Document:

exhibit101

  CHAR1\1903866v8  OMNIBUS AMENDMENT AGREEMENT  THIS OMNIBUS AMENDMENT AGREEMENT (this “Amendment Agreement”) is dated as of  June 30, 2022 and entered into by and among Monarch National Insurance Company, a Florida  corporation (“MNIC”), FedNat Insurance Company, a Florida corporation (“FNIC”), FedNat Holding  Company, a Florida corporation and FNIC’s parent (“FNHC” and, together with FNIC, “FedNat”), Hale  Partnership Capital Management, LLC, a North Carolina limited liability company (“HPCM”) and the  Hale Investors (as listed on the signature page). MNIC, FNIC, FNHC, HPCM, and the Hale Investors are  each a “Party” and are collectively the “Parties”.  W I T N E S S E T H:  WHEREAS, as contemplated by the Master Restructure Agreement (as defined below), MNIC  and FNIC have entered into that certain Redemption Agreement dated as of May 13, 2022 (the  “Redemption Agreement”) pursuant to which MNIC has committed to purchase and redeem from FNIC,  and FNIC to sell and transfer to MNIC, the 300,000 shares of MNIC’s issued and outstanding common  stock, par value $10.00 (“Common Stock”) held by FNIC in exchange for a promissory note;   WHEREAS, certain of the Parties have entered into that certain Stock Investment and  Subscription Agreement dated as of May 13, 2022 (the “Stock Investment and Subscription Agreement”)  pursuant to which, and on the terms and conditions of which, the Hale Investors have agreed to purchase  MNIC Common Stock to equal 60% of the outstanding shares of Common Stock of MNIC following the  closing of all transactions contemplated under the Master Restructure Agreement; and  WHEREAS, the Parties have entered into that certain Master Restructure Agreement dated as of  May 13, 2022 (the “Master Restructure Agreement” and, with the Redemption Agreement and the Stock  Investment and Subscription Agreement, the “Transaction Agreements”) pursuant to which the Parties  committed to recapitalize and restructure MNIC by providing an aggregate of $25,000,000 in new  investment to MNIC ($15,000,000 from the Hale Investors and $10,000,000 from FNHC) and redeeming  the existing shares of common stock of MNIC held by FNIC, in each case subject to the approval of  Florida’s Office of Insurance Regulation.  NOW, THEREFORE, for and in consideration of the above premises and other good and valuable  consideration, the receipt and sufficiency of which hereby is acknowledged by the Parties hereto, the  Parties hereto agree as follows:  1. Amendments.  Effective upon the execution of this Amendment Agreement:  (a) Any and all references to the amendment of MNIC’s Articles of Incorporation to change  the name of MNIC and create additional shares of common stock (including without limitation,  provisions defining or requiring the delivery of the “Amended Articles”) found in the Transaction  Agreements are hereby deleted in their entirety.    (b)  The Master Restructure Agreement shall be amended as follows:    (i) Section 1.3 shall be amended and restated to read as follows:  “Unsecured Notes Redemption. Between the date hereof and Closing, FNHC shall negotiate with  the noteholders currently holding outstanding FNHC unsecured notes in the aggregate principal  amount of $121,000,000 to consent to the transactions contemplated hereunder and waive all  

 

   2    CHAR1\1903866v8  existing events of default under such indentures for a period of the later of (a) 60 days following  the Closing or (b) 60 days following the negotiations described in the following sentence (the  “Noteholder Consent”), such Noteholder Consent to be effective prior to Closing.  Furthermore,  following the Closing, FNHC shall negotiate with such noteholders to allow the redemption of a  portion of such unsecured notes in the aggregate amount of not less than $75,000,000 on or  before August 31, 2022 at a discount of at least 85% to the par value thereof and to waive any  prepayment premium associated with such redemption and all future prepayments under the  associated indenture.”  Furthermore, all references in the Master Restructure Agreement or the Stock Investment and  Subscription Agreement to the Noteholder Consent and Redemption Agreement are hereby  revised to reference,  in each, case, the Noteholder Consent.  (ii) Section 1.4 shall be amended to remove the requirement to confirm with  Demotech, Inc. a continued “A” Financial Stability Rating following policy assumption and thus  shall be amended and restated to read as follows:  “Demotech Disclosure.  Between the date hereof and Closing, MNIC shall confidentially share  with Demotech, Inc. its intended assumption of policies as set forth in Section 1.8 below and the  additional capitalization to come from FedNat and the Hale Investors as described in Sections 1.6  and 1.7 below.”   (iii) Sections 1.5(a) and (b) shall be amended and restated to read simply “Reserved”.  (iv) The second sentence of Section 1.6 shall be amended and restated to read as  follows, as the Parties have modified Section 1.2(a) of the Shareholders Agreement to provide  that Dave Michelson and Jenifer Kimbrough shall continue on the Board of Directors of MNIC  for a period of two (2) years following the Effective Date regardless of whether their service is as  a FedNat Director (as defined in the Shareholders Agreement) or as an individual appointed by  the Hale Investors following a decrease in the number of seats FNHC has the right to designate:  “FNHC or FNIC, as the holder of the Common Stock so received, shall, pursuant to that certain  Shareholders Agreement to be made effective as of (and as a condition to) the Closing  substantially in the form attached hereto as Exhibit A (the “Shareholders Agreement”), have the  right to designate two (2) members of the Board of Directors of MNIC and be subject to the  transfer restrictions set forth therein.”  (v) Section 1.12 shall be amended and restated to read as follows:  “Redemption and Transfer of Outstanding Stock Held by FNIC. Effective simultaneously with  the transactions described in Sections 1.5 and 1.6, MNIC shall, pursuant to a Stock Redemption  Agreement in the form of Exhibit F attached hereto (as amended through the date of Closing, if  applicable), redeem all but one of the Existing Shares from FNIC in exchange for a surplus note  substantially in the form of Exhibit G attached hereto (the “Redemption Note”) in principal  amount equal to 15% of the surplus of MNIC at Closing, such principal amount not to exceed  $2,798,408 (which the Parties acknowledge was 15% of the 3/31/22 estimated surplus of MNIC).   Two (2) days following the Closing and without further action on the part of FNIC or any Party,  the single remaining share of Common Stock held by FNIC shall automatically transfer to FNHC,  following which time FNIC acknowledges and agrees it shall no longer hold any equity of  MNIC.”  

