exhibit103-reinsuranceca






                                                         EXECUTION VERSION        REINSURANCE CAPACITY RIGHT OF FIRST REFUSAL AGREEMENT                THIS REINSURANCE CAPACITY RIGHT OF FIRST REFUSAL AGREEMENT  (this “Agreement”), dated December 2, 2019 (the “Effective Date”), is entered into by and between  FEDNAT HOLDING COMPANY, a Florida corporation (“FedNat”), and 1347 PROPERTY  INSURANCE HOLDINGS INC., a company organized and existing under the laws of Delaware  (“PIH”).  Each of FedNat and PIH are, at times, each individually referred to in this Agreement as  a “Party,” and collectively referred to in this Agreement as the “Parties.”          WHEREAS,  insurance  company  subsidiaries  of  FedNat  (each,  a  “FedNat  Insurance  Company”  and,  collectively,  the  “FedNat  Insurance  Companies”)  may,  from  time  to  time,  negotiate and procure reinsurance in such amounts and on such terms that the FedNat Insurance  Companies deem to be appropriate; and          WHEREAS,  on  the  Effective  Date,  FedNat  is  entering  into  a  transaction  with  PIH,  pursuant to which FedNat will acquire one hundred percent (100%) of the issued and outstanding  capital stock of three subsidiaries of PIH (the “Acquisition”); and                WHEREAS, after the closing of the Acquisition, PIH may provide reinsurance coverage  to insurance providers through its insurance company subsidiaries, and PIH desires to obtain the  opportunity to provide reinsurance coverage to the FedNat Insurance Companies pursuant to the  terms and conditions set forth in this Agreement; and          WHEREAS, it is a condition precedent to the consummation of the Acquisition for the  Parties to enter into this Agreement upon the terms and conditions set forth herein.       NOW, THEREFORE, in consideration of the promises and the mutual covenants contained  herein, and for other good and valuable consideration, the receipt and sufficiency of which are  hereby acknowledged, the Parties agree as follows:          1.    Right of First Refusal.                              (a)   With respect to each purchase after the Effective Date until the conclusion  of the Term (as defined in Section 2) by one or more of the FedNat Insurance Companies of each  layer (each, a “Reinsurance Coverage Layer”) of their annual property catastrophe excess of loss  reinsurance program (the “CAT Reinsurance Program”), PIH shall have a right of first refusal  (each,  a  “Right of  First  Refusal”)  to  sell  through  any  of  its  insurance  company  subsidiaries  a  maximum  of  seven  and  one-half  percent  (7.5%)  of  annual  in  force  limit  of  any  and  each  Reinsurance  Coverage  Layer  so  purchased  by  the  FedNat  Insurance  Companies  (the  “ROFR  Reinsurance Maximum”); provided, that in no event shall PIH have the right to exercise a Right  of First Refusal such that, immediately after the exercise thereof, PIH and its affiliates collectively  would have an annual aggregate in force amount of all reinsurance coverage sold to the FedNat  Insurance  Companies,  in  the  aggregate,  of  greater  than  Fifteen  Million  and  No/100  Dollars  ($15,000,000.00) (the “Reinsurance Limit”).  Each sale by PIH pursuant to a Right of First Refusal  shall be documented under the corresponding Firm Order Terms or Modified Firm Order Terms,  as applicable (each as defined below), and subject in every case to: (I) the terms, conditions, and    4812-0918-3365 





 






