Exhibit 10.4

 

INVESTMENT ADVISORY AGREEMENT

 

This investment advisory agreement (this “Agreement”) is made and entered into
effective as of December 2, 2019, by and between Fundamental Global Advisors
LLC, a Delaware limited liability company (the “Advisor”) and FedNat Holding
Company, a Florida corporation (the “Client”).

 

Preliminary Statements

 

A. The Advisor wishes to provide non-discretionary investment advisory services
to the Client.

 

B. The Advisor and the Client wish to enter into this Agreement in order to set
forth the terms by which the Advisor would perform the investment advisory
services for the Client.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto hereby agree as follows:

 

1. Non-Discretionary Investment Advisory Services; Fees.

 

(a) The Advisor will provide the Client with non-discretionary investment
advisory services (the “Investment Advisory Services”), including without
limitation: identifying, analyzing and recommending potential investments,
advising as to existing investments and investment optimization, recommending
investment dispositions, and advising as to the Advisor’s views and outlook on
macro-economic conditions. The Client hereby engages the Advisor as investment
adviser to the Client to provide non-discretionary investment advice with
respect to Client investments and potential investments. The Advisor hereby
accepts such appointment. Advisor will have no authority to withdraw or transfer
assets from Client’s accounts. The Advisor may engage and assign all or a
portion of the Investment Advisory Services to a sub-advisor so long as such
sub-advisor is a registered investment adviser.

 

(b) Advisor will conduct periodic portfolio reviews with Client. Advisor will
generally be available to discuss Client’s account during normal business hours.
Advisor will attempt to meet with Client at least annually to discuss Client’s
investment needs, goals and objectives and review Client’s account performance
and the continued suitability of investments recommended by Advisor for Client.

 

(c) The Advisor will for all purposes of this Agreement be an independent
contractor and not an agent or employee of the Client.

 

(d) In consideration of the Investment Advisory Services provided to the Client
hereunder, the Client will pay the Advisor an annual management fee of $100,000,
paid quarterly in advance (the “Management Fee”). The quarterly installment of
the Management Fee will be due no later than five business days after the
beginning of each calendar quarter, commencing with the calendar quarter
beginning January 1, 2020 (which first payment shall include a pro-rated portion
of the Management Fee attributable to the period commencing on the date of this
Agreement and ending on (and including) December 31, 2019).

 

 

 

 

2. Expenses. The Client will be responsible for the fees and expenses of
administrators, auditors and other service providers of the Client. The Advisor
will be responsible for its own expenses in connection with the provision of the
Investment Advisory Services.

 

3. Representations and Warranties; Covenants.

 

(a) The Client represents and warrants to the Advisor and agrees as follows: (i)
this Agreement has been duly and validly authorized by the Client and executed
and delivered by the Client in accordance with the applicable provisions of its
governing documents (the “Governing Provisions”) and constitutes a valid and
binding agreement of the Client enforceable in accordance with its terms; (ii)
its entering into this Agreement will not breach or cause to be breached any of
the Governing Provisions or any other undertaking, agreement, contract, statute,
rule or regulation to which the Client is a party or by which it is bound; and
(iii) it is duly incorporated and validly existing and in good standing under
the laws of the State of Florida and it has the full power and authority under
the Governing Provisions to enter into, and perform its obligations under, this
Agreement.

 

(b) The Advisor represents and warrants to the Client and agrees as follows: (i)
this Agreement has been duly and validly authorized, executed and delivered by
the Advisor in accordance with its Governing Provisions and constitutes a valid
and binding agreement of the Advisor enforceable in accordance with its terms;
(ii) its entering into this Agreement will not breach or cause to be breached
any undertaking, agreement, contract, statute, rule or regulation to which the
Advisor is a party or by which it is bound; (iii) it is duly organized and
validly existing and in good standing under the laws of the State of Delaware;
and (iv) it is and shall remain in compliance in all respects with the Governing
Provisions and all laws, rules, regulations and orders of any governmental
agency or self-regulatory organization applicable to the Advisor and/or this
Agreement.

 

(c) The Client further acknowledges that all advice given by the Advisor is the
confidential property of the Advisor, and the Client will not make use of such
advice in any manner or disclose the same to third parties, other than to
Client’s other investment managers who would be involved in the evaluation and
execution of any such advice, without the prior written consent of the Advisor.
Nothing contained in this Agreement will require the Advisor to disclose the
details of any of its investment programs, formulae or strategies, except as
required by applicable law.

 

(d) The Client acknowledges that Advisor’s past performance and advice regarding
Client’s accounts cannot guarantee future results. As with all market
investments, Client investments can appreciate or depreciate and Advisor does
not guarantee or warrant that the services it offers will result in a profit or
perform in any particular way. Client also understands that there are no
guarantees that its investment goals or objectives will be met or that any
investment recommendations by the Advisor will be successful in achieving
Client’s short or long-term objectives or perform within any target risk
limitations.

 

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(e) The Client expressly understands and agrees that Advisor is not qualified
to, and does not purport to provide, any legal, accounting, estate, actuary, or
tax advice or to prepare any legal, accounting or tax documents. Nothing in this
Agreement is to be construed as providing for such services. Client will rely on
its own tax attorney or accountant for tax advice or tax preparation.

