorizes the Trustee to give it effect.

 

By purchasing the Subordinated Notes, each Holder is deemed to agree and acknowledge that the Subordinated Notes shall be subordinated to the claims of all Senior Creditors on the terms and to the minimum extent necessary under the Applicable Supervisory Regulations (whether they be the Bermuda Group Rules, Solvency II or otherwise) as in effect from time to time so as to permit the Subordinated Notes to qualify as Tier 2 Capital. The subordination provisions above shall be given effect prior to the application of the subordination provisions of Article 10 of the Indenture.

 

If an Issuer Winding-Up Event occurs, the entire principal amount of the Subordinated Notes, together with accrued and unpaid interest (including Arrears of Interest) and any Additional Amounts thereon, will automatically become due and payable without any declaration or other action on the part of the Trustee or any Holder of the Subordinated Notes; provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Subordinated Notes may rescind an acceleration and its consequences. The right of acceleration only applies upon the occurrence of an Issuer Winding-Up Event. Any failure to pay interest on the Subordinated Notes when due as a result of a Mandatory Deferral Event or to pay principal of the Subordinated Notes when due as a result of any of the applicable Conditions to Redemption not being satisfied shall not constitute an Issuer Winding-Up Event under the Indenture or the Subordinated Notes.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Subordinated Notes at any time by the Issuer and the Trustee with the written consent of the Holders of not less than a majority in principal amount of the Subordinated Notes at the time outstanding. The Indenture also contains, with certain exceptions as therein provided, provisions permitting Holders of not less than a majority in principal amount of the Subordinated Notes at the time outstanding, on behalf of the Holders of all the Subordinated Notes, to waive compliance by the Issuer with certain provisions of the Indenture. Any such consent or waiver by the Holder of this Subordinated Note shall be conclusive and binding upon such Holder and upon all future Holders of this Subordinated Note and of any Subordinated Note issued in exchange herefor or in lieu hereof whether or not notation of such consent or waiver is made upon this Subordinated Note or such other Subordinated Note. Any amendment or modification to the Indenture or the Subordinated Notes shall require the prior consent of the Applicable Supervisor, if such consent is then required under the Applicable Supervisory Regulations and any amendment or modification

 

A- 7



 

made or purported to be made without such consent shall be void. The Issuer, when authorized by Board Resolutions, and the Trustee, at any time and from time to time, may amend or supplement certain provisions relating to the Applicable Supervisor, without the consent of any Holder to the extent determined reasonably necessary to comply with, or satisfy, regulations or requirements of the Applicable Supervisor relating to the Subordinated Notes, as determined by the senior management of the Issuer in good faith.

 

As provided in and subject to the provisions of the Indenture, the Holder of this Subordinated Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless (i) such Holder shall have previously given the Trustee written notice of a continuing Issuer Winding-Up Event, (ii) the Holders of not less than 25% in principal amount of the Subordinated Notes that are outstanding shall have made a written request to the Trustee to institute proceedings in respect of such Issuer Winding-Up Event as Trustee and offered the Trustee indemnity satisfactory to it, (iii) the Trustee shall have failed to institute any such proceeding for 60 days after receipt of such notice, request and offer of indemnity, and (iv) the Trustee shall not have received from the Holders of a majority in principal amount of the Subordinated Notes that are outstanding a direction inconsistent with such written request during such 60-day period. The foregoing shall not apply to any suit instituted by any Holder of this Subordinated Note for the enforcement of any payment of principal hereof or any premium or interest hereon, or any Additional Amounts, on or after the respective due dates expressed herein.

 

Subject to the express terms of the Indenture, no reference herein to the Indenture and no provision of this Subordinated Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of, premium, if any, and interest on this Subordinated Note at the times, places and rate, and in the coin or currency, herein prescribed.

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Subordinated Note is registrable upon surrender of this Subordinated Note for registration of transfer at the office of the Registrar, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Issuer duly executed by, the Holder thereof or his attorney duly authorized in writing, and thereupon one or more new Subordinated Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith.

 

Prior to due presentation of this Subordinated Note for registration of transfer, the Issuer, the Trustee and any Agent of the Issuer or the Trustee may treat the Person in whose name this Subordinated Note is registered as the owner thereof for all purposes, whether or not such Subordinated Note be overdue, and neither the Issuer nor the Trustee or any such agent shall be affected by notice to the contrary.

 

No recourse for the payment of the principal of (and premium, if any on) or interest (including Arrears of Interest) on this Subordinated Note and no recourse under or upon any obligation, covenant or agreement of the Issuer in the Indenture or any indenture supplemental

 

A- 8



 

thereto or in any Subordinated Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, agent, officer or director or subsidiary, as such, past, present or future, of the Issuer or any successor entity thereof, either directly or through the Issuer or any successor entity, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of consideration for the issue hereof, expressly waived and released.

 

[This Subordinated Note is a Global Note and is subject to the provisions of the Indenture relating to Global Notes.](3)

 

THE INDENTURE (OTHER THAN Section 4.05 AND Article 11 OF THE INDENTURE) AND EACH SUBORDINATED NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW OR ANY SUCCESSOR TO SUCH STATUTE) WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE. Section 4.05 AND Article 11 OF THE INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF BERMUDA (OR IN THE EVENT THAT THE APPLICABLE SUPERVISOR IS BASED IN A JURISDICTION OTHER THAN BERMUDA, UNDER THE LAWS OF THAT JURISDICTION). EXCEPT THAT THE RIGHT OF THE TRUSTEE TO RECEIVE ITS FEES, EXPENSES AND INDEMNIFICATION PURSUANT TO Section 7.05, AND ITS LIEN PROVIDED FOR IN SUCH SECTION, SHALL BE GOVERNED BY THELAWS OF THE STATE OF NEW YORK.

 


(3)  For global notes only.

 

A- 9



 

ABBREVIATIONS

 

The following abbreviations, when used in the inscription of the face of this Subordinated Note, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM -as tenants in common

UNIF GIFT MIN ACT

 

 

 

Custodian

 

(Cust)

 

TEN ENT -as tenants by the entireties

 

 

 

(Minor)

 

 

 

 

JT TEN —as joint tenants with right of survivorship and not as tenants in common

Uniform Gifts to Minors Act

 

 

 

(State)

 

Additional abbreviations may also be used
though not in the above list.

 

A- 10



 

SCHEDULE OF INCREASES AND DECREASES IN GLOBAL NOTE(4)

 

SIRIUS INTERNATIONAL GROUP, LTD.
Floating Rate Callable Subordinated Notes Due 2047

 

The initial principal amount of this Global Note is SEK [        ]. The following increases or decreases in this Global Note have been made:

 

Date

 

Amount of decrease
in principal amount
of this Global Note

 

Amount of increase
in principal amount
of this Global Note

 

Principal amount of
this Global Note
following such
decrease or increase

 

Signature of
authorized
signatory of
Registrar

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


(4)  For Global Notes only.

 

A- 11




Exhibit 10.15

 

EXECUTION VERSION

 

 

Published CUSIP Number:

G8200KAA7

 

Revolving Credit CUSIP Number:

G8200KAB5

 

$300,000,000

 

CREDIT AGREEMENT

 

dated as of February 8, 2018,

 

by and among

 

SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.

as Parent,

 

SIRIUS INTERNATIONAL GROUP, LTD.

as Borrower,

 

THE OTHER SUBSIDIARIES OF BORROWER FROM TIME TO TIME PARTY HERETO,

as Account Parties,

 

THE LENDERS FROM TIME TO TIME PARTY HERETO,

as Lenders

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Administrative Agent,

L/C Agent

and Fronting Bank

 

WELLS FARGO SECURITIES, LLC

and

JPMORGAN CHASE BANK, N.A.

as Joint Lead Arrangers and Joint Bookrunners

 

and

 

JPMORGAN CHASE BANK, N.A.

as Syndication Agent

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I.

DEFINITIONS

1

 

 

 

SECTION 1.1.

Definitions

1

 

 

 

SECTION 1.2.

Other Definitions and Provisions

28

 

 

 

SECTION 1.3.

Accounting Terms

28

 

 

 

SECTION 1.4.

Rounding

29

 

 

 

SECTION 1.5.

References to Agreement and Laws

29

 

 

 

SECTION 1.6.

Times of Day

29

 

 

 

SECTION 1.7.

Letter of Credit Amounts

30

 

 

 

SECTION 1.8.

Exchange Rate Fluctuations

30

 

 

 

ARTICLE II.

REVOLVING CREDIT FACILITY

30

 

 

 

SECTION 2.1.

Revolving Credit Loans

30

 

 

 

SECTION 2.2.

Swingline Loans

30

 

 

 

SECTION 2.3.

Procedure for Advances of Revolving Credit Loans and Swingline Loans

32

 

 

 

SECTION 2.4.

Repayment and Prepayment of Loans

34

 

 

 

SECTION 2.5.

Voluntary Reduction of the Commitments

35

 

 

 

SECTION 2.6.

Termination of Revolving Credit Facility

35

 

 

 

ARTICLE III.

LETTER OF CREDIT FACILITY

35

 

 

 

SECTION 3.1.

Syndicated Letters of Credit

35

 

 

 

SECTION 3.2.

Participated Letters of Credit

38

 

 

 

SECTION 3.3.

Expiry Date of Letters of Credit

40

 

 

 

SECTION 3.4.

Obligations Absolute

41

 

 

 

SECTION 3.5.

Interest

42

 

 

 

SECTION 3.6.

Cash Collateralization of Letters of Credit

43

 

 

 

SECTION 3.7.

Use of Letters of Credit

44

 

 

 

SECTION 3.8.

The Fronting Bank and L/C Agent

44

 

 

 

SECTION 3.9.

Letter of Credit Fees and Other Charges

44

 

 

 

SECTION 3.10.

Designation of Additional Account Parties

45

 

 

 

ARTICLE IV.

GENERAL LOAN PROVISIONS

46

 

 

 

SECTION 4.1.

Interest

46

 

 

 

SECTION 4.2.

Notice and Manner of Conversion or Continuation of Loans

47

 

i



 

SECTION 4.3.

Fees

48

 

 

 

SECTION 4.4.

Manner of Payment

48

 

 

 

SECTION 4.5.

Evidence of Indebtedness

49

 

 

 

SECTION 4.6.

Sharing of Payments by Lenders

49

 

 

 

SECTION 4.7.

Administrative Agent’s Clawback

50

 

 

 

SECTION 4.8.

Changed Circumstances

51

 

 

 

SECTION 4.9.

Indemnity

52

 

 

 

SECTION 4.10.

Increased Costs

52

 

 

 

SECTION 4.11.

Taxes

54

 

 

 

SECTION 4.12.

Mitigation Obligations; Replacement of Lenders

58

 

 

 

SECTION 4.13.

Increase in Commitments

59

 

 

 

SECTION 4.14.

Cash Collateral

61

 

 

 

SECTION 4.15.

Defaulting Lenders

61

 

 

 

SECTION 4.16.

Provisions Relating to NAIC Qualified Lenders

64

 

 

 

ARTICLE V.

CONDITIONS OF CLOSING AND ISSUANCE

65

 

 

 

SECTION 5.1.

Conditions to Closing and Initial Credit Extensions

65

 

 

 

SECTION 5.2.

Conditions Precedent to all Credit Extensions

67

 

 

 

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES

69

 

 

 

SECTION 6.1.

Organization; Power; Qualification

69

 

 

 

SECTION 6.2.

Ownership

69

 

 

 

SECTION 6.3.

Authorization; Enforceability

69

 

 

 

SECTION 6.4.

Compliance of Agreement, Loan Documents and Credit Extensions with Laws, Etc.

70

 

 

 

SECTION 6.5.

Compliance with Law; Governmental Approvals

70

 

 

 

SECTION 6.6.

Tax Returns and Payments

70

 

 

 

SECTION 6.7.

Intellectual Property Matters

70

 

 

 

SECTION 6.8.

Environmental Matters

71

 

 

 

SECTION 6.9.

Employee Benefit Matters

71

 

 

 

SECTION 6.10.

Margin Stock

71

 

 

 

SECTION 6.11.

Government Regulation

72

 

 

 

SECTION 6.12.

Financial Statements

72

 

 

 

SECTION 6.13.

No Material Adverse Change

72

 

 

 

SECTION 6.14.

Solvency

72

 

 

 

SECTION 6.15.

Ownership of Properties

72

 

 

 

SECTION 6.16.

Insurance Licenses

72

 

ii



 

SECTION 6.17.

Litigation

73

 

 

 

SECTION 6.18.

Anti-Corruption Laws; Anti-Money Laundering Laws and Sanctions

73

 

 

 

SECTION 6.19.

Disclosure

73

 

 

 

ARTICLE VII.

AFFIRMATIVE COVENANTS

74

 

 

 

SECTION 7.1.

Financial Statements

74

 

 

 

SECTION 7.2.

Certificates; Other Reports

75

 

 

 

SECTION 7.3.

Notice of Litigation and Other Matters

76

 

 

 

SECTION 7.4.

Preservation of Corporate Existence and Related Matters

77

 

 

 

SECTION 7.5.

Maintenance of Property and Licenses

77

 

 

 

SECTION 7.6.

Insurance

77

 

 

 

SECTION 7.7.

Payment of Taxes and Other Obligations

77

 

 

 

SECTION 7.8.

Compliance with Laws and Approvals

78

 

 

 

SECTION 7.9.

Environmental Laws

78

 

 

 

SECTION 7.10.

Compliance with ERISA

78

 

 

 

SECTION 7.11.

Maintenance of Books and Records; Inspection

78

 

 

 

SECTION 7.12.

Use of Proceeds

79

 

 

 

SECTION 7.13.

Compliance with Anti-Corruption Laws; Anti-Money Laundering Laws and Sanctions

79

 

 

 

ARTICLE VIII.

NEGATIVE COVENANTS

79

 

 

 

SECTION 8.1.

Indebtedness

79

 

 

 

SECTION 8.2.

Liens

81

 

 

 

SECTION 8.3.

Investments

83

 

 

 

SECTION 8.4.

Fundamental Changes

84

 

 

 

SECTION 8.5.

Asset Dispositions

84

 

 

 

SECTION 8.6.

Restricted Payments

85

 

 

 

SECTION 8.7.

Transactions with Affiliates

85

 

 

 

SECTION 8.8.

Accounting Changes; Organizational Documents

86

 

 

 

SECTION 8.9.

No Further Negative Pledges; Restrictive Agreements

86

 

 

 

SECTION 8.10.

Nature of Business

87

 

 

 

SECTION 8.11.

Financial Strength Rating

87

 

 

 

SECTION 8.12.

Financial Covenants

87

 

 

 

ARTICLE IX.

DEFAULT AND REMEDIES

89

 

 

 

SECTION 9.1.

Events of Default

89

 

 

 

SECTION 9.2.

Remedies

91

 

 

 

SECTION 9.3.

Rights and Remedies Cumulative; Non-Waiver; etc.

92

 

iii



 

SECTION 9.4.

Crediting of Payments and Proceeds

92

 

 

 

SECTION 9.5.

Administrative Agent May File Proofs of Claim

93

 

 

 

ARTICLE X.

THE ADMINISTRATIVE AGENT

94

 

 

 

SECTION 10.1.

Appointment and Authority

94

 

 

 

SECTION 10.2.

Rights as a Lender

94

 

 

 

SECTION 10.3.

Exculpatory Provisions

94

 

 

 

SECTION 10.4.

Reliance by the Administrative Agent

95

 

 

 

SECTION 10.5.

Delegation of Duties

96

 

 

 

SECTION 10.6.

Resignation of Administrative Agent

96

 

 

 

SECTION 10.7.

Non-Reliance on Administrative Agent and Other Lenders

98

 

 

 

SECTION 10.8.

No Other Duties, Etc.

98

 

 

 

SECTION 10.9.

Lender ERISA Representations

98

 

 

 

ARTICLE XI.

MISCELLANEOUS

100

 

 

 

SECTION 11.1.

Notices

100

 

 

 

SECTION 11.2.

Amendments, Waivers and Consents

103

 

 

 

SECTION 11.3.

Expenses; Indemnity

104

 

 

 

SECTION 11.4.

Right of Setoff

107

 

 

 

SECTION 11.5.

Governing Law; Jurisdiction, Etc.

107

 

 

 

SECTION 11.6.

Waiver of Jury Trial

108

 

 

 

SECTION 11.7.

Reversal of Payments

109

 

 

 

SECTION 11.8.

[Reserved]

109

 

 

 

SECTION 11.9.

Successors and Assigns; Participations

109

 

 

 

SECTION 11.10.

Treatment of Certain Information; Confidentiality

113

 

 

 

SECTION 11.11.

Performance of Duties

114

 

 

 

SECTION 11.12.

All Powers Coupled with Interest

114

 

 

 

SECTION 11.13.

Survival

115

 

 

 

SECTION 11.14.

Titles and Captions

115

 

 

 

SECTION 11.15.

Severability of Provisions

115

 

 

 

SECTION 11.16.

Counterparts; Integration; Effectiveness; Electronic Execution

115

 

 

 

SECTION 11.17.

Term of Agreement

116

 

 

 

SECTION 11.18.

USA PATRIOT Act; Anti-Money Laundering Laws

116

 

 

 

SECTION 11.19.

Independent Effect of Covenants

116

 

 

 

SECTION 11.20.

No Advisory or Fiduciary Responsibility

116

 

 

 

SECTION 11.21.

Inconsistencies with Other Documents

117

 

iv



 

SECTION 11.22.

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

117

 

 

 

SECTION 11.23.

Judgment Currency

118

 

 

 

ARTICLE XII.

GUARANTY

118

 

 

 

SECTION 12.1.

The Guaranty

118

 

 

 

SECTION 12.2.

Guaranty Unconditional

119

 

 

 

SECTION 12.3.

Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances

120

 

 

 

SECTION 12.4.

Waiver by the Guarantor

120

 

 

 

SECTION 12.5.

Subrogation

120

 

 

 

SECTION 12.6.

Stay of Acceleration

121

 

 

 

SECTION 12.7.

Continuing Guaranty; Assignments

121

 

 

 

SECTION 12.8.

Subordination of Other Obligations

121

 

v



 

EXHIBITS

 

Exhibit A-1

- Form of Revolving Credit Note

Exhibit A-2

- Form of Swingline Note

Exhibit B

- Form of Notice of Borrowing

Exhibit C

- Form of Notice of Account Designation

Exhibit D

- Form of Syndicated Letter of Credit

Exhibit E

- Form of Notice of Conversion/Continuation

Exhibit F

- Form of Officer’s Compliance Certificate

Exhibit G

- Form of Assignment and Assumption

Exhibit H-1

- Form of U.S. Tax Compliance Certificate (Non-Partnership Foreign Lenders)

Exhibit H-2

- Form of U.S. Tax Compliance Certificate (Non-Partnership Foreign Participants)

Exhibit H-3

- Form of U.S. Tax Compliance Certificate (Foreign Participant Partnerships)

Exhibit H-4

- Form of U.S. Tax Compliance Certificate (Foreign Lender Partnerships)

Exhibit I

- Form of Fronting Agreement

 

 

SCHEDULES

 

Schedule 1.1

- Commitments and Commitment Percentages

Schedule 6.2

- Subsidiaries and Capitalization

Schedule 8.1

- Existing Indebtedness

Schedule 8.2

- Existing Liens

Schedule 8.3

- Existing Investments

Schedule 8.5

- Asset Dispositions

 

vi


 

CREDIT AGREEMENT, dated as of February 8, 2018, by and among SIRIUS INTERNATIONAL INSURANCE GROUP, LTD., an exempted company organized under the laws of Bermuda, SIRIUS INTERNATIONAL HOLDINGS LTD., an exempted company organized under the laws of Bermuda, SIRIUS INTERNATIONAL GROUP, LTD., an exempted company organized under the laws of Bermuda, the Subsidiaries of the Borrower from time to time party hereto as Account Parties, the lenders who are party to this Agreement and the lenders who may become a party to this Agreement pursuant to the terms hereof, as Lenders, and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent for the Lenders.

 

STATEMENT OF PURPOSE

 

The Borrower has requested, and subject to the terms and conditions set forth in this Agreement, the Administrative Agent and the Lenders have agreed to extend, certain credit facilities to the Credit Parties.

 

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

 

ARTICLE I.

 

DEFINITIONS

 

SECTION 1.1.                                           Definitions .  The following terms when used in this Agreement shall have the meanings assigned to them below:

 

Account Party ” means any of the Borrower, Sirius Bermuda Insurance Company Ltd., a company organized under the laws of Bermuda, Sirius International Insurance Corp., a company organized under the laws of Sweden, Sirius America Insurance Company, a New York corporation, Sirius Re Holdings, Inc., a Delaware corporation, and any other Wholly-Owned Subsidiary of the Borrower designated to be an Account Party pursuant to Section 3.10 , in each case, with respect to Letters of Credit issued on its account.

 

Account Party Joinder Agreement ” means a joinder agreement in form and substance reasonably satisfactory to the Administrative Agent delivered in connection with Section 3.10 .

 

Accounting Principles Election ” has the meaning assigned thereto in Section 1.3(a) .

 

Acquisition ” means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which any Credit Party or any of its Subsidiaries (a) acquires any business or all or substantially all of the assets of any Person, or division thereof, whether through purchase of assets, merger, amalgamation or otherwise or (b) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the Equity Interests of any Person which have ordinary voting power for the election of members of the board of directors or the equivalent governing body (other than Equity Interests having such power only by reason of the happening of a contingency).

 



 

Administrative Agent ” means Wells Fargo, in its capacity as Administrative Agent hereunder, and any successor thereto appointed pursuant to Section 10.6 .

 

Administrative Agent’s Office ” means the office of the Administrative Agent specified in or determined in accordance with the provisions of Section 11.1(c) .

 

Administrative Questionnaire ” means an administrative questionnaire in a form supplied by the Administrative Agent.

 

Affiliate ” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

Agent Parties ” has the meaning assigned thereto in Section 11.1(e)(ii) .

 

Agreement ” means this Credit Agreement.

 

A.M. Best ” means A.M. Best Company, Inc.

 

Anti-Corruption Laws ” means all laws, rules, and regulations of any jurisdiction applicable to the Parent or any of its Subsidiaries from time to time concerning or relating to bribery or corruption, including, to the extent applicable, the United States Foreign Corrupt Practices Act of 1977 and the rules and regulations thereunder and the U.K. Bribery Act 2010 and the rules and regulations thereunder.

 

Anti-Money Laundering Laws ” means any and all laws, rules and regulations applicable to the Parent or any of its Subsidiaries from time to time concerning or relating to terrorism financing or money laundering, including any applicable provision of the PATRIOT Act and The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. §§ 5311-5330 and 12U.S.C. §§ 1818(s), 1820(b) and 1951-1959).

 

Applicable Law ” means all applicable provisions of constitutions, laws, statutes, ordinances, rules, treaties, regulations, permits, licenses, approvals, interpretations and orders of Governmental Authorities and all orders and decrees of all courts and arbitrators.

 

Applicable Rate ” means, for any day, as to the Commitment Fees and L/C Fees payable hereunder or as to the interest rate margin on any LIBOR Rate Loan or Base Rate Loan, as the case may be, the applicable percentages per annum determined by reference to the Debt Ratings as set forth below:

 

Applicable Rate

 

 

 

 

 

 

 

 

 

 

Pricing
Level

 

Debt Ratings

 

Commitment
Fee

 

LIBOR Rate Loans
and L/C Fees

 

Base Rate
Loans

 

I

 

A-/A- or better

 

0.15

%

1.25

%

0.25

%

II

 

BBB+/ BBB+

 

0.175

%

1.375

%

0.375

%

III

 

BBB/ BBB

 

0.225

%

1.50

%

0.50

%

IV

 

BBB-/ BBB-

 

0.275

%

1.75

%

0.75

%

V

 

BB+/BB+ or lower

 

0.325

%

2.00

%

1.00

%

 

2



 

Initially, commencing on the Closing Date the Applicable Rate shall be determined based upon Pricing Level III.  Notwithstanding anything herein to the contrary:

 

(a)                                  if the Debt Ratings issued by S&P and Fitch differ by one level, then the Pricing Level corresponding to the higher of such Debt Ratings shall apply (with pricing tier I being the highest and pricing tier V being the lowest);

 

(b)                                  if the Debt Ratings issued by S&P and Fitch differ by more than one level, then the Pricing Level corresponding to one level below the higher of the two Debt Ratings shall apply;

 

(c)                                   if only one of S&P or Fitch shall have in effect a Debt Rating, then the Pricing Level shall be determined by reference to the available Debt Rating; and

 

(d)                                  if the Borrower does not have any Debt Rating, pricing tier V shall apply.

 

Each change in the Applicable Rate resulting from a publicly announced change in any Debt Rating after the Closing Date shall be effective during the period commencing on the date of the public announcement thereof and ending on the date immediately preceding the effective date of the next such change.

 

Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Arrangers ” means, collectively, Wells Fargo Securities and JPMorgan Chase Bank, N.A., in their capacities as the joint lead arrangers and joint bookrunners.

 

Asset Disposition ” means the sale, transfer, license, lease or other disposition of any Property (including any disposition of Equity Interests) by any Credit Party or any Restricted Subsidiary thereof, any merger, amalgamation, consolidation or similar combination of any Credit Party or any Restricted Subsidiary thereof with any Person that is not a Credit Party or a Restricted Subsidiary thereof and any issuance of Equity Interests by any Restricted Subsidiary of the Parent to any Person that is not a Credit Party or any Restricted Subsidiary thereof.

 

Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.9 ), and accepted by the Administrative Agent, in substantially the form attached as Exhibit G or any other form reasonably approved by the Administrative Agent.

 

Availability Period ” means the period from and including the Closing Date to, but not including, the Commitment Termination Date.

 

Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

3



 

Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 

Bankruptcy Code ” means 11 U.S.C. §§ 101 et seq.

 

Base Rate ” means, for any day, the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50% and (c) on each date of determination, LIBOR for an Interest Period of one month plus 1.00%; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate, the Federal Funds Rate or LIBOR ( provided that clause (c)  shall not be applicable during any period in which LIBOR is unavailable or unascertainable).

 

Base Rate Loan ” means any Loan bearing interest at a rate based upon the Base Rate as provided in Section 4.1(a) .

 

Benefit Plan ” means any employee benefit plan, within the meaning of Section 3(3) of ERISA, other than a Multiemployer Plan, which is maintained, funded or administered for the employees of any Credit Party or any ERISA Affiliate.

 

Borrower ” means Sirius International Group, Ltd., a Bermuda exempted company.

 

Borrowing ” means a borrowing consisting of simultaneous Revolving Credit Loans of the same Type and, in the case of LIBOR Rate Loans, having the same Interest Period made by the Lenders or Swingline Loans, as the context may require.

 

Business Day ” means (a) for all purposes other than as set forth in clause (b) below, any day other than a Saturday, Sunday or legal holiday on which banks in Charlotte, North Carolina, Hamilton, Bermuda, Stockholm, Sweden and New York, New York, are open for the conduct of their commercial banking business and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any LIBOR Rate Loan, or any Base Rate Loan as to which the interest rate is determined by reference to LIBOR, any day that is a Business Day described in clause (a)  and that is also a London Banking Day.

 

Cash Collateral Account ” has the meaning assigned thereto in Section 3.6(a) .

 

Cash Collateralize ” means, to pledge and deposit with, or deliver to, the Administrative Agent, for the benefit of the Lenders as collateral for Letter of Credit Exposure or obligations of the Lenders to fund participations in respect of Participated Letters of Credit, cash, deposit account balances or Cash Equivalents pursuant to Section 3.6 .  “ Cash Collateral ” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

 

Cash Equivalents ” means, collectively:

 

(a)                                  marketable direct obligations issued or unconditionally guaranteed by the United States or any agency thereof maturing within one hundred eighty (180) days from the date of acquisition thereof,

 

4



 

(b)                                  marketable direct obligations issued by United States government sponsored enterprise or any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one hundred eighty (180) days from the date of acquisition thereof and currently having, as of the date of acquisition thereof, one of the two highest ratings obtainable from either S&P or Moody’s Investors Service, Inc.,

 

(c)                                   certificates of deposit maturing no more than one hundred eighty (180) days from the date of acquisition thereof issued by commercial banks incorporated under the laws of the United States, each having combined capital, surplus and undivided profits of not less than $500,000,000 and having a rating of “A” or better by a nationally recognized rating agency,

 

(d)                                  time deposits maturing no more than thirty (30) days from the date of creation thereof with commercial banks or savings banks or savings and loan associations each having membership either in the FDIC or the deposits of which are insured by the FDIC and in amounts not exceeding the maximum amounts of insurance thereunder,

 

(e)                                   shares of any money market mutual fund that has substantially all of its assets invested continuously in the types of investments referred to in clauses (a)  through (d)  above, or

 

(f)                                    in the case of any Credit Party or any Subsidiary that is organized, incorporated or conducts any material business operations in any jurisdiction other than the United States of America, other short-term investments similar to those listed in clauses (a)  through (e)  above, of a type, tenor and quality analogous to the foregoing with banks and funds organized in such other jurisdictions.

 

Change in Control ” means an event or series of events by which:

 

(a)                                  prior to an IPO, and after an IPO if the IPO Entity is the Parent, the Parent shall fail to beneficially own, directly or indirectly, more than fifty percent (50%) of (i) the economic interest of the Borrower or (ii) the voting power of Borrower entitled to vote in the election of members of the board of directors (or equivalent governing body) of the Borrower; or

 

(b)                                  prior to an IPO, the Permitted Investors shall collectively fail to beneficially own, directly or indirectly, more than fifty percent (50%) of (i) the economic interest of the Parent or (ii) the voting power of the Parent entitled to vote in the election of members of the board of directors (or equivalent governing body) of the Parent; or

 

(c)                                   after an IPO, (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than the Permitted Investors becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a “person” or “group” shall be deemed to have “beneficial ownership” of all Equity Interests that such “person” or “group” has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of more than thirty five percent (35%) of the Equity Interests of the IPO Entity entitled to vote in the election of members of the board of directors (or equivalent governing body) of the IPO Entity or (ii) a majority of the

 

5



 

members of the board of directors (or other equivalent governing body) of the IPO Entity shall not constitute Continuing Directors; or

 

(d)                                  there shall have occurred under any indenture or other instrument evidencing any Indebtedness in excess of $50,000,000 any “change in control” or similar provision (as set forth in the indenture, agreement or other evidence of such Indebtedness) obligating the Parent or any of its Subsidiaries to repurchase, redeem or repay all or any part of the Indebtedness or Equity Interests provided for therein.

 

Change in Law ” means the occurrence, after the date of this Agreement, of any of the following:  (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, implemented or issued.

 

Closing Date ” means the date of this Agreement.

 

Code ” means the Internal Revenue Code of 1986, and the rules and regulations promulgated thereunder.

 

Commitment ” means, as to any Lender, the obligation of such Lender to make Revolving Credit Loans, to issue Syndicated Letters of Credit and to purchase participations in Participated Letters of Credit and Swingline Loans for the account of the applicable Credit Party hereunder in an aggregate principal amount at any time outstanding not to exceed the amount set forth opposite such Lender’s name on the Register, as such amount may be modified at any time or from time to time pursuant to the terms hereof.  The initial Commitment of each Lender is set forth opposite the name of such Lender on Schedule 1.1 .

 

Commitment Fee ” has the meaning assigned thereto in Section 4.3(i) .

 

Commitment Percentage ” means, with respect to any Lender at any time, the percentage of the total Commitments of all the Lenders represented by such Lender’s Commitment, but subject to the provisions of Section 4.15 .  If the Commitments have terminated or expired, the Commitment Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.  The Commitment Percentage of each Lender on the Closing Date is set forth opposite the name of such Lender on Schedule 1.1 .

 

Commitment Termination Date ” means the earliest to occur of (a) February 8, 2021, (b) the date of termination of the entire Commitments by the Credit Parties pursuant to Section 2.5 , and (c) the date of termination of the Commitments pursuant to Section 9.2(a) .

 

6



 

Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq. ).

 

Conditional Common Equity ” means convertible preferred equity issued by the Borrower or any of its Subsidiaries which will convert to common equity of the Borrower or any of its Subsidiaries upon shareholder approval (provided that such shareholder approval is obtained within the period required by the terms thereof).

 

Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

 

Consolidated Net Worth ” means, at any time, the sum of all amounts that would be included on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries under shareholders’ equity at such date, plus Deferred Tax Liability on Safety Reserve, but excluding:

 

(a)                                  the accumulated net unrealized investment gain (or loss) on investments, including net unrealized foreign currency gain (or loss) on investment, less applicable related income tax provisions (or plus applicable related income tax benefits), in each case, as of September 30, 2017;

 

(b)                                  the net unrealized investment gain (or loss), including net unrealized foreign currency gain (or loss) on investment, less applicable related income tax provisions (or plus applicable related income tax benefits), in each case, included in the consolidated comprehensive income (or loss) subsequent to September 30, 2017;

 

(c)                                   the equity in the net unrealized investment gain (or loss), less applicable related income tax provisions (or plus applicable related income tax benefits), in each case, from investments in unconsolidated Affiliates; and

 

(d)                                  any non-controlling interest.

 

Consolidated Tangible Net Worth ” has the meaning assigned thereto in Section 8.12(b) .

 

Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “ Controlling ” and “ Controlled ” have meanings correlative thereto.

 

Credit Exposure ” means, with respect to any Lender at any time, the sum of (i) the aggregate principal amount of all Revolving Loans made by such Lender that are outstanding at such time, (ii) such Lender’s Letter of Credit Exposure at such time and (iii) such Lender’s Swingline Exposure at such time.

 

Credit Extension ” means (a) a Borrowing or (b) an issuance of a Letter of Credit.

 

Credit Facility ” means, collectively, the Revolving Credit Facility, the Swingline Facility and the L/C Facility.

 

Credit Parties ” means, collectively, the Borrower, the Guarantors and the Account Parties.

 

7



 

Debt Rating ” means a rating as determined by S&P and Fitch of the Borrower’s non-credit-enhanced, senior unsecured long-term indebtedness.

 

Debtor Relief Laws ” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.

 

Default ” means any event which with the passage of time, the giving of notice or any other condition, would constitute an Event of Default.

 

Defaulting Lender ” means, subject to Section 4.15(c) , any Lender that (a) has failed to (i) fund all or any portion of the Revolving Credit Loans required to be funded by it hereunder within two Business Days of the date such Loans or participations were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the L/C Agent, the Fronting Bank, the Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent, the L/C Agent, the Fronting Bank, or the Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan or issue a Letter of Credit hereunder and states that such position is based on such Lender’s good faith determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c)  upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the FDIC or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a)  through (d)  above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject

 

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to Section 4.15(c) ) upon delivery of written notice of such determination to the Borrower, the Fronting Bank, the L/C Agent, the Swingline Lender and each Lender.

 

Deferred Tax Liability on Safety Reserve ” means the amount included in solvency capital under Swedish statutory requirements equal to the deferred tax liability on the safety reserve of any Subsidiary of the Borrower formed under the laws of Sweden, which is the untaxed reserve into which, subject to certain limitations under Swedish law, such Subsidiary is permitted to transfer pre-tax income.

 

Dollars ” or “ $ ” means, unless otherwise qualified, dollars in lawful currency of the United States.

 

EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a)  of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a)  or (b)  of this definition and is subject to consolidated supervision with its parent.

 

EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

EEA Resolution Authority ” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section 11.9 (subject to such consents, if any, as may be required under Section 11.9 ).  Notwithstanding the foregoing, unless otherwise agreed by the Parent, a Person must be a NAIC Qualified Lender to qualify as an Eligible Assignee.

 

Employee Benefit Plan ” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

 

Environmental Claims ” means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, accusations, allegations, notices of noncompliance or violation, investigations (other than internal reports prepared by any Person in the ordinary course of business and not in response to any third party action or request of any kind) or proceedings relating in any way to any actual or alleged violation of or liability under any Environmental Law or relating to any permit issued, or any approval given, under any such Environmental Law, including, without limitation, any and all claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to public health or the environment.

 

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Environmental Laws ” means any and all federal, foreign, state, provincial and local laws, statutes, ordinances, codes, rules, standards and regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities, relating to the protection of public health or the environment, including, but not limited to, requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of hazardous materials.

 

Equity Interests ” means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests, (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person and (f) any and all warrants, rights or options to purchase any of the foregoing.

 

ERISA ” means the Employee Retirement Income Security Act of 1974, and the rules and regulations thereunder.

 

ERISA Affiliate ” means any Person who together with any Credit Party or any of its Subsidiaries is treated as a single employer within the meaning of Section 414(b) or (c) of the Code or Section 4001(b) of ERISA or, solely for purposes of Section 412 of the Code, Section 414(m) or (o) of the Code.

 

EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor thereto), as in effect from time to time.

 

Eurodollar Reserve Percentage ” means, for any day, the percentage which is in effect for such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any basic, supplemental or emergency reserves) in respect of eurocurrency liabilities (as defined in Regulation D) or any similar category of liabilities for a member bank of the Federal Reserve System in New York City.

 

Event of Default ” means any of the events specified in Section 9.1 ; provided that any requirement for passage of time, giving of notice, or any other condition, has been satisfied.

 

Evergreen Letter of Credit ” has the meaning assigned thereto in Section 3.3 .

 

Exchange Act ” means the Securities Exchange Act of 1934.

 

Excluded Taxes ” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having an office or fixed place of business or, in the case of any Lender, its applicable Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, United States federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable

 

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interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in a Loan or Commitment (other than pursuant to an assignment request by the Parent under Section 4.12(b) ) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 4.11 , amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 4.11(g)  and (d) any United States federal withholding Taxes imposed under FATCA.

 

FATCA ” means (a) Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, and any agreements entered into pursuant to Section 1471(b)(1) of the Code, (b) any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the United States and any other jurisdiction with the purpose (in either case) of facilitating the implementation of (a)  above, or (c) any agreement pursuant to the implementation of paragraphs (a)  or (b)  above with the IRS, the United States government or any governmental or taxation authority in the United States.

 

FDIC ” means the Federal Deposit Insurance Corporation.

 

Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that if such rate is not so published for any day which is a Business Day, the Federal Funds Rate for such day shall be the average of the quotation for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent.  Notwithstanding the foregoing, if the Federal Funds Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

 

Fee Letters ” means (a) the Wells Fargo Fee Letter and (b) the separate fee letter agreement dated January 12, 2018 among the Parent and JPMorgan Chase Bank, N.A.

 

Final Expiry Date ” means the date when the Final Maturity Date has occurred, all Letters of Credit have expired or terminated and all Obligations owing hereunder and in the other Loan Documents have been paid in full.

 

Final Maturity Date ” means the first anniversary of the Commitment Termination Date.

 

Financial Strength Rating ” means, as to any Person, the rating that has been most recently announced by A.M. Best as the “financial strength rating” of such Person.

 

Fiscal Year ” means the fiscal year of the Parent and its Subsidiaries.

 

Fitch ” means Fitch Ratings Ltd. and any successor or successors thereto.

 

Foreign Lender ” means a Lender that is resident or organized under the laws of a jurisdiction other than the United States, each State thereof or the District of Columbia.

 

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Foreign Pension Plan ” means any plan, fund (including any superannuation fund) or other similar program established or maintained outside the United States of America by the Parent or any one or more of its Subsidiaries primarily for the benefit of employees of the Parent or such Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.

 

Fronting Agreement ” means an agreement between any Non-NAIC Qualified Lender and any Non-NAIC Fronting Bank that such Non-NAIC Fronting Bank will itself honor the obligations of such Non-NAIC Bank in respect of a draft complying with terms of a Syndicated Letter of Credit as if, and to the extent, such Non-NAIC Fronting Bank were the Issuing Lender originally named on such Syndicated Letter of Credit in substantially the form of Exhibit I .

 

Fronting Bank ” means, as applicable, (i) with respect to Participated Letters of Credit, Wells Fargo and (ii) with respect to Syndicated Letters of Credit, any Non-NAIC Fronting Bank.

 

Fronting Exposure ” means, at any time there is a Defaulting Lender, (a) with respect to any Issuing Lender, such Defaulting Lender’s Commitment Percentage of the outstanding L/C Obligations with respect to Letters of Credit issued by such Issuing Lender, other than such L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof and (b) with respect to the Swingline Lender, such Defaulting Lender’s Commitment Percentage of outstanding Swingline Loans other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

 

Fronting Obligations ” means, at any time with respect to Wells Fargo, the sum of (a) the aggregate Participated Letter of Credit Exposure of the Lenders plus (b) the Syndicated Letter of Credit Exposure attributable to any Non-NAIC Qualified Lender for which Wells Fargo acts as Fronting Bank pursuant to Section 4.16(b) .