requirements  of  all  applicable  regulations,  rules,  and  laws  (including,  without  limitation,  the  applicable regulations and laws of the State of Florida) (collectively, “Applicable Laws”) (it being  acknowledged and agreed that PIH has no right  to exercise a Right of First Refusal or to sell  reinsurance  to  any  FedNat  Insurance  Company  pursuant  to  this  Agreement  if  doing  so  would  violate  any  Applicable  Laws);  and  (II)  the  other  terms  and  conditions  of  this Section  1.   All  reinsurance sold by PIH pursuant to a Right of First Refusal shall be memorialized by an agreement  in such form and subject to such terms and conditions as are customary in the property and casualty  insurance industry (each, a “Reinsurance Agreement”).  If any Reinsurance Agreement is entered  into  by  PIH  prior  to  the  conclusion  of  the  Term,  but  the  term  of  the  applicable  Reinsurance  Agreement (the “Reinsurance Period”) otherwise ends after the conclusion of the Term, then such  Reinsurance Agreement shall remain in full force and effect after the Term in accordance with the  terms and provisions of the applicable Reinsurance Agreement.                            (b)   FedNat shall cause the FedNat Insurance Companies, either through one or  more reinsurance brokers selected by FedNat (each, a “Broker” and, collectively, the “Brokers”)  or directly through a third party reinsurer of FedNat’s choosing, in each case in FedNat’s sole  discretion  from  time  to  time,  to  seek  written  quotes  for,  and  terms  and  conditions  of,  each  Reinsurance  Coverage  Layer  to  be  purchased  pursuant  to  the  CAT  Reinsurance  Program  in  appropriate reinsurance markets and from potentially eligible third party reinsurers (including PIH)  for a reasonable period of time, and to concurrently provide all exposure and related information  materially  relevant  and  customarily  requested  for  such  Reinsurance  Coverage  Layer  to  such  potential third party reinsurers (including PIH), subject to such third party reinsurers’ (and PIH’s)  execution and delivery to FedNat of a Standard Non-Disclosure Agreement.  Thereafter, FedNat  shall  cause  the  applicable  FedNat  Insurance  Company  to  determine  firm  order  terms  for  the  Reinsurance Coverage Layer (the “Firm Order Terms”) and communicate those Firm Order Terms  to  the  potential  third  party  reinsurers  (including  PIH).  The  final  executed  terms  of  the  CAT  Reinsurance Program for each Reinsurance Coverage Layer entered into by applicable FedNat  Insurance Company shall be the same as described in the Firm Order Terms or Modified Firm  Order Terms (as defined below), as applicable. PIH shall have a period of three (3) business days  after its receipt of Firm Order Terms to elect in writing (in the manner provided in Section 11) to  provide all or a portion  of the ROFR Reinsurance Maximum with respect to that Reinsurance  Coverage Layer at the Firm Order Terms without any additional terms, conditions, or stipulations,  but only if the exercise of the Right of First Refusal and the sale of reinsurance pursuant thereto  would  not  cause  PIH  and  its  affiliates  to  collectively  exceed  the  Reinsurance  Limit  as  of  the  applicable time. For the avoidance of doubt, PIH may exercise the Right of First Refusal for only  a portion of a ROFR Reinsurance Maximum applicable to any or each of the Reinsurance Coverage  Layer in order to comply with the Reinsurance Limit. Any such election of a Right of First Refusal  by PIH shall be irrevocable once it has been made, but shall be subject to the terms of the applicable  Reinsurance Agreement as of the applicable time.                             (c)   To the extent that PIH elects not to provide or participate in a Reinsurance  Coverage Layer at the Firm Order Terms, or fails to notify FedNat of its election within the three  (3)  business  day  time  frame  set  forth  in Section  1(b), then  the  applicable  FedNat  Insurance  Company shall have the right to accept PIH’s allotment of such Reinsurance Coverage Layer at  the Firm Order Terms from any combination of other eligible reinsurers willing to offer coverage  at the Firm Order Terms; provided, that in the event that the Firm Order Terms are materially                                         -2- 





 






