Warrant agreement



 Exhibit 4.2 
 WARRANT AGREEMENT 
 This Warrant Agreement
(the “Agreement”) is made as of July 30, 2008 between Homeowners Choice, Inc., a Florida corporation, with offices at 145 N.W. Central Park Plaza, Suite 115, Port St. Lucie, Florida 34986 (the “Company”), and American Stock
Transfer & Trust Company, LLC, a New York State limited liability trust company, with offices at 6201 15th Avenue, Brooklyn, New York 11219
(the “Warrant Agent”). 
 WHEREAS, the Company is engaged in a public offering (the “Public Offering”) of units
(the “Units”) and, in connection therewith, has determined to issue and deliver up to 1,666,668 warrants to the public investors (the “Warrants”) evidencing the right of the holder thereof to purchase shares of the Company’s
common stock, no par value per share (the “Common Stock”), as described herein; 
 WHEREAS, the Company has filed with the
Securities and Exchange Commission a Registration Statement on Form S-1, No. 333-150513, as amended, and a Registration Statement on Form S-1, No. 333-152503, as amended (collectively referred to herein as the “Registration
Statement”), for the registration, under the Securities Act of 1933, as amended (the “Act”) of, among other securities, the Warrants and the Common Stock issuable upon exercise of the Warrants; 
 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, cancellation and exercise of the Warrants; 
 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: 
 1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants, and the
Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this Agreement. 
 2. Warrants. 
 2.1 Form of Warrant. Each Warrant shall be issued in registered
form only, shall be in substantially the form of Exhibit A hereto, the provisions of which are incorporated 








 
herein, and shall be signed by, or bear the facsimile signature of, the President and the Secretary of the Company or such other officer(s) of the Company
designated by its board of directors. In the event the person whose facsimile signature has been placed upon any Warrant shall have ceased to serve in the capacity in which such person signed the Warrant before such Warrant is issued, it may be
issued with the same effect as if he or she had not ceased to be such at the date of issuance. 
 2.2 Effect of
Countersignature. Unless and until countersigned by the Warrant Agent pursuant to this Agreement, a Warrant shall be invalid and of no effect and may not be exercised by the holder thereof. 
 2.3 Registration. 
 2.3.1
Warrant Register. The Warrant Agent shall maintain books (the “Warrant Register”), for the registration of original issuance and the registration of transfer of the Warrants. Upon the initial issuance of the Warrants, the
Warrant Agent shall issue and register the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Warrant Agent by the Company. 
 2.3.2 Registered Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem
and treat the person in whose name such Warrant shall be registered upon the Warrant Register (the “registered holder”), as the absolute owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation of
ownership or other writing on the Warrant made by anyone other than the Company or the Warrant Agent), for the purpose of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice
to the contrary. 
 2.4 Detachability of Warrants. The securities comprising the Units will be separately transferable
immediately upon the commencement of trading of the Common Stock and the Warrants on The Nasdaq Stock Market LLC. 
 3. Terms and
Exercise of Warrants. 
 3.1 Warrant Price. Two Warrants 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 one share of Common Stock, at the price of $9.10 per whole share, subject to the adjustments provided in Section 4 hereof
and in the last sentence of this Section 3.1. The term “Warrant Price” as used in this Agreement refers to the price per share at which Common Stock may be purchased at the time a Warrant is exercised. The Company in its sole
discretion may lower the Warrant Price at any time prior to the Expiration Date. 
 3.2 Duration of Warrants. A Warrant may be exercised only during the period (the “Exercise Period”) commencing on July 30, 2008 and terminating at 5:00 p.m., New York City time on the earlier to occur of
(i) July 31, 2013 and (ii) the day prior to the date fixed for cancellation of the Warrants as provided in Section 6 of this Agreement (“Expiration Date”). Each Warrant not 

  