 

Fronting Sublimit ” means the lesser of (a) $62,500,000 and (b) the aggregate Commitments as such amount may be reduced pursuant to the terms hereof, it being understood that the Fronting Sublimit is part of, and not in addition to, the aggregate Commitments.

 

Fund ” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course of its activities.

 

GAAP ” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied; provided that at any time after the Accounting Principles Election, all references to GAAP hereunder shall be deemed to be references to IFRS or UK

 

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GAAP, as applicable, mutatis mutandis , except to the extent such terms and data relate to periods prior to the effectiveness of the Accounting Principles Election.

 

Governmental Approvals ” means all authorizations, consents, approvals, permits, licenses and exemptions of, and all registrations and filings with or issued by, any Governmental Authorities.

 

Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supranational bodies such as the European Union or the European Central Bank).

 

Group ” means the Borrower and its Subsidiaries.

 

Guarantee Obligations ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable by another Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (limited, in the case of this clause (b) , to the lesser of (i) the principal amount of the obligations secured by such Lien and (ii) the fair market value (as determined by such Person in good faith) of the assets subject to such Lien); provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.  The amount of any Guarantee Obligation shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “ Guarantee ” as a verb has a corresponding meaning.

 

Guarantor ” means the Parent, the Borrower (with respect to the Obligations of the other Account Parties) and Sirius International Holdings Ltd.

 

Guaranty ” means the undertakings by the Guarantors under Article XII .

 

Hedge Agreement ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward

 

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commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement.

 

Hedge Termination Value ” means, in respect of any one or more Hedge Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Hedge Agreements, (a) for any date on or after the date such Hedge Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) , the amount(s) determined as the mark-to-market value(s) for such Hedge Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedge Agreements (which may include a Lender or any Affiliate of a Lender).

 

IFRS ” means the International Financial Reporting Standards as issued by the International Accounting Standards Board, which are in effect from time to time.

 

Increase Effective Date ” has the meaning assigned thereto in Section 4.13(d) .

 

Indebtedness ” means, with respect to any Person at any date and without duplication, the sum of the following:

 

(a)                                  all obligations of such Person for borrowed money;

 

(b)                                  all obligations of such Person for the deferred purchase price of Property or services (other than trade and similar payables incurred or accrued in the ordinary course of such Person’s business and contingent acquisition consideration that is not yet overdue for more than 30 days after the date fixed for payment thereof);

 

(c)                                   all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments;

 

(d)                                  all indebtedness created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person (limited, to the extent the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such Property, to the fair market value (as determined by such Person in good faith) of such Property);

 

(e)                                   all capital lease obligations of such person;

 

(f)                                    all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter of credit, bank guarantees, surety bonds or similar facilities,

 

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provided that indebtedness arising pursuant to any standby or documentary letter of credit (whether issued pursuant to this agreement or otherwise) shall not be included as Indebtedness unless and until such letter of credit is drawn by its beneficiary;

 

(g)                                   all obligations of such Person, contingent or otherwise, to purchase, redeem, retire, defease or otherwise acquire for value any Equity Interests of such person;

 

(h)                                  all Guarantee Obligations of such person in respect of any of the foregoing;

 

(i)                                      all obligations of the kind referred to in clauses (a)  through (h)  above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on Property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation; and

 

(j)                                     all obligations of such person in respect of Hedge Agreements.

 

Indemnified Taxes ” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Credit Party under any Loan Document and (b) to the extent not otherwise described in clause (a) , Other Taxes.

 

Indemnitee ” has the meaning assigned thereto in Section 11.3(b) .

 

Information ” has the meaning assigned thereto in Section 11.10 .

 

Information Materials ” means any information memoranda or other marketing materials provided to the Lenders generally in connection with the primary syndication of the Credit Facilities hereunder, including, for the avoidance of doubt, the Confidential Information Memorandum with respect to the Credit Facilities dated as of January 2018.

 

Insurance Regulatory Authority ” means, with respect to any Subsidiary of the Parent, the insurance department or similar Governmental Authority charged with regulating insurance companies or insurance holding companies, in its jurisdiction of domicile and, to the extent that it has regulatory authority over such Insurance Subsidiary, in each other jurisdiction in which such Insurance Subsidiary conducts business or is licensed to conduct business.

 

Insurance Subsidiary ” means any Subsidiary of the Parent the ability of which to pay dividends is regulated by an Insurance Regulatory Authority or that is otherwise required to be regulated thereby in accordance with the applicable law of its jurisdiction of domicile.

 

Interest Period ” means, as to each LIBOR Rate Loan, the period commencing on the date such LIBOR Rate Loan is disbursed or converted to or continued as a LIBOR Rate Loan and ending on the date one (1), two (2), three (3), or six (6) months or, if agreed by all of the Lenders twelve (12) months thereafter, in each case as selected by the Borrower in its Notice of Borrowing or Notice of Conversion/Continuation and subject to availability; provided that:

 

(i)                                      the Interest Period shall commence on the date of advance of or conversion to any LIBOR Rate Loan and, in the case of immediately successive Interest Periods, each successive

 

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Interest Period shall commence on the date on which the immediately preceding Interest Period expires;

 

(ii)                                   if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that if any Interest Period with respect to a LIBOR Rate Loan would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the immediately preceding Business Day;

 

(iii)                                any Interest Period with respect to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month at the end of such Interest Period;

 

(iv)                               no Interest Period shall extend beyond the Maturity Date; and

 

(v)                                  there shall be no more than ten (10) Interest Periods in effect at any time.

 

Investment ” means, with respect to any Person, that such Person (a) purchases, owns, invests in or otherwise acquires (in one transaction or a series of transactions), directly or indirectly, any Equity Interests, interests in any partnership or joint venture (including, without limitation, the creation or capitalization of any Subsidiary), evidence of Indebtedness or other obligation or security, substantially all or a portion of the business or assets of any other Person or any other investment or interest whatsoever in any other Person, (b) makes any Acquisition or (c) makes or permits to exist, directly or indirectly, any loans, advances or extensions of credit to, or any investment in cash or by delivery of Property in, any Person.

 

Investment Company Act ” means the Investment Company Act of 1940 (15 U.S.C. § 80(a)(1), et seq. ).

 

IPO ” means an initial public offering of Equity Interests by the Borrower or any direct or indirect parent of the Borrower, including the Parent (such Person subject to such IPO, the “ IPO Entity ”), registered with the Securities Exchange Commission under the Securities Act of 1933.

 

IRS ” means the United States Internal Revenue Service.

 

ISP ” means the International Standby Practices, International Chamber of Commerce Publication No. 590 (or such later version thereof as may be in effect at the applicable time).

 

issue ” means, with respect to any Letter of Credit, to issue, to amend or to extend the expiry of, or to renew or increase the Stated Amount of, such Letter of Credit; and the terms “ issued ”, “ issuing ” and “ issuance ” have correlative meanings.

 

Issuing Lender ” means (i) with respect to any Participated Letter of Credit, the Fronting Bank and (ii) with respect to any Syndicated Letter of Credit, the Lenders who have issued such Syndicated Letter of Credit, which may include any Affiliate of any Lender, provided that such Affiliate is a NAIC Qualified Lender.

 

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L/C Advance ” has the meaning assigned thereto in Section 3.2(d)(i) .

 

L/C Agent ” means Wells Fargo, in such capacity.

 

L/C Disbursement ” means (i) with respect to any Participated Letter of Credit, any payment made by the Fronting Bank pursuant thereto and (ii) with respect to any Syndicated Letter of Credit, any payment made by an Issuing Lender pursuant thereto.

 

L/C Facility ” means the letter of credit facility established pursuant to Article III .

 

L/C Fee ” has the meaning assigned thereto in Section 3.9(i) .

 

L/C Obligations ” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time, including any automatic or scheduled increases provided for by the terms of such Letters of Credit, determined without regard to whether any conditions to drawing could be met at that time, plus (b) the aggregate amount of all L/C Disbursements that have not yet been reimbursed by or on behalf of the applicable Account Party at such time.

 

Lender ” means the Persons listed on Schedule 1.1 and any other Person that shall have become a party to this Agreement as a Lender pursuant to an Assignment and Assumption, other than any Person that ceases to be a party hereto as a Lender pursuant to an Assignment and Assumption.

 

Lending Office ” means, with respect to any Lender, the office of such Lender maintaining such Lender’s extensions of credit made hereunder.

 

Letter of Credit Documents ” means, with respect to any Letter of Credit, collectively, any Letter of Credit Notice therefor and any other applications, agreements, instruments, guarantees or other documents (whether general in application to all Letters of Credit issued by the applicable Issuing Lender or applicable only to such Letter of Credit) governing or providing for the rights and obligations of the parties concerned or at risk with respect to such Letter of Credit.

 

Letter of Credit Exposure ” means, at any time for each Lender, the sum of such Lender’s Participated Letter of Credit Exposure and Syndicated Letter of Credit Exposure.

 

Letter of Credit Notice ” means a Syndicated Letter of Credit Notice or a Participated Letter of Credit Notice, as the context requires.

 

Letters of Credit ” means the collective reference to letters of credit issued pursuant to Article III .

 

LIBOR ” means,

 

(i)                                      for any interest rate calculation with respect to a LIBOR Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars for a period equal to the applicable Interest Period which appears on Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately 11:00 a.m. (London time) two

 

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(2) London Banking Days prior to the first day of the applicable Interest Period.  If, for any reason, such rate does not appear on Reuters Screen LIBOR01 Page (or any applicable successor page), then “LIBOR” shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) two (2) London Banking Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period, and

 

(ii)                                   for any interest rate calculation with respect to a Base Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars for an Interest Period equal to one month (commencing on the date of determination of such interest rate) which appears on the Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately 11:00 a.m. (London time) on such date of determination, or, if such date is not a Business Day, then the immediately preceding Business Day.  If, for any reason, such rate does not appear on Reuters Screen LIBOR01 Page (or any applicable successor page) then “LIBOR” for such Base Rate Loan shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) on such date of determination for a period equal to one month commencing on such date of determination.

 

If at any time the Administrative Agent determines (which determination shall be conclusive absent manifest error) that the supervisor for the administrator of the LIBOR or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which LIBOR shall no longer be used for determining interest rates for loans, then the Administrative Agent and the Borrower shall endeavor to establish an alternate rate of interest to LIBOR that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable, including adjustments to the Applicable Rate as may be necessary to maintain the relative margin on the applicable Obligations as in effect prior to the implementation of such alternate rate of interest and such other related changes after giving effect thereto.  Notwithstanding anything to the contrary in Section 11.2 , such amendment shall become effective without any further action or consent of any other party to this Agreement so long as the Administrative Agent shall not have received, within five Business Days of the date notice of such alternate rate of interest (including any adjustments to the marginal rates) is provided to the Lenders, a written notice from the Required Lenders stating that such Required Lenders object to such amendment.  Until an alternate rate of interest (including any adjustments to the Applicable Rate) shall be determined in accordance with this paragraph (but only to the extent LIBOR for such Interest Period is not available or published at such time on a current basis), (x) any Notice of Conversion/Continuation that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a LIBOR Rate Loan shall be ineffective and any such LIBOR Rate Loan shall be repaid on the last day of the then current Interest Period applicable thereto and (y) if any Notice of Borrowing requests a LIBOR Rate Loan, such Borrowing shall be made as a Base Rate Loan.

 

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Each calculation by the Administrative Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest error.  To the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied to the then applicable Interest Period in a manner consistent with market practice as reasonably determined by the Administrative Agent; provided that if such market practice is reasonably determined by the Administrative Agent to not be administratively feasible, such approved rate shall be applied in a manner reasonably determined by the Administrative Agent.

 

Notwithstanding the foregoing, in no event shall LIBOR be less than 0%.

 

LIBOR Rate ” means a rate per annum determined by the Administrative Agent pursuant to the following formula:

 

LIBOR Rate =

LIBOR

1.00-Eurodollar Reserve Percentage

 

LIBOR Rate Loan ” means any Loan bearing interest at a rate based upon the LIBOR Rate as provided in Section 4.1(a) .

 

Lien ” means, with respect to any asset, any mortgage, leasehold mortgage, lien, pledge, charge, security interest, hypothecation or encumbrance of any kind in respect of such asset.  For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease obligation or other title retention agreement relating to such asset.

 

Loan Documents ” means, collectively, this Agreement, each Note, the Letter of Credit Documents, the Wells Fargo Fee Letter (solely with respect to the annual administrative agent fee and the fronting fee described therein), and each other document, instrument, certificate and agreement executed and delivered by the Credit Parties or any of their respective Subsidiaries in favor of or provided to the Administrative Agent in connection with this Agreement or otherwise referred to herein or contemplated hereby.

 

Loans ” means the collective reference to the Revolving Credit Loans and the Swingline Loans, and “ Loan ” means any of such Loans.

 

London Banking Day ” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank Eurodollar market.

 

Material Adverse Effect ” means, with respect to the Parent and its Subsidiaries, (a) a material adverse effect on the operations, business, properties or financial condition of such Persons, taken as a whole, (b) a material impairment of the ability of any such Person to perform its payment obligations under the Loan Documents to which it is a party, (c) a material impairment of the rights and remedies of the Administrative Agent, on behalf of the Lenders, under any Loan Document or (d) a material impairment of the legality, validity, binding effect or enforceability against the Credit Parties, taken as a whole, of the Loan Documents.

 

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Material Insurance Subsidiaries ” means, collectively, each Insurance Subsidiary of the Parent that is a Material Subsidiary.

 

Material Subsidiaries ” means, collectively, each Subsidiary that is a Credit Party and each other Restricted Subsidiary that is a “significant subsidiary” as such term is defined in Regulation S-X.

 

Maturity Date ” means February 8, 2021.

 

Minimum Collateral Amount ” means, at any time, (i) with respect to Cash Collateral provided to reduce or eliminate Fronting Exposure during the existence of a Defaulting Lender, an amount equal to the Fronting Exposure of the Fronting Bank at such time, (ii) with respect to Cash Collateral provided in accordance with Section 2.4(c) , the amount required by such Section, and (iii) with respect to Cash Collateral provided in accordance with Section 4.14(i)  or Section 9.2(b ), an amount equal to 103% of the aggregate L/C Obligations.

 

Minimum Consolidated Tangible Net Worth ” has the meaning assigned thereto in Section 8.12(b) .

 

Multiemployer Plan ” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA that is subject to Title IV of ERISA and to which any Credit Party or any ERISA Affiliate is making, or is accruing an obligation to make, or has accrued an obligation to make contributions within the preceding five (5) years.

 

NAIC ” means the National Association of Insurance Commissioners and any successor thereto.

 

NAIC Qualified Institution List ” has the meaning assigned thereto in the definition of “ NAIC Qualified Lender .”

 

NAIC Qualified Lender ” means, at any time, any Lender listed on the “NAIC List of Qualified U.S. Financial Institutions” maintained by the securities valuation office of the NAIC as issuers of letters of credit for which reinsurance reserve credit can be given (the “ NAIC Qualified Institution List ”) at such time and acting through the legal entity so listed.

 

Non-Consenting Lender ” means any Lender that does not approve any consent, waiver, amendment, modification or termination that (a) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 11.2 and (b) has been approved by the Required Lenders.

 

Non-Defaulting Lender ” means, at any time, each Lender that is not a Defaulting Lender at such time.

 

Non-Extension Notice Date ” has the meaning assigned thereto in Section 3.3 .

 

Non-NAIC Fronting Bank ” means any Lender or other Person (which is a NAIC Qualified Lender) reasonably acceptable to the Administrative Agent which is requested by the Borrower,

 

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and which agrees in its sole discretion in writing, to be a fronting bank on behalf of a Non-NAIC Qualified Lender.

 

Non-NAIC Qualified Lender ” means, at any time, any Lender that is not a NAIC Qualified Lender at such time.

 

Notice of Borrowing ” has the meaning assigned thereto in Section 2.3(a) .

 

Notice of Conversion/Continuation ” has the meaning assigned thereto in Section 4.2 .

 

Notice of Non-Extension ” has the meaning assigned thereto in Section 3.3 .

 

Obligations ” means all principal of and interest (including interest and fees accruing after the filing of a petition or commencement of a case by or with respect to any Credit Party seeking relief under any applicable Debtor Relief Laws, whether or not the claim for such interest and fees is allowed in such proceeding) on the Loans, Reimbursement Obligations and all fees, expenses, indemnities, liabilities, financial accommodations and other monetary obligations owing, due or payable at any time by any Credit Party to the Administrative Agent, the L/C Agent, any Issuing Lender, any Lender or any other Person entitled thereto, under this Agreement or any of the other Loan Documents, in each case whether direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured.

 

OFAC ” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

 

Officer’s Compliance Certificate ” means a certificate of the chief financial officer or the treasurer of the Parent substantially in the form attached as Exhibit F .

 

Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

Other Taxes ” means all present or future stamp, court, documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 4.12 ).

 

Parent ” means Sirius International Insurance Group, Ltd., an exempted company organized under the laws of Bermuda.

 

Parent Materials ” has the meaning assigned thereto in Section 11.1(e)(i) .

 

Participant ” has the meaning assigned thereto in Section 11.9(d) .

 

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Participant Register ” has the meaning assigned thereto in Section 11.9(d) .

 

Participated Letter of Credit Exposure ” means, at any time for each Lender, such Lender’s Commitment Percentage of the sum of (i) the aggregate Stated Amount of all outstanding Participated Letters of Credit and (ii) the aggregate amount of all outstanding Reimbursement Obligations with respect to Participated Letters of Credit at such time.

 

Participated Letters of Credit ” means Letters of Credit issued by the Fronting Bank under Section 3.2 .

 

PATRIOT Act ” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

 

PBGC ” means the Pension Benefit Guaranty Corporation or any successor agency.

 

Pension Plan ” means any Benefit Plan, other than a Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the Code and which (a) is maintained, funded or administered for the employees of any Credit Party or any ERISA Affiliate or (b) has at any time within the preceding five (5) years been maintained, funded or administered for the employees of any Credit Party or any current or former ERISA Affiliates.

 

Permitted Investors ” means, collectively, (a) any Person who holds the Equity Interests of the Parent on the Closing Date, including, for the avoidance of doubt, China Minsheng Investment Group Corp. Ltd., and its Affiliates, (b) any Person that is a parent company of any Person referred to in clause (a)  and (c)  any controlled investment Affiliate of any such Person referred to in clause  (a)  or (b) .

 

Permitted Liens ” means the Liens permitted pursuant to Section 8.2 .

 

Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

Platform ” means Debt Domain, Intralinks, SyndTrak or a substantially similar electronic transmission system.

 

Prime Rate ” means, at any time, the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate.  Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs.  The parties hereto acknowledge that the rate announced publicly by the Administrative Agent as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks.

 

Property ” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including, without limitation, Equity Interests.

 

PTE ” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

 

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Qualified Securities ” means any other debt or equity securities issued by the Borrower or any of its Subsidiaries whose proceeds are accorded equity treatment by S&P (or any successor thereto).

 

Ratable Share ” of any amount means, at any time for each Lender, a percentage obtained by dividing such Lender’s Commitment at such time by the aggregate Commitments then in effect or, if the Commitment Termination Date has occurred, the Ratable Share of each Lender shall be determined by dividing such Lender’s outstanding Credit Exposure by the aggregate of all outstanding Credit Exposure as of any date of determination.

 

Recipient ” means (a) the Administrative Agent, (b) any Lender or Issuing Lender and (c) the Fronting Bank, as applicable.

 

Register ” has the meaning assigned thereto in Section 11.9(c) .

 

Reimbursement Obligation ” means the obligation of any Account Party to reimburse the applicable Issuing Lenders for any payment made by such Issuing Lenders under, or in respect of, any Letter of Credit issued for its account, together with interest thereon payable as provided herein.

 

Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

 

Removal Effective Date ” has the meaning assigned thereto in Section 10.6(b) .

 

Required Lenders ” means, at any time, Lenders having Credit Exposures representing more than fifty percent (50%) of the aggregate Exposures of all Lenders.  The Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time, provided that, the amount of any participation in any Swingline Loan and Participated Letter of Credit that such Defaulting Lender has failed to fund that has not been reallocated to and funded by another Lender shall be deemed to be held by the Swingline Lender or Fronting Bank, as the case may be, in making such determination.

 

Resignation Effective Date ” has the meaning assigned thereto in Section 10.6(a) .

 

Responsible Officer ” means, as to any Person, the chief executive officer, president, chief financial officer, controller, treasurer or assistant treasurer of such Person or any other officer of such Person designated in writing by the Credit Parties and reasonably acceptable to the Administrative Agent; provided that, to the extent requested thereby, the Administrative Agent shall have received a certificate of such Person certifying as to the incumbency and genuineness of the signature of each such officer.  Any document delivered hereunder or under any other Loan Document that is signed by a Responsible Officer of a Person shall be conclusively presumed to have been authorized by all necessary corporate, limited liability company, partnership and/or other action on the part of such Person and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Person.

 

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Restricted Payment ” means any dividend on, or the making of any payment or other distribution on account of, or the purchase, redemption, retirement or other acquisition (directly or indirectly) of, or the setting apart assets for a sinking or other analogous fund for the purchase, redemption, retirement or other acquisition of, any class of Equity Interests of any Credit Party or any Subsidiary thereof, or the making of any distribution of cash, property or assets to the holders of any Equity Interests of any Credit Party or any Subsidiary thereof on account of such Equity Interests.

 

Restricted Subsidiary ” means any Subsidiary of the Parent other than the Unrestricted Subsidiary.

 

Revolving Credit Facility ” means the revolving credit facility established pursuant to Article II .

 

Revolving Credit Loan ” means any revolving loan made to the Borrower pursuant to Section 2.1 , and all such revolving loans collectively as the context requires.

 

Revolving Credit Note ” means a promissory note made by the Borrower in favor of a Lender evidencing the Revolving Loans made by such Lender, substantially in the form attached as Exhibit A-1 , and any substitutes therefor, and any replacements, restatements, renewals or extension thereof, in whole or in part.

 

Revolving Credit Outstandings ” means the sum of (a) with respect to Revolving Credit Loans and Swingline Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Revolving Credit Loans and Swingline Loans, as the case may be, occurring on such date; plus (b) with respect to any L/C Obligations on any date, the aggregate outstanding amount thereof on such date after giving effect to any Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.

 

S&P ” means Standard & Poor’s Financial Services LLC, a part of McGraw-Hill Financial and any successor thereto.

 

Sanctions ” means any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws, including but not limited to those imposed, administered or enforced from time to time by the U.S. government (including those administered by OFAC or the U.S. Department of State), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority.

 

Sanctioned Country ” means at any time, a country, territory or region which is itself the subject or target of any Sanctions (including, as of the Closing Date, Cuba, Iran, North Korea, Syria and Crimea).

 

Sanctioned Person ” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC (including, without limitation, OFAC’s Specially Designated Nationals and Blocked Persons List and OFAC’s Consolidated Non-SDN List), the

 

24



 

U.S. Department of State, the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority, (b) any Person located, operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in clauses (a)  and (b) , including a Person that is deemed by OFAC to be a Sanctions target based on the ownership of such legal entity by Sanctioned Peron(s).

 

Securities Act ” means the Securities Act of 1933 (15 U.S.C. § 77 et seq. ).

 

Solvent ” and “ Solvency ” mean, with respect to any Person and its subsidiaries on a consolidated basis, on any date of determination, that on such date, (a) the fair value of the property of such Person and its subsidiaries, on a consolidated basis, is greater than the total amount of liabilities, including contingent liabilities, of such Person and its subsidiaries, on a consolidated basis, (b) the present fair salable value of the assets of such Person and its subsidiaries, on a consolidated basis, is not less than the amount that will be required to pay the probable liability of such Person and its subsidiaries, on a consolidated basis, on its debts as they become absolute and matured in the ordinary course of business, (c) such Person and its subsidiaries, on a consolidated basis, do not intend to, and do not believe that it will, incur debts or liabilities beyond the ability of such Person and its subsidiaries, on a consolidated basis, to pay such debts and liabilities as they mature in the ordinary course of business and (d) such Person and its subsidiaries, on a consolidated basis, is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which the property of such Person and its subsidiaries, on a consolidated basis, would constitute unreasonably small capital.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

Spot Rate ” means, on any day, with respect to any currency other than Dollars, the rate at which such currency may be exchanged into Dollars based on the exchange rate on the immediately prior Business Day as determined by Thompson Reuters and publicly reports on its free website at https://www.reuters.com/finance/currencies or any successor thereto.

 

Stated Amount ” means, with respect to any Letter of Credit at any time, the aggregate amount available to be drawn thereunder at such time (regardless of whether any conditions for drawing could then be met).

 

Subsidiary ” means as to any Person, any corporation, partnership, limited liability company or other entity of which more than fifty percent (50%) of the outstanding Equity Interests having ordinary voting power to elect a majority of the board of directors (or equivalent governing body) or other managers of such corporation, partnership, limited liability company or other entity is at the time owned by (directly or indirectly) such Person (irrespective of whether, at the time, Equity Interests of any other class or classes of such corporation, partnership, limited liability company or other entity shall have or might have voting power by reason of the happening of any contingency).  Unless otherwise qualified, references to “Subsidiary” or “Subsidiaries” herein shall refer to those of the Parent.

 

Syndicated Letter of Credit ” means Letters of Credit issued severally by the Lenders under Section 3.1 .

 

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Syndicated Letter of Credit Exposure ” means, at any time for each Lender, such Lender’s Commitment Percentage of the sum of (i) the aggregate Stated Amount of all outstanding Syndicated Letters of Credit and (ii) the aggregate amount of all outstanding Reimbursement Obligations in respect of Syndicated Letters of Credit at such time.

 

Syndicated Letter of Credit Notice ” has the meaning assigned thereto in Section 3.1(b) .

 

Swap Obligation ” means, with respect to any Credit Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

 

Swingline Commitment ” means the lesser of (a) $50,000,000 and (b) the Commitment.

 

Swingline Facility ” means the swingline facility established pursuant to Section 2.1 .

 

Swingline Lender ” means Wells Fargo in its capacity as swingline lender hereunder or any successor thereto.

 

Swingline Loan ” means any swingline loan made by the Swingline Lender to the Borrower pursuant to Section 2.1 , and all such swingline loans collectively as the context requires.

 

Swingline Note ” means a promissory note made by the Borrower in favor of the Swingline Lender evidencing the Swingline Loans made by the Swingline Lender, substantially in the form attached as Exhibit A-2 , and any substitutes therefor, and any replacements, restatements, renewals or extension thereof, in whole or in part.

 

Swingline Participation Amount ” has the meaning assigned thereto in Section 2.2(b)(iii) .

 

Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, fines, additions to tax or penalties applicable thereto.

 

Termination Event ” means the occurrence of any of the following which, individually or in the aggregate, has resulted or would reasonably be expected to result in liability of any Credit Party:  (a) a “reportable event” described in Section 4043 of ERISA for which the thirty (30) day notice requirement has not been waived by the PBGC, or (b) the withdrawal of any Credit Party or any ERISA Affiliate from a Pension Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA, or (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination, under Section 4041 of ERISA, if the plan assets are not sufficient to pay all plan liabilities, or (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC, or (e) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, or (f) the imposition of a Lien with respect to any Pension Plan pursuant to Section 430(k) of the Code or Section 303(k) of ERISA, or (g) the determination that any Pension Plan is considered an “at-risk” plan within the meaning of Section 430 of the Code or Section 303 of ERISA or the determination that any Multiemployer

 

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Plan is in “endangered” or “critical” status within the meaning of Section 432 of the Code or Section 305 of ERISA, or (h) the partial or complete withdrawal of any Credit Party or any ERISA Affiliate from a Multiemployer Plan if withdrawal liability is asserted by such plan, or (i) any event or condition which results in the insolvency of a Multiemployer Plan under Section 4245 of ERISA, or (j) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA, or (k) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Credit Party or any ERISA Affiliate, or (l) the failure to satisfy the minimum funding standard of Section 412 or 430 of the Code or Section 302 or 303 of ERISA, whether or not waived, with respect to any Pension Plan, or (m) the occurrence of a non-exempt prohibited transaction within the meaning of Section 4975 of the Code or Section 406 of ERISA with respect to any Benefit Plan, or (n) the failure of any Benefit Plan intended to be qualified under Section 401(a) of the Code to so qualify, or the failure of any trust forming part of any such plan to qualify for exemption from taxation under Section 501(a) of the Code, or (o) the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan.

 

Threshold Amount ” means $50,000,000.

 

Total Consolidated Capitalization ” has the meaning assigned thereto in Section 8.12(a) .

 

Total Consolidated Debt ” has the meaning assigned thereto in Section 8.12(a) .

 

UCP ” means the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publication No. 600 (or such later version thereof as may be in effect at the applicable time).

 

UK GAAP ” means generally accepted accounting principles in the United Kingdom.

 

United States ” and “ U.S. ” means the United States of America.

 

Unrestricted Subsidiary ” means The Phoenix Holdings Ltd. (“ The Phoenix ”), provided that The Phoenix will be re-designated a Restricted Subsidiary upon the earlier of (a) the Parent, at any time, owning in the aggregate, directly or indirectly, beneficially, at least 66.67% of the aggregate Equity Interests of The Phoenix or (b) the Borrower re-designating The Phoenix as a Restricted Subsidiary by written notice to the Administrative Agent; provided , however , that once The Phoenix has been designated as a Restricted Subsidiary, it cannot be re-designated as an Unrestricted Subsidiary.

 

U.S. Person ” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

 

U.S. Tax Compliance Certificate ” has the meaning assigned thereto in Section 4.11(g) .

 

Wells Fargo ” means Wells Fargo Bank, National Association, a national banking association.

 

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Wells Fargo Fee Letter ” means the separate fee letter agreement dated January 12, 2018 among the Borrower, Wells Fargo and Wells Fargo Securities, LLC.

 

Wholly-Owned ” means, with respect to a Subsidiary, that all of the Equity Interests of such Subsidiary are, directly or indirectly, owned or controlled by the Parent and/or one or more of its Wholly-Owned Subsidiaries (except for directors’ qualifying shares or other shares required by Applicable Law to be owned by a Person other than the Parent and/or one or more of its Wholly-Owned Subsidiaries).

 

Withholding Agent ” means any Credit Party and the Administrative Agent.

 

Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

 

SECTION 1.2.                                           Other Definitions and Provisions .  With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:  (a) the definitions of terms herein shall apply equally to the singular and plural forms of the terms defined, (b) whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms, (c) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (d) the word “will” shall be construed to have the same meaning and effect as the word “shall”, (e) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (f) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (g) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (h) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights, (i) the term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form, (j) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (k) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including”.

 

SECTION 1.3.                                           Accounting Terms .

 

(a)                                  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with GAAP applied on a consistent basis, as in effect from time to time, except as otherwise specifically prescribed herein; provided that by written notice after the Closing Date delivered from the Borrower to the Administrative Agent (the “ Accounting Principles Election ”), the

 

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Borrower may elect to prepare and deliver financial statements in conformity with IFRS or UK GAAP, as applicable, and in such case, all accounting terms shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with IFRS or UK GAAP, as applicable, mutatis mutandis , applied on a consistent basis, and in effect from time to time, except to the extent such terms and data relate to periods prior to the effectiveness of the Accounting Principles Election.  Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Parent and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.

 

(b)                                  If at any time, any change in GAAP, any Accounting Principles Election or any change in IFRS or UK GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP, IFRS or UK GAAP, as applicable, prior to such change and (ii) the Credit Parties shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change.

 

SECTION 1.4.                                           Rounding .  Any financial ratios required to be maintained pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio or percentage is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

 

SECTION 1.5.                                           References to Agreement and Laws .  Unless otherwise expressly provided herein, (a) any definition or reference to formation documents, governing documents, agreements (including the Loan Documents) and other contractual documents or instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) any definition or reference to any Applicable Law, including, without limitation, Anti-Corruption Laws, Anti-Money Laundering Laws, the Bankruptcy Code, the Code, the Commodity Exchange Act, ERISA, the Exchange Act, the PATRIOT Act, the Securities Act, the UCC, the Investment Company Act, the Trading with the Enemy Act of the United States or any of the foreign assets control regulations of the United States Treasury Department, shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Applicable Law.

 

SECTION 1.6.                                           Times of Day .  Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).  Unless otherwise specified, to the extent any obligation is required to be paid or performed hereunder on a date that

 

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is not a Business Day, the date for payment or performance shall be construed to be required on the immediately succeeding Business Day.

 

SECTION 1.7.                                           Letter of Credit Amounts .  For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Article 29(a) of the UCP or Rule 3.13 or Rule 3.14 of the ISP or similar terms of the Letter of Credit itself, or if compliant documents have been presented but not yet honored, such Letter of Credit shall be deemed to be “outstanding” and “undrawn” in the amount so remaining available to be paid, and the obligations of the applicable Credit Parties and each Lender shall remain in full force and effect until the Fronting Bank and the Lenders shall have no further obligations to make any payments or disbursements under any circumstances with respect to any Letter of Credit.

 

SECTION 1.8.                                           Exchange Rate Fluctuations .  When applying any monetary limits, thresholds and other exceptions to the representations and warranties, undertakings and Events of Default under the Loan Documents, the equivalent to an amount in the relevant currency shall be calculated at the Spot Rate or, to the extent such Spot Rate is not available, such other publicly available conversion rate agreed to by the Borrower and the Administrative Agent acting reasonably in each case, as at the date of the incurring or making the relevant disposal, acquisition, investment, lease, loan, debt or guarantee or taking any other relevant action.

 

ARTICLE II.

 

REVOLVING CREDIT FACILITY

 

SECTION 2.1.                                           Revolving Credit Loans .  Subject to the terms and conditions of this Agreement and the other Loan Documents, and in reliance upon the representations and warranties set forth in this Agreement and the other Loan Documents, each Lender severally agrees to make Revolving Credit Loans in Dollars to the Borrower from time to time during the Availability Period as requested by the Borrower in accordance with the terms of Section 2.3 ; provided , that (a) the aggregate Credit Exposures shall not exceed the aggregate Commitments and (b) the Credit Exposure of any Lender (after giving effect to any amount requested) shall not at any time exceed such Lender’s Commitment.  Each Revolving Credit Loan by a Lender shall be in a principal amount equal to such Lender’s Commitment Percentage of the aggregate principal amount of Revolving Credit Loans requested on such occasion.  Subject to the terms and conditions hereof, the Borrower may borrow, repay and reborrow Revolving Credit Loans.

 

SECTION 2.2.                                           Swingline Loans .

 

(a)                                  Availability .  Subject to the terms and conditions of this Agreement and the other Loan Documents, and in reliance upon the representations and warranties set forth in this Agreement and the other Loan Documents, the Swingline Lender agrees to make Swingline Loans in Dollars to the Borrower from time to time during the Availability Period; provided , that (i) after giving effect to any amount requested, the sum of the aggregate Credit Exposures shall not exceed the aggregate Commitments and (ii) the aggregate principal amount of all outstanding Swingline Loans (after giving effect to any amount requested) shall not exceed the Swingline Commitment; provided , further , that the Swingline Lender shall not be required to make a Swingline Loan to

 

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refinance an outstanding Swingline Loan.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans.

 

(b)                                  Refunding .

 

(i)                                      The Swingline Lender, at any time and from time to time in its sole and absolute discretion may, on behalf of the Borrower (which hereby irrevocably directs the Swingline Lender to act on its behalf), by written notice given no later than 11:00 a.m. on any Business Day request each Lender to make, and each Lender hereby agrees to make, a Revolving Credit Loan as a Base Rate Loan in an amount equal to such Lender’s Commitment Percentage of the aggregate amount of the Swingline Loans outstanding on the date of such notice, to repay the Swingline Lender.  Each Lender shall make the amount of such Revolving Credit Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office within one Business Day of notice from the Administrative Agent.  The proceeds of such Revolving Credit Loans shall be immediately made available by the Administrative Agent to the Swingline Lender for application by the Swingline Lender to the repayment of the Swingline Loans.  No Lender’s obligation to fund its respective Commitment Percentage of a Swingline Loan shall be affected by any other Lender’s failure to fund its Commitment Percentage of a Swingline Loan, nor shall any Lender’s Commitment Percentage be increased as a result of any such failure of any other Lender to fund its Commitment Percentage of a Swingline Loan.

 

(ii)                                   The Borrower shall pay to the Swingline Lender, within one Business Day of demand, and in any event as set forth in Section 2.4 , in immediately available funds the amount of such Swingline Loans to the extent amounts received from the Revolving Credit Lenders are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded.  If any portion of any such amount paid to the Swingline Lender shall be recovered by or on behalf of the Borrower from the Swingline Lender in bankruptcy or otherwise, the loss of the amount so recovered shall be ratably shared among all the Lenders in accordance with their respective Commitment Percentages.

 

(iii)                                Immediately upon the making of a Swingline Loan, and without any further action on the part of the Swingline Lender or the Lenders, the Swingline Lender hereby grants to each Lender, and each Lender hereby acquires from such Swingline Lender, a participation in such Swingline Loan equal to such Lender’s Commitment Percentage of the amount of such Swingline Loan.  If for any reason any Swingline Loan cannot be refinanced with a Revolving Credit Loan pursuant to Section 2.2(b)(i) , each Lender shall, on the date such Revolving Credit Loan was to have been made pursuant to the notice referred to in Section 2.2(b)(i) , purchase for cash an undivided participating interest in the then outstanding Swingline Loans by paying to the Swingline Lender an amount (the “ Swingline Participation Amount ”) equal to such Lender’s Commitment Percentage of the aggregate principal amount of Swingline Loans then outstanding.  Each Lender will immediately transfer to the Swingline Lender, in immediately available funds, the amount of its Swingline Participation Amount.  Whenever, at any time after the Swingline Lender has received from any Lender such Lender’s Swingline Participation Amount, the Swingline Lender receives any payment on account of the Swingline Loans, the Swingline Lender will distribute to such Lender its Swingline Participation Amount (appropriately

 

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adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s participating interest was outstanding and funded and, in the case of principal and interest payments, to reflect such Lender’s pro rata portion of such payment if such payment is not sufficient to pay the principal of and interest on all Swingline Loans then due); provided that in the event that such payment received by the Swingline Lender is required to be returned, such Lender will return to the Swingline Lender any portion thereof previously distributed to it by the Swingline Lender.

 

(iv)                               Each Lender’s obligation to make the Revolving Credit Loans referred to in Section 2.2(b)(i)  and to purchase participating interests pursuant to Section 2.2(b)(iii)  shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right that such Lender or the Borrower may have against the Swingline Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Article V , (C) any adverse change in the condition (financial or otherwise) of the Borrower, (D) any breach of this Agreement or any other Loan Document by the Borrower, any other Credit Party or any other Lender or (E) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

 

(v)                                  If any Lender fails to make available to the Administrative Agent, for the account of the Swingline Lender, any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.2(b)  by the time specified in Section 2.2(b)(i)  or 2.2(b)(iii) , as applicable, the Swingline Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swingline Lender at a rate per annum equal to the applicable Federal Funds Rate, plus any administrative, processing or similar fees customarily charged by the Swingline Lender in connection with the foregoing.  If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Credit Loan or Swingline Participation Amount, as the case may be.  A certificate of the Swingline Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii)  shall be conclusive absent manifest error.

 

(c)                                   Defaulting Lenders .                                       Notwithstanding anything to the contrary contained in this Agreement, this Section 2.1 shall be subject to the terms and conditions of Section 4.14 and Section 4.15 .

 

SECTION 2.3.                                           Procedure for Advances of Revolving Credit Loans and Swingline Loans .