modified with respect to a Reinsurance Coverage Layer (which, for the avoidance of doubt, shall  mean any change that materially changes the price or any material coverage terms or conditions  of such Firm Order Terms that are more favorable to reinsurance providers) (the “Modified Firm  Order Terms”), FedNat shall cause the applicable FedNat Insurance Company to first provide PIH  with a new Right of First Refusal with respect to that Reinsurance Coverage Layer at the Modified  Firm Order Terms.  In such case, PIH shall have two (2) business days following its receipt of the  Modified Firm Order Terms to elect in writing (in the manner provided in Section 11) to exercise  the Right of First Refusal to provide all or a portion of the ROFR Insurance Maximum for the  applicable  Reinsurance  Coverage  Layer  on  such  Modified  Firm  Order  Terms;  otherwise,  the  applicable  FedNat  Insurance  Company  shall  have  the  right  to  accept  PIH’s  allotment  of  such  Reinsurance Coverage Layer at the Modified Firm Order Terms from any combination of other  eligible reinsurers willing to offer coverage at the Modified Firm Order Terms.  Notwithstanding  any provision of this Agreement to the contrary, in no event shall PIH be eligible to sell reinsurance  to any FedNat Insurance Company in excess of the ROFR Reinsurance Maximum with respect to  any Reinsurance Coverage  Layer, or make any  sale that would cause PIH and its  affiliates  to  collectively exceed the Reinsurance Limit.                      (d)   Upon entry into any Reinsurance Agreement, and as a condition precedent  to the exercise of a Right of First Refusal, the applicable PIH insurance company that has entered  into any Reinsurance Agreement shall both: (i) be duly licensed and accredited in all applicable  jurisdictions  to  provide  all  reinsurance  coverage  that  is  contemplated  by  the  Reinsurance  Agreement; and (ii) either – (A) both maintain an insurer financial strength rating from A.M. Best  Company, Inc. of not less than “A-” and be an accredited insurer in Florida such that FedNat can  take credit for reinsurance in accordance with all Applicable Laws, or (B) fully collateralize with  cash, letters of credit, or appropriate trust agreement equal in value to one hundred percent (100%)  of its share of the total limit of each applicable Reinsurance Coverage Layer in a manner acceptable  to the applicable FedNat Insurance Company and acceptable to any applicable insurance regulator  pursuant to Applicable Laws; provided, that, if PIH utilizes a trust agreement, whether in whole  or in part, to satisfy this condition precedent, then – (Y) no more than one trust agreement shall be  used by PIH to satisfy this condition with respect to all Insurance Coverage Layers, and (Z) the  materials terms and provisions of the Trust that relate to the availability and release of funds to  satisfy reinsurance obligations shall be in form and substance reasonably satisfactory to FedNat.   The applicable PIH insurance company shall have seventy two (72) hours from such election, or  until  the  effective  date  of  the  applicable  CAT  Reinsurance  Program  (whichever  is  sooner),  to  satisfy the condition set forth in Section 1(d)(ii) and provide reasonable proof thereof to FedNat;  otherwise, PIH’s election to exercise the Right of First Refusal shall be deemed by the Parties to  be waived and declined with respect to the Reinsurance Coverage Layers in question.  Each year  during  the  Term,  within  a  reasonable  period  of  time  prior  to  the  implementation  of  the  CAT  Reinsurance  Program  for  that  year,  FedNat  may  request  that  PIH  reasonably  demonstrate  to  FedNat that either of the conditions listed in subparts (i) and (ii) of this Section 1(d) will be satisfied  prior to the effective date of such CAT Reinsurance Program.                      (e)   PIH’s right to exercise a Right of First Refusal shall exist each time that  FedNat  or  a  FedNat  Insurance  Company  desires  to  purchase   Reinsurance  Coverage  Layers  pursuant to the CAT Reinsurance Program during the Term. For the avoidance of doubt, neither  FedNat nor any FedNat Insurance Company shall purchase Reinsurance Coverage Layers from                                         -3- 





 