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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
the close of business on the Expiration Date. The Company in its sole discretion may extend the duration of the Warrants by delaying the Expiration Date. 
 3.3 Exercise of Warrants. 
 3.3.1 Payment. Subject to the provisions of the
Warrant and this Agreement, a Warrant, when countersigned by the Warrant Agent, may be exercised by the registered holder thereof by surrendering it, at the office of the Warrant Agent, or at the office of its successor as Warrant Agent, in
Brooklyn, New York, with the subscription form, as set forth in the Warrant, duly executed, and by paying in full, in lawful money of the United States, in good certified check or good bank draft payable to the order of the Company (or as otherwise
agreed to by the Company), the Warrant Price for each full share of Common Stock as to which the Warrant is exercised and any and all applicable taxes due in connection with the exercise of the Warrant, the exchange of the Warrant for the Common
Stock, and the issuance of the Common Stock. 
 3.3.2 Issuance of Certificates. As soon as practicable after the exercise of
any Warrant and the clearance of the funds in payment of the Warrant Price, the Company shall issue to the registered holder of such Warrant a certificate or certificates for the number of full shares of Common Stock to which such holder is
entitled, registered in such name or names as may be directed by such holder, and if such Warrant shall not have been exercised in full, a new countersigned Warrant for the number of shares as to which such Warrant shall not have been exercised.
Notwithstanding the foregoing, the Company shall not be obligated to deliver any securities pursuant to the exercise of a Warrant unless a registration statement under the Act with respect to the Common Stock is effective. Warrants may not be
exercised by, or securities issued to, any registered holder in any state in which such exercise would be unlawful. 
 3.3.3 Valid
Issuance. All shares of Common Stock issued upon the proper exercise of a Warrant in conformity with this Agreement shall be validly issued, fully paid and nonassessable. 
 3.3.4 Date of Issuance. Each person in whose name any such certificate for shares of Common Stock is issued shall for all purposes be
deemed to have become the holder of record of such shares on the date on which the Warrant was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such certificate, except that, if the date of such
surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are
open. 
 4. Adjustments. 
 4.1 Stock Dividends — Split-Ups. If after the date hereof, and subject to the provisions of Section 4.6 below, the number of outstanding shares of Common Stock is increased by a stock dividend payable in shares of
Common Stock, or by a split-up of shares of Common Stock, or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of Common Stock issuable upon exercise of each Warrant shall be
increased in proportion to such increase in outstanding shares of Common Stock. 
  

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 4.2 Aggregation of Shares. If after the date hereof, and subject to the provisions of
Section 4.6, the number of outstanding shares of Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Common Stock or other similar event, then, on the effective date of such
consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Common Stock issuable upon exercise of each Warrant shall be decreased in proportion to such decrease in outstanding shares of Common Stock.

 4.3 Adjustments in Exercise Price. Whenever the number of shares of Common Stock purchasable upon the exercise of the
Warrants is adjusted, as provided in Section 4.1 and 4.2 above, the Warrant Price shall be adjusted (to the nearest cent) by multiplying such Warrant Price immediately prior to such adjustment by a fraction (x) the numerator of which shall
be the number of shares of Common Stock purchasable upon the exercise of the Warrants immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter.

 4.4 Replacement of Securities Upon Reorganization, Etc. In case of any reclassification or reorganization of the outstanding
shares of Common Stock (other than a change covered by Section 4.1 or 4.2 hereof or that solely affects the par value of such shares of Common Stock), or in the case of any merger or consolidation of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding shares of Common Stock), or in the case of any sale or conveyance to
another corporation or entity of the assets or other property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Warrant holders shall thereafter have the right to purchase and
receive, upon the basis and upon the terms and conditions specified in the Warrants and in lieu of the shares of Common Stock of the Company 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 Warrant holder
would have received if such Warrant holder had exercised his, her or its Warrant(s) immediately prior to such event; and if any reclassification also results in a change in shares of Common Stock covered by Section 4.1 or 4.2, then such
adjustment shall be made pursuant to Sections 4.1, 4.2, 4.3 and this Section 4.4. The provisions of this Section 4.4 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other
transfers. 
 4.5 Notices of Changes in Warrant. Upon every adjustment of the Warrant Price or the number of shares issuable
upon exercise of a Warrant, the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Warrant Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at
such price upon the exercise of a Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the occurrence of any event specified in Sections 4.1, 4.2, 4.3 or 4.4, then, in any
such event, the Company shall give 

  

