Document:

EX-10.45

 EXHIBIT 10.45 

 

					
	

	  	 STATE BOARD OF ADMINISTRATION

OF FLORIDA
  

1801 HERMITAGE BOULEVARD, SUITE 100

TALLAHASSEE, FLORIDA 32308
 (850) 488-4406
  
 POST OFFICE
BOX 13300
 32317-3300
	  	 RON DESANTIS

GOVERNOR
 CHAIR

 
 JIMMY PATRONIS

CHIEF FINANCIAL OFFICER
  

ASHLEY MOODY
 ATTORNEY GENERAL

 
 ASHBEL C. WILLIAMS

EXECUTIVE DIRECTOR &

CHIEF INVESTMENT OFFICER

 REIMBURSEMENT CONTRACT 

Effective: June 1, 2019 

(“Contract”) 

between 
 HOMEOWNERS
CHOICE PROPERTY AND CASUALTY INSURANCE COMPANY 
 (“Company”) 

NAIC # 12944 
 and 

THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA (“SBA”) 

WHICH ADMINISTERS THE FLORIDA HURRICANE CATASTROPHE FUND (“FHCF”) 

PREAMBLE 
 Section 215.555, Florida Statutes creates
the FHCF and directs the SBA to administer the FHCF. This Contract, consisting of the principal document entitled Reimbursement Contract, addressing the mandatory FHCF coverage, and Addenda, is subject to Section 215.555, Florida Statutes, and
to any administrative rule adopted pursuant thereto, and is not intended to be in conflict therewith. All provisions in the principal document are equally applicable to each Addendum unless specifically superseded by one of the Addenda. 

In consideration of the promises set forth in this Contract, the parties agree as follows: 

ARTICLE I—SCOPE OF AGREEMENT 
 As a condition
precedent to the SBA’s obligations under this Contract, the Company shall report to the SBA in a specified format the business it writes which is described in this Contract as Covered Policies. The terms of this Contract shall determine the
rights and obligations of the parties. This Contract provides reimbursement to the Company under certain circumstances, as described herein, and does not provide or extend insurance or reinsurance coverage to any person, firm, corporation or other
entity. The SBA shall reimburse the Company for its Ultimate Net Loss on Covered Policies, which were in force and in effect at the time of the Covered Event causing the Loss, in excess of the Company’s Retention as a result of each Covered
Event commencing during the Contract Year, to the extent funds are available, all as hereinafter defined. 
 ARTICLE II—PARTIES TO THE CONTRACT

 This Contract is solely between the Company, an Authorized Insurer or any entity writing Covered Policies under Section 627.351, Florida
Statutes, in the State of Florida, and the SBA. In no instance shall any 

  

					
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insured of the Company, any claimant against an insured of the Company, or any other third party have any rights under this Contract, except as provided in Article XV. The SBA will disburse funds
only to the Company, except as provided for in Article XV. The Company shall not, without the prior approval of the Florida Office of Insurance Regulation, sell, assign, or transfer to any third party, in return for a fee or other consideration any
sums the FHCF pays under this Contract or the right to receive such sums. 
 ARTICLE III – TERM; EXECUTION 

 

	(1)	 Term 

This Contract applies to Losses from Covered Events which commence during the period from 12:00:01 a.m., Eastern Time, June 1,2019, to
12:00 midnight, Eastern Time, May 31, 2020 (the “Contract Year”). The SBA shall not be liable for Losses from Covered Events which commence after the effective time and date of expiration or termination. Should this Contract expire or
terminate while a Covered Event is in progress, the SBA shall be responsible for such Covered Event in progress in the same manner and to the same extent it would have been responsible had the Contract expired the day following the conclusion of the
Covered Event in progress. 
  

	(2)	 Mandatory Nature of this Contract 

 

	 	(a)	 Statutory Requirement 

This Contract has been adopted as part of Rule 19-8.010, Florida Administrative Code (F.A.C.), in
fulfillment of the statutory requirement that the SBA enter into a Contract with each Company writing Covered Policies in Florida. Under Section 215.555(4)(a), Florida Statutes, the SBA must enter into such a Contract with each such Company,
and each such Company must enter into the Contract as a condition of doing business in Florida. Under Section 215.555(16)(c), Florida Statutes, Companies writing Covered Policies must execute the Contract by March 1 of the immediately
preceding Contract Year. 
  

	 	(b)	 Duty to Provide a Fully and Timely Executed Copy of this Contract to the FHCF Administrator

 The Company must provide a fully executed copy of this Contract in electronic form to the Administrator no later
than the March 1 statutory deadline for execution, or, in the case of a New Participant, no later than 30 days after the New Participant began writing Covered Policies. 
  

	(3)	 Contract Deemed Executed Notwithstanding Execution Errors 

Except with respect to New Participants, this Contract is deemed to have been executed by the Company as of the March 1 statutory
deadline, notwithstanding the fact that the Coverage Level election in Article XX(1)(b) may be invalid, and notwithstanding the fact that the person purporting to execute the Contract on the part of the Company may have lacked the requisite
authority. With respect to New Participants, this Contract is deemed to have been executed by the New Participant as of the date on which the New Participant began writing Covered Policies; coverage shall be determined as provided in paragraphs
(c) and (d). Execution of this Contract by or on behalf of an entity that does not write Covered Policies is void. If the Company failed to timely submit an executed copy of this Contract, or if the executed Contract includes an invalid
Coverage Level election under Article XX, the Company’s Coverage Level shall be deemed as follows: 
  

	 	(a)	 For a Company that is a member of a National Association of Insurance Commissioners (NAIC) group, the same
Coverage Level selected by the other Companies of the same NAIC group shall be deemed. If executed Contracts for none of the members of an NAIC group have been received by the FHCF Administrator, the Coverage Level from the prior Contract Year shall
be deemed. 

  

	 	(b)	 For a Company that is not a member of an NAIC group under which other Companies are active participants in the
FHCF, the Coverage Level from the prior Contract Year shall be deemed. 

  

	 	(c)	 For a New Participant that is a member of an NAIC group, the same Coverage Level selected by the other
Companies of the same NAIC group shall be deemed. 

  

					
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	 	(d)	 For a New Participant that is not a member of an NAIC group under which other Companies are active participants
in the FHCF, the 45%, 75% or 90% Coverage Levels may be selected if the FHCF Administrator receives executed Contracts within 30 calendar days after the effective date of the first Covered Policy, otherwise, the 45% Coverage Level shall be deemed to
have been selected. 

 ARTICLE IV – LIABILITY OF THE FHCF 

 

	(1)	 The SBA shall reimburse the Company with respect to each Covered Event commencing during the Contract Year in
the amount of Ultimate Net Loss paid by the Company in excess of the Company’s Retention, as adjusted pursuant to the definition of Retention in Article V, multiplied by the applicable Coverage Level, plus 5% of the reimbursed Losses as a Loss
Adjustment Expense Allowance, the total of which shall not exceed the Company’s Limit. 

  

	(2)	 Section 215.555(4)(c)1., Florida Statutes provides that the obligation of the FHCF with respect to all
Contracts covering a particular Contract Year shall not exceed the Actual Claims-Paying Capacity of the FHCF up to a specified dollar limit. 

  

	(3)	 In order to assure that reimbursements do not exceed the statutory limit on the obligation of the FHCF provided
in Section 215.555(4)(c)1., Florida Statutes, the SBA shall, upon the occurrence of a Covered Event, evaluate the potential Losses to the FHCF and the FHCF’s capacity at the time of the event. The initial Projected Payout Multiple used to
reimburse the Company for its Losses shall not exceed the Projected Payout Multiple as calculated based on the capacity needed to provide the FHCF’s coverage. If it appears that the Estimated Claims-Paying Capacity may be exceeded, the SBA
shall reduce the projected payout factors or multiples for determining each participating insurer’s projected payout uniformly among all insurers to reflect the Estimated Claims-Paying Capacity. 

 

	(4)	 Reimbursement amounts shall not be reduced by reinsurance paid or payable to the Company from other sources.
Once the Company’s Limit has been exhausted, the Company will not be entitled to further reimbursements. 

 ARTICLE V –
DEFINITIONS 
 As used in this Contract, the following words and phrases are defined to mean: 

 

	(1)	 Actual Claims-Paying Capacity of the FHCF 

This term means the sum of the Balance of the Fund as of December 31 of a Contract Year, plus any reinsurance purchased by the FHCF, plus
the amount the SBA is able to raise through the issuance of revenue bonds under Section 215.555(6), Florida Statutes. 
  

	(2)	 Actuarially Indicated 

This term means an amount determined according to principles of actuarial science to be adequate, but not excessive, in the aggregate, to pay
current and future obligations and expenses of the fund, including additional amounts if needed to pay debt service on revenue bonds and to provide required debt service coverage in excess of the amounts required to pay actual debt service on
revenue bonds, and determined according to principles of actuarial science to reflect each insurer’s relative exposure to hurricane losses. 
  

	(3)	 Additional Living Expense (ALE) 

ALE Losses covered by the FHCF are not to exceed 40 percent of the insured value of a Residential Structure or its contents based on the
coverage provided in the policy. Fair rental value, loss of rents, or business interruption losses are not covered by the FHCF. 
  

	(4)	 Administrator 

This term means the entity with which the SBA contracts to perform administrative tasks associated with the operations of the FHCF. The current
Administrator is Paragon Strategic Solutions Inc., 8200 Tower, 5600 West 83’1 Street, Suite 1100, Minneapolis, Minnesota 55437. The telephone number is (800)
689-3863, and the facsimile number is (800) 264-0492. 

  

					
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	(5)	 Authorized Insurer 

This term is defined in Section 624.09(1), Florida Statutes. 
  

	(6)	 Balance of the Fund as of December 31 or Fund Balance 

This term means the amount of assets available to pay claims resulting from Covered Events which occurred during the Contract Year, not
including any pre-event or post-event bonds, reinsurance, or proceeds from other financing mechanisms. 
  

	(7)	 Borrowing Capacity 

This term means the amount of funds which are able to be raised by the issuance of revenue bonds or through other financing mechanisms, less
bond issuance expenses and reserves. 
  

	(8)	 Citizens Property Insurance Corporation (Citizens) 

This term means Citizens Property Insurance Corporation as created under Section 627.351(6), Florida Statutes. For the purposes of the
FHCF, Citizens Property Insurance Corporation incorporates two accounts, (a) the coastal account and (b) the personal lines and commercial lines accounts. Each account is treated by the FHCF as if it were a separate participating insurer
with its own reportable exposures, Reimbursement Premium, Retention, and Ultimate Net Loss. 
  

	(9)	 Covered Event 

This term means any one storm declared to be a hurricane by the National Hurricane Center which causes insured losses in Florida. A Covered
Event begins when a hurricane causes damage in Florida while it is a hurricane and continues throughout any subsequent downgrades in storm status by the National Hurricane Center regardless of whether the hurricane makes landfall. Any storm,
including a tropical storm, which does not become a hurricane is not a Covered Event. 
  

	(10)	 Coverage Level 

This term means the level of reimbursement (90%, 75%, or 45%), as elected by the Company under Article XX or deemed under Article III(3), which
is used in determining reimbursement under Article IV. 
  

	(11)	 Covered Policy 

 

	 	(a)	 Covered Policy, as defined in Section 215.555(2)(c), Florida Statutes, is further clarified to mean only
that portion of a binder, policy or contract of insurance that insures real or personal property located in the State of Florida to the extent such policy insures a Residential Structure or the contents of a Residential Structure, located in the
State of Florida. 

  

	 	(b)	 Covered Policy also includes any collateral protection insurance policy covering personal residences which
protects both the borrower’s and the lender’s financial interest, in an amount at least equal to the coverage for the dwelling in place under the lapsed homeowner’s policy, if such policy can be accurately reported as required in
Section 215.555(5), Florida Statutes. A Company will be deemed to be able to accurately report data if the required data, as specified in the Premium Formula adopted in Section 215.555(5), Florida Statutes, are available.

  

	 	(c)	 Covered Policy does not include any policy or exposure excluded under Article VI. 

 

	(12)	 Deductible Buy-Back Policy 

This term means a specific policy that provides coverage to a policyholder for some portion of the policyholder’s deductible under a
policy issued by another insurer. 
  

	(13)	 Estimated Claims-Paying Capacity of the FHCF 

This term means the sum of the projected Balance of the Fund as of December 31 of a Contract Year, plus any reinsurance purchased by the
FHCF, plus the most recent estimate of the Borrowing Capacity of the FHCF, determined pursuant to Section 215.555(4)(c), Florida Statutes. 
  

	(14)	 Excess Policy 

This term means, for the purposes of this Contract, a policy that provides insurance protection for large commercial property risks and that
provides a layer of coverage above a primary layer (which is insured by a different insurer) that acts much the same as a very large deductible. 