 

   3    CHAR1\1903866v8  (vi) The following provision shall be inserted as Section 4.2 of Article IV in the  Master Restructure Agreement:  FNIC, on behalf of itself, its direct and indirect equity owners and all other parties claiming by or  through FNIC (each, a “Releasing Party”), releases MNIC and its successors and assigns and, to  the extent acting in such capacity for MNIC, each of their respective officers, directors,  employees, representatives and agents (each, a “Released Party”) from any and all actions,  claims, debts, liabilities, and obligations of every kind and character, whether at law or in equity,  which such Releasing Party has or may have with respect to the redemption of the Redeemed  Stock, including the Redemption Price paid therefor and the value assigned to the Common Stock  of MNIC herein (each, a “Released Claim” and, collectively, the “Released Claims”) and hereby  confirms its receipt of fair value for the Redeemed Stock.  Each Releasing Party represents that it  has made no assignment, conveyance, or transfer of any kind of any Released Claim. FNIC, for  itself and on behalf of each Releasing Party, acknowledges and intends that this Section 4.2 shall  be effective as a bar to each of the Released Claims.   (c)   The Redemption Agreement is revised as follows:     i. The RECITALS are amended and restated as follows:    “WHEREAS, Holder currently owns 300,000 shares of the issued and outstanding common stock  of MNIC, par value $10.00 (the “Shares”); and      WHEREAS, as contemplated by the Restructure Agreement, as amended effective as of May 23,  2022 (the “Amended Restructure Agreement”), MNIC will redeem 299,999 of the Shares (the “Redeemed  Stock”) on the terms and conditions set forth herein, and the remaining share it shall transfer in the  manner and on the terms provided in the Amended Restructure Agreement following the closing of all  other transactions contemplated by the Amended Restructure Agreement.”    (d) The Stock Investment and Subscription Agreement shall be amended as follows:      i.   “MGEN II-Hale Fund, LP” shall be removed from the definition of Hale  Investors.     ii. The following provision shall be inserted as Section 6.8 of Article VI in the  Stock Investment and Subscription Agreement:    Schedule 6.8 sets forth (a) a true and complete list of the names and locations of all banks, trust  companies, securities brokers and other financial institutions at which MNIC has an account or  safe deposit box or maintains a banking, custodial , trading or other similar relationship and, if  applicable, also identifies any account which is held in the name of FNHC or an Affiliate but  dedicated to MNIC’s business (each a “Bank Account” and, collectively, the “Bank Accounts”);  and (b) a true and complete list of each such Bank Account, box or relationship, indicating in  each case the account number and the names of the respective officers, employees, agents or  other similar representatives of the Issuer Parties or their Affiliates, as applicable, having  signatory power with respect thereto.  The Issuer Parties, for themselves and their Affiliates,  covenant and agree to cooperate with the Hale Investors at or promptly following Closing to  ensure Issuer and Issuer’s Board and its respective officers have full control over such Bank  Accounts.     ii. Exhibit A shall be amended and restated and replaced with Exhibit A, attached hereto.  

 

   4    CHAR1\1903866v8    2. All provisions of the Transaction Agreements not amended or modified herein are hereby  ratified and remain in full force and effect.   3. Counterparts; Section References; Acceptance of Amendment.  This Amendment may be  executed in any number of counterparts and by different Parties hereto in separate counterparts and  transmitted by facsimile or via emailed PDF file to the other Parties, each of which when so executed and  delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute  but one and the same instrument. Section titles and references used in this Amendment shall be without  substantive meaning or content of any kind whatsoever and are not a part of the agreements among the  parties hereto evidenced hereby.  4. Governing Law; Severability; Successors and Assigns.  This Amendment shall be  governed by and construed and interpreted in accordance with, the laws of the State of Florida.  If any  provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall  be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of  such provision or any remaining provisions of this Amendment. This Amendment shall be binding upon  and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and  assigns of the Parties.   [SIGNATURES CONTAINED ON FOLLOWING PAGES]    

 

  AMENDMENT AGREEMENT  IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed by their  respective authorized officers as of the day and year first above written.   MNIC:    MONARCH NATIONAL INSURANCE COMPANY      By: /s/ Michael H. Braun      Name: Michael H. Braun   Title: President     FNIC:    FEDNAT INSURANCE COMPANY      By: /s/ Michael H. Braun      Name: Michael H. Braun   Title: President     FNHC:    FEDNAT HOLDING COMPANY      By: /s/ Bruce Simberg       Name: Bruce Simberg   Title: Chairman of the Board  

 