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written notice to each Warrant holder, at the last address set forth for such holder in the Warrant Register, of the record date or the effective date of the
event. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event. 
 4.6 No
Fractional Shares. Notwithstanding any provision contained in this Agreement to the contrary, the Company shall not issue fractional shares upon exercise of Warrants and no payment will be made with respect to any fractional share of Common
Stock to which any holder of Warrants might otherwise be entitled upon exercise of Warrants. 
 4.7 Form of Warrant. The form
of Warrant need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after such adjustment may state the same Warrant Price and the same number of shares as is stated in the Warrants initially issued pursuant
to this Agreement. However, the Company may at any time in its sole discretion make any change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any Warrant thereafter issued or
countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise, may be in the form as so changed. 
 5.
Transfer and Exchange of Warrants. 
 5.1 Registration of Transfer. The Warrant Agent shall register the transfer,
from time to time, of any outstanding Warrant upon the Warrant Register, upon surrender of such Warrant for transfer, properly endorsed with signatures properly guaranteed and accompanied by appropriate instructions for transfer. Upon any such
transfer, a new Warrant representing an equal aggregate number of Warrants shall be issued and the old Warrant shall be cancelled by the Warrant Agent. The Warrants so cancelled shall be delivered by the Warrant Agent to the Company from time to
time upon request. 
 5.2 Procedure for Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, together with
a written request for exchange or transfer, and thereupon the Warrant Agent shall issue in exchange therefor one or more new Warrants as requested by the registered holder of the Warrants so surrendered, representing an equal aggregate number of
Warrants; provided, however, that in the event that a Warrant surrendered for transfer bears a restrictive legend, the Warrant Agent shall not cancel such Warrant and issue new Warrants in exchange therefor until the Warrant Agent has received an
opinion of counsel for the Company stating that such transfer may be made and indicating whether the new Warrants must also bear a restrictive legend. 
 5.3 Fractional Warrants. The Warrant Agent shall not be required to effect any registration of transfer or exchange which will result in the issuance of a warrant certificate for a fraction of a
warrant. 
 5.4 Service Charges. No service charge shall be made for any exchange or registration of transfer of Warrants.

 5.5 Warrant Execution and Countersignature. The Warrant Agent is hereby authorized to countersign and to deliver, in
accordance with the terms of this Agreement, the Warrants required to be issued pursuant to the provisions of this Section 5, and the Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Warrants duly executed on
behalf of the Company for such purpose. 
  

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 6. Cancellation of Warrants. 
 6.1 Cancellation. Subject to Section 6.4 hereof, the outstanding Warrants may be cancelled in whole or in part (and if in part, by lot)
at the option of the Company, at any time before the expiration of the Warrants and after January 30, 2009, upon the notice referred to in Section 6.2, provided that the closing price per share of the Common Stock has exceeded $11.38 for at
least ten (10) trading days within any period of twenty (20) consecutive trading days, including the last trading day of the period. 
 6.2 Date Fixed for, and Notice of, Cancellation. In the event that the Company shall elect to cancel all or a portion of the Warrants, the Company shall fix a date for the cancellation. The date of cancellation shall be a date
which is more than 30 calendar days, but less than 60 calendar days after a notice of cancellation is mailed by the Company by first class mail to the holders of the Warrants at their last addresses as they shall appear in the Company’s Warrant
ledger. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the registered holder receives such notice. 
 6.3 Exercise After Notice of Cancellation. The Warrants may be exercised at any time after notice of cancellation has been given by the Company pursuant to Section 6.2 hereof and prior to the close
of business on the business day that is one day prior to the date fixed for cancellation. On and after the cancellation date, the record holder of the Warrants shall have no further rights under the Warrants. 
 6.4 Outstanding Warrants Only. The Company understands that the cancellation rights provided for by this Section 6 apply only to
outstanding Warrants. 
 7. Other Provisions Relating to Rights of Holders of Warrants. 
 7.1 No Rights As Shareholder. A Warrant does not entitle the registered holder thereof to any of the rights of a shareholder of the Company,
including, without limitation, the right to receive dividends, or other distributions, to exercise any preemptive rights to vote or to consent or to receive notice as shareholders in respect of the meetings of shareholders or the election of
directors of the Company or any other matter. 
 7.2 Lost, Stolen, Mutilated, or Destroyed Warrants. If any Warrant is lost,
stolen, mutilated, or destroyed, the Company and the Warrant Agent may on such terms as to indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new
Warrant of like denomination, tenor, and date as the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or
destroyed Warrant shall be at any time enforceable by anyone. 
  