  

					
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	(15)	 Insurer Group 

For purposes of the Coverage Level election in Section 215.555(4)(b), Florida Statutes, Insurer Group means the group designation assigned
by the National Association of Insurance Commissioners (NAIC) for regulatory purposes. A Company is a member of a group as designated by the NAIC until such Company is assigned another group designation or is no longer a member of a group. 

 

	(16)	 Limit 

This term means the maximum amount that a Company may recover under this Contract, calculated by multiplying the Company’s Reimbursement
Premium by the Payout Multiple. 
  

	(17)	 Loss 

This term means an incurred loss under a Covered Policy from a Covered Event, including Additional Living Expenses not to exceed
40 percent of the insured value of a Residential Structure or its contents and amounts paid as fees on behalf of or inuring to the benefit of a policyholder. The term Loss does not include allocated or unallocated loss adjustment expenses or
any item for which this Contract does not provide reimbursement pursuant to the exclusions in Article VI. 
  

	(18)	 Loss Adjustment Expense Allowance 

 

	 	(a)	 The Loss Adjustment Expense Allowance is equal to 5% of the reimbursed Losses under this Contract as provided
in Article IV, pursuant to Section 215.555(4)(b)1., Florida Statutes. 

  

	 	(b)	 The Loss Adjustment Expense Allowance is included in, and not in addition to, the Limit applicable to a
Company. 

  

	(19)	 New Participant 

This term means a Company that begins writing Covered Policies on or after the beginning of the Contract Year. A Company that removes Covered
Policies from Citizens pursuant to an assumption agreement effective on or after June 1 and had written no other Covered Policies before June 1 is also considered a New Participant. 

 

	(20)	 Payout Multiple 

This term means the multiple as calculated in accordance with Section 215.555(4)(c), Florida Statutes, which is derived by dividing the
actual single season Claims-Paying Capacity of the FHCF by the total aggregate industry Reimbursement Premium for the FHCF for the Contract Year billed as of December 31 of the Contract Year. The final Payout Multiple is determined once
Reimbursement Premiums have been billed as of December 31 and the amount of bond proceeds has been determined. 
  

	(21)	 Premium Formula 

This term means the Formula developed pursuant to Section 215.555(5)(b), Florida Statutes, and approved by the SBA Trustees for the
purpose of determining the Actuarially Indicated Reimbursement Premium to be paid to the FHCF. 
  

	(22)	 Projected Payout Multiple 

The Projected Payout Multiple is used to calculate a Company’s projected payout pursuant to Section 215.555(4)(d)2., Florida
Statutes. The Projected Payout Multiple is derived by dividing the estimated single season Claims-Paying Capacity of the FHCF by the estimated total aggregate industry Reimbursement Premium for the FHCF for the Contract Year. The Company’s
Reimbursement Premium as paid to the SBA for the Contract Year is multiplied by the Projected Payout Multiple to estimate the Company’s coverage from the FHCF for the Contract Year. 

 

	(23)	 Reimbursement Premium or Premium 

These terms mean the amount to be paid by the Company, as determined by multiplying each $1,000 of insured value reported by the Company in
accordance with Section 215.555(5)(b), Florida Statutes, by the rate as derived from the Premium Formula, as described in Rule 19-8.028, F.A.C. 

 

	(24)	 Residential Structure 

In general, this term means a unit or building used exclusively or predominantly for dwelling or habitational occupancies, including the
primary structure and appurtenant structures insured under the same Covered Policy and any other structures covered under endorsements associated with the Covered Policy covering the Residential Structure. 

  

					
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	 	(a)	 With respect to a unit or home insured under a personal lines residential policy form, such unit or home is
deemed to have a habitational occupancy and to be a Residential Structure regardless of the term of its occupancy. 

  

	 	(  )	 With respect to a condominium structure or complex insured under a commercial lines policy, such structure is
deemed to have a habitational occupancy and to be a Residential Structure, regardless of the term of occupancy of individual units. 

  

	 	(a)	 A single structure which includes a mix of commercial habitational and commercial non-habitational occupancies, and is insured under a commercial lines policy, is considered a Residential Structure if 50% or more of the total insured value of the structure is used for habitational occupancies.

  

	 	(b)	 Residential Structures do not include any structures excluded under Article VI. 

 

	(25)	 Retention 

This term means the amount of Losses from a Covered Event which must be incurred by the Company before it is eligible for reimbursement from
the FHCF. 
  

	 	(a)	 When the Company incurs Losses from one or two Covered Events during the Contract Year, the Company’s full
Retention shall be applied to each of the Covered Events. 

  

	 	(b)	 When the Company incurs Losses from more than two Covered Events during the Contract Year, the Company’s
full Retention shall be applied to each of the two Covered Events causing the largest Losses for the Company. For each other Covered Event resulting in Losses, the Company’s Retention shall be reduced to
one-third of its full Retention. 

  

	 	1.	 All reimbursement of Losses for each Covered Event shall be based on the Company’s full Retention until
December 31 of the Contract Year. Adjustments to reflect a reduction to one-third of the full Retention shall be made on or after January 1 of the Contract Year provided the Company reports its
Losses as specified in this Contract. 

  

	 	2.	 Adjustments to the Company’s Retention shall be based upon its paid and outstanding Losses as reported on
the Company’s Proof of Loss Reports, but shall not include incurred but not reported Losses. The Company’s Proof of Loss Reports shall be used to determine which Covered Events constitute the Company’s two largest Covered Events.
After this initial determination, any subsequent adjustments shall be made quarterly by the SBA only if the Proof of Loss Reports reveal that loss development patterns have resulted in a change in the order of Covered Events entitled to the
reduction to one-third of the full Retention. 

  

	 	(c)	 The Company’s full Retention is established in accordance with the provisions of
Section 215.555(2)(e), Florida Statutes, and shall be determined by multiplying the Retention Multiple by the Company’s Reimbursement Premium for the Contract Year. 

 

	(26)	 Retention Multiple 

 

	 	(a)	 The Retention Multiple is applied to the Company’s Reimbursement Premium to determine the Company’s
Retention. The Retention Multiple for the 2019/2020 Contract Year shall be equal to $4.5 billion, adjusted based upon the reported exposure for the 2017/2018 Contract Year to reflect the percentage growth in exposure to the FHCF since 2004,
divided by the estimated total industry Reimbursement Premium at the 90% Coverage Level for the Contract Year as determined by the SBA. 

  

	 	(b)	 The Retention Multiple shall be adjusted to reflect the Coverage Level elected by the Company under this
Contract as follows: 

  

	 	1.	 If the Company elects the 90% Coverage Level, the adjusted Retention Multiple is 100% of the amount determined
under paragraph (a); 

  

	 	2.	 If the Company elects the 75% Coverage Level, the adjusted Retention Multiple is 120% of the amount determined
under paragraph (a); or 

  

					
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	 	3.	 If the Company elects the 45% Coverage Level, the adjusted Retention Multiple is 200% of the amount determined
under paragraph (a). 

  

	(27)	 Ultimate Net Loss 

 

	 	(a)	 This term means all Losses under Covered Policies in force at the time of a Covered Event prior to the
application of the Company’s Retention and Coverage Level, and excluding loss adjustment expense and any exclusions under Article VI. 

  

	 	(b)	 In calculating the Company’s Ultimate Net Loss, the amounts described in paragraph (a) shall be
reduced by the deductibles applicable under the policy to the hurricane loss, which must first be applied to the portion of the Loss covered by the FHCF. 

  

	 	(c)	 Salvages and all other recoveries, excluding reinsurance recoveries, shall be first deducted from such Loss to
arrive at the amount of liability attaching hereunder. 

  

	 	(d)	 All salvages, recoveries or payments recovered or received subsequent to a Loss settlement under this Contract
shall be applied as if recovered or received prior to the aforesaid settlement and all necessary adjustments shall be made by the parties hereto. 

  

	 	(e)	 The SBA shall be subrogated to the rights of the Company to the extent of its reimbursement of the Company. The
Company agrees to assist and cooperate with the SBA in all respects as regards such subrogation. The Company further agrees to undertake such actions as may be necessary to enforce its rights of salvage and subrogation, and its rights, if any,
against other insurers as respects any claim, loss, or payment arising out of a Covered Event. 

 ARTICLE VI – EXCLUSIONS 

This Contract does not provide reimbursement for: 
  

	(1)	 Any losses not defined as being within the scope of a Covered Policy, including any loss other than a loss
under the first-party property section of a policy pertaining strictly to the structure, its contents, appurtenant structures, or ALE coverage. 

  

	(2)	 Any policy which excludes wind or hurricane coverage. 

 

	(3)	 Any Excess Policy or Deductible Buy-Back Policy that requires
individual ratemaking, as determined by the FHCF. 

  

	(4)     (a)	 Any policy for Residential Structures that provides a layer of coverage underneath an Excess Policy issued by a
different insurer; 

  

	 	(b)	 Any policy providing a layer of windstorm or hurricane coverage for a particular structure above or below a
layer of windstorm or hurricane coverage under a separate policy issued by a different insurer, or any other circumstance in which two or more insurers provide primary windstorm or hurricane coverage for a single structure using separate policy
forms; 

  

	 	(c)	 Any other policy providing a layer of windstorm or hurricane coverage for a particular structure below a layer
of self-insured windstorm or hurricane coverage for the same structure; or 

  

	 	(d)	 The exclusions in this subsection do not apply to primary quota share policies written by Citizens Property
Insurance Corporation under Section 627.351(6)(c)2., Florida Statutes. 

  

	(5)	 Any liability of the Company attributable to losses for fair rental value, loss of rent or rental income, or
business interruption. 

  

	(6)	 Any collateral protection policy that does not meet the definition of Covered Policy as defined in Article
V(11)(b). 

  

	(7)	 Any reinsurance assumed by the Company. 

 

	(8)	 Hotels, motels, timeshares, shelters, camps, retreats, or other similar structures. 

 

	(9)	 Retail, office, mercantile, or manufacturing facilities, or other similar structures. 

 

	(10)	 Any exposure for condominium or homeowner associations if no Residential Structures are insured under the
policy. 

  

					
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	(11)	 Commercial healthcare facilities and nursing homes; however, a nursing home which is an integral part of a
retirement community consisting primarily of habitational structures that are not nursing homes will not be subject to this exclusion. 

  

	(12)	 Any exposure under commercial policies covering only appurtenant structures or structures that do not function
as a habitational structure (e.g., a policy covering only the pool of an apartment complex). 

  

	(13)	 Policies covering only Additional Living Expense. 

 

	(14)	 Any exposure for barns or barns with apartments or living quarters. 

 

	(15)	 Any exposure for builders risk coverage or new Residential Structures under construction.

  

	(16)	 Any exposure for vehicles, recreational vehicles, golf carts, or boats (including boat related equipment)
requiring licensing. 

  

	(17)	 Any liability of the Company for extra contractual obligations or liabilities in excess of original policy
limits. This exclusion includes, but is not limited to, amounts paid as bad faith awards, punitive damages awards, or other court-imposed fines, sanctions, or penalties; or other amounts in excess of the coverage limits under the Covered Policy.

  

	(18)	 Any losses paid in excess of a policy’s hurricane limit in force at the time of the Covered Event,
including individual coverage limits (i.e., building, appurtenant structures, contents, and additional living expense), or other amounts paid as the result of a voluntary expansion of coverage by the insurer, including, but not limited to, a
discount on or waiver of an applicable deductible. This exclusion includes overpayments of a specific individual coverage limit even if total payments under the policy are within the aggregate policy limit. 

 

	(19)	 Any losses paid under a policy for Additional Living Expense, written as a time element coverage, in excess of
the Additional Living Expense exposure reported for that policy under the Data Call for the applicable Contract Year (unless policy limits have changed effective after June 30 of the Contract Year). 

 

	(20)	 Any losses which the Company’s claims files do not adequately support. Claim file support shall be deemed
adequate if in compliance with the Records Retention Requirements outlined on the Form FHCF-L1B (Proof of Loss Report) applicable to the Contract Year. 

 

	(21)	 Any exposure for, or amounts paid to reimburse a policyholder for, condominium association loss assessments or
under similar coverages for contractual liabilities. 

  

	(22)	 Losses in excess of the aggregate limits of liability specified in Article IV and in
Section 215.555(4)(c), Florida Statutes. 

  

	(23)	 Any liability assumed by the Company from Pools, Associations, and Syndicates. Exception: Covered Policies
assumed from Citizens under the terms and conditions of an executed assumption agreement between the Company and Citizens are covered by this Contract. 

  

	(24)	 All liability of the Company arising by contract, operation of law, or otherwise, from its participation or
membership, whether voluntary or involuntary, in any insolvency fund. “Insolvency fund” includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, howsoever denominated, established or governed, which
provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee, or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be
insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part. 