 

(a)                                  Requests for Borrowing .  The Borrower shall give the Administrative Agent irrevocable prior written notice substantially in the form of Exhibit B (a “ Notice of Borrowing ”) not later than 12:00 noon (or, in the case of any Swingline Loan, not later than 2:00 p.m.) (i) at least one (1) Business Day before each Base Rate Loan, (ii) on the same Business Day as each Swingline Loan and (iii) at least three (3) Business Days before each LIBOR Rate Loan, of its

 

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intention to borrow, specifying (A) the date of such borrowing, which shall be a Business Day, (B) the amount of such Borrowing, which shall be, (x) with respect to Base Rate Loans (other than Swingline Loans) in an aggregate principal amount of $3,000,000 or a whole multiple of $1,000,000 in excess thereof, (y) with respect to LIBOR Rate Loans in an aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (z) with respect to Swingline Loans in an aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess thereof, (C) whether such Loan is to be a Revolving Credit Loan or Swingline Loan, (D) in the case of a Revolving Credit Loan whether the Loans are to be LIBOR Rate Loans or Base Rate Loans, and (E) in the case of a LIBOR Rate Loan, the duration of the Interest Period applicable thereto; provided that if the Borrower wishes to request LIBOR Rate Loans having an Interest Period of twelve months in duration, such notice must be received by the Administrative Agent not later than 12:00 noon four (4) Business Days prior to the requested date of such borrowing, whereupon the Administrative Agent shall give prompt notice to the Lenders of such request and determine whether the requested Interest Period is acceptable to all of them.  If the Borrower fails to specify a type of Loan in a Notice of Borrowing, then the applicable Loans shall be made as Base Rate Loans.  If the Borrower requests a borrowing of LIBOR Rate Loans in any such Notice of Borrowing, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.  A Notice of Borrowing received after 12:00 noon (or 2:00 p.m., in the case of any Swingline Loan) shall be deemed received on the next Business Day unless otherwise agreed by the Administrative Agent (and, in the case of any Swingline Loan, the Swingline Lender).  The Administrative Agent shall promptly notify the Lenders of each Notice of Borrowing.

 

(b)                                  Disbursement of Revolving Credit and Swingline Loans .  Not later than 2:00 p.m. (or 3:00 p.m., in the case of any Swingline Loan) on the proposed borrowing date, (i) each Revolving Credit Lender will make available to the Administrative Agent, for the account of the Borrower, at the office of the Administrative Agent in funds immediately available to the Administrative Agent, such Revolving Credit Lender’s Revolving Credit Commitment Percentage of the Revolving Credit Loans to be made on such borrowing date and (ii) the Swingline Lender will make available to the Administrative Agent, for the account of the Borrower, at the office of the Administrative Agent in funds immediately available to the Administrative Agent, the Swingline Loans to be made on such borrowing date.  The Borrower hereby irrevocably authorizes the Administrative Agent to disburse the proceeds of each borrowing requested pursuant to this Section in immediately available funds by crediting or wiring such proceeds in accordance with any wiring instructions set forth in the applicable Notice of Borrowing, or if no such wiring instructions are set forth, the deposit account of the Borrower identified in the most recent notice substantially in the form attached as Exhibit C (a “ Notice of Account Designation ”) delivered by the Borrower to the Administrative Agent or as may be otherwise agreed upon by the Borrower and the Administrative Agent from time to time.  Subject to Section 4.7 hereof, the Administrative Agent shall not be obligated to disburse the portion of the proceeds of any Revolving Credit Loan requested pursuant to this Section to the extent that any Revolving Credit Lender has not made available to the Administrative Agent its Revolving Credit Commitment Percentage of such Loan.  Revolving Credit Loans to be made for the purpose of refunding Swingline Loans shall be made by the Revolving Credit Lenders as provided in Section 2.2(b) .

 

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SECTION 2.4.                                           Repayment and Prepayment of Loans .

 

(a)                                  Revolving Credit Loans .  The Borrower shall repay to the Administrative Agent for the ratable account of the Lenders on the Commitment Termination Date the aggregate principal amount of all Revolving Loans outstanding on such date.

 

(b)                                  Swingline Loans .  The Borrower shall repay each Swingline Loan on the earlier to occur of (i) the date ten (10) Business Days after such Swingline Loan is made and (ii) the Commitment Termination Date; provided that on each date that a Borrowing of Revolving Credit Loans is made, the Borrower shall repay all Swingline Loans then outstanding and the proceeds of any such Borrowing shall be applied by the Administrative Agent to repay any Swingline Loans outstanding.  At any time that there shall exist a Defaulting Lender, immediately upon the request of the Swingline Lender, the Borrower shall repay the outstanding Swingline Loans made by such Swingline Lender in an amount sufficient to eliminate any Fronting Exposure in respect of such Swingline Loans.

 

(c)                                   Mandatory Prepayments .  If at any time the aggregate Credit Exposures exceed the Commitment, the Borrower agrees to repay within one Business Day of notice from the Administrative Agent, by payment to the Administrative Agent for the account of the Lenders, Credit Extensions in an amount equal to such excess with each such repayment applied first , to the principal amount of outstanding Swingline Loans, second to the principal amount of outstanding Revolving Credit Loans and third , with respect to any Letters of Credit then outstanding, a payment of Cash Collateral into a Cash Collateral Account opened by the Administrative Agent, for the benefit of the Lenders, in an amount equal to such excess (such Cash Collateral to be applied in accordance with Section 9.2(b) ).

 

(d)                                  Optional Prepayments .  The Borrower may at any time and from time to time prepay Revolving Credit Loans and Swingline Loans, in whole or in part, without premium or penalty, with irrevocable prior written notice to the Administrative Agent given not later than 12:00 noon (i) on the same Business Day as each Base Rate Loan and each Swingline Loan and (ii) at least three (3) Business Days before each LIBOR Rate Loan, specifying the date and amount of prepayment and whether the prepayment is of LIBOR Rate Loans, Base Rate Loans, Swingline Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each.  Upon receipt of such notice, the Administrative Agent shall promptly notify each Revolving Credit Lender.  If any such notice is given, the amount specified in such notice shall be due and payable on the date set forth in such notice.  Partial prepayments shall be in an aggregate amount of $3,000,000 or a whole multiple of $1,000,000 in excess thereof with respect to Base Rate Loans (other than Swingline Loans), $5,000,000 or a whole multiple of $1,000,000 in excess thereof with respect to LIBOR Rate Loans and $500,000 or a whole multiple of $100,000 in excess thereof with respect to Swingline Loans.  A Notice of Prepayment received after 12:00 noon shall be deemed received on the next Business Day unless otherwise agreed by the Administrative Agent (and, in the case of any Swingline Loan, the Swingline Lender).  Each such repayment shall be accompanied by any amount required to be paid pursuant to Section 4.9 hereof.

 

(e)                                   Limitation on Prepayment of LIBOR Rate Loans .  The Borrower may not prepay any LIBOR Rate Loan on any day other than on the last day of the Interest Period applicable

 

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thereto unless such prepayment is accompanied by any amount required to be paid pursuant to Section 4.9 hereof.

 

SECTION 2.5.                                           Voluntary Reduction of the Commitments .  The Borrower shall have the right at any time and from time to time, upon at least three (3) Business Days prior written notice to the Administrative Agent, to permanently reduce, without premium or penalty, (i) the entire Revolving Credit Commitment at any time or (ii) portions of the Revolving Credit Commitment, from time to time, in an aggregate principal amount not less than $3,000,000 or any whole multiple of $1,000,000 in excess thereof.  Any reduction of the Revolving Credit Commitment shall be applied to the Revolving Credit Commitment of each Revolving Credit Lender according to its Revolving Credit Commitment Percentage.  All Commitment Fees accrued until the effective date of any termination of the Revolving Credit Commitment shall be paid on the effective date of such termination.  Any such written notice may be conditioned upon the effectiveness of any other credit facilities or the receipt of proceeds from, or consummation of, any other event, but shall otherwise be irrevocable.

 

SECTION 2.6.                                           Termination of Revolving Credit Facility .  The Revolving Credit Facility and the Commitments shall terminate on the Commitment Termination Date.

 

ARTICLE III.

 

LETTER OF CREDIT FACILITY

 

SECTION 3.1.                                           Syndicated Letters of Credit .

 

(a)                                  General .  At the request of any Account Party, each Lender agrees, on and subject to the terms and conditions of this Agreement, to issue Letters of Credit as Syndicated Letters of Credit for the account of such Account Party in U.S. Dollars from time to time during the Availability Period.  Each Syndicated Letter of Credit shall be issued severally by all of the Lenders acting through the L/C Agent, at the time of issuance as a single multi-bank letter of credit, and shall be substantially in the form of Exhibit D with such changes therein as the L/C Agent (in consultation with the applicable Account Party) determines are acceptable to it and not adverse to the interests of the Lenders.

 

(b)                                  Notice of Issuance .  To request the issuance of a Syndicated Letter of Credit, the applicable Account Party shall hand deliver or transmit by facsimile (or transmit by electronic communication, if arrangements for doing so have been approved by the L/C Agent; provided that the L/C Agent hereby approves such electronic communication delivered by email) to the L/C Agent and the Administrative Agent (which shall promptly notify the Lenders) not later than 12:00 noon three Business Days in advance of the requested date of issuance (or such shorter period as is acceptable to the L/C Agent, including any request for the issuance of a Syndicated Letter of Credit on the Closing Date, subject to approval by the L/C Agent) a letter of credit notice on the L/C Agent’s standard form (with such changes as the L/C Agent shall reasonably deem appropriate) or other electronic notice acceptable to the L/C Agent (a “ Syndicated Letter of Credit Notice ”) requesting the issuance of a Syndicated Letter of Credit, or identifying the Syndicated Letter of Credit to be amended, renewed, extended or increased, as the case may be, and specifying:  (A) the date of issuance (which shall be a Business Day), (B) the date on which such Syndicated

 

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Letter of Credit is to expire (which shall comply with Section 3.3 ), (C) the Stated Amount of such Syndicated Letter of Credit (it being agreed that all Letters of Credit shall be issued in U.S. Dollars), (D) the name and address of the beneficiary thereof, and (E) such other customary information as shall be necessary to prepare, amend, renew, extend or increase, as the case may be, such Syndicated Letter of Credit, it being understood and agreed that Syndicated Letters of Credit may be extended and renewed in accordance with Section 3.3 .  It is the intention of the parties to this Agreement that Syndicated Letters of Credit issued to support reinsurance-related obligations shall have terms and conditions necessary to qualify such Syndicated Letters of Credit as permissible collateral under applicable law and, subject to the terms and conditions of this Agreement, the Issuing Lenders agree to issue such Syndicated Letters of Credit.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any Syndicated Letter of Credit Notice or other Letter of Credit Document submitted by the applicable Account Party to, or entered into by the applicable Account Party with, the L/C Agent relating to any Syndicated Letter of Credit issued for its account, the terms and conditions of this Agreement shall control.

 

(c)                                   Obligation of Lenders .  The obligation of any Issuing Lender under any Syndicated Letter of Credit shall be several and not joint and shall be in an amount equal to such Issuing Lender’s Commitment Percentage of the aggregate Stated Amount of such Syndicated Letter of Credit at the time such Syndicated Letter of Credit is issued (subject to any amendments to such Syndicated Letter of Credit expressly permitted hereunder) and each Syndicated Letter of Credit shall expressly so provide.  Absent the prior written consent of each Issuing Lender, no Syndicated Letter of Credit may be issued that would vary the several and not joint nature of the obligations of the Issuing Lenders thereunder as provided in this Section 3.1(c) .  The failure of any Issuing Lender to make any L/C Disbursement in respect of any Syndicated Letter of Credit on any date shall not relieve any other Issuing Lender of its corresponding obligation, if any, hereunder to do so on such date, but no Issuing Lender shall be responsible for the failure of any other Issuing Lender to make its L/C Disbursement in respect of any Syndicated Letter of Credit.  Concurrently with or promptly following any change in Commitments pursuant to Section 11.9 (to the extent agreed to between the assigning Lender and the assignee) or any other event or circumstance resulting in a change in the Commitment Percentages of the Lenders, the L/C Agent shall amend or replace each outstanding Syndicated Letter of Credit to reflect the new Commitment Percentages of the Lenders.  Until a Syndicated Letter of Credit has been so amended or replaced, the Lenders (both before and after giving effect to the change in Commitment Percentages) shall be deemed to have irrevocably and unconditionally sold and purchased participations in such Syndicated Letter of Credit (including each drawing made thereunder and the obligations of the applicable Account Party under this Agreement with respect thereto and any Cash Collateral or other security therefor or guaranty pertaining thereto) as necessary to give effect to the change in Commitment Percentages.

 

(d)                                  Issuance Administration .  Each Syndicated Letter of Credit shall be executed and delivered by the L/C Agent in the name and on behalf of, and as attorney-in-fact for, each Issuing Lender, and the L/C Agent shall act under each Syndicated Letter of Credit, and each Syndicated Letter of Credit shall expressly provide that the L/C Agent shall act, as the agent of each such Issuing Lender to (i) execute and deliver such Syndicated Letter of Credit, (ii) receive drafts, other demands for payment and other documents presented by the beneficiary under such Syndicated Letter of Credit, (iii) determine whether such drafts, demands and documents are in compliance

 

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with the terms and conditions of such Syndicated Letter of Credit, (iv) notify such Issuing Lender and the applicable Account Party that a valid drawing has been made and the date that the related L/C Disbursement is to be made and (v) exercise all rights held by the issuer of a letter of credit under the documents for which such Syndicated Letter of Credit shall provide credit enhancement (or designate any Person as its representative for all such purposes under such documents); provided that the L/C Agent shall have no obligation or liability for any L/C Disbursement under such Syndicated Letter of Credit (other than in its capacity as an Issuing Lender), and each Syndicated Letter of Credit shall expressly so provide.  Each Issuing Lender hereby irrevocably appoints and designates the L/C Agent as its attorney-in-fact, acting through any duly authorized officer, to execute and deliver in the name and on behalf of such Issuing Lender each Syndicated Letter of Credit to be issued by such Issuing Lender hereunder and to take such other actions contemplated by this Section 3.1(d) .  Promptly upon the request of the L/C Agent, each Issuing Lender will furnish to the L/C Agent such additional powers of attorney or other evidence as any beneficiary of any Syndicated Letter of Credit may reasonably request in order to demonstrate that the L/C Agent has the power to act as attorney-in-fact for such Issuing Lender to execute and deliver such Syndicated Letter of Credit.

 

(e)                                   Disbursement Procedures .  The L/C Agent shall, promptly following its receipt thereof (and, in any event, within any time specified in the text of the relevant Syndicated Letter of Credit), examine all documents purporting to represent a demand for payment under a Syndicated Letter of Credit.  The L/C Agent shall promptly after such examination and before such L/C Disbursement notify each applicable Issuing Lender and the applicable Account Party by telephone (confirmed by facsimile or email) of such demand for payment.  With respect to any demand for payment made under a Syndicated Letter of Credit which the L/C Agent has informed the applicable Issuing Lenders is valid, each such Issuing Lender will promptly make a L/C Disbursement in respect of such Syndicated Letter of Credit in accordance with the amount of its liability under such Syndicated Letter of Credit and this Agreement, and such L/C Disbursement is to be made to the account of the L/C Agent most recently designated by it for such purpose by notice to the Issuing Lenders.  The L/C Agent will make such L/C Disbursement available to the beneficiary of such Syndicated Letter of Credit by promptly crediting the amounts so received, in the funds so received, to the account identified by such beneficiary in connection with such demand for such L/C Disbursement.  Promptly following any L/C Disbursement by any Issuing Lender in respect of any Syndicated Letter of Credit, the L/C Agent will notify the applicable Account Party of such L/C Disbursement.

 

(f)                                    Reimbursement .  Each Account Party agrees that it shall reimburse the applicable Issuing Lenders in respect of any L/C Disbursement made under such Account Party’s Syndicated Letters of Credit by paying to the Administrative Agent an amount in U.S. Dollars equal to the amount of such L/C Disbursement, with interest payable thereon as provided in Section 3.5 , no later than 3:00 p.m., Charlotte time, on the first Business Day after the date of the L/C Disbursement.  Each Account Party’s obligation to reimburse the Issuing Lenders with respect to such Account Party’s Reimbursement Obligations shall be absolute and unconditional and subject to the provisions of Section 4.1 .

 

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SECTION 3.2.                                           Participated Letters of Credit .

 

(a)                                  General .  At the request of any Account Party, the Fronting Bank agrees, on and subject to the terms and conditions of this Agreement and in reliance upon the agreements of the Lenders set forth in this Section 3.2 , to issue Letters of Credit as Participated Letters of Credit for the account of such Account Party in U.S. Dollars from time to time during the Availability Period.  Each Participated Letter of Credit shall be in a form customarily used or otherwise approved by the Fronting Bank (in consultation with the applicable Account Party).

 

(b)                                  Notice of Issuance .  To request the Issuance of a Participated Letter of Credit, the applicable Account Party shall hand deliver or transmit by facsimile (or transmit by electronic communication, if arrangements for doing so have been approved by the Fronting Bank; provided that the Fronting Bank hereby approves such electronic communication delivered by email) to the Fronting Bank and the Administrative Agent (which shall promptly notify the Lenders) at least three Business Days in advance of the requested date of issuance (or such shorter period as is acceptable to the Administrative Agent and the Fronting Bank, including any request for the issuance of a Participated Letter of Credit on the Closing Date, subject to approval by the Administrative Agent and the Fronting Bank) a letter of credit notice on the Fronting Bank’s standard form (with such changes as the Fronting Bank shall reasonably deem appropriate) or other electronic notice acceptable to the Fronting Bank (a “ Participated Letter of Credit Notice ”) requesting the issuance of a Participated Letter of Credit, or identifying the Participated Letter of Credit to be amended, renewed, extended or increased, as the case may be, and specifying:  (A) the date of issuance (which shall be a Business Day), (B) the date on which such Participated Letter of Credit is to expire (which shall comply with Section 3.3 ), (C) the Stated Amount of such Participated Letter of Credit (it being agreed that all Letters of Credit shall be issued in U.S. Dollars), (D) the name and address of the beneficiary thereof, and (E) such other customary information as shall be necessary to prepare, amend, renew, extend or increase, as the case may be, such Participated Letter of Credit, it being understood and agreed that Participated Letters of Credit may be extended and renewed in accordance with Section 3.3 .  It is the intention of the parties to this Agreement that Participated Letters of Credit issued to support reinsurance-related obligations shall have terms and conditions necessary to qualify such Participated Letters of Credit as permissible collateral under applicable law and, subject to the terms and conditions of this Agreement, the Fronting Bank agrees to issue such Participated Letters of Credit.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any Participated Letter of Credit Notice or other Letter of Credit Document submitted by the applicable Account Party to, or entered into by the applicable Account Party with, the Fronting Bank relating to any Participated Letter of Credit issued for its account, the terms and conditions of this Agreement shall control.

 

(c)                                   Participations .  By the Issuance of a Participated Letter of Credit by the Fronting Bank and without any further action on the part of the Fronting Bank or the Lenders, the Fronting Bank shall be deemed to have sold and transferred to each Lender, and each Lender shall be deemed irrevocably and unconditionally to have purchased and received from the Fronting Bank, without recourse or warranty, an undivided interest and participation in such Participated Letter of Credit in an amount equal to such Lender’s Commitment Percentage of the Stated Amount of such Participated Letter of Credit and the applicable Account Party’s reimbursement obligations with respect thereto.  Each Lender acknowledges and agrees that its obligation to acquire participations

 

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pursuant to this paragraph in respect of Participated Letters of Credit is absolute, irrevocable and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any such Participated Letter of Credit or the occurrence and continuance of a Default or Event of Default or reduction or termination of the aggregate Commitments.  In consideration and in furtherance of the foregoing, as set forth in Section 3.2(d)(i)  each Lender hereby absolutely and unconditionally agrees to pay in U.S. Dollars to the Administrative Agent, for account of the Fronting Bank, such Lender’s Commitment Percentage of each L/C Disbursement made by the Fronting Bank in respect of any Participated Letter of Credit or at any time after any reimbursement payment is required to be disgorged or refunded to the applicable Account Party for any reason.  Such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Promptly following receipt by the Administrative Agent of any payment from the applicable Account Party pursuant to Section 3.2(e) , the Administrative Agent shall distribute such payment to the Fronting Bank or, to the extent that any Lenders have made payments pursuant to this paragraph to reimburse the Fronting Bank, then to such Lenders and the Fronting Bank as their interests may appear.  Any payment made by a Lender pursuant to this paragraph to reimburse the Fronting Bank for any L/C Disbursement shall not relieve the applicable Account Party of its obligation to reimburse such L/C Disbursement.

 

(d)                                  Disbursement Procedures; Funding of Participations .

 

(i)                                      The Fronting Bank shall, promptly following its receipt thereof (and, in any event, within any time specified in the text of the relevant Participated Letters of Credit), examine all documents purporting to represent a demand for payment under a Participated Letter of Credit.  The Fronting Bank shall promptly after such examination notify the Administrative Agent and the applicable Account Party by telephone (confirmed by facsimile or email) of such demand for payment and whether the Fronting Bank has made or will make a L/C Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the applicable Account Party of its obligation to reimburse the Fronting Bank and the Lenders with respect to any such L/C Disbursement.  If the applicable Account Party shall fail to reimburse the Fronting Bank for such L/C Disbursement on the date and time specified in Section 3.2(e) , the Administrative Agent shall notify each Lender of the applicable L/C Disbursement, the payment then due from the applicable Account Party in respect thereof and such Lender’s Commitment Percentage thereof.  Each Lender (including the Lender acting as Fronting Bank) shall upon such notice make funds available in U.S. Dollars to the Administrative Agent for the account of the Fronting Bank at the Payment Office in an amount equal to its Commitment Percentage of the unpaid L/C Disbursement (such amount, its “ L/C Advance ”) not later than 2:00 p.m. on the Business Day specified in such notice by the Administrative Agent.  No such making of a L/C Advance shall relieve or otherwise impair the obligation of the applicable Account Party to reimburse the Fronting Bank for the amount of any payment made by the Fronting Bank under such Letter of Credit, together with interest as provided herein.

 

(ii)                                   If any Lender fails to make available to the Administrative Agent for the account of the Fronting Bank any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 3.2(d)  by the time specified therein, the Fronting Bank shall be entitled to recover from such Lender (acting through the Administrative

 

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Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Fronting Bank at a rate per annum equal to the Federal Funds Rate from time to time in effect.  A certificate of the Fronting Bank submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (ii) shall be conclusive absent manifest error.  Until a Lender funds its L/C Advance pursuant to this Section 3.2(d)  to reimburse the Fronting Bank for any L/C Disbursement, interest in respect of such Lender’s L/C Advance shall be solely for the account of the Fronting Bank.

 

(e)                                   Reimbursement .  Each Account Party agrees that it shall reimburse the Fronting Bank in respect of any L/C Disbursement made under such Account Party’s Participated Letters of Credit by paying to the Administrative Agent an amount in U.S. Dollars equal to the amount of such L/C Disbursement, with interest payable thereon as provided in Section 3.5 , no later than 3:00 p.m., Charlotte time, on the first Business Day after the date of the L/C Disbursement.  Each Account Party’s obligation to reimburse the Fronting Bank with respect to its Reimbursement Obligations shall be absolute and unconditional and subject to the provisions of Section 4.1 .

 

(f)                                    Repayment of Participations.

 

(i)                                      At any time after the Fronting Bank has made a payment under any Participated Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 3.2(d)(i) , if the Administrative Agent receives for the account of the Fronting Bank any payment in respect of the related unpaid L/C Disbursement or interest thereon (whether directly from the applicable Account Party or otherwise, including proceeds of cash collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Commitment Percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s L/C Advance was outstanding) in the same funds as those received by the Administrative Agent.

 

(ii)                                   If any payment received by the Administrative Agent for the account of the Fronting Bank pursuant to Section 3.2(d)  is required to be returned under any of the circumstances described in Section 4.1 (including pursuant to any settlement entered into by the Fronting Bank in its discretion), each Lender shall pay to the Administrative Agent for the account of the Fronting Bank its Ratable Share thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect.

 

SECTION 3.3.                                           Expiry Date of Letters of Credit .  Each Letter of Credit shall expire at or prior to the earlier of (a) the close of business on the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension), or (b) the Final Maturity Date; provided , however , if any Account Party so requests in any applicable Letter of Credit Notice, the L/C Agent or the Fronting Bank, as applicable, agrees to issue a Letter of Credit that provides for the automatic renewal for successive periods of one year or less (but not beyond the Final Maturity Date) (each, an “ Evergreen Letter of Credit ”) unless and until the L/C Agent or Fronting Bank, as applicable, shall have delivered

 

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prior written notice of nonrenewal to the beneficiary of such Letter of Credit (a “ Notice of Non-Extension ”) no later than 60 days prior to the expiry date specified in such Letter of Credit (such time, the “ Non-Extension Notice Date ”).  Once an Evergreen Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Agent or Fronting Bank, as applicable, to permit the extension of such Letter of Credit at any time to an expiry date not later than the Final Maturity Date; provided , however , that the L/C Agent or Fronting Bank, as applicable, shall not permit any such extension, nor shall it be required to extend such Letter of Credit, if (x) the L/C Agent or Fronting Bank, as applicable, has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit (as extended) under the terms hereof (by reason of the provisions of Section 5.2 ), (y) it has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, the Required Lenders or the applicable Account Party that one or more of the applicable conditions specified in Section 5.2 is not then satisfied or (z) the Commitment Termination Date has occurred.

 

SECTION 3.4.                                           Obligations Absolute .

 

(a)                                  The Reimbursement Obligations of each Account Party with respect to a L/C Disbursement under any Letter of Credit issued for the account of such Account Party and the obligation of any Lender to make its L/C Advance to the Fronting Bank with respect to any L/C Disbursement under any Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and any Letter of Credit Document under all circumstances, including the following circumstances:

 

(i)                                      any lack of validity or enforceability of this Agreement, any other Loan Document, any Letter of Credit Document or any other agreement or instrument relating thereto;

 

(ii)                                   any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of such Account Party in respect of any Letter of Credit Document or any other amendment or waiver of or any consent to departure from all or any of the Letter of Loan Documents;

 

(iii)                                the existence of any claim, set-off, defense or other right that such Account Party may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for which any such beneficiary or any such transferee may be acting), any Issuing Lender, the Administrative Agent, the L/C Agent, any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any other Letter of Credit Document or any unrelated transaction;

 

(iv)                               any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

 

(v)                                  payment by any Issuing Lender under a Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit;

 

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(vi)                               any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the Obligations of such Account Party; or

 

(vii)                            any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, such Account Party, any other Credit Party or any other guarantor, other than as may be expressly set forth in this Agreement.

 

(b)                                  None of the Administrative Agent, the L/C Agent, any Issuing Lender or any Lender, or any of their Related Parties, shall have any liability or responsibility to any Account Party by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder, or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond their control; provided that the foregoing shall not be construed to excuse the Fronting Bank or the L/C Agent from liability to the applicable Account Party to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by each Account Party to the extent permitted by applicable law) suffered by such Account Party that are caused by the gross negligence or willful misconduct of the Fronting Bank or the L/C Agent (as determined by a court of competent jurisdiction by a final and nonappealable judgment) when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  It is expressly understood and agreed that (i) the acceptance by the Fronting Bank or the L/C Agent, as the case may be, of documents that appear on their face to comply with the terms of a Letter of Credit, without responsibility for further investigation, (ii) the exclusive reliance by the Fronting Bank or the L/C Agent, as the case may be, on the documents presented to it under a Letter of Credit as to any and all matters set forth therein, including the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect (so long as such document appears on its face to comply with the terms of such Letter of Credit), and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever, and (iii) any noncompliance in any immaterial respect of the documents presented under such Letter of Credit with the terms thereof shall, in each case, be deemed not to constitute gross negligence or willful misconduct of the Fronting Bank or the L/C Agent.

 

SECTION 3.5.                                           Interest .  Unless the applicable Account Party reimburses each L/C Disbursement made in respect of Letters of Credit issued for its account in full on the date such L/C Disbursement is made, the unpaid amount of the Reimbursement Obligation thereof shall bear interest from the date of each L/C Disbursement until such amount shall be paid in full as follows:  (i) from and including the date such L/C Disbursement is made to and including the 3rd Business Day following such date, at the Base Rate plus the Applicable Rate at such time applicable to Base Rate Loans, and (ii) thereafter, at the Base Rate plus the Applicable Rate at such time applicable to Base Rate Loans plus 2%.  Such interest shall be payable on demand.

 

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SECTION 3.6.                                           Cash Collateralization of Letters of Credit .

 

(a)                                  If (A) as of the Commitment Termination Date, any Letter of Credit may for any reason remain outstanding, (B) any Event of Default occurs and is continuing and the Administrative Agent or the Required Lenders, as applicable, require each Account Party to Cash Collateralize the aggregate Letter of Credit Exposure issued for its account pursuant to Section 9.2(b) , (C) the aggregate L/C Obligations in respect of Participated Letters of Credit and Syndicated Letters of Credit for which Wells Fargo has agreed to serve as a Fronting Bank at any time exceeds the Fronting Sublimit, or (D) the aggregate Credit Exposure for all Lenders at any time exceeds the aggregate Commitments, then in each case, each Account Party shall deliver to the Administrative Agent an amount of Cash Collateral in U.S. Dollars equal to 103% of the aggregate Stated Amount of all Letters of Credit issued for its account outstanding at such time (whether or not any beneficiary under any Letter of Credit shall have drawn or be entitled at such time to draw thereunder); provided that in the case of clauses (C) and (D) above, the Account Parties shall only be required to deliver an amount of Cash Collateral equal to the amount of the applicable excess.  The Administrative Agent shall deposit such Cash Collateral in a special collateral account of each Account Party pursuant to arrangements reasonably satisfactory to the Administrative Agent (such account, the “ Cash Collateral Account ”) for the benefit of the Administrative Agent, the Issuing Lenders and the Lenders.

 

(b)                                  Each Account Party hereby grants to the Administrative Agent, for the benefit of the Fronting Bank and the other Issuing Lenders, a Lien upon and security interest in its Cash Collateral Account and all amounts held therein from time to time as security for the Letter of Credit Exposure of such Account Party, and for application to its aggregate Obligations, as and when the same shall arise.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account for the benefit of the Fronting Bank and the other Issuing Lenders and the Account Parties shall have no interest therein except as set forth in Section 3.6(c) .  Other than any interest on the investment of such amounts in Cash Equivalents, which investments shall be made at the direction of the applicable Account Party (unless an Event of Default shall have occurred and be continuing, in which case the determination as to investments shall be made at the option and in the discretion of the Administrative Agent), amounts in the Cash Collateral Account shall not bear interest.  Interest and profits, if any, on such investments shall accumulate in such account.

 

(c)                                   In the event of a drawing, and subsequent payment by any Issuing Lender, under any Letter of Credit at any time during which any amounts are held in the applicable Cash Collateral Account, the Administrative Agent will deliver to such Issuing Lender an amount equal to the Reimbursement Obligation created as a result of such payment (or, if the amounts so held are less than such Reimbursement Obligation, all of such amounts) to reimburse the Issuing Lender therefor.  Any amounts remaining in any Cash Collateral Account (including interest and profits) after the expiration of the Letters of Credit of the applicable Account Party and the reimbursement in full of the Issuing Lenders for all of their respective obligations thereunder shall be held by the Administrative Agent, for the benefit of such Account Party, to be applied against the then due Obligations of such Account Party in such order and manner as the Administrative Agent may direct.  If any Account Party is required to provide cash collateral pursuant hereto, such amount (including interest and profits), to the extent not applied as aforesaid, shall be returned to such Account Party, provided that after giving effect to such return (i) the aggregate Credit Exposure

 

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would not exceed the aggregate Commitments at such time and (ii) no Event of Default shall have occurred and be continuing at such time.  If any Account Party is required to provide Cash Collateral as a result of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to such Account Party within three Business Days after all Events of Default have been cured or waived.

 

SECTION 3.7.                                           Use of Letters of Credit .  The Letters of Credit shall be available for, and each Account Party agrees that it shall use its Letters of Credit to support, its own insurance obligations, obligations under reinsurance agreements and retrocession agreements to which it is a party and similar risk obligations and for general corporate purposes.

 

SECTION 3.8.                                           The Fronting Bank and L/C Agent .  The Fronting Bank and the L/C Agent shall act on behalf of the Lenders with respect to any Letters of Credit issued or administered by it and the documents associated therewith, and such Fronting Bank and L/C Agent shall have all of the rights, benefits and immunities (i) provided to the Administrative Agent in Article X with respect to any acts taken or omissions suffered in connection with Letters of Credit issued or proposed to be issued by it or administered by it and any documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article X included such Fronting Bank or L/C Agent with respect to such acts or omissions, and (ii) as additionally provided herein with respect to the Fronting Bank or the L/C Agent, as applicable

 

SECTION 3.9.                                           Letter of Credit Fees and Other Charges .  The Borrower agrees to pay the following amounts:

 

(i)                                      to the Administrative Agent, for the account of each Lender, a letter of credit fee (the “ Letter of Credit Fee ”) for each calendar quarter (or portion thereof) in respect of all Letters of Credit issued for the account of the Account Parties and outstanding during such quarter, at a per annum rate equal to Applicable Rate in effect for such fee from time to time on such Lender’s Commitment Percentage of the average daily aggregate Stated Amount of such Letters of Credit.  The Letter of Credit Fee shall be due and payable quarterly in arrears (i) on the last Business Day of each calendar quarter, commencing March 31, 2018 through the Final Maturity Date, (ii) on the Final Maturity Date and (iii) on the Final Expiry Date.  Notwithstanding anything to the contrary contained herein, during any period in which Wells Fargo acts as a Fronting Bank for any Non-NAIC Qualified Lender pursuant to Section 4.16(b) , the Letter of Credit Fee payable to such Non-NAIC Qualified Lender shall be reduced by 0.25% per annum, and Wells Fargo shall receive the amount of such reduction from the Borrower for its own account as a fronting fee; and

 

(ii)                                   (A) to the Fronting Bank, for its own account, with respect to each Participated Letter of Credit issued by the Fronting Bank hereunder, a fronting fee as described in the Wells Fargo Fee Letter, on the terms, in the amount and at the times set forth therein, (B) to each Non-NAIC Fronting Bank, a fronting fee as mutually agreed upon between the Borrower, such Non-NAIC Qualified Lender and such Non-NAIC Fronting Bank with respect to each Syndicated Letter of Credit issued for the account of any Account Party (it being understood that unless otherwise agreed between the applicable Non-NAIC Qualified Lender, such Non-NAIC Fronting Bank, the Administrative Agent and the Borrower, such fronting fee shall be paid by reducing the applicable Letter of Credit Fee

 

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otherwise payable to such Non-NAIC Qualified Lender by an amount equal to such fronting fee and paying the same to such Non-NAIC Fronting Bank) and (B) to the Fronting Bank and the L/C Agent, such reasonable fees and expenses as the Fronting Bank or the L/C Agent customarily require in connection with the issuance, amendment, transfer, negotiation, processing and/or administration of letters of credit.

 

SECTION 3.10.                                    Designation of Additional Account Parties .

 

(a)                                  After the Closing Date, the Borrower may at any time and from time to time designate any Wholly-Owned Restricted Subsidiary as an Account Party by delivery to the Administrative Agent of an Account Party Joinder Agreement executed by such Account Party and the Borrower and the satisfaction of the other conditions precedent set forth in Section 3.10(b) , and upon such delivery and satisfaction such Subsidiary shall for all purposes of this Agreement be an Account Party and a party to this Agreement until the Borrower shall have executed and delivered to the Administrative Agent an Account Party Termination with respect to such Subsidiary (or any other Account Party as of the Closing Date), whereupon such Subsidiary (or such other Account Party as of the Closing Date) shall cease to be an Account Party and a party to this Agreement.  Notwithstanding the preceding sentence, no Account Party Termination will become effective as to any Account Party at a time when any Letter of Credit issued for the account of such Account Party shall be outstanding hereunder, provided that such Account Party Termination shall be effective to terminate the right of such Account to request further Letters of Credit under this Agreement.  Notwithstanding the foregoing, in the event any Account Party (other than the Borrower) shall cease to be a Wholly-Owned Subsidiary of Borrower, it shall automatically cease to be an Account Party hereunder, other than with respect to Letters of Credit previously issued on its account.

 

(b)                                  The designation of an Account Party pursuant to Section 3.10(a)  is subject to the conditions precedent that:

 

(i)                                      An Account Party Joinder Agreement shall have been duly authorized, executed and delivered to the Administrative Agent by the proposed Account Party;

 

(ii)                                   Each of the Administrative Agent, the Lenders, and the Fronting Bank have approved in writing the designation of such proposed Account Party;

 

(iii)                                The Borrower or such proposed Account Party shall have furnished or caused to be furnished to the Administrative Agent the documents required under clauses (ii) , (iii)  and (iv)  of Section 5.1(b)  with respect to such proposed Account Party; and

 

(iv)                               The proposed Account Party shall have provided to the Administrative Agent and the Lenders the documentation and other information requested by the Administrative Agent and the Lenders in order to comply with requirements of any Anti-Money Laundering Laws, including, without limitation, the PATRIOT Act and any applicable “know your customer” rules and regulations.

 

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ARTICLE IV.

 

GENERAL LOAN PROVISIONS

 

SECTION 4.1.                                           Interest .

 

(a)                                  Interest Rate Options .  Subject to the provisions of this Section, at the election of the Borrower, (i) Revolving Credit Loans shall bear interest at (A) the Base Rate plus the Applicable Rate or (B) the LIBOR Rate plus the Applicable Rate ( provided that the LIBOR Rate shall not be available until three (3) Business Days (or four (4) Business Days with respect to a LIBOR Rate based on a twelve month Interest Period) after the Closing Date unless the Borrower has delivered to the Administrative Agent a written agreement in form and substance reasonably satisfactory to the Administrative Agent indemnifying the Lenders in the manner set forth in Section 4.9 of this Agreement) and (ii) any Swingline Loan shall bear interest at the Base Rate plus the Applicable Rate.  The Borrower shall select the rate of interest and Interest Period, if any, applicable to any Loan at the time a Notice of Borrowing is given or at the time a Notice of Conversion/Continuation is given pursuant to Section 4.2 .

 

(b)                                  Default Rate .  Subject to Section 9.3 , (i) immediately upon the occurrence and during the continuance of an Event of Default under Section 9.1(a) , Section 9.1(b) , Section 9.1(h)  or Section 9.1(i) , or (ii) at the election of the Required Lenders (or the Administrative Agent at the direction of the Required Lenders), upon the occurrence and during the continuance of any other Event of Default, (A) the Borrower shall no longer have the option to request LIBOR Rate Loans, Swingline Loans or Letters of Credit, (B) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum of two percent (2%) in excess of the rate (including the Applicable Rate) then applicable to LIBOR Rate Loans until the end of the applicable Interest Period and thereafter at a rate equal to two percent (2%) in excess of the rate (including the Applicable Rate) then applicable to Base Rate Loans, (C) all outstanding Base Rate Loans and other Obligations arising hereunder or under any other Loan Document shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate (including the Applicable Rate) then applicable to Base Rate Loans or such other Obligations arising hereunder or under any other Loan Document and (D) all accrued and unpaid interest shall be due and payable on demand of the Administrative Agent.  Interest shall continue to accrue on the Obligations after the filing by or against the Borrower of any petition seeking any relief in bankruptcy or under any Debtor Relief Law.

 

(c)                                   Interest Payment and Computation .  Interest on each Base Rate Loan shall be due and payable in arrears on the last Business Day of each calendar quarter commencing March 31, 2018; and interest on each LIBOR Rate Loan shall be due and payable on the last day of each Interest Period applicable thereto, and if such Interest Period extends over three (3) months, at the end of each three (3) month interval during such Interest Period.  All computations of interest for Base Rate Loans when the Base Rate is determined by the Prime Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest provided hereunder shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365/366-day year).

 

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(d)                                  Maximum Rate .  In no contingency or event whatsoever shall the aggregate of all amounts deemed interest under this Agreement charged or collected pursuant to the terms of this Agreement exceed the highest rate permissible under any Applicable Law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto.  In the event that such a court determines that the Lenders have charged or received interest hereunder in excess of the highest applicable rate, the rate in effect hereunder shall automatically be reduced to the maximum rate permitted by Applicable Law and the Lenders shall at the Administrative Agent’s option (i) promptly refund to the Borrower any interest received by the Lenders in excess of the maximum lawful rate or (ii) apply such excess to the principal balance of the Obligations.  It is the intent hereof that the Borrower not pay or contract to pay, and that neither the Administrative Agent nor any Lender receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by the Borrower under Applicable Law.