any other third party reinsurer unless and until it has complied with the obligations to PIH in this  Section 1.                2.    Term.  Subject to the terms of Section 17 below, PIH shall have a Right of First  Refusal  with  respect  to  any  Reinsurance  Coverage  Layer  purchased  by  a  FedNat  Insurance  Company pursuant to the CAT Reinsurance Program, pursuant to the terms and conditions set  forth in Section 1, for any Reinsurance Period commencing on or after the Effective Date and prior  to the fifth (5th) anniversary of the Effective Date (the “Term”) only.                 3.    Confidential and Proprietary Information.  The Parties acknowledge and agree  that this Agreement does not constitute a sale, lease, license or other transfer by either Party of any  proprietary systems  or intellectual property of the other Party.  FedNat  shall have the right  to  require, as a condition precedent to providing exposure and related information (including, without  limitation, reinsurance submission and modelling data) that is materially relevant and customarily  requested for any Reinsurance Layer, to require all third party reinsurers (including PIH) to execute  and deliver to FedNat non-disclosure agreements in reasonable form and substance provided by  FedNat (with no material deviation with respect to any individual reinsurer or PIH) with respect  to such information (a “Standard Non-Disclosure Agreement”).                4.    Relationship among the Parties; Enforceability.  The terms of this Agreement  are not intended to make any of the Parties, or any of their respective subsidiaries or affiliates, a  joint employer for any purpose. Each of the Parties agrees that the provisions of this Agreement  as a whole are not intended to, and do not, constitute control by one Party of the other Party or any  subsidiaries or affiliates of the other Party, or provide a Party with the ability to control the other  Party or any subsidiaries or affiliates of the other Party, and each Party expressly disclaims any  right or power under this Agreement to exercise any power whatsoever over the management or  policies  of  the  other  Party  or  any  subsidiaries  or  affiliates  of  the  other  Party.   The  Parties  acknowledge and agree that FedNat and the FedNat Insurance Companies have sole and absolute  discretion over whether (a) to purchase reinsurance, and (b) the timing, amount, and types of any  reinsurance  and  Reinsurance  Coverage  Layers  they  purchase  (subject  to  the  terms  of  this  Agreement).  Nothing in this Agreement shall be construed to oblige either Party to act in breach  of the requirements of any Applicable Laws, including, without limitation, securities, insurance  and trade regulation laws and regulations, written policy statements of securities commissions,  insurance and other regulatory authorities, and the bylaws, rules, regulations and written policy  statements  of  relevant  securities  and  self-regulatory  organizations.   Each  Party  represents,  warrants, covenants and agrees to and in favor of the other Party that this Agreement, and the  obligations contained herein, are valid, binding and enforceable against it, and that the execution,  delivery and performance of the obligations set forth herein will not violate any law, rule, order,  judgment, decree, lien, regulation, contract, agreement or other restriction of any kind binding on  it.                5.    Governing Law.  This Agreement and all actions and proceedings (whether at law,  in contract or in tort) that may be based upon, arise out of or relate to this Agreement, or the  negotiation, execution or performance hereof, shall be governed by and construed in accordance  with the laws of the State of Florida without regard to principles of conflicts of law.                                                 -4- 





 