  AMENDMENT AGREEMENT    IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed by their  respective authorized officers as of the day and year first above written.     HPCM:    HALE PARTNERSHIP CAPITAL MANAGEMENT,  LLC      By: /s/ Steven A. Hale II      Name: Steven A. Hale II   Title: Manager     HALE INVESTORS:    HALE PARTNERSHIP FUND, LP    By: Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II      Name: Steven A. Hale II   Title: Manager     MGEN II – HALE FUND, LP    By: Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II      Name: Steven A. Hale II   Title: Manager     CLARK — HALE FUND, LP    By: Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II      Name: Steven A. Hale II   Title: Manager     SMITH – HALE FUND, LP    By: Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II      Name: Steven A. Hale II   Title: Manager  

 

  AMENDMENT AGREEMENT    IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed by their  respective authorized officers as of the day and year first above written.      HALE INVESTORS:     DICKINSON – HALE FUND, LP    By: Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II      Name: Steven A. Hale II   Title: Manager    THE VANDERBILT UNIVERSITY “VUA HALE  SMA”    By: Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II      Name: Steven A. Hale II   Title: Manager     HALE ICFG FUND, LP    By: Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II      Name: Steven A. Hale II   Title: Manager    NATIONAL CONSUMER TITLE INSURANCE  COMPANY      By: /s/ Steven A. Hale II      Name: Steven A. Hale II   Title: Chief Executive Officer        

 

  AMENDMENT AGREEMENT  EXHIBIT A  Investment    Hale Investor Committed Capital New Shares Percentage Interest Hale ICFG Fund, LP $5,000,000 60,000 20.00% The Vanderbilt University  “VUA Hale SMA”  $4,300,000  51,600 17.20% Hale Partnership Fund, LP $3,150,000 37,800 12.60% Clark – Hale Fund, LP $1,000,000 12,000 4.00% Dickinson – Hale Fund, LP $600,000 7,200 2.40% National Consumer Title  Insurance Company  $150,000 1,800 0.60% Smith – Hale Fund, LP $800,000 9,600 3.20% TOTAL $15,000,000 180,000 60.0%exhibit102

  CHAR1\1899890v7          MONARCH NATIONAL INSURANCE COMPANY  SHAREHOLDERS’ AGREEMENT        ______________________________________  July 1, 2022  ______________________________________      

 

  CHAR1\1899890v7  TABLE OF CONTENTS  Page  1.  Board of Directors............................................................................................................... 1  1.1  Board Composition ................................................................................................. 1  1.2  Modification of Board Composition & Designation Rights ................................... 1  1.3  Term ........................................................................................................................ 2  1.4  Reimbursement of Fees and Expenses .................................................................... 3  1.5  Meetings; Manner of Acting ................................................................................... 3  2.  Restrictions on Transfer ...................................................................................................... 4  2.1  Restrictions on Transfer .......................................................................................... 4  2.2  Drag Along.............................................................................................................. 4  2.3  Delivery of Shares at Closing ................................................................................. 5  2.4  No Penalty for Terminated Sale .............................................................................. 6  3.  Irrevocable Proxy and Power of Attorney .......................................................................... 6  4.  Confidentiality .................................................................................................................... 6  5.  Notices ................................................................................................................................ 7  6.  Legend on Stock Certificates .............................................................................................. 8  7.  Termination ......................................................................................................................... 8  8.  Parties Bound; Entire Agreement ....................................................................................... 9  9.  Amendment ......................................................................................................................... 9  10.  Strict Performance .............................................................................................................. 9  11.  Legal Representation .......................................................................................................... 9  12.  Governing Law; Venue ....................................................................................................... 9  13.  Definitions........................................................................................................................... 9        

 

  CHAR1\1899890v7  SHAREHOLDERS’ AGREEMENT  THIS SHAREHOLDERS’ AGREEMENT (this “Agreement”), dated and effective as of  July 1, 2022 (the “Effective Date”), is made and entered into by and among Monarch National  Insurance Company, a Florida corporation (the “Corporation”), the Hale Investors (as defined  herein, and FedNat Holding Company (collectively, with the Hale Investors and each additional  Person who, on or after the date hereof, executes either this Agreement or a joinder in the form of  Exhibit A, the “Shareholders” and each individually, a “Shareholder”).  RECITALS  The Corporation and the Shareholders wish to enter into this Agreement to document their  mutual agreements with respect to, among other items, the composition of the Board (as defined  below) and the rights of and restrictions on the holders of Common Stock.  THEREFORE, in consideration of the mutual promises hereinafter made, and other good  and valuable consideration, receipt of which is hereby acknowledged, the parties hereby agree as  set forth below.  1. Board of Directors.  The business of the Corporation is and shall be managed by a Board of Directors (the  “Board of Directors” or the “Board” and the members thereof, the “Directors” and each, a  “Director”) consisting of five (5) Persons.  1.1 Board Composition.  Subject to the provisions of Section 1.2 hereof, each  Shareholder hereby covenants and agrees to vote all of such Shareholder’s shares of  Common Stock (and any other voting capital stock of the Corporation as such may exist  from time to time, collectively, “Shares”), and to take all other necessary or desirable  actions within such Shareholder’s control (whether in such Shareholder’s capacity as a  Shareholder, Director, officer of the Corporation or otherwise), and the Corporation will  take all necessary and desirable actions within its control in order to cause:  (a) the election to the Board of three (3) Directors designated by the Hale  Investors (the “Hale Directors”), which Hale Directors shall initially be Bradley G. Garner,  Peter Sherman and Anthony Sciacca; and  (b) the election to the Board of two (2) Directors designated by FedNat (the  “FedNat Directors”), which FedNat Directors shall initially be Jenifer Kimbrough and  Dave Michelson.  The Shareholders executing this Agreement on the date hereof hereby acknowledge and agree that  their signatures hereto shall serve as their written consent to the establishment, on the Effective  Date, of a Board composed of the individuals named above, and no separate meeting or vote shall  be necessary in order to create such Board or elect such Persons.    1.2 Modification of Board Composition & Designation Rights.    