 

SECTION 4.2.                                           Notice and Manner of Conversion or Continuation of Loans .  Provided that no Event of Default has occurred and is then continuing, the Borrower shall have the option to (a) convert at any time following the third Business Day after the Closing Date all or any portion of any outstanding Base Rate Loans (other than Swingline Loans) in a principal amount equal to $5,000,000 or any whole multiple of $1,000,000 in excess thereof into one or more LIBOR Rate Loans and (b) upon the expiration of any Interest Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a principal amount equal to $3,000,000 or a whole multiple of $1,000,000 in excess thereof into Base Rate Loans (other than Swingline Loans) or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans.  Whenever the Borrower desires to convert or continue Loans as provided above, the Borrower shall give the Administrative Agent irrevocable prior written notice in the form attached as Exhibit E (a “ Notice of Conversion/Continuation ”) not later than 12:00 noon three (3) Business Days before the day on which a proposed conversion or continuation of such Loan is to be effective specifying (A) the Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to be converted or continued, the last day of the Interest Period therefor, (B) the effective date of such conversion or continuation (which shall be a Business Day), (C) the principal amount of such Loans to be converted or continued, and (D) the Interest Period to be applicable to such converted or continued LIBOR Rate Loan; provided that if the Borrower wishes to request LIBOR Rate Loans having an Interest Period of twelve months in duration, such notice must be received by the Administrative Agent not later than 12:00 noon four (4) Business Days prior to the requested date of such conversion or continuation, whereupon the Administrative Agent shall give prompt notice to the applicable Lenders of such request and determine whether the requested Interest Period is acceptable to all of them.  If the Borrower fails to give a timely Notice of Conversion/Continuation prior to the end of the Interest Period for any LIBOR Rate Loan, then the applicable LIBOR Rate Loan shall be converted to a Base Rate Loan.  Any such automatic conversion to a Base Rate Loan shall be effective as of the last day of the Interest Period then in effect with respect to the applicable LIBOR Rate Loan.  If the Borrower requests a conversion to, or continuation of, LIBOR Rate Loans, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.  Notwithstanding anything to the contrary herein, a Swingline Loan may not be converted to a LIBOR Rate Loan.  The Administrative Agent shall promptly notify the affected Lenders of such Notice of Conversion/Continuation.

 

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SECTION 4.3.                                           Fees .

 

(i)                                      Commitment Fee .  Commencing on the Closing Date, subject to Section 4.15(a)(iii) , the Borrower shall pay to the Administrative Agent, for the account of the Lenders, a non-refundable commitment fee (the “ Commitment Fee ”) at a rate per annum equal to the Applicable Rate on the average daily unused portion of the Commitment of the Lenders (other than the Defaulting Lenders, if any); provided , that the amount of outstanding Swingline Loans shall not be considered usage of the Commitment for the purpose of calculating the Commitment Fee.  The Commitment Fee shall be payable in arrears on the last Business Day of each calendar quarter during the term of this Agreement commencing March 31, 2018 and ending on the date upon which all Obligations (other than contingent indemnification obligations not then due) arising under the Revolving Credit Facility shall have been indefeasibly and irrevocably paid and satisfied in full, all Letters of Credit have been terminated or expired (or been Cash Collateralized) and the Commitment has been terminated.  The Commitment Fee shall be distributed by the Administrative Agent to the Lenders (other than any Defaulting Lender) pro   rata in accordance with such Revolving Credit Lenders’ respective Commitment Percentages.

 

(ii)                                   Other Fees .  The Borrower shall pay to the Arrangers and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in their Fee Letters.  The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified.

 

SECTION 4.4.                                           Manner of Payment .  Each payment by the applicable Credit Party on account of the principal of or interest on the Loans or of any fee, commission or other amounts (including the Reimbursement Obligation) payable to the Lenders under this Agreement shall be made not later than 3:00 p.m. on the date specified for payment under this Agreement to the Administrative Agent at the Administrative Agent’s Office for the account of the Lenders entitled to such payment in Dollars, in immediately available funds and shall be made without any setoff, counterclaim or deduction whatsoever.  Any payment received after 3:00 p.m. shall be deemed to have been made on the next succeeding Business Day for all purposes.  Upon receipt by the Administrative Agent of each such payment, the Administrative Agent shall distribute to each such Lender at its address for notices set forth herein its Commitment Percentage in respect of the relevant Credit Facility (or other applicable share as provided herein) of such payment and shall wire advice of the amount of such credit to each Lender.  Each payment to the Administrative Agent on account of the principal of or interest on the Swingline Loans or of any fee, commission or other amounts payable to the Swingline Lender shall be made in like manner, but for the account of the Swingline Lender.  Each payment to the Administrative Agent of any Issuing Lender’s fees or L/C Participants’ commissions shall be made in like manner, but for the account of such Issuing Lender or the L/C Participants, as the case may be.  Each payment to the Administrative Agent of Administrative Agent’s fees or expenses shall be made for the account of the Administrative Agent and any amount payable to any Lender under Sections 4.9 , Section 4.10 , Section 4.11 or Section 11.3 shall be paid to the Administrative Agent for the account of the applicable Lender.  Subject to the definition of Interest Period, if any payment under this Agreement shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business Day and such extension of time shall in such case be included in computing

 

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any interest if payable along with such payment.  Notwithstanding the foregoing, if there exists a Defaulting Lender each payment by the Borrower to such Defaulting Lender hereunder shall be applied in accordance with Section 4.15(a)(ii) .

 

SECTION 4.5.                                           Evidence of Indebtedness .

 

(a)                                  Extensions of Credit .  The Credit Extensions made by each Lender and each Issuing Lender shall be evidenced by one or more accounts or records maintained by such Lender or such Issuing Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the Administrative Agent and each Lender or the applicable Issuing Lender shall be conclusive absent manifest error of the amount of the Credit Extension made by the Lenders or such Issuing Lender to the Credit Parties and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Credit Parties hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender or any Issuing Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Revolving Credit Note and/or Swingline Note, as applicable, which shall evidence such Lender’s Revolving Credit Loans and/or Swingline Loans, as applicable, in addition to such accounts or records.  Each Lender may attach schedules to its Notes and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.

 

(b)                                  Participations .  In addition to the accounts and records referred to in subsection (a) , each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swingline Loans.  In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

 

SECTION 4.6.                                           Sharing of Payments by Lenders .  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations (other than pursuant to Section 4.8(c) , Section 4.9 , Section 4.10 , Section 4.11 or Section 11.3 ) greater than its pro   rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:

 

(a)                                  if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and

 

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(b)                                  the provisions of this paragraph shall not be construed to apply to (A) any payment made by the Credit Parties pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (B) the application of Cash Collateral provided for in Section 4.14 or (C) any payment obtained by a Lender as consideration for the assignment of, or sale of, a participation in any of its Loans or participations in Swingline Loans and Letters of Credit to any assignee or participant, other than to any Credit Party or any of their Subsidiaries or Affiliates (as to which the provisions of this paragraph shall apply) .

 

Each Credit Party consents to the foregoing and agrees, to the extent it may effectively do so under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Credit Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Credit Party in the amount of such participation.

 

SECTION 4.7.                                           Administrative Agent’s Clawback .

 

(a)                                  Funding by Lenders; Presumption by Administrative Agent .  Unless the Administrative Agent shall have received notice from a Lender (i) in the case of Base Rate Loans, not later than 12:00 noon on the date of any proposed borrowing and (ii) otherwise, prior to the proposed date of any borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Sections 2.3(b)  and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the daily average Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans.  If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such borrowing.  Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

(b)                                  Payments by the Borrower; Presumptions by Administrative Agent .  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders, the Issuing Lenders or the Swingline Lender hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders, the Issuing Lenders or the Swingline Lender, as the case may be, the amount due.  In such event, if the Borrower has not in

 

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fact made such payment, then each of the Lenders, the Issuing Lenders or the Swingline Lender, as the case maybe, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, such Issuing Lender or the Swingline Lender, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

(c)                                   Nature of Obligations of Lenders .  The obligations of the Lenders under this Agreement to make the Loans, to issue or participate in Letters of Credit and to make payments under this Section, Section 4.11(e) , Section 11.3(c)  or Section 11.7 , as applicable, are several and are not joint or joint and several.  The failure of any Lender to make available its Commitment Percentage of any Loan requested by the Borrower shall not relieve it or any other Lender of its obligation, if any, hereunder to make its Commitment Percentage of such Loan available on the borrowing date, but no Lender shall be responsible for the failure of any other Lender to make its Commitment Percentage of such Loan available on the borrowing date.

 

SECTION 4.8.                                           Changed Circumstances .

 

(a)                                  Circumstances Affecting LIBOR Rate Availability .  In connection with any request for a LIBOR Rate Loan or a conversion to or continuation thereof, if for any reason (i) the Administrative Agent shall determine (which determination shall be conclusive and binding absent manifest error) that Dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable amount and Interest Period of such Loan, (ii) the Administrative Agent shall determine (which determination shall be conclusive and binding absent manifest error) that reasonable and adequate means do not exist for the ascertaining the LIBOR Rate for such Interest Period with respect to a proposed LIBOR Rate Loan or (iii) the Required Lenders shall determine (which determination shall be conclusive and binding absent manifest error) that the LIBOR Rate does not adequately and fairly reflect the cost to such Lenders of making or maintaining such Loans during such Interest Period, then the Administrative Agent shall promptly give notice thereof to the Borrower.  Thereafter, until the Administrative Agent notifies the Borrower that such circumstances no longer exist, the obligation of the Lenders to make LIBOR Rate Loans and the right of the Borrower to convert any Loan to or continue any Loan as a LIBOR Rate Loan shall be suspended, and the Borrower shall either (A) repay in full (or cause to be repaid in full) the then outstanding principal amount of each such LIBOR Rate Loan together with accrued interest thereon (subject to Section 4.1(d) ), on the last day of the then current Interest Period applicable to such LIBOR Rate Loan; or (B) convert the then outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan as of the last day of such Interest Period.

 

(b)                                  Laws Affecting LIBOR Rate Availability .  If, after the date hereof, the introduction of, or any change in, any Applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any of the Lenders (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful or impossible for any of the Lenders (or any of their respective Lending Offices) to honor its obligations hereunder to make or maintain any LIBOR Rate Loan, such Lender shall promptly

 

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give notice thereof to the Administrative Agent and the Administrative Agent shall promptly give notice to the Borrower and the other Lenders.  Thereafter, until the Administrative Agent notifies the Borrower that such circumstances no longer exist, (i) the obligations of the Lenders to make LIBOR Rate Loans, and the right of the Borrower to convert any Loan to a LIBOR Rate Loan or continue any Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrower may select only Base Rate Loans and (ii) if any of the Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of the then current Interest Period applicable thereto, the applicable Loan shall immediately be converted to a Base Rate Loan for the remainder of such Interest Period.

 

(c)                                   Illegality .  If, after the date hereof (or, in the case of any Lender, such later date as such Lender becomes a Lender hereunder) in any applicable jurisdiction, any Issuing Lender or any Lender determines that the introduction of, or any changes in, any Applicable Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Issuing Lender or any Lender to (i) perform any of its obligations hereunder or under any other Loan Document or (ii) to fund or maintain its participation in any Loan or Letter of Credit, such Person shall promptly notify the Administrative Agent, then, upon the Administrative Agent notifying the applicable Credit Party, and until such notice by such Person is revoked, any obligation of such Person to issue, make fund or maintain any such Credit Extension shall be suspended.  Upon receipt of such notice, the Credit Parties shall, unless such Issuing Lender or Lender has been replaced in accordance with Section 4.12 , (A) repay that Person’s participation in the Loans or other applicable Obligations on the last day of the Interest Period for each Loan or other Obligation occurring after the Administrative Agent has notified the Borrower or, if earlier, the date specified by such Person in the notice delivered to the Administrative Agent (being no earlier than the last day of any applicable grace period permitted by Applicable Law) and (B) take all reasonable actions requested by such Person to mitigate or avoid such illegality.

 

SECTION 4.9.                                           Indemnity .  The Borrower hereby indemnifies each of the Lenders against any actual loss or expense (including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain a LIBOR Rate Loan or from fees payable to terminate the deposits from which such funds were obtained) which may arise or be attributable to each Lender’s obtaining, liquidating or employing deposits or other funds acquired to effect, fund or maintain any Loan (a) as a consequence of any failure by the Borrower to make any payment when due of any amount due hereunder in connection with a LIBOR Rate Loan, (b) due to any failure of the Borrower to borrow or continue a LIBOR Rate Loan or convert to a LIBOR Rate Loan on a date specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation or (c) due to any payment, prepayment or conversion of any LIBOR Rate Loan on a date other than the last day of the Interest Period therefor.  A certificate of such Lender setting forth the basis for determining such amount or amounts necessary to compensate such Lender shall be forwarded to the Borrower through the Administrative Agent and shall be conclusively presumed to be correct save for manifest error.

 

SECTION 4.10.                                    Increased Costs .

 

(a)                                  Increased Costs Generally .  If any Change in Law shall:

 

(i)                                      impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with

 

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or for the account of, or advances, loans or other credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBOR Rate) or any Issuing Lender;

 

(ii)                                   subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b)  through (d)  of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

 

(iii)                                impose on any Lender or any Issuing Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or LIBOR Rate Loans made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such Lender, the Issuing Lender or such other Recipient of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender, such Issuing Lender or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, such Issuing Lender or such other Recipient hereunder (whether of principal, interest or any other amount) then, upon written request of such Lender, such Issuing Lender or other Recipient, the Borrower shall promptly pay to any such Lender, such Issuing Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, such Issuing Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

 

(b)                                  Capital Requirements .  If any Lender or any Issuing Lender determines that any Change in Law affecting such Lender or such Issuing Lender or any Lending Office of such Lender or such Lender’s or such Issuing Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s or such Issuing Lender’s capital or on the capital of such Lender’s or such Issuing Lender’s holding company, if any, as a consequence of this Agreement, the Commitment of such Lender or the Loans made by, or participations in Letters of Credit or Swingline Loans held by, such Lender, or the Letters of Credit issued by such Issuing Lender, to a level below that which such Lender or such Issuing Lender or such Lender’s or such Issuing Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Lender’s policies and the policies of such Lender’s or such Issuing Lender’s holding company with respect to capital adequacy and liquidity), then from time to time upon written request of such Lender or such Issuing Lender the Borrower shall promptly pay to such Lender or such Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Lender or such Lender’s or such Issuing Lender’s holding company for any such reduction suffered.  It is acknowledged that this Agreement is being entered into by the Lenders on the understanding that the Lenders will not be required to maintain capital against their Commitment or Swingline Commitment, as applicable, under current Applicable Laws, regulations and regulatory guidelines.  In the event the Lenders shall be advised by any Governmental Authority or shall otherwise determine on the basis of pronouncements of any Governmental Authority that such understanding is incorrect, it is agreed that the Lenders will be

 

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entitled to make claims under this Section (each such claim to be made within a reasonable period of time after the period to which it relates) based upon market requirements prevailing on the date hereof for commitments under comparable credit facilities against which capital is required to be maintained.

 

(c)                                   Certificates for Reimbursement .  A certificate of a Lender, or an Issuing Lender or such other Recipient setting forth the amount or amounts necessary to compensate such Lender or such Issuing Lender, such other Recipient or any of their respective holding companies, as the case may be, as specified in paragraph (a)  or (b)  of this Section and delivered to the Borrower, shall be conclusive absent manifest error.  The Borrower shall pay such Lender or such Issuing Lender or such other Recipient, as the case may be, the amount shown as due on any such certificate within ten (10) Business Days after receipt thereof.  Notwithstanding the foregoing, the Borrower shall be not required to pay such amounts to any Lender, Issuing Lender or other Recipient unless such Lender, Issuing Lender or other Recipient certifies that it is the general practice of such Lender, Issuing Lender or Recipient at such time to request compensation for such matters from similarly situated borrowers.

 

(d)                                  Delay in Requests .  Failure or delay on the part of any Lender or any Issuing Lender or such other Recipient to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or such Issuing Lender’s or such other Recipient’s right to demand such compensation; provided that the Borrower shall not be required to compensate any Lender or any Issuing Lender or any other Recipient pursuant to this Section for any increased costs incurred or reductions suffered more than six (6) months prior to the date that such Lender or such Issuing Lender or such other Recipient, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s or such Issuing Lender’s or such other Recipient’s intention to claim compensation therefor (except that if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

SECTION 4.11.                                    Taxes .

 

(a)                                  Defined Terms .  For purposes of this Section 4.11 , the term “Lender” includes any Issuing Lender and the term “Applicable Law” includes FATCA.

 

(b)                                  Payments Free of Taxes .  Any and all payments by or on account of any obligation of any Credit Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law.  If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Credit Party shall be increased as necessary so that, after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section), the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.  Upon becoming aware that it must make a deduction or withholding of any Tax pursuant to this Section 4.11(b)  that requires an increased sum payable by

 

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a Credit Party or is otherwise an Indemnified Tax, the applicable Withholding Agent shall promptly notify the Credit Parties and the Administrative Agent.

 

(c)                                   Payment of Other Taxes by the Credit Parties .  The Credit Parties shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

 

(d)                                  Indemnification by the Credit Parties .  The Credit Parties shall jointly and severally indemnify each Recipient, within ten (10) Business Days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the applicable Credit Party by a Recipient (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Recipient, shall be conclusive absent manifest error.

 

(e)                                   Indemnification by the Lenders .  Each Lender shall severally indemnify the Administrative Agent, within ten (10) Business Days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Credit Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Credit Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.9(d)  relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Administrative Agent to setoff and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e) .

 

(f)                                    Evidence of Payments .  As soon as practicable after any payment of Taxes by any Credit Party to a Governmental Authority pursuant to this Section 4.11 , such Credit Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(g)                                   Status of Lenders .

 

(i)                                      Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will

 

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permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 4.11(g)(ii)(A) , (ii)(B) , and (ii)(D)  below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission (A) would subject such Lender to any material unreimbursed cost or expense or (B) would materially prejudice the legal or commercial position of such Lender.

 

(ii)                                   Without limiting the generality of the foregoing:

 

(A)                                Any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from United States federal backup withholding tax;

 

(B)                                any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

 

(1)                                  in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN-E establishing an exemption from, or reduction of, United States feder6al withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E establishing an exemption from, or reduction of, United States federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

(2)                                  executed copies of IRS Form W-8ECI;

 

(3)                                  in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit H-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation”

 

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described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed copies of IRS Form W-8BEN-E; or

 

(4)                                  to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit H-2 or Exhibit H-3 , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit H-4 on behalf of each such direct and indirect partner;

 

(C)                                any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in United States federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

 

(D)                                if a payment made to a Lender under any Loan Document would be subject to United States federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (D) , “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

 

(h)                                  Treatment of Certain Refunds .  If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been

 

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indemnified pursuant to this Section 4.11 (including by the payment of additional amounts pursuant to this Section 4.11 ), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (h)  ( plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (h) , in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (h)  the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.  This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

 

(i)                                      Survival .  Each party’s obligations under this Section 4.11 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

 

SECTION 4.12.                                    Mitigation Obligations; Replacement of Lenders .

 

(a)                                  Designation of a Different Lending Office .  If any Lender asserts that it has become illegal for it to issue, make fund or maintain any such Credit Extension under Section 4.8(c) , requests compensation under Section 4.9 , or requires any Credit Party to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 4.11 , then such Lender shall, at the request of the Borrower, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would avoid any illegality described in Section 4.8(c)  or eliminate or reduce amounts payable pursuant to Section 4.9 or Section 4.11 , as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b)                                  Replacement of Lenders .  If any Lender asserts that it has become illegal for it to issue, make fund or maintain any such Credit Extension under Section 4.8(c) , requests compensation under Section 4.9 , or if any Credit Party is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 4.11 , and, in each case, such Lender has declined or is unable to designate a different Lending Office in accordance with Section 4.12(a) , or if any Lender is a Defaulting Lender or a Non-Consenting Lender or ceases to be a NAIC Qualified Lender (unless such Lender

 

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has in effect a Fronting Agreement with a Person which is listed on the NAIC Qualified Institution List to act as a Fronting Bank in accordance with Section 4.16 ), then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 11.9 ), all of its interests, rights (other than its existing rights to payments pursuant to Section 4.9 or Section 4.11 ) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

 

(i)                                      the Borrower shall have paid or cause to be paid to the Administrative Agent the assignment fee (if any) specified in Section 11.9 ;

 

(ii)                                   such Lender shall have received payment of an amount equal to the outstanding principal of any of its Loans and L/C Advances, its funded participations in Letters of Credit and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 4.9 from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

 

(iii)                                in the case of any such assignment resulting from a claim for compensation under Section 4.9 or payments required to be made pursuant to Section 4.11 , such assignment will result in a reduction in such compensation or payments thereafter;

 

(iv)                               such assignment does not conflict with Applicable Law; and

 

(v)                                  in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

 

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply and, in the case of any request for compensation or Indemnified Taxes or additional amounts, such requests have been rescinded.

 

(c)                                   Selection of Lending Office .  Subject to Section 4.12(a) , each Lender may make any Loans to the Borrower through any Lending Office, provided that the exercise of this option shall not affect the obligations of the Borrower to repay the Loan in accordance with the terms of this Agreement or otherwise alter the rights of the parties hereto.

 

SECTION 4.13.                                    Increase in Commitments .

 

(a)                                  Request for Increase .  Provided there exists no Default or Event of Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Borrower may from time to time, request an increase in the aggregate Commitments by an aggregate amount (for all such requests) not exceeding $100,000,000; provided that any such request for an increase shall be in a minimum amount of $5,000,000.  At the time of sending such notice, the Borrower (in consultation with the Administrative Agent) shall specify the time period within which each

 

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Lender is requested to respond (which shall in no event be less than ten (10) Business Days from the date of delivery of such notice to the Lenders).

 

(b)                                  Lender Elections to Increase .  Each Lender shall notify the Administrative Agent within such time period whether or not it agrees to increase its Commitment and, if so, whether by an amount equal to, greater than, or less than its Commitment Percentage of such requested increase.  Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment.

 

(c)                                   Notification by Administrative Agent; Additional Lenders .  The Administrative Agent shall notify the Borrower and each Lender of the Lenders’ responses to each request made hereunder.  To achieve the full amount of a requested increase and subject to the approval of the Administrative Agent, the Fronting Bank and the Swingline Lender, the Borrower may also invite one or more Eligible Assignees to become Lenders pursuant to a joinder agreement in form and substance reasonably satisfactory to the Administrative Agent and the Borrower.

 

(d)                                  Effective Date and Allocations .  If the aggregate Commitments are increased in accordance with this Section, the Administrative Agent and the Borrower shall determine the effective date (the “ Increase Effective Date ”) and the final allocation of such increase.  The Administrative Agent shall promptly notify the Borrower and the Lenders of the final allocation of such increase and the Increase Effective Date.

 

(e)                                   Conditions to Effectiveness of Increase .  As a condition precedent to such increase, the Borrower shall deliver to the Administrative Agent a certificate dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer of the Borrower (x) certifying and attaching the resolutions adopted by the board of directors of the Borrower approving or consenting to such increase, and (y) certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article VI and the other Loan Documents are true and correct in all material respects on and as of the Increase Effective Date (except to the extent any such representation and warranty is qualified by materiality or reference to Material Adverse Effect, in which case, such representation and warranty shall be true and correct in all respects), except to the extent that such representations and warranties specifically refer to an earlier date, in which case such representations and warranties are true and correct in all material respects as of such earlier date (except to the extent any such representation and warranty is qualified by materiality or reference to Material Adverse Effect, in which case, such representation and warranty shall be true and correct in all respects), and (B) no Default or Event of Default exists.  The Borrower shall prepay any Revolving Credit Loans outstanding on the Increase Effective Date (and pay any additional amounts required pursuant to Section 4.9 ) to the extent necessary to keep the outstanding Revolving Credit Loans ratable with any revised Commitment Percentages arising from any nonratable increase in the Commitments under this Section, after giving effect to any assignments or reallocations of Revolving Credit Loans entered into among the Lenders substantially concurrently with the effectiveness of such increase.

 

(f)                                    Conflicting Provisions .  This Section shall supersede any provisions in Section 4.6 or Section 11.2 to the contrary.

 

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SECTION 4.14.                                    Cash Collateral .  If there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent, the Fronting Bank (with a copy to the Administrative Agent) or the Swingline Lender (with a copy to the Administrative Agent), the Borrower shall provide Cash Collateral in an amount not less than the applicable Minimum Collateral Amount (determined after giving effect to Section 4.15(a)(v)  and any Cash Collateral provided by such Defaulting Lender).

 

(a)                                  Grant of Security Interest .  Each Account Party, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of the Fronting Bank and the Lenders, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the obligations to which such Cash Collateral may be applied pursuant to subsection (b) below.  If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent, the Fronting Bank and the Lenders as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Account Parties will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).

 

(b)                                  Application .  Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, Cash Collateral provided under Section 4.14(a)  or Section 4.15 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of its Participated Letter of Credit Exposure (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

 

(c)                                   Termination of Requirement .  Cash Collateral (or the appropriate portion thereof) provided to reduce the Fronting Exposure of the Fronting Bank shall no longer be required to be held as Cash Collateral pursuant to this Section 4.14 following (i) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (ii) the determination by the Administrative Agent that there exists excess Cash Collateral; provided that, subject to Section 4.14 , the Person providing Cash Collateral and the Fronting Bank may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations.

 

SECTION 4.15.                                    Defaulting Lenders .

 

(a)                                  Defaulting Lender Adjustments .  Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by Applicable Law:

 

(i)                                      Waivers and Amendments .  Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders and Section 11.2 .

 

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(ii)                                   Defaulting Lender Waterfall .  Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article IX or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 11.4 shall be applied at such time or times as may be determined by the Administrative Agent as follows:  first , to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second , to the payment on a pro   rata basis of any amounts owing by such Defaulting Lender to the Issuing Lenders or the Swingline Lender hereunder; third , to Cash Collateralize the Fronting Exposure of the Fronting Bank with respect to such Defaulting Lender in accordance with Section 4.14 ; fourth , as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan or funded participation in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth , if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro   rata in order to (A) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans and funded participations under this Agreement and (B) Cash Collateralize the Issuing Lenders’ future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 4.14 ; sixth , to the payment of any amounts owing to the Lenders, the Issuing Lenders or the Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, any Issuing Lender or the Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (1) such payment is a payment of the principal amount of any Loans or funded participations in Letters of Credit or Swingline Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (2) such Loans were made or the related Letters of Credit or Swingline Loans were issued at a time when the conditions set forth in Section 5.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and funded participations in Letters of Credit or Swingline Loans owed to, all Non-Defaulting Lenders on a pro   rata basis prior to being applied to the payment of any Loans of, or funded participations in Letters of Credit or Swingline Loans owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations and Swingline Loans are held by the Lenders pro   rata in accordance with their respective Commitment Percentages without giving effect to Section 4.15(a)(iv) .  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 4.15(a)(ii)  shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

 

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(iii)                                Certain Fees .

 

(A)                                No Defaulting Lender shall be entitled to receive any Commitment Fee for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

 

(B)                                A Defaulting Lender shall be entitled to receive Letter of Credit Fees pursuant to Section 3.9 for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Commitment Percentage of the Stated Amount of Letters of Credit for which such Defaulting Lender has provided Cash Collateral required pursuant to Section 4.14 .

 

(C)                                With respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Borrower shall pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s Participated Letter of Credit Exposure that has been reallocated to such Non-Defaulting Lender pursuant to Section 4.15(a)(iv) .

 

(D)                                Notwithstanding the foregoing, if any Defaulting Lender’s Participated Letter of Credit Exposure is not Cash Collateralized or reallocated pursuant to Section 4.15(a)(iv) , then, without prejudice to any rights or remedies of the Fronting Bank or any Lender hereunder, all Letter of Credit Fees that otherwise would have been payable to such Defaulting Lender with respect to such Defaulting Lender’s Participated Letter of Credit Exposure shall be payable to the Fronting Bank until such Defaulting Lender’s Participated Letter of Credit Exposure is Cash Collateralized.

 

(iv)                               Reallocation of Participations .  All or any part of such Defaulting Lender’s Participated Letter of Credit Exposure shall be automatically reallocated (effective on the day such Lender becomes a Defaulting Lender) among the Non-Defaulting Lenders in accordance with their respective Commitment Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not cause the Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment.  Subject to Section 11.22 , no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

 

(v)                                  Cash Collateral, Repayment of Swingline Loans .  If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, (x)  first , repay all Swingline Loans and (y)  second , Cash Collateralize the Issuing Lenders’ Fronting Exposure in accordance with the procedures set forth in Section 4.14 .

 

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(b)                                  Fronting Bank; Swingline Lender .  So long as any Lender is a Defaulting Lender, (i) the Fronting Bank shall not be required to issue any Participated Letter of Credit unless the Commitments of the Non-Defaulting Lenders and/or Cash Collateral provided by the Account Parties or the Defaulting Lender are at least equal to the Stated Amount of such Participated Letter of Credit, and participating interests in any such newly issued Participated Letter of Credit shall be allocated among non-Defaulting Lenders (and Defaulting Lenders shall not participate therein) and (ii) the Swingline Lender shall not be under any obligation to make any Swingline Loan if it shall determine (which determination shall be conclusive and binding absent manifest error) that it has, or by such Credit Extension may have, Fronting Exposure.

 

(c)                                   Defaulting Lender Cure .  If the Borrower, the Administrative Agent, the L/C Agent, the Swingline Lender and the Fronting Bank agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), such Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held pro   rata by the Lenders in accordance with the Commitments without giving effect to Section 4.15(a)(a)(iv) ), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Credit Parties while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

SECTION 4.16.                                    Provisions Relating to NAIC Qualified Lenders .

 

(a)                                  Each Lender represents that on the date of this Agreement (or, if later, the date such Lender becomes a party to this Agreement), it is a NAIC Qualified Lender or has entered into a Fronting Agreement with a NAIC Qualified Lender in accordance with the requirements of this Section 4.16 .  Each Lender agrees to use commercially reasonable efforts in order to, at all times, (i) be listed on the NAIC Qualified Institution List or (ii) if such Lender is not listed on the NAIC Qualified Institution List, maintain in effect a Fronting Agreement with a Person which a NAIC Qualified Lender to act as a Fronting Bank for such Lender in respect of its obligations under the Syndicated Letters of Credit (which Person, prior to entering in such Fronting Agreement, shall be subject to the prior written consent of each of the Borrower and the Administrative Agent, such consent, in each case, shall not be unreasonably withheld).  If any Lender shall enter into a Fronting Agreement hereunder at any time, it shall promptly furnish a copy thereof to the Borrower and the Administrative Agent.  In connection with the execution or termination of any Fronting Agreement, the L/C Agent is authorized to amend or replace each outstanding Syndicated Letter of Credit to add or remove the applicable Lender and Fronting Bank, as the case may be.  Each Lender shall promptly provide evidence to the Administrative Agent or the Borrower of such Lender’s compliance with the requirements of this Section 4.16 upon request by the Administrative Agent or the Borrower.

 

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(b)                                  If at any time any Lender shall cease to be a NAIC Qualified Lender and does not have a Fronting Agreement in effect with a Fronting Bank, such Lender shall promptly notify the Borrower and the Administrative Agent and forthwith comply with its obligations under this Section 4.16 .  Upon receipt of such notice, the Borrower may request to have another Lender or another Person that is a NAIC Qualified Lender (which Person shall be subject to the prior written consent of each of the Borrower and the Administrative Agent, such consent, in each case, shall not be unreasonably withheld) act as Fronting Bank for such Non-NAIC Qualified Lender with respect to any Syndicated Letter of Credit Exposure attributable to such Non-NAIC Qualified Lender.  Any such Lender or other Person may, in its sole discretion, agree to act as a Fronting Bank with respect to such Syndicated Letter of Credit Exposure, but has no obligation to do so.  After giving effect to the issuance of any such Syndicated Letter of Credit for which Wells Fargo has so agreed to act as Fronting Bank, the Fronting Obligations shall not exceed the Fronting Sublimit.

 

(c)                                   In the event any Lender or other Person agrees to act as a Fronting Bank pursuant to Section 4.16(b) , the L/C Agent is authorized, upon the Borrower’s request, to amend or replace each outstanding Syndicated Letter of Credit to remove the applicable Non-NAIC Qualified Lender and add such Person to reflect the application of this Section 4.16 and to issue new Syndicated Letters of Credit reflecting the application of this Section 4.16 .  With respect to any Syndicated Letter of Credit as to which any Lender or other Person acts as a Fronting Bank for a Non-NAIC Qualified Lender, such Fronting Bank shall be deemed to have sold and transferred to such Non-NAIC Qualified Lender, and such Non-NAIC Qualified Lender shall be deemed irrevocably and unconditionally to have purchased and received from such Fronting Bank, without recourse or warranty, an undivided interest and participation in such Non-NAIC Qualified Syndicated Letter of Credit Exposure.  The purchase and funding of such participation shall be governed by the provisions of Section 3.2(c) , Section 3.2(d)  and Section 3.2(f) , mutatis mutandis .

 

ARTICLE V.

 

CONDITIONS OF CLOSING AND ISSUANCE

 

SECTION 5.1.                                           Conditions to Closing and Initial Credit Extensions .  The obligation of the Lenders to close this Agreement and to make the initial Credit Extensions, if any, on the Closing Date is subject to the satisfaction of each of the following conditions:

 

(a)                                  Executed Loan Documents .  This Agreement and a Revolving Credit Note in favor of each Lender requesting a Revolving Credit Note at least two Business Days prior to the Closing Date, shall have been duly authorized, executed and delivered to the Administrative Agent by the parties thereto.

 

(b)                                  Closing Certificates; Etc. The Administrative Agent shall have received each of the following in form and substance reasonably satisfactory to the Administrative Agent:

 

(i)                                      Officer’s Certificate .  A certificate from a Responsible Officer of the Borrower to the effect that (A) all representations and warranties of the Credit Parties contained in this Agreement and the other Loan Documents are true, correct and complete in all material respects (except to the extent any such representation and warranty is

 

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qualified by materiality or reference to Material Adverse Effect, in which case, such representation and warranty shall be true, correct and complete in all respects); (B) as of the Closing Date, no Default or Event of Default has occurred and is continuing; and (C) since December 31, 2016, except as disclosed in any Information Materials, no event has occurred or condition arisen, either individually or in the aggregate, that has had, or would reasonably be expected to have a Material Adverse Effect.

 

(ii)                                   Certificate of Secretary of each Credit Party .  A certificate of a Responsible Officer of each Credit Party certifying as to the incumbency and genuineness of the signature of each officer of such Credit Party executing Loan Documents to which it is a party and certifying that attached thereto is (A) a true, correct and complete copy of the articles or certificate of incorporation or formation (or equivalent), as applicable, of such Credit Party and all amendments thereto, certified as of a recent date by the appropriate Governmental Authority in its jurisdiction of incorporation, organization or formation (or equivalent), as applicable, (B) a true, correct and complete copy of the bylaws or other governing document of such Credit Party as in effect on the Closing Date, (C) a true, correct and complete copy of resolutions duly adopted by the board of directors (or other governing body) of such Credit Party authorizing and approving the transactions contemplated hereunder and the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party, and (D) a copy of any applicable certificate required to be delivered pursuant to Section 5.1(b)(iii)  required to be satisfied as of the Closing Date.

 

(iii)                                Certificates of Good Standing .  Certificates as of a recent date of the good standing of each Credit Party under the laws of its jurisdiction of incorporation, organization or formation (or equivalent), as applicable, to the extent available in such jurisdiction.

 

(iv)                               Opinions of Counsel .  Opinions of counsel to the Credit Parties addressed to the Administrative Agent and the Lenders with respect to the Credit Parties, the Loan Documents and such other matters as the Administrative Agent shall request (which such opinions shall expressly permit reliance by permitted successors and assigns of the Administrative Agent and the Lenders).

 

(c)                                   Lien Search .  The Administrative Agent shall have received the results of a Lien search, in form and substance reasonably satisfactory to the Administrative Agent, indicating among other things that the assets of each such Credit Party are free and clear of any Lien (except for Permitted Liens).

 

(d)                                  No Injunction, Etc.   No action, proceeding or investigation shall have been instituted, threatened in writing or proposed in writing against any Credit Party before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain substantial damages in respect of, or which is related to or arises out of this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby or thereby.

 

(e)                                   Payment at Closing .  The Borrower shall have paid (i) to the Arrangers and the Administrative Agent, the fees required under the Fee Letters to be paid on the Closing Date, in

 

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the amounts due and payable on the Closing Date as required by the terms thereof, (ii) to the Administrative Agent, the initial payment of the annual administrative fee described in the Wells Fargo Fee Letter, and (iii) all other fees and reasonable expenses of the Arrangers, the Administrative Agent, the L/C Agent, the Issuing Lenders and the Lenders required hereunder to be paid on or prior to the Closing Date (including reasonable fees and expenses of counsel, subject to any limitations set forth herein) in connection with this Agreement, the other Loan Documents and the transactions contemplated hereby.

 

(f)                                    PATRIOT Act, etc.   The Credit Parties shall have provided to the Administrative Agent and the Lenders the documentation and other information requested by the Administrative Agent and the Lenders in order to comply with requirements of any Anti-Money Laundering Laws, including, without limitation, the PATRIOT Act and any applicable “know your customer” rules and regulations.

 

Without limiting the generality of the provisions of Section 10.3 , for purposes of determining compliance with the conditions specified in this Section 5.1 , the Administrative Agent and each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

 

SECTION 5.2.                                           Conditions Precedent to all Credit Extensions .  The obligations of the Lenders to make or participate in any Credit Extensions (including the initial Credit Extensions) and/or any Issuing Lender to issue or extend any Letter of Credit are subject to the satisfaction of the following conditions precedent on the relevant borrowing, issuance or extension date:

 

(a)                                  Continuation of Representations and Warranties .  The representations and warranties contained in this Agreement and the other Loan Documents shall be true and correct in all material respects, except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect, which such representation and warranty shall be true and correct in all respects, on and as of such borrowing, issuance or extension date with the same effect as if made on and as of such date (except for any such representation and warranty that by its terms is made only as of an earlier date, which representation and warranty shall remain true and correct in all material respects as of such earlier date, except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect, which such representation and warranty shall be true and correct in all respects as of such earlier date).

 

(b)                                  No Existing Default .  No Default or Event of Default shall have occurred and be continuing (i) on the borrowing date with respect to such Loan or after giving effect to the Loans to be made on such date or (ii) on the issuance or extension date with respect to such Letter of Credit or after giving effect to the issuance or extension of such Letter of Credit on such date.

 

(c)                                   Notice .  The Administrative Agent shall have received a Notice of Borrowing or Letter of Credit Application, as applicable, from the Borrower as required hereunder.

 

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(d)                                  Miscellaneous .  In addition to the foregoing, each Issuing Lender shall be under no obligation to issue any Letter of Credit (and, with respect to Syndicated Letters of Credit, the L/C Agent shall not Issue any Syndicated Letter of Credit on behalf of the Issuing Lenders) if:

 

(i)                                      any order, judgment or decree of any Governmental Authority or arbitrator having jurisdiction over such Issuing Lender shall by its terms enjoin or restrain the issuance of such Letter of Credit or any law applicable to such Issuing Lender or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over it shall prohibit, or request that it refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon it with respect to such Letter of Credit any restriction or reserve or capital requirement (for which such issuing Lender is not otherwise compensated) not in effect on the Closing Date, or any unreimbursed loss, cost or expense which was not applicable or in effect as of the Closing Date and which such Issuing Lender in good faith deems material to it;

 

(ii)                                   the L/C Agent or the Fronting Bank, as applicable, shall have delivered a Notice of Non-Extension with respect to such Letter of Credit;

 

(iii)                                the Administrative Agent has received written notice from the Fronting Bank, the L/C Agent or the Required Lenders, as the case may be, or from the applicable Account Party, on or prior to the Business Day prior to the requested date of the issuance of such Letter of Credit, that one or more of the applicable conditions under this Section 5.2 is not then satisfied;

 

(iv)                               the expiry date of such Letter of Credit would occur more than thirteen months after the date of issuance or last extension unless the Required Lenders have approved such expiry date;

 

(v)                                  the expiry date of such Letter of Credit occurs after the Final Maturity Date, unless all of the Lenders have approved such expiry date in writing;

 

(vi)                               such Letter of Credit is not substantially in form and substance reasonably acceptable to the Fronting Bank or the L/C Agent (acting on behalf of the Issuing Lenders);

 

(vii)                            such Letter of Credit is denominated in a currency other than U.S. Dollars;

 

(viii)                         immediately after giving effect thereto, either (A) any Lender’s Credit Exposure would exceed such Lender’s Commitment at such time, or (B) the aggregate Credit Exposure of the Lenders would exceed the aggregate Commitments at such time;

 

(ix)                               with respect to the issuance of any Participated Letter of Credit or Syndicated Letter of Credit for which Wells Fargo has agreed to serve as a Fronting Bank, immediately after giving effect thereto, the aggregate L/C Obligations outstanding in respect of all Participated Letters of Credit and such Syndicated Letters of Credit would exceed the Fronting Sublimit at such time; or

 

(x)                                  in the case of a Syndicated Letter of Credit, any Lender is a Non-NAIC Qualified Lender at such time (unless such Lender has in effect a Fronting Agreement with

 

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a Person which is listed on the NAIC Qualified Institution List to act as a Fronting Bank in accordance with Section 4.16 or Wells Fargo acts as a Fronting Bank for such Non-NAIC Qualified Lender in accordance with Section 4.16(b) ).