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 7.3 Reservation of Common Stock. The Company shall at all times reserve and keep available
a number of its authorized but unissued shares of Common Stock that will be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Agreement. 
 7.4 Registration of Common Stock. The Company has filed with the Securities and Exchange Commission a Registration Statement for the
registration, under the Act, of, and it shall take such action as is necessary to qualify for sale, in those states in which the Warrants were initially offered by the Company, the Common Stock issuable upon exercise of the Warrants. The
Company will use its best efforts to maintain the effectiveness of such Registration Statement until the expiration of the Warrants in accordance with the provisions of this Agreement. 
 8. Concerning the Warrant Agent and Other Matters. 
 8.1 Payment of Taxes. The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent in connection with the issuance or delivery of shares
of Common Stock upon the exercise of the Warrants, but the Company shall not be obligated to pay any transfer taxes in connection with the Warrants or such shares. 
 8.2 Resignation, Consolidation, or Merger of Warrant Agent. 
 8.2.1 Appointment of
Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to
the Company. If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder of the Warrant (who shall, with such notice, submit his Warrant for inspection by the Company), then
the holder of any Warrant may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s cost. Any successor Warrant Agent, whether appointed by the Company
or by such court, shall be a corporation organized and existing under the laws of the State of New York, in good standing and having its principal office in Brooklyn, New York, and authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with
like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an
instrument transferring to such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver any
and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations. 
  

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 8.2.2 Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be
appointed, the Company shall give notice thereof to the predecessor Warrant Agent and the transfer agent for the Common Stock not later than the effective date of any such appointment. 
 8.2.3 Merger or Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be
consolidated or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement without any further act. 
 8.3 Fees and Expenses of Warrant Agent. 
 8.3.1 Remuneration. The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and will reimburse the Warrant Agent upon demand for all
expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder. 
 8.3.2 Further
Assurances. The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the
Warrant Agent for the carrying out or performing of the provisions of this Agreement. 
 8.4 Liability of Warrant Agent.

 8.4.1 Reliance on Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall
deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a statement signed by the President, Chairman of the Board or Secretary of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or
suffered in good faith by it pursuant to the provisions of this Agreement. 
 8.4.2 Indemnity. The Warrant Agent shall be
liable hereunder only for its own negligence, willful misconduct or bad faith. The Company agrees to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for
anything done or omitted by the Warrant Agent in the execution of this Agreement except as a result of the Warrant Agent’s negligence, willful misconduct, or bad faith. 
 8.4.3 Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the
validity or execution of any Warrant (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant; nor shall it be responsible to make any
adjustments required under the provisions of Section 4 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act
hereunder be deemed to make any representation or warranty as to the authorization or reservation of any 

  

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shares of Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock will when issued be valid and fully
paid and nonassessable. 
 8.5 Acceptance of Agency. The Warrant Agent hereby accepts the agency established by this Agreement
and agrees to perform the same upon the terms and conditions herein set forth and, among other things, shall account promptly to the Company with respect to Warrants exercised and concurrently account for, and pay to the Company, all moneys received
by the Warrant Agent for the purchase of shares of Common Stock through the exercise of Warrants. 
 9. Miscellaneous
Provisions. 
 9.1 Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company
or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns. 
 9.2 Notices. Any
notice, statement or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by
certified mail or private courier service within five days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent), as follows: 
 Homeowners Choice, Inc. 
 2340 Drew Street,
Suite 200 
 Clearwater, Florida 33765 
 Attn: Andrew Graham, General Counsel 
 Any notice, statement or demand authorized by this Agreement to be given or made by the holder of any
Warrant or by the Company to or on the Warrant Agent shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five days after deposit of such notice, postage
prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows: 
 American Stock
Transfer & Trust Company, LLC 
 6201 15th Avenue 
 Brooklyn, New York 11219 
 Attn: Herbert Lemmer 
 with a copy in each case to:

 Foley & Lardner LLP 
 100 North Tampa Street, Suite 2700 
 Tampa, Florida 33602 
 Attn: Martin A. Traber and Carolyn T. Long 
  

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 9.3 Applicable Law. The validity, interpretation, and performance of this Agreement and of
the Warrants shall be governed in all respects by the laws of the State of Florida, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The Company and the
Warrant Agent hereby agree that any action, proceeding or claim arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of Florida or the United States District Court for the Middle District
of Florida, and irrevocably submit to such jurisdiction, which jurisdiction shall be exclusive. The Warrant Agent hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or
summons to be served upon the Warrant Agent may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 9.2 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the Warrant Agent in any action, proceeding or claim. 
 9.4
Persons Having Rights Under This Agreement. Nothing in this Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation
other than the parties hereto and the registered holders of the Warrants, any right, remedy, or claim under or by reason of this Agreement or any covenant, condition, stipulation, promise, or agreement herein. All covenants, conditions,
stipulations, promises, and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors and assigns and of the registered holders of the Warrants. 
 9.5 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 Brooklyn, 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. 
 9.6 Counterparts. This Agreement may be executed in any number of 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. 
 9.7 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. 
  

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 IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and
year first above written. 
  

							
	Attest:	 		 	HOMEOWNERS CHOICE, INC.
				
	 /s/ Denise Lombardo
	 		 	By:	 	 /s/ Francis McCahill, III

		 		 	Name:	 	 Francis McCahill, III

		 		 	Title:	 	 Chief Executive Officer

			
	Attest:	 		 	AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
				
	 /s/ Susan Silber
	 		 	By:	 	 /s/ Herbert J. Lemmer

	Name: Susan Silber	 		 	Name:	 	 Herbert J. Lemmer

	Title: Assistant Secretary	 		 	Title:	 	 Vice President









 EXHIBIT A 
 FORM OF WARRANT CERTIFICATE 
 THIS WARRANT CERTIFICATE CANNOT BE TRANSFERRED OR EXCHANGED UNTIL THE
DATE (THE “DETACHMENT DATE”) ESTABLISHED FOR SEPARATION FROM THE SHARES TO WHICH THIS WARRANT IS ATTACHED EXCEPT AS PART OF A UNIT OF HOMEOWNERS CHOICE, INC. 
 EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT 
 AGENT AS PROVIDED HEREIN 
 Warrant Certificate evidencing 
 Warrants to
Purchase Common Stock, no par value, as described herein. 
 Homeowners Choice, Inc. 
  

											
	No.         	 		 		 		  		  	CUSIP No. 43741E 11 1

 VOID AFTER 5:00 P.M., NEW YORK CITY TIME, 
 ON JULY 31, 2013, OR UPON EARLIER CANCELLATION 
 This certifies that
                                        
is the registered holder of the above indicated number of warrants to purchase certain securities (each a “Warrant”). Each Warrant entitles the holder thereof, subject to the provisions contained herein and in the Warrant
Agreement (as defined below), to purchase from Homeowners Choice, Inc., a Florida corporation (the “Company”), one half of a share of the Company’s Common Stock, provided that a single Warrant may not be exercised. Two Warrants
may be exercised to acquire one share of the Company’s Common Stock (each, a “Share”) at the Exercise Price set forth below. The exercise price of each set of two Warrants (the “Exercise Price”) shall be
$9.10 initially, subject to adjustments as set forth in the Warrant Agreement (as defined below). 
 Subject to the terms of the Warrant
Agreement, each Warrant evidenced hereby may be exercised in whole, but not in part, at any time, as specified herein, on any Business Day (as defined below) occurring during the period (the “Exercise Period”) commencing on July 30,
2008 and ending at 5:00 P.M., New York City time, on the earlier to occur of (i) July 31, 2013 and (ii) the day prior to the date fixed for cancellation of the Warrants as provided in Section 6 of the Warrant Agreement (the
“Expiration Date”). Each Warrant remaining unexercised after 5:00 P.M., New York City time on the Expiration Date shall become void, and all rights of the holder of this Warrant Certificate evidencing such Warrant shall
cease. 
 The holder of the Warrants represented by this Warrant Certificate may
exercise any two Warrants by delivering, not later than 5:00 P.M., New York City time, on any Business Day during the Exercise Period (the “Exercise Date”) to American Stock Transfer & Trust Company, LLC (the
“Warrant Agent,” which term includes any successor warrant agent under the Warrant Agreement described below) at its corporate trust department 