 

  2  CHAR1\1899890v7  (a) FedNat.  The designation rights afforded to FedNat will remain as set forth  in Section 1.1 above for so long as FedNat holds at least seventy-five percent (75%) of the  Shares of the Corporation it holds as of the Effective Date.  In the event that FedNat holds  less than seventy-five percent (75%), but more than fifty percent (50%), of the Shares of  the Corporation it holds on the Effective Date, FedNat shall have the right to designate one  (1) Director (and there shall be only one FedNat Director in such case).  In the event FedNat  ceases to hold at least fifty percent (50%) of the Shares of the Corporation it holds as of  the Effective Date, FedNat shall no longer have the right to designate a Director.  To the  extent FedNat loses designation rights with respect to one or both of the FedNat Directors,  the vacancy created in the Board shall be filled by an individual designated by the Hale  Investors.  The Shareholders agree that Dave Michelson and Jenifer Kimbrough shall  continue to serve on the Board (absent their earlier resignation or death) for a period of two  (2) years following the Effective Date, whether as FedNat Directors or as the individual(s)  designated by the Hale Investors in replacement of FedNat Directors.  (b) Hale Investors. The designation rights afforded to the Hale Investors will  remain as set forth in Section 1.1 above for so long as the Hale Investors hold, in aggregate,  at least two-thirds (66 2/3%) of the Shares of the Corporation held by them as of the  Effective Date.  In the event that the Hale Investors, in aggregate, hold less than two-thirds,  but more than half (50%) of the Shares of the Corporation held by them on the Effective  Date, the Hale Investors shall have the right to designate two (2) Directors. In the event the  Hale Investors hold, in aggregate, less than half, but at least one-third (33 1/3%) of the  Shares of the Corporation held by them on the Effective Date, the Hale Investors shall have  the right to designate only one Hale Director.  In the event the Hale Investors, in aggregate,  cease to hold at least one-third (33 1/3%)  of the Shares of the Corporation held by them  as of the Effective Date, the Hale Investors shall no longer have the right to designate a  Director.  To the extent the Hale Investors lose designation rights with respect to one or  more of the Hale Directors, the vacancy(ies) created in the Board shall be filled by an  individual or individuals designated by FedNat.  (c) Term.  Subject to Section 1.2 and this Section 1.3, each Director shall serve  for a period of one (1) year (or until the next annual meeting of the Corporation following his or  her election) or until his or her earlier resignation or death or his or her removal by the Shareholders  having the right to designate such Director.  (d) For avoidance of doubt, a Director may be removed during his or her term  of office only by the Shareholder(s) entitled to designate such Director; provided, however,  that: (i) unless otherwise agreed by the Shareholders entitled to designate such Director, a  Director who is also an officer of the Corporation (or of FedNat Holding Company or  FedNat Insurance Company) shall automatically cease to be a Director at such time as he  or she ceases to hold office and (ii) any Director may be removed for Cause by a vote of  the majority of the Board (exclusive of such Director).  “Cause” shall mean (A) the  conviction or plea of no contest in a judicial proceeding for fraud, theft, embezzlement or  other act perpetrated against or harmful to the reputation of the Corporation, (B) any  material violation of legal requirements or any material policy of the Corporation  applicable to such Director that relates to equal employment opportunity, discrimination,  harassment or retaliation, (C) the Director’s willful malfeasance in connection with his or  

 

  3  CHAR1\1899890v7  her service to the Corporation; (D)  habitual use of alcohol or any controlled substance  without prescription, in each case, that hinders the Director’s ability to discharge his or her  duties with respect to the Corporation; or (E) the issuance by the Florida Office of  Insurance Regulation of an order determining a Director is not competent or trustworthy  or otherwise requiring removal of a Director pursuant to Section 624.310, Florida Statutes,  or other applicable provision of the Florida Insurance Code.  (e) A Director may resign at any time upon written notice to the Corporation.   Such resignation shall be effective upon receipt unless it is specified to be effective at some  other time or upon the happening of some other event.  A vacancy in the Board because of  the resignation, death or removal of a Director will be filled by the Shareholder(s) entitled  to designate or elect such Director pursuant to the terms of Section 1.1.  If any Person(s)  having the right to designate a Director fails to designate a Director pursuant to the terms  of Section 1.1, such position in the Board shall remain vacant until such Person exercises  its, his or their right to designate a Director as provided hereunder.  1.3 Reimbursement of Fees and Expenses.  Each Director shall be reimbursed  for such individual’s reasonable out-of-pocket expenses, including travel, lodging and  other similar expenses incurred in the performance of such duties as a Director, including  expenses related to attending Board meetings.  Nothing contained in this Section 1.4 shall  be construed to preclude any Director from serving the Corporation in any other capacity  and receiving reasonable compensation therefor, subject to Shareholder approval.  1.4 Meetings; Manner of Acting.  The Board of Directors shall delegate day-to- day management of the Corporation to the officers thereof, but the Board shall provide  ongoing oversight and direction for the Corporation, and shall meet regularly as described  in the bylaws of the Corporation.  (a) The presence of three (3) Directors (in person, via phone or video  technology (Zoom, Teams or similar application) or by proxy), to include at least two (2)  Hale Directors, shall constitute a quorum for any meeting of the Board of Directors.  (b) Except as otherwise set forth in this Agreement, the affirmative vote of a  majority of the Directors present at a meeting where a quorum is present shall constitute  the action of the Board.    (c) As noted in the bylaws of the Corporation, written notice of any special  meeting shall be given to each Director either by personal delivery, facsimile, or any other  form of electronic communication at least two (2) days prior to the special meeting, or by  written notice sent by first class mail to each Director and mailed at least five (5) days  before the meeting. (To the extent the Board of Directors sets its regular meeting schedule  at a meeting where fewer than all Directors are present, the meeting schedule shall be  provided to all Directors not present at such calendaring meeting, in writing, promptly  following the meeting and, in all cases, with at least as much advance notice of the first  regular meeting following the determination of such meeting calendar as if such regular  meeting were a special meeting).    