 

ARTICLE VI.

 

REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES

 

To induce the Administrative Agent and Lenders to enter into this Agreement and to induce the Lenders to make Credit Extensions, the Credit Parties hereby represent and warrant to the Administrative Agent, the Issuing Lenders and the Lenders both immediately before and immediately after giving effect to the transactions contemplated hereunder, which representations and warranties shall be deemed made on the Closing Date and as otherwise set forth in Section 5.2 , that:

 

SECTION 6.1.                                           Organization; Power; Qualification .  Each Credit Party and each Material Subsidiary thereof (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, (b) has the power and authority to own its Properties and to carry on its business as now being and hereafter proposed to be conducted and (c) is duly qualified and authorized to do business in each jurisdiction in which the character of its Properties or the nature of its business requires such qualification and authorization except in jurisdictions where the failure to be so qualified or in good standing would not reasonably be expected to result in a Material Adverse Effect.  No Credit Party is an EEA Financial Institution.

 

SECTION 6.2.                                           Ownership .  Each Restricted Subsidiary of each Credit Party as of the Closing Date, and the percentage ownership of each owner in such Restricted Subsidiary as of the Closing Date, is listed on Schedule 6.2 .  All outstanding shares of the Parent and each of its applicable Restricted Subsidiaries have been duly authorized and validly issued and are fully paid and nonassessable (to the extent such concept is applicable) and not subject to any preemptive or similar rights, except as described in Schedule 6.2 .  Each direct or indirect owner of the Parent that beneficially owns 10% or more of the aggregate Equity Interests of the Parent, together with such owner’s percentage ownership, is described on Schedule 6.2 .  As of the Closing Date, there are no outstanding stock purchase warrants, subscriptions, options, securities, instruments or other rights of any type or nature whatsoever, which are convertible into, exchangeable for or otherwise provide for or require the issuance of Equity Interests of any Credit Party or any Restricted Subsidiary thereof, except as described on Schedule 6.2 .

 

SECTION 6.3.                                           Authorization; Enforceability .  Each Credit Party has the right, power and authority and has taken all necessary corporate and other action to authorize the execution, delivery and performance of this Agreement and each of the other Loan Documents to which it is a party in accordance with their respective terms.  This Agreement and each of the other Loan Documents have been duly executed and delivered by the duly authorized officers of each Credit Party that is a party thereto, and each such document constitutes the legal, valid and binding obligation of each Credit Party, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal Debtor Relief Laws from time to time in effect which affect the enforcement of creditors’ rights in general and the availability of equitable remedies.

 

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SECTION 6.4.                                           Compliance of Agreement, Loan Documents and Credit Extensions with Laws, Etc.   The execution, delivery and performance by each Credit Party of the Loan Documents to which each such Person is a party, in accordance with their respective terms, the Credit Extensions hereunder and the transactions contemplated hereby or thereby do not and will not, by the passage of time, the giving of notice or otherwise, (a) require any Governmental Approval or violate any Applicable Law relating to any Credit Party where the failure to obtain such Governmental Approval or such violation would reasonably be expected to have a Material Adverse Effect, (b) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws or other organizational documents of any Credit Party, (c) conflict with, result in a breach of or constitute a default under any indenture, agreement or other instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person, which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (d) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by such Person other than Permitted Liens or (e) require any consent or authorization of, filing with, or other act in respect of, an arbitrator or Governmental Authority and no consent of any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement other than consents, authorizations, filings or other acts or consents for which the failure to obtain or make would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.5.                                           Compliance with Law; Governmental Approvals .  Each Credit Party and each Material Subsidiary thereof (a) has all Governmental Approvals required by any Applicable Law for it to conduct its business, each of which is in full force and effect, (b) is in compliance with each Governmental Approval applicable to it and in compliance with all other Applicable Laws relating to it or any of its respective properties and (c) has timely filed all material reports, documents and other materials required to be filed by it under all Applicable Laws with any Governmental Authority, except in each case of clauses (a) , (b)  or (c)  where the failure to have, comply or file would not reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.6.                                           Tax Returns and Payments .  Each Credit Party and each Material Subsidiary thereof has timely filed all material federal, state, provincial, local and foreign tax returns and reports required to be filed by it and has paid all Taxes, assessments, fees and other charges levied upon it or upon its properties that are shown thereon as due and payable, other than (i) those Taxes, assessments, fees and other charges that are being contested in good faith and by proper proceedings and for which adequate reserves have been established in accordance with GAAP or (ii) where the failure to file such returns and reports or the failure to pay such Taxes, assessments, fees and other charges would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  To the knowledge of the Credit Parties, there is no ongoing audit or examination or other investigation by any Governmental Authority of the tax liability of any Credit Party or any Restricted Subsidiary thereof the outcome of which would reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.7.                                           Intellectual Property Matters .  Each Credit Party and each Material Subsidiary thereof owns or possesses legal rights to use all material franchises, licenses, copyrights, copyright applications, patents, patent rights or licenses, patent applications, trademarks, trademark rights, service mark, service mark rights, trade names, trade name rights,

 

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copyrights and other rights with respect to the foregoing which taken as a whole are reasonably necessary to conduct its business where the failure to own or possess such legal rights would not reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.8.                                           Environmental Matters .  Each of the Credit Parties and each Material Subsidiary thereof is in compliance with existing Environmental Laws and there are no written pending environmental claims alleging potential liability or responsibility for any violation of any Environmental Law on their respective businesses, operations and properties, in each case are reasonably likely to be adversely determined and with respect to which, if adversely determined, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.9.                                           Employee Benefit Matters .

 

(a)                                  Each Credit Party and each ERISA Affiliate is in compliance with all applicable provisions of ERISA, the Code and the regulations and published interpretations thereunder with respect to all Benefit Plans except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired and except where a failure to so comply would not reasonably be expected to have a Material Adverse Effect.

 

(b)                                  No Termination Event has occurred or is reasonably expected to occur except for such events that would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

 

(c)                                   Each Foreign Pension Plan has been maintained in compliance with its terms and with the requirements of any and all Applicable Law and has been maintained, where required, in good standing with applicable regulatory authorities, except where the failure to do any of the foregoing has not had, or would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  All contributions required to be made with respect to a Foreign Pension Plan have been timely made, except where the failure to do any of the foregoing has not had, or would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  No Credit Party or any of its Subsidiaries has incurred any obligation in connection with the termination of, or withdrawal from, any Foreign Pension Plan, except for any obligations which have not had, or would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  The present value of the accrued benefit liabilities (whether or not vested) under each Foreign Pension Plan, determined as of the end of the most recently ended fiscal year of the Borrower on the basis of actuarial assumptions, each of which is reasonable, did not exceed the current value of the assets of such Foreign Pension Plan allocable to such benefit liabilities (any such excess a “value shortfall”), except for any such value shortfalls which have not had, or would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

 

SECTION 6.10.                                    Margin Stock .  No Credit Party nor any Restricted Subsidiary thereof is engaged principally or as one of its activities in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” (as each such term is defined or used, directly or indirectly, in Regulation U of the Board of Governors of the Federal Reserve System).  No part of the proceeds of any of the Loans or Letters of Credit will be used for purchasing or carrying margin

 

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stock or for any purpose which violates, or which would be inconsistent with, the provisions of Regulation T, U or X of such Board of Governors.

 

SECTION 6.11.                                    Government Regulation .  No Credit Party nor any Material Subsidiary thereof is an “investment company” or a company “controlled” by an “investment company” (as each such term is defined or used in the Investment Company Act).

 

SECTION 6.12.                                    Financial Statements .  The Borrower has heretofore furnished to the Administrative Agent and Lenders copies of (i) the audited consolidated balance sheets of both the Borrower and its Restricted Subsidiaries and the Parent and its Restricted Subsidiaries for the fiscal years ending December 31, 2015 and 2016 and the related statements of income, shareholders’ equity and cash flows for the fiscal years then ended, together with the opinion of PricewaterhouseCoopers LLP thereon, prepared in accordance with GAAP and (ii) the unaudited consolidated balance sheet of both the Borrower and its Restricted Subsidiaries and the Parent and its Restricted Subsidiaries as of the last day of the fiscal quarter ending September 30, 2017, and the related statements of income, shareholders’ equity and cash flows for the partial period then ended, prepared in accordance with GAAP, subject to the absence of notes required by GAAP and normal year-end and other audit adjustments.  Such financial statements present fairly in all material respects the consolidated financial condition of the Credit Parties and their respective Restricted Subsidiaries, and the consolidated results of their operations and their consolidated cash flows, as of the dates and for the periods indicated.

 

SECTION 6.13.                                    No Material Adverse Change .  Since December 31, 2016, except as disclosed in any Information Materials, no event has occurred or condition arisen, either individually or in the aggregate, that has had, or would reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.14.                                    Solvency .  As of the Closing Date, the Credit Parties taken together on a consolidated basis are Solvent.

 

SECTION 6.15.                                    Ownership of Properties .  Each Credit Party and each Material Subsidiary thereof (i) has good and marketable title to all real property owned by it, (ii) holds interests as lessee under valid leases in full force and effect with respect to all material leased real and personal property used in connection with its business, and (iii) has good title to all of its other material properties and assets necessary or used in the ordinary course of its business, in each case of clauses (i) , (ii)  and (iii) , except for such defects in title as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.16.                                    Insurance Licenses .  Each Material Insurance Subsidiary holds licenses (including licenses or certificates of authority from relevant Insurance Regulatory Authorities), permits or authorizations in all jurisdictions necessary to transact its insurance and reinsurance business (collectively, the “ Licenses ”), except where the failure to hold such License would not reasonably be expected to have a Material Adverse Effect.  (i) No such License is the subject of a proceeding for suspension, revocation or limitation or any similar proceedings, and (ii) no such suspension, revocation or limitation is threatened in writing by any relevant Insurance Regulatory Authority, that, in each instance under (i)  and (ii)  above, would individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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SECTION 6.17.                                    Litigation .  There are no actions, suits or proceedings pending nor, to its knowledge, threatened in writing against any Credit Party or any Restricted Subsidiary thereof, or any of their respective properties in any court or before any arbitrator of any kind or before or by any Governmental Authority that is reasonably likely to be adversely determined and with respect to which, if adversely determined, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.18.                                    Anti-Corruption Laws; Anti-Money Laundering Laws and Sanctions .

 

(a)                                  None of (i) the Parent or any of its Restricted Subsidiaries, or, to the knowledge of the Borrower or any such Restricted Subsidiary, any of their respective directors, officers, or employees, or (ii) any agent or representative of the Parent or any of its Restricted Subsidiaries that will act in any capacity in connection with the Credit Facility, (A) is a Sanctioned Person or currently the subject or target of any Sanctions, (B) is controlled by or is acting on behalf of a Sanctioned Person or (C) is located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions, in a manner that would result in the violation of applicable Sanctions by any party hereto.

 

(b)                                  Each of the Parent and its Restricted Subsidiaries has implemented and maintains in effect policies and procedures designed to ensure compliance by the Parent and its Restricted Subsidiaries and their respective directors, officers and employees with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions.

 

(c)                                   Each of the Parent and its Restricted Subsidiaries, and, to the knowledge of the Borrower, each director, officer, employee and agent of the Parent and each such Restricted Subsidiary, is in compliance with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions in all material respects.

 

(d)                                  No proceeds of any Credit Extension have been used, directly or indirectly, by the Parent or any of its Restricted Subsidiaries or, to the knowledge of the Borrower, any of its or their respective directors, officers, employees and agents in violation of Section 7.12(c) .

 

SECTION 6.19.                                    Disclosure .  No financial statement, material report, material certificate or other material factual information furnished in writing by or on behalf of any Credit Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished), taken together as a whole, contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein (taken as a whole), in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, pro forma financial information, estimated financial information and other projected or estimated information, such information was prepared in good faith based upon assumptions believed to be reasonable at the time prepared (it being recognized by the Lenders that projections are not to be viewed as facts and that the actual results during the period or periods covered by such projections may materially vary from such projections).

 

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ARTICLE VII.

 

AFFIRMATIVE COVENANTS

 

Until all of the Obligations (other than contingent indemnification obligations not then due) have been paid and satisfied in full in cash, all Letters of Credit have been terminated or expired and the Commitments terminated, each Credit Party will, and will cause each of its Restricted Subsidiaries to:

 

SECTION 7.1.                                           Financial Statements .  Deliver to the Administrative Agent, in form and detail satisfactory to the Administrative Agent (which shall promptly make such information available to the Lenders in accordance with its customary practice):

 

(a)                                  Annual Financial Statements of the Parent .  Within 120 days (or, with respect to the first fiscal year with respect to which an Accounting Principles Election is made, within 150 days) (or, if earlier, the date that is five Business Days following the date of any required public filing thereof) after the end of each Fiscal Year (commencing with the Fiscal Year ended December 31, 2017), an audited consolidated balance sheet of the Parent and its Subsidiaries as of the close of such Fiscal Year and audited consolidated statements of income, retained earnings and cash flows including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the preceding Fiscal Year and prepared in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the year.  Such annual financial statements shall be audited by an independent certified public accounting firm of recognized national standing acceptable to the Administrative Agent, and accompanied by a report and opinion thereon by such certified public accountants prepared in accordance with generally accepted auditing standards that is not subject to any “going concern” or similar qualification or exception or any qualification as to the scope of such audit or with respect to accounting principles followed by the Parent or any of its Subsidiaries not in accordance with GAAP.

 

(b)                                  Annual Financial Statements of the Borrower .  Within 120 days (or, with respect to the first fiscal year with respect to which an Accounting Principles Election is made, within 150 days) (or, if earlier, the date that is five Business Days following the date of any required public filing thereof) after the end of each Fiscal Year (commencing with the Fiscal Year ended December 31, 2017), an audited consolidated balance sheet of the Borrower and its Subsidiaries as of the close of such Fiscal Year and audited consolidated statements of income, retained earnings and cash flows including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the preceding Fiscal Year and prepared in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the year.  Such annual financial statements shall be audited by an independent certified public accounting firm of recognized national standing acceptable to the Administrative Agent, and accompanied by a report and opinion thereon by such certified public accountants prepared in accordance with generally accepted auditing standards that is not subject to any “going concern” or similar qualification or exception or any qualification as to the scope of such audit or

 

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with respect to accounting principles followed by the Borrower or any of its Subsidiaries not in accordance with GAAP.

 

(c)                                   Quarterly Financial Statements of the Parent .  Within 60 days (or, with respect to the first three fiscal quarters for which financial statements are required hereunder with respect to which an Accounting Principles Election is made, within 75 days) (or, if earlier, the date that is five Business Days following the date of any required public filing thereof) after the end of the first three fiscal quarters of each Fiscal Year (commencing with the fiscal quarter ended March 31, 2018), an unaudited consolidated balance sheet of the Parent and its Subsidiaries as of the close of such fiscal quarter and unaudited consolidated statements of income, retained earnings and cash flows and a report containing management’s discussion and analysis of such financial statements for the fiscal quarter then ended and that portion of the Fiscal Year then ended, including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the corresponding period in the preceding Fiscal Year and prepared by the Parent in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the period, and certified by the chief financial officer of the Parent to present fairly in all material respects the financial condition of the Parent and its Subsidiaries on a consolidated basis as of their respective dates and the results of operations of the Parent and its Subsidiaries for the respective periods then ended, subject to normal year-end adjustments and the absence of footnotes.

 

(d)                                  Quarterly Financial Statements of the Borrower .  Within 60 days (or, with respect to the first three fiscal quarters for which financial statements are required hereunder with respect to which an Accounting Principles Election is made, within 75 days) (or, if earlier, the date that is five Business Days following the date of any required public filing thereof) after the end of the first three fiscal quarters of each Fiscal Year (commencing with the fiscal quarter ended March 31, 2018), an unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of the close of such fiscal quarter and unaudited consolidated statements of income, retained earnings and cash flows and a report containing management’s discussion and analysis of such financial statements for the fiscal quarter then ended and that portion of the Fiscal Year then ended, including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the corresponding period in the preceding Fiscal Year and prepared by the Borrower in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the period, and certified by the chief financial officer of the Borrower to present fairly in all material respects the financial condition of the Borrower and its Subsidiaries on a consolidated basis as of their respective dates and the results of operations of the Borrower and its Subsidiaries for the respective periods then ended, subject to normal year-end adjustments and the absence of footnotes.

 

SECTION 7.2.                                           Certificates; Other Reports .  Deliver to the Administrative Agent (which shall promptly make such information available to the Lenders in accordance with its customary practice):

 

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(a)                                  (a)at each time financial statements are delivered pursuant to Section 7.1(b)  or Section 7.1(d) , a duly completed Officer’s Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower;

 

(b)                                  promptly upon receipt thereof, copies of all reports, if any, submitted to the Parent or the Borrower, or any of their respective boards of directors by their respective independent public accountants in connection with their auditing function, including, without limitation, any management report and any management responses thereto;

 

(c)                                   promptly upon the request thereof, such other information and documentation required by bank regulatory authorities under applicable Anti-Money Laundering Laws (including, without limitation, any applicable “know your customer” rules and regulations and the PATRIOT Act), as from time to time reasonably requested by the Administrative Agent or any Lender; and

 

(d)                                  such other information regarding the operations, business affairs and financial condition of any Credit Party or any Subsidiary thereof as the Administrative Agent, on its behalf or on behalf of any Lender, may reasonably request.

 

SECTION 7.3.                                           Notice of Litigation and Other Matters .  Promptly (but in no event later than ten (10) days after any Responsible Officer of any Credit Party obtains knowledge thereof) notify the Administrative Agent in writing of (which shall promptly make such information available to the Lenders in accordance with its customary practice):

 

(a)                                  the occurrence of any Default or Event of Default;

 

(b)                                  the commencement of all proceedings and investigations by or before any Governmental Authority and all actions and proceedings in any court or before any arbitrator against or involving any Credit Party or any Material Subsidiary thereof or any of their respective properties, assets or businesses in each case that if adversely determined would reasonably be expected to result in a Material Adverse Effect;

 

(c)                                   any attachment, judgment, lien, levy or order exceeding the Threshold Amount (other than Permitted Liens) that has been assessed against any Credit Party or any Subsidiary thereof;

 

(d)                                  (i) any unfavorable determination letter from the IRS regarding the qualification of an Benefit Plan under Section 401(a) of the Code (along with a copy thereof), (ii) all notices received by any Credit Party or any ERISA Affiliate of the PBGC’s intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (iii) all notices received by any Credit Party or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA and (iv) the Parent obtaining knowledge or reason to know that any Credit Party or any ERISA Affiliate has filed or intends to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA, in each case, that would reasonably be expected to result in a Material Adverse Effect;

 

(e)                                   that any contribution required to be made with respect to a Foreign Pension Plan has not been timely made, except such contributions that would not reasonably be expected to have

 

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a Material Adverse Effect, or that the Parent or any Subsidiary of the Parent may incur any liability pursuant to any Foreign Pension Plan as to which there is a reasonable possibility of liability which could reasonably be expected to have Material Adverse Effect; and

 

(f)                                    any announcement by A.M. Best of any change in the Financial Strength Rating of any Material Insurance Subsidiary.

 

Each notice pursuant to Section 7.3(a)  shall be accompanied by a statement of a Responsible Officer of the Parent or the Borrower setting forth details of the occurrence referred to therein and stating what action the Credit Parties have taken and proposes to take with respect thereto and shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

 

SECTION 7.4.                                           Preservation of Corporate Existence and Related Matters .  Except as permitted by Section 8.5 , preserve and maintain its separate corporate existence or equivalent form and all rights, franchises, licenses and privileges necessary to the conduct of its business, and qualify and remain qualified as a foreign corporation or other entity and authorized to do business in each relevant jurisdiction, in each case, except where the failure to so exist, maintain such rights, franchises, licenses and privileges or qualify would not reasonably be expected to have a Material Adverse Effect.

 

SECTION 7.5.                                           Maintenance of Property and Licenses .

 

(a)                                  Protect and preserve all Properties necessary in and material to its business, including copyrights, patents, trade names, service marks and trademarks; maintain in good working order and condition, ordinary wear and tear excepted, all buildings, equipment and other tangible real and personal property; and from time to time make or cause to be made all repairs, renewals and replacements thereof and additions to such Property necessary for the conduct of its business, so that the business carried on in connection therewith may be conducted in a commercially reasonable manner, in each case except as would not reasonably be expected to result in a Material Adverse Effect.

 

(b)                                  Maintain, in full force and effect in all material respects, each and every material license, permit, certification, qualification, approval or franchise issued by any Governmental Authority required for each of them to conduct their respective businesses as presently conducted, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

SECTION 7.6.                                           Insurance .  Maintain insurance with financially sound and reputable insurance companies against at least such risks and in at least such amounts as are customarily maintained in the same general area by companies of established repute engaged in similar businesses, as reasonably determined by such Person in good faith, and as may be required by Applicable Law.

 

SECTION 7.7.                                           Payment of Taxes and Other Obligations .  Except where the failure to pay or perform such items described in this Section would not reasonably be expected to have a Material Adverse Effect, pay and perform all taxes, assessments and other governmental charges that may be levied or assessed upon it or any of its Property; provided , that the Parent or such

 

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Subsidiary may contest any item described in this Section in good faith so long as adequate reserves are maintained with respect thereto in accordance with GAAP.

 

SECTION 7.8.                                           Compliance with Laws and Approvals .  Observe and remain in compliance in all material respects with all Applicable Laws and maintain in full force and effect all Governmental Approvals, in each case applicable to the conduct of its business except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

SECTION 7.9.                                           Environmental Laws .  In addition to and without limiting the generality of Section 7.8 , (a) comply with, and ensure such compliance by all tenants and subtenants with all applicable Environmental Laws and obtain and comply with and maintain, and ensure that all tenants and subtenants, if any, obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws and (b) conduct and complete all investigations and all remedial, removal and other actions required under Environmental Laws, and promptly comply with all lawful orders and directives of any Governmental Authority regarding Environmental Laws, in each case, except where such failure to do so would not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 7.10.                                    Compliance with ERISA .  In addition to and without limiting the generality of Section 7.8 , except where the failure to so comply would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) comply with applicable provisions of ERISA, the Code and the regulations and published interpretations thereunder with respect to all Benefit Plans, (ii) not take any action or fail to take action the result of which would reasonably be expected to result in a liability to the PBGC or to a Multiemployer Plan, (iii) not participate in any prohibited transaction that would result in any civil penalty under ERISA or tax under the Code and (iv) operate each Benefit Plan in such a manner that will not incur any tax liability under Section 4980B of the Code or any liability to any qualified beneficiary as defined in Section 4980B of the Code.

 

SECTION 7.11.                                    Maintenance of Books and Records; Inspection .  Each Credit Party shall, and shall cause each of their respective Material Subsidiaries to, (i) maintain adequate books, accounts and records, in which full, true and correct entries shall be made of all financial transactions in relation to its business and properties, and prepare all financial statements required under this Agreement, in each case in accordance with GAAP and in compliance with the requirements of any Governmental Authority having jurisdiction over it, and (ii) permit employees or agents of the Administrative Agent, and after the occurrence and during the continuance of an Event of Default, any Lender, to visit and inspect its properties and examine or audit its books, records, working papers and accounts and make copies and memoranda of them, and at its own cost and expense (other than after the occurrence of an Event of Default), and to discuss its affairs, finances and accounts with its officers and employees and, upon notice to the Parent, the independent public accountants of the Credit Parties and their Material Subsidiaries (and by this provision the Credit Parties authorize such accountants to discuss the finances and affairs of the Credit Parties and their Material Subsidiaries), all at such times and from time to time, upon reasonable notice and during business hours, as may be reasonably requested; provided that except during the continuance of an Event of Default the Administrative Agent shall not exercise such rights described in clause (ii)  of this Section more than once per calendar year.

 

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SECTION 7.12.                                    Use of Proceeds .

 

(a)                                  The Borrower shall use the proceeds of the Loans for working capital and general corporate purposes of the Borrower and its Subsidiaries.

 

(b)                                  Each Account Party shall use the Letter of Credit Facility to support insurance obligations, obligations under reinsurance agreements and retrocession agreements and similar risk obligations and for general corporate purposes.

 

(c)                                   No Credit Party will request or use any Credit Extension, (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, except to the extent permitted for a Person required to comply with Sanctions or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

 

SECTION 7.13.                                    Compliance with Anti-Corruption Laws; Anti-Money Laundering Laws and Sanctions .  The Credit Parties will maintain in effect and enforce policies and procedures designed to ensure compliance by the Credit Parties, their Subsidiaries and their respective directors, officers, employees and agents with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws, and Sanctions.

 

ARTICLE VIII.

 

NEGATIVE COVENANTS

 

Until all of the Obligations (other than contingent, indemnification obligations not then due) have been paid and satisfied in full in cash, all Letters of Credit have been terminated or expired, the Commitments terminated, the Credit Parties will not, and will not permit any of their respective Restricted Subsidiaries to:

 

SECTION 8.1.                                           Indebtedness .  Create, incur, assume or suffer to exist any Indebtedness except:

 

(a)                                  the Obligations;

 

(b)                                  guaranties of the Obligations as provided herein or any other Loan Document;

 

(c)                                   Indebtedness existing on the Closing Date and, to the extent the principal amount of any such Indebtedness is in excess of $5,000,000, set forth on Schedule 8.1 , as well as any refinancings, refunds, renewals or extensions of such Indebtedness (without increase in the principal amount thereof other than by the amount of any necessary pre-payment premiums, unpaid accrued interest and other costs of refinancing);

 

(d)                                  short-term Indebtedness (i.e. with a maturity of less than one year when issued) provided by one or more of the Permitted Investors to any Insurance Subsidiary incurred or issued to provide short-term liquidity to facilitate claims payment in the event of catastrophe; provided

 

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that such Indebtedness shall be subordinated to the Obligations in a manner reasonably satisfactory to the Administrative Agent;

 

(e)                                   Indebtedness of any Insurance Subsidiary incurred or issued in the ordinary course of its business or in securing insurance-related obligations (that do not constitute Indebtedness) of such Insurance Subsidiary and letters of credit, bank guarantees, surety bonds or similar instruments issued for the account of any Insurance Subsidiary in the ordinary course of its business or in securing insurance-related obligations (that do not constitute Indebtedness) of such Insurance Subsidiary;

 

(f)                                    Indebtedness in respect of letters of credit, bank guarantees, bids, leases, statutory obligations, surety and appeal bonds, or performance bonds or other obligations of a like nature arising in the ordinary course of business and not for capital raising purposes and issued for the account of any non-Insurance Subsidiary;

 

(g)                                   Indebtedness of a Subsidiary acquired after the date of this Agreement or a Person merged into or consolidated with a Subsidiary after the date of this Agreement and Indebtedness assumed in connection with the acquisition of assets, which Indebtedness, in each case, exists at the time of such acquisition, merger or consolidation and is not created in contemplation of such event, as well as any refinancings, refunds, renewals or extensions of such Indebtedness (without increase in the principal amount thereof other than by the amount of any necessary pre-payment premiums, unpaid accrued interest and other costs of refinancing);

 

(h)                                  Indebtedness owing or issued by a member of the Group to any other member of the Group (other than the Unrestricted Subsidiary) or to any Affiliate (not being a member of the Group) of the Borrower, provided that if such Indebtedness is owing or issued by any Credit Party to any Affiliate (not being a member of the Group) of the Borrower, such Indebtedness shall be subordinated to the Obligations in a manner reasonably satisfactory to the Administrative Agent;

 

(i)                                      Obligations in respect of Guarantees made by a member of the Group (i) to any other member of the Group (other than the Unrestricted Subsidiary), (ii) as an Investment permitted pursuant to Section 8.3 , provided that the Guarantee of any Indebtedness owed by the Unrestricted Subsidiary must comply with the limitations set forth in Section 8.3(j) , (iii) of Indebtedness of any other member of the Group that is permitted under this Section 8.1 and (iv) of obligations of any other member of the Group in respect of leases and similar liabilities;

 

(j)                                     to the extent constituting Indebtedness, liabilities representing collateral held with respect to securities lending activities and not exceeding ten percent (10%) of the Borrower’s consolidated investment assets as of the end of the most recent Financial Quarter for which consolidated financial statements have been furnished pursuant to Section 7.1(a)  and Section 7.1(c) ;

 

(k)                                  Hedge Agreements entered into by a member of the Group in the ordinary course of business for non-speculative purposes;

 

(l)                                      Indebtedness secured by Liens permitted pursuant to Section 8.2(n) ; provided , that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $100,000,000; and

 

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(m)                              other Indebtedness of members of the Group, provided that, in the case of any Indebtedness of any Restricted Subsidiary of the Borrower, at the time such Indebtedness is incurred or issued, the aggregate principal amount of such Indebtedness when added to all other Indebtedness of Restricted Subsidiaries of the Borrower incurred or issued pursuant to this paragraph (m) and then outstanding, does not exceed 10 percent (10%) of the Consolidated Net Worth of the Borrower (determined as of the end of the most recent fiscal quarter for which financial statements are available), as well as any refinancings, refunds, renewals or extensions of such Indebtedness (without increase in the principal amount thereof other than by the amount of any necessary pre-payment premiums, unpaid accrued interest and other costs of refinancing).

 

SECTION 8.2.                                           Liens .  Create, incur, assume or suffer to exist, any Lien on or with respect to any of its Property (other than “margin stock” which if covered hereby would cause the Lenders to be in violation of Regulation U), whether now owned or hereafter acquired, except:

 

(a)                                  Liens on Cash Collateral granted pursuant to the Loan Documents;

 

(b)                                  Liens for taxes, assessments and other governmental charges or levies (i) not yet due or as to which the period of grace, if any, related thereto has not expired or (ii) which are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP;

 

(c)                                   Liens in existence on the Closing Date and, to the extent securing Indebtedness in a principal amount in excess of $5,000,000, described on Schedule 8.2 , and the replacement, renewal or extension thereof; provided that the scope of any such Lien shall not be increased, or otherwise expanded, to cover any additional property or type of asset, other than accessions to, and products and proceeds of, the foregoing;

 

(d)                                  the claims of materialmen, mechanics, carriers, warehousemen, processors or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business, which (i) Liens are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP or (ii) do not, individually or in the aggregate, materially impair the use thereof in the operation of the business of the Group;

 

(e)                                   deposits or pledges made in the ordinary course of business in connection with, or to secure payment of, obligations under workers’ compensation, unemployment insurance and other types of social security or similar legislation, or to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds, letters of credit, bank guarantees and other obligations of a like nature incurred in the ordinary course of business;

 

(f)                                    survey exceptions or encumbrances in the nature of zoning restrictions, easements and rights or restrictions of record on the use of real property, which in the aggregate are not substantial in amount and which do not, in any case, materially impair the use thereof in the ordinary conduct of business;

 

(g)                                   Liens arising from the filing of precautionary UCC financing statements relating solely to personal property leased pursuant to operating leases entered into in the ordinary course of business of the Group;

 

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(h)                                  Liens (i) arising in connection with any legal proceeding which is being contested in good faith or (ii) securing judgments for the payment of money not constituting an Event of Default under Section 9.1(l)  or securing appeal or other surety bonds relating to such judgments;

 

(i)                                      (i) Liens on Property (i) of any Subsidiary that becomes a member of the Group which are in existence at the time that such Subsidiary is acquired and (ii) existing at the time such tangible property or tangible assets are purchased or otherwise acquired by any member of the Group pursuant to a transaction permitted pursuant to this Agreement; provided that, with respect to each of the foregoing clauses (i)  and (ii) , (A) such Liens are not incurred in connection with, or in anticipation of, such purchase or other acquisition, (B) such Liens do not attach to any other Property of any member of the Group and (C) the Indebtedness secured by such Liens is permitted under Section 8.1(g)  of this Agreement);

 

(j)                                     (i) Liens of a collecting bank arising in the ordinary course of business under Section 4210 of the Uniform Commercial Code in effect in the relevant jurisdiction and (ii) Liens of any depositary bank in connection with statutory, common law and contractual rights of setoff and recoupment with respect to any deposit account of any member of the Group;

 

(k)                                  (i) contractual or statutory Liens of landlords to the extent relating to the property and assets relating to any lease agreements with such landlord, and (ii) contractual Liens of suppliers (including sellers of goods) or customers granted in the ordinary course of business to the extent limited to the property or assets relating to such contract;

 

(l)                                      any interest or title of a licensor, sublicensor, lessor or sublessor with respect to any assets under any license or lease agreement entered into in the ordinary course of business which do not (i) interfere in any material respect with the business of the Group or (ii) secure any Indebtedness;

 

(m)                              Liens on Investments and cash balances of the Borrower or any Insurance Subsidiary (other than capital stock of any Subsidiary) securing obligations of the Borrower or any Insurance Subsidiary in respect of (i) letters of credit obtained in the ordinary course of business; and/or (ii) trust arrangements formed in the ordinary course of business, or other security arrangements with any Insurance Subsidiary, in each case for the benefit of cedents to secure reinsurance recoverables owed to them by the Borrower or any Insurance Subsidiary;

 

(n)                                  Liens consisting of capital lease obligations or otherwise upon Property to secure any part of the cost of development, construction, alteration, repair or improvement of such Property, or Indebtedness incurred to finance such cost, and the replacement, renewal or extension thereof; provided that the scope of any such Lien shall not be increased, or otherwise expanded, to cover any additional property or type of asset, other than accessions to, and products and proceeds of, the foregoing;

 

(o)                                  Liens upon Property subject to any sale and leaseback transaction not prohibited hereunder;

 

(p)                                  Liens upon Property in favor of any member of the Group granted by another member of the Group (i) securing Indebtedness permitted under Section 8.1(g)  or (ii) for purposes of satisfying any requirements of Applicable Law or any regulatory authority having jurisdiction

 

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over the members of the Group that require any intercompany transactions to be on an arms’ length basis;

 

(q)                                  any interest or title of a lessor under any lease entered into in the ordinary course of business;

 

(r)                                     Liens over securities that are lent pursuant to securities lending activities;

 

(s)                                    Liens to secure obligations under Hedge Agreements that are permitted by Section 8.1(k) ; and

 

(t)                                     Liens not otherwise permitted hereunder securing Indebtedness or other obligations in the aggregate principal amount not to exceed ten percent (10%) of the Consolidated Net Worth of the Borrower (determined as of the end of the most recent fiscal quarter for which financial statements are available).

 

SECTION 8.3.                                           Investments .  Make any Investment, except:

 

(a)                                  Investments (other than Acquisitions) made in accordance with the investment policy approved by the board of directors of the Parent from time to time;

 

(b)                                  Investments in existence on the Closing Date set forth on Schedule 8.3 and the replacement, renewal or extension thereof;

 

(c)                                   Investments by any member of the Group in any Credit Party (other than the Parent) or Restricted Subsidiary;

 

(d)                                  Investments by any Restricted Subsidiary that is not a Credit Party in any Credit Party (other than the Parent) or any other Restricted Subsidiary that is not a Credit Party;

 

(e)                                   Investments in cash and Cash Equivalents;

 

(f)                                    Investments by the Parent or any of its Restricted Subsidiaries consisting of capital expenditures;

 

(g)                                   deposits made in the ordinary course of business to secure the performance of leases or other obligations as permitted by Section 8.2 ;

 

(h)                                  Hedge Agreements permitted pursuant to Section 8.1 ;

 

(i)                                      purchases of assets in the ordinary course of business;

 

(j)                                     so long as the Unrestricted Subsidiary remains an Unrestricted Subsidiary, Investments by any member of the Group in the form of loans, advances or extensions of credit to the Unrestricted Subsidiary in the aggregate principal amount not to exceed $100,000,000 at any time outstanding;

 

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(k)                                  other Investments (other than the type of Investments in the Unrestricted Subsidiary referred to in Section 8.3(j) ) so long as at the time of the relevant Investment, no Event of Default shall have occurred and be continuing or would immediately result therefrom; and

 

(l)                                      Investments in the form of Restricted Payments permitted pursuant to Section 8.6 .

 

SECTION 8.4.                                           Fundamental Changes .  Except to effect a merger, amalgamation, consolidation or similar combination constituting an Asset Disposition permitted by Section 8.5 , merge, amalgamate consolidate or enter into any similar combination (whether in a single transaction or a series of transactions) with, any other Person or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), except that (a) any Credit Party or any Restricted Subsidiary may merge into or consolidate with any other Person so long as (i) the surviving entity is a Credit Party or a Restricted Subsidiary of a Credit Party (and in any event, if a Credit Party is a party to such merger, amalgamation or consolidation, the surviving entity shall be such Credit Party, it being understood and agreed that in the case of a merger, amalgamation or consolidation between the Borrower and any other Credit Party, the survivor entity of such merger, amalgamation or consolidation shall be the Borrower), and (ii) immediately before and after giving effect thereto, no Event of Default would occur or exist and (b) any Restricted Subsidiary may liquidate, wind up or dissolve if (i) such Subsidiary owns no more than a nominal amount of assets, has no more than a nominal amount of liabilities and does not actively conduct, transact or otherwise engage in any business or operations or (ii) such liquidation, winding up or dissolution is not materially disadvantageous to the Lenders, as determined in the reasonable discretion of the Lenders.

 

SECTION 8.5.                                           Asset Dispositions .  Make any Asset Disposition except:

 

(a)                                  any Asset Disposition in the ordinary course of business;

 

(b)                                  the transfer to any Credit Party or any Restricted Subsidiary pursuant to any transaction permitted pursuant to Section 8.3 or Section 8.4 ;

 

(c)                                   the write-off, discount, sale or other disposition of defaulted or past-due receivables and similar obligations in the ordinary course of business and not undertaken as part of an accounts receivable financing transaction;

 

(d)                                  dispositions of Investments in cash and Cash Equivalents;

 

(e)                                   the transfer by any member of the Group that is not a Credit Party of its assets to any Credit Party ( provided that in connection with any new transfer, such Credit Party shall not pay more than an amount equal to the fair market value of such assets as determined in good faith at the time of such transfer);

 

(f)                                    the transfer by any member of the Group of Property to any Credit Party (other than the Parent) or Restricted Subsidiary;

 

(g)                                   the sale of (i) obsolete, worn-out or surplus assets no longer used or usable in the business of the Group and (ii) non-core assets acquired in any Investment permitted by Section 8.3 ;

 

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(h)                                  any Asset Disposition described on Schedule 8.5 ; and

 

(i)                                      Asset Dispositions not otherwise permitted pursuant to this Section; provided that (i) at the time of such Asset Disposition, no Event of Default shall exist or would result from such Asset Disposition, (ii) such Asset Disposition is made for fair market value, (iii) the Borrower is in pro forma compliance with the financial covenants set forth in Section 8.12 , recalculated after giving effect to such Asset Disposition and any other related transactions, (iv) such Asset Disposition does not constitute a disposition of all or substantially all of the assets of the Borrower and its Subsidiaries on a consolidated basis and (v) if such Asset Disposition consists of a merger, amalgamation, consolidation or similar combination of which any Account Party (other than the Borrower) is a party, prior to the consummation of such merger, amalgamation, consolidation or combination, all Letters of Credit issued for the account of such Account Party, if any, shall have been cancelled and surrendered to the Administrative Agent (or arrangements shall have been made for such cancellation and/or surrender satisfactory to the Administrative Agent).

