Document:

Exhibit 10.5

 

Reinstatement Premium Protection

Reinsurance Contract

(Louisiana Only)

Effective:  July 1, 2014

Federated National Insurance Company

Sunrise, Florida

	
 

	

 

Reinstatement Premium Protection

Reinsurance Contract

(Louisiana Only)

Effective:  July 1, 2014

Federated National Insurance Company

Sunrise, Florida

	
Reinsurer(s)

	 	
Participation(s)

	 
	 	 		 
	
Ariel Re Bda Limited for and on behalf of Ariel Syndicate No. 1910

	 	 	
15.0

	
%

	
AXIS Specialty Limited

	 	 	
85.0

	
%

	
Total

	 	 	
100.0

	
%

 

		

 

Table of Contents

	
Article

	 	
Page

	
1

	
Coverage

	
1

	
2

	
Commencement and Termination

	
1

	
3

	
Concurrency of Conditions

	
2

	
4

	
Premium

	
3

	
5

	
Sanctions

	
3

	
6

	
Loss Notices and Settlements

	
3

	
7

	
Late Payments

	
4

	
8

	
Offset

	
5

	
9

	
Access to Records

	
5

	
10

	
Errors and Omissions (BRMA 14F)

	
5

	
11

	
Currency (BRMA 12A)

	
5

	
12

	
Taxes (BRMA 50B)

	
6

	
13

	
Federal Excise Tax (BRMA 17D)

	
6

	
14

	
Foreign Account Tax Compliance Act

	
6

	
15

	
Reserves

	
6

	
16

	
Insolvency

	
8

	
17

	
Arbitration

	
8

	
18

	
Service of Suit (BRMA 49C)

	
9

	
19

	
Severability (BRMA 72E)

	
10

	
20

	
Governing Law (BRMA 71B)

	
10

	
21

	
Confidentiality

	
10

	
22

	
Non-Waiver

	
11

	
23

	
Notices and Contract Execution

	
11

	
24

	
Intermediary

	
12

 

		

 

Reinstatement Premium Protection

Reinsurance Contract

(Louisiana Only)

Effective:  July 1, 2014

entered into by and between

Federated National Insurance Company

Sunrise, Florida

(hereinafter referred to as the "Company")

and

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the "Reinsurer")

Article 1 - Coverage

 

By this Contract the Reinsurer agrees to indemnify the Company for 100% of any reinstatement premium which the Company pays or becomes liable to pay as a result of loss occurrences covered under the Company's Property Catastrophe Excess of Loss (Louisiana Only) Reinsurance Contract, effective July 1, 2014 (hereinafter referred to as the "Original Contract"), subject to the terms, conditions and limitations hereinafter set forth.

Article 2 - Commencement and Termination

 

 

	A.	This Contract shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2014, with respect to reinstatement premium payable by the Company under the Original Contract as a result of losses arising out of loss occurrences commencing at or after that time and date, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1, 2015.

	B.	Notwithstanding the provisions of paragraph A. above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract at any time by giving written notice to the Subscribing Reinsurer in the event any of the following circumstances occur:

		1.	The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at the inception of this Contract has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) 12 months prior to that date; or

		2.	The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at any time during the term of this Contract has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the inception of this Contract; or

 

		

 

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		3.	The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below "A-" and/or Standard & Poor's rating has been assigned or downgraded below "BBB+"; or

		4.	The Subscribing Reinsurer has become, or has announced its intention to become, merged with, acquired by or controlled by any other entity or individual(s) not controlling the Subscribing Reinsurer's operations previously; or

		5.	A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or

		6.	The Subscribing Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or

		7.	The Subscribing Reinsurer has reinsured its entire liability under this Contract without the Company's prior written consent; or

		8.	The Subscribing Reinsurer has ceased assuming new or renewal property or casualty treaty reinsurance business; or

		9.	The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid; or

	 	10.	The Subscribing Reinsurer has failed to comply with the funding requirements set forth in the Reserves Article.

	C.	If this Contract is terminated or expires while a loss occurrence covered hereunder is in progress, the Reinsurer's liability hereunder shall, subject to the other terms and conditions of this Contract, be determined as if the entire loss occurrence had occurred prior to the termination or expiration of this Contract, provided that no part of such loss occurrence is claimed against any renewal or replacement of this Contract.

 

Article 3 - Concurrency of Conditions

 

	A.	It is agreed that this Contract will follow the terms, conditions, exclusions, definitions, warranties and settlements of the Company under the Original Contract, which are not inconsistent with the provisions of this Contract.

	B.	The Company shall advise the Reinsurer of any material changes in the Original Contract which may affect the liability of the Reinsurer under this Contract.

 

		

 

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Article 4 - Premium

 

	A.	As premium for the reinsurance coverage provided hereunder for the term of this Contract, the Company shall pay the Reinsurer the product of the following (or a pro rata portion thereof in the event the term of this Contract is less than 12 months and for purposes of calculating subparagraph 3 below, the term of the Original Contract is a full 12 months):

		1.	1.217; times

		2.	The Final Adjusted Rate on Line for the Original Contract; times

		3.	An amount equal to 100% reinsurance placement percentage under the Original Contract of the final adjusted premium paid by the Company for the Original Contract.

"Final Adjusted Rate on Line" as used herein shall mean an amount equal to a 100% reinsurance placement percentage under the Original Contract of the final adjusted premium paid by the Company for the Original Contract divided by the Reinsurer's Per Occurrence Limit under the Original Contract.

	B.	The Company shall pay the Reinsurer a deposit premium of $57,137 in four equal installments of $14,284.25 on July 1 and October 1 of 2014, and January 1 and April 1 of 2015.  However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination.

	C.	As soon as possible after the termination or expiration of this Contract, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for the term of this Contract, computed in accordance with paragraph A., and any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly.

 

Article 5 - Sanctions

 

Neither the Company nor any Subscribing Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America that are applicable to either party.

 

Article 6 - Loss Notices and Settlements

 

	A.	Whenever reinstatement premium settlements made by the Company under the Original Contract appear likely to result in a claim hereunder, the Company shall notify the Reinsurer.  The Company will advise the Reinsurer of all subsequent developments relating to such claims that, in the opinion of the Company, may materially affect the position of the Reinsurer.

	B.	All reinstatement premium settlements made by the Company under the Original Contract, provided they are within the terms of the Original Contract and within the terms of this Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable within 10 days of receipt of reasonable evidence of the amount paid (or scheduled to be paid) by the Company.

 

		

 

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Article 7 - Late Payments

 

	A.	The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract.

	B.	In the event any premium, loss or other payment due either party is not received by the intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest charge on the amount past due calculated for each such payment on the last business day of each month as follows:

		1.	The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

		2.	1/365ths of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times

		3.	The amount past due, including accrued interest.

It is agreed that interest shall accumulate until payment of the original amount due plus interest charges have been received by the Intermediary.

	C.	The establishment of the due date shall, for purposes of this Article, be determined as follows:

		1.	As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment.

		2.	Any claim or loss payment due the Company hereunder shall be deemed due 10 days after the proof of loss or demand for payment is transmitted to the Reinsurer.  If such loss or claim payment is not received within the 10 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

		3.	As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1. and 2. of this paragraph C., the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 days following transmittal of written notification that the provisions of this Article have been invoked.

For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary.

 

		

 

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	D.	Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract.  If the debtor party prevails in an arbitration or other proceeding, then any interest charges due hereunder on the amount in dispute shall be null and void.  If the debtor party loses in such proceeding, then the interest charge on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings.  If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

	E.	Interest charges arising out of the application of this Article that are $1,000 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period.

Article 8 - Offset

 

The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract or any other contract heretofore or hereafter entered into between the Company and the Reinsurer, whether acting as assuming reinsurer or ceding company.  The provisions of this Article shall not be affected by the insolvency of either party.

Article 9 - Access to Records

 

The Reinsurer or its designated representatives shall have access at any reasonable time to all records of the Company which pertain in any way to this reinsurance, provided the Reinsurer gives the Company at least 15 days prior notice of request for such access.  However, a Subscribing Reinsurer or its designated representatives shall not have any right of access to the records of the Company if it is not current in all undisputed payments due the Company.  "Undisputed" as used herein shall mean any amount that the Subscribing Reinsurer has not contested in writing to the Company specifying the reason(s) why the payments are disputed.

Article 10 - Errors and Omissions (BRMA 14F)

 

Inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery.

Article 11 - Currency (BRMA 12A)

 

	A.	Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract shall be in United States Dollars.

 

		

 

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	B.	Amounts paid or received by the Company in any other currency shall be converted to United States Dollars at the rate of exchange at the date such transaction is entered on the books of the Company.

Article 12 - Taxes (BRMA 50B)

 

In consideration of the terms under which this Contract is issued, the Company will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia.

Article 13 - Federal Excise Tax (BRMA 17D)

 

	A.	The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to the Federal Excise Tax.

	B.	In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium payable hereon and the Company or its agent should take steps to recover the tax from the United States Government.

Article 14 - Foreign Account Tax Compliance Act

 

	A.	To the extent the Reinsurer is subject to the deduction and withholding of premium payable hereon as set forth in the Foreign Account Tax Compliance Act (Sections 1471-1474 of the Internal Revenue Code), the Reinsurer shall pay and allow such deduction and withholding from the premium payable under this Contract.

	B.	The Company assumes no responsibility for recovering any such premium deductions and withholdings paid by the Company to the U.S. Internal Revenue Service.

Article 15 - Reserves

 

	A.	The Reinsurer agrees to fund its share of amounts, including but not limited to, the Company's ceded unearned premium and outstanding loss reserves (being the sum of all reinstatement premiums paid by the Company under the Original Contract but not yet recovered from the Reinsurer, plus the Company's reserves for reinstatement premium due under the Original Contract, if any) (hereinafter referred to as "Reinsurer's Obligations") by:

		1.	Clean, irrevocable and unconditional letters of credit issued and confirmed, if confirmation is required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers of letters of credit and acceptable to said insurance regulatory authorities; and/or

		2.	Escrow accounts for the benefit of the Company; and/or

 

		

 

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		3.	Cash advances;

if the Reinsurer:

		1.	Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company and if, without such funding, a penalty would accrue to the Company on any financial statement it is required to file with the insurance regulatory authorities involved; or

		2.	Has an A.M. Best Company's rating equal to or below B++ at the inception of this Contract.

The Reinsurer, at its sole option, may fund in other than cash if its method and form of funding are acceptable to the insurance regulatory authorities involved.

	B.	With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued for a term of at least one year and will include an "evergreen clause," which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than 30 days prior to said expiration date.  The Company and the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that said letters of credit may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

		1.	To reimburse itself for the Reinsurer's share of unearned premiums returned to insureds on account of policy cancellations, unless paid in cash by the Reinsurer;

		2.	To reimburse itself for the Reinsurer's share of reinstatement premiums paid by the Company under the terms of the Original Contract, unless paid in cash by the Reinsurer;

		3.	To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer;

		4.	To fund a cash account in an amount equal to the Reinsurer's share of amounts, including, but not limited to, the Reinsurer's Obligations as set forth above, funded by means of a letter of credit which is under non-renewal notice, if said letter of credit has not been renewed or replaced by the Reinsurer 10 days prior to its expiration date;

		5.	To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, if so requested by the Reinsurer.

In the event the amount drawn by the Company on any letter of credit is in excess of the actual amount required for B(1), B(2) or B(4), or in the case of B(3), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn.

 

		

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Article 16 - Insolvency

 

	A.	In the event of the insolvency of the Company, this reinsurance shall be payable directly to the Company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the Company without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim.  It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor.  The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

	B.	Where two or more Subscribing Reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the Company.

	C.	It is further understood and agreed that, in the event of the insolvency of the Company, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the Company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the Company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the Company to such payees.

Article 17 - Arbitration

 

	A.	As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration.  One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters.  In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration.  If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.

 

		

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	B.	Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire.  The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law.  The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties.  Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

	C.	If more than one Subscribing Reinsurer is involved in the same dispute, all such Subscribing Reinsurers shall, at the option of the Company, constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the Subscribing Reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such Subscribing Reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the Subscribing Reinsurers participating under the terms of this Contract from several to joint.

	D.	Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration.  In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

	E.	Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.

Article 18 - Service of Suit (BRMA 49C)

 

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities)

	A.	It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court of competent jurisdiction within the United States.  Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.

	B.	Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract.

 

		

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Article 19 - Severability (BRMA 72E)

 

If any provision of this Contract shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction.

Article 20 - Governing Law (BRMA 71B)

 

This Contract shall be governed by and construed in accordance with the laws of the State of Florida.

Article 21 - Confidentiality

 

	A.	The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract, including all information obtained through any audits and any claims information between the Company and the Reinsurer, and any submission or other materials relating to any renewal (hereinafter referred to as "Confidential Information") are proprietary and confidential to the Company.

	B.	Except as provided for in paragraph C. below, the Reinsurer shall not disclose any Confidential Information to any third parties, including but not limited to the Reinsurer's subsidiaries and affiliates, other insurance companies and their subsidiaries and affiliates, underwriting agencies, research organizations, any unaffiliated entity engaged in modeling insurance or reinsurance data, and statistical rating organizations.

	C.	Confidential Information may be used by the Reinsurer only in connection with the performance of its obligations or enforcement of its rights under this Contract and will only be disclosed when required by (1) retrocessionaires subject to the business ceded to this Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial condition, or (3) external auditors performing an audit of the Reinsurer's records in the normal course of business; provided that the Reinsurer advises such parties of the confidential nature of the Confidential Information and their obligation to maintain its confidentiality.  The Reinsurer shall be responsible for any breach of this provision by any third-party representatives of the Reinsurer.  The Company requires that any third-party representatives of the Reinsurer agree, in writing, to be bound by this Confidentiality Article or by a separate written confidentiality agreement, containing terms no less stringent than those set forth in this Article.

	D.	Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer agrees to provide the Company with written notice of same at least 10 days prior to such release or disclosure and to use its best efforts to assist the Company in maintaining the confidentiality provided for in this Article.

	E.	Any disclosure of Non-Public Personally Identifiable Information shall comply with all state and federal statutes and regulations governing the disclosure of Non-Public Personally Identifiable Information.  "Non-Public Personally Identifiable Information" shall be defined as this term or a similar term is defined in any applicable state, provincial, territory, or federal law.  Disclosing or using this information for any purpose not authorized by applicable law is expressly forbidden without the prior consent of the Company.

 

		

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	F.	The parties agree that any information subject to privilege, including the attorney-client privilege or attorney work product doctrine (collectively "Privilege") shall not be disclosed to the Reinsurer until, in the Company's opinion, such Privilege is deemed to be waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.  Furthermore, the Reinsurer shall not assert that any Privilege otherwise applicable to the Confidential Information has been waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.

	G.	The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

Article 22 - Non-Waiver

 

The failure of the Company or Reinsurer to insist on compliance with this Contract or to exercise any right, remedy or option hereunder shall not:  (1) constitute a waiver of any rights contained in this Contract, (2) prevent the Company or Reinsurer from thereafter demanding full and complete compliance, (3) prevent the Company or Reinsurer from exercising such remedy in the future, nor (4) affect the validity of this Contract or any part thereof.

Article 23 - Notices and Contract Execution

 

	A.	Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile.  With the exception of notices of termination, first class mail is also acceptable.

	B.	The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto:

		1.	Paper documents with an original ink signature;

		2.	Facsimile or electronic copies of paper documents showing an original ink signature; and/or

		3.	Electronic records with an electronic signature made via an electronic agent.  For the purposes of this Contract, the terms "electronic record," "electronic signature" and "electronic agent" shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

	C.	This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

 

		

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Article 24 - Intermediary

 

Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business hereunder.  All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements) relating to this Contract will be transmitted to the Company or the Reinsurer through the Intermediary.  Payments by the Company to the Intermediary will be deemed payment to the Reinsurer.  Payments by the Reinsurer to the Intermediary will be deemed payment to the Company only to the extent that such payments are actually received by the Company.

In Witness Whereof, the Company by its duly authorized representative has executed this Contract as of the date specified below:

 

	
This

	
 

	
 day of

	
 

	
 in the year

	
 

	
.

 

Federated National Insurance Company

 

 

		

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Interests and Liabilities Agreement

attached to and forming part of the

Reinstatement Premium Protection

Reinsurance Contract

(Louisiana Only)

Effective:  July 1, 2014

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Ariel Re Bda Limited

for and on behalf of Ariel Syndicate No. 1910

London, England

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 15.0% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2014, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2015, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, in lieu of the provisions of paragraph C of Article 21 - Confidentiality - the following shall apply:

		"C.	Confidential Information may be used by the Reinsurer only in connection with the performance of its obligations or enforcement of its rights under this Contract and will only be disclosed when required by (1) retrocessionaires subject to the business ceded to this Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial condition, (3) external auditors performing an audit of the Reinsurer's records in the normal course of business, (4) the Reinsurer's legal counsel, or (5) the Reinsurer's agent, Asta Managing Agent; provided that the Reinsurer advises such parties of the confidential nature of the Confidential Information and their obligation to maintain its confidentiality.  The Company may require that any third-party representatives of the Reinsurer agree, in writing, to be bound by this Confidentiality Article or by a separate written confidentiality agreement, containing terms no less stringent than those set forth in this Article.  If a third-party representative of the Reinsurer is not bound, in writing, by this Confidentiality Article or by a separate written confidentiality agreement, the Reinsurer shall be responsible for any breach of this provision by such third-party representative of the Reinsurer."

 

		

Page 1

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

 

	
This

	
 

	
 day of

	
 

	
 in the year

	
 

	
.

 

Federated National Insurance Company

 

 

	
This

	
 

	
 day of

	
 

	
 in the year

	
 

	
.

 

Ariel Re Bda Limited for and on behalf of Ariel Syndicate No. 1910

 

 

		

 

Page 2

Interests and Liabilities Agreement

attached to and forming part of the

Reinstatement Premium Protection

Reinsurance Contract

(Louisiana Only)

Effective:  July 1, 2014

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

AXIS Specialty Limited

Pembroke, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

 

The Subscribing Reinsurer hereby accepts an 85.0% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2014, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2015, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

 

	
This

	
 

	
 day of

	
 

	
 in the year

	
 

	
.

 

AXIS Specialty LimitedExhibit 10.6

 

THE SECURITIES REPRESENTED BY THIS SUBSCRIPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATES OR OTHER JURISDICTIONS, AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND THE REGISTRATION AND QUALIFICATION REQUIREMENTS OF SUCH LAWS.  THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND SUCH LAWS PURSUANT TO REGISTRATION, QUALIFICATION OR EXEMPTION THEREFROM AND IN ACCORDANCE WITH THE TERMS OF THE LIMITED LIABILITY COMPANY AGREEMENT OF MONARCH DELAWARE HOLDINGS LLC, AS AMENDED FROM TIME TO TIME.  THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE OR OTHER SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS, AND ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

SUBSCRIPTION AGREEMENT

 

Monarch Delaware Holdings LLC

This subscription agreement (the “Agreement”) is entered into by and among C.A. Bancorp Inc., an Alberta corporation (“CAB”), Federated National Holding Company, a Florida corporation (“FNHC”), and Transatlantic Reinsurance Company, a New York corporation (“TransRe” and, each of CAB, FNHC, and TransRe, an “Investor”), effective as of July 18, 2014.

 

WHEREAS, the Investors desire to subscribe for the number and class of limited liability company interests of the Monarch Delaware Holdings LLC, a to-be-formed Delaware limited liability company (the “Company”), set forth on the signature page to this Agreement opposite such Investors’ name (the “Company Units”).

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

The Subscription

 

1.      Each of CAB, FNHC and TransRe, desiring to become an Investor in the Company and subject to the conditions set forth in this Agreement, hereby irrevocably subscribes for and agrees to purchase such Investor’s Company Units for an aggregate purchase price in the amount set forth on the signature page to this Agreement opposite such Investor’s name (the “Purchase Price”).

 

2.      Upon signing the signature page of this Agreement by or on behalf of each named Investor, this Agreement shall be validly executed and delivered by such Investor and shall be valid, binding and enforceable against such Investor in accordance with the terms and subject to the conditions set forth in this Agreement, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization and similar laws affecting creditors’ rights generally and equitable principles of general applicability.

 

3.      The Investor acknowledges and agrees that its subscription for Company Units is in connection with the formation of Monarch National Insurance Company, a to-be-formed Florida corporation (“Monarch National”), and Monarch National Holding Company, a to-be-formed Florida corporation (“Monarch Holdco” and, together with the Company and Monarch National, the “Monarch Entities”), both of which will become direct and indirect wholly owned subsidiaries of the Company upon the issuance by the Florida Office of Insurance Regulation (the “Florida OIR”) of a certificate of authority to Monarch National  to write homeowners’ multi-peril and other property and casualty insurance in the State of Florida (the “Proposed Business”), the approval of Monarch Holdco to operate as an insurance holding company in the State of Florida, and such other approvals of the Florida OIR as are necessary or advisable for Monarch National to operate the Proposed Business and for Monarch Holdco to be an insurance holding company in the State of Florida  in each case on the terms and conditions set forth in the LLC Agreement and the OIR Application (each as defined below) (collectively, the “Florida OIR Approvals”).

 

4.      The parties have negotiated drafts of the following agreements and instruments to be entered into prior to or on the Closing Date (as defined below): (a) a Limited Liability Company Agreement of the Company (the “LLC Agreement”); (b) a note in the principal amount of $5,000,000 to be payable by Monarch Holdco to TransRe (the “Note”); (c) a Managing General Agency and Claims Administration Agreement (the “MGA Agreement”) to be entered into between Monarch National and Federated National Underwriters, Inc. (a wholly owned subsidiary of FNHC); (d) an investment management agreement (the “Investment Management Agreement”) to be entered into between CAB or a CAB affiliate and any or all of the Monarch Entities; and (e) a Reinsurance Right of First Refusal Agreement (the “ROFR Agreement”) to be entered into between Monarch National and TransRe (collectively, all of these agreements and instruments, the “Company Documents”).

 

5.      As soon as practicable following the effective date of this Agreement, CAB and FNHC shall, for the benefit of the Investors, cause the formation of the Company, and thereafter cause the Company to submit to the Florida OIR an application for permission for the Monarch Entities to form a Florida insurance company and holding company (the “Application”).  CAB and FNHC shall use their commercially reasonable efforts to cause the Company (a) to ensure that the Application and all supporting documentation, when filed, is complete and accurate and (b) to respond promptly to all requests for further information from the Florida OIR.  Each Investor agrees to make commercially reasonable efforts to (i) cooperate with the Company and the other Investors in connection with the Application and (ii) provide or cause to be provided, as promptly as possible, all such information, documents, certificates and affidavits as such Investor, or its officers, directors or other affiliates, may be required or requested to provide in connection with the Application by the Company, CAB, FNHC or the Florida OIR. The Company shall, at all times during the pendency of the Application, keep the Investors appraised of the progress of the Application and promptly provide them with copies of any correspondence to or from the Florida OIR and any material change, actual or contemplated, in the Application, affairs of the Company or in any information provided to the Florida OIR or the Investors.

 

6.      Upon receipt of the Florida OIR Approvals, the Company shall deliver to each Investor a notice, that sets forth the date (the “Closing Date”) of the purchase of Company Units by each of CAB, FNHC and TransRe pursuant to this Agreement (the “Closing”).  The Closing Date will be five business days after the date of such notice.

 

Conditions to Closing.  The obligations of an Investor to purchase the Company Units are subject to the fulfillment on or before the Closing Date of each of the conditions set forth below, unless waived in whole or in part by such Investor in writing.

 

7.      As of the Closing Date, the Company shall have been duly organized as a limited liability company and be validly existing and in good standing under the laws of the State of Delaware; and each of Monarch Holdco and Monarch National shall have been duly incorporated as a corporation under the laws of the State of Florida and be validly existing and in good standing under the laws of the State of Florida.  The Monarch Entities shall have full right, power and authority to enter into the Company Documents and all documents and instruments to be executed and delivered in connection therewith to which they are parties, and to perform their respective obligations thereunder.  CAB, FNHC and TransRe shall each have executed their counterparts to the LLC Agreement.

 

8.      The Company shall have received the Florida OIR Approvals without the imposition of any non-customary terms and conditions.

 

9.      Each of the Company Documents and all agreements, documents and instruments to be executed in connection herewith and therewith, at the time of execution will be authorized by the Monarch Entities parties thereto, as applicable, and, when executed and delivered by the Monarch Entities, as applicable, will constitute a valid and binding obligation of the applicable Monarch Entities enforceable against them, as applicable, in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization and similar laws affecting creditors’ rights generally and equitable principles of general applicability.

 

10.      Upon receipt of the Purchase Price from an Investor, such Investor’s Company Units will be duly authorized and validly issued, and no holder thereof is or will be subject to personal liability by reason of being such a holder.

 

11.      On or prior to Closing, (a) Monarch National and Federated National Underwriters, Inc. shall enter into the MGA Agreement, in the form as reasonably approved by the parties hereto, as approved by the Florida OIR, and on economic terms agreed to by the parties as of the date of this Agreement; (b) CAB or an affiliate of CAB shall enter into the Investment Management Agreement with any or all of the Monarch Entities, in the form as reasonably approved by parties hereto, as approved by the Florida OIR, and on economic terms agreed to by the parties as of the date of this Agreement; (c) Monarch Holdco shall execute and deliver the Note to TransRe in the form substantially agreed to on the date of this Agreement; and (d) Monarch Holdco and TransRe shall execute and deliver a ROFR Agreement in the form substantially agreed to by the parties on the date of this Agreement, as approved by the Florida OIR and on economic terms agreed to by the parties as of the date of this Agreement.

 

12.      None of the other Investors shall have given notice or be reasonably expected to give notice of its intention not to complete, or shall it have become conclusive that any Investor will not be completing, its subscription for Company Units.

 

Optional Advance Purchase. At the election of any Investor, such Investor shall have the right, but not the obligation, to purchase all, but not less than all, of such Investor’s Company Units prior to the Closing Date (an “Optional Closing”) subject to the fulfillment on or before an Optional Closing of each of the conditions set forth below, unless waived in whole or in part by such Investor in writing (any Investor participating in an Optional Closing, an “Advance Investor”).  An Optional Closing will be on such date as may be agreed between the Company and any Advance Investor. For the avoidance of doubt, any Investor that does not exercise its option to purchase its Company Units at an Optional Closing will purchase its Company Units at the Closing.

 

13.      The Company shall have been duly organized as a limited liability company and be validly existing and in good standing under the laws of the State of Delaware.

 

14.      FNHC and CAB shall have agreed upon investment committee guidelines for the Monarch Entities.

 

15.      Each Advance Investor shall have agreed upon and executed an interim limited liability company operating agreement for the Company (the “Interim Operating Agreement”) that provides for each Advance Investor to take all action within their respective power (including having all of their interests in the Company represented in person or by proxy at all meetings of the members of the Company, voting such interests, acting by written consent, and using all reasonable efforts to cause any manager of the Company designated by such Advance Investor not to take any action inconsistent with this Agreement) required to cause the Company to replace the Interim Operating Agreement with the LLC Agreement upon receipt of the Florida OIR Approvals.

 

16.      No Advance Investor shall have permitted the Company to assume any material debt or material obligation other than one arising under the Company Agreements in such form as approved and agreed to by each of CAB, FNHC, and TransRe.

 

Representations, Warranties and Covenants of each Investor. Each Investor, severally and not jointly, hereby represents, warrants and covenants that:

 

17.      Such Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, and the person signing this Agreement on the Investor’s behalf is a duly elected, qualified and acting officer of the Investor and has the necessary authorization to act on behalf of the Investor and to execute and deliver this Agreement and all documents and instruments to be executed and delivered in connection herewith.  The Investor has full right, power and authority to enter into this Agreement and to perform its obligations hereunder.

 

18.      Any information furnished by the Investor pursuant to this Agreement, including with respect to the Investor’s financial position, background and investment experience, is or will be, as the case may be, true, correct and complete in all material respects as of the date of this Agreement and as of the Closing.

 

19.      The execution and delivery by the Investor of, and the performance by the Investor of its obligations under, this Agreement will not contravene any provision of applicable law, the organizational documents of the Investor, any agreement or other instrument binding upon the Investor, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Investor.  Other than the Florida OIR Approvals, no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Investor of its obligations under this Agreement, except where failure to do so could not be expected to have a material adverse effect on the Company.

 

20.      The Investor certifies that it is either (a) an “accredited investor” as such term is defined in Regulation D under the Securities Act or (b) not a “U.S. person” as such term is defined in Regulation S under the Securities Act.  Annex A, as completed by the Investor, sets forth the basis on which the Investor satisfies accredited investor status, if applicable.  The Investor is a “qualified purchaser” as defined for purposes of Section 3(c)(7) of the Investment Company Act of 1940, as amended.  Annex B, as completed by the Investor, sets forth the basis on which the Investor satisfies qualified purchaser status.   The Investor is not subject to and is not aware of any facts that would cause the Investor to be subject to any of the “Bad Actor” disqualifications as described in Rule 506(d)(1)(i) to (viii) of the Securities Act.

 

21.      The Investor is knowledgeable, sophisticated and experienced in business and financial matters, and it fully understands the limitations on ownership, sale, transfer or other disposition of the Company Units and is capable of evaluating an investment in the Company Units.  The Investor is able to bear the economic risk of its investment in the Company Units and is currently able to afford the complete loss of such investment.  The Investor acknowledges that the Company, when formed, will be a newly formed entity that has not conducted any business operations and, therefore, there are substantial risks incident to its investment in the Company Units.

 

22.      The Investor has received, read carefully in their entirety and understands the LLC Agreement and  the Note.

 

23.      Unless specifically identified to the Company, no portion of the assets used to purchase the Company Units or any beneficial interest therein constitutes or will constitute the assets of an “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) that is subject to Title 1 of ERISA, a plan, individual retirement account or other arrangement that is subject to Section 4975 of the Internal Revenue Code of 1986, as amended, or any other state, local, non-U.S. or other laws or regulations that would have the same effect as the regulations promulgated under ERISA.

 

24.      Each Investor shall, on or prior to Closing, execute and deliver the LLC Agreement.

 

25.      At the Closing, each Investor shall deliver the Purchase Price applicable to such Investor and TransRe shall deliver the principal amount of the Note by wire transfer to the Company to an account designated by the Company.

 

Transfer Restrictions

 

26.      Each Investor understands and agrees that (a) the Company Units are being offered in a transaction not involving any public offering within the United States within the meaning of the Securities Act; (b) the Company Units have not been, and will not be, registered under the Securities Act; and (c) the Company Units may not be transferred except as permitted by the Interim Operating Agreement or the LLC Agreement, as applicable.  The Investor agrees that, if in the future it decides to offer, resell, pledge or otherwise transfer such Company Units or any interest therein, such Company Units or interest therein will be offered, resold, pledged or otherwise transferred only as permitted by the Interim Operating Agreement or the LLC Agreement, as applicable, and only in a transaction exempt from, or not subject to, the registration requirements of the Securities Act or pursuant to a registration statement declared effective by the Securities and Exchange Commission (the “SEC”).

 

27.      Each Investor agrees that any certificate or Company record representing or reflecting Company Units shall bear a legend or notation stating the foregoing transfer restrictions, which restrictions shall terminate only in accordance with the terms of such legend.

 

28.      Each of the foregoing restrictions is subject to any requirement of law that the disposition of the Investor’s property, be at all times within the control of the Investor and to compliance with any applicable federal and state securities laws.

 

The Offering

 

29.      Each Investor acknowledges that none of the materials relating to the sale of the Company Units have been subject to review, comment or approval by the staff of the SEC or any U.S. state or foreign securities commission.

 

30.      Except as set forth in Section 39, each Investor is acquiring the Company Units for its own account, for investment, and is not purchasing the Company Units with a view to, or for offer or sale in connection with, any resale or distribution thereof (within the meaning of the Securities Act) that would violate the securities laws of the United States or any state thereof.

 

31.      Each Investor has had access to all information that it believes is necessary, sufficient or appropriate in connection with the Company, it has been afforded an opportunity to ask questions concerning the terms and conditions of the offering of the Company Units and the LLC Agreement, it has had all such questions answered to its satisfaction, it has been supplied all additional information that it has requested and, after being advised by persons deemed appropriate by such Investor concerning this Agreement, the LLC Agreement and the transactions contemplated hereby, has made an independent decision to purchase the Company Units based on information it has determined to be adequate to verify the accuracy of any other information that the Investor deems relevant to making an investment decision to purchase the Company Units.

 

32.      The Investors did not become aware of the offering of the Company Units, nor were the Company Units offered to the Investors, by any form of general solicitation or general advertising.  In making the decision to purchase the Company Units, the Investors relied solely on information obtained by the Investor directly from the Company as a result of any inquiries by the Investor or one or more of the Investor’s advisors.

 

General

 

33.      Each Investor acknowledges that the Company and its affiliates and others will rely on the acknowledgments, representations and warranties contained in this Agreement as a basis for exemption from registration of the issuance of the Company Units under the Securities Act and under the securities laws of all applicable states and for other purposes.  The Investor agrees to notify the Company promptly if any of the acknowledgments, representations or warranties set forth in this Agreement are no longer accurate.

 

34.      The Company and its affiliates are irrevocably authorized to produce this Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

35.      All notices, requests, demands and other communications hereunder shall be in writing and must be delivered in person, registered, electronic or certified mail or express courier at the address set forth on the signature page to this Agreement or at such other address as may be designated by the addressee thereof upon written notice to the other parties hereto.

 

36.      This Agreement contains the entire agreement between the parties hereto with respect to the matters contemplated herein and supersedes all prior agreements or understandings among the parties related to such matters.

 

37.      This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

 

38.      Each Investor agrees to provide to the Company, on or prior to Closing, together with this completed and signed Agreement, including Annex A and Annex B, a completed and signed Substitute IRS Form W-9 or W-8BEN.

 

39.      This Agreement is not transferable or assignable by the Investor, but CAB may transfer or assign this Agreement to an affiliate that is majority-owned by CAB and the Company and Investors acknowledge that CAB currently intends to do so.

 

40.      This Agreement may be executed in two or more counterparts, each of which together shall be deemed an original, but all of which together shall constitute one and the same instrument. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

41.      This Agreement shall be terminated if any of the conditions to Closing set forth in this Agreement shall not have been fulfilled or waived by each of the Investors by December 31, 2014.

 

[The remainder of this page intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

	
140 Class A Units

	
C.A. BANCORP INC.

	 
	 		
	
Purchase Price: US$14,000,000

	 	 
	 	 	 
	 	
By: /s/ Colin King

	 
	 	
Name:  Colin King

	 
	 	
Title: In Capacity of Chief Executive Officer

	 
	 	
Address: 225a Macpherson Avenue, Suite 201

	 
	 	
 Toronto, ON M4V 1A1

	 
	 	 	 
	 	 	 
	
140 Class A Units

	
FEDERATED NATIONAL HOLDING COMPANY

	 
	 		
	
Purchase Price: US$14,000,000

	 	 
	 	 	 
	 	
By: /s/ Michael H. Braun

	 
	 	
Name: Michael H. Braun

	 
	 	
Title: Chief Executive Officer & President

	 
	 	
Address: 14050 Northwest 14th Street, Suite 180

	 
	 	
  Sunrise, Florida 33323

	 
	 	 	 
	 	 	 
	
50 Class B Units

	
TRANSATLANTIC REINSURANCE COMPANY

	 
	 		
	
Purchase Price: US$5,000,000

	 	 
	 	 	 
	 	
By: /s/ Ken Yapp

	 
	 	
Name: Ken Yapp

	 
	 	
Title: Vice President and Assistant General Counsel

	 
	 	
Address: One Liberty Plaza, 165 Broadway

	 
	 	
  New York, NY 10006

	 

 

[Signature Page to Subscription Agreement of Monarch Delaware Holdings LLC]

ANNEX A

ACCREDITED INVESTOR STATUS

Accredited Investor Status.  Please mark the appropriate box next to each description applicable:

 

[       ]     A natural person whose individual net worth (as defined in Rule 501(a)(5)(i) of Regulation D promulgated under the Securities Act), or joint net worth with that person's spouse, exceeds $1,000,000.

 

[       ]      A natural person who had individual income in excess of $200,000 in each of the two most recent years, or joint income with that person's spouse in excess of $300,000 in each of those years and who has a reasonable expectation of reaching the same income level in the current year.

 

[       ]      A director or executive officer (as defined in Rule 501(f) of Regulation D promulgated under the Securities Act) of the Company.

 

[       ]      A bank (as defined in Section 3(a)(2) of the Securities Act) or a savings and loan association or other institution (as defined in Section 3(a)(5)(A) of the Securities Act), whether acting in its individual or fiduciary capacity.

 

[       ]      A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended.

 

[       ]         An insurance company (as defined in Section 2(13) of the Securities Act).

 

[       ]        An investment company registered under the Investment Company Act of 1940, as amended, or a business development company (as defined in Section 2(a)(48) of the Investment Company Act of 1940, as amended).

 

[       ]        A Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended.

 

[       ]       A plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000.

 

[       ]         An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), if (A) the investment decision is made by a plan fiduciary (as defined in Section 3(21) of ERISA) which is either a bank, savings and loan association, insurance company or registered investment advisor,  (B) the employee benefit plan has total assets in excess of $5,000,000 or (C) if the plan is a self directed plan, its investment decisions are made solely by persons who are accredited investors.

 

[       ]         A private business development company (as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended).

 

[       ]      A corporation, a partnership, an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or a Massachusetts or similar business trust, not formed for the specific purpose of acquiring securities, with total assets in excess of $5,000,000.

 

[       ]      A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring securities, whose acquisition is directed by a person who, either alone or with his or her purchaser representative(s), has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of acquiring securities.

 

[       ]         An entity in which all of the equity owners meet the requirements of at least one of the above subparagraphs for accredited investors.

 

ANNEX B

QUALIFIED PURCHASER STATUS

Qualified Purchaser Status.  Please mark the appropriate box next to each description applicable:

 

	(1)	[       ] A natural person (including any person who will hold a joint, community property, or other similar shared ownership interest in the Company with that person’s qualified purchaser spouse) who owns at least $5,000,000 in Investments (as defined in Rule 2a51-1 under the Investment Company Act).

 

	(2)	[       ] A company* that owns at least $5,000,000 in Investments and that is owned directly or indirectly by or for two or more natural persons who are related as siblings or spouse (including former spouses), or direct lineal descendants by birth or adoption, spouses of such persons, the estates of such persons, or foundations, charitable organizations, or trusts established by or for the benefit of such persons (a “Family Company”).

 

	(3)	[       ] A trust that is not covered by clause (2) above, and that was not formed for the specific purpose of investing in the Company, as to which the trustee or other person authorized to make decisions with respect to the trust, and each settlor or other person who has contributed assets to the trust, is a person described in clause (1), (2), or (4).

 

	(4)	[      ] A person (including a company), acting for its own account or the accounts of other qualified purchasers, who in the aggregate owns and invests on a discretionary basis, not less than $25,000,000 in Investments.

 

	(5)	[       ] A “Qualified Institutional Buyer” as defined in Rule 144A under the Securities Act (as that term is modified by the limitations imposed thereon by Rule 2a51-1(g)(1) under the Investment Company Act);

 

	(6)	[       ] A company, regardless of the amount of its Investments, where each of the beneficial owners of securities issued by such company is a person described in clause (1), (2), (3) or (4) of this Annex C.  (If this item is checked, please contact the Company.  Additional requirements may apply.)

 

	*	For purposes of this Question, “company” includes a corporation, a partnership, an association, a joint-stock company, a trust or a fund.  In order to be a “qualified purchaser” any company that both (i) would, but for an exception provided in Sections 3(c)(1) or 3(c)(7) of the Investment Company Act, be an investment company and (ii) was in existence prior to May 1, 1996, must have complied with the consent provisions of Section 2(a)(51)(C) of the Investment Company Act.

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