Exhibit 10.1

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (the “Agreement”) is made and entered into as
of December 2, 2019 by and between FedNat Holding Company, a Florida corporation
(the “Company”), and 1347 Property Insurance Holdings, Inc., a Delaware
corporation (“Parent”).

 

This Agreement is made pursuant to the Equity Purchase Agreement dated as of
February 25, 2019 by and between the Company, Parent, Maison Managers, Inc., a
Delaware corporation, Maison Insurance Company, a Louisiana corporation, and
ClaimCor, LLC, a Florida limited liability company (the “Purchase Agreement”).

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and Parent agree as
follows:

 

1. Definitions. Capitalized terms used and not otherwise defined herein that are
defined in the Purchase Agreement shall have the meanings given such terms in
the Purchase Agreement. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the following meanings:

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 405 under the Securities Act.

 

“Business Day” means a day other than a Saturday or Sunday or other day on which
banks located in New York City are authorized or required by law to close.

 

“Closing Date” has the meaning set forth in the Purchase Agreement.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.01 per share,
and any securities into which such shares of voting common stock may hereinafter
be reclassified.

 

“Effective Date” means the date that the Registration Statement filed pursuant
to Section 2 is first declared effective by the Commission.

 

“Effectiveness Deadline” means, with respect to a Registration Statement, the
earlier of: (i) the seventy-fifth (75th) day following the Closing Date or (ii)
the second (2nd) Trading Day after the date the Company is notified (orally or
in writing, whichever is earlier) by the Commission that such Registration
Statement will not be “reviewed” or will not be subject to further review;
provided, that if the Effectiveness Deadline falls on a Saturday, Sunday or
other day that the Commission is closed for business, the Effectiveness Deadline
shall be extended to the next Business Day on which the Commission is open for
business.

 

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

 

“Principal Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

“Registrable Securities” means all of the Shares and any securities issued or
issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the Shares, provided that Shares shall cease to
be Registrable Securities upon the earliest to occur of the following: (A) a
sale pursuant to a Registration Statement or Rule 144 under the Securities Act
(in which case, only such security sold shall cease to be a Registrable
Security); (B) becoming eligible for sale without time, volume or manner of sale
restrictions by Parent under Rule 144 and without current public information
pursuant to Rule 144(c)(1); (C) if such Shares have ceased to be outstanding;
and (D) the date a Registration Statement becomes effective including such
Shares and all such Shares have been disposed by Parent in accordance with such
effective Registration Statement. For the avoidance of doubt, the fact that the
Registrable Securities may at times cease to be Registrable Securities does not
prevent them from again becoming Registrable Securities in the future.

 

“Registration Statements” means any one or more registration statements of the
Company required to be filed pursuant to this Agreement under the Securities Act
that covers the resale of any of the Registrable Securities pursuant to the
provisions of this Agreement, amendments and supplements to such Registration
Statements, including post-effective amendments, all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
Registration Statements.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any successor
rule thereto.

 

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“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any successor
rule thereto.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any successor
rule thereto.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Shares” means the shares of Common Stock issued to the Parent pursuant to the
Purchase Agreement.

 

“Trading Day” means a day on which the Common Stock is listed or quoted and
traded on its Principal Market.

 

“Trading Market” means whichever of the New York Stock Exchange, the NYSE MKT,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market or OTC Bulletin Board on which the Common Stock is listed or quoted for
trading on the date in question.

 

2. Registration Request. The Company shall file with the Commission as soon as
reasonably practicable after the Closing Date, but in any event no later than
fifteen (15) Business Days after the Closing Date, a Registration Statement
covering the resale of all Registrable Securities for an offering to be made on
a continuous basis pursuant to Rule 415. Each Registration Statement filed
hereunder shall be on Form S-3 (except if the Company is not then eligible to
register for resale the Registrable Securities on Form S-3, in which case such
registration shall be on Form S-1 or on another appropriate form in accordance
herewith and the Company shall undertake to register the Registrable Securities
on Form S-3 as soon as such form is available; provided, that the Company shall
use its best efforts to maintain the effectiveness of the Registration Statement
then in effect until such time as a Registration Statement on Form S-3 covering
the Registrable Securities has been declared effective by the Commission). The
Company shall use its best efforts to cause each Registration Statement to be
declared effective by the Commission as soon as practicable following the filing
thereof, but in any event no later than the Effectiveness Deadline, and shall
use its best efforts to keep each Registration Statement continuously effective
under the Securities Act until the earlier of (i) such time as all of the
Registrable Securities covered by such Registration Statement have been publicly
sold by Parent or (ii) the date that all Registrable Securities covered by such
Registration Statement may be sold by Parent (A) without volume or manner of
sale restrictions under Rule 144 and (B) without the requirement for the Company
to be in compliance with the current public information requirement under Rule
144(c)(1) (such period of time, the “Effectiveness Period”). The Company shall
request effectiveness of any such Registration Statement as of 5:00 p.m., New
York City time, on a Trading Day. The Company shall promptly notify Parent via
facsimile or electronic mail of a “.pdf” format data file of the effectiveness
of a Registration Statement on the same Trading Day that the Company confirms
effectiveness with the Commission, which shall be the date requested for
effectiveness of such Registration Statement. The Company shall, by 9:30 a.m.,
New York City time, on the Trading Day after the effective date of such
Registration Statement, file a final Prospectus for a Registration Statement
with the Commission, as required by Rule 424(b).

 

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3. Piggyback Registration.

 

(a) Without prejudice to the rights of Parent under Section 4(o), if at any time
when any Registrable Securities are outstanding, there is not an effective
Registration Statement covering all of the Registrable Securities and the
Company intends to file a Registration Statement covering a primary or secondary
offering of any of its equity securities, whether or not the sale for its own
account, which is not a registration solely to implement an employee benefit
plan pursuant to a registration statement on Form S-8 (or successor form), a
registration statement on Form S-4 (or successor form) or a transaction to which
Rule 145 or any other similar rule of the Commission is applicable, the Company
will promptly (and in any event at least fifteen (15) Business Days before the
anticipated filing date) give written notice to Parent of its intention to
effect such a registration (which notice shall state the intended method of
disposition of such Registrable Securities, the number of securities proposed to
be registered, the proposed managing underwriter(s) (if any, and if known) and a
good faith estimate by the Company of the proposed minimum offering price of
such equity securities). The Company will effect the registration under the
Securities Act of all Registrable Securities that Parent requests be included in
such registration (a “Piggyback Registration”) by a written notice delivered to
the Company within five (5) Business Days after the notice given by the Company
in the preceding sentence. Subject to Section 3(b), securities requested to be
included in a Company registration pursuant to this Section 3 shall be included
by the Company on the same form of Registration Statement as has been selected
by the Company for the securities the Company is registering for sale referred
to above. Parent shall be permitted to withdraw all or part of the Registrable
Securities from the Piggyback Registration at any time at least five (5)
Business Days prior to the effective date of the Registration Statement relating
to such Piggyback Registration. If the Company elects to terminate any
registration filed under this Section 3 prior to the effectiveness of such
registration, the Company will have no obligation to register the securities
sought to be included by Parent in such registration under this Section 3. There
shall be no limit to the number of Piggyback Registrations pursuant to this
Section 3(a).

 

(b) If a Registration Statement under this Section 3 relates to an underwritten
offering and the managing underwriter(s) advise(s) the Company that in its or
their reasonable opinion the number of securities requested to be included in
such offering exceeds the number that can be sold without adversely affecting
the marketability of such offering (including an adverse effect on the per share
offering price), the Company will include in such registration or Prospectus
only such number of securities that in the reasonable opinion of such
underwriter(s) can be sold without adversely affecting the marketability of the
offering (including an adverse effect on the per share offering price), which
securities will be so included in the following order of priority: (i) first,
the Common Stock and other securities the Company proposes to sell, (ii) second,
the Registrable Securities of Parent to the extent that Parent has requested
inclusion of Registrable Securities pursuant to this Section 3, and (iii) third,
any other securities of the Company that have been requested to be so included,
subject to the terms of this Agreement. The Company shall select the investment
banking firm or firms to act as the lead underwriter or underwriters in
connection with an underwritten offering made pursuant to this Section 3. Parent
may not participate in any underwritten registration under this Section 3 unless
Parent (i) agrees to sell the Registrable Securities it desires to have covered
by the underwritten offering on the basis provided in any underwriting
arrangements in customary form and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required, in customary form, under the terms of such
underwriting arrangements.

 

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4. Registration Procedures. In connection with the Company’s registration
obligations hereunder:

 

(a) the Company shall, not less than three (3) Trading Days prior to the filing
of a Registration Statement or any related Prospectus or any amendment or
supplement thereto (and, promptly upon request of Parent, copies of documents to
be incorporated or deemed to be incorporated by reference into such Registration
Statement, Prospectus or amendment or supplement thereto), (i) furnish to one
counsel designated by Parent (“Parent’s Counsel”), copies of such Registration
Statement, Prospectus or amendment or supplement thereto, as proposed to be
filed, which documents will be subject to the reasonable review of Parent’s
Counsel, and (ii) cause its officers and directors, counsel and independent
registered public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of Parent’s Counsel, to conduct a
reasonable investigation within the meaning of the Securities Act; provided that
all such documents provided prior to filing, and the information contained
therein, shall be confidential and may not be disclosed to any third party, nor
shall Parent undertake any transactions in the Common Stock after receiving such
documents but prior to the filing of such documents. The Company shall not (i)
file any Registration Statement, or any such Prospectus, or amendment or
supplement thereto containing information to which Parent’s Counsel reasonably
objects in good faith and (ii) submit a request for acceleration of the
effectiveness of a Registration Statement or any amendment or supplement thereto
without the prior approval of Parent, which consent shall not be unreasonably
withheld, or delayed or conditioned, provided, that, the Company is notified of
such objection in writing no later than two (2) Trading Days after Parent has
been so furnished copies of a Registration Statement or any related Prospectus
or amendments or supplements thereto.

 

(b) (i) the Company shall prepare and file with the Commission such amendments,
including post-effective amendments and supplements, to each Registration
Statement and the Prospectus used in connection therewith as may be necessary to
keep such Registration Statement continuously effective as to the applicable
Registrable Securities for its Effectiveness Period (except during a Grace
Period (as defined below)); (ii) the Company shall cause the related Prospectus
to be amended or supplemented by any required Prospectus supplement (subject to
the terms of this Agreement), and, as so supplemented or amended, to be filed
pursuant to Rule 424 (except during a Grace Period); (iii) the Company shall
respond as promptly as reasonably practicable to any comments received from the
Commission with respect to each Registration Statement or any amendment thereto
and, as promptly as reasonably possible, provide Parent’s Counsel true and
complete copies of all correspondence from and to the Commission relating to
such Registration Statement (provided, that the Company shall excise any
information contained therein which would constitute material non-public
information); and (iv) the Company shall comply in all material respects with
the applicable provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by a
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of (subject to the terms of this Agreement) in
accordance with the intended methods of disposition by Parent as set forth in
such Registration Statement as so amended or in such Prospectus as so
supplemented; provided, that Parent shall be responsible for the delivery of the
Prospectus to the Persons to whom Parent sells any of the Registrable Securities
(including in accordance with Rule 172 under the Securities Act), and Parent
agrees to dispose of Registrable Securities in compliance with applicable
federal and state securities laws. In the case of amendments and supplements to
a Registration Statement which are required to be filed pursuant to this
Agreement (including pursuant to this Section 4(b)) by reason of the Company
filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous report
under the Exchange Act, the Company shall have incorporated such report by
reference into such Registration Statement, if applicable, or shall file such
amendments or supplements with the Commission on the same day on which the
Exchange Act report is filed which created the requirement for the Company to
amend or supplement such Registration Statement.

 

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(c) the Company shall notify Parent (which notice shall, pursuant to clauses
(ii) through (vi) hereof, be accompanied by an instruction to suspend the use of
the Prospectus until the requisite changes have been made, if applicable) as
promptly as reasonably practicable (and, in the case of (i)(A) below, not less
than one (1) Trading Day prior to such filing) (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to a Registration Statement is
proposed to be filed with the Commission; (B) when the Commission notifies the
Company whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement; and
(C) with respect to each Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of the issuance by the Commission or
any other federal or state governmental authority of any stop order suspending
the effectiveness of a Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; (v) of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or the Prospectus, as the case may be, it will not
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
(in the case of any Prospectus, form of prospectus or supplement thereto, in
light of the circumstances under which they were made), not misleading and (vi)
of the occurrence or existence of any pending corporate development with respect
to the Company that the Company believes may be material and that, in the
determination of the Company, makes it not in the best interest of the Company
to allow continued availability of a Registration Statement or Prospectus,
provided, that any and all of such information shall remain confidential to
Parent until such information otherwise becomes public, unless disclosure to
Parent is required by law or judicial process; provided, further, that
notwithstanding any Parent’s agreement to keep such information confidential,
the Company and Parent make no acknowledgement that any such information is
material, non-public information.

 

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(d) Notwithstanding anything to the contrary herein, at any time after the
Registration Statement has been declared effective by the Commission, the
Company may delay the disclosure of material non-public information concerning
the Company if the disclosure of such information at the time is not, in the
good faith judgment of the Company, in the best interests of the Company. The
Company shall be entitled to exercise its right under this Section 4(d) to
suspend the availability of a Registration Statement and Prospectus for a period
or periods (each, a “Grace Period”) not to exceed sixty (60) calendar days
(which need not be consecutive days) in any twelve (12)-month period and any
such Grace Period shall not exceed an aggregate of thirty (30) consecutive days
and the first day of any such period must be at least five (5) days after the
last day of any such prior Grace Period. For purposes of determining the length
of a Grace Period above, the Grace Period shall begin on and include the date
the Parent receives the notice referred to in Section 4(c)(ii) through (vi) and
shall end on and include the later of the date Parent receives the notice
referred to in this Section 4(d) and the date referred to in such notice. During
the Grace Period, the Company shall not be required to maintain the
effectiveness of any Registration Statement filed hereunder and, in any event,
Parent shall suspend sales of Registrable Securities pursuant to such
Registration Statements during the pendency of the Grace Period; provided, the
Company shall promptly and in compliance Sections 4(c) and (d) (i) notify Parent
in writing of the existence of material non-public information giving rise to a
Grace Period or the need to file a post-effective amendment, as applicable, and
the date on which such Grace Period will begin, (ii) use its best efforts to
terminate a Grace Period as promptly as reasonably practicable provided that
such termination is, in the good faith judgment of the Company, in the best
interest of the Company, and to ensure that the use of the Prospectus may be
resumed as promptly as is practicable, and (iii) notify Parent in writing of the
date on which the Grace Period ends. Notwithstanding anything to the contrary,
the Company shall cause the Company’s transfer agent to deliver unlegended
Shares to a transferee of Parent in connection with any sale of Registrable
Securities with respect to which Parent has entered into a contract for sale
prior to Parent’s receipt of the notice of a Grace Period and for which Parent
has not yet settled.

 

(e) the Company shall use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as soon as practicable.

 

(f) the Company shall furnish to Parent, without charge, at least one (1)
conformed copy of each Registration Statement and each amendment thereto and all
exhibits to the extent requested by Parent (including those previously furnished
or incorporated by reference) promptly after the filing of such documents with
the Commission; provided, that the Company shall have no obligation to provide
any document pursuant to this clause that is available on the Commission’s EDGAR
or successor system.

 

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(g) the Company agrees to promptly deliver to Parent, without charge, as many
copies of each Prospectus or Prospectuses (including each form of prospectus)
and each amendment or supplement thereto as such Persons may reasonably request.
The Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by Parent in connection with the offering and sale of
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.

 

(h) the Company shall, prior to any resale of Registrable Securities by Parent,
use its best efforts to register or qualify or cooperate with Parent in
connection with the registration or qualification (or exemption from the
registration or qualification) of such Registrable Securities for the resale by
Parent under the securities or Blue Sky laws of such jurisdictions within the
United States as Parent reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any general tax in any
such jurisdiction where it is not then so subject or file a consent to service
of process in any such jurisdiction.

 

(i) the Company shall reasonably cooperate with Parent to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted under applicable law, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as Parent may reasonably request.
Certificates for Registrable Securities free from all restrictive legends may be
transmitted by the Company’s transfer agent to Parent by crediting the account
of Parent’s prime broker with the Depositary Trust Company, if and as directed
by Parent.

 

(j) the Company shall following the occurrence of any event contemplated by
Sections 4(c)(ii)-(vi), as promptly as reasonably practicable, as applicable:
(i) use its best efforts to prevent the issuance of any stop order or obtain its
withdrawal at the earliest possible moment if the stop order have been issued,
or (ii) taking into account the Company’s good faith assessment of any adverse
consequences to the Company and its shareholders of the premature disclosure of
such event, prepare and file a supplement or amendment, including a
post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus, form of prospectus or supplement thereto, in light
of the circumstances under which they were made), not misleading.

 

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(k) the Company may require Parent to furnish to the Company a certified
statement as to (i) the number of securities of the Company beneficially owned
by Parent and any Affiliate thereof, (ii) any Financial Industry Regulatory
Authority (“FINRA”) affiliations, (iii) any natural persons who have the power
to vote or dispose of the Common Stock, and (iv) any other information as may be
requested by the Commission, FINRA, any state securities commission or any other
government or regulatory body with jurisdiction over the Company or its
activities. The Company shall reasonably cooperate with any broker-dealer
through which Parent proposes to resell its Registrable Securities in effecting
a filing with the FINRA Corporate Financing Department, as requested by Parent.

 

(l) if requested by Parent’s Counsel, the Company shall (i) promptly incorporate
in a Prospectus supplement or post-effective amendment to the Registration
Statement such information as the Company reasonably agrees (upon advice of
counsel) is required to be included therein and (ii) make all required filings
of such Prospectus supplement or such post-effective amendment as soon as
reasonably practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment.

 

(m) the Company shall use best efforts to cause all Registrable Securities to be
listed on each Trading Market on which securities of the same series or class
issued by the Company are then listed, or if no such similar securities are then
listed, on a Trading Market selected by the Company.

 

(n) the Company may require Parent to furnish to the Company in writing such
information required under the Securities Act in connection with such
registration regarding Parent and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request in writing.

 

(o) the Company shall not file any other registration statements until, or grant
registration rights to any Person that can be exercised prior to, the date that
all Shares either are registered pursuant to a Registration Statement that is
declared effective by the Commission and is effective or may be sold without any
restriction or limitation pursuant to Rule 144 and without the requirement to be
in compliance with Rule 144(c)(1); provided, that this Section 4(o) shall not
prohibit the Company from filing amendments (pre-effective and post-effective)
to, or conducting offerings pursuant to, registration statements filed prior to
the date of this Agreement; and provided, further, that no such amendment shall
increase the number of securities registered on a registration statement.

 

(p) in no event shall the Company include any securities other than Registrable
Securities on any Registration Statement without the prior written consent of
Parent.

 

(q) the Company shall comply with all applicable rules and regulations of the
Commission in connection with its obligations under this Agreement.

 

(r) the Company shall hold in confidence and not make any disclosure of
information concerning Parent provided to the Company unless (i) disclosure of
such information is necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning Parent is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written
notice to Parent and allow Parent, at Parent’s expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information.

 

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(s) the Company shall use its best efforts to cause the Registrable Securities
covered by a Registration Statement to be registered with or approved by such
other U.S. state securities regulators as may be necessary to consummate the
disposition of such Registrable Securities.

 

(t) unless required by applicable law, neither the Company nor any subsidiary or
Affiliate thereof shall identify Parent as an underwriter in any public
disclosure or filing with the Commission or any Trading Market.

 

(u) within two (2) Business Days after a Registration Statement which covers
Registrable Securities is ordered effective by the Commission, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to Parent and
Parent’s Counsel) confirmation in writing that such Registration Statement has
been declared effective by the Commission.

 

5. Registration Expenses. All fees and expenses incident to the Company’s
performance of or compliance with its obligations under this Agreement
(excluding any underwriting discounts and selling commissions, stock transfer
taxes and fees of Parent’s Counsel) shall be borne by the Company whether or not
any Registrable Securities are sold pursuant to a Registration Statement. The
fees and expenses referred to in the foregoing sentence that are the Company’s
responsibility shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with any Trading Market on which the Common Stock
is then listed for trading, (B) with respect to compliance with applicable state
securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as requested by Parent) and (C) if not previously paid by the
Company in connection with an issuer filing, with respect to any filing that may
be required to be made by any broker through which Parent intends to make sales
of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the
broker is receiving no more than a customary brokerage commission in connection
with such sale), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably requested by Parent), (iii)
messenger, telephone and delivery expenses of the Company, (iv) fees and
disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement, including the Company’s
independent registered public accountants. In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.

 

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6. Indemnification.

 

(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify, defend and hold harmless Parent, the
officers, directors, agents, general partners, managing members, managers,
Affiliates and employees, each Person who controls Parent (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, general partners, managing members, managers, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable costs of
preparation and investigation and reasonable and documented attorneys’ fees) and
expenses (collectively, “Losses”), as incurred, that arise out of or are based
upon (i) any untrue or alleged untrue statement of a material fact contained in
any Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus or in any
filing made in connection with the qualification of the offering under the
securities or other “blue sky” laws of any jurisdiction in which Registrable
Securities are offered, or arising out of or relating to any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus or form of prospectus
or supplement thereto, in light of the circumstances under which they were made)
not misleading, or (ii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any state securities law or any rule or
regulation thereunder, in connection with the performance of its obligations
under this Agreement, except to the extent, but only to the extent, that (A)
such untrue statements, alleged untrue statements, omissions or alleged
omissions are based solely upon information regarding Parent furnished in
writing to the Company by or on behalf of Parent expressly for use therein, or
to the extent that such information relates to Parent or Parent’s proposed
method of distribution of Registrable Securities and was reviewed and approved
in writing by Parent or Parent’s Counsel expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto, (B) Parent’s failure to deliver or cause to be delivered the
Prospectus or any amendment or supplement thereto made available by the Company,
or (C) in the case of an occurrence of an event of the type specified in
Sections 4(c)(ii)-(vi), related to the use by Parent of an outdated or defective
Prospectus after the Company has notified Parent that the Prospectus is outdated
or defective and prior to the receipt by Parent of the Advice contemplated and
defined in Section 7(e) below, but only if and to the extent that following the
receipt of the Advice the misstatement or omission giving rise to such Loss
would have been corrected. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of an Indemnified Party (as
defined in Section 6(c)) and shall survive the transfer of the Registrable
Securities by Parent. The Company shall notify Parent promptly of the
institution, threat or assertion of any Proceeding arising from or in connection
with the transactions contemplated by this Agreement of which the Company is
aware.

 

-11-

 

 

(b) Indemnification by Parent. Parent shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, in each case to the extent and only to the extent, that such Losses
arise solely out of or are based solely upon any untrue statement of a material
fact contained in any Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to 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, or any form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information regarding Parent
furnished in writing to the Company by or on behalf of Parent expressly for use
therein. In no event shall the liability of Parent hereunder (together with any
liability under Section 6(d)) be greater in amount than the dollar amount of the
net proceeds received by Parent upon the sale of the Registrable Securities
giving rise to such indemnification obligation.

 

(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought
or asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall have the right to assume the defense thereof, including the
employment of one (1) counsel reasonably satisfactory to the Indemnified Party
and the payment of all reasonable and documented fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such written notice within a reasonable time of commencement of
any such Proceeding shall not relieve the Indemnifying Party of its obligations
or liabilities pursuant to this Agreement, except (and only) to the extent that
such failure shall have materially and adversely prejudiced the Indemnifying
Party in its ability to defend such Proceeding.

 

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest exists if the same counsel were to
represent such Indemnified Party and the Indemnifying Party; provided, that the
Indemnifying Party shall not be liable for the fees and expenses of more than
one separate firm of attorneys at any time for all Indemnified Parties. The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, delayed or conditioned. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding, does not
involve a finding or admission of wrongdoing by the Indemnified Party or any of
its affiliates, does not impose equitable remedies or obligations on the
Indemnified Party or any or its affiliates other than solely the payment of
money damages for which the Indemnifying Party will pay.

 

-12-

 

 

Subject to the terms of this Agreement, all documented fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section 6(c)) shall be paid to the Indemnified
Party, as incurred, within ten (10) Business Days after written notice thereof
to the Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is finally
judicially determined to not be entitled to indemnification hereunder.

 

Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by Parent pursuant to Section 7(j).

 

(d) Contribution. If a claim for indemnification under Section 6(a) or 6(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses 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 any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in this Agreement, any reasonable attorneys’ or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in Section 6(a) and 6(b) was
available to such party in accordance with its terms.

 

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6(d), Parent shall not be
required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by Parent from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that Parent has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.

 

-13-

 

 

The indemnity and contribution agreements contained in this Section 6 are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties and are not in diminution or limitation of the
indemnification provisions under the Purchase Agreement.

 

7. Miscellaneous.

 

(a) Remedies. In the event of a breach by the Company or by Parent of any of
their obligations under this Agreement, the Company or Parent, as the case may
be, in addition to being entitled to seek to exercise all rights granted by law
and under this Agreement, including recovery of damages, will be entitled to
seek specific performance of its rights under this Agreement. The Company and
Parent agree that monetary damages may not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement.

 

(b) Rule 144 Requirements. With a view of making available to the Parent the
benefits of Rule 144 that may at any time permit Parent to sell securities of
the Company to the public without registration, the Company shall make and
maintain public information available, as those terms are understood and defined
in Rule 144, and shall timely file with the Commission all reports and
information required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the Commission thereunder and as
the Commission may require. The Company shall furnish to Parent promptly upon
request a written statement as to its compliance with the reporting requirements
of Rule 144 (or any successor exemptive rule), the Securities Act and the
Exchange Act (at any time that it is subject to such reporting requirements); a
copy of its most recent annual or quarterly report; and such other reports and
documents as Parent may reasonably request in availing itself of any rule or
regulation of the Commission allowing it to sell any such securities without
registration.

 

(c) Obligations of Parent in a Registration. Parent agrees to timely furnish in
writing such information regarding it, the securities sought to be registered
and the intended method of disposition of the Registrable Securities held by it,
as shall be reasonably be required to effect the registration of such
Registrable Securities (the “Requested Information”).

 

(d) Compliance. Parent covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it
(unless an exemption therefrom is available) in connection with sales of
Registrable Securities pursuant to the Registration Statement and shall sell the
Registrable Securities only in accordance with a method of distribution
described in the Registration Statement.

 

(e) Discontinued Disposition. Parent agrees that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in Sections
4(c)(ii)-(vi), Parent will forthwith discontinue disposition of such Registrable
Securities under a Registration Statement until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus (as it may
have been supplemented or amended) may be resumed. The Company will use its best
efforts to ensure that the use of the Prospectus may be resumed as promptly as
is practicable.

 

-14-

 

 

(f) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, or
waived unless the same shall be in writing and signed by the Company and Parent.

 

(g) Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be delivered as set forth in the
Purchase Agreement.

 

(h) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. The Company may not
assign its rights or obligations hereunder (except by merger or in connection
with another entity acquiring all or substantially all of such party’s assets)
without the prior written consent of the other party. Parent may assign its
rights hereunder as set forth in Section 7(i).

 

(i) Assignment of Registration Rights. The rights under this Agreement shall be
automatically assignable by Parent to any transferee of all or any portion of
such Parent’s Registrable Securities if: (i) Parent agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment; (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act or applicable state securities
laws; and (iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this sentence the transferee or assignee agrees
in writing with the Company to be bound by all of the provisions contained
herein.

 

(j) Execution and Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature were the original thereof.

 

(k) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with Section 9.07 of the Purchase Agreement.

 

(l) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any other remedies provided by law.

 

-15-

 

 

(m) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their good faith reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

 

(n) Headings. The headings in this Agreement are for convenience only and shall
not limit or otherwise affect the meaning hereof.

 

(o) Effectiveness; Termination. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than as set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.

 

[SIGNATURES ON FOLLOWING PAGE]

 

-16-

 

 

IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be executed and delivered by their duly authorized officers, effective as of
the date first set forth on the first page hereof.

 

  COMPANY:       FEDNAT HOLDING COMPANY, a Florida corporation         By: /s/
Michael Braun   Name: Michael Braun   Title: Chief Executive Officer        
PARENT:       1347 PROPERTY INSURANCE HOLDINGS, INC., a Delaware corporation    
    By: /s/ John S. Hill   Name: John S. Hill   Title: Vice President, Chief
Financial Officer and Secretary

 

[End of Agreement.]

 

Signature Page to Registration Rights Agreement