 

  4  CHAR1\1899890v7  2. Restrictions on Transfer.  2.1 Restrictions on Transfer.  (a) Except for in the event of a “Drag-Along Sale” as described in Section 2.2,  no Shareholder (other than the Hale Investors) shall Transfer any interest in any of such  Shareholder’s Shares without the prior written consent of the holders of the majority of  Shares exclusive of the Shareholder’s Shares.    (b) Any Transfer that does not comply with this Agreement shall be void, and  the purported transferee shall not be entitled to be recognized as an owner of Shares by the  Corporation or to be recognized as a Shareholder.  Any payment by the Corporation to one  shown on the Corporation’s records as a Shareholder, or to his or her creditors or personal  representatives, shall absolve the Corporation of all liability to any transferee who may be  interested in such payment by reason of a Transfer that did not conform to this Agreement.  (c) No Transfer otherwise complying with this Agreement will be effective  unless the Transferee executes a joinder to this Agreement, pays all reasonable expenses  connected with such Transfer, complies with the other requirements and restrictions set  forth herein, and, if requested by the Board, provides to the Corporation a legal opinion  satisfactory to the Corporation that the related Shares may be Transferred without  registration under the Securities Act of 1933 and applicable state securities laws pursuant  to a registration exemption applicable to the Shares or such Transfer.  2.2 Drag Along.  (a) Notwithstanding anything contained in this Agreement to the contrary, in  the event that the Hale Investors wish to accept a bona fide offer from a third party to  purchase all or a portion of their Shares, then the Hale Investors shall have the right to give  written notice to the remaining Shareholders of the intended sale and the remaining  Shareholders agree that upon the written request of the Hale Investors given at least fifteen  (15) days prior to the intended sale date, they will sell all (or the equivalent percentage) of  their Shares to the purchasing third party on the same terms and at the same price per share  (or prices per share, if the price per share of different classes of capital stock are different)  as the Hale Investors (a “Drag-Along Sale”); provided, however, that not all Shareholders  must be provided the same opportunity to participate in any “rollover” or similar form of  consideration in such Drag-Along Sale.  The written notice provided by the Hale Investors  to the other Shareholders in such case shall include the name of the Person(s) to whom all  Shares will be sold and the price and other material terms on which the sale will be made.  (b) In furtherance of, and not in limitation of the foregoing, in connection with  a Drag-Along Sale, each Shareholder will (i) consent to and raise no objections against  such sale or the process pursuant to which it was arranged, (ii) waive any dissenter’s rights  and other similar rights, and (iii) subject to the limitations set forth in Section 2.2(c) below,  execute all documents containing the same terms and conditions as those executed by the  Hale Investors as reasonably requested by the Hale Investors.  

 

  5  CHAR1\1899890v7  (c) Notwithstanding anything in this Section 2.2 to the contrary, Shareholders  subject to the rights of the Hale Investors under this Section 2.2 shall be required to make  securities laws representations or representations regarding matters of title, power,  authority, enforceability and other customary representations solely with respect to such  Shareholder and such Shareholder’s ownership of the Shares (and not with respect to all  Shareholders or the Corporation’s compliance with securities laws).  Furthermore, the Hale  Investors and other Shareholders hereby agree to ensure that the indemnification  obligations in a Drag-Along Sale are several, and not joint, liabilities of the Shareholders,  whether through agreement with the third-party purchaser or a contribution agreement  among the Shareholders (other than any representation referred to above with respect to  representations made as to such Shareholder and its Shares).  (d) All Shareholders will bear their pro rata share of any escrows, adjustments  or holdbacks in the purchase price, as well as of the costs and expenses incurred by the  Corporation in connection with a Drag-Along Sale to the extent such costs and expenses  are incurred for the benefit of all Shareholders and are not otherwise paid by the  Corporation or the purchaser.    2.3 Tag Along.  If, in connection with a proposed transfer by the Hale Investors  to a bona fide third party purchaser of Shares constituting a majority of all of the  outstanding Shares of the Corporation, the Hale Investors do not exercise the Drag Along  provisions of Section 2.2 (i.e. do not request that FedNat participate in such sale), the Hale  Investors shall, nonetheless, provide written notice to FedNat of the intended sale at least  fifteen (15) days prior to the intended sale date and FedNat may, by giving written notice  to the Hale Investors, not later than five (5) business days following delivery of the notice  from the Hale Investors, elect nonetheless to participate in such transaction on the same  price, terms and conditions to be received by the Hale Investors.  If FedNat chooses so to  participate, FedNat shall take all necessary and desirable actions in connection with the  consummation of the transaction, including the execution of such agreements and  instruments and other actions reasonably necessary to provide the representations,  warranties, indemnities, covenants, conditions, escrow agreements and other provisions  and agreements relating to such transaction.  FedNat shall be responsible for all costs it  incurs in electing to participate and shall bear its pro rata share (determined based  on  relative Share ownership by FedNat and the Hale Investors) of any escrow, adjustment or  holdback in the purchase price and of the costs and expenses the Corporation incurs for the  benefit of all selling Shareholders if not otherwise paid by the Corporation or the purchaser.   To the extent the third party purchaser in the proposed Transfer is not willing to purchase  both FedNat’s Shares and the Shares the Hale Investors proposed to Transfer in such sale,  then both FedNat and the Hale Investors shall reduce the amount to be sold to such third  party purchaser by an equivalent percentage for purposes of completing the sale.  2.4 Delivery of Shares at Closing.  The closing for any purchase of Shares under  Section 2.2 or Section 2.3 shall take place at the Corporation’s principal offices or at such  other place as shall be mutually agreed by the Hale Investors and the proposed purchaser.   At such closing, the holders of the certificates representing the Shares being transferred  shall deliver such certificates evidencing the Shares to the Corporation duly endorsed for  transfer, in exchange for delivery of the purchase price.  Each Shareholder hereby  