  

	(25)	 Property losses that are proximately caused by any peril other than a Covered Event, including, but not limited
to, fire, theft, flood or rising water, or windstorm that does not constitute a Covered Event, or any liability of the Company for loss or damage caused by or resulting from nuclear reaction, nuclear radiation, or radioactive contamination from any
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or remote, and regardless of any other cause or event contributing concurrently or in any other sequence to the loss. 

 

	(26)	 Losses from water damage, which is generally excluded under property insurance contracts, including flood,
surface water, waves, tidal water, overflow of a body of water, storm surge, or spray from any of these, whether or not driven by wind. 

  

	(27)	 A policy providing personal property coverage separate from coverage of personal property included in a
homeowner’s, mobile home owner’s, condominium unit owner’s, or tenant’s policy or other policy covering a Residential Structure, or in an endorsement to such a policy. 

 

	(28)	 Endorsements predominantly covering Specialized Fine Arts Risks or collectible types of property meeting the
following requirements: 

  

	 	(a)	 An endorsement predominantly covering Specialized Fine Arts Risks and not covering any Residential Structure if
it meets the description in subparagraph 1 and if the conditions in subparagraph 2 are met. 

  

	 	1.	 For purposes of this exemption, a Specialized Fine Arts Risk endorsement is an endorsement that:

  

	 	a.	 Insures works of art, of rarity, or of historic value, such as paintings, works on paper, etchings, art glass
windows, pictures, statuary, sculptures, tapestries, antique furniture, antique silver, antique rugs, rare books or manuscripts, jewelry, or other similar items; 

 

	 	b.	 Charges a minimum premium of $500; and 

 

	 	c.	 Insures scheduled items valued, in the aggregate, at no less than $100,000. 

 

	 	2.	 The insurer offers specialized loss prevention services or other collector services designed to prevent or
minimize loss, or to value or inventory the Specialized Fine Arts for insurance purposes, such as: 

  

	 	a.	 Collection risk assessments; 

 

	 	b.	 Fire and security loss prevention; 

 

	 	c.	 Warehouse inspections to protect items stored off-site;

  

	 	d.	 Assistance with collection inventory management; or 

 

	 	e.	 Collection valuation reviews. 

 

	 	(b)	 An endorsement generally used by the Company to cover personal property which could include property of a
collectible nature, including fine arts, as further described in this paragraph, either on a scheduled basis or written under a blanket limit, and not covering anything other than personal property. All such endorsements are subject to the exclusion
provided in this paragraph when the endorsement limit equals or exceeds $500,000. Generally such collectible property has unusually high values due to its investible, artistic, or unique intrinsic nature. The class of property covered under such an
endorsement represents an unusually high exposure value and such endorsement is intended to provide coverage for a class or classes of property that is not typical for the contents coverage under residential property insurance policies. In many
cases property may be located at various locations either in or outside the state of Florida or the location of the property may change from time to time. The investment nature of such property distinguishes this type of exposure from the typical
contents associated with a Covered Policy. 

  

	(29)	 Any losses under liability coverages. 

ARTICLE VII – MANAGEMENT OF CLAIMS AND LOSSES 
 The
Company shall investigate and settle or defend all claims and Losses. All payments of claims or Losses by the Company within the terms and limits of the appropriate coverage parts of Covered Policies shall be binding on the SBA, subject to the terms
of this Contract, including the provisions in Article XIII relating to inspection of records and examinations. 

  

					
	    	  	9	  	 FHCF-2019K

Rule 19-8.010 F.A.C.

 ARTICLE VIII – REIMBURSEMENT ADJUSTMENTS 

Section 215.555(4)(d) and (e), Florida Statutes, provides the SBA with the right to seek the return of excess reimbursements which have been paid to the
Company along with interest thereon. Excess reimbursements are those payments made to the Company by the SBA that are in excess of the Company’s coverage under the Contract Year. Excess reimbursements may result from adjustments to the
Projected Payout Multiple or the Payout Multiple, incorrect exposure (Data Call) submissions or resubmissions, incorrect calculation of Reimbursement Premium or Retention, incorrect Proof of Loss Reports, incorrect calculation of reinsurance
recoveries, or subsequent readjustment of policyholder claims, including subrogation and salvage, or any combination of the foregoing. The Company will be sent an invoice showing the due date for adjustments along with the interest due thereon
through the due date. The applicable interest rate for interest credits, and for interest charges for adjustments beyond the Company’s control, will be the average rate earned by the SBA for the FHCF for the first four months of the Contract
Year. The applicable interest rate for interest charges on excess reimbursements due to adjustments resulting from incorrect exposure submissions or Proof of Loss Reports will accrue at this rate plus 5%. All interest will continue to accrue if not
paid by the due date. 
 ARTICLE IX – REIMBURSEMENT PREMIUM 
  

	(1)	 The Company shall, in a timely manner, pay the SBA its Reimbursement Premium for the Contract Year. The
Reimbursement Premium for the Contract Year shall be calculated in accordance with Section 215.555, Florida Statutes, with any rules promulgated thereunder, and with Article X(2). 

 

	(2)	 The Company’s Reimbursement Premium is based on its June 30 exposure in accordance with Article X,
except as provided for New Participants under Article X, and is not adjusted to reflect an increase or decrease in exposure for Covered Policies effective after June 30 nor is the Reimbursement Premium adjusted when the Company cancels policies
or is liquidated or otherwise changes its business status (merger, acquisition, or termination) or stops writing new business (continues in business with its policies in a runoff mode). Similarly, new business written after June 30 will not
increase or decrease the Company’s FHCF Reimbursement Premium or impact its FHCF coverage. FHCF Reimbursement Premiums are required of all Companies based on their writing Covered Policies in Florida as of June 30, and each Company’s
FHCF coverage as based on the definition in Section 215.555(2)(m), Florida Statutes, shall exist for the entirety of the Contract Year regardless of exposure changes, except as provided for New Participants under Article X.

  

	(3)	 Since the calculation of the Actuarially Indicated Premium assumes that the Companies will pay their
Reimbursement Premiums timely, interest charges will accrue under the following circumstances. A Company may choose to estimate its own Reimbursement Premium installments. However, if the Company’s estimation is less than the provisional
Reimbursement Premium billed, an interest charge will accrue on the difference between the estimated Reimbursement Premium and the final Reimbursement Premium. If a Company estimates its first installment, the Administrator shall bill that estimated
Reimbursement Premium as the second installment as well, which will be considered as an estimate by the Company. No interest will accrue regarding any provisional Reimbursement Premium if paid as billed by the FHCF’s Administrator, except in
the case of an estimated second installment as set forth in this Article. Also, if a Company makes an estimation that is higher than the provisional Reimbursement Premium billed but is less than the final Reimbursement Premium, interest will not
accrue. If the Reimbursement Premium payment is not received from a Company when it is due, an interest charge will accrue on a daily basis until the payment is received. Interest will also accrue on Reimbursement Premiums resulting from submissions
or resubmissions finalized after December 1 of the Contract Year. An interest credit will be applied for any Reimbursement Premium which is overpaid as either an estimate or as a provisional Reimbursement Premium. Interest shall not be credited
past December 1 of the Contract Year. The applicable interest rate for interest credits will be the average rate earned by the SBA for the FHCF for the first four months of the Contract Year. The applicable interest rate for interest charges
will accrue at this rate plus 5%. 

  

					
	    	  	10	  	 FHCF-2019K

Rule 19-8.010 F.A.C.

 ARTICLE X – REPORTS AND REMITTANCES 

 

	(1)	 Exposures 

  

	 	(a)	 If the Company writes Covered Policies before June 1 of the Contract Year, the Company shall report to the
SBA, unless otherwise provided in Rule 19-8.029, F.A.C., no later than the statutorily required date of September 1 of the Contract Year, by ZIP Code or other limited geographical area as specified by the
SBA, its insured values under Covered Policies as of June 30 of the Contract Year as outlined in the annual reporting of insured values form, FHCF-DIA (Data Call) adopted for the Contract Year under Rule 19-8.029, F.A.C., and other data or information in the format specified by the SBA. 

  

	 	(b)	 If the Company first begins writing Covered Policies on or after June 1 but prior to December 1 of
the Contract Year, the Company shall report to the SBA, no later than February 1 of the Contract Year, by ZIP Code or other limited geographical area as specified by the SBA, its insured values under Covered Policies as of November 30 of
the Contract Year as outlined in the Supplemental Instructions for New Participants section of the Data Call adopted for the Contract Year under Rule 19-8.029, F.A.C., and other data or information in the
format specified by the SBA. 

  

	 	(c)	 If the Company first begins writing Covered Policies on December 1 through and including May 31 of
the Contract Year, the Company shall not report its exposure data for the Contract Year to the SBA. 

  

	 	(d)	 The requirement that a report is due on a certain date means that the report shall be received by the SBA no
later than 4 p.m. Eastern Time on the due date. Reports sent to the FHCF Administrator in Minneapolis, Minnesota, will be returned to the sender. Reports not in the physical possession of the SBA by 4 p.m., Eastern Time, on the applicable due date
are late. 

  

	(2)	 Reimbursement Premium 

 

	 	(a)	 If the Company writes Covered Policies before June 1 of the Contract Year, the Company shall pay the FHCF
its Reimbursement Premium in installments due on or before August 1, October 1, and December 1 of the Contract Year in amounts to be determined by the FHCF. However, if the Company’s Reimbursement Premium for the prior Contract
Year was less than $5,000, the Company’s full provisional Reimbursement Premium, in an amount equal to the Reimbursement Premium paid in the prior year, shall be due in full on or before August 1 of the Contract Year. The Company will be
invoiced for amounts due, if any, beyond the provisional Reimbursement Premium payment, on or before December 1 of the Contract Year. 

  

	 	(b)	 If the Company is under administrative supervision, or if any control or oversight of the Company has been
transferred through any legal or regulatory action to a state regulator or court appointed receiver or rehabilitator (referred to in the aggregate as “state action”): 

 

	 	1.	 The full annual provisional Reimbursement Premium as billed and any outstanding balances will be due and
payable on August 1, or the date that such State action occurs after August 1 of the Contract Year. 

  

	 	2.	 Failure by such Company to pay the full annual provisional Reimbursement Premium as specified in subparagraph
1. by the applicable due date shall result in the 45% Coverage Level being deemed for the complete Contract Year regardless of the level selected for the Company through the execution of this Contract and regardless of whether a Covered Event
occurred or triggered coverage. 

  

	 	3.	 Subparagraphs 1. and 2. do not apply if the state regulator, receiver, or rehabilitator provides a letter of
assurance to the FHCF stating that the Company will have the resources and will pay the full Reimbursement Premium for the Coverage Level selected through the execution of this Contract. 

  

					
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Rule 19-8.010 F.A.C.

	 	4.	 When control or oversight has been transferred, in whole or in part, through a legal or regulatory action, the
controlling management of the Company shall specify by August 1 or as soon thereafter as possible (but not to exceed two weeks after any regulatory or legal action) in a letter to the FHCF as to the Company’s intentions to either pay the
full FHCF Reimbursement Premium as specified in subparagraph 1., to default to the 45% Coverage Level being deemed as specified in subparagraph 2., or to provide the assurances as specified in subparagraph 3. 

 

	 	(c)	 A New Participant that first begins writing Covered Policies on or after June 1 but prior to
December 1 of the Contract Year shall pay the FHCF a provisional Reimbursement Premium of $1,000 no later than 30 days from the date the New Participant began writing Covered Policies. The Administrator shall calculate the Company’s actual
Reimbursement Premium for the period based on its actual exposure as of November 30 of the Contract Year, as reported on or before February 1 of the Contract Year. To recognize that New Participants have limited exposure during this
period, the actual Reimbursement Premium as determined by processing the Company’s exposure data shall then be divided in half, the provisional Reimbursement Premium shall be credited, and the resulting amount shall be the total Reimbursement
Premium due for the Company for the remainder of the Contract Year. However, if that amount is less than $1,000, then the Company shall pay $1,000. The Reimbursement Premium payment is due no later than April 1 of the Contract Year. The
Company’s Retention and coverage will be determined based on the total Reimbursement Premium due as calculated above. 

  

	 	(d)	 A New Participant that first begins writing Covered Policies on or after December 1 through and including
May 31 of the Contract Year shall pay the FHCF a Reimbursement Premium of $1,000 no later than 30 days from the date the New Participant began writing Covered Policies. 

 

	 	(e)	 The requirement that the Reimbursement Premium is due on a certain date means that the Reimbursement Premium
shall be remitted by wire transfer or ACH and shall have been credited to the FHCF ‘ s account, as set out on the invoice sent to the Company, on the due date applicable to the particular installment. 