 
(i) this Warrant Certificate and the Warrants to be exercised (the “Book-Entry Warrants”) free on the records of The Depository Trust
Company (the “Depository”) to an account of the Warrant Agent at the Depository designated for such purpose in writing by the Warrant Agent to the Depository, (ii) an election to purchase (“Election to
Purchase”), properly executed (A) by the holder hereof on the reverse of this Warrant Certificate or (B) properly executed by the institution in whose account the Warrant is recorded on the records of the Depository (the
“Participant”) substantially in the form included on the reverse hereof, as applicable and (iii) the Exercise Price for each set of Warrants to be exercised in lawful money of the United States of America by certified or
official bank check or by bank wire transfer in immediately available funds. If any of (a) this Warrant Certificate or the Book-Entry Warrants, (b) the Election to Purchase, or (c) the Exercise Price therefor, is received by the
Warrant Agent after 5:00 P.M., New York City time, the Warrants will be deemed to be received and exercised on the Business Day next succeeding the date such items are received and such date shall be the Exercise Date for purposes
hereof. If the date such items are received is not a Business Day, the Warrants will be deemed to be received and exercised on the next succeeding day which is a Business Day and such date shall be the Exercise Date. If the Warrants to be
exercised are received or deemed to be received after the Expiration Date, the exercise thereof will be null and void and any funds delivered to the Warrant Agent will be returned to the holder as soon as practicable. In no event will interest
accrue on funds deposited with the Warrant Agent in respect of an exercise or attempted exercise of Warrants. The validity of any exercise of Warrants will be determined by the Warrant Agent in its sole discretion and such determination will be
final and binding upon the holder of the Warrants and the Company. Neither the Warrant Agent nor the Company shall have any obligation to inform a holder of Warrants of the invalidity of any exercise of Warrants. 
 As used herein, the term “Business Day” means any day that is not a Saturday or Sunday and is not a United States federal holiday or a
day on which banking institutions generally are authorized or obligated by law or regulation to close in New York City. 
 Warrants may be
exercised only in sets of two Warrants. No fractional shares of Common Stock are to be issued upon the exercise of any Warrant and no payment will be made with respect to any fractional share of Common Stock to which any holder of Warrants
might otherwise be entitled upon exercise of Warrants. If fewer than all of the Warrants evidenced by this Warrant Certificate are exercised, a new Warrant Certificate for the number of Warrants remaining unexercised shall be executed by the
Company and countersigned by the Warrant Agent as provided in Section 2 of the Warrant Agreement, and delivered to the holder of this Warrant Certificate at the address specified on the books of the Warrant Agent or as otherwise specified by
such Registered Holder. 
 This Warrant Certificate is issued under and in accordance with the Warrant Agreement, dated as of July 30, 2008
(the “Warrant Agreement”), between the Company and the Warrant Agent and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the holder of this Warrant Certificate and the
beneficial owners of the Warrants represented by this Warrant Certificate consent by acceptance hereof. Copies of the Warrant Agreement are on file and can be inspected at the above-mentioned office of the Warrant Agent and at the office of the
Company at 2340 Drew Street, Suite 200, Clearwater, Florida 33765. 