 

  6  CHAR1\1899890v7  authorizes and directs the Secretary of the Corporation to transfer the Shares that are  purchased hereunder upon tender of the applicable purchase price to the Person entitled  thereto and to record such transfer in the books and records of the Corporation, including  without limitation the share transfer ledger.   2.5 No Penalty for Terminated Sale. For avoidance of doubt and  notwithstanding anything herein to the contrary, no Hale Investor shall be liable to any  other Shareholder in the event no Shares Transfer or are sold after the provisions of Section  2.2 or Section 2.3 have been triggered.  3. Irrevocable Proxy and Power of Attorney.  Each Shareholder hereby constitutes and  appoints as the proxies of the party and hereby grants a power of attorney to the Chief Executive  Officer of the Company, and to an individual designated by the Hale Investors, should the need  arise, with full power of substitution, with respect to the matters set forth herein, including, without  limitation, votes regarding the size and composition of the Board pursuant to Section 1.1 and votes  regarding any Drag-Along-Sale pursuant to Section 2.2 hereof.  Each Shareholder hereby  authorizes each such individual to represent and vote, if and only if the party (i) fails to vote, or  (ii) attempts to vote (whether by proxy, in person or by written consent), in a manner which is  inconsistent with the terms of this Agreement, all of such party’s Shares in favor of the election of  persons as members of the Board or to approve a Drag-Along Sale, in each case, determined  pursuant to and in accordance with the terms and provisions of this Agreement and otherwise to  take any action reasonably necessary to effect this Agreement. The power of attorney granted  hereunder shall authorize the Chief Executive Officer of the Company or such designee of the Hale  Investors to execute and deliver the documentation referred to in Section 2.2 on behalf of any party  failing to do so within five (5) business days of a request by the Corporation or the Hale Investors.  Each of the proxy and power of attorney granted pursuant to this Section 3 is given in consideration  of the agreements and covenants of the Company and the parties in connection with the  transactions contemplated by this Agreement and, as such, each is coupled with an interest and  shall be irrevocable unless and until this Agreement terminates or expires pursuant its terms. Each  party hereto hereby revokes any and all previous proxies or powers of attorney with respect to the  Shares and shall not hereafter, unless and until this Agreement terminates or expires pursuant to  the terms hereof, purport to grant any other proxy or power of attorney with respect to any of the  Shares, deposit any of the Shares into a voting trust or enter into any agreement (other than this  Agreement), arrangement or understanding with any person, directly or indirectly, to vote, grant  any proxy or give instructions with respect to the voting of any of the Shares, in each case, with  respect to any of the matters set forth herein.   4. Confidentiality. Each Shareholder (a) shall protect, and shall use such  Shareholder’s reasonable best efforts to cause its, his or her employees, Affiliates, owners,  accountants, representatives, agents, consultants and advisors (collectively, “Representatives”) to  protect, the confidentiality of all proprietary and confidential information relating to the assets and  business of the Corporation, and (b) shall not disclose, and shall use such Shareholder’s reasonable  best efforts to cause such Shareholder’s Representatives not to disclose, such proprietary and  confidential information to any other Person; provided, however, such Person may disclose such  information to the extent that such disclosure is pursuant to or in connection with (i) a subpoena  or court order, (ii) any investigation or audit by a governmental authority, including in connection  with audits of financial statements and regulatory examinations, (iii) any suit or proceeding with  

 

  7  CHAR1\1899890v7  respect to this Agreement, (iv) the filing of any tax returns or (v) as required by securities laws and  regulations or other applicable law and regulations.  In all such cases, such Person shall disclose  such information only to the extent required to fulfill such purpose or legal requirement.  If any  such Person becomes legally compelled to disclose any such proprietary or confidential  information, such Person shall promptly notify the Board of such fact so that the Board or the  officers of the Corporation may seek an appropriate remedy to prevent such production, and  request the Person demanding such production to allow the Corporation a reasonable period of  time to seek such remedy.  The obligations under this Section 4 shall cease as to any Corporation  information which (A) at the time of disclosure is part of the public domain or otherwise generally  known in the industry in which the Corporation operates;  (B) after disclosure becomes part of the  public domain or becomes generally known in the industry in which the Corporation operates  through no violation of this Section 4; (C) prior to disclosure was in the possession of the receiving  Person as shown by his, her or its written records and was not subject to an obligation of secrecy;  (D) is acquired from a third party, provided that such information was not acquired by such third  party, directly or indirectly, under an obligation of secrecy; or (E) was disclosed or developed  independently by personnel of the receiving Person not exposed to the Corporation’s information.  5. Notices.  All notices, offers, acceptances or any other communication provided for  under this Agreement shall be given in writing by personal delivery, by nationally recognized  overnight delivery service, by registered or certified mail or by e-mail or other electronic means,  read receipt requested, and shall be addressed, in the case of the Corporation, to its principal office,  for the Hale Investors and FedNat at their respective addresses set forth below and for each other  Shareholder from time to time party hereto, to the attention of the individual and to the address  designated in writing by such Person in the Corporation’s records.  Notice shall be deemed given  as of (a) the date of personal delivery, (b) email delivery, return receipt requested, (c) one (1)  business day after the deposit of such notice via overnight delivery service for domestic delivery  and five (5) business days after the deposit of such notice via overnight delivery service for  international delivery or (c) on the date such registered or certified letter, properly addressed, is  postmarked.  Hale Investors:  c/o Hale Partnership Capital Management  3675 Marine Drive  Greenville, NC 27834  Attention: Steven Hale   Phone No.: 336-552-6228  Email: steve@halepartnership.com    with a copy (which shall not constitute notice) to:  Moore & Van Allen PLLC  100 North Tryon Street, 47th Floor  Charlotte, North Carolina 28202  Attention:  Ryan M. Smith  Email:  ryansmith@mvalaw.com   FedNat:  