 

	 	(f)	 Except as required by Section 215.555(7)(c), Florida Statutes, or as described in the following sentence,
Reimbursement Premiums, together with earnings thereon, received in a given Contract Year will be used only to pay for Losses attributable to Covered Events occurring in that Contract Year or for Losses attributable to Covered Events in subsequent
Contract Years and will not be used to pay for past Losses or for debt service on post-event revenue bonds issued pursuant to Section 215.555(6)(a)1., Florida Statutes. Reimbursement Premiums and earnings thereon may be used for payments
relating to such revenue bonds in the event emergency assessments are insufficient. If Reimbursement Premiums or earnings thereon are used for debt service on post-event revenue bonds, then the amount of the Reimbursement Premiums or earnings
thereon so used shall be returned, without interest, to the Fund when emergency assessments or other legally available funds remain available after making payment relating to the post-event revenue bonds and any other purposes for which emergency
assessments were levied. 

  

					
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Rule 19-8.010 F.A.C.

	(3)	 Losses 

  

	 	(a)	 In General 

Losses resulting from a Covered Event commencing during the Contract Year shall be reported by the Company and reimbursed by the FHCF as
provided herein and in accordance with the Statute, this Contract, and any rules adopted pursuant to the Statute. For a Company participating in a quota share primary insurance agreement(s) with Citizens Property Insurance Corporation Coastal
Account, Citizens and the Company shall report only their respective portion of Losses under the quota share primary insurance agreement(s). Pursuant to Section 215.555(4)(c), Florida Statutes, the SBA is obligated to pay for Losses not to
exceed the Actual Claims-Paying Capacity of the FHCF, up to the limit in accordance with Section 215.555(4)(c)1., Florida Statutes, for any one Contract Year. 
  

	 	(b)	 Loss Reports 

  

	 	1.	 At the direction of the SBA, the Company shall report its projected Ultimate Net Loss fromeach Covered Event to
provide information to the SBA in determining any potential liability for possible reimbursable Losses under the Contract on the Interim Loss Report, Form FHCF-L1A, adopted for the Contract Year under Rule 19-8.029, F.A.C. Interim Loss Reports (including subsequent Interim Loss Reports if required by the SBA) will be due in no less than fourteen days from the date of the notice from the SBA that such a report is
required. 

  

	 	2.	 FHCF reimbursements will be issued based on Ultimate Net Loss information reported by the Company on the Proof
of Loss Report, Form FHCF-L1B, adopted for the Contract Year under Rule 19-8.029, F.A.C. 

 

	 	a.	 To qualify for reimbursement, the Proof of Loss Report must have the electronic signatures of two executive
officers authorized by the Company to sign or submit the report. 

  

	 	b.	 The Company must also submit a Detailed Claims Listing, Form FHCF-DCL,
adopted for the Contract Year under Rule 19-8.029, F.A.C., at the same time it submits its first Proof of Loss Report for a specific Covered Event that qualifies the Company for reimbursement under that
Covered Event, and must be prepared to supply a Detailed Claims Listing for any subsequent Proof of Loss Report upon request. 

  

	 	c.	 While the Company may submit a Proof of Loss Report requesting reimbursement at any time following a Covered
Event, the Company shall submit a mandatory Proof of Loss Report for each Covered Event no earlier than December 1 and no later than December 31 of the Contract Year during which the Covered Event occurs using the most current data
available, regardless of the amount of Ultimate Net Loss or the amount of reimbursements or advances already received. 

  

	 	d.	 For the Proof of Loss Reports due by December 31 of the Contract Year, and the required subsequent
quarterly and annual reports required under subparagraphs 3. and 4., the Company shall submit its Proof of Loss Reports by each quarter-end or year-end using the most
current data available. However, the date of such data shall not be more than sixty days prior to the applicable quarter-end or year-end date. 

 

	 	e.	 For the Proof of Loss Reports due by December 31 of the Contract Year and the required subsequent annual
reports required under subparagraph 4., the Company shall include a Detailed Claims Listing if requested by the SBA. 

  

	 	3.	 Updated Proof of Loss Reports for each Covered Event are due quarterly thereafter until all Losses resulting
from a Covered Event are fully discharged including any adjustments to such Losses due to salvage or other recoveries, or the Company has received its full coverage under the Contract Year in which the Covered Event occurred. Guidelines follow:

  

					
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Rule 19-8.010 F.A.C.

	 	a.	 Quarterly Proof of Loss Reports are due by March 31 from a Company whose Losses exceed, or are expected to
exceed, 50% of its FHCF Retention for a specific Covered Event. 

  

	 	b.	 Quarterly Proof of Loss Reports are due by June 30 from a Company whose Losses exceed, or are expected to
exceed, 75% of its FHCF Retention for a specific Covered Event. 

  

	 	c.	 Quarterly Proof of Loss Reports are due by September 30 and quarterly thereafter from a Company whose
Losses exceed, or are expected to exceed, its FHCF Retention for a specific Covered Event. 

 If the Company’s
Retention must be recalculated as the result of an exposure resubmission, and if the recalculated Retention changes the FHCF’s reimbursement obligations, then the Company shall submit additional Proof of Loss Reports for recalculation of the
FHCF’s obligations. 
  

	 	4.	 Annually after December 31 of the Contract Year, all Companies shall submit a mandatory year-end Proof of Loss Report for each Covered Event, as applicable, using the most current data available. This Proof of Loss Report shall be filed no earlier than December 1 and no later than December 31
of each year and shall continue until the earlier of the commutation process described in paragraph (3)(d) or until all Losses resulting from the Covered Event are fully discharged including any adjustments to such Losses due to salvage or other
recoveries. 

  

	 	5.	 The SBA, except as noted below, will determine and pay, within 30 days or as soon as practicable after
receiving Proof of Loss Reports, the reimbursement amount due based on Losses paid by the Company to date and adjustments to this amount based on subsequent quarterly information. The adjustments to reimbursement amounts shall require the SBA to
pay, or the Company to return, amounts reflecting the most recent determination of Losses. 

  

	 	a.	 The SBA shall have the right to consult with all relevant regulatory agencies to seek all relevant information,
and shall consider any other factors deemed relevant, prior to the issuance of reimbursements. 

  

	 	b.	 The SBA shall require commercial self-insurance funds established under Section 624.462, Florida Statutes,
to submit contractor receipts to support paid Losses reported on a Proof of Loss Report, and the SBA may hire an independent consultant to confirm Losses, prior to the issuance of reimbursements. 

 

	 	c.	 The SBA shall have the right to conduct a claims examination prior to the issuance of any advances or
reimbursements requested by Companies that have been placed under regulatory supervision by a State or where control has been transferred through any legal or regulatory proceeding to a state regulator or court appointed receiver or rehabilitator.

  

	 	6.	 All Proof of Loss Reports received will be compared with the FHCF’s exposure data to establish the facial
reasonableness of the reports. The SBA may also review the results of current and prior Contract Year exposure and claims examinations to determine the reasonableness of the reported Losses. Except as noted in subparagraph 5., Companies meeting
these tests for reasonableness will be scheduled for reimbursement. Companies not meeting these tests for reasonableness will be handled on a case-by-case basis and will
be contacted to provide specific information regarding their individual book of business. The discovery of errors in a Company’s reported exposure under the Data Call may require a resubmission of the current Contract Year Data Call which, as
the Data Call impacts the Company’s Reimbursement Premium, Retention, and coverage for the Contract Year, will be required before the Company’s request for reimbursement or an advance will be fully processed by the Administrator.

  

					
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Rule 19-8.010 F.A.C.

	 	(c)	 Loss Reimbursement Calculations 

 

	 	1.	 In general, the Company’s paid Ultimate Net Losses must exceed its full FHCF Retention for a specific
Covered Event before any reimbursement is payable from the FHCF for that Covered Event. As described in Article V(25)(b), Retention adjustments will be made on or after January 1 of the Contract Year. No interest is payable on additional
payments to the Company due to this type of Retention adjustment. Each Company, including entities created pursuant to Section 627.351(6), Florida Statutes, incurring reimbursable Losses will receive the amount of reimbursement due under the
individual Company’s Contract up to the amount of the Company’s payout. If more than one Covered Event occurs in any one Contract Year, any reimbursements due from the FHCF shall take into account the Company’s Retention for each
Covered Event. However, the Company’s reimbursements from the FHCF for all Covered Events occurring during the Contract Year shall not exceed, in aggregate, the Projected Payout Multiple or Payout Multiple, as applicable, times the individual
Company’s Reimbursement Premium for the Contract Year. 

  

	 	2.	 Reserve established. When a Covered Event occurs in a subsequent Contract Year when reimbursable Losses are
still being paid for a Covered Event in a previous Contract Year, the SBA will establish a reserve for the outstanding reimbursable Losses for the previous Contract Year, based on the length of time the Losses have been outstanding, the amount of
Losses already paid, the percentage of incurred Losses still unpaid, and any other factors specific to the loss development of the Covered Events involved. 

  

	 	(d)	 Commutation 

  

	 	1.	 Except as provided in subparagraph 3., not less than 36 months or more than 60 months afterthe end of the
Contract Year, the Company shall file a final Proof of Loss Report(s), with the exception of Companies having no reportable Losses as described in sub-subparagraph a. Otherwise, the final Proof of Loss
Report(s) is required as specified in sub-subparagraph b. The Company and SBA may mutually agree to initiate commutation after 36 months and prior to 60 months after the end of the Contract Year. The
commutation negotiations shall begin at the later of 60 months after the end of the Contract Year or upon completion of the FHCF claims examination for the Company and the resolution of all outstanding examination issues. 

 

	 	a.	 If the Company’s most recently submitted Proof of Loss Report(s) indicates that it has no Losses resulting
from Covered Events during the Contract Year, the SBA shall after 36 months request that the Company execute a final commutation agreement. The final commutation agreement shall constitute a complete and final release of all obligations of the SBA
with respect to Losses. If the Company chooses not to execute a final commutation agreement, the SBA shall be released from all obligations 60 months following the end of the Contract Year if no Proof of Loss Report indicating reimbursable Losses
had been filed and the commutation shall be deemed concluded. However during this time, if the Company determines that it does have Losses to report for FHCF reimbursement, the Company must submit an updated Proof of Loss Report prior to the end of
60 months after the Contract Year and the Company shall be required to follow the commutation provisions and time frames otherwise specified in this section. 

  

	 	.	 If the Company has submitted a Proof of Loss Report indicating that it does have Losses resulting from a
Covered Event during the Contract Year, the SBA may require the Company to submit within 30 days an updated, current Proof of Loss Report for each Covered Event during the Contract Year. The Proof of Loss Report must include all paid Losses as well
as all outstanding Losses and incurred but not reported Losses, which are not finally settled and which may be reimbursable Losses under this Contract, and must be accompanied by supporting documentation (at a minimum an adjuster’s summary
report or equivalent details) and a copy of a written opinion on the present value of the 

  

					
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Rule 19-8.010 F.A.C.

	 	
outstanding Losses and incurred but not reported Losses by the Company’s certifying actuary. Failure of the Company to provide an updated current Proof of Loss Report, supporting
documentation, and an opinion by the date requested by the SBA may result in referral to the Florida Office of Insurance Regulation for a violation of the Contract. Increases in reported paid, outstanding, or incurred but not reported Losses on
original or corrected Proof of Loss Report filings received later than 60 months after the end of the Contract Year shall not be eligible for reimbursement or commutation. 

 

	 	2.	 Determining the present value of outstanding Losses. 

 

	 	a.	 If the Company exceeds or expects to exceed its Retention, the Company and the SBA or their respective
representatives shall attempt, by mutual agreement, to agree upon the present value of all outstanding Losses, both reported and incurred but not reported, resulting from Covered Events during the Contract Year. The Loss valuation process under this
subparagraph may begin only after all other issues arising under this Contract have been resolved, and shall be suspended pending resolution of any such issues that arise during the Loss valuation process. Payment by the SBA of its portion of any
amount or amounts so mutually agreed and certified by the Company’s certifying actuary shall constitute a complete and final release of the SBA in respect of all Losses, both reported and unreported, under this Contract. 

 

	 	b.	 If agreement on present value cannot be reached within 90 days of the FHCF’s receipt of the final Proof of
Loss Report and supporting documentation, the Company and the SBA may mutually appoint an actuary, adjuster, or appraiser to investigate and determine such Losses. If both parties then agree, the SBA shall pay its portion of the amount so determined
to be the present value of such Losses. 

  

	 	c.	 If the parties fail to agree on the valuation of any Losses, then any difference in valuation of the Loss shall
be settled by a panel of three actuaries, as provided in this subparagraph. Either the SBA or the Company may initiate the process under this subparagraph by providing written notice to the other party stating that the parties are at an impasse with
respect to valuation of Losses and specifying the dollar amounts in dispute. 

  

	 	i.	 One actuary shall be chosen by each party, and the third actuary shall be chosen by those two actuaries. If
either party does not appoint an actuary within 30 days after the initiation of the process, the other party may appoint two actuaries. If the two actuaries fail to agree on the selection of an independent third actuary within 30 days of their
appointment, each of them shall name two, of whom the other shall decline one and the decision shall be made by drawing lots. 