 

SECTION 8.6.                                           Restricted Payments .  Declare or pay any Restricted Payments; provided that:

 

(a)                                  so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the Borrower may declare and pay cash dividends (for further distribution to its direct and indirect parent companies, including the Parent) to the holders of its Equity Interests;

 

(b)                                  so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the Parent may in the ordinary course of business redeem, retire or otherwise acquire shares of its Equity Interests or options or other equity or phantom equity in respect of its Equity Interests from present or former officers, employees, directors or consultants (or their family members or trusts or other entities for the benefit of any of the foregoing) of any Credit Party or any Restricted Subsidiary thereof or make severance payments to such Persons in connection with the death, disability or termination of employment or consultancy of any such officer, employee, director or consultant; and

 

(c)                                   any member of the Group may (i) declare and pay dividends to any Credit Party or to a Wholly-Owned Subsidiary and (ii) declare and pay pro rata dividends to such Subsidiary’s equity holders.

 

SECTION 8.7.                                           Transactions with Affiliates .  Directly or indirectly enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate, in each case involving aggregate payments in excess of $5,000,000, other than:

 

(i)                                      transactions permitted by Section 8.1 , 8.3 , 8.4 , 8.5 , and 8.6 ;

 

(ii)                                   transactions among Credit Parties and their Restricted Subsidiaries not prohibited hereunder;

 

(iii)                                other transactions on terms not materially less favorable as would be obtained by it on a comparable arm’s-length transaction with an independent, unrelated

 

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third party as determined in good faith by the board of directors (or equivalent governing body) of the Borrower;

 

(iv)                               employment and severance arrangements (including equity incentive plans and employee benefit plans and arrangements) with their respective officers and employees in the ordinary course of business; and

 

(v)                                  payment of customary fees and reasonable out-of-pocket costs to, and indemnities for the benefit of, directors, officers and employees of the Parent, the Borrower and their Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of the Parent and its Subsidiaries.

 

SECTION 8.8.                                           Accounting Changes; Organizational Documents .

 

(a)                                  Change its Fiscal Year end, or make (without the consent of the Administrative Agent) any material change in its accounting treatment and reporting practices except as required by GAAP or in connection with an Accounting Principles Election.

 

(b)                                  Amend, modify or change its articles of incorporation (or corporate charter or other similar organizational documents) or amend, modify or change its bylaws (or other similar documents) in any manner materially adverse to the rights or interests of the Lenders under the Loan Documents.

 

SECTION 8.9.                                           No Further Negative Pledges; Restrictive Agreements .

 

(a)                                  Enter into, assume or be subject to any agreement prohibiting or otherwise restricting the creation or assumption of any Lien upon its properties or assets (other than “margin stock” which if covered thereby would cause the applicable counterparty to such agreement to be in violation of Regulation U), whether now owned or hereafter acquired, or requiring the grant of any security for such obligation if security is given for some other obligation, except (i) pursuant to this Agreement and the other Loan Documents, (ii) pursuant to any document or instrument governing Indebtedness incurred pursuant to Section 8.1 , (iii) customary restrictions contained in the organizational documents of any member of the Group as of the Closing Date, (iv) customary restrictions in connection with any Permitted Lien or any document or instrument governing any Permitted Lien ( provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien), (v) obligations that are binding on a Subsidiary at the time such Subsidiary first becomes a member of the Group, so long as such obligations are not entered into in contemplation of such Person becoming a member of the Group, (vi) customary restrictions contained in an agreement related to the sale of Property (to the extent such sale is permitted pursuant to Section 8.5 ) that limit the transfer of such Property pending the consummation of such sale, (vii) customary restrictions in leases, subleases, licenses and sublicenses or asset sale agreements otherwise permitted by this Agreement so long as such restrictions relate only to the assets subject thereto, (viii) customary provisions restricting assignment of any agreement entered into in the ordinary course of business, and (ix) other prohibitions or restrictions in agreements not prohibited hereunder and not materially more onerous, taken as a whole, than the restrictions included in this Agreement and the other Loan Documents.

 

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(b)                                  Create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Credit Party that is a member of the Group or any Material Subsidiary thereof to (i) pay dividends or make any other distributions to any Credit Party or any Subsidiary on its Equity Interests or with respect to any other interest or participation in, or measured by, its profits, (ii) pay any Indebtedness or other obligation owed to any Credit Party or (iii) make loans or advances to any Credit Party, except in each case for such encumbrances or restrictions existing under or by reason of (A) this Agreement and the other Loan Documents, (B) any document or instrument governing Indebtedness incurred pursuant to Section 8.1 , (C) customary restrictions contained in the organizational documents of any member of the Group as of the Closing Date, (D) other prohibitions or restrictions in agreements not prohibited hereunder and not materially more onerous, taken as a whole, than the restrictions included in this Agreement and the other Loan Documents and (E) Applicable Law.

 

(c)                                   Create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Credit Party that is a member of the Group or any Material Subsidiary thereof to (i) sell, lease or transfer any of its properties or assets to any Credit Party or (ii) act as a Credit Party pursuant to the Loan Documents or any renewals, refinancings, exchanges, refundings or extension thereof, except in each case for such encumbrances or restrictions existing under or by reason of (A) this Agreement and the other Loan Documents, (B) Applicable Law, (C) pursuant to any document or instrument governing Indebtedness incurred pursuant to Section 8.1 , (D) any Permitted Lien or any document or instrument governing any Permitted Lien ( provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien), (E) obligations that are binding on a Subsidiary at the time such Subsidiary first becomes a member of the Group, so long as such obligations are not entered into in contemplation of such Person becoming a member of the Group, (F) customary restrictions contained in an agreement related to the sale of Property (to the extent such sale is permitted pursuant to Section 8.5 ) that limit the transfer of such Property pending the consummation of such sale, (G) customary restrictions in leases, subleases, licenses and sublicenses or asset sale agreements otherwise permitted by this Agreement so long as such restrictions relate only to the assets subject thereto, (H) customary provisions restricting assignment of any agreement entered into in the ordinary course of business and (I) other prohibitions or restrictions in agreements not prohibited hereunder and not materially more onerous, taken as a whole, than the restrictions included in this Agreement and the other Loan Documents.

 

SECTION 8.10.                                    Nature of Business .  Engage in any business other than the business conducted by the Parent and its Subsidiaries as of the Closing Date and any business or business activities incidental or reasonably related or ancillary thereto or that are reasonable extensions, developments, and expansions thereof.

 

SECTION 8.11.                                    Financial Strength Rating .  At any time, permit the Financial Strength Rating of any Material Insurance Subsidiary to fall below B++.

 

SECTION 8.12.                                    Financial Covenants .

 

(a)                                  Maximum Consolidated Indebtedness to Total Consolidated Capitalization Ratio .  As of the last day of any fiscal quarter, permit the ratio of Total Consolidated Debt to Total Consolidated Capitalization to be greater than 35%.

 

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For purposes of this Section 8.12(a) , the following definitions will apply:

 

Total Consolidated Debt ” means, at any date, the sum, without duplication, of all amounts that would be reflected and classified as debt on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries prepared as of such date, provided that Total Consolidated Debt shall, in any event, not include:

 

(i)                                      Indebtedness of the type described in clauses (d) , (e) , (f) , (h) , (i) , (j)  and (k)  in Section 8.1 ;

 

(ii)                                   Conditional Common Equity;

 

(iii)                                indebtedness arising pursuant to any standby or documentary letter of credit (whether issued pursuant to this agreement or otherwise) unless and until such letter of credit is drawn by its beneficiary;

 

(iv)                               any other amounts in respect of Qualified Securities, other than such Qualified Securities that mature or are mandatorily redeemable pursuant to a sinking fund obligation or otherwise or are redeemable at the option of the holder thereof, in each case, prior to the date that is 91 days after the Maturity Date; or

 

(v)                                  any amounts resulting from any entity consolidated as a Variable Interest Entity in “ASC Topic 810 — Consolidations”.

 

Total Consolidated Capitalization ” means, as at any date, the sum, without duplication, of

 

(i)                                      Consolidated Net Worth of the Borrower and its Restricted Subsidiaries; plus

 

(ii)                                   Total Consolidated Debt of the Borrower and its Restricted Subsidiaries; plus

 

(iii)                                the amounts in respect of Qualified Securities, Conditional Common Equity and any other preferred equity that would be reflected on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries prepared as of such date and which are not already included in clauses (a)  or (b)  above.

 

(b)                                  Minimum Consolidated Tangible Net Worth .  As of the last day of any fiscal quarter, permit Consolidated Tangible Net Worth of the Borrower and its Restricted Subsidiaries to be less than an amount equal to the Minimum Consolidated Tangible Net Worth.

 

For purposes of this Section 8.12(b) , the following definitions will apply:

 

Consolidated Tangible Net Worth ” means, at any time, Consolidated Net Worth excluding any amount set forth on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries in respect of intangible assets including goodwill.

 

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Minimum Consolidated Tangible Net Worth ” means, as of the Closing Date, $1,335,757,500 and shall be reset as of the last day of each Fiscal Year ending after the Closing Date to an amount equal to the greater of (x) 67.5% of Consolidated Tangible Net Worth reflected in the audited financial statements delivered pursuant to Section 7.1(a)  as of such date and (y) the Minimum Consolidated Tangible Net Worth in effect prior to the last day of the immediately preceding Fiscal Year.

 

ARTICLE IX.

 

DEFAULT AND REMEDIES

 

SECTION 9.1.                                           Events of Default .  Each of the following shall constitute an Event of Default:

 

(a)                                  Default in Payment of Principal of Loans and Reimbursement Obligations .  Any Credit Party shall default in any payment of principal of any Loan or Reimbursement Obligation when and as due (whether at maturity, by reason of acceleration or otherwise) and such default, in the case of any Reimbursement Obligation, shall continue for a period of two (2) Business Days.

 

(b)                                  Other Payment Default .  Any Credit Party shall default in the payment when and as due (whether at maturity, by reason of acceleration or otherwise) of interest on any Loan or Reimbursement Obligation or the payment of any other Obligation, and such default shall continue for a period of five (5) Business Days.

 

(c)                                   Misrepresentation .  Any representation, warranty, or written certification made or deemed made by or on behalf of any Credit Party in this Agreement, in any other Loan Document, or in any document delivered in connection herewith or therewith that is subject to materiality or Material Adverse Effect qualifications, shall be incorrect or misleading in any respect when made or deemed made or any representation, warranty or written certification made or deemed made by or on behalf of any Credit Party in this Agreement, any other Loan Document, or in any document delivered in connection herewith or therewith that is not subject to materiality or Material Adverse Effect qualifications, shall be incorrect or misleading in any material respect when made or deemed made.

 

(d)                                  Default in Performance of Certain Covenants .  Any Credit Party or any Subsidiary thereof shall default in the performance or observance of any covenant or agreement contained in 7.3(a) , 7.4 (as to existence of the Credit Parties only), 7.12 , or Article VIII .

 

(e)                                   Default in Performance of Other Covenants and Conditions .  Any Credit Party or any Subsidiary thereof shall default in the performance or observance of any term, covenant, condition or agreement contained in this Agreement (other than as specifically provided for in this Section) or any other Loan Document and such default shall continue for a period of thirty (30) days after the Administrative Agent’s delivery of written notice thereof to the Borrower.

 

(f)                                    Indebtedness Cross-Default .  Any Credit Party or any Subsidiary thereof shall (i) default in the payment of any Indebtedness (other than any Loan or any Reimbursement Obligation) the aggregate principal amount of which is in excess of the Threshold Amount, or with

 

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respect to any Hedge Agreement, the Hedge Termination Value of which is in excess of the Threshold Amount, in each case beyond the period of grace if any, provided in the instrument or agreement under which such Indebtedness was created, or (ii) default in the observance or performance of any other agreement or condition relating to any Indebtedness (other than any Loan or any Reimbursement Obligation) the aggregate principal amount, or with respect to any Hedge Agreement, the Hedge Termination Value, of which is in excess of the Threshold Amount or contained in any instrument or agreement evidencing, securing or relating thereto or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice and/or lapse of time, if required, any such Indebtedness to become due, or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity (any applicable grace period having expired).

 

(g)                                   Change in Control .  Any Change in Control shall occur.

 

(h)                                  Voluntary Bankruptcy Proceeding .  Any Credit Party or any Material Subsidiary thereof shall (i) commence a voluntary case under any Debtor Relief Laws, (ii) file a petition seeking to take advantage of any Debtor Relief Laws, (iii) consent to or fail to contest in a timely and appropriate manner any petition filed against it in an involuntary case under any Debtor Relief Laws, (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or foreign, (v) admit in writing its inability to pay its debts as they become due, (vi) make a general assignment for the benefit of creditors, or (vii) take any corporate action for the purpose of authorizing any of the foregoing.

 

(i)                                      Involuntary Bankruptcy Proceeding .  A case or other proceeding shall be commenced against any Credit Party or any Material Subsidiary thereof in any court of competent jurisdiction seeking (i) relief under any Debtor Relief Laws, or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like for any Credit Party or any Material Subsidiary thereof or for all or any substantial part of their respective assets, domestic or foreign, and such case or proceeding shall continue without dismissal or stay for a period of sixty (60) consecutive days, or an order granting the relief requested in such case or proceeding (including, but not limited to, an order for relief under such federal bankruptcy laws) shall be entered; provided that the foregoing shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within twenty (20) Business Days of commencement.

 

(j)                                     Failure of Agreements .  Any provision of this Agreement or any provision of any other Loan Document shall for any reason cease to be in full force and effect (other than in accordance with its terms or by reason of the release of a Credit Party or its assets in accordance with the terms of the Loan Documents or the satisfaction in full of the Obligations in accordance with the terms hereof) or any Credit Party or any Subsidiary thereof party to any Loan Document shall contest the validity or enforceability of the Loan Documents in writing.

 

(k)                                  Employee Benefit Matters .  (i) The occurrence of any Termination Event that has, individually or in the aggregate with all other Termination Events that have occurred, had a Material Adverse Effect or (ii) a Foreign Pension Plan termination resulting in a required

 

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contribution by any Credit Party or any of its respective Restricted Subsidiaries or other liability or obligation to such Foreign Pension Plan that has had Material Adverse Effect or (iii) a contribution failure with respect to any Foreign Pension Plan sufficient to give rise to a Lien under Applicable Law that has had a Material Adverse Effect.

 

(l)                                      Judgment .  One or more judgments, orders or decrees shall be entered against any Credit Party or any Subsidiary thereof by any court and continues without having been satisfied, discharged, vacated or stayed for a period of sixty (60) consecutive days after the entry thereof and such judgments, orders or decrees are for the payment of money, individually or in the aggregate (not paid or fully covered by insurance as to which the relevant insurance company has not denied coverage) equal to or in excess of the Threshold Amount.

 

SECTION 9.2.                                           Remedies .  Upon the occurrence and during the continuance of an Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower:

 

(a)                                  Acceleration; Termination of Credit Facility .  Terminate the Commitments and declare the principal of and interest on the Loans and the Reimbursement Obligations at the time outstanding, and all other amounts owed to the Lenders and to the Administrative Agent under this Agreement or any of the other Loan Documents and all other Obligations, to be forthwith due and payable, whereupon the same shall promptly become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by each Credit Party, anything in this Agreement or the other Loan Documents to the contrary notwithstanding, and terminate the Credit Facility and any right of any Credit Party to request Credit Extensions; provided , that upon the occurrence of an Event of Default specified in Section 9.1(h)  or Section 9.1(i) , the Credit Facility shall be automatically terminated and all Obligations shall automatically become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by each Credit Party, anything in this Agreement or in any other Loan Document to the contrary notwithstanding.

 

(b)                                  Letters of Credit .  With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred upon the occurrence of the Event of Default, (i) demand that each Account Party (and each Account Party hereby agrees to) deposit in a Cash Collateral Account opened by the Administrative Agent an amount of cash equal to 103% of the aggregate then undrawn and unexpired amount of such Letters of Credit issued for its account to be held and applied in accordance with Section 3.6 and/or (ii) terminate or cause the L/C Agent or Fronting Bank, as applicable, to terminate any or all of the Letters of Credit or give Notices of Non-Extension in respect thereof if permitted in accordance with its terms.  Such Cash Collateral shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay the other Obligations.  After all such Letters of Credit shall have expired or been fully drawn upon, the Reimbursement Obligation shall have been satisfied and all other Obligations shall have been paid in full, the balance, if any, in such Cash Collateral account shall be returned to the applicable Account Party.

 

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(c)                                   General Remedies .  Exercise on behalf of the Issuing Lenders and the Lenders all of its other rights and remedies under this Agreement, the other Loans Documents and Applicable Law, in order to satisfy all of the Obligations.

 

SECTION 9.3.                                           Rights and Remedies Cumulative; Non-Waiver; etc.

 

(a)                                  The enumeration of the rights and remedies of the Administrative Agent and the Lenders set forth in this Agreement is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now or hereafter exist at law or in equity or by suit or otherwise.  No delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default.  No course of dealing between any Credit Party, the Administrative Agent and the Lenders or their respective agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the other Loan Documents or to constitute a waiver of any Event of Default.

 

(b)                                  Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Credit Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 9.2 for the benefit of all the Lenders and the Issuing Lenders; provided that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Issuing Lender or the Swingline Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as an Issuing Lender or Swingline Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 11.4 (subject to the terms of Section 4.6 ), or

 

(d)                                  any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Credit Party under any Debtor Relief Law; and provided , further , that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 9.2 and (ii) in addition to the matters set forth in clauses (b) , (c)  and (d)  of the preceding proviso and subject to Section 4.6 , any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

 

SECTION 9.4.                                           Crediting of Payments and Proceeds .  In the event that the Obligations have been accelerated pursuant to Section 9.2 or the Administrative Agent or any Lender has exercised any remedy set forth in this Agreement or any other Loan Document, all payments received on account of the Obligations and all net proceeds from the enforcement of the

 

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Obligations shall, subject to the provisions of Sections 4.14 and 4.15 , be applied by the Administrative Agent as follows:

 

(a)                                  First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts, including attorney fees, payable to the Administrative Agent in its capacity as such;

 

(b)                                  Second , to payment of that portion of the Obligations constituting fees (other than Commitment Fees and Letter of Credit fees), indemnities and other amounts (other than principal and interest) payable to the Lenders, the Issuing Lenders and the Swingline Lender under the Loan Documents, including attorney fees, ratably among the Lenders, the Issuing Lenders and the Swingline Lender in proportion to the respective amounts described in this clause Second payable to them;

 

(c)                                   Third , to payment of that portion of the Obligations constituting accrued and unpaid Commitment Fees, Letter of Credit fees and interest on the Loans and Reimbursement Obligations, ratably among the Lenders, the Issuing Lenders and the Swingline Lender in proportion to the respective amounts described in this clause Third payable to them;

 

(d)                                  Fourth , to payment of that portion of the Obligations constituting unpaid principal of the Loans and Reimbursement Obligations, ratably among the Lenders and the Issuing Lenders in proportion to the respective amounts described in this clause Fourth payable to them;

 

(e)                                   Fifth , to the Administrative Agent for the account of the Issuing Lenders, to Cash Collateralize any L/C Obligations then outstanding; and

 

(f)                                    Last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Applicable Law.

 

SECTION 9.5.                                           Administrative Agent May File Proofs of Claim .  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Credit Party, the Administrative Agent (irrespective of whether any Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Credit Parties) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

 

(a)                                  to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Issuing Lenders and the Administrative Agent under Section 3.9 and Section 11.3 ) allowed in such judicial proceeding; and

 

(b)                                  to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

 

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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and each Issuing Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the Issuing Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 3.9 and Section 11.3 .  Nothing contained herein shall be deemed to authorize the Administrative Agent to consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment, or composition affecting the obligations of any Credit Party hereunder or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

 

ARTICLE X.

 

THE ADMINISTRATIVE AGENT

 

SECTION 10.1.                                    Appointment and Authority .

 

(a)                                  Each of the Lenders and each Issuing Lender hereby irrevocably appoints Wells Fargo to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Lenders, and no Credit Party nor any of their respective Subsidiaries shall have rights as a third-party beneficiary of any of such provisions.  It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law.  Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

 

SECTION 10.2.                                    Rights as a Lender .  The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Parent or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

 

SECTION 10.3.                                    Exculpatory Provisions .

 

(a)                                  The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder and thereunder

 

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shall be administrative in nature.  Without limiting the generality of the foregoing, the Administrative Agent:

 

(i)                                      shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing;

 

(ii)                                   shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or Applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

 

(iii)                                shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Parent, any Credit Party or any of their respective Subsidiaries or Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

 

(b)                                  The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 9.2 and Section 11.2 ) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final nonappealable judgment.  The Administrative Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until notice describing such Default or Event of Default is given to the Administrative Agent by the Parent, a Lender or an Issuing Lender.

 

(c)                                   The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article V or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

SECTION 10.4.                                    Reliance by the Administrative Agent .  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request,

 

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certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an Issuing Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender or such Lender or such Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such Lender or such Issuing Lender prior to the making of such Loan or the issuance of such Letter of Credit.  The Administrative Agent may consult with legal counsel (who may be counsel for the Credit Parties), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

SECTION 10.5.                                    Delegation of Duties .  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Credit Facility as well as activities as Administrative Agent.  The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.

 

SECTION 10.6.                                    Resignation of Administrative Agent .

 

(a)                                  The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Lenders and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower and subject to the consent (not to be unreasonably withheld or delayed) of the Borrower (provided no Event of Default has occurred and is continuing at the time of such resignation), to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “ Resignation Effective Date ”), then the retiring Administrative Agent may (but shall not be obligated to), in consultation with the Borrower and subject to the consent (not to be unreasonably withheld or delayed) of the Borrower (provided no Event of Default has occurred and is continuing at such time), on behalf of the Lenders and the Issuing Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender.  Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

 

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(b)                                  If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d)  of the definition thereof, the Required Lenders may, to the extent permitted by Applicable Law, by notice in writing to the Borrower and such Person, remove such Person as Administrative Agent and, in consultation with the Borrower appoint a successor.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

 

(c)                                   With effect from the Resignation Effective Date or the Removal Effective Date (as applicable), (i) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the Issuing Lenders under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) except for any indemnity payments owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and each Issuing Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents.  The fees payable by the Credit Parties to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Credit Parties and such successor.  After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 11.3 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

 

(d)                                  Any resignation by, or removal of, Wells Fargo as Administrative Agent pursuant to this Section shall also constitute its resignation as Fronting Bank and L/C Agent.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Fronting Bank and L/C Agent, if in its sole discretion it elects to, and Swingline Lender, (ii) each of the retiring Fronting Bank, L/C Agent and Swingline Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (iii) the successor Fronting Bank and L/C Agent, if in its sole discretion it elects to and in consultation with the Borrower, shall issue Letters of Credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Fronting Bank and L/C Agent to effectively assume the obligations of the retiring Fronting Bank and L/C Agent with respect to such Letters of Credit.

 

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SECTION 10.7.                                    Non-Reliance on Administrative Agent and Other Lenders .  Each Lender and each Issuing Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender and each Issuing Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

 

SECTION 10.8.                                    No Other Duties, Etc.   Anything herein to the contrary notwithstanding, none of the syndication agents, documentation agents, co-agents, arrangers or bookrunners listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or an Issuing Lender hereunder.

 

SECTION 10.9.                                    Lender ERISA Representations .

 

(a)                                  Each Lender (x) represents and warrants, as of the date such Person became a Lender part hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Credit Parties, that at least one of the following is and will be true:

 

(i)                                      Such Lender is not using “plan assets” (within the meaning of 29 CFR § 2510.3101, as modified by Section 3(42) of ERISA) of one or more Employee Benefit Plans in connection with the Loans, the Letters of Credit or the Commitment;

 

(ii)                                   The transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of an performance of the Loans, the Letters of Credit, the Commitment and this Agreement;

 

(iii)                                (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitment and this Agreement (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitment and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I

 

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of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitment and this Agreement; or

 

(iv)                               Such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

 

(b)                                  In addition, unless sub-clause (i)  in the immediately preceding clause (a)  is true with respect to a Lender or such Lender has not provided another representation, warranty and covenant as provided in sub-clause (iv)  in the immediately preceding clause (a) , such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Credit Parties, that:

 

(i)                                      none of the Administrative Agent, the Arrangers or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto);

 

(ii)                                   the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitment and this Agreement is independent (within the meaning of 29 CFR § 2510.3-21) and is a bank, an insurance carrier, an investment adviser, a broker-dealer or other person that holds, or has under management or control, total assets of at least $50,000,000, in each case as described in 29 CFR § 2510.3-21(c)(1)(i)(A)-(E);

 

(iii)                                the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitment and this Agreement is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies (including in respect of the Obligations);

 

(iv)                               the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitment and this Agreement is a fiduciary under ERISA or the Code, or both, with respect to the Loans, the Letters of Credit, the Commitment and this Agreement and is responsible for exercising independent judgment in evaluating the transactions hereunder; and

 

(v)                                  no fee or other compensation is being paid directly to the Administrative Agent, any Arranger or any their respective Affiliates for investment advice (as opposed to other services) in connection with the Loans, the Letters of Credit, the Commitment or this Agreement.

 

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(c)                                   The Administrative Agent and the Arrangers hereby inform the Lenders that each such Person is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Letters of Credit, the Commitment and this Agreement, (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Commitment for an amount less than the amount being paid for an interest in the Loans, the Letters of Credit or the Commitment by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

 

ARTICLE XI.

 

MISCELLANEOUS

 

SECTION 11.1.                                    Notices .

 

(a)                                  Notices Generally .  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (b)  below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows:

 

 

If to any Credit Party:

 

Sirius International Group, Ltd.
140 Broadway, 32nd Floor
New York, New York 10005
Attention of:  Gene Boxer, General Counsel
Telephone No.:  (212) 312-2512
Facsimile No.:  (212) 312-2526
E-mail:  Gene.Boxer@siruisgroup.com

 

With copies to:

 

Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York 10019

 

Attention of:

Gregory Astrachan, Esq.

 

 

Viktor Okasmaa, Esq.

 

Telephone No.:

(212) 728-8608

 

 

(212) 728-8270

 

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Facsimile No.:

(212) 728-9608

 

 

(212) 728-9270

 

 

 

 

E-mail:

gastrachan@willkie.com

 

 

vokasmaa@willkie.com

 

 

 

 

If to Wells Fargo as
Administrative
Agent, Fronting Bank, L/C Agent or:
Swingline Lender

 

Wells Fargo Bank, National Association
MAC D1109-019
1525 West W.T. Harris Blvd.
Charlotte, NC 28262
Attention of:  Syndication Agency Services
Telephone No.:  (704) 590-2703
Facsimile No.:  (704) 715-0092

 

With copies to:

 

Wells Fargo Bank, National Association
One Wells Fargo Center, 11th Floor
301 South College Street
Charlotte, North Carolina 28202
Attention of:  Will Goley
Telephone No.:  (704) 410-0854
Facsimile No.:  (704) 410-0331
E-mail:  will.goley@wellsfargo.com

 

 

 

If to any Lender:

 

To the address of such Lender set forth on the Register with respect to deliveries of notices and other documentation that may contain material non-public information.

 

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices delivered through electronic communications to the extent provided in paragraph (b)  below, shall be effective as provided in said paragraph (b) .

 

(b)                                  Electronic Communications .  Notices and other communications to the Lenders and the Issuing Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or any

 

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Issuing Lender pursuant to Article III or IV (other than notices and other communications sent by email) if such Lender or such Issuing Lender, as applicable, has notified the Administrative Agent that is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or any Credit Party may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications (other than notices and other communications sent by email).  Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i)  of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i)  and (ii)  above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or other communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

 

(c)                                   Administrative Agent’s Office .  The Administrative Agent hereby designates its office located at the address set forth above, or any subsequent office which shall have been specified for such purpose by written notice to the Credit Parties and the Lenders, as the Administrative Agent’s Office referred to herein, to which payments due are to be made and at which Loans will be disbursed and Letters of Credit are to be requested.

 

(d)                                  Change of Address, Etc.   Each Credit Party, the Administrative Agent, the L/C Agent and any Issuing Lender may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.  Any Lender may change its address or facsimile number for notices and other communications hereunder by notice to the Credit Parties, the Administrative Agent, and each Issuing Lender.

 

(e)                                   Platform .

 

(i)                                      Each Credit Party agrees that the Administrative Agent may, but shall not be obligated to, make available materials and/or information provided by or on behalf of the Credit Parties hereunder (collectively, “ Parent Materials ”) to the Issuing Lenders and the other Lenders by posting the Parent Materials on the Platform.

 

(ii)                                   The Platform is provided “as is” and “as available.”  The Agent Parties (as defined below) do not warrant the accuracy or completeness of the Parent Materials or the adequacy of the Platform, and expressly disclaim liability for errors or omissions in the Parent Materials.  No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Parent Materials or the Platform.  In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to any Credit Party, any Lender or any other Person or entity for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or

 

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otherwise) arising out of any Credit Party’s or the Administrative Agent’s transmission of communications through the Internet (including, without limitation, the Platform), except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided that in no event shall any Agent Party have any liability to any Credit Party, any Lender, the Issuing Lender or any other Person for indirect, special, incidental, consequential or punitive damages, losses or expenses (as opposed to actual damages, losses or expenses).

 

SECTION 11.2.                                    Amendments, Waivers and Consents .  Except as set forth below or as specifically provided in any Loan Document, any term, covenant, agreement or condition of this Agreement or any of the other Loan Documents may be amended or waived by the Lenders, and any consent given by the Lenders, if, but only if, such amendment, waiver or consent is in writing signed by the Required Lenders (or by the Administrative Agent with the consent of the Required Lenders) and delivered to the Administrative Agent and, in the case of an amendment, signed by Borrower; provided, that no amendment, waiver or consent shall:

 

(a)                                  increase or extend the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 9.2 ) or increase the amount of Loans of any Lender, in any case, without the written consent of such Lender;

 

(b)                                  waive, extend or postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly and adversely affected thereby;

 

(c)                                   reduce the principal of, or the rate of interest specified herein on, any Loan or Reimbursement Obligation, or (subject to clause (iii)  of the proviso set forth in the paragraph below) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly and adversely affected thereby; provided that only the consent of the Required Lenders shall be necessary (i) to waive any obligation of any Credit Party to pay interest at the rate set forth in Section 4.1(b)  during the continuance of an Event of Default or (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Obligation or to reduce any fee payable hereunder;

 

(d)                                  change Section 4.6 in a manner that would alter the pro   rata sharing of payments or order of application required thereby without the written consent of each Lender directly and adversely affected thereby;

 

(e)                                   change any provision of this Section or reduce the percentages specified in the definitions of “Required Lenders,” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender directly and adversely affected thereby;

 

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(f)                                    consent to the assignment or transfer by any Credit Party of such Credit Party’s rights and obligations under any Loan Document to which it is a party (except as permitted pursuant to Section 8.4 ), in each case, without the written consent of each Lender;

 

(g)                                   release any Guarantor from the Guaranty set forth in Article XII , without the written consent of each Lender; or

 

(h)                                  change this Section 11.2 , without the written consent of each Lender; provided further , that (i) no amendment, waiver or consent shall, unless in writing and signed by the Fronting Bank or the L/C Agent in addition to the Lenders required above, affect the rights or duties of the Fronting Bank or the L/C Agent, as applicable, under this Agreement, (ii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document, (iii) the Fee Letters may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto, (iv) no amendment, waiver or consent shall, unless in writing and signed by the Swingline Lender in addition to the Lender required above, affect the rights or duties of the Swingline Lender under this Agreement, and (v) the Administrative Agent and the Borrower shall be permitted to amend any provision of the Loan Documents (and such amendment shall become effective without any further action or consent of any other party to any Loan Document) if the Administrative Agent and the Borrower shall have jointly identified an obvious error or any error, ambiguity, defect or inconsistency or omission of a technical or immaterial nature in any such provision.  Notwithstanding anything to the contrary herein, no Defaulting Lender or Lender that ceases to be a NAIC Qualified Lender (unless such Lender has in effect a Fronting Agreement with a Person which is listed on the NAIC Qualified Institution List to act as a Fronting Bank in accordance with Section 4.16 ) shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that (A) the Commitment of such Lender may not be increased or extended without the consent of such Lender, and (B) any amendment, waiver, or consent hereunder which requires the consent of all Lenders or each affected Lender that by its terms disproportionately and adversely affects any such Defaulting Lender or Non-NAIC Qualified Lender relative to other affected Lenders shall require the consent of such Defaulting Lender or Non-NAIC Qualified Lender.

 

SECTION 11.3.                                    Expenses; Indemnity .

 

(a)                                  Costs and Expenses .  Promptly following written demand therefor, the Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable documented fees, charges and disbursements of counsel for the Administrative Agent, but limited to the reasonable and documented out-of-pocket fees, disbursements and other charges of one counsel to the Arrangers, and, if reasonably necessary, a single local counsel and regulatory counsel for the Arrangers, in each relevant jurisdiction and with respect to each relevant specialty, and in the case of an actual or perceived conflict of interest, one additional counsel in each relevant jurisdiction to the affected Arrangers similarly situated and taken as a whole), in connection with the syndication of the Credit Facility, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all

 

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reasonable out-of-pocket expenses incurred by the Administrative Agent, the L/C Agent or any Issuing Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the L/C Agent, any Lender or any Issuing Lender (including the reasonable documented fees, charges and disbursements of any counsel for the Administrative Agent, the L/C Agent, any Lender or any Issuing Lender) , in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

 

(b)                                  Indemnification by the Borrower .  The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), the L/C Agent, each Lender and each Issuing Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims (including, without limitation, any Environmental Claims), penalties, damages, liabilities and related expenses (including the reasonable documented fees, charges and disbursements of any counsel for any Indemnitee, but limited, in the case of legal fees and expenses, to the reasonable and documented out-of-pocket fees, disbursements and other charges of one counsel to all Indemnitees (taken as a whole) and, if reasonably necessary, a single local counsel for all Indemnitees (taken as a whole) in each relevant jurisdiction and with respect to each relevant specialty, and in the case of an actual or perceived conflict of interest, one additional counsel in each relevant jurisdiction to the affected Indemnitees similarly situated and taken as a whole), incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Borrower or any other Credit Party), arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Agent or any Issuing Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of hazardous materials on or from any property owned or operated by any Credit Party or any Subsidiary thereof, or any Environmental Claim related in any way to any Credit Party or any Subsidiary, (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Credit Party or any Subsidiary thereof, and regardless of whether any Indemnitee is a party thereto, or (v) any claim (including, without limitation, any Environmental Claims), investigation, litigation or other proceeding (whether or not the Administrative Agent or any Lender is a party thereto) and the prosecution and defense thereof, arising out of or in any way connected with the Loans, this Agreement, any other Loan Document, or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby, including without limitation, reasonable attorneys and consultant’s fees, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (A) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or the gross negligence or willful misconduct of any Related Party controlled

 

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by such Indemnitee who is directly involved with the transactions contemplated hereby, (B) result from a claim brought by any Credit Party or any Subsidiary thereof against an Indemnitee (or any Related Party controlled by such Indemnitee who is directly involved with the transactions contemplated hereby) for a material breach of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Credit Party or such Subsidiary has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction or (C) arise from any dispute solely between the Indemnitees and not involving any act or omission by any Credit Party or any of its Affiliates, other than any claims against the Administrative Agent or any Arranger in their respective capacity or in fulfilling their role as an Administrative Agent or Arranger or any similar role hereunder or under any Loan Document.  This Section 11.3(b)  shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

 

(c)                                   Reimbursement by Lenders .  To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under clause (a)  or (b)  of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C Agent, the Fronting Bank, or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the L/C Agent, the Fronting Bank, or such Related Party, as the case may be, such Lender’s Ratable Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided , that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the L/C Agent or the Fronting Bank in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or the L/C Agent or the Fronting Bank in connection with such capacity.  The obligations of the Lenders under this clause (c)  are subject to the provisions of Section 4.7(c) .

 

(d)                                  Waiver of Consequential Damages, Etc.   To the fullest extent permitted by Applicable Law, the Borrower and each other Credit Party shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof.  No Indemnitee referred to in clause (b)  above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

 

(e)                                   Payments .  All amounts due under this Section shall be payable promptly after demand therefor.

 

(f)                                    Survival .  Each party’s obligations under this Section shall survive the termination of the Loan Documents and payment of the obligations hereunder.

 

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SECTION 11.4.                                    Right of Setoff .  If an Event of Default shall have occurred and be continuing, each Lender, each Issuing Lender, the Swingline Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to setoff and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, such Issuing Lender, the Swingline Lender or any such Affiliate to or for the credit or the account of the Borrower or any other Credit Party against any and all of the obligations of the Borrower or such Credit Party now or hereafter existing under this Agreement or any other Loan Document to such Lender, such Issuing Lender, the Swingline Lender or any of their respective Affiliates, irrespective of whether or not such Lender, such Issuing Lender, the Swingline Lender or any such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such Credit Party may be contingent or unmatured or are owed to a branch or office of such Lender, such Issuing Lender, the Swingline Lender or such Affiliate different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender or any Affiliate thereof shall exercise any such right of setoff, (x) all amounts so setoff shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 4.6 and, pending such payment, shall be segregated by such Defaulting Lender or Affiliate of a Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the Issuing Lenders, and the Lenders, and (y) the Defaulting Lender or its Affiliate shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender or any of its Affiliates as to which such right of setoff was exercised.  The rights of each Lender, each Issuing Lender, the Swingline Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, such Issuing Lender, the Swingline Lender or their respective Affiliates may have.  Each Lender, and such Issuing Lender and the Swingline Lender agree to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

 

SECTION 11.5.                                    Governing Law; Jurisdiction, Etc .

 

(a)                                  Governing Law .  This Agreement and the other Loan Documents and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York.

 

(b)                                  Submission to Jurisdiction .  Each party hereto irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, the L/C Agent, any Lender, any Issuing Lender, the Swingline Lender, or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees that all claims

 

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in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by Applicable Law, in such federal court.  Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement or in any other Loan Document shall affect any right that the Administrative Agent, any Lender, any Issuing Lender or the Swingline Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or any other Credit Party or its properties in the courts of any jurisdiction.

 

(c)                                   Waiver of Venue .  Each party hereto irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b)  of this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(d)                                  SERVICE OF PROCESS .  EACH CREDIT PARTY IRREVOCABLY CONSENTS THAT SERVICE OF PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO IT AT THE ADDRESS OF ITS AGENT FOR SERVICE OF PROCESS, SIRIUS AMERICA INSURANCE COMPANY, WITH OFFICES AT 140 BROADWAY, 32ND FLOOR, NEW YORK, NEW YORK 10005, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED.  IN ADDITION, EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.1 .  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

SECTION 11.6.                                    Waiver of Jury Trial .

 

(a)                                  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

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SECTION 11.7.                                    Reversal of Payments .  To the extent any Credit Party makes a payment or payments to the Administrative Agent for the ratable benefit of any of the Credit Parties or to any Credit Party directly or the Administrative Agent or any Lender exercises its right of setoff, which payments or proceeds (including any proceeds of such setoff) or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any Debtor Relief Law, other Applicable Law or equitable cause, then, to the extent of such payment or proceeds repaid, the Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if such payment or proceeds had not been received by the Administrative Agent, and each Lender and each Issuing Lender severally agrees to pay to the Administrative Agent upon demand its applicable Ratable Share (without duplication) of any amount so recovered from or repaid by the Administrative Agent plus interest thereon at a per annum rate equal to the Federal Funds Rate from the date of such demand to the date such payment is made to the Administrative Agent.

 

SECTION 11.8.                                    [Reserved]

 

SECTION 11.9.                                    Successors and Assigns; Participations .

 

(a)                                  Successors and Assigns Generally .  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Credit Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of paragraph (b)  of this Section, (ii) by way of participation in accordance with the provisions of paragraph (d)  of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (e)  of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d)  of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)                                  Assignments by Lenders .  Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that, any such assignment shall be subject to the following conditions:

 

(i)                                      Minimum Amounts .