 

  8  CHAR1\1899890v7  FedNat Holding Company  14050 NW 14th Street, Suite 180    Sunrise, FL 33323       Attention:  Bruce F. Simberg, Chairman of the Board  Email:  bsimberg@fednat.com    with a copy (which shall not constitute notice) to:  Nelson Mullins Riley & Scarborough LLP  2 South Biscayne Boulevard, 21st Floor  Miami, Florida 33131  Attention:  Nina S. Gordon  Email:  nina.gordon@nelsonmullins.com   Any Party may change its notice address by giving notice to the other Party in the manner  and at the then current address provided hereinabove.    6. Legend on Stock Certificates.  The stock certificates of the Corporation shall bear  the following legend:  THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE  “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS.  THESE  SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF  SUCH REGISTRATION OR AN EXEMPTION, OR AN OPINION OF  COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER) AS TO ANY  EXEMPTION, FROM THE REGISTRATION PROVISIONS OF THE  SECURITIES ACT OR SUCH LAWS.  THE SHARES REPRESENTED BY THIS CERTIFICATE ARE HELD  PURSUANT TO A SHAREHOLDERS’ AGREEMENT EFFECTIVE [___], 2022  BY AND AMONG THE CORPORATION AND ITS SHAREHOLDERS, ARE  SUBJECT TO RESTRICTIONS ON TRANSFER AS SET FORTH THEREIN,  AND MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE  TERMS THEREOF.  7. Termination.  This Agreement shall terminate (a) upon the expiration of the period  in which Articles of Dissolution of the Corporation filed with the Florida Department of State may  be revoked, (b) when a judicial dissolution of the Corporation becomes final and not subject to  appeal, (c) upon the voluntary agreement of the Shareholders when bound by the terms hereof; (d)  when only one of the Shareholders party hereto, including those Shareholders made party hereto  by joinder, own Shares, (e) upon the restatement of this Agreement completed in accordance with  the terms hereof, (f) upon the effectives of a merger or consolidation in which the Shareholders  holding a majority of the outstanding Shares hereunder do not hold the majority of the outstanding  

 

  9  CHAR1\1899890v7  Shares of the surviving corporation, or (g) upon the sale of all Shares of the Corporation to an  unrelated third party purchaser.  8. Parties Bound; Entire Agreement.  This Agreement shall be binding upon the  parties hereto and their respective heirs, executors, administrators, personal representatives,  donees, legatees, transferees, successors and assigns.  The Shareholders agree for themselves and  their heirs, executors, administrators, personal representatives, donees, legatees, transferees,  successors and assigns to execute any and all instruments and to perform any acts that may be  necessary or proper to carry out the purpose of this Agreement.  The undersigned parties agree that  this Agreement constitutes the entire agreement among themselves and the Corporation with  respect to the subject matter hereof and supersedes all other, prior agreements, negotiations,  representations and discussions with respect to the subject matter hereof.  9. Amendment.  This Agreement may be amended or modified or a provision hereof  waived only with the consent of the majority of the Shares held by the Hale Investors; provided,  however, that amendment of Section 1 shall also require the consent of FedNat; and provided  further, that the Board or any officer of the Corporation may amend or modify this Agreement or  Schedule 1 attached hereto (a) to correct any typos or similar administrative errors contained  herein, or (b) to reflect (i) a change in the name, location of principal place of business or registered  agent or office of the Corporation approved by the Board, or (ii) the admission or substitution of  Shareholders whose admission or substitution has been made in accordance with this Agreement;  and provided, further, that the amendment of any provision hereof which grants a specific right or  set of rights to a particular Shareholder or group of Shareholders may not be amended without the  written consent of such Shareholder or the written consent of the Shareholders within such group  holding a majority of the outstanding Shares held by such group; and provided, further, no  amendment which adversely and disproportionately affects a Shareholder relative to other  similarly situated Shareholders shall be effective without the consent of such Shareholder.  10.  Strict Performance. The failure of a party hereto to insist upon strict performance  of any of the provisions of this Agreement shall not be construed as a waiver of rights arising out  of any subsequent breach or default of such provisions.  11. Legal Representation.  Each Person party hereto acknowledges that such party has  been advised to seek independent counsel with regard to this Agreement and has had the  opportunity to seek and/or has sought such counsel.  12. Governing Law; Venue.  This Agreement shall be governed by and construed and  interpreted in accordance with the laws of the State of Florida without regard to conflicts of law  principles.  Any action arising or proceeding out of or relating to this Agreement shall be decided  in the federal and state courts seated in Tampa, Florida.  13. Definitions.  “Affiliate” means, with respect to any Person, another Person who, directly or  indirectly, controls, is controlled by or is under common control with such Person,  including, without limitation, any general partner, managing member, officer, director or  trustee of such Person, or any venture capital fund or registered investment company now  