  

	 	ii.	 All of the actuaries shall be regularly engaged in the valuation of property claims and losses and shall be
members of the Casualty Actuarial Society and of the American Academy of Actuaries. 

  

	 	iii.	 None of the actuaries shall be under the control of either party to this Contract. 

 

	 	iv.	 Each party shall submit a written statement of its case to the panel of actuaries and the opposing party no
later than 30 days after the appointment of the third actuary. Within 15 days after receiving the other party’s submission, a party may submit its written response to the panel of actuaries and the other party. After the appointment of the
third actuary, a party may not communicate with the panel or any member of the panel except in writing simultaneously furnished to all members of the panel and the opposing party. Any member of the panel may present questions to be answered by both
parties, which shall be answered in writing and simultaneously furnished to the members of the panel and the opposing party or, at the discretion of the panel, may be provided in a meeting or teleconference attended by both parties and all members
of the panel. 

  

					
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Rule 19-8.010 F.A.C.

	 	v.	 The written decision of a majority of the panel as to the disagreement over the valuation of losses identified
in the written notice of impasse, when filed with the parties hereto, shall be final and binding on both parties. 

  

	 	d.	 The reasonable and customary expense of the actuaries and of the commutation (as a result of sub-subparagraphs 2.b. and c.) shall be equally divided between the two parties. Said commutation shall take place in Tallahassee, Florida, unless some other place is mutually agreed upon by the Company and the SBA.

  

	 	3.	 The Company and SBA may mutually agree to initiate and complete a commutation for zero dollars without being
subject to the 36-month waiting period provided in subparagraph (d)1. Such early commutation, once completed, eliminates the mandatory Proof of Loss Report requirements required under subparagraphs (b)3. and
4. for all reporting periods subsequent to the completion of the commutation. 

  

	(4)	 Advances 

  

	 	(a)	 The SBA may make advances for loss reimbursements as defined herein, at market interest rates, to the Company
in accordance with Section 215.555(4)(e), Florida Statutes. An advance is an early reimbursement which allows the Company to continue to pay claims in a timely manner. Advances will be made based on the Company’s paid and reported
outstanding Losses for Covered Policies (excluding all incurred but not reported Losses) as reported on a Proof of Loss Report, and shall include a Loss Adjustment Expense Allowance as calculated by the FHCF. In order to be eligible for an advance,
the Company must submit its exposure data for the Contract Year as required under subsection (1) of this Article. Except as noted below, advances, if approved, will be made as soon as practicable after the SBA receives a written request, signed
by two officers of the Company, for an advance of a specific amount and any other information required for the specific type of advance under paragraphs (c) and (d). All reimbursements due to the Company shall be offset against any amount of
outstanding advances plus the interest due thereon. 

  

	 	(b)	 For advances or excess advances, which are advances that are in excess of the amount to which the Company is
entitled, the market interest rate shall be the prime rate as published in the Wall Street Journal on the first business day of the Contract Year. This rate will be adjusted annually on the first business day of each subsequent Contract Year,
regardless of whether the Company executes subsequent Contracts. In addition to the prime rate, an additional 5% interest charge will apply on excess advances. All interest charged will commence on the date the SBA issues a check for an advance and
will cease on the date upon which the FHCF has received the Company’s Proof of Loss Report for the Covered Event for which the Company qualifies for reimbursement. If such reimbursement is less than the amount of outstanding advances issued to
the Company, interest will continue to accrue on the outstanding balance of the advances until subsequent Proof of Loss Reports qualify the Company for reimbursement under any Covered Event equal to or exceeding the amount of any outstanding
advances. Interest shall be billed on a periodic basis. If it is determined that the Company received funds in excess of those to which it was entitled, the interest as to those sums will not cease on the date of the receipt of the Proof of Loss
Report but will continue until the Company reimburses the FHCF for the overpayment. 

  

	 	(c)	 If the Company has an outstanding advance balance as of December 31 of this or any other Contract Year,
the Company is required to have an actuary certify outstanding and incurred but not reported Losses as reported on the applicable December Proof of Loss Report. 

 

	 	(d)	 The specific type of advances enumerated in Section 215.555, Florida Statutes, follow. I. Advances to
Companies to prevent insolvency, as defined under Article XV. 

  

	 	a.	 Section 215.555(4)(e)1., Florida Statutes, provides that the SBA shall advance to the Company amounts
necessary to maintain the solvency of the Company, up to 50 percent of the SBA’s estimate of the reimbursement due to the Company. 

  

					
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Rule 19-8.010 F.A.C.

	 	b.	 In addition to the requirements outlined in subparagraph (4)(a), the requirements for an advance to a Company
to prevent insolvency are that the Company demonstrates it is likely to qualify for reimbursement and that the immediate receipt of moneys from the SBA is likely to prevent the Company from becoming insolvent, and the Company provides the following
information: 

  

	 	i.	 Current assets; 

  

	 	ii.	 Current liabilities other than liabilities due to the Covered Event; 

 

	 	iii.	 Current surplus as to policyholders; 

 

	 	iv.	 Estimate of other expected liabilities not due to the Covered Event; and 

 

	 	v.	 Amount of reinsurance available to pay claims for the Covered Event under other reinsurance treaties.

  

	 	c.	 The SBA’s final decision regarding an application for an advance to prevent insolvency shall be based on
whether or not, considering the totality of the circumstances, including the SBA’s obligations to provide reimbursement for all Covered Events occurring during the Contract Year, granting an advance is essential to allowing the entity to
continue to pay additional claims for a Covered Event in a timely manner. 

  

	 	2.	 Advances to entities created pursuant to Section 627.351(6), Florida Statutes. 

 

	 	a.	 Section 215.555(4)(e)2., Florida Statutes, provides that the SBA may advance to an entity created pursuant
to Section 627.351(6), Florida Statutes, up to 90% of the lesser of the SBA’s estimate of the reimbursement due or the entity’s share of the actual aggregate Reimbursement Premium for that Contract Year, multiplied by the current
available liquid assets of the FHCF. 

  

	 	b.	 In addition to the requirements outlined in paragraph (4)(a), the requirements for an advance to entities
created pursuant to Section 627.351(6), Florida Statutes, are that the entity must demonstrate to the SBA that the advance is essential to allow the entity to pay claims for a Covered Event. 

 

	 	3.	 Advances to limited apportionment companies. 

Section 215.555(4)(e)3., Florida Statutes, provides that the SBA may advance the amount of estimated reimbursement payable to limited
apportionment companies. 
  

	 	(e)	 In determining whether or not to grant an advance and the amount of an advance, the SBA: 

 

	 	1.	 Shall determine whether its assets available for the payment of obligations are sufficient and sufficiently
liquid to fulfill its obligations to other Companies prior to granting an advance; 

  

	 	2.	 Shall review and consider all the information submitted by such Companies; 

 

	 	3.	 Shall review such Companies’ compliance with all requirements of Section 215.555, Florida Statutes;

  

	 	4.	 Shall consult with all relevant regulatory agencies to seek all relevant information; 

 

	 	5.	 Shall review the damage caused by the Covered Event and when that Covered Event occurred;

  

	 	6.	 Shall consider whether the Company has substantially exhausted amounts previously advanced;

  

	 	7.	 Shall consider any other factors deemed relevant; and 

 

	 	8.	 Shall require commercial self-insurance funds established under section 624.462, Florida Statutes, to submit a
copy of written estimates of expenses in support of the amount of advance requested. 

  

					
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Rule 19-8.010 F.A.C.

	 	(f)	 Any amount advanced by the SBA shall be used by the Company only to pay claims of its policyholders for the
Covered Event which has precipitated the immediate need to continue to pay additional claims as they become due. 

  

	(5)	 Inadequate Data Submissions 

If exposure data or other information required to be reported by the Company under the terms of this Contract are not received by the FHCF in
the format specified by the FHCF or is inadequate to the extent that the FHCF requires resubmission of data, the Company will be required to pay the FHCF a resubmission fee of $1,000 for resubmissions that are not a result of an examination by the
SBA. If a resubmission is necessary as a result of an examination report issued by the SBA, the first resubmission fee will be $2,000. If the Company’s examination-required resubmission is inadequate and the SBA requires an additional
resubmission(s), the resubmission fee for each subsequent resubmission shall be $2,000. A resubmission of exposure data may delay the processing of the Company’s request for reimbursement or an advance. 

 

	(6)	 Confidential Information/Trade Secret Information 

Pursuant to the provisions of Section 215.557, Florida Statutes, the reports of insured values under Covered Policies by ZIP Code
submitted to the SBA pursuant to Section 215.555, Florida Statutes, are confidential and exempt from the provisions of Section 119.07(1), Florida Statutes, and Section 24(a), Art. I of the State Constitution. If other information
submitted by the Company to the FHCF could reasonably be ruled a “trade secret” as defined in Section 812.081, Florida Statutes, such information must be clearly marked “Trade Secret Information.” 

ARTICLE XI – TAXES 
 In consideration of the terms
under which this Contract is issued, the Company agrees to make no deduction in respect of the Reimbursement Premium herein when making premium tax returns to the appropriate authorities. Should any taxes be levied on the Company in respect of the
Reimbursement Premium herein, the Company agrees to make no claim upon the SBA for reimbursement in respect of such taxes. 
 ARTICLE XII – ERRORS
AND OMISSIONS 
 Any inadvertent delay, omission, or error on the part of the SBA shall not be held to relieve the Company from any liability which would
attach to it hereunder if such delay, omission, or error had not been made. 
 ARTICLE XIII – INSPECTION OF RECORDS 

The Company shall allow the SBA to inspect, examine, and verify, at reasonable times, all records of the Company relating to the Covered Policies under this
Contract, including Company files concerning claims, Losses, or legal proceedings regarding subrogation or claims recoveries which involve this Contract, including premium, loss records and reports involving exposure data or Losses under Covered
Policies. This right by the SBA to inspect, examine, and verify shall survive the completion and closure of an exposure examination or claims examination file and the termination of the Contract. The Company shall have no right to re-open an exposure or claims examination once closed and the findings have been accepted by the Company; any re-opening shall be at the sole discretion of the SBA. If the
State Board of Administration Finance Corporation has issued revenue bonds and relied upon the exposure and Loss data submitted and certified by the Company as accurate to determine the amount of bonding needed, the SBA may choose not to require, or
accept, a resubmission if the resubmission will result in additional reimbursements to the Company. The SBA may require any discovered errors, inadvertent omissions, and typographical errors associated with the data reporting of insured values,
discovered prior to the closing of the file and acceptance of the examination findings by the Company, to be corrected to reflect the proper values. The Company shall retain its records in accordance with the requirements for records retention
regarding exposure reports and claims reports outlined herein, and in any administrative rules adopted pursuant to Section 215.555, Florida Statutes. Companies writing covered collateral protection policies, as defined in defmition (11)(b) of
Article V, must be able to provide documentation that the policy covers personal residences, protects both the borrower’s and lender’s interest, and that the coverage is in an amount at least equal to the coverage for the dwelling in place
under the lapsed homeowner’s policy. 

  

					
	    	  	19	  	 FHCF-2019K

Rule 19-8.010 F.A.C.

	(1)	 Purpose of FHCF Examination 

The purpose of the examinations conducted by the SBA is to evaluate the accuracy of the FHCF exposure or Loss data reported by the Company.
However, due to the limited nature of the examination, it cannot be relied upon as an assurance that a Company’s data is reported accurately or in its entirety. The Company should not rely on the FHCF to identify every type of reporting error
in its data. In addition, the reporting requirements are subject to change each Contract Year so it is the Company’s responsibility to be familiar with the applicable Contract Year requirements and to incorporate any changes into its data for
that Contract Year. It is also the Company’s responsibility to ensure that its data is reported accurately and to comply with Florida Statutes and any applicable rules when reporting exposure data. The examination report is not intended to
provide a legal determination of the Company’s compliance. 
  

	(2)	 Examination Requirements for Exposure Verification 

The Company shall retain complete and accurate records, in policy level detail, of all exposure data submitted to the SBA in any Contract Year
until the SBA has completed its examination of the Company’s exposure submissions. The Company shall also retain complete and accurate records of any completed exposure examination for any Contract Year in which the Company incurred Losses
until the completion of the claims examination and commutation for that Contract Year. The records to be retained are outlined in the Data Call adopted for the Contract Year under Rule 19-8.029, F.A.C. A
complete list of records to be retained for the exposure examination is set forth in Form FHCF-EAP1, adopted for the Contract Year under Rule 19-8.029, F.A.C. 

 

	(3)	 Examination Requirements for Loss Reports 

The Company shall retain complete and accurate records of all reported Losses and/or advances submitted to the SBA until the SBA has completed
its examination of the Company’s reimbursable Losses and commutation for the Contract Year (if applicable) has been concluded. The records to be retained are set forth as part of the Proof of Loss Report, Form
FHCF-L1B and Form FHCF-LAP1, both adopted for the Contract Year under Rule 19-8.029, F.A.C. 
  