 

(A)                                in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Loans at the time owing to it or contemporaneous assignments to related Approved Funds (determined after giving effect to such assignments) that equal at least the amount specified in paragraph (b)(i)(B)  of this Section in the aggregate or in the case of an assignment

 

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to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

 

(B)                                in any case not described in paragraph (b)(i)(A)  of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) assigned shall not be less than $5,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided that the Borrower shall be deemed to have given its consent five (5) Business Days after the date written notice thereof has been delivered by the assigning Lender (through the Administrative Agent) unless such consent is expressly refused by the Borrower prior to such fifth (5th) Business Day;

 

(ii)                                   Proportionate Amounts .  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Commitment assigned ;

 

(iii)                                Required Consents .  No consent shall be required for any assignment except to the extent required by paragraph (b)(i)(B) of this Section and, in addition:

 

(A)                                the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided , that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within 10 Business Days after having received notice thereof;

 

(B)                                the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

 

(C)                                the consents of the Fronting Bank and the Swingline Lender shall be required for any assignment, unless such assignment is to an Affiliate of a Lender, provided that such Affiliate, at the time of any such assignment, (1) is a NAIC Qualified Lender and (2) has senior unsecured debt ratings that are either (x) at least A- from S&P and A3 from Moody’s Investors Service, Inc. or (y) the same or better than such ratings of the assigning Lender.

 

(iv)                               Assignment and Assumption .  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 for each assignment; provided that (A) only one

 

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such fee will be payable in connection with simultaneous assignments to two or more related Approved Funds by a Lender and (B) the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(v)                                  No Assignment to Certain Persons .  No such assignment shall be made to (A) the Parent or any of its Subsidiaries or Affiliates, (B) any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B)  or (C)  a Person that is a Non-NAIC Qualified Lender.

 

(vi)                               No Assignment to Natural Persons .  No such assignment shall be made to a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person).

 

(vii)                            Certain Additional Payments .  In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the Commitment Percentage of Loans previously requested, but not funded by, the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (A) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the Issuing Lenders, the Swingline Lender and each other Lender hereunder (and interest accrued thereon), and (B) acquire (and fund as appropriate) its Commitment Percentage of all participations in Participated Letters of Credit and drawn Syndicated Letters of Credit.  Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c)  of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of, Section 4.8 , Section 4.9 , Section 4.10 , Section 4.11 and Section 11.3 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided , that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party

 

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hereunder arising from that Lender’s having been a Defaulting Lender.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (d)  of this Section (other than a purported assignment to a natural Person or any Credit Party or any Credit Party’s Subsidiaries or Affiliates, which shall be null and void).

 

(c)                                   Register .  The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices in Charlotte, North Carolina, a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amounts of (and stated interest on) the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”).  The entries in the Register shall be conclusive, absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for inspection by the Borrower and any Lender (but only to the extent of entries in the Register that are applicable to such Lender), at any reasonable time and from time to time upon reasonable prior notice.

 

(d)                                  Participations .  Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person, (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person, or the Parent or any of the Parent’s Subsidiaries or Affiliates) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Issuing Lender, the Swingline Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 11.3(c)  with respect to any payments made by such Lender to its Participant(s).

 

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in Section 11.2(a) , Section 11.2(b) , Section 11.2(c) , Section 11.2(d)  that directly and adversely affects such Participant.  The Credit Parties agree that each Participant shall be entitled to the benefits of Section 4.9 , Section 4.10 and Section 4.11 (subject to the requirements and limitations therein (it being understood that the documentation required under Section 4.11(g)  shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 4.12 as if it were an assignee under paragraph (b)  of this Section; and (B) shall not be entitled to receive any greater payment under Section 4.10 or Section 4.11 , with respect to any participation, than its participating Lender would have been

 

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entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation.  Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 4.12(b)  with respect to any Participant.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.4 as though it were a Lender; provided that such Participant agrees to be subject to Section 4.6 and Section 11.4 as though it were a Lender.

 

Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts of (and stated interest on) each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

 

(e)                                   Certain Pledges .  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank or other central bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

SECTION 11.10.                             Treatment of Certain Information; Confidentiality .  Each of the Administrative Agent, the Lenders and the Issuing Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective Related Parties in connection with the Credit Facility, this Agreement, the transactions contemplated hereby or in connection with marketing of services by such Affiliate or Related Party to the Parent or any of its Subsidiaries (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by, or required to be disclosed to, any regulatory or similar authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners) or in accordance with the Administrative Agent’s, such Issuing Lender’s or any Lender’s regulatory compliance policy if the Administrative Agent, such Issuing Lender or such Lender, as applicable, deems such disclosure to be necessary for the mitigation of claims by those authorities against the Administrative Agent, such Issuing Lender or such Lender, as applicable, or any of its Related Parties (in which case, the Administrative Agent, such Issuing Lender or such Lender, as applicable, shall use commercially reasonable efforts to, except with respect to any audit or examination conducted by bank

 

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accountants or any governmental bank regulatory authority exercising examination or regulatory authority, promptly notify the Borrower, in advance, to the extent practicable and otherwise permitted by Applicable Law), (c) as to the extent required by Applicable Laws or regulations or in any legal, judicial, administrative proceeding or other compulsory process, (d) to any other party hereto, (e) in connection with the exercise of any remedies under this Agreement or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document, or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Parent and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its Subsidiaries or the Credit Facility or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the Credit Facility, (h) with the consent of the Borrower, (i) deal terms and other information customarily reported to Thomson Reuters, other bank market data collectors and similar service providers to the lending industry and service providers to the Administrative Agent and the Lenders in connection with the administration of the Loan Documents, (j) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, any Lender, any Issuing Lender or any of their respective Affiliates from a third party that is not, to such Person’s knowledge, subject to confidentiality obligations to the Borrower or any other Credit Party, (k) to the extent that such information is independently developed by such Person, or (l) for purposes of establishing a “due diligence” defense.  For purposes of this Section, “ Information ” means all information received from any Credit Party or any Subsidiary thereof relating to any Credit Party or any Subsidiary thereof or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or any Issuing Lender on a nonconfidential basis prior to disclosure by any Credit Party or any Subsidiary thereof; provided that, in the case of information received from a Credit Party or any Subsidiary thereof after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

SECTION 11.11.                             Performance of Duties .  Each of the Credit Party’s obligations under this Agreement and each of the other Loan Documents shall be performed by such Credit Party at its sole cost and expense.

 

SECTION 11.12.                             All Powers Coupled with Interest .  All powers of attorney and other authorizations granted to the Lenders, the Administrative Agent and any Persons designated by the Administrative Agent or any Lender pursuant to any provisions of this Agreement or any of the other Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the Obligations remain unpaid or unsatisfied, any of the Commitments remain in effect or the Credit Facility has not been terminated.

 

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SECTION 11.13.                             Survival .

 

(a)                                  All representations and warranties set forth in Article VIII and all representations and warranties contained in any certificate, or any of the Loan Documents (including, but not limited to, any such representation or warranty made in or in connection with any amendment thereto) shall constitute representations and warranties made under this Agreement.  All representations and warranties made under this Agreement shall be made or deemed to be made at and as of the Closing Date (except those that are expressly made as of a specific date), shall survive the Closing Date and shall not be waived by the execution and delivery of this Agreement, any investigation made by or on behalf of the Lenders or any Credit Extension.

 

(b)                                  Notwithstanding any termination of this Agreement, the express indemnities to which the Administrative Agent and the Lenders are entitled under the provisions of this Article XI and any other provision of this Agreement and the other Loan Documents shall continue in full force and effect and shall protect the Administrative Agent and the Lenders against events arising after such termination as well as before.

 

SECTION 11.14.                             Titles and Captions .  Titles and captions of Articles, Sections and subsections in, and the table of contents of, this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement.

 

SECTION 11.15.                             Severability of Provisions .  Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.  In the event that any provision is held to be so prohibited or unenforceable in any jurisdiction, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such provision to preserve the original intent thereof in such jurisdiction (subject to the approval of the Required Lenders).

 

SECTION 11.16.                             Counterparts; Integration; Effectiveness; Electronic Execution .

 

(a)                                  Counterparts; Integration; Effectiveness .  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, the Issuing Lenders, the Swingline Lender and/or the Arrangers, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 7.1 , this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

 

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(b)                                  Electronic Execution of Assignments .  The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

SECTION 11.17.                             Term of Agreement .  This Agreement shall remain in effect from the Closing Date through and including the date upon which all Obligations (other than contingent indemnification obligations not then due) arising hereunder or under any other Loan Document shall have been indefeasibly and irrevocably paid and satisfied in full, all Letters of Credit have been terminated or expired and the Commitments have been terminated.  No termination of this Agreement shall affect the rights and obligations of the parties hereto arising prior to such termination or in respect of any provision of this Agreement which survives such termination.

 

SECTION 11.18.                             USA PATRIOT Act; Anti-Money Laundering Laws .  The Administrative Agent and each Lender hereby notifies each Credit Party that pursuant to the requirements of the PATRIOT Act or any other Anti-Money Laundering Laws, each of them is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of each Credit Party and other information that will allow such Lender to identify each Credit Party in accordance with the PATRIOT Act or such Anti-Money Laundering Laws.

 

SECTION 11.19.                             Independent Effect of Covenants .  Each Credit Party expressly acknowledges and agrees that each covenant contained in Article VII and Article VIII hereof shall be given independent effect.  Accordingly, no Credit Party shall engage in any transaction or other act otherwise permitted under any covenant contained in Article VII or Article VIII , if before or after giving effect to such transaction or act, such Credit Party shall or would be in breach of any other covenant contained in Article VII or Article VIII .

 

SECTION 11.20.                             No Advisory or Fiduciary Responsibility .

 

(a)                                  In connection with all aspects of each transaction contemplated hereby, each Credit Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that (i) the facilities provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, the Arrangers and the Lenders, on the other hand, and the Borrower is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof), (ii) in connection with the process leading to such transaction, each of the Administrative Agent, the Arrangers and the Lenders is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Borrower or any of its Affiliates, stockholders, creditors or employees or any other Person, (iii) none of the Administrative Agent, the Arrangers or the

 

116



 

Lenders has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower or any of its Affiliates with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether any Arranger or Lender has advised or is currently advising the Borrower or any of its Affiliates on other matters) and none of the Administrative Agent, the Arrangers or the Lenders has any obligation to the Borrower or any of its Affiliates with respect to the financing transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents, (iv) the Arrangers and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from, and may conflict with, those of the Borrower and its Affiliates, and none of the Administrative Agent, the Arrangers or the Lenders has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship and (v) the Administrative Agent, the Arrangers and the Lenders have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and the Credit Parties have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate.

 

(b)                                  Each Credit Party acknowledges and agrees that each Lender, the Arrangers and any Affiliate thereof may lend money to, invest in, and generally engage in any kind of business with, any of the Parent, the Borrower, any Affiliate thereof or any other person or entity that may do business with or own securities of any of the foregoing, all as if such Lender, Arranger or Affiliate thereof were not a Lender or Arranger or an Affiliate thereof (or an agent or any other person with any similar role under the Credit Facilities) and without any duty to account therefor to any other Lender, the Arrangers, the Parent, the Borrower, or any Affiliate of the foregoing.  Each Lender, the Arrangers and any Affiliate thereof may accept fees and other consideration from the Parent, the Borrower, or any Affiliate thereof for services in connection with this Agreement, the Credit Facilities or otherwise without having to account for the same to any other Lender, the Arrangers, the Borrower or any Affiliate of the foregoing.

 

SECTION 11.21.                             Inconsistencies with Other Documents .  In the event there is a conflict or inconsistency between this Agreement and any other Loan Document, the terms of this Agreement shall control.

 

SECTION 11.22.                             Acknowledgement and Consent to Bail-In of EEA Financial Institutions .  Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

 

(a)                                  the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

 

(b)                                  the effects of any Bail-In Action on any such liability, including, if applicable:

 

117



 

(i)                                      a reduction in full or in part or cancellation of any such liability;

 

(ii)                                   a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

 

(iii)                                the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.

 

SECTION 11.23.                             Judgment Currency .  If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given.  The obligation of the applicable Credit Party in respect of any such sum due from it to the Administrative Agent or any Lender or Issuing Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “ Agreement Currency ”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender or Issuing Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency.  If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender or Issuing Lender from the applicable Credit Party in the Agreement Currency, such Credit Party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender or Issuing Lender, as the case may be, against such loss.  If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender or Issuing Lender in such currency, the Administrative Agent or such Lender or Issuing Lender, as the case may be, agrees to return the amount of any excess to the applicable Credit Party (or to any other Person who may be entitled thereto under applicable Law).

 

ARTICLE XII.

 

GUARANTY

 

SECTION 12.1.                                    The Guaranty .

 

(a)                                  In order to induce the Lenders to enter into this Agreement and to make Credit Extensions hereunder and in recognition of the direct benefits to be received by the Guarantors from the Credit Extensions hereunder, each Guarantor hereby unconditionally, absolutely and irrevocably, guarantees, as a primary obligor and not merely as surety, the full and punctual payment of all Obligations of the Borrower and the Account Parties under the Loan Documents (or, in the case of the Borrower in its capacity as a Guarantor, the full and punctual payment of all Obligations of the other Account Parties under the Loan Documents).  This Guaranty is a guaranty

 

118



 

of payment and not of collection.  Upon failure by the Borrower or any Account Party to pay punctually any such amount owing by it (or, in the case of the Borrower in its capacity as a Guarantor, upon the failure by any other Account Party to pay punctually any such amount owing by it), each Guarantor agrees to pay forthwith on demand the amount not so paid at the place and in the manner specified in this Agreement.

 

SECTION 12.2.                                    Guaranty Unconditional .  The obligations of each Guarantor under this Article XII shall be unconditional, absolute and irrevocable, and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by:

 

(i)                                      any extension, renewal, settlement, compromise, waiver or release (including with respect to any Cash Collateral) in respect of any obligation of any other obligor under any of the Loan Documents, by operation of law or otherwise;

 

(ii)                                   any modification or amendment of or supplement to any of the Loan Documents in accordance with the terms thereof;

 

(iii)                                any release, non-perfection or invalidity of any direct or indirect security for any obligation of any other obligor under any of the Loan Documents;

 

(iv)                               any change in the corporate existence, structure or ownership of any obligor, or any filing by or against any Credit Party of any petition seeking any relief in bankruptcy or under any Debtor Relief Law or other similar proceeding affecting any other obligor or its assets or any resulting release or discharge of any obligation of any other obligor contained in any of the Loan Documents;

 

(v)                                  the existence of any claim, set-off or other rights which any obligor may have at any time against any other obligor, the Administrative Agent, the L/C Agent, the Swingline Lender, any Issuing Lender, any Lender or any other corporation or person, whether in connection with any of the Loan Documents or any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim;

 

(vi)                               any invalidity or unenforceability relating to or against any other obligor for any reason of any of the Loan Documents, or any provision of applicable law or regulation purporting to prohibit the payment by any other obligor of principal, interest or any other amount payable under any of the Loan Documents;

 

(vii)                            any law, regulation or order of any jurisdiction, or any other event, affecting any term of any obligation or the Lenders’ rights with respect thereto;

 

(viii)                         the addition or release of any Guarantor hereunder or the taking, acceptance or release of other guarantees of the Obligations; or

 

(ix)                               any other act or omission to act or delay of any kind by any obligor, the Administrative Agent, the L/C Agent, any Issuing Lender, the Swingline Lender, any Lender or any other corporation or person or any other circumstance whatsoever (other than the defense of payment) which might, but for the provisions of this paragraph,

 

119



 

constitute a legal or equitable discharge of or defense to such Guarantor’s obligations under this Article XII .

 

SECTION 12.3.                                    Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances .  Each Guarantor’s obligations under this Article XII shall remain in full force and effect until the Commitments of the Lenders hereunder shall have terminated, no Credit Extension shall be outstanding and all Obligations payable by the Credit Parties under the Loan Documents shall have been paid in full, or until such earlier date terminated in accordance with Section 12.7 .  If at any time any payment of any Obligation payable by a Credit Party under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of such Credit Party or otherwise, each Guarantor’s obligations under this Article XII with respect to such payment shall be reinstated as though such payment had been due but not made at such time.

 

SECTION 12.4.                                    Waiver by the Guarantor .  Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any corporation or person against any other obligor or any other corporation or person.  Each Guarantor warrants and agrees that each waiver set forth in this Section 12.4 is made with full knowledge of its significance and consequences, and such waivers shall be effective to the maximum extent permitted by law.

 

SECTION 12.5.                                    Subrogation .  Each Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against the Borrower or any Account Party, or any other insider guarantor that arises from the existence, payment, performance or enforcement of such Guarantor’s obligations under or in respect of this Guaranty or any other Loan Document, including any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Lender, any Issuing Lender, the Swingline Lender, the L/C Agent or the Administrative Agent against any Credit Party or any other insider guarantor or any Cash Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including the right to take or receive from any other Credit Party or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all Obligations payable under this Agreement shall have been paid in full in cash, no Loans or Letters of Credit shall be outstanding and the Commitments of the Lenders hereunder shall have expired or been terminated.  If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the later of (a) the payment in full in cash of all amounts payable under this Guaranty, the termination of the Commitments and expiry or cancellation of all Letters of Credit and (b) the Final Maturity Date, such amount shall be received and held in trust for the benefit of the Lenders, shall be segregated from other property and funds of such Guarantor and shall forthwith be paid or delivered to the Administrative Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to all amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as collateral for any amounts payable under this Guaranty thereafter arising.  If (i) any Guarantor shall make payment to the Lenders, the Issuing Lenders, the Swingline Lender and the Administrative Agent of all or any amounts payable under this Guaranty, (ii) all amounts payable under this Guaranty shall have been paid in full in cash, and (iii) the Final Maturity Date shall have

 

120



 

occurred, the Lenders, the Issuing Lenders, the Swingline Lender and the Administrative Agent will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the obligations resulting from such payment made by such Guarantor pursuant to this Guaranty.

 

SECTION 12.6.                                    Stay of Acceleration .  If acceleration of the time for payment of any amount payable by any Credit Party under any of the Loan Documents is stayed upon the occurrence of any filing by or against any Credit Party of any petition seeking any relief in bankruptcy or under any Debtor Relief Law, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by the Guarantors under this Article XII forthwith on demand by the Administrative Agent made at the request, or with the consent, of the Required Lenders.

 

SECTION 12.7.                                    Continuing Guaranty; Assignments .  This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the later of (i) the payment in full in cash of all Obligations payable under this Agreement, the termination of the Commitments and expiry or cancellation of all Letters of Credit and (ii) the Final Maturity Date or, in each case, such earlier date on which such Guarantor ceases to be a Guarantor under the Loan Documents in accordance with the terms of the Loan Documents, (b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Lenders, the Issuing Lenders, the Swingline Lender and the Administrative Agent and their successors, transferees and assigns.  Without limiting the generality of clause (c)  of the immediately preceding sentence, any Lender may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, in each case as and to the extent provided in Section 11.9 .

 

SECTION 12.8.                                    Subordination of Other Obligations .  Any Indebtedness of any Credit Party now or hereafter held by any Guarantor is hereby subordinated in right of payment to the Obligations of such Credit Party, and any such Indebtedness collected or received by any Guarantor after receipt of notice of an Event of Default (which has occurred and is continuing) by Administrative Agent shall be held in trust for Administrative Agent on behalf of the Lenders and shall forthwith be paid over to Administrative Agent for the benefit of Lenders to be credited and applied against such Obligations but without affecting, impairing or limiting in any manner the liability of such Guarantor under any other provision hereof.

 

[Signature pages to follow]

 

121


 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal by their duly authorized officers, all as of the day and year first written above.

 

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

 

 

 

By:

/s/ Warren J. Trace

 

Name:  Warren J. Trace

 

Title:  Vice President

 

 

 

 

 

 

 

SIRIUS BERMUDA INSURANCE COMPANY LTD.

 

 

 

 

By:

/s/ Warren J. Trace

 

Name:  Warren J. Trace

 

Title:  Vice President

 

 

 

 

 

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP LTD.

 

 

 

 

By:

/s/ Warren J. Trace

 

Name:  Warren J. Trace

 

Title:  Vice President

 

 

 

 

 

 

 

SIRIUS INTERNATIONAL HOLDINGS LTD.

 

 

 

 

By:

/s/ Warren J. Trace

 

Name:  Warren J. Trace

 

Title:  Vice President

 

 

 

 

 

 

 

SIRIUS INTERNATIONAL

 

FÖRSÄKRINGSAKTIEBOLAG (PUBL)

 

 

 

 

By:

/s/ Lars Ek

 

Name:  Lars Ek

 

Title:  Authorized Signatory

 

 

 

 

 

SIRIUS INTERNATIONAL

 

FÖRSÄKRINGSAKTIEBOLAG (PUBL)

 

 

 

 

By:

/s/ Lars Andersson

 

Name: Lars Andersson

 

Title: Authorized Signatory

 

Sirius International Group, Ltd.

2018 Credit Agreement

 



 

 

SIRIUS AMERICA INSURANCE COMPANY

 

 

 

 

By:

/s/ Robert P. Kuehn

 

Name:  Robert P. Kuehn

 

Title:  Vice President, General Counsel & Corporate Secretary

 

 

 

 

 

 

 

SIRIUS RE HOLDINGS

 

 

 

 

By:

/s/ Robert P. Kuehn

 

Name:  Robert P. Kuehn

 

Title:  Senior Vice President & Corporate Secretary

 

Sirius International Group, Ltd.

2018 Credit Agreement

 



 

 

LENDERS:

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION , as Administrative Agent, L/C Agent, Fronting Bank, Issuing Lender and Lender

 

 

 

 

 

 

 

By:

/s/ William R. Goley

 

Name:

William R. Goley

 

Title:

Managing Director

 

Sirius International Group, Ltd.

2018 Credit Agreement

 



 

 

JPMORGAN CHASE BANK, NA. , as Lender

 

 

 

 

 

 

 

By:

/s/ James S. Mintzer

 

Name:

James S. Mintzer

 

Title:

Executive Director

 

Sirius International Group, Ltd.

2018 Credit Agreement

 



 

 

BMO HARRIS BANK N.A. , as Lender

 

 

 

 

 

 

 

By:

/s/ Joan Murphy

 

Name:

Joan Murphy

 

Title:

Managing Director

 

Sirius International Group, Ltd.

2018 Credit Agreement

 



 

 

DNB SWEDEN AB , as Lender By:

 

 

 

 

 

By:

/s/ Mats Hӓvermark

 

Name:

Mats Hӓvermark

 

Title:

Legal Counsel

 

 

 

 

 

 

 

By:

/s/ Mikael Widercrantz

 

Name:

Mikael Widercrantz

 

Title:

Client Advisor

 

Sirius International Group, Ltd.

2018 Credit Agreement

 



 

 

HSBC BANK USA, NA. , as Lender

 

 

 

 

 

 

By:

/s/ Richard Herder

 

Name:

Richard Herder

 

Title:

Managing Director, North America FIG Insurance

 

Sirius International Group, Ltd.

2018 Credit Agreement

 



 

 

LLOYDS BANK PLC , as Lender

 

 

 

 

 

 

By:

/s/ Kamala Basdeo

 

Name:

Kamala Basdeo

 

Title:

Assistant Manager

 

 

 

 

 

 

 

By:

/s/ Jennifer Larrow

 

Name:

Jennifer Larrow

 

Title:

Assistant Manager

 

Sirius International Group, Ltd.

2018 Credit Agreement

 



 

 

Barclays Bank PLC , as Lender

 

 

 

 

Executed in London

 

 

 

 

 

 

By:

/s/ Krishna Maneic

 

Name:

Krishna Maneic

 

Title:

Director

 

Sirius International Group, Ltd.

2018 Credit Agreement

 



 

 

CITIBANK, N.A. , as Lender

 

 

 

 

 

 

By:

/s/ Justine O’Connor

 

Name:

Justine O’Connor

 

Title:

Vice President and Director

 

Sirius International Group, Ltd.

2018 Credit Agreement

 


 

EXHIBIT A-1

 

FORM OF REVOLVING CREDIT NOTE

 

A-1- 1



 

REVOLVING CREDIT NOTE

 

$              

                , 2018

 

FOR VALUE RECEIVED, the undersigned, SIRIUS INTERNATIONAL GROUP, LTD., an exempted company organized under the laws of Bermuda (the “ Borrower ”), promises to pay to                 (the “ Lender ”), at the place and times provided in the Credit Agreement referred to below, the principal sum of [          ] DOLLARS ($[          ]) or, if less, the unpaid principal amount of all Revolving Credit Loans made by the Lender from time to time pursuant to that certain Credit Agreement, dated as of February 8, 2018 (as amended, restated, extended or otherwise modified from time to time, the “ Credit Agreement ”) by and among the Borrower, Sirius International Insurance Group, Ltd., Sirius International Holdings Ltd., the other subsidiaries of the Borrower party thereto, the lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent.  Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.

 

The unpaid principal amount of this Revolving Credit Note from time to time outstanding is payable as provided in the Credit Agreement and shall bear interest as provided in Section 4.1 of the Credit Agreement.  All payments of principal and interest on this Revolving Credit Note shall be payable in Dollars in immediately available funds as provided in the Credit Agreement.

 

This Revolving Credit Note is entitled to the benefits of, and evidences Obligations incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Obligations evidenced by this Revolving Credit Note and on which such Obligations may be declared to be immediately due and payable.

 

THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

Except as required by the Credit Agreement, the Borrower hereby waives all requirements as to diligence, presentment, demand of payment, protest and notice of any kind with respect to this Revolving Credit Note.

 

[Signature Page Follows]

 

A-1- 2



 

IN WITNESS WHEREOF, the undersigned has executed this Revolving Credit Note as of the day and year first above written.

 

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

A-1- 3



 

EXHIBIT A-2

 

FORM OF SWINGLINE NOTE

 

A-2- 1



 

SWINGLINE NOTE

 

$            

             , 2018

 

FOR VALUE RECEIVED, the undersigned, SIRIUS INTERNATIONAL GROUP, LTD., an exempted company organized under the laws of Bermuda (the “ Borrower ”), promises to pay to WELLS FARGO BANK, NATIONAL ASSOCIATION (the “ Lender ”), at the place and times provided in the Credit Agreement referred to below, the principal sum of FIFTY MILLION DOLLARS ($50,000,000.00) or, if less, the unpaid principal amount of all Swingline Loans made by the Lender from time to time pursuant to that certain Credit Agreement, dated as of February 8, 2018 (as amended, restated, extended or otherwise modified from time to time, the “ Credit Agreement ”) by and among the Borrower, Sirius International Insurance Group, Ltd., Sirius International Holdings Ltd., the other subsidiaries of the Borrower party thereto, the lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent.  Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.

 

The unpaid principal amount of this Swingline Note from time to time outstanding is payable as provided in the Credit Agreement and shall bear interest as provided in Section 4.1 of the Credit Agreement.  Swingline Loans refunded as Revolving Credit Loans in accordance with Section 2.2(b)  of the Credit Agreement shall be payable by the Borrower as Revolving Credit Loans, and shall not be payable under this Swingline Note as Swingline Loans.  All payments of principal and interest on this Swingline Note shall be payable in Dollars in immediately available funds as provided in the Credit Agreement.

 

This Swingline Note is entitled to the benefits of, and evidences Obligations incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Obligations evidenced by this Swingline Note and on which such Obligations may be declared to be immediately due and payable.

 

THIS SWINGLINE NOTE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

Except as required by the Credit Agreement, the Borrower hereby waives all requirements as to diligence, presentment, demand of payment, protest and notice of any kind with respect to this Swingline Note.

 

[Signature Page Follows]

 

A-2- 2



 

IN WITNESS WHEREOF, the undersigned has executed this Swingline Note under seal as of the day and year first above written.

 

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

A-2- 3



 

EXHIBIT B

 

FORM OF NOTICE OF BORROWING

 

B- 1



 

NOTICE OF BORROWING

 

Dated as of:                           

 

Wells Fargo Bank, National Association,

as Administrative Agent

MAC D 1109-019

1525 West W.T. Harris Blvd.

Charlotte, North Carolina 28262

Attention:  Syndication Agency Services

 

Ladies and Gentlemen:

 

This irrevocable Notice of Borrowing is delivered to you pursuant to Section 2.3 of the Credit Agreement dated as of February 8, 2018 (as amended, restated, extended or otherwise modified from time to time, the “ Credit Agreement ”), by and among Sirius International Insurance Group, Ltd., Sirius International Holdings Ltd., Sirius International Group, Ltd. (the “ Borrower ”), the other subsidiaries of the Borrower party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent for the Lenders, as L/C Agent and as the Fronting Bank.  Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.

 

1.                                       The Borrower hereby requests that the Lenders make [ a Revolving Credit Loan ][ a Swingline Loan ] to the Borrower in the aggregate principal amount of $          .  (Complete with an amount in accordance with Section 2.3 of the Credit Agreement.)

 

2.                                       The Borrower hereby requests that such Loan(s) be made on the following Business Day:                 .  (Complete with a Business Day in accordance with Section 2.3 of the Credit Agreement).

 

3.                                       The Borrower hereby requests that such Loan(s) bear interest at the following interest rate, plus the Applicable Margin, as set forth below:

 

 

 

 

 

Interest Period

Component

 

 

 

(LIBOR

of Loan(1)

 

Interest Rate

 

Rate only)

 

 

[ Base Rate or LIBOR Rate ](2)

 

 

 


(1)  Complete with the Dollar amount of that portion of the overall Loan requested that is to bear interest at the selected interest rate and/or Interest Period (e.g., for a $20,000,000 loan, $5,000,000 may be requested at Base Rate, $8,000,000 may be requested at LIBOR with an interest period of three months and $7,000,000 may be requested at LIBOR with an interest period of one month).

 

(2)  Complete with (i) the Base Rate or the LIBOR Rate for Revolving Credit Loans or (ii) the Base Rate for Swingline Loans.

 

B- 2



 

4.                                       All of the conditions applicable to the Loan(s) requested herein as set forth in the Credit Agreement have been satisfied as of the date hereof or will be satisfied as of the date of the requested Loan(s).

 

[Signature Page Follows]

 

B- 3



 

IN WITNESS WHEREOF, the undersigned has executed this Notice of Borrowing as of the day and year first written above.

 

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

B- 4


 

EXHIBIT C

 

FORM OF ACCOUNT DESIGNATION

 

C- 1



 

NOTICE OF ACCOUNT DESIGNATION

 

Dated as of:                         

 

Wells Fargo Bank, National Association,

as Administrative Agent

MAC D 1109-019

1525 West W.T. Harris Blvd.

Charlotte, North Carolina 28262

Attention:  Syndication Agency Services

 

Ladies and Gentlemen:

 

This Notice of Account Designation is delivered to you pursuant to Section 2.3(b)  of the Credit Agreement dated as of February 8, 2018 (as amended, restated, extended or otherwise modified from time to time, the “ Credit Agreement ”), by and among Sirius International Insurance Group, Ltd., Sirius International Group, Ltd. (the “ Borrower ”), the other subsidiaries of the Borrower party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent for the Lenders, as L/C Agent and as the Fronting Bank.  Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.

 

1.                                       The Administrative Agent is hereby authorized to disburse all Loan proceeds into the following account(s):

 

 

Bank Name:

 

ABA Routing Number:

 

Account Number:

 

2.                                       This authorization shall remain in effect until revoked or until a subsequent Notice of Account Designation is provided to the Administrative Agent.

 

[Signature Page Follows]

 

C- 2



 

IN WITNESS WHEREOF, the undersigned has executed this Notice of Account Designation as of the day and year first written above.

 

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

C- 3



 

EXHIBIT D

 

FORM OF SYNDICATED LETTER OF CREDIT

 

D- 1



 

SYNDICATED LETTER OF CREDIT

 

 

For Internal Identification Purposes Only

Issue Date

 

 

   Applicant:  (Name)

Clean, Irrevocable Stand By Letter of Credit No.:

 

 

 

To Beneficiary:  (Name)

 

 

(Address)

(Address)

 

 

Dear Sir or Madam:

 

The banks and financial institutions set forth in Schedule 1 hereto (the “ Lenders ”) hereby open this clean, unconditional and irrevocable for the term hereof Syndicated Letter of Credit in your favor as beneficiary (the “ Beneficiary ”) through Wells Fargo Bank, National Association, acting as administrative agent (in such capacity, the “ Administrative Agent ” and attorney-in-fact for the Lenders) (this “ Letter of Credit ”) in the aggregate amount of U.S. [$              ] , effective immediately and remaining in full force and effect, and expiring at the Administrative Agent’s address at 401 N. Research Parkway, First Floor, Winston-Salem, North Carolina, 27101, Attention International Operations, Standby Letters of Credit, D4004-017 no later than 5:00 p.m., Charlotte, North Carolina time, on                  (the “ Expiration Date ”, as such date may be extended as set forth below).

 

The term “ Beneficiary ” includes any successor by operation of law of the named Beneficiary including, without limitation, any liquidator, rehabilitator, receiver or conservator.  The term “ Business Day ” means a day which is not a Saturday, Sunday, legal holiday or any other day on which banking institutions in Charlotte, North Carolina or the city in which the payment office of the Administrative Agent is located are required by law to be closed.

 

The Lenders hereby severally undertake to promptly honor your sight draft(s) drawn on us, duly endorsed by the Beneficiary expressly specifying the Letter of Credit No.            for all or any part of this credit if presented at the Administrative Agent’s office specified in the first paragraph hereof on a Business Day on or prior to the Expiration Date, as such date may be extended.

 

Each of the Lenders agrees, for itself alone and not jointly with any other Lender, to promptly honor a draft drawn by you and presented to the Administrative Agent in an amount not to exceed the aggregate amount available to be drawn hereunder multiplied by such Lender’s percentage obligation as set forth on Schedule 1 to this Syndicated Letter of Credit (the “ Percentage Obligations ”) and in accordance with the terms and conditions hereinafter set forth.  The obligations of the Lenders hereunder shall be several and not joint, and multiple draws shall be available under this Letter of Credit.  Upon the transfer by a Lender to the Administrative Agent for your account of the amount specified in a draft drawn on such Lender hereunder, such Lender shall be fully discharged of its obligations under this Letter of Credit with respect to such draft, such Lender shall not be obligated thereafter to make any further payments under this Letter of Credit with respect to such draft, and the amount available to be drawn thereafter under this Letter

 

D- 2



 

of Credit shall be automatically and permanently reduced by an amount equal to the amount of such draft.  The failure of any Lender to make funds available to the Administrative Agent for payment under this Letter of Credit shall not relieve any other Lender of its obligation hereunder to make funds available to the Administrative Agent.  Neither the Administrative Agent nor any Lender shall be responsible for the failure of any other Lender to honor its share of any drawings hereunder or to make funds available to the Administrative Agent.

 

Except to the extent the amount of this Letter of Credit may be increased, this Letter of Credit cannot be modified or revoked without your written consent; provided that this Letter of Credit may be amended to delete a Lender or add a Lender or change Percentage Obligations so long as such amendment does not decrease the amount of this Letter of Credit, and need only be signed by the Administrative Agent so long as any Lender added shall be listed on the “NAIC List of Qualified U.S. Financial Institutions” maintained by the securities valuation office of the National Association of Insurance Commissioners as issuers of letters of credit for which reinsurance reserve credit can be given.

 

Wells Fargo Bank, National Association has been appointed by the Lenders to act as, has been granted the authority by the Lenders to act as, and has been irrevocably granted a power of attorney by the Lenders to act as Administrative Agent for the Lenders obligated under this Letter of Credit.  As Administrative Agent, Wells Fargo Bank, National Association has full power of attorney from such Lenders to act on their behalf hereunder to (i) execute and deliver this Letter of Credit, (ii) receive drafts, other demands for payment and other documents presented by you hereunder, (iii) determine whether such drafts, demands and documents are in compliance with the terms of this Letter of Credit, and (iv) notify the Lenders that a valid drawing has been made and the date that the related payment under this Letter of Credit is to be made; provided , however , that the Administrative Agent shall have no obligation or liability for any payment under this Letter of Credit (other than payment to you of such funds as have been made available to it by the Lenders pursuant to your draw).

 

This Letter of Credit will be automatically extended without amendment for a one year period upon the Expiration Date and upon each anniversary of such date, unless at least sixty (60) days prior to such Expiration Date, or prior to any anniversary of such date, we notify you in writing by registered mail or courier that we elect not to so extend this Letter of Credit.

 

Upon receipt by you of our notice of election not to extend this Letter of Credit, you may draw hereunder by your sight draft(s) drawn on us and bearing the clause “Drawn under Credit No.           .”

 

This Letter of Credit sets forth in full the terms of the Administrative Agent’s undertaking and of each Lender’s undertaking.  Such undertaking shall not in any way be modified, amended or amplified by reference to any document or instrument referred to herein or in which this Letter of Credit is referred to or to which this Letter of Credit relates and any such reference shall not be deemed to incorporate herein by reference any document or instrument.

 

All bank charges and commissions incurred in this transaction are for the applicant’s account.

 

D- 3



 

We hereby agree with you that drafts drawn under and in compliance with the terms of this Letter of Credit will be duly honored upon presentation to the drawee.  The obligation of the Administrative Agent and of each Lender under this Letter of Credit is the individual obligation of the Administrative Agent and each Lender, respectively, and is in no way contingent upon reimbursement with respect thereto.

 

Except as otherwise expressly stated herein, this Letter of Credit is subject to and governed by the Laws of the State of New York and the 2007 revision of the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication 600) and, in the event of any conflict, the Laws of the State of New York will control.  If this Letter of Credit expires during an interruption of business as described in Article 36 of said I.C.C. publication, we agree to effect payment if this Letter of Credit is drawn against within 30 days after the resumption of business.

 

Signature

Title

 

 

Wells Fargo Bank, National Association

 

as Administrative Agent and attorney-in fact for

 

the Lenders set forth in Schedule 1

 

to this Syndicated Letter of Credit

 

 

D- 4



 

SCHEDULE 1

 

LENDER

 

PERCENTAGE OBLIGATION

 

 

 

 

 

 

 

 

 

 

D- 5


 

EXHIBIT E

 

FORM OF NOTICE OF CONVERSION/CONTINUATION

 

E- 1



 

NOTICE OF CONVERSION/CONTINUATION

 

Dated as of:                           

 

Wells Fargo Bank, National Association,

as Administrative Agent

MAC D 1109-019

1525 West W.T. Harris Blvd.

Charlotte, North Carolina 28262

Attention:  Syndication Agency Services

 

Ladies and Gentlemen:

 

This irrevocable Notice of Conversion/Continuation (this “ Notice ”) is delivered to you pursuant to Section 4.2 of the Credit Agreement dated as of February 8, 2018 (as amended, restated, extended or otherwise modified from time to time, the “ Credit Agreement ”), by and among Sirius International Insurance Group, Ltd., Sirius International Holdings Ltd., Sirius International Group, Ltd. (the “ Borrower ”), the other subsidiaries of the Borrower party thereto, the lenders party thereto, and Wells Fargo Bank, National Association (“ Wells Fargo ”), as Administrative Agent for the Lenders, as L/C Agent and as the Fronting Bank.  Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.

 

1.                                       The Loan to which this Notice relates is a Revolving Credit Loan.

 

2.                                       This Notice is submitted for the purpose of:  (Check one and complete applicable information in accordance with the Credit Agreement.)

 

o                                     Converting all or a portion of a Base Rate Loan into a LIBOR Rate Loan

 

Outstanding principal balance:

 

$

 

 

 

Principal amount to be converted:

 

$

 

 

 

Requested effective date of conversion:

 

 

 

 

 

Requested new Interest Period:

 

 

 

o                                     Converting all or a portion of a LIBOR Rate Loan into a Base Rate Loan

 

Outstanding principal balance:

 

$

 

 

 

Principal amount to be converted:

 

$

 

 

 

Last day of the current Interest Period:

 

 

 

 

 

Requested effective date of conversion:

 

 

 

E- 2



 

o                                     Continuing all or a portion of a LIBOR Rate Loan as a LIBOR Rate Loan

 

Outstanding principal balance:

 

$

 

 

 

Principal amount to be continued:

 

$

 

 

 

Last day of the current Interest Period:

 

 

 

 

 

Requested effective date of continuation:

 

 

 

 

 

Requested new Interest Period:

 

 

 

[Signature Page Follows]

 

E- 3



 

IN WITNESS WHEREOF, the undersigned has executed this Notice of Conversion/Continuation as of the day and year first written above.