      6.    Submission to Jurisdiction.  Each Party agrees that it shall bring any action or  proceeding  between  the  Parties  arising  out  of  or  related  to  this  Agreement  or  the  transactions  contained in or contemplated by this Agreement exclusively in the United States District Court for  the Southern District of Florida or another court sitting in Broward County, Florida (the “Chosen  Courts”),  and  with  respect  to  any  such  action  or  proceeding:  (a)  irrevocably  submits  to  the  exclusive jurisdiction of the Chosen Courts; (b) waives any objection to laying venue in any such  action or proceeding in the Chosen Courts; (c) waives any objection that the Chosen Courts are an  inconvenient forum or do not have jurisdiction over any party hereto; and (d) agrees that service  of process upon such party in any such action or proceeding shall be effective if notice is given in  accordance with Section 11.                7.    Waiver  of  Jury  Trial.   EACH  PARTY  ACKNOWLEDGES  AND  AGREES  THAT  ANY  CONTROVERSY  WHICH  MAY  ARISE  UNDER  THIS  AGREEMENT  IS  LIKELY  TO  INVOLVE  COMPLICATED  AND  DIFFICULT  ISSUES,  AND  THEREFORE  EACH  SUCH  PARTY  HEREBY  IRREVOCABLY  AND  UNCONDITIONALLY  WAIVES  ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY  LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS  AGREEMENT,  OR  THE  TRANSACTIONS  CONTEMPLATED  BY  THIS  AGREEMENT.   EACH  PARTY  CERTIFIES  AND  ACKNOWLEDGES  THAT  (I)  NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR  OTHERWISE,  THAT  SUCH  OTHER  PARTY  WOULD  NOT,  IN  THE  EVENT  OF  LITIGATION,  SEEK  TO  ENFORCE  THE  FOREGOING  WAIVER,  (II)  EACH    PARTY  UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III)  EACH  PARTY  MAKES  THIS  WAIVER  VOLUNTARILY,  AND  (IV)  EACH  PARTY  HAS  BEEN  INDUCED  TO  ENTER  INTO  THIS  AGREEMENT  BY,  AMONG  OTHER  THINGS,  THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.                8.    Assignment.                        (a)   Definitions.   As  used  in  this  Agreement,  the  term  “affiliate(s)”  or  “affiliated” shall mean any entity that controls, is controlled by or is under common control with  the other entity. As used in this Agreement, the term “subsidiary” or “subsidiaries” with respect to  any person means any entity of which (or in which) more than 50% of the issued and outstanding  voting interests are directly or indirectly owned by that person or the entity is otherwise controlled  by that person. The term “person” means any individual, corporation, limited liability company,  partnership, joint venture, association, trust, or any such entity.                            (b)   Prohibition on Assignment; Exceptions.  Neither this Agreement nor the  rights or obligations hereunder shall be assignable by FedNat or FedNat Insurance Companies or  their affiliates without the prior written consent of PIH.  Except as expressly set forth in this Section  8(b), neither this Agreement nor the rights or obligations hereunder shall be assignable by PIH, its  affiliates,  or  its  successors  and  assigns  without  the  prior  written  consent  of  FedNat.   Notwithstanding anything to the contrary contained in Section 10 hereof, this Agreement may be  assigned, sold or otherwise transferred by PIH without any consideration to FedNat or FedNat  Insurance Companies in the following manners, subject to the terms and conditions of Section 8(c)                                         -5- 





 






and subject to the approval of FedNat (such approval not to be unreasonably withheld, conditioned,  or delayed so long as the terms and requirements of Section 8(c) are satisfied):                            (i)   PIH may assign this entire Agreement (but not a portion hereof) to        any one of its subsidiaries or affiliates.                                        (ii)  PIH may sell assign or otherwise transfer (“Transfer”) this entire        Agreement  (but  not  a portion  hereof)  to  an  unaffiliated  party  (“Transferee”).  The        consideration for the Transfer will be at the sole discretion of PIH and the Transferee.                      (c)   Conditions to Assignment.                                  (i)   As a condition precedent to PIH’s or any successor’s or permitted        assign’s (an “Assignor”) assignment of this Agreement to one of the persons set forth in        Section  8(b) (an  “Assignee”),  the  Assignor  shall  deliver  to  FedNat  prior  to  such        assignment:  (A)  an  assignment  and  assumption  agreement  in  form  and  substance        reasonably satisfactory to FedNat and pursuant to which Assignee agrees to be bound by        all of the terms and provisions of this Agreement in its entirety as “PIH” (including all of        the conditions required for the exercise of a Right of First Refusal), without condition or        reservation;  and  (B)  a  Standard  Non-Disclosure  Agreement  provided  by  FedNat  and        executed by the Assignee pursuant to which Assignee agrees to maintain the confidentiality        of  all  exposure  and  related  information  (including,  without  limitation,  reinsurance        submission and modelling data).                                        (ii)  In the event that an Assignor elects to assign this Agreement to a        person who is not an affiliate or subsidiary of PIH (a “Proposed Third-Party Assignee”),        prior to such assignment and as a condition precedent thereof, the Assignor shall deliver        written notice (in the manner required by Section 11) to FedNat of all material terms and        conditions of such assignment (the “Assignment Terms”). FedNat shall then have a period        of  three  (3)  business  days  after  its  receipt  of  written  notice  of  all  material  terms  and        conditions to elect in writing (in the manner provided in Section 11) to elect to assume this        Agreement from the Assignor pursuant to the Assignment Terms, without any additional        terms, conditions, or stipulations.  Any such election by FedNat shall be irrevocable once        it has been made.  To the extent that FedNat elects not to exercise its right to assume this        Agreement pursuant to the Assignment Terms, or fails to notify Assignor of its election        within the three (3) business day time frame set forth above in this Section 8(c)(ii), then        Assignor shall have the right for a period of thirty (30) days to assign this Agreement to        the Proposed Third-Party Assignee pursuant to the Assignment Terms (subject to the other        conditions  precedent  set  forth  in  this Section  8); provided,  that  in the  event  that  the        assignment  is  not  consummated  within  such  thirty  (30)  day  period,  or  the  Assignment        Terms are materially modified (which, for the avoidance of doubt, shall mean any change        that materially  affects  the price or any material terms or conditions  of the Assignment        Terms  that  are  more  favorable  to  the  Proposed  Assignee)  (the  “Modified  Assignment        Terms”), the Assignor shall again provide FedNat with a new right of first refusal with        respect to the assignment of this Agreement at the Modified Assignment Terms.  In such        case,  FedNat  shall  have  two  (2)  business  days  following  its  receipt  of  the  Modified                                         -6- 