 

  10  CHAR1\1899890v7  or hereafter existing that is controlled by one (1) or more general partners, managing  members or investment advisers of, or shares the same management company or  investment adviser with, such Person.   “Agreement” has the meaning given in the Preamble.  “Board” and “Board of Directors” have the meaning given in Section 1.1.  “Cause” has the meaning given in Section 1.3(a).  “Common Stock” means the common stock of the Corporation.  “Corporation” has the meaning given in the Preamble.  “Director(s)” has the meaning given in Section 1.  “Drag-Along Sale” has the meaning given in Section 2.2(a).  “Effective Date” has the meaning given in the Preamble.  “Encumbrance” means a transfer as collateral security for an obligation, whether as  a security interest, pledge, assignment for the benefit of one or more creditors (other than  another Shareholder), hypothecation or otherwise, and any other lien on or right or other  interest in the Shares arising by any means other than a Transfer, including the involuntary  imposition of any security interest, lien or charge.  “FedNat” means FedNat Holding Company.  “FedNat Directors” has the meaning given in Section 1.1(a).  “Hale Directors” has the meaning given in Section 1.1(a).  “Hale Investor” means each “Hale Investor” indicated on the signature pages hereto  as of the Effective Date, and any successor or assign of such Shareholders designated as a  Hale Investor by the Board.  “Person” means an individual (or individuals), trust, entity, government,  government agency, political subdivision or unincorporated association.  “Representatives” has the meaning given in Section 4.  “Shareholder” and “Shareholders” have the meaning given in the Preamble.  “Shares” has the meaning given in Section 1.1.  “Transfer” means any sale, gift, assignment, pledge, or any other voluntary or  involuntary disposition (including the creation of an Encumbrance), by operation of law,  by divorce decree or equitable distribution, by bankruptcy, by testamentary disposition or  intestate succession, or otherwise, to any other Person. 

 

  SHAREHOLDERS’ AGREEMENT    IN WITNESS WHEREOF, the parties hereto have hereunto set their hands or caused this  Agreement to be signed by their duly authorized officers, all on the day and year first above  written.  MONARCH NATIONAL INSURANCE COMPANY   By: /s/ Michael H. Braun   Name:  Michael H. Braun  Title:  President    

 

  SHAREHOLDERS’ AGREEMENT    IN WITNESS WHEREOF, the parties hereto have hereunto set their hands or caused this  Agreement to be signed by their duly authorized officers, all on the day and year first above  written.  HALE INVESTORS:    HALE PARTNERSHIP FUND, LP    By:  Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II            Steven A. Hale II, Manager      MGEN II – HALE FUND, LP    By:  Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II            Steven A. Hale II, Manager      CLARK – HALE FUND, LP    By:  Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II            Steven A. Hale II, Manager         

 

  13    IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their  respective authorized officers as of the day and year first above written.    HALE INVESTORS:    SMITH – HALE FUND, LP    By:  Hale Partnership Capital Advisors, LLC, its General  Partner    By: /s/ Steven A. Hale II            Steven A. Hale II, Manager      DICKINSON – HALE FUND, LP    By:  Hale Partnership Capital Advisors, LLC, its General  Partner    By: /s/ Steven A. Hale II             Steven A. Hale II, Manager      THE VANDERBILT UNIVERSITY “VUA HALE SMA”    By:  Hale Partnership Capital Management, LLC, its  investment advisor      By: /s/ Steven A. Hale II             Steven A. Hale II, Manager      HALE ICFG FUND, LP    By:  Hale Partnership Capital Advisors, LLC, its General  Partner    By: /s/ Steven A. Hale II             Steven A. Hale II, Manager        NATIONAL CONSUMER TITLE INSURANCE  COMPANY      By:  /s/ Steven A. Hale II       Name:  Steven A. Hale II  Title:  Chief Executive Officer  

 

  SHAREHOLDERS’ AGREEMENT    IN WITNESS WHEREOF, the parties hereto have hereunto set their hands or caused this  Agreement to be signed by their duly authorized officers, all on the day and year first above  written.      FEDNAT:    FEDNAT HOLDING COMPANY    By: /s/ Bruce Simberg   Name:  Bruce Simberg  Title:  Chairman of the Board    

 

    CHAR1\1899890v7  SCHEDULE 1    Share Ownership    Please see attached.    

 

    CHAR1\1899890v7  EXHIBIT A  Joinder  MONARCH NATIONAL INSURANCE COMPANY     JOINDER & EXECUTION PAGE FOR  SHAREHOLDERS’ AGREEMENT    [Date]  The undersigned acknowledges that [he/she/it] has received a copy of the Shareholders’  Agreement effective as of ___________, 2022 by and among Monarch National Insurance  Company, a Florida corporation (the “Corporation”) and the Shareholders of the Corporation (the  “Agreement”).  The undersigned covenants that [he/she/it] has read the Agreement and is  otherwise familiar with its terms and conditions.  The undersigned further agrees and understands  that by execution of this Joinder & Execution Page, [he/she/it] acknowledges the transfer  restrictions set forth in Section 2 of the Agreement and hereby makes and binds  [himself/herself/itself] to all of the rights, covenants and other obligations as a Shareholder set  forth in the Agreement.  IN WITNESS WHEREOF, the undersigned has executed this Joinder & Execution Page  as of the date first written above.    FOR INDIVIDUALS:  By:   Printed Name:     FOR ENTITIES:  [ENTITY NAME]  By:   Name:   Title:

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