 

4. Termination.

 

(a) The term of this Agreement will commence as of the date of this Agreement
and continue in effect for a period of five years unless terminated earlier as
provided in this Section 4.

 

(b) The Advisor may terminate this Agreement at any time upon reasonable prior
written notice to the Client. Client may terminate this Agreement only in the
following circumstances:

 

(i) if the Advisor commits any breach of its obligations under this Agreement
and fails, within (10) ten business days of receipt of notice served by the
Client requiring it so to do, to make good such breach;

 

(ii) at any time by giving notice in writing to the Advisor if the Advisor goes
into liquidation (except a voluntary liquidation for the purpose of
reconstruction or amalgamation upon terms previously approved in writing by the
parties) or if a receiver is appointed of any of the assets of the Advisor or if
the Advisor makes or proposes any arrangement or composition with its creditors
or class of creditors;

 

(iii) if the Advisor is found in a legal proceeding to have violated any
antifraud or anti-manipulative provisions of laws relating to the financial
services industry or of any other criminal statute involving intentional fraud,
misappropriation, misrepresentation, or embezzlement; or

 

(iv) if the Adviser is subject to censure or disqualification of under the
Investment Advisers Act of 1940, or the Securities Act of 1933, each as amended,
or if the Advisor is no longer the holder of all licenses, permissions,
authorizations and consents required to enable it to perform its duties pursuant
to this Agreement.

 

(b) Upon termination of this Agreement, the Advisor must repay to the Client the
unearned portion (computed on the basis of the number of days elapsed), if any,
of any Management Fees previously paid to the Advisor.

 

5. Miscellaneous.

 

(a) Entire Agreement. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes any prior
agreements or understandings.

 

(b) Amendment; Waiver. Any term of this Agreement may be amended or waived only
by an instrument in writing and signed by both the Advisor and the Client. A
waiver of any breach or failure to enforce any term or provision of this
Agreement will not in any way affect, limit or waive a party’s rights hereunder
at any time to enforce strict compliance thereafter with every term or provision
of this Agreement.

 

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(c) Successors and Assigns. Neither party may assign its rights or obligations
under this Agreement without the prior written consent of the other party;
provided, that consent of the Client will not be required for the Advisor to
engage sub-advisors to provide the Investment Advisory Services as provided in
Section 1(a). This Agreement is binding upon and will inure to the benefit of
the Advisor and the Client and their respective successors and permitted
assigns.

 

(d) Governing Law. This Agreement is governed by, and is to be construed and
enforced in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.

 

(e) Notices. All notices, demands and other communications hereunder must be in
writing (including facsimile and email) and must be given:

 

  If to the Advisor:

 

D. Kyle Cerminara

Fundamental Global Investors, LLC

4201 Congress Street, Suite 140

Charlotte, North Carolina 28209

E-Mail: kyle@fundamentalglobal.com

 

with a copy (which shall not constitute notice) to:

 

Eliot D. Raffkind

Akin Gump Strauss Hauer & Feld LLP

2300 N. Field Street

Suite 1800

Dallas, TX 75201

E-Mail: eraffkind@akingump.com

 

  If to the Client:

 

FedNat Holding Company

14050 NW 14th Street, Suite 180

Sunrise, FL 33323

Attention: Michael H. Braun, CEO and President

E-Mail: mbraun@fednat.com

 

with a copy (which shall not constitute notice) to:

 

Nelson Mullins Broad and Cassel

2 S. Biscayne Blvd., # 2100

Miami, FL 33131

Attention: Nina Gordon, Esq.

E-Mail: nina.gordon@nelsonmullins.com

 

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or to such other address, facsimile number or email address and with such other
copies as such party may hereafter specify for the purpose of notice to the
other party. Each such notice, request, demand or other communication will be
effective (i) if given by facsimile, when such facsimile is transmitted to the
facsimile number specified in this section and evidence of receipt is received,
(ii) if sent by email, on receipt by the sender of a “read receipt” in respect
of the relevant message or (iii) if given by any other means, upon delivery or
refusal of delivery at the address specified in this section

 

(f) Severability. If any provision or clause of this Agreement is found to be
invalid or unenforceable under any applicable law, this Agreement will be
considered severable and divisible, and a reviewing body shall have the
authority to amend or “blue pencil” the Agreement so as to make it fully valid
and enforceable.

 

(g) Captions. The headings and captions used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.

 

(h) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

[Signature page follows]

 

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This Agreement has been executed and delivered by the parties hereto as of the
date first written above.

 

  FedNat Holding Company, a Florida corporation         By: /s/ Michael Braun  
Name: Michael Braun   Title: Chief Executive Officer         Fundamental Global
Advisors LLC, a Delaware limited liability company         By: FGI Funds
Management, LLC   Its: Manager         By: /s/ D. Kyle Cerminara   Name:  D.
Kyle Cerminara   Title: Manager

 

[End of Agreement.]

 

Signature Page to Investment Advisory Agreement