 






      Additional Terms to elect in writing (in the manner provided in Section 11) to assume this        Agreement on such Modified Additional Terms.  No Assignor shall make any assignment        of this Agreement unless and until it has complied with the requirements of this Section        8(c)(ii).                                        (iii) Notwithstanding  anything  to  the  contrary  set  forth  in  this        Agreement, in no event shall PIH or any of its successors or permitted assigns assign this        Agreement  to  a  person  that  sells  residential  property  insurance  in  the  State  of  Florida        directly to the primary insured.                             (d)   Binding Effect.  This Agreement shall inure to the benefit of and be binding  upon the Parties and their respective successors and permitted assigns.                9.    Entire  Agreement.   This  Agreement  constitutes  the  entire  agreement,  and  supersedes all prior agreements and understandings (oral and written), by and among the Parties  with respect to the subject matter hereof.                10.   No Third Party Rights. Nothing contained in this Agreement, express or implied,  establishes or creates, or is intended or will be construed to establish or create, any right in or  remedy of, or any duty or obligation to, any third party.                11.   Notices.   All  notices,  requests,  claims,  demands,  and  other  communication  hereunder will be in  writing and shall be deemed to  have been duly  given:  (a) on the date of  delivery,  if  delivered  by  hand  to  the  address  below  (or  to  such  other  address  as  a  Party  may  designate by written notice to other Party); (b) on the date of confirmed receipt if delivered by  certified mail, postage prepaid and return receipt requested addressed as below (or to such other  address as a Party may designate by written notice to other Party); or (c) for the purposes of notices,  elections and other communications pursuant to the procedures set forth in Section 1, on the date  of transmittal via electronic mail to the e-mail addresses of the applicable person or party involved  with the reinsurance arrangements for the reinsurance coverage at such time, with a copy delivered  to the individuals identified below.                If to FedNat or any FedNat Insurance Company:                FedNat Holding Company        14050 NW 14th Street, Suite 180        Sunrise, FL 33323        Attention: Michael H. Braun, CEO and President        E-Mail: mbraun@fednat.com                      with a copy (which shall not constitute notice) to:                  Nelson Mullins Broad and Cassel        2 S. Biscayne Blvd., # 2100        Miami, FL 33131        Attention:  Nina Gordon, Esq.                                         -7- 





 