	(4)	 Examination Procedures 

 

	 	(a)	 The FHCF will send an examination notice letter to the Company providing the commencement date of the
examination, the site of the examination, any accommodation requirements of the examiner, and the reports and data which must be assembled by the Company and forwarded to the FHCF. The Company shall be prepared to choose one location in which to be
examined, unless otherwise specified by the SBA. 

  

	 	(b)	 The reports and data are required to be forwarded to the FHCF as set forth in an examination notice letter. The
information is then forwarded to the examiner. If the FHCF receives accurate and complete records as requested, the examiner will contact the Company to inform the Company as to what policies or other documentation will be required once the examiner
is on site. Any records not required to be provided to the examiner in advance shall be made available at the time the examiner arrives on site. Any records to support reported exposure or Losses which are provided after the examiner has left the
work-site will, at the SBA’s discretion, result in an additional examination of exposure and/or Loss records or an extension or expansion of the examination already in progress. All costs associated with such additional examination or with the
extension or expansion of the original examination shall be borne by the Company. 

  

	 	(c)	 At the conclusion of the examiner’s work and the management review of the examiner’s report,
findings, recommendations, and work papers, the FHCF will forward an examination report to the Company. 

  

					
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Rule 19-8.010 F.A.C.

	 	(d)	 Within 30 days from the date of the letter accompanying the examination report, the Company must provide a
written response to the FHCF. The response must indicate whether the Company agrees with the findings and recommendations of the examination report. If the Company disagrees with any examination findings or recommendations, the reason for the
disagreement must be outlined in the response and the Company must provide supporting information to support its objection. An extension of 30 days may be granted if the Company can show that the need for additional time is due to circumstances
beyond the reasonable control of the Company. No response is required if the examination report does not include any findings or recommendations. 

  

	 	(e)	 If the Company accepts the examination findings and recommendations, and there is no recommendation for
additional information, the examination report will be finalized and the exam file closed. 

  

	 	(f)	 If the Company disputes the examiner’s findings, the areas in dispute will be resolved by a meeting or a
conference call between the Company and FHCF management. 

  

	 	(g)       1.	 If the recommendation of the examiner is to resubmit the Company’s exposure data for the Contract Year in
question, then the FHCF will send the Company a letter outlining the process for resubmission and including a deadline to resubmit. Once the resubmission is received, the FHCF’s Administrator calculates a revised Reimbursement Premium for the
Contract Year which has been examined. The SBA shall then review the resubmission with respect to the examiner’s findings, and accept the resubmission or contact the Company with any questions regarding the resubmission. Once the SBA has
accepted the resubmission as a sufficient response to the examiner’s findings, the exam is closed. 

  

	 	2.	 If the recommendation of the examiner is to give the Company the option to either resubmit the exposure data or
to pay the estimated Reimbursement Premium difference, then the FHCF will send the Company a letter outlining the process for resubmission or for paying the estimated Reimbursement Premium difference and including a deadline for the resubmission or
the payment to be received by the FHCF’s Administrator. If the Company chooses to resubmit, the same procedures outlined in Article XIII(4) apply. 

  

	 	(h)	 If the recommendation of the examiner is to update the Company’s Proof of Loss Report(s) for the Contract
Year under review, the FHCF will send the Company a letter outlining the process for submitting the Proof of Loss Report(s) and including a deadline to file. Once the Proof of Loss Report(s) is received by the FHCF Administrator, the FHCF’s
Administrator will calculate a revised reimbursement. The SBA shall then review the submitted Proof of Loss Report(s) with respect to the examiner’s findings, and accept the Proof of Loss Report(s) as filed or contact the Company with any
questions. Once the SBA has accepted the corrected Proof of Loss Report(s) as a sufficient response to the examiner’s findings, the exam is closed. 

  

	 	(i)	 The examiner’s list of errors is made available in the examination report sent to the Company. Given that
the examination was based on a sample of the Company’s policies or claims rather than the whole universe of the Company’s Covered Policies or reported claims, the error list is not intended to provide a complete list of errors but is
intended to indicate what information needs to be reviewed and corrected throughout the Company’s book of Covered Policy business or claims information to ensure more complete and accurate reporting to the FHCF. 

 

	(5)	 Costs of the Examinations 

The costs of the examinations shall be borne by the SBA. However, in order to remove any incentive for a Company to delay preparations for an
examination, the SBA shall be reimbursed by the Company for any examination expenses incurred in addition to the usual and customary costs, which additional expenses were incurred as a result of the Company’s failure, despite proper notice, to
be prepared for the examination or as a result of a Company’s failure to provide requested information. All requested information must be complete and accurate. 

  

					
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Rule 19-8.010 F.A.C.

 ARTICLE XIV – OFFSETS 

The SBA reserves the right to offset amounts payable to the SBA from the Company, including amounts payable under the Reimbursement Contract for any Contract
Year and also including the Company’s full Reimbursement Premium for the current Contract Year (regardless of installment due dates), against any (1) Reimbursement Premium refunds under any Contract Year, (2) reimbursement or advance
amounts, or (3) amounts agreed to in a commutation agreement, which are due and payable to the Company from the SBA as a result of the liability of the SBA. 

ARTICLE XV– INSOLVENCY OF THE COMPANY 
 Company shall
notify the FHCF immediately upon becoming insolvent. Except as otherwise provided below, no reimbursements will be made until the FHCF has completed and closed its examination of the insolvent Company’s Losses, unless an agreement is entered
into by the court appointed receiver specifying that all data and computer systems required for FHCF exposure and claims examinations will be maintained until completion of the Company’s exposure and claims examinations. Except as otherwise
provided below, in order to account for potential erroneous reporting, the SBA shall hold back 25% of requested reimbursements until the exposure and claims examinations for the Company are completed. Only those Losses supported by the examination
will be reimbursed. Pursuant to Section 215.555(4)(g), Florida Statutes, the FHCF is required to pay the “net amount of all reimbursement moneys” due an insolvent insurer to the Florida Insurance Guaranty Association (FIGA) for the
benefit of Florida policyholders. For the purpose of this Contract, a Company is insolvent when an order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction. In light of the need for an immediate
infusion of funds to enable policyholders of insolvent companies to be paid for their claims, the SBA may enter into agreements with FIGA allowing exposure and claims examinations to take place immediately without the usual notice and response time
limitations and allowing the FHCF to make reimbursements (net of any amounts payable to the SBA from the Company or FIGA) to FIGA before the examinations are completed and before the response time expires for claims filing by reinsurers and
financial institutions, which have a priority interest in those funds pursuant to Section 215.555(4)(g), Florida Statutes. Such agreements must ensure the availability of the necessary records and adequate security must be provided so that if
the FHCF determines that it overpaid FIGA on behalf of the Company, or if claims are filed by reinsurers or financial institutions having a priority interest in these funds, that the funds will be repaid to the FHCF by FIGA within a reasonable time.

 ARTICLE XVI – TERMINATION 
 The FHCF and the
obligations of both parties under this Contract can be terminated only as may be provided 
 by law or applicable rules. 

ARTICLE XVII – VIOLATIONS 
  

	(1)	 Statutory Provisions 

 

	 	(a)	 Section 215.555(10), Florida Statutes, provides that any violation of Section 215.555, Florida
Statutes, or of rules adopted under that section, constitutes a violation of the Florida Insurance Code. This Contract has been adopted as part of Rule 19-8.010, Florida Administrative Code, under the
authority of that section of Florida Statutes. 

  

	 	(b)	 Section 215.555(11), Florida Statutes, authorizes the SBA to take any action necessary to enforce the
rules and the provisions and requirements of this Contract, required by and adopted pursuant to Section 215.555, Florida Statutes. 

  

	(2)	 Noncompliance 

 

	 	(a)	 As used in this Article, the term “noncompliance” means the failure of the Company to meet any
applicable requirement of Section 215.555, Florida Statutes, or of any rule adopted under the authority of that section of Florida Statutes, including, but not limited to, any failure to meet a deadline for an FHCF payment, Data Call
submissions or resubmissions, Loss reporting or 

  

					
	    	  	22	  	 FHCF-2019K

Rule 19-8.010 F.A.C.

	 	
commutation documentation, or a deadline related to SBA examination requirements. The Company remains in a state of noncompliance as long as the Company fails to meet the applicable
requirement(s). 

  

	 	(b)	 If the Company is in a state of noncompliance, the SBA reserves the right to withhold any payments or advances
due to the Company until the SBA determines that the Company is no longer in a state of noncompliance. 

 ARTICLE XVIII –
APPLICABLE LAW 
 This Contract shall be governed by and construed according to the laws of the State of Florida in respect of any matter relating to or
arising out of this Contract. 
 ARTICLE XIX – DUE DATES 

If any due date provided in this Contract is a Saturday, Sunday or a legal State of Florida or federal holiday, then the actual due date will be the day
immediately following the applicable due date which is not a Saturday, Sunday or a legal State of Florida or federal holiday. 

  

					
	    	  	23	  	 FHCF-2019K

Rule 19-8.010 F.A.C.

 ARTICLE XX – REIMBURSEMENT CONTRACT ELECTIONS 

 

	(1)	 Coverage Level 

For purposes of determining reimbursement (if any) due the Company under this Contract and in accordance with the Statute, the Company has the
option to elect a 45% or 75% or 90% Coverage Level under this Contract. If the Company is a member of an NAIC group, all members must elect the same Coverage Level, and the individual executing this Contract on behalf of the Company, by placing his
or her initials in the box under (a) below, affirms that the Company has elected the same Coverage Level as all members of its NAIC group. If the Company is an entity created pursuant to Section 627.351, Florida Statutes, the Company must
elect the 90% Coverage Level. The Company shall not be permitted to change its Coverage Level during the Contract Year. The Company shall be permitted to change its Coverage Level at the beginning of a new Contract Year, but may not reduce its
Coverage Level if a Covered Event required the issuance of revenue bonds, until the bonds are no longer outstanding. 
 The Coverage Level
elected by the Company for the prior Contract Year effective June 1, 2018 was as follows: Homeowners Choice Property and Casualty Insurance Company – 45% 
  

	 	(a)	 NAIC Group Affirmation: Initial the following box if the Company is part of an NAIC Group:

  
 

 
  

	 	(b)	 Coverage Level Election: The Company hereby elects the following Coverage Level for the Contract Year
from 12:00:01 a.m., Eastern Time, June 1, 2019, to 12:00 a.m., Eastern Time, May 31, 2020, (the individual executing this Contract on behalf of the Company shall place his or her initials in the box to the left of the percentage elected
for the Company): 

  

							
	

	  	45% OR	  	75% OR	  	90%

  

	(2)	 Additional Living Expense (ALE) Written as Time Element Coverage 

If your Company writes Covered Policies that provide ALE coverage on a time element basis (i.e., coverage is based on a specific period of time
as opposed to a stated dollar limit), you must initial the ‘Yes – Time Element ALE’ box below. If your Company does not write time element ALE coverage, initial ‘No – Time Element ALE’ box below. 

 

					
	                	  	OR	  	                
	 No – Time

Element ALE
	  	Yes – Time
 Element ALE

  

					
	    	  	24	  	 FHCF-2019K

Rule 19-8.010 F.A.C.

 ARTICLE XXI – SIGNATURES 

Approved by: 
 Paragon Strategic Solutions Inc., on Behalf
of the State Board of Administration of the State of Florida and as Administrator of the Florida Hurricane Catastrophe Fund. 
  

							
	By: 	 	

	 		 	3-26-19
		 	 	 		 	   Date

 Authority to sign on behalf of the Company: 

The person signing this Contract on behalf of the Company hereby represents that he or she is an officer of the Company, acting within his or her authority to
enter into this Contract on behalf of the Company, with the requisite authority to bind the Company and make the representations on behalf of the Company as set forth in this Contract. 