 

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

E- 4



 

EXHIBIT F

 

FORM OF OFFICER’S COMPLIANCE CERTIFICATE

 

F- 1



 

OFFICER’S COMPLIANCE CERTIFICATE

 

Dated as of:                        

 

THIS CERTIFICATE is delivered pursuant to the Credit Agreement dated as of February 8, 2018 (as amended, restated, supplemented and otherwise modified from time to time and in effect on the date hereof, the “ Credit Agreement ”), by and among Sirius International Insurance Group, Ltd., Sirius International Group, Ltd. (the “ Borrower ”), the other subsidiaries of the Borrower party thereto, the lenders party thereto, and Wells Fargo Bank, National Association (“ Wells Fargo ”), as Administrative Agent for the Lenders, as L/C Agent and as the Fronting Bank.  Capitalized terms used herein without definition shall have the meanings given to such terms in the Credit Agreement.

 

The undersigned hereby certifies that:

 

1.                                       [He][She] is a duly elected                 of the Borrower.(3)

 

2.                                       Accompanying this Certificate are copies of the financial statements as of             , and for the [quarter] [year] then ended, required to be delivered under Section[7.1(b)][7.1(d)] of the Credit Agreement.  Such financial statements have been prepared in accordance with the requirements of Section [7.1(b)][7.1(d)] .

 

3.                                       The undersigned has reviewed the terms of the Credit Agreement and has made, or caused to be made under the supervision of the undersigned, a review in reasonable detail of the transactions and condition of the Parent and its Subsidiaries during the accounting period covered by such financial statements.

 

4.                                       The examination described in paragraph 3 above did not disclose, and the undersigned has no knowledge of the existence of, any Default or Event of Default as of the date of this Certificate[, except as set forth below]

 

[Describe here or in a separate attachment any exceptions to paragraph 4 above by listing, in reasonable detail, the nature of the Default or Event of Default and the action that the Credit Parties have taken or propose to take with respect thereto.]

 

5.                                       Attached to this Certificate as Attachment A is a covenant compliance worksheet reflecting the computation of the financial covenants set forth in Section 8.12 of the Credit Agreement as of the last day of and for the period covered by the financial statements enclosed herewith.

 


(3)  NTD:  Credit Agreement requires signature of the chief executive officer, chief financial officer, treasurer or controller of the Borrower.

 

F- 2



 

IN WITNESS WHEREOF, the undersigned has executed and delivered this Certificate as of the     day of                , 20  .

 

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

F- 3



 

ATTACHMENT A

 

COVENANT COMPLIANCE WORKSHEET

 

A.                                     Total Consolidated Debt to Total Consolidated Capitalization ( Section 8.12(a)  of the Credit Agreement)

 

Total Consolidated Debt of the Borrower and its Restricted Subsidiaries, as at any date:

 

(1)

 

All amounts that would be reflected and classified as debt on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries prepared as of such date

 

$

 

 

 

 

 

(2)

 

Less : Indebtedness of the type described in clauses (d) , (e) , (f) , (h) , (i) , (j)  and (k)  in Section 8.1 of the Credit Agreement (to the extent included in Line 1(a))

 

$

 

 

 

 

 

(3)

 

Less : Conditional Common Equity

 

$

 

 

 

 

 

(4)

 

Less : indebtedness arising pursuant to any standby or documentary letter of credit (whether issued pursuant to the Credit Agreement or otherwise) unless and until such letter of credit is drawn by its beneficiary

 

$

 

 

 

 

 

(5)

 

Less : any other amounts in respect of Qualified Securities, other than such Qualified Securities that mature or are mandatorily redeemable pursuant to a sinking fund obligation or otherwise or are redeemable at the option of the holder thereof, in each case, prior to the date that is 91 days after the Maturity Date

 

$

 

 

 

 

 

(6)

 

Less : any amounts resulting from any entity consolidated as a Variable Interest Entity in “ASC Topic 810 — Consolidations”

 

$

 

Total Consolidated Debt = Line (1)  minus Line (2)  minus Line (3)  minus Line (4)  minus Line (5)  minus Line (6)

 

$

 

F- 4



 

Total Consolidated Capitalization of the Borrower and is Restricted Subsidiaries, as at any date:

 

(1)

 

Consolidated Net Worth of the Borrower and its Restricted Subsidiaries, as of any date:

 

 

 

 

 

 

 

 

 

(a)                                  All amounts that would be included on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries under shareholders’ equity at such date

 

$

 

 

 

 

 

 

 

(b)                                  Plus : Deferred Tax Liability on Safety Reserve

 

$

 

 

 

 

 

 

 

(c)                                   Less : the accumulated net unrealized investment gain (or loss) on investments, including net unrealized foreign currency gain (or loss) on investment, less applicable related income tax provisions (or plus applicable related income tax benefits), in each case, as of September 30, 2017

 

$

 

 

 

 

 

 

 

(d)                                  Less : the net unrealized investment gain (or loss), including net unrealized foreign currency gain (or loss) on investment, less applicable related income tax provisions (or plus applicable related income tax benefit), in each case, included in the consolidated comprehensive income (or loss) subsequent to September 30, 2017

 

$

 

 

 

 

 

 

 

(e)                                   Less : the equity in the net unrealized investment gain (or loss), less applicable related income tax provisions (or plus applicable related income tax benefits), in each case, from investments in unconsolidated Affiliates

 

$

 

 

 

 

 

 

 

(f)                                    Less : any non-controlling interest

 

$

 

 

 

 

 

 

 

Consolidated Net Worth = Line (a)  plus Line (b)  minus Line (c)  minus Line (d)  minus Line (e)  minus Line (f)

 

$

 

 

 

 

 

(2)

 

Plus : Total Consolidated Debt of the Borrower and its $Restricted Subsidiaries [calculated above]

 

$

 

 

 

 

 

(3)

 

Plus : the amounts in respect of Qualified Securities, Conditional Common Equity and any other

 

 

 

F- 5



 

 

 

preferred equity that would be reflected on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries prepared as of $such date (to the extent not already included in Line (1) or Line (2))

 

$

 

Total Consolidated Capitalization = Line (1) plus Line (2) plus Line (3)

 

 

 

$

 

 

 

 

 

Total Consolidated Debt to Total Consolidated Capitalization = Total Consolidated Debt divided by Total Consolidated Capitalization

 

 

 

 

:

 

 

 

 

 

 

 

 

Maximum Permitted Total Consolidated Debt to Total Consolidated Capitalization

 

 

 

0.35

:

1.0

 

B.                                     Minimum Consolidated Tangible Net Worth
( Section 8.12(b)  of the Credit Agreement)

 

(1)

 

Consolidated Tangible Net Worth of the Borrower and its Restricted Subsidiaries, as at any date:

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Consolidated Net Worth [calculated above]

 

$

 

 

 

 

 

 

 

 

 

 

 

 

(b)

Less : any amount set forth on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries in respect of intangible assets including goodwill

 

$

 

 

 

 

 

 

 

Consolidated Tangible Net Worth = Line 1(a)  minus Line 1(b)

 

 

 

$

 

 

 

 

 

(2) Minimum Required Consolidated Tangible Net Worth(4)

 

$

 

 

 


(4)  The Minimum Consolidated Tangible Net Worth shall be reset as of the last day of each Fiscal Year ending after the Closing Date to an amount equal to the greater of (x) 67.5% of Consolidated Tangible Net Worth reflected in the audited financial statements delivered pursuant to Section 7.1(a)  as of such date and (y) the Minimum Consolidated Tangible Net Worth in effect prior to the last day of the immediately preceding Fiscal Year.

 

F- 6


 

EXHIBIT G

 

FORM OF ASSIGNMENT AND ASSUMPTION

 

THIS ASSIGNMENT AND ASSUMPTION (this “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between [ Insert name of Assignor ] (the “ Assignor ”) and [ Insert name of Assignee ] (the “ Assignee ”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below, receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto (the “ Standard Terms and Conditions ”) are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i)  above (the rights and obligations sold and assigned pursuant to clauses (i)  and (ii)  above being referred to herein collectively as the “ Assigned Interest ”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

1.

 

Assignor:

 

 

 

 

 

 

 

2.

 

Assignee:

 

 

 

 

 

 

 

 

 

 

 

[and is an Affiliate/Approved Fund of [ identify Lender ](5)]

 

 

 

 

 

3.

 

Borrower:

 

Sirius International Group, Ltd.

 

4.                                       Administrative Agent:  Wells Fargo Bank, National Association, as the Administrative Agent under the Credit Agreement.

 

5.                                       Credit Agreement:  Credit Agreement, dated as of February 8, 2018, by and among the Borrower, Sirius International Insurance Group, Ltd., Sirius International Holdings Ltd., the

 


(5)  Select as applicable.

 

G- 1



 

other subsidiaries of the Borrower party thereto, the lenders party thereto (the “ Lenders ”), and Wells Fargo Bank, National Association, as Administrative Agent, L/C Agent and Fronting Bank.

 

6.                                       Assigned Interest:

 

Aggregate Amount of
Commitment/Letter
of Credit Exposure
for all Lenders(6)

 

Amount of
Commitment/Letter of
Credit Exposure
Assigned(7)

 

Percentage Assigned
of Commitment/
Letter of Credit
Exposure(8)

 

CUSIP
Number(9)

 

$

 

$

 

 

%

 

 

$

 

$

 

 

%

 

 

$

 

$

 

 

%

 

 

 

[7.                                   Trade Date:                                              ](10)

 

8.                                       Effective Date:              [TO BE INSERTED BY THE ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 


(6)  Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

 

(7)  Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

 

(8)  Set forth, to at least 9 decimals, as a percentage of the Commitment/Letter of Credit Exposure of all Lenders thereunder.

 

(9)  Insert if applicable.

 

(10)  To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

 

G- 2



 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

 

ASSIGNOR :

 

 

 

[NAME OF ASSIGNOR]

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

ASSIGNEE :

 

 

 

[NAME OF ASSIGNEE]

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

Consented to and Accepted:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION ,

 

as Administrative Agent, Fronting Bank and Swingline Lender

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

[Consented to:

 

 

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

](11)

 

 


(11)  To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.

 

G- 3



 

ANNEX 1 to Assignment and Assumption

 

Credit Agreement, dated as of February 8, 2018, by and among the Borrower, Sirius International Insurance Group, Ltd., Sirius International Holdings Ltd., the other subsidiaries of the Borrower party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent, L/C Agent and Fronting Bank.

 

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

 

1.                                       Representations and Warranties .

 

1.1                                Assignor .  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is not a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Credit Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Documents or any collateral thereunder, (iii) the financial condition of the Company, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Credit Document or (iv) the performance or observance by the Company, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Credit Document.

 

1.2.                             Assignee .  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 7.1 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Documents, and (ii) it will perform in accordance with their terms all of the obligations that by the terms of the Credit Documents are required to be performed by it as a Lender.

 

G- 4



 

2.                                       Payments .  From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts that have accrued to but excluding the Effective Date and to the Assignee for amounts that have accrued from and after the Effective Date.

 

3.                                       General Provisions .  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the laws of the State of New York.

 

G- 5



 

EXHIBIT H-1

 

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

 

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Credit Agreement dated as of February 8, 2018 (as amended, restated, extended or otherwise modified from time to time, the “ Credit Agreement ”), by and among Sirius International Insurance Group, Ltd. (the “ Parent ”), Sirius International Group, Ltd. (the “ Borrower ”), Sirius International Holdings Ltd., the other subsidiaries of the Borrower party thereto (the “ Account Parties ,” and together with the Parent and the Borrower, the “ Credit Parties ”), the lenders party thereto (the “ Lenders ”) and Wells Fargo Bank, National Association, as agent (the “ Agent ”).

 

Pursuant to the provisions of Section 4.11 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Commitment in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of any Credit Party within the meaning of Section 881(c)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Credit Parties as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Agent and the Credit Parties with a certificate of its non-U.S. Person status on IRS Form W-8BEN-E.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Credit Parties and the Agent, and (2) the undersigned shall have at all times furnished the Credit Parties and the Agent, to the extent it is legally able to do so, with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

 

[NAME OF LENDER]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Date:            , 20  

 

H-1- 1



 

EXHIBIT H-2

 

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

 

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Credit Agreement dated as of February 8, 2018 (as amended, restated, extended or otherwise modified from time to time, the “ Credit Agreement ”), by and among Sirius International Insurance Group, Ltd. (the “ Parent ”), Sirius International Group, Ltd. (the “ Borrower ”), Sirius International Holdings Ltd., the other subsidiaries of the Borrower party thereto (the “ Account Parties ,” and together with the Parent and the Borrower, the “ Credit Parties ”), the lenders party thereto (the “ Lenders ”) and Wells Fargo Bank, National Association, as agent (the “ Agent ”).

 

Pursuant to the provisions of Section 4.11 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of any Credit Party within the meaning of Section 881(c)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Credit Parties as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN-E.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

 

[NAME OF PARTICIPANT]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Date:            , 20  

 

H-2- 1



 

EXHIBIT H-3

 

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

 

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Credit Agreement dated as of February 8, 2018 (as amended, restated, extended or otherwise modified from time to time, the “ Credit Agreement ”), by and among Sirius International Insurance Group, Ltd. (the “ Parent ”), Sirius International Group, Ltd. (the “ Borrower ”), Sirius International Holdings Ltd., the other subsidiaries of the Borrower party thereto (the “ Account Parties ,” and together with the Parent and the Borrower, the “ Credit Parties ”), the lenders party thereto (the “ Lenders ”) and Wells Fargo Bank, National Association, as agent (the “ Agent ”).

 

Pursuant to the provisions of Section 4.11 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of any Credit Party within the meaning of Section 881(c)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Credit Parties as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption:  (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

 

[NAME OF PARTICIPANT]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Date:            , 20  

 

H-3- 1



 

EXHIBIT H-4

 

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

 

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Credit Agreement dated as of February 8, 2018 (as amended, restated, extended or otherwise modified from time to time, the “ Credit Agreement ”), by and among Sirius International Insurance Group, Ltd. (the “ Parent ”), Sirius International Group, Ltd. (the “ Borrower ”), Sirius International Holdings Ltd., the other subsidiaries of the Borrower party thereto (the “ Account Parties ,” and together with the Parent and the Borrower, the “ Credit Parties ”), the lenders party thereto (the “ Lenders ”) and Wells Fargo Bank, National Association, as agent (the “ Agent ”).

 

Pursuant to the provisions of Section 4.11 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Commitment in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Commitment, (iii) with respect to the extension of credit pursuant to the Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of any Credit Party within the meaning of Section 881(c)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Credit Parties as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Agent and the Account Party with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption:  (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption.  By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Credit Parties and the Agent, and (2) the undersigned shall have at all times furnished the Credit Parties and the Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

 

[NAME OF LENDER]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Date:            , 20  

 

H-4- 1


 

EXHIBIT I

 

FORM OF FRONTING AGREEMENT

 

                    , 20          

 

[Name of Fronting Lender]

[Address]

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement dated as of February 8, 2018 (as amended, restated, extended or otherwise modified from time to time, the “ Credit Agreement ”), by and among Sirius International Insurance Group, Ltd., Sirius International Holdings Ltd., Sirius International Group, Ltd. (the “ Borrower ”), the other subsidiaries of the Borrower party thereto, the lenders party thereto, and Wells Fargo Bank, National Association (“ Wells Fargo ”), as Administrative Agent for the Lenders, as L/C Agent and as the Fronting Bank.  Capitalized terms used but not otherwise defined herein have the same meaning as in the Credit Agreement.

 

The undersigned (the “ Non-NAIC Qualified Lender ”) is an Issuing Lender under the Credit Agreement in respect of Syndicated Letters of Credit but is not on the date hereof a bank listed on the “NAIC List of Qualified U.S. Financial Institutions” maintained by the securities valuation office of the NAIC as issuers of letters of credit for which reinsurance reserve credit can be given.  Accordingly, the Non-NAIC Qualified Lender hereby requests that you be a Non-NAIC Fronting Bank with respect to the Non-NAIC Qualified Lender for the purposes of the Credit Agreement and each Syndicated Letter of Credit that is issued thereunder.

 

The Non-NAIC Fronting Bank hereby undertakes that it will from time to time on any Business Day during the Availability Period issue the Non-NAIC Qualified Lender’s Commitment Percentage of any Syndicated Letter of Credit, and the Non-NAIC Qualified Lender hereby agrees to purchase participations in the obligations of the Non-NAIC Fronting Bank in such capacity in the amount of Non-NAIC Qualified Lender’s Commitment Percentage of each such Syndicated Letter of Credit on the terms and conditions set forth in the Credit Agreement which are incorporated by reference herein.  Notwithstanding the foregoing, the Non-NAIC Fronting Bank’s aggregate liability under all Syndicated Letters of Credit issued for the Non-NAIC Qualified Lender pursuant to this Agreement at any one time shall be limited to an amount equal to the Non-NAIC Qualified Lender’s Commitment under the Credit Agreement in effect on the date hereof (an amount equal to $       ), as such amount may be increased after the date hereof with your prior written consent.

 

In consideration of the foregoing, the Non-NAIC Qualified Lender agrees that if the Non-NAIC Fronting Bank makes any L/C Disbursement in respect of the Non-NAIC Qualified Lender’s Commitment Percentage of any Syndicated

 

Letter of Credit and the applicable Account Party fails to reimburse the Non-NAIC Fronting Bank for such L/C Disbursement as required by the Credit Agreement, the Non-NAIC Qualified Lender shall reimburse the Non-NAIC Fronting Bank pursuant to Section 3.2(d)  of the Credit Agreement by paying to the Non-NAIC Fronting Bank an amount equal to the amount of

 

I- 1



 

such L/C Disbursement made by the Non-NAIC Fronting Bank, such payment to be made not later than 2:00 p.m., Charlotte, North Carolina time, on (i) the Business Day that the Non-NAIC Qualified Lender receives notice of such L/C Disbursement, if such notice is received prior to 12:00 Noon, Charlotte, North Carolina time, or (ii) the Business Day immediately following the day that the Non-NAIC Qualified Lender receives such notice, if such notice is not received prior to such time.  The Non-NAIC Qualified Lender’s obligation to reimburse the Non-NAIC Fronting Bank as provided in the foregoing sentence shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this letter agreement under any and all circumstances whatsoever, and irrespective of any event or circumstance of the type described in Section 3.4 of the Credit Agreement (or of any analogous event or circumstance).  All payments made by the Non-NAIC Qualified Lender hereunder shall be made without setoff, counterclaim or other defense, in Dollars and in immediately available funds to the Administrative Agent, for the account of the Non-NAIC Fronting Bank.

 

If any L/C Disbursement is made by you, then, unless the Non-NAIC Qualified Lender shall reimburse the amount of such L/C Disbursement to you in full on the date such L/C Disbursement is made by you, the unpaid amount thereof shall bear interest, for each day from and including the date such L/C Disbursement is made to but excluding the date of reimbursement, at the rate per annum equal to (i) the Federal Funds Rate to but excluding the date three Business Days after such L/C Disbursement and (ii) from and including the date three Business Days after such L/C Disbursement, 2% plus the Federal Funds Rate.

 

As consideration for the agreement of the Non-NAIC Fronting Bank hereunder, the Non-NAIC Qualified Lender and the Borrower hereby authorizes the Administrative Agent to (i) prior to the distribution by the Administrative Agent of the Letter of Credit Fees otherwise payable to the Non-NAIC Qualified Lender pursuant to Section 3.9 of the Credit Agreement, deduct from such Letter of Credit Fees an amount equal to       (such amount, the “ Fronting Fee”), and (ii) pay such Fronting Fee (by deducting such Fronting Fee from the Letter of Credit Fees otherwise payable to the Non-NAIC Qualified Lender under the Credit Agreement) to the Non-NAIC Fronting Bank quarterly in arrears on the last Business Day of each calendar quarter until all Syndicated Letters of Credit of which the Non-NAIC Fronting Bank has fronted for the Non-NAIC Qualified Lender have been returned, canceled or terminated.  All payments made by the Non-NAIC Qualified Lender hereunder shall be made without setoff, counterclaim or other defense, in Dollars and in immediately available funds to the Administrative Agent, for the account of the Non-NAIC Fronting Bank.

 

This letter agreement shall be governed by and construed in accordance with the law of the State of New York.

 

[Signatures are on the next page.]

 

I- 2



 

Please indicate your acceptance of the foregoing terms and conditions by signing the three enclosed copies of this letter agreement and returning (a) one such signed copy to the Non-NAIC Qualified Lender at the address indicated below, (b) one such signed copy to the Administrative Agent at Wells Fargo Bank, National Association, 1525 West W.T. Harris Blvd., Mailcode D1109-019, Charlotte, North Carolina 28262, Attention:  Syndication Agency Services, Telephone:  (704) 590 2706, Facsimile:  (704) 590 2790, and (c) one such signed copy to the Borrower.

 

[NAME OF NON-NAIC QUALIFIED LENDER]

 

 

 

By

 

 

Name:

 

Title:

 

Address:

 

 

 

 

 

AGREED AS AFORESAID:

 

[NAME OF NON-NAIC FRONTING LENDER]

 

 

 

By

 

 

Name:

 

Title:

 

 

I- 3




Exhibit 10.16

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

This FIRST AMENDMENT TO CREDIT AGREEMENT (this “ Amendment ”), dated as of July 30, 2018, is entered into by and among SIRIUS INTERNATIONAL INSURANCE GROUP, LTD., an exempted company organized under the laws of Bermuda (the “ Parent ”), SIRIUS INTERNATIONAL HOLDINGS LTD., an exempted company organized under the laws of Bermuda, SIRIUS INTERNATIONAL GROUP, LTD., an exempted company organized under the laws of Bermuda (the “ Borrower ”), SIRIUS BERMUDA INSURANCE COMPANY LTD., a company organized under the laws of Bermuda, SIRIUS INTERNATIONAL INSURANCE CORP., a company organized under the laws of Sweden, SIRIUS AMERICA INSURANCE COMPANY, a New York corporation, SIRIUS RE HOLDINGS, INC., a Delaware corporation, the Lenders (as hereinafter defined) party hereto, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent.

 

RECITALS

 

A.                                     The Borrower, the other affiliates of the Borrower party thereto (collectively, the “ Credit Parties ”), the several lenders from time to time party thereto (the “ Lenders ”), and the Administrative Agent are party to the Credit Agreement, dated as of February 8, 2018 (the “ Credit Agreement ”).  Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement as amended by this Amendment.

 

B.                                     The Borrower has requested that the Lenders amend the Credit Agreement and the Lenders are willing to consent to such amendments to the Credit Agreement on the terms and subject to conditions set forth herein.

 

STATEMENT OF AGREEMENT

 

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

 

ARTICLE I

 

AMENDMENTS TO CREDIT AGREEMENT

 

Effective upon the First Amendment Effective Date (as hereinafter defined), the Credit Agreement is hereby amended as follows:

 

(a)                                  The following definitions are hereby inserted in Section 1.1 of the Credit Agreement in proper alphabetical order:

 

Beneficial Ownership Certification ” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

 

Beneficial Ownership Regulation ” means 31 C.F.R. § 1010.230.

 



 

Easterly Merger ” means the transactions contemplated by that certain Agreement and Plan of Merger, dated as of June 23, 2018, as amended, restated, modified or waived from time to time, by and among the Parent, Easterly Acquisition Corp., a Delaware corporation, and Sirius Acquisitions Holding Company III, a wholly owned subsidiary of the Parent, together with any related transactions, including any restructuring or reorganization of the Credit Parties and their Restricted Subsidiaries in connection therewith or for purposes of effecting the foregoing that is not materially disadvantageous to the Lenders, as determined in the reasonable discretion of the Administrative Agent.

 

First Amendment ” means that certain First Amendment to Credit Agreement, dated as of July 30, 2018, among the Credit Parties, the Administrative Agent and the Lenders party thereto.

 

First Amendment Effective Date ” means July 30, 2018.

 

SEC ” means the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.

 

(b)                                  The following definitions in Section 1.1 of the Credit Agreement are hereby amended and restated in their entirety as follows:

 

IPO ” means (a) an initial public offering of Equity Interests by the Borrower or any direct or indirect parent of the Borrower, including the Parent, registered with the Securities Exchange Commission under the Securities Act of 1933 or (b) the Easterly Merger or any other acquisition, purchase, merger or combination of the Borrower or any direct or indirect parent of the Borrower, including the Parent, by, or with, a publicly traded special acquisition company or targeted acquisition company or any entity similar to the foregoing or any subsidiary thereof that results in the Equity Interests of the Borrower or any direct or indirect parent of the Borrower, including the Parent (or, in each case, its successor by merger or combination), being traded on a United States national securities exchange.

 

IPO Entity ” means the publicly traded company resulting from any IPO.

 

(c)                                   Section 6.19 of the Credit Agreement is hereby amended by inserting the following new sentence at the end of such Section:

 

As of the First Amendment Effective Date, all of the information included in the Beneficial Ownership Certification is true and correct in all material respects.

 

(d)                                  Section 7.1(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

(a)                                  Annual Financial Statements of the Parent .  Within 120 days (or, with respect to the first fiscal year with respect to which an Accounting Principles Election is made, within 150 days) (or, if earlier, the date that is five Business Days following the date of any required public filing thereof) after the end of each Fiscal Year (commencing with the Fiscal Year ended December 31, 2017), an audited consolidated balance sheet of the

 

2



 

Parent and its Subsidiaries as of the close of such Fiscal Year and audited consolidated statements of income, retained earnings and cash flows including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the preceding Fiscal Year and prepared in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the year.  Such annual financial statements shall be audited by an independent certified public accounting firm of recognized national standing acceptable to the Administrative Agent, and accompanied by a report and opinion thereon by such certified public accountants prepared in accordance with generally accepted auditing standards that is not subject to any “going concern” or similar qualification or exception or any qualification as to the scope of such audit or with respect to accounting principles followed by the Parent or any of its Subsidiaries not in accordance with GAAP (provided that delivery within the time periods specified above of copies of the Annual Report on Form 10-K of the IPO Entity filed with the SEC shall be deemed to satisfy the requirements of this Section 7.1(a)).

 

(e)                                   Section 7.1(c) of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

(c)                                   Quarterly Financial Statements of the Parent .  Within 60 days (or, with respect to the first three fiscal quarters for which financial statements are required hereunder with respect to which an Accounting Principles Election is made, within 75 days) (or, if earlier, the date that is five Business Days following the date of any required public filing thereof) after the end of the first three fiscal quarters of each Fiscal Year (commencing with the fiscal quarter ended March 31, 2018), an unaudited consolidated balance sheet of the Parent and its Subsidiaries as of the close of such fiscal quarter and unaudited consolidated statements of income, retained earnings and cash flows for the fiscal quarter then ended and that portion of the Fiscal Year then ended, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the corresponding period in the preceding Fiscal Year and prepared by the Parent in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the period, and certified by the chief financial officer of the Parent to present fairly in all material respects the financial condition of the Parent and its Subsidiaries on a consolidated basis as of their respective dates and the results of operations of the Parent and its Subsidiaries for the respective periods then ended, subject to normal year-end adjustments and the absence of footnotes (provided that delivery within the time periods specified above of copies of the Quarterly Report on Form 10-Q of the IPO Entity filed with the SEC shall be deemed to satisfy the requirements of this Section 7.1(c)).

 

(f)                                    Section 7.1(d) of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

(d)                                  Quarterly Financial Statements of the Borrower .  Within 60 days (or, with respect to the first three fiscal quarters for which financial statements are required hereunder with respect to which an Accounting Principles Election is made, within 75 days) (or, if earlier, the date that is five Business Days following the date of any required

 

3



 

public filing thereof) after the end of the first three fiscal quarters of each Fiscal Year (commencing with the fiscal quarter ended March 31, 2018), an unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of the close of such fiscal quarter and unaudited consolidated statements of income, retained earnings and cash flows for the fiscal quarter then ended and that portion of the Fiscal Year then ended, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the corresponding period in the preceding Fiscal Year and prepared by the Borrower in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the period, and certified by the chief financial officer of the Borrower to present fairly in all material respects the financial condition of the Borrower and its Subsidiaries on a consolidated basis as of their respective dates and the results of operations of the Borrower and its Subsidiaries for the respective periods then ended, subject to normal year-end adjustments and the absence of footnotes.

 

(g)                                   Section 7.13 of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

SECTION 7.13   Compliance with Anti-Corruption Laws; Anti-Money Laundering Laws and Sanctions .  The Credit Parties will (a) maintain in effect and enforce policies and procedures designed to ensure compliance by the Credit Parties, their Subsidiaries and their respective directors, officers, employees and agents with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws, and Sanctions and (b) promptly upon the reasonable request of the Administrative Agent or any Lender, provide the Administrative Agent or such Lender, as the case may be, any information or documentation reasonably requested by it for purposes of complying with the Beneficial Ownership Regulation, including any change in the information provided in the Beneficial Ownership Certification.

 

(h)                                  Section 8.1 of the Credit Agreement is hereby amended by (i) deleting the word “and” from the end of clause (l) therein; (ii) redesignating clause (m) therein as clause (n); and (iii) inserting the following as a new clause (m) therein:

 

(m)                              Indebtedness in the form of Investments permitted pursuant to Section 8.3 ; and

 

(i)                                      Section 8.3(l) of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

(l)                                      Investments in the form of, or constituting intercompany loans in lieu of, Restricted Payments permitted pursuant to Section 8.6 .

 

(j)                                     Section 8.4 of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

SECTION 8.4   Fundamental Changes .  Except to effect the Easterly Merger or any merger, amalgamation, consolidation or similar combination constituting an Asset Disposition permitted by Section 8.5, merge, amalgamate consolidate or enter into any similar combination (whether in a single transaction or a series of transactions) with, any other

 

4



 

Person or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), except that (a) any Credit Party or any Restricted Subsidiary may merge into or consolidate with any other Person so long as (i) the surviving entity is a Credit Party or a Restricted Subsidiary of a Credit Party (and in any event, if a Credit Party is a party to such merger, amalgamation or consolidation, the surviving entity shall be such Credit Party, it being understood and agreed that in the case of a merger, amalgamation or consolidation between the Borrower and any other Credit Party, the survivor entity of such merger, amalgamation or consolidation shall be the Borrower), and (ii) immediately before and after giving effect thereto, no Event of Default would occur or exist and (b) any Restricted Subsidiary may liquidate, wind up or dissolve if (i) such Subsidiary owns no more than a nominal amount of assets, has no more than a nominal amount of liabilities and does not actively conduct, transact or otherwise engage in any business or operations or (ii) such liquidation, winding up or dissolution is not materially disadvantageous to the Lenders, as determined in the reasonable discretion of the Lenders.

 

(k)                                  Section 8.6 of the Credit Agreement is hereby amended by (i) deleting the word “and” from the end of clause (b) therein; (ii) redesignating clause (c) therein as clause (d); and (iii) inserting the following as a new clause (c) therein:

 

(c)                                   so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the Parent may declare and pay any Restricted Payment; and

 

ARTICLE II

 

CONDITIONS OF EFFECTIVENESS

 

2.1                             The amendments set forth in ARTICLE I shall become effective as of the date (the “ First Amendment Effective Date ”) when, and only when, each of the following conditions precedent shall have been satisfied:

 

(a)                                  The Administrative Agent shall have received an executed counterpart of this Amendment from each of the Credit Parties and Lenders constituting the Required Lenders.

 

(b)                                  Each Credit Party or Subsidiary thereof that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall have delivered to the Administrative Agent, and any Lender requesting the same, a Beneficial Ownership Certification in relation to such Credit Party or such Subsidiary, in each case at least five (5) Business Days prior to the First Amendment Effective Date.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Each of the Credit Parties hereby represents and warrants, on and as of the First Amendment Effective Date, that (i) the representations and warranties contained in the Credit Agreement and the other Loan Documents qualified as to materiality are true and correct in all respects and those not so qualified are true and correct in all material respects, both immediately before and after giving effect to this Amendment (except to the extent any such representation or

 

5



 

warranty is expressly stated to have been made as of a specific date, in which case such representation or warranty is true and correct in all respects (if qualified as to materiality) or true and correct in all material respects (if not so qualified), in each case only on and as of such specific date), (ii) this Amendment has been duly authorized, executed and delivered by such Person and constitutes the legal, valid and binding obligation of such Person enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally, by general equitable principles or by principles of good faith and fair dealing (regardless of whether enforcement is sought in equity or at law) (iii) such Credit Party has the right, power and authority and has taken all necessary corporate and other action to authorize the execution, delivery and performance by such Person of this Amendment, (iv) the execution, delivery and performance of this Amendment and the transactions contemplated hereby do not and will not, by the passage of time, the giving of notice or otherwise, (a) require any Governmental Approval or violate any Applicable Law relating to such Credit Party where the failure to obtain such Governmental Approval or such violation would reasonably be expected to have a Material Adverse Effect, (b) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws or other organizational documents of such Credit Party, (c) conflict with, result in a breach of or constitute a default under any indenture, agreement or other instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person, which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (d) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by such Person other than Permitted Liens or (e) require any consent or authorization of, filing with, or other act in respect of, an arbitrator or Governmental Authority and no consent of any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement other than consents, authorizations, filings or other acts or consents for which the failure to obtain or make would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and (v) no Default or Event of Default shall have occurred and be continuing on the First Amendment Effective Date, both immediately before and immediately after giving effect to this Amendment and the amendments contemplated hereby.

 

ARTICLE IV

 

ACKNOWLEDGEMENT AND CONFIRMATION

 

Each Credit Party hereby ratifies the Credit Agreement as amended by this Amendment and acknowledges and reaffirms (a) that it is bound by all terms of the Credit Agreement and Loan Documents applicable to it and (b) that it is responsible for the observance and full performance of its respective Obligations.

 

ARTICLE V

 

MISCELLANEOUS

 

5.1                             Governing Law .  This Amendment and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this

 

6



 

Amendment and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York.

 

5.2                             Loan Document .  As used in the Credit Agreement, “hereinafter,” “hereto,” “hereof,” and words of similar import shall, unless the context otherwise requires, mean the Credit Agreement after amendment by this Amendment.  Any reference to the Credit Agreement or any of the other Loan Documents herein or in any such documents shall refer to the Credit Agreement and the other Loan Documents as amended hereby.  This Amendment is limited to the matters expressly set forth herein, and shall not constitute or be deemed to constitute an amendment, modification or waiver of any provision of the Credit Agreement except as expressly set forth herein.  Except to the extent expressly set forth herein, all of the terms and conditions of the Credit Agreement and the other Loan Documents remain unchanged and shall continue in full force and effect.  This Amendment shall constitute a Loan Document under the terms of the Credit Agreement.

 

5.3                             Expenses .  The Borrower shall pay all reasonable and documented out-of-pocket fees and expenses of counsel to the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Amendment.

 

5.4                             Severability .  To the extent any provision of this Amendment is prohibited by or invalid under the applicable law of any jurisdiction, such provision shall be ineffective only to the extent of such prohibition or invalidity and only in any such jurisdiction, without prohibiting or invalidating such provision in any other jurisdiction or the remaining provisions of this Amendment in any jurisdiction.

 

5.5                             Successors and Assigns .  This Amendment shall be binding upon, inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties hereto.

 

5.6                             Construction .  The headings of the various sections and subsections of this Amendment have been inserted for convenience only and shall not in any way affect the meaning or construction of any of the provisions hereof.

 

5.7                             Counterparts; Integration .  This Amendment may be executed and delivered via facsimile or electronic mail with the same force and effect as if an original were executed and may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures hereto were upon the same instrument.  This Amendment constitutes the entire contract among the parties hereto with respect to the subject matter hereof and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

7


 

IN WITNESS WHEREOF , the parties hereto have caused this Amendment to be executed by their duly authorized officers as of the date first above written.

 

 

SIRIUS INTERNATIONAL GROUP, LTD.

 

 

 

By:

/s/ Allan Waters

 

Name:

Allan Waters

 

Title:

Chairman & CEO

 

 

 

 

 

SIRIUS BERMUDA INSURANCE COMPANY LTD.

 

 

 

By:

/s/ Monica M. Cramér Manhem

 

Name:

Monica M. Cramér Manhem

 

Title:

Director

 

 

 

 

 

SIRIUS INTERNATIONAL INSURANCE GROUP LTD.

 

 

 

 

 

By:

/s/ Allan Waters

 

Name:

Allan Waters

 

Title:

Chairman & CEO

 

 

 

 

 

SIRIUS INTERNATIONAL HOLDINGS LTD.

 

 

 

 

 

By:

/s/ Allan Waters

 

Name:

Allan Waters

 

Title:

Chairman & CEO

 

 

 

 

 

SIRIUS INTERNATIONAL INSURANCE CORP.

 

 

 

 

 

By:

/s/ Lars Andersson

 

Name:

Lars Andersson

 

Title:

CFO

 

 

 

 

 

SIRIUS AMERICA INSURANCE COMPANY

 

 

 

 

 

By:

/s/ Robert P. Kuehn

 

Name:

Robert P. Kuehn

 

Title:

SVP & General Cousnel

 

SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT

 



 

 

SIRIUS RE HOLDINGS INC.

 

 

 

 

 

 

By:

/s/ Robert P. Kuehn

 

Name:

Robert P. Kuehn

 

Title:

SVP

 

SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT

 



 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, L/C Agent, Fronting Bank, Issuing Lender and Lender

 

 

 

 

 

By:

/s/ William R. Goley

 

Name:

William R. Goley

 

Title:

Managing Director

 

SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT

 



 

 

JPMORGAN CHASE BANK, N.A., as a Lender

 

 

 

 

 

By:

/s/ James Mintzer

 

Name:

James Mintzer

 

Title:

Executive Director

 

SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT

 



 

 

BMO HARRIS BANK N.A., as a Lender

 

 

 

 

 

By:

/s/ Benjamin Mlot

 

Name:

Benjamin Mlot

 

Title:

Vice President

 

SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT

 



 

 

DNB SWEDEN AB, as a Lender

 

 

 

 

 

By:

/s/ Lars Kvarnholg

 

Name:

Lars Kvarnholg

 

Title:

Legal Counsel

 

 

 

 

 

By:

/s/ Johan Sjogren

 

Name:

Johan Sjogren

 

Title:

SVP

 

 

SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT

 



 

 

HSBC BANK USA, National Association, as a Lender

 

 

 

 

 

By:

/s/ Richard Herder

 

Name:

Richard Herder

 

Title:

Managing Director, Financial Institutions Group

 

SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT

 



 

 

LLOYDS BANK, plc, as a Lender

 

 

 

 

 

By:

/s/ Tina Wong

 

Name:

Tina Wong

 

Title:

Assistant Manager

 

 

 

 

 

By:

/s/ Jennifer Larrow

 

Name:

Jennifer Larrow

 

Title:

Assistant Manager

 

SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT

 



 

 

BARCLAYS BANK PLC, as a Lender

 

 

 

 

 

Executed in New York

 

 

 

By:

/s/ Nathalie Maolis

 

Name:

Nathalie Maolis

 

Title:

Director, Insurance, Corporate Bank

 

SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT

 



 

 

CITIBANK, NA., as a Lender

 

 

 

 

 

By:

/s/ John Modin

 

Name:

John Modin

 

Title:

Vice President and Managing Director

 

SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT

 




Exhibit 23.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the use in this Amendment No. 1 to the Registration Statement on Form S-4 (No. 333-226620) of Sirius International Insurance Group, Ltd. of our report dated August 6, 2018 relating to the consolidated financial statements and financial statement schedules of Sirius International Insurance Group, Ltd., which appears in this Registration Statement.  We also consent to the reference to us under the heading “Experts” in such Registration Statement.

 

/s/ PricewaterhouseCoopers LLP

 

New York, New York

September 10, 2018

 




Exhibit 23.2

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT

 

We consent to the inclusion in this Registration Statement of Sirius International Insurance Group, Ltd. on Amendment No. 1 to Form S-1, File No. 333-226620, of our report dated March 16, 2018, which includes an explanatory paragraph as to Easterly Acquisition Corp.’s ability to continue as a going concern, with respect to our audits of the financial statements of Easterly Acquisition Corp. as of December 31, 2017 and 2016 and for the years then ended and for the period from April 29, 2015 (inception) through December 31, 2015, which report appears in the Prospectus, which is part of this Registration Statement. We also consent to the reference to our Firm under the heading “Experts” in such Prospectus.

 

/s/ Marcum LLP

 

Marcum LLP

New York, NY

September 10, 2018