Document:

exhibit101formofvotingag

                                                                                                                                                    EXECUTION VERSION                                                                                                                      VOTING AGREEMENT          THIS VOTING  AGREEMENT,  dated  as  of  February  25,  2019  (this  “Agreement”),  is  by  and  among FEDNAT  HOLDING  COMPANY,  a  Florida  corporation  (“FedNat”), [*]  (the  “Investment  Manager”)  and  the  stockholder  or  stockholders  listed  on  the  signature  page  hereof  (collectively,  the  “Stockholder”).          WHEREAS, concurrently herewith, FedNat, 1347 Property Insurance Holdings, Inc., a Delaware  corporation (“PIH”), Maison Managers, Inc., a Delaware corporation (“MM”), Maison Insurance Company,  a  Louisiana  corporation  (“MIC”),  and  ClaimCor,  LLC,  a  Florida  limited  liability  company  (“CC”  and,  together with MM and MIC, each, a “Company” and, collectively, the “Companies”) are entering into an  Equity  Purchase  Agreement  (as  it  may  be  amended  or  modified  from  time  to  time,  the  “Purchase  Agreement”)  pursuant  to  which  it  is  contemplated  that  FedNat  will  purchase  all  of  the  issued  and  outstanding capital stock and membership interests, as applicable, of the Companies (the “Acquisition”);          WHEREAS, as of the date hereof, the Investment Manager is the investment manager of, and has  the right to direct the voting of, [*] shares of the issued and outstanding common stock of PIH beneficially  owned by the Stockholder (such common stock, together with any other capital stock of PIH acquired by  the Stockholder after the date hereof, whether acquired directly or indirectly, upon the exercise of options,  conversion  of  convertible  securities,  a stock  dividend  or  distribution,  or  a  split-up,  reverse  stock  split,  recapitalization, combination, reclassification or otherwise, entitled to vote on the approval and adoption of  the Purchase Agreement, being collectively referred to herein as the “Shares”);           WHEREAS, obtaining the approval of the Acquisition by the affirmative vote of Persons holding a  majority of all issued and outstanding shares of the common stock of PIH is a condition precedent to the  consummation of the Acquisition; and          WHEREAS,  as an  inducement  to  FedNat  to  enter  into  the  Purchase  Agreement  and  incur  the  obligations therein, FedNat has required that the Investment Manager and the Stockholder enter into this  Agreement.          NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements  set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby  acknowledged, the parties hereto agree as follows:          1.    Recitals; Definitions.  The recitals set forth above are true and correct, and incorporated  into this Agreement by this reference.  Capitalized terms used in this Agreement, but not defined herein,  shall have the meanings given to those terms in the Purchase Agreement.                2.    Agreement to Vote; Restrictions on Voting and Dispositions.                            (a)   Agreement  to  Vote.   The  Investment  Manager  hereby  irrevocably  and        unconditionally agrees that, from the date hereof until the Expiration Time (as defined in Section 5),        at  any  meeting  (whether  annual  or  special  and  each  adjourned  or  postponed  meeting)  of  PIH’s        stockholders, however called, or in connection with any written consent of PIH’s stockholders, the        Investment Manager will cause the Shares to be represented at such meeting (or otherwise cause all        of the Shares to be counted as present thereat for purposes of calculating a quorum), and vote or                                           -1-    

 

                                                                                             cause to be voted (including by written consent, if applicable) all of the Shares, both: (i) in favor of        the approval and adoption of the Purchase Agreement and the Acquisition, including any proposal        to adjourn or postpone such meeting of PIH’s stockholders (that is not opposed by FedNat) to a        later date if there are not sufficient votes to approve and adopt the Purchase Agreement and the        Acquisition on the date on which such meeting is held; (ii) against any Acquisition Proposal, that, if        accepted  and  ratified  by  the  Board  of  Directors  of  PIH,  would  constitute  a  breach  of  PIH’s        obligations  under  Section  5.03  of  the  Purchase  Agreement;  and  (iii)  against  any  other  action  or        agreement  that  results,  or  could  reasonably  be  expected  to  result,  in  a  material  breach  of  any        covenant,  agreement,  representation  or  warranty  or  other  obligation  of  PIH  set  forth  in  the        Purchase Agreement or any other agreement entered into by PIH, the Companies, or any of their        respective affiliates in connection with the Transactions, or prevent, materially impair or materially        delay  the  consummation  of  the  Acquisition  (except  in  the  manner  permitted  by  the  Purchase        Agreement).                            (b)   Restrictions  on  Transfers.   The  Investment  Manager and  the  Stockholder  each        hereby agrees that, from the date hereof until the Expiration Time, neither the Investment Manager        nor  the  Stockholder  shall,  directly  or  indirectly,  sell  (including  short  sales),  transfer,  give,  pledge,        grant  a  security  interest in,  encumber,  assign,  grant  any  option  for  the  sale  of,  enter  into  a  “put        equivalent position” (as defined by Rule 16a-1(h) under the Exchange Act) or otherwise transfer or        dispose  of (including by  operation of law) any  Shares (collectively, “Transfer”), or enter into any        agreement, arrangement or undertaking with respect to any Transfer of any Shares, other than to any        affiliate; provided that as a condition to such Transfer with an affiliate, such affiliate shall agree in a        signed  writing  reasonably  acceptable  to  FedNat  to  be  bound  by  and  comply  with  all  of  the        provisions of this Agreement.  Any Transfer in violation of this Agreement shall be void.                3.    Transfer of Voting Rights; Inconsistent Agreements.  The Investment Manager and the  Stockholder  hereby  agree  that,  prior  to  the  Expiration  Time,  neither  the  Investment  Manager  nor  the  Stockholder shall, whether by grant of proxy or power of attorney, by deposit of any of the Shares into a  voting  trust  or  similar  arrangement,  by  agreement,  contract,  or  other  arrangement  with  any  Person  (including, without limitation, any voting agreement or similar arrangement), or otherwise, grant, delegate or  otherwise  assign  any  of  the  Stockholder’s  voting  power  as  a  stockholder  of  PIH,  whether  directly  or  indirectly, in any manner that is inconsistent with the Stockholder’s obligations under this Agreement.                4.    Representations,  Warranties  and  Covenants  of  the  Investment  Manager  and  the  Stockholder.                      (a)   Representations and Warranties.  The Investment Manager and the Stockholder each        represent and warrant to FedNat as follows:                                    (i)   Capacity.   Each  of  the  Investment  Manager  and  the  Stockholder  has  all              requisite capacity, power and authority to enter into and perform its obligations under this              Agreement.   No  filing  with,  and  no  permit,  authorization,  consent  or  approval  of,  a              Governmental Entity is necessary on the part of the Investment Manager or the Stockholder              for the execution, delivery and performance of this Agreement by it or the consummation by              it of the transactions and agreements contemplated hereby.                                        (ii)  Due Authorization.  This Agreement has been duly executed and delivered              by  the  Investment  Manager  and  the  Stockholder  and  the  execution,  delivery  and              performance  of  this  Agreement  by  the  Investment  Manager  and  the  Stockholder  and  the                                           -2-    

 

                                                                           consummation  of  the  transactions  contemplated  hereby  have  been  duly  authorized  by  all  necessary action on the part of the Investment Manager and the Stockholder.                          (iii) Binding Agreement.  Assuming the due authorization, execution and delivery  of this Agreement by FedNat, this Agreement constitutes the valid and binding agreement of  the Investment Manager and the Stockholder, enforceable against the Investment Manager  and the  Stockholder in accordance with its terms (except  to the extent that enforceability  may be limited by applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent  transfer or similar Laws affecting the enforcement of creditors’ rights generally or by general  principles of equity).                          (iv)  Non-Contravention.  Except as contemplated by this Agreement, neither the  Investment  Manager  nor  the  Stockholder  is  a  party  to  any  grant  of  proxy  or  power  of  attorney, has not deposited any of the Shares into a voting trust or similar arrangement, has  not entered into any agreement, contract, or other arrangement with any Person (including,  without  limitation,  any  voting  agreement  or  similar  arrangement),  or  otherwise  granted,  delegated or otherwise assigned any of its voting power as a stockholder of PIH, whether  directly or indirectly, in any manner that is inconsistent with the Investment Manager and  the Stockholder’s obligations under this Agreement.  Neither the execution and delivery of  this Agreement by the Investment Manager and the Stockholder nor the consummation by  the  Investment  Manager  and  the  Stockholder  of  the  transactions  and  agreements  contemplated hereby or compliance by the Investment Manager and the Stockholder with  any  of  the  provisions  hereof  shall  (X)  conflict  with  or  violate  any  provision  of  the  organizational documents of the Investment Manager or the Stockholder; (Y) result in any  breach or violation of, or constitute a default (or an event which, with notice or lapse of time  or  both,  would  become  a  default)  under,  or  give  to  others  any  rights  of  termination,  amendment,  acceleration  or  cancellation  of,  or  result  in  the  creation  of  a  Lien  on  any  property or asset of the Investment Manager or the Stockholder pursuant to any Contract to  which the  Investment  Manager or the  Stockholder is a party  or by  which the  Investment  Manager  or  the Stockholder  or  any  property  or  asset  of  the  Investment  Manager  or  the  Stockholder  is  bound  or  affected;  or  (Z)  violate  any  Law  or  judgment,  order,  injunction,  ruling or decree of any Governmental Entity applicable to the Investment Manager or the  Stockholder or any of the Investment Manager or the Stockholder’s properties or assets.                  (v)   Ownership of Shares.  Except for restrictions in favor of FedNat pursuant to  this Agreement, and except for such transfer restrictions of general applicability as may be  provided under the Securities Act and the “blue sky” laws of the various States of the United  States, the Stockholder is the beneficial owner of all of the Shares, in each case free and clear  of Liens, and each of the Investment Manager and the Stockholder has the power to vote or  direct the vote with respect to the Shares. As used in this Agreement, the terms “beneficial  owner,” “beneficially own” and “beneficial ownership” shall have the meaning set forth in  Rule 13d-3 promulgated by the Securities and Exchange Commission under the Exchange  Act.  No Person has any contractual or other right or obligation to purchase or otherwise  acquire any of such Shares and the Stockholder has not assigned any rights associated with  any Shares to any Person.                (vi)  Absence of Litigation. As of the date hereof, there is no Action pending or,  to  the  knowledge  of  the  Investment  Manager  or  the  Stockholder,  threatened,  against  or  affecting the Investment Manager or the Stockholder before or by any Governmental Entity,                               -3-              

 

                                                                                                   except as is not expected, and would not reasonably be expected, either individually or in the              aggregate, to impair the ability of the Investment Manager or the Stockholder to perform the              Investment Manager or the Stockholder’s obligations hereunder in any respect.                            (vii) Reliance.  Each of the Investment Manager and the Stockholder understands              and acknowledges that FedNat is entering into the Purchase Agreement in reliance upon its              execution and delivery of this Agreement and the representations, warranties, covenants, and              agreements of the Investment Manager and the Stockholder contained herein.                            (viii) Investment  Manager.   The  Investment  Manager  serves  as  the  investment              manager of the Stockholder and has the authority to execute this Agreement on behalf of              the Stockholder and to direct the voting of the Shares.                      (b)   Covenants.  The Stockholder hereby further covenants and agrees as follows:                                        (i)   The  Stockholder  hereby  authorizes  FedNat  to  publish  and  disclose  in  any              announcement  or  disclosure  in  connection  with  the  Transactions,  including, without              limitation, any registration statement filed with the SEC in connection with the Transactions              and  any  other  applicable  filings  under  the  Exchange  Act  or  the  Securities  Act,  the              Stockholder’s  identity  and  ownership  of  the  Shares  and  the  nature  of  the  Stockholder’s              obligations under this Agreement.                            (ii)  The Stockholder hereby waives and agrees not to exercise any appraisal or              dissenter’s  rights  that  may  arise  with  respect  to  the  Shares  in  connection  with  the              Acquisition.                       (iii) The  Stockholder  covenants  and  agrees,  until  the  Expiration  Time,  to              promptly  notify  FedNat  of:  (A)  any  fact,  event,  or  circumstance  that  would  constitute  a              breach  of  any  of  the  representations,  warranties,  covenants,  or  other  agreements  of              Stockholder in this Agreement; and (B) the receipt by the Stockholder of any notice or other              communication  from  any  Person  alleging  that  the  consent  of  such  Person  is  or  may  be              required in connection with this Agreement.                5.    Termination.  Other than Section 5 and Section 6, all of which shall survive any termination  of  this  Agreement,  this  Agreement  and  all  obligations  of  the  Stockholder  hereunder  will  automatically  terminate and cease to be of any further force and effect upon the earlier to occur of: (a) the Closing; and  (b)  the  termination  of  the  Purchase  Agreement  in  accordance  with  its  terms  (such  earlier  time,  the  “Expiration Time”). Notwithstanding the foregoing provisions of this Section 5, nothing herein shall relieve  any party hereto from liability for any breach of this Agreement prior to any such termination.                6.    Miscellaneous.                      (a)   Expenses.   All  expenses  incurred  in  connection  with  this  Agreement  and  the        transactions contemplated by this Agreement shall be paid by the party incurring such expenses.                            (b)   Notices.  All notices, demands and other communications to be given or delivered        under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to        have been given: (i) if personally delivered, on the date of delivery; (ii) if delivered by express courier        service  of  national  standing  (with  charges  prepaid),  on  the  Business  Day  following  the  date  of                                           -4-    

 

                                                                                 delivery to such courier service; (iii) if deposited in the United States mail, first-class postage prepaid,  on  the  fifth  (5th)  Business  Day  following  the  date  of  such  deposit;  or  (iv) if  delivered  by  email  transmission, on the date of such transmission, provided, that confirmation of such transmission is  received within one (1) Business Day.  All notices, demands and other communications hereunder  shall be delivered as set forth below, or pursuant to such other instructions as may be designated in  writing by the party to receive such notice:                If to FedNat, to:                             FedNat Holding Company              14050 NW 14th Street, Suite 180              Sunrise, FL 33323              Attention: Michael H. Braun, CEO and President              E-Mail: mbraun@fednat.com                            with a copy (which shall not constitute notice) to:                             Nelson Mullins Broad and Cassel              2 S. Biscayne Boulevard, Suite 2100              Miami, FL 33131              Attention:  Nina S. Gordon, Esq.              E-Mail:  nina.gordon@nelsonmullins.com                            If to the Stockholder, to:               c/o 1347 Property Insurance Holdings, Inc.              1511 N. Westshore Blvd., Suite 870              Tampa, FL 33607              Attention:  D. Kyle Cerminara              E-Mail:  kyle@fundamentalglobal.com                            with a copy (which shall not constitute notice) to:                             Thompson Hine LLP               3900 Key Center              127 Public Square              Cleveland, OH 44114              Attention: Derek D. Bork, Esq.              email:  derek.bork@thompsonhine.com                            If to the Investment Manager, to:                            c/o 1347 Property Insurance Holdings, Inc.              1511 N. Westshore Blvd., Suite 870              Tampa, FL 33607              Attention:  D. Kyle Cerminara              E-Mail:  kyle@fundamentalglobal.com                            with a copy (which shall not constitute notice) to:                                                    -5-              

 

                                                                                             Thompson Hine LLP               3900 Key Center              127 Public Square              Cleveland, OH 44114              Attention: Derek D. Bork, Esq.              email:  derek.bork@thompsonhine.com                      (c)   Amendments,  Waivers,  Etc.  This  Agreement  may  not  be  amended,  changed,  supplemented,  waived  or  otherwise  modified  or  terminated  except  by  an  instrument  in  writing  signed by FedNat and the Stockholder.                (d)   Successors and Assigns.  No party may assign any of its rights or delegate any of its  obligations under this Agreement without the prior written consent of the other party.  Subject to  the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of and  be  enforceable  by  the  parties  and  their  respective  successors  and  assigns,  including  without  limitation any corporate successor by merger or otherwise.            (e)   Third Party Beneficiaries.  Nothing expressed or referred to in this Agreement will  be  construed  to  give  any  Person,  other  than  the  parties  to  this  Agreement  and  their  respective  successors and permitted assigns, any legal or equitable right, remedy or claim under or with respect  to this Agreement or any provision of this Agreement.          (f)   No Partnership, Agency,  or Joint Venture.   This  Agreement is intended to create,  and creates, a contractual relationship and is not intended to create, and does not create, any agency,  partnership, joint venture or any like relationship between the parties hereto.            (g)   Further Assurances; Ownership.  From time to time prior to the Expiration Time at  the request of FedNat, and without further consideration, the Stockholder shall execute and deliver  or cause to be executed and delivered such additional documents and instruments and take all such  further  action  as  may  be  reasonably  necessary  or  desirable  to  carry  out  and  fully  effectuate  the  actions required by it under this Agreement.           (h)   No Group.  Nothing in this Agreement shall be interpreted as creating or forming a  “group” with any Person, including FedNat, for purposes of Rule 13d-5(b)(1) of the Exchange Act  or any