Homeowners Choice Property and Casualty Insurance Company 

 

			
	 PARESHBHAI PATEL – CHAIRMAN
	 	                                   
                                         
            
	Printed Name and Title	 	

  

							
	By: 	 		 		 	        2/26/2019        
	 	Signature	 		 	            Date

  

					
	    	  	25	  	 FHCF-2019K

Rule 19-8.010 F.A.C.Exhibit

        

Neenah, Inc. 
20__ Performance Share Unit Award Agreement
THIS AGREEMENT (the “Agreement”), effective ______, 20__, sets forth the terms and conditions of the grant of Performance Share Units (“Performance Shares”) by Neenah, Inc. (the “Company”) to the Participant pursuant to the provisions of the Neenah, Inc. 2018 Omnibus Stock and Incentive Compensation Plan (the “Plan”).  The Participant’s number of target Performance Shares for 20__ (the “Target Performance Shares”) has been provided to the Participant in the Participant’s Morgan Stanley StockPlan Connect account.
Summary
The Award under this Agreement consists of two components, Component I and Component II. 
The Component I portion of the Award has a one-year Performance Period and is subject to a two-year vesting period after the end of the Performance Period.  The performance metrics are Return on Invested Capital (“ROIC”), Corporate Revenue Growth, and Adjusted Earnings per Share Growth. 
The Component II portion of the Award has a three-year Performance Period and is vested at the end of the Performance Period.  The performance metric is Relative TSR.  
These components are described below under the headings “Component I” and “Component II,” respectively, and the features common to both components are described after that under the heading “Provisions Applicable to all Performance Shares.”  This summary is subject to the terms of the Agreement below.
Agreement
The Company and the Participant agree as follows:
Component I:  ROIC, Corporate Revenue Growth and Adjusted Earnings per Share Growth Component of Award
		
	1.
	Performance Period:  The Performance Period for Component I commences on January 1, 20__ and ends on December 31, 20__.

		
	2.
	Performance Metrics:

		
	(a)
	“Return on Invested Capital” (“ROIC”) is defined as the difference expressed in basis points (with 100 equal to 1 percentage point) between ROIC for the Company for the Performance Period and ROIC for the Company for the prior calendar year.  “ROIC” is defined as After-tax Adjusted EBIT from continuing operations divided by Average Net Invested Capital.  “Adjusted EBIT” is earnings before interest and taxes, excluding the effects of gains/losses on sale of assets, goodwill impairment, facility/asset closure, integration or restructuring costs, and other material non-recurring items.  Tax rates are based on the statutory effective tax rates of each business entity adjusted for permanent differences impacting these rates.  “Average Net Invested Capital” is the straight average for the twelve months of total assets less cash and short-term non-interest bearing liabilities, all expressed in constant currency.

		
	(b)
	“Corporate Revenue Growth” is defined as the percentage change in the Company’s Net Sales for the Performance Period, excluding translation impacts from changes in foreign exchange rates, as compared with the prior calendar year.  

		
	(c)
	“Net Sales” means net sales for Technical Products and Fine Paper and excludes revenues from non-strategic products reported as part of the Other segment.

		
	(d)
	“Adjusted Earnings per Share Growth” is defined as the percentage change in the Company’s Adjusted Earnings per Share for the Performance Period, as compared with the prior calendar year.  “Adjusted Earnings per Share” is defined as the Company’s earnings per fully diluted common share from continuing operations, excluding the effects of gains/losses on sale of assets, goodwill impairment, facility/asset closure, integration or restructuring costs, and other material non-recurring items.

		
	3.
	Percentage Weighting for each Performance Metric:  The following percentage weighting for each performance metric will apply for purposes of determining the number of Performance Shares earned under Component I: 

	
		
	Performance Metric
	Weighting

	ROIC
	__%

	Corporate Revenue Growth
	__%

	Adjusted Earnings per Share Growth
	__%

		
	4.
	Percentage Attained based on each Performance Metric:  The payout percentage attained based on each performance metric, which will be used for determining the number of Performance Shares earned under Component I, is as follows:

	
					
	 
	Performance Metric Weighting
	Threshold
	Target
	Maximum

	Payout Percentage Attained
	 
	___%
	___%
	___%

	ROIC
	__%
	___ bps
	___ bps
	___ bps

	Corporate Revenue Growth
	__%
	__%
	__%
	__%

	Adjusted Earnings per Share Growth
	__%
	__%
	__%
	__%

Straight line extrapolation of the payout percentage attained will be calculated for results between Threshold and Target, and between Target and Maximum.  Below Threshold, the payout percentage attained is 0%.  For Maximum or above, the payout percentage attained is ___%.  Notwithstanding the foregoing, the Compensation Committee retains discretion to adjust an award (increase or reduce) under this Agreement based on its assessment of the Company’s performance with respect to strategic initiatives.
		
	5.
	Number of Performance Shares Earned: The number of Performance Shares earned under Component I is determined as follows:

		
	(a)
	Step 1:  multiply the percentage weighting for each performance metric by the payout percentage attained based on such performance metric to arrive at the percentage of Target Performance Shares earned based on such performance metric; 

		
	(b)
	Step 2:  add the sum of the percentages of Target Performance Shares earned based on each performance metric; 

		
	(c)
	Step 3:  multiply the sum of the percentages of Target Performance Shares earned based on each performance metric by the total number of Target Performance Shares and     

		
	(d)
	Step 4:  increase or reduce the award calculated in Step 3 by the percentage that the Compensation Committee determines in its discretion.

As an example, assume the percentage attained based on each performance metric is as shown below:
	
					
	 
	Percentage Weighting
	x
	Payout Percentage Attained
	Percentage Target Shares Earned

	ROIC
	__%
	x
	___%
	=   __%

	Corporate Revenue Growth
	__%
	x
	___%
	=   __%

	Adjusted Earnings per Share Growth
	__%
	x
	___%
	=   __%

__% + __% + __% = __%.   
		
	6.
	Dividend Equivalents:  The Performance Shares under Component I do not accrue dividend equivalents during the Performance Period, except if a Change in Control occurs during the Performance Period, in which case, they accrue dividend equivalents beginning on the date of the Change in Control.  Beginning on the earlier of (a) the first day following the end of the Performance Period, or (b) the date of the Change in Control, the Performance Shares shall accrue dividend equivalents.  The dividend equivalents shall be paid to the Participant in cash or shares of Stock, as determined by the authorized officers as designated by the Committee, within thirty (30) days following the end of each calendar quarter.  The dividend equivalents paid for such calendar quarter will be equal to the dividend per Share (if any) declared by the Company during such calendar quarter, multiplied by the number of Performance Shares held by the Participant.  If dividend equivalents for a calendar quarter are paid in shares of Stock, the number of shares of Stock will be equal to the dividend equivalents for the calendar quarter, divided by the Fair Market Value per share of stock as of the date the dividend is payable as declared by the Company.  After the Performance Shares have been settled or forfeited, no further dividend equivalents shall accrue.

		
	7.
	Vesting and Payment of the Performance Shares:  One hundred percent (100%) of the earned Performance Shares under Component I will vest on the earliest of the dates specified below and will be paid when specified below (with the vesting date listed first in each Subsection, followed by payment date):

		
	(a)
	December 31, 20__ provided the Participant has continued in the employment of the Company, its Affiliates, or its Subsidiaries through such date, in which case the Performance Shares will be paid on December 31, 20__;

		
	(b)
	On the date the Participant incurs a “Separation from Service” (within the meaning of Code Section 409A), if that occurs on or after July 1, 20__ and before December 31, 20__ due to death, “Retirement” or “Disability” (as defined in the Plan) (but in the case of Disability determined without regard to the length of any elimination period under the long term disability benefits plan), in which case the number of Performance Shares earned during Performance Period will be prorated based upon the ratio that the number of calendar months served during the Component I Performance Period  (full credit given for partial months) bears to 12 months and will be paid upon the later of 20__, by February 28, 20__, or within thirty (30) days following the date of the Participant’s Separation from Service provided, however, if the Participant is a “Specified Employee” within the meaning of Code Section 409A, the Performance Shares will be paid six (6) months following such Separation from Service to the extent required to comply with Code Section 409A (but not before 20__, by February 28, 20__ or later than December 31, 20__ to the extent permissible under Code Section 409A);

		
	(c)
	On the date of a “Change in Control” (as defined in Section 15 of “Provisions Applicable to all Performance Shares”), if that occurs on or after January 1, 2019 and before December 31, ____, with respect to which Neenah, Inc. is not the surviving entity, provided the Participant has continued in the employment of the Company, its Affiliates, or its Subsidiaries through such occurrence; provided, however, that if the Change in Control occurs on or after January 1, 2019 and before December 31, ____, the Participant shall be deemed to earn 75% of the Target Performance Shares.  The Performance Shares will be paid within thirty (30) days following the Change in Control; or

		
	(d)
	On the date the Participant incurs a Separation from Service if a Change in Control occurs on or after January 1, 20__ and before December 31, 20__, with respect to which Neenah, Inc. is the surviving entity, and within two years after the date of the Change in Control and before December 31, 20__, the Participant incurs a Separation from Service as a result of the Participant’s employment being terminated by the Company, its Affiliates, and/or Subsidiaries other than for Cause, or being terminated by the Participant for Good Reason; provided, however, that if the Change in Control occurs on or after January 1, 20__ and before December 31, 20__, the Participant shall be deemed to earn 75% of the Target Performance Shares.  For the purposes of this Agreement, the terms “Cause” and “Good Reason” shall have the same meaning as provided in the Executive Severance Plan.  The Performance Shares shall be paid within thirty (30) days following Separation from Service, but not later than December 31, 20__; provided, however, that in the case of a Participant who is a Specified Employee, the Performance Shares will be paid six (6) months following Separation from Service to the extent required to comply with Code Section 409A, but not later than December 31, 20__ to the extent permissible under Code Section 409A.

Component II:  Relative TSR Component of Award
		
	1.
	Performance Period:  The Performance Period for Component II commences on January 1, 20__ and ends on December 31, 20__.

		
	2.
	Performance Measure:  Relative Total Shareholder Return (“Relative TSR”) is defined as the Company’s Total Shareholder Return (“TSR”) relative to the TSR of the companies in the Russell 2000 Value Index.

“TSR” is expressed as a percentage and calculated as follows:
(December 20__ average closing stock price + dividends paid and reinvested during the Performance Period - December 20__ average closing stock price) 

December 20__ average closing stock price
The TSR for companies (including the Company) in the Russell 2000 Value Index will be ranked from highest to lowest and Relative TSR will be measured based on the Company’s TSR ranking within each quartile of the companies in the Russell 2000 Value Index.    
		
	3.
	Percentage Weighting for Relative TSR:  The Relative TSR percentage weighting is __% and will apply for determining the number of Performance Shares earned under Component II.

		
	4.
	Percentage Attained based on Relative TSR:  The payout percentage attained based on Relative TSR, which will be used for purposes of determining the number of Performance Shares earned under Component II, is as follows:

	
					
	 
	Performance Metric Weighting
	Threshold
	Target
	High

	Payout Percentage Attained
	 
	___%
	____%
	___%

	Relative TSR
	___%
	3rd Quartile Russell 2000 Value Index
	2nd Quartile Russell 2000 Value Index
	1st Quartile Russell 2000 Value Index

Straight line extrapolation of the payout percentage attained will be calculated for results between Threshold and Target (i.e., over the 25th percentile up to the 50th percentile), and between Target and Maximum (i.e., over the 50th percentile up to the 75th percentile).  Below Threshold, the payout percentage attained is 0%.  For Maximum or above, the payout percentage attained is ___%.  Notwithstanding the foregoing, the Compensation Committee retains discretion to adjust an award (increase or reduce) under this Agreement based on its assessment of the Company’s performance with respect to strategic initiatives.
		
	5.
	Number of Performance Shares Earned: The number of Performance Shares earned based on Relative TSR performance is determined as follows:

		
	(a)
	Step 1:  multiply ___% (i.e., the percentage weighting for Relative TSR) by the payout percentage attained based on Relative TSR to arrive at the percentage of Target Performance Shares earned based on Relative TSR; 

		
	(b)
	Step 2:  multiply the percentage of Target Performance Shares earned based on Relative TSR by the total number of Target Performance Shares; and

		
	(c)
	Step 3:  increase or reduce the award calculated in Step 3 by the percentage that the Compensation Committee determines in its discretion.

As an example, assume the Relative TSR payout percentage below is attained:
	
					
	 
	Percentage Weighting
	x
	Payout Percentage Attained
	Percentage Target Shares Earned

	Relative TSR
	___%
	x
	___%
	=    ___%

Therefore, the number of Performance Shares earned based on Relative TSR is ___% of the number of Target Performance Shares.
		
	6.
	Dividend Equivalents:  The Performance Shares actually earned under Component II accrue dividend equivalents during the Performance Period.  The dividend equivalents shall be paid to the Participant in cash or shares of Stock, as determined by the authorized officers as designated by the Committee.  The dividend equivalents will be equal to the dividend per Share (if any) declared by the Company during the Performance Period, multiplied by the number of Performance Shares held by the Participant.  If dividend equivalents are paid in shares of Stock, the number of shares of Stock will be equal to the dividend equivalents for each given date during the Performance Period, divided by the Fair Market Value per share of Stock as of the date the dividend is payable as declared by the Company.  The dividend equivalents will be paid on the same date as the Award is paid pursuant to Section 7 of Component II.  After the Performance Shares have been settled or forfeited, no further dividend equivalents shall accrue.