      E-Mail:  nina.gordon@nelsonmullins.com                        If to PIH:                D. Kyle Cerminara        Fundamental Global Investors, LLC        4201 Congress Street, Suite 140        Charlotte, North Carolina 28209        E-Mail:  kyle@fundamentalglobal.com          with a copy (which shall not constitute notice) to:                                   Thompson Hine LLP        3900 Key Center        127 Public Square        Cleveland, OH 44114        Attention:  Derek D. Bork, Esq.        E-Mail:  derek.bork@thompsonhine.com          12.   Counterparts.  This Agreement may be executed in one or more counterparts, and  may  be  exchanged  in  electronic  form  (including  by  PDF),  each  of  which  shall  be  deemed  an  original, but all of which shall constitute one and the same instrument.                13.   Amendment; Modification.  The Parties may by written agreement duly signed  by both Parties, subject to any regulatory approval that may be required: (a) extend the time for  the performance of any of the obligations or other acts of the Parties; (b) waive any inaccuracies  in the documents delivered pursuant to this Agreement; and (c) waive compliance with or modify,  amend or supplement  any  of the agreements  contained in this  Agreement  or waive or modify  performance of any of the obligations of any of the Parties. This Agreement may not be amended  or modified except by an instrument in writing duly signed on behalf of the Parties.                14.   Waiver. No failure by any Party to take any action or assert any right hereunder  shall be deemed to be a waiver of its right to take any action or assert any right hereunder with  respect to any future occurrence of those circumstances.                15.   Severability.  To the extent any provision of this Agreement shall be invalid or  unenforceable, it shall be considered deleted from this Agreement and the remaining provisions of  this Agreement shall be unaffected and shall continue in full force and effect. Notwithstanding any  implication in this Section 15 to the contrary, if any part of the Agreement is found to be unlawful  or impermissible by a court or administrative body of competent jurisdiction, the Parties shall use  reasonable efforts to amend this Agreement to address the concerns in a manner that results in a  lawful and permissible agreement.                16.   Headings.  Headings contained in this Agreement are for reference purposes only,  and they shall not affect in any way the meaning or interpretation of this Agreement.                                         -8- 





 






      17.   Termination.  This Agreement, the Right of First Refusal, and all rights of  PIH  (including  its  affiliates  and  assigns)  and  any  Transferee(s)  to  participate  in  any  Reinsurance  Coverage Layers shall terminate upon the expiration of the Term, except as set forth in Section  1(a). This Agreement may only otherwise be terminated by mutual consent of the Parties, or as  otherwise provided herein.  Either Party may terminate this Agreement in the event that the other  Party either: (a) commits a material breach of the terms of the Agreement and has been given  written notice and at least thirty (30) days’ prior opportunity to cure such breach, and fails to do  so; or (b) is deemed insolvent by applicable regulatory or judicial authorities, or is the subject of  conservation,  rehabilitation,  liquidation,  bankruptcy  or  other  similar  insolvency  proceedings,  which proceedings, if involuntarily instituted, are not dismissed within sixty (60) days after the  initiation  of  the  proceedings  (provided,  that  a  Party  may  elect  to  terminate  this Agreement  immediately if such proceedings are voluntarily initiated by the other Party with respect to itself).                18.   Survival.   The  provisions  of Sections  3  through  16,  and  this Section  18,  shall  survive the expiration or earlier termination of this Agreement.                19.   Attorneys’ Fees. In the event of any dispute or controversy between the Parties  relating to the interpretation of this Agreement or to the transactions contemplated hereby, the  prevailing Party shall be entitled to recover from the non-prevailing Party reasonable attorneys’  fees  and  expenses  incurred  by  the  prevailing  Party.   Such  award  shall  include  post-judgment  attorneys’ fees and costs.                  [Remainder of Page Intentionally Blank.  Signature Page Follows.]                                                      -9- 





 






         IN WITNESS WHEREOF, the Parties have caused to be executed and delivered by their  duly authorized officers this Agreement to be effective as of the Effective Date.                                          FEDNAT:                                                                            FEDNAT  HOLDING  COMPANY,        a  Florida                                      corporation                                                                                                                  By:  /s/ Michael Braun                                                          Name:  Michael Braun                                                            Title:  Chief Executive Officer                                                                                                                                                                   PIH:                                                                            1347  PROPERTY  INSURANCE  HOLDINGS,                                      INC., a Delaware corporation                                                                                                                  By:  /s/ John S. Hill                                                           Name:  John S. Hill                                                             Title:  V-P, CFO & Secretary                                                    [End of Agreement.]                                                                      SIGNATURE PAGE TO          REINSURANCE CAPACITY RIGHT OF FIRST REFUSAL AGREEMENT