 After January 30, 2009, the Company may, at its option, cancel in whole or in part (and if in part, by
lot) the then outstanding Warrants upon giving notice in accordance with the terms of the Warrant Agreement (the “Cancellation Notice”), provided, that the closing price per share of the Company’s common stock has
exceeded $11.38 for at least ten (10) trading days within any period of twenty (20) consecutive trading days, including the last trading day of the period. In the event that the Company shall elect to cancel all or a portion of the then
outstanding Warrants, the Company shall fix a date for the cancellation (the “Cancellation Date”). The Warrants may be exercised in accordance with the terms of this Agreement at any time after a Cancellation Notice shall have been
given by the Company; provided, however, that no Warrants may be exercised subsequent to the expiration of the Exercise Period; provided, further, that all rights whatsoever with respect to the Warrants shall cease on the
Cancellation Date. 
 The accrual of dividends, if any, on the Shares issued upon the valid exercise of any Warrant will be governed by the
terms generally applicable to such Shares. From and after the issuance of such Shares, the former holder of the Warrants exercised will be entitled to the benefits generally available to other holders of Shares and such former holder’s
right to receive payments of dividends and any other amounts payable in respect of the Shares shall be governed by, and shall be subject to, the terms and provisions generally applicable to such Shares. 
 The Exercise Price and the number of Shares purchasable upon the exercise of each set of two Warrants shall be subject to adjustment as provided pursuant
to Section 4 of the Warrant Agreement. 
 Prior to the Detachment Date, the Warrants represented by this Warrant Certificate may be
exchanged or transferred only together with the Shares to which such Warrant is attached (together, a “Unit”), and only for the purpose of effecting, or in conjunction with, an exchange or transfer of such Unit. Additionally,
prior to the Detachment Date, each transfer of such Unit on the register of the Units shall operate also to transfer the Warrants included in such Units. From and after the Detachment Date, the above provisions shall be of no further force and
effect. Upon due presentment for registration of transfer or exchange of this Warrant Certificate at the stock transfer division of the Warrant Agent, the Company shall execute, and the Warrant Agent shall countersign and deliver, as provided
in Section 5 of the Warrant Agreement, in the name of the designated transferee one or more new Warrant Certificates of any authorized denomination evidencing in the aggregate a like number of unexercised Warrants, subject to the limitations
provided in the Warrant Agreement. 
 Neither this Warrant Certificate nor the Warrants evidenced hereby shall entitle the holder hereof or
thereof to any of the rights of a holder of the Shares, including, without limitation, the right to receive dividends, if any, or payments upon the liquidation, dissolution or winding up of the Company or to exercise voting rights, if any.








 The Warrant Agreement and this Warrant Certificate may be amended as provided in the Warrant Agreement
including, under certain circumstances described therein, without the consent of the holder of this Warrant Certificate or the Warrants evidenced thereby. 
 THIS WARRANT CERTIFICATE AND ALL RIGHTS HEREUNDER AND UNDER THE WARRANT AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO CONTRACTS
FORMED AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF FLORIDA, WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 This Warrant Certificate shall not be entitled to any benefit under the Warrant Agreement or be valid or obligatory for any purpose,
and no Warrant evidenced hereby may be exercised, unless this Warrant Certificate has been countersigned by the manual signature of the Warrant Agent. 







 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. 
 Dated as of
                              
  

			
	HOMEOWNERS CHOICE, INC.
		
	By:	 	  

	Name:	 	  

	Title:	 	  



  

			
	AMERICAN STOCK TRANSFER
& TRUST COMPANY, LLC, AS WARRANT AGENT
		
	By:	 	  

	Name:	 	  

	Title:	 	  









 [REVERSE] 
 The Corporation will furnish without charge to each shareholder who so requests the powers, designations, preferences and relative, participating, optional, or other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights. 
 Instructions for Exercise of Warrant 
 To exercise the Warrants evidenced hereby, the holder or Participant must, by 5:00 P.M., New York City time, on the specified Exercise Date, deliver
to the Warrant Agent at its stock transfer division, a certified or official bank check or a wire transfer in immediately available funds, in each case payable to the Warrant Agent in an amount equal to the Exercise Price in full for the Warrants
exercised. In addition, the Warrant holder or Participant must provide the information required below and deliver this Warrant Certificate to the Warrant Agent at the address set forth below and the Book-Entry Warrants to the Warrant Agent in its
account with the Depository designated for such purpose. The Warrant Certificate and this Election to Purchase must be received by the Warrant Agent by 5:00 P.M., New York time, on the specified Exercise Date. 
 ELECTION TO PURCHASE 
 TO BE EXECUTED IF
WARRANT HOLDER DESIRES 
 TO EXERCISE THE WARRANTS EVIDENCED HEREBY 
 The undersigned hereby irrevocably elects to exercise, on
                    ,          (the “Exercise Date”),
                     Warrants, evidenced by this Warrant Certificate, to purchase,
                     of the shares of Common Stock (each a “Share”) of Homeowners Choice, Inc., a Florida corporation
(the “Company”), and represents that, on or before the Exercise Date, such holder has tendered payment for such Shares by certified or official bank check or bank wire transfer in immediately available funds to the order of the
Company c/o American Stock Transfer & Trust Company, LLC, in the amount of $          in accordance with the terms hereof. The undersigned requests that said number of Shares be in
fully registered form, registered in such names and delivered, all as specified in accordance with the instructions set forth below. 
 If
said number of Shares is less than all of the Shares purchasable hereunder, the undersigned requests that a new Warrant Certificate evidencing the remaining balance of the Warrants evidenced hereby be issued and delivered to the holder of the
Warrant Certificate unless otherwise specified in the instructions below. 