		
	7.
	Vesting and Payment of the Performance Shares:  One hundred percent (100%) of the earned Performance Shares under Component II will vest on the earliest of the dates specified below and will be paid when specified below (with the vesting date listed first in each Subsection, followed by payment date):

		
	(a)
	December 31, 20__, provided the Participant has continued in the employment of the Company, its Affiliates, or its Subsidiaries through such date, in which case the Performance Shares will be paid in 20__ by February 28, 20__;

		
	(b)
	On the date the Participant incurs a Separation from Service that occurs on or after July 1, 20__and before December 31, 20__due to death, Retirement or Disability (but in the case of Disability determined without regard to the length of any elimination period under the long term disability benefits plan), in which case the number of Performance Shares earned during the Performance Period will be prorated based upon the ratio that the number of calendar months served during the Component II Performance Period  (full credit given for partial months) bears to 12 months (provided such ratio shall not exceed 100%) and will be paid in 20__by February 28, 20__, provided, however, if the Participant is a Specified Employee within the meaning of Code Section 409A, the Performance Shares will be paid  six (6) months following such Separation from Service to the extent required to comply with Code Section 409A;

		
	(c)
	On the date of a Change in Control with respect to which Neenah, Inc. is not the surviving entity, provided the Participant has continued in the employment of the Company, its Affiliates, or its Subsidiaries through such occurrence; provided, however, that the Participant shall be deemed to earn 25% of the Target Performance Shares.  The Performance Shares will be paid within thirty (30) days following the Change in Control; or

		
	(d)
	On the date the Participant incurs a Separation from Service if a Change in Control occurs with respect to which Neenah, Inc. is the surviving entity, and within two years after the date of the Change in Control and before December 31, 20__, the Participant incurs a Separation from Service as a result of the Participant’s employment being terminated by the Company, its Affiliates, and/or Subsidiaries other than for Cause, or by the Participant for Good Reason; provided, however, that the Participant shall be deemed to earn __% of the Target Performance Shares.  The Performance Shares will be paid within thirty (30) days following Separation from Service; provided, however, that in the case of a Participant who is a Specified Employee, the Performance Shares will be paid six (6) months following Separation from Service to the extent required to comply with Code Section 409A, but not later than February 28, 20__ to the extent permissible under Code Section 409A.

Provisions Applicable to all Performance Shares
		
	1.
	Settlement of Award:  The Company shall issue to the Participant one share of Stock (as defined in the Plan) for each Performance Share earned by the Participant that becomes vested in accordance with the provisions of Section 7 of Component I or Section 7 of Component II.  Notwithstanding the forgoing or any other provision hereof, the Committee reserves the sole and unfettered discretion to reduce the number of shares of Stock that would otherwise be issuable pursuant to this Agreement.  Any fractional share of Stock payable to the Participant in accordance with this Section shall be rounded up to the nearest whole share of Stock.  Notwithstanding the foregoing, pursuant to Section 4.4 or Article 18 of the Plan, the Company may adjust the number or kind of shares or substitute cash.

		
	2.
	Termination of Employment for Other Reasons:  In the event that the Participant’s employment with the Company terminates before December 31, 20__, then except as set forth in Section 7 of Component I or Section 7 of Component II, this Award and all Performance Shares hereunder shall be forfeited and no payment shall be made to the Participant.

		
	3.
	Nontransferability:  Performance Shares awarded pursuant to this Agreement may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated (“Transfer”), other than by will or by the laws of descent and distribution.  If any Transfer, whether voluntary or involuntary, of Performance Shares is made, or if any attachment, execution, garnishment, or lien shall be issued against or placed upon the Performance Shares, the Participant’s right to such Performance Shares shall be immediately forfeited to the Company, and this Agreement shall lapse.

		
	4.
	Requirements of Law:  The granting of Performance Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

		
	5.
	Inability to Obtain Authorization:  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance of any shares of Stock hereunder, shall relieve the Company of any liability with respect to the failure to issue such shares of Stock as to which such requisite authority shall not have been obtained.

		
	6.
	Tax Withholding:  The Company will have the power and the right to deduct or withhold, or require the Participant or the Participant’s beneficiary to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Agreement.

		
	7.
	Stock Withholding:  With respect to withholding required upon any taxable event arising as a result of Performance Shares granted hereunder, the Company, unless notified otherwise by the Participant in writing within thirty (30) days prior to the taxable event, will have the right to satisfy the tax withholding requirement by withholding shares of Stock having a Fair Market Value equal to the total statutory tax required to be withheld on the transaction.  The Participant agrees to pay to the Company, its Affiliates, and/or its Subsidiaries any amount of tax that the Company, its Affiliates, and/or its Subsidiaries may be required to withhold as a result of the Participant’s participation in the Plan that are not satisfied by the means previously described.

		
	8.
	Administration:  This Agreement and the Participant’s rights hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan.  It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which will be binding upon the Participant.

		
	9.
	Continuation of Employment:  This Agreement will not confer upon the Participant any right to continuation of employment by the Company, its Affiliates, and/or its Subsidiaries, nor will this Agreement interfere in any way with the Company’s, its Affiliates’, and/or its Subsidiaries’ right to terminate the Participant’s employment at any time.

		
	10.
	Amendment to the Plan:  The Plan is discretionary in nature and the Committee may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval.

		
	11.
	Amendment to This Agreement:  The Committee may terminate, amend, or modify this Agreement.  No such termination, amendment, or modification of the Agreement may adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval.

		
	12.
	Successor:  All obligations of the Company under the Plan and this Agreement, with respect to the Performance Shares, will be binding on any legal successor to or assigns of the Company.

		
	13.
	Severability:  The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions will nevertheless be binding and enforceable.

		
	14.
	Applicable Laws and Consent to Jurisdiction:  The validity, construction, interpretation, and enforceability of this Agreement will be determined and governed by the laws of the state of Delaware without giving effect to the principles of conflicts of law.  For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction and agree that such litigation will be conducted in the federal or state courts of the state of Georgia.

		
	15.
	Definition of Change in Control:  “Change in Control” means the occurrence of a “change in the ownership of the Company,” a “change in the effective control of the Company,” or a “change in the ownership of a substantial portion of the Company’s assets” (as such terms are defined below).

		
	(a)
	A “change in ownership of the Company” shall occur on the date that any one person, or more than one person acting as a “Group” (as defined below), acquires ownership of stock of the Company that, together with stock held by such person or Group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; provided, however, that, if any one person or more than one person acting as a Group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the Company.  In addition, the following shall not constitute a change in ownership of the Company:  (i) any acquisition by any one person, or more than one person acting as a Group, who on December 1, 2004 is the “beneficial owner” (within the meaning of Rule 13d-3 of the Rules and Regulations under the Securities Exchange Act of 1934, as amended) (a “Beneficial Owner”) of thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”), (ii) any acquisition directly from the Company, including without limitation, a public offering of securities, (iii) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates, or (v) any transaction described in Subsection (d) below.

		
	(b)
	A “change in the effective control of the Company” occurs on the date that:

		
	(i)
	Any one person, or more than one person acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty-five percent (35%) or more of the total voting power of the stock of the Company; provided, however, if any one person, or more than one person acting as a group, is considered to own thirty-five percent (35%) or more of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a change in the effective control of the Company.  Notwithstanding the foregoing, the following shall not constitute a change in the effective control of the Company:  (A) any acquisition by any one person, or more than one person acting as a Group, who on December 1, 2004 is the Beneficial Owner of thirty percent (30%) or more of the Outstanding Company Voting Securities, (B) any acquisition directly from the Company, including without limitation, a public offering of securities, (C) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates, or (D) any transaction described in Subsection (d) below; or

		
	(ii)
	A majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; provided, however, that this Paragraph (ii) shall apply only to the Company if no other corporation is a majority shareholder of the Company.

		
	(c)
	A “change in the ownership of a substantial portion of the Company’s assets” occurs on the date that any one person, or more than one person acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total “Gross Fair Market Value” (as defined below) equal to or more than 90% of the total Gross Fair Market Value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that, a transfer of assets by the Company is not treated as a change in the ownership of such assets if the assets are transferred to:

		
	(i)
	a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;

		
	(ii)
	an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;

		
	(iii)
	a person, or more than one person acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company;

		
	(iv)
	an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in Paragraph (iii) hereof); or

		
	(v)
	a Successor Entity pursuant to a transaction described in Subsection (d) below.

		
	(d)
	Consummation of a reorganization, merger, or consolidation to which the Company is a party, or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”) shall not constitute a change in ownership of the Company, a change in the effective control of the Company, or a change in the ownership of a substantial portion of the Company’s assets, if following such Business Combination: (i) all or substantially all the individuals or entities who were the Beneficial Owners of Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than sixty percent (60%) of the combined voting power of the outstanding voting securities entitled to vote generally in the election of the members of the board of directors of the company resulting from the Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (the “Successor Entity”) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Voting Securities; (ii) no person or Group (excluding any Successor Entity or any employee benefit plan, or related trust, of the Company or such Successor Entity) beneficially owns, directly or indirectly, thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of the Successor Entity, except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of the members of the board of directors of the Successor Entity were members of the incumbent Board (including members of the Board whose appointment or election is endorsed by a majority of the Board prior to the date of the appointment or election) at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination.

		
	(e)
	For purposes of the definition of Change in Control:

		
	(i)
	“Group” means persons acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase, or acquisition of stock of the Company or assets of the Company, or a similar business transaction with the Company (the “Transaction”); provided, however, that with respect to any person who owns stock of both the Company and the other corporation in a Transaction, such person will only be treated as acting as a group with respect to his or her interest in the other corporation prior to the Transaction;

		
	(ii)
	“Gross Fair Market Value” means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets; and

		
	(iii)
	Notwithstanding any other provision hereof, stock ownership shall be determined under Code Section 409A, and no Change in Control shall be deemed to have occurred hereunder unless such event constitutes a change in the ownership or effective control of the Company or in a substantial portion of the assets of the Company under Code Section 409A.

		
	16.
	“Retirement” means voluntary resignation of employment by a Participant, who is also an employee of the Company or an Affiliate (as defined in the Plan),after (i) the later of attaining age sixty-five (65) or the fifth anniversary of the Participant’s date of hire, or (ii) attaining age fifty-five (55) with at least five (5) Years of Vesting Service; provided, however, that if a Participant is a participant under the Company’s Pension Plan or Retirement Contribution Plan, “Retirement” shall mean satisfying the requirements for “retirement” or “early retirement” as defined in the applicable plan.  For purposes of the definition of “Retirement,” “Years of Vesting Service” shall be determined in the same manner as years of vesting service are determined pursuant to the Company’s Pension Plan or Retirement Contribution Plan, whichever is applicable to the Participant; however, if such plan is subsequently terminated, the “Committee” (as defined in the Plan) shall determine the meaning of such term in its sole discretion. 

		
	17.
	Compensation Recovery Policy: The Board has adopted this compensation recovery policy (the “Clawback Policy”) for “named executive officers,” other senior officers and participants (each hereinafter referred to individually as an “Executive” and collectively as “Executives”) in the Company’s Management Incentive Plan (“MIP”) and the Company’s Long-term Compensation Plan (“LTCP”), and the Performance Shares granted under this Agreement shall be deemed to be components  of the MIP and/or the LTCP.  Under the Clawback Policy, the Board may, to the extent permitted by governing law, require reimbursement of any MIP bonus or LTCP stock grants paid to an individual Executive, a group of Executives or all Executives if:  (i) the payment was predicated upon the achievement of certain financial results that were subsequently the subject of a material restatement, (ii) the Board reasonably determines that the Executive engaged in conduct that caused or partially caused the need for the restatement or that the restatement is of such a nature as to warrant seeking recovery of compensation from all or some larger group of Executives, and (iii) a lower payment would have been made to the Executive (or group of Executives) based upon the restated financial results.  In each such instance, the Board may seek to recover the relevant overpayment amount of the MIP bonus or LTCP grant for the period at issue.  In applying the Clawback Policy, the Board will have sole discretion in determining whether an Executive’s conduct has or has not met any particular standard of conduct under law or Company policy and whether the compensation recovery should apply to an individual Executive or a larger group of Executives and the extent of the amount of recovery sought.  Further, following a restatement of the Company’s financial statements, the Company will recover any compensation received by (a) the Chief Executive Officer and Chief Financial Officer that is required to be recovered by Section 304 of the Sarbanes-Oxley Act of 2002 (Section 304 of the Sarbanes-Oxley Act of 2002 requires the Chief Executive Officer and Chief Financial Officer of a company to disgorge their bonuses and other incentive compensation where (i) the company must prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws and (ii) the noncompliance results from misconduct), or (b) an executive officer, to the extent required under Section 954 of the Dodd-Frank Wall Street Reform Act and Consumer Protection Act.

		
	18.
	The Plan Governs; Capitalized Terms:  The Plan provides a complete description of the terms and conditions governing the Performance Shares.  If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms will completely supersede and replace the conflicting terms of this Agreement.  All capitalized terms will have the meanings ascribed to them in the Plan, unless specifically defined otherwise herein.

1

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