1347 Property Insurance Holdings, Inc. S-1


Exhibit
10.22


 


STOCK
PURCHASE AGREEMENT


 


This
Stock Purchase Agreement (the “Agreement”) is entered into as of January 2, 2018, by and among 1347 Advisors
LLC, a Delaware limited liability company (“1347 Advisors”), IWS Acquisition Corporation, a Florida corporation
(“IWS” and, together with 1347 Advisors, the “Sellers”), and 1347 Property Insurance Holdings,
Inc., a Delaware corporation (the “Company”). The Company, 1347 Advisors and IWS are referred to collectively
herein as the “Parties.”


 


RECITALS


 


WHEREAS,
the Company and 1347 Advisors previously entered into an Agreement to Buyout and Release dated February 24, 2015, pursuant to
which, among other things, the Company: (i) issued to 1347 Advisors an aggregate of 120,000 shares of the Company’s Series
B Preferred Stock and (ii) executed and delivered to 1347 Advisors a Performance Shares Grant Agreement dated February 24, 2015,
(the “Performance Shares Agreement”) pursuant to which 1347 Advisors is entitled to receive an aggregate of
100,000 shares of common stock of the Company, par value $0.001, subject to the Company achieving certain performance milestones;


 


WHEREAS,
1347 Advisors and IWS previously entered into a letter agreement dated October 3, 2017, pursuant to which 1347 Advisors sold 60,000
shares of the Company’s Series B Preferred Stock to IWS (the “Series B Transaction”);


 


WHEREAS,
after giving effect to the Series B Transaction, 1347 Advisors owns an aggregate of 60,000 shares of the Company’s Series
B Preferred Stock (the “1347 Advisors Preferred Shares”) and IWS owns an aggregate of 60,000 shares of the
Company’s Series B Preferred Stock (the “IWS Preferred Shares”);


 


WHEREAS,
the Company has determined that it would be in the Company’s best interests to: (i) terminate the Performance Shares Agreement;
(ii) repurchase the 1347 Advisors Preferred Shares; and, (iii) subject to certain contingencies, repurchase the IWS Preferred
Shares (clauses (i), (ii) and (iii), collectively, the “Transactions”); and


 


WHEREAS,
the Parties desire to enter into this Agreement to set forth in writing the terms and conditions of the Transactions.


 


AGREEMENT


 


NOW,
THEREFORE, in consideration of the premises and the actual promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as
follows.


 


Section
1.              Definitions.


 


“Capital
Raise” means any issuance of equity or incurrence of indebtedness by the Company or any of its subsidiaries resulting
in Net Issuance Proceeds in excess of $5,000,000.


 


“Losses”
means all actions, suits, proceedings, hearings, investigations, complaints, claims, demands, injunctions, judgments, orders,
decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, liabilities, obligations, taxes, liens,
losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses.


 


“Net
Issuance Proceeds” means, in respect of any Capital Raise, cash proceeds, net of underwriting discounts and reasonable
out-of-pocket costs and expenses paid or incurred in connection therewith.


 


“Person”
means an individual, a partnership, a corporation, an association, a joint stock company, a limited liability company or partnership,
a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision
thereof).


 


“Security
Interest” means any lien, encumbrance, mortgage, pledge, or other security interest.


 



    


     


    

 


Section
2.             1347 Advisors Transactions.


 


(a)          Purchase
and Sale of 1347 Advisors Preferred Shares. At the First Closing, on and subject to the terms of this Agreement:


 


(i)         the
Company shall purchase from 1347 Advisors, and 1347 Advisors shall sell, transfer, convey, and deliver to the Company, the 1347
Advisors Preferred Shares free and clear of any Security Interests; and


 


(ii)        the Company shall pay to 1347 Advisors an aggregate purchase price of $1,740,000 (the “1347 Advisors Purchase Price”),
representing (i) $1,500,000, comprising $25 per Series B Preferred Share, and (ii) declared and unpaid dividends in respect of
the 1347 Advisors Preferred Shares and the IWS Preferred Shares (in respect of the dividend payment due on February 23, 2018)
amounting to $240,000 in the aggregate as of the Closing.


 


(b)          Termination
of the Performance Shares Agreement.


 


(i)         Subject
to the terms and conditions of this Agreement, each of the Company and 1347 Advisors agrees that the Performance Shares Agreement
shall be terminated and cancelled as of the First Closing.


 


(ii)        In
consideration of 1347 Advisors agreeing to voluntarily terminate the Performance Shares Agreement, the Company hereby agrees that
at the First Closing it shall pay to 1347 Advisors an aggregate cash payment of $300,000 (the “Performance Award Termination
Payment”).


 


Section
3.             IWS Transaction.


 


(a)          Subject
to the terms and conditions of this Agreement, within five (5) business days after the Company’s receipt of the Net Issuance
Proceeds of a Capital Raise, the Company shall purchase from IWS, and IWS shall transfer, convey, and deliver to the Company,
the IWS Preferred Shares free and clear of any Security Interests.


 


(b)          In
consideration of the IWS Preferred Shares, the Company shall pay to IWS an aggregate purchase price (the “IWS Purchase
Price”), of $1,500,000, comprising $25 per Series B Preferred Share, without any dividend or interest payment in respect
of the IWS Preferred Shares as of the Second Closing.


 


(c)          As a condition precedent to the obligations of the Company and IWS to consummate the transactions contemplated by this
Section 3, the Company shall have successfully completed a Capital Raise within one hundred and twenty (120) days after
the First Closing. The Company’s successful completion of a Capital Raise shall be a condition precedent to the obligations
of the Company and IWS to consummate the transactions contemplated by this Section 3 and if a Capital Raise has not been
completed within one hundred and twenty (120) days after the First Closing, the obligations of Company and of IWS to complete
the purchase and sale of the IWS Preferred Shares shall terminate.


 


Section
4.             The Closings.


 


(a)          The
First Closing. The closing of the transactions contemplated by Section 2 of this Agreement shall take place remotely
via the exchange of documents and signatures on January 2, 2018, or at such other time and date as 1347 Advisors and the Company
may agree (which time and date are designated as the “First Closing”).


 


(b)          The
Second Closing. Subject to Section 3(c), the closing of the transactions contemplated by Section 3 of this Agreement
shall take place remotely via the exchange of documents and signatures on such date and time as the Company and IWS mutually agree
(the “Second Closing”); provided, that the Second Closing shall be no more than one hundred and fifty (150)
days following the First Closing.


 


(c)          Deliveries
at the Closings.


 


(i)         At
the First Closing, (A) 1347 Advisors shall initiate the electronic or physical delivery of the 1347 Advisors Preferred Shares
to the Company (and if physical delivery, the 1347 Advisors Preferred Shares duly endorsed in blank or accompanied by stock powers
or other instruments of transfer duly endorsed in blank) and (B) 1347 Advisors and the Company shall deliver an instrument reasonably
satisfactory to them terminating the Performance Shares Agreement. The Company shall deliver to 1347 Advisors the 1347 Advisors
Purchase Price and the Performance Award Termination Payment in immediately available funds by wire transfer to an account designated
by 1347 Advisors.


 






    


     


    

 


(ii)        At
the Second Closing, IWS shall initiate the electronic or physical delivery of the IWS Preferred Shares to the Company (and if
physical delivery, the IWS Preferred Shares duly endorsed in blank or accompanied by stock powers or other instruments of transfer
duly endorsed in blank). The Company shall deliver to IWS the IWS Purchase Price in immediately available funds by wire transfer
to an account designated by IWS.


 


Section
5.             Representations and Warranties of the Company. The Company represents and warrants to each of 1347 Advisors and IWS,
as applicable, that the statements contained in this Section 5 are correct and complete as of the First Closing and the
Second Closing, as applicable.


 


(a)          Organization.
The Company is validly existing, and in good standing under the laws of the State of Delaware.


 


(b)          Authorization;
Enforceability. The Company has the requisite corporate power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. The execution, delivery and performance of this Agreement by the Company has been duly authorized and
no other corporate proceedings on the part of the Company are required to authorize this Agreement and the transactions contemplated
hereby. This Agreement constitutes the valid and binding obligation of the Company, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
and other laws of general application relating to or affecting, creditors’ rights and to general principles of equity.


 


(c)          Noncontravention.
Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i)
violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, or other restriction of any
government, governmental agency, or court to which the Company is subject, or any provision of the charter or bylaws of the Company,
(ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which the Company is a party or by which the Company is bound or to which any of the Company’s assets
is subject (or result in the imposition of any Security Interest upon any of its assets), or (iii) require the Company to give
any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency
in order for the Parties to consummate the transactions contemplated by this Agreement.


 


(d)          Solvency.
After giving effect to the transactions contemplated by this Agreement, the Company has assets which, valued at their fair market
values, exceed its liabilities.


 


Section
6.             Representations and Warranties of the Sellers. Each of the Sellers, on its own behalf, represents and warrants to
the Company that the statements contained in this Section 6 are correct and complete as of the First Closing or Second
Closing, as applicable.


 


(a)          Organization.
The Seller is validly existing, and in good standing under the laws of its state of organization.


 


(b)          Authorization;
Enforceability. The Seller has the requisite organizational power and authority to execute and deliver this Agreement and
to perform its obligations hereunder. The execution, delivery and performance of this Agreement by the Seller has been duly authorized
and no other organizational proceedings on the part of the Seller are required to authorize this Agreement and the transactions
contemplated hereby. This Agreement constitutes the valid and binding obligation of the Seller, enforceable in accordance with
its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other laws of general application relating to or affecting, creditors’ rights and to general principles of
equity.


 


(c)          Noncontravention.
Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i)
violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, or other restriction of any
government, governmental agency, or court to which the Seller is subject, (ii) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Seller is a party
or by which it is bound or to which any of its assets is subject (or result in the imposition of any Security Interest upon any
of its assets), or (iii) require the Seller to give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this
Agreement.


 



    


     


    

 


(d)           Shares.
The Seller holds of record and owns beneficially the 1347 Advisors Preferred Shares or the IWS Preferred Shares, as applicable,
free and clear of any restrictions on transfer, Security Interests, options, warrants, purchase rights, commitments, and claims.
The Seller is not a party to any option, warrant, purchase right, or other contract or commitment that could require it to sell,
transfer, or otherwise dispose of any 1347 Advisors Preferred Shares or IWS Preferred Shares, as applicable (other than this Agreement).
At the First Closing or Second Closing, as applicable, Seller will deliver to the Company good and valid title to the 1347 Advisors
Preferred Shares or the IWS Preferred Shares, as applicable, free and clear of all Security Interests, except for restrictions
on transfer arising under applicable federal and state securities laws.


 


Section
7.              Survival and Indemnification. All of the representations, warranties, covenants, and agreements contained in this
Agreement shall survive the First Closing and Second Closing, as applicable. Each of the Sellers shall indemnify the Company from
and against any Losses the Company may suffer resulting from, arising out of, relating to, or caused by a misrepresentation or
breach by such Seller of the representations, warranties, covenants or agreements of such Seller contained in this Agreement.
The Company shall indemnify each of the Sellers from and against any Losses such Seller may suffer resulting from, arising out
of, relating to, or caused by a misrepresentation or breach by the Company of the representations, warranties, covenants or agreements
of the Company contained in this Agreement.


 


Section
8.              Miscellaneous.


 


(a)           Entire
Agreement. This Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof and
supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof.


 


(b)           Succession
and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective
successors and assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without
the prior written approval of the other Parties.


 


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


 


(d)           Headings The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.


 


(e)           Notices.
All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given upon receipt if it is sent by facsimile (with confirmed receipt),
or reputable express courier, and addressed or otherwise sent to the intended recipient as set forth below:


 


If
to the Company:


 


1347
Property Insurance Holdings, Inc.





1511
N. Westshore Blvd., Suite 870





Tampa,
Florida 33607





Attn:
Chief Financial Officer


 


If
to 1347 Advisors or IWS:


 


1347
Advisors LLC





150
Pierce Road





Itasca,
Illinois 60143





Attn:
William A. Hickey, Jr.


 



    


     


    

 


Any
Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address or
facsimile number set forth above using any other means (including personal delivery, messenger service, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any Party may change the address or facsimile number to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by giving the other Party notice in the manner herein
set forth.


 


(f)            Governing
Law; Interpretation. This Agreement shall be construed in accordance with and governed for all purposes by the internal substantive
laws of the State of Delaware applicable to contracts executed and to be wholly-performed within such State.


 


(g)           Amendments
and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed
by the Company and the Sellers. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty
or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.


 


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


 


(i)            Expenses.
The Sellers and the Company will bear their own costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.


 


(j)            Construction.
Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation.


 


*
* * * *


 



    


     


    

 


IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.


 


	1347 PROPERTY INSURANCE HOLDINGS,
    INC.	 
	 	 
	By:	/s/ John S. Hill	 
	Name:	John S. Hill	 
	Title:	Vice President, Chief Financial Officer and
    Secretary	 
	 	 	 
	1347 ADVISORS LLC	 
	 	 
	By:	/s/ Hassan R. Baqar	 
	Name:	Hassan R. Baqar	 
	Title:	Managing Director	 
	 	 	 
	IWS ACQUISITION CORPORATION	 
	 	 
	By:	/s/ Erik M. Wikander	 
	Name:	Eric M. Wikander	 
	Title:	President