 Dated:                     ,          
  

					
	Name:	 	  
	    	(Please Print)
		
	  
	    	
	(Insert Social Security or Other Identifying
Number of Holder)	    	
			
	Address:	 	  
	    	
	  
	    	
	  
	    	
			
	Signature:	 	  
	    	

 This Warrant may only be exercised by presentation to the Warrant Agent. 
 The method of delivery of this Warrant Certificate is at the option and risk of the exercising holder and the delivery of this Warrant Certificate will
be deemed to be made only when actually received by the Warrant Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to assure
timely delivery. 
 (Instructions as to form and delivery of Shares and/or Warrant Certificates) 
  

			
	Name in which Shares are to be registered if other than in the name of the registered holder of this Warrant Certificate:	    	  

		
	Address to which Shares are to be mailed if other than to the address of the registered holder of this Warrant Certificate as shown on the books of the Warrant Agent:	    	  

		    	(Street Address)
		
		    	  

		    	(City and State) (Zip Code)









			
	Name in which Warrant Certificate evidencing unexercised Warrants, if any, are to be registered if other than in the name of the registered holder of this Warrant Certificate:	    	  

		
	Address to which certificate representing unexercised Warrants, if any, are to be mailed if other than to the address of the registered holder of this Warrant Certificate as shown on the books
of the Warrant Agent:	    	  

		    	(Street Address)
		
		    	  

		    	(City and State) (Zip Code)
		
		    	Dated:
		
		    	  

		    	Signature
		
		    	Signature must conform in all respects to the name of the holder as specified on the face of this Warrant Certificate. If Shares, or a Warrant Certificate evidencing unexercised Warrants, are
to be issued in a name other than that of the registered holder hereof or are to be delivered to an address other than the address of such holder as shown on the books of the Warrant Agent, the above signature must be guaranteed by an Eligible
Guarantor Institution (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions with membership in an approved Signature Guarantee Medallion Program), pursuant to S.E.C. Rule 17Ad-15.








 SIGNATURE GUARANTEE 
  

			
	 Name of Firm:
	 	  

	 Address:
	 	  

	 Area Code and Number:
	 	  

	 Authorized Signature:
	 	  

	 Name:
	 	  

	 Title:
	 	  

	 Dated:
	 	  









 ASSIGNMENT 
 (FORM OF ASSIGNMENT TO BE EXECUTED IF WARRANT HOLDER 
 DESIRES TO TRANSFER WARRANTS EVIDENCED HEREBY)

 FOR VALUE RECEIVED,                      HEREBY
SELL(S), ASSIGN(S) AND TRANSFER(S) UNTO: 
  

			
	  
	  	  

	(Please print name and address including zip code of assignee)	  	(Please insert social security or other identifying number of assignee)

 the rights represented by the within Warrant Certificate and does hereby irrevocably constitute and appoint
                                        
Attorney to transfer said Warrant Certificate on the books of the Warrant Agent with full power of substitution in the premises. 
 Dated: 
  

			
	  
	 	
	Signature	 	
	
	(Signature must conform in all respects to the name of the holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by an Eligible Guarantor
Institution (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions with membership in an approved Signature Guarantee Medallion Program), pursuant to S.E.C. Rule 17Ad-15.


 SIGNATURE GUARANTEE 
  


			
	 Name of Firm:
	 	  

	 Address:
	 	  

	 Area Code and Number:
	 	  

	 Authorized Signature:
	 	  

	 Name:
	 	  

	 Title:
	 	  

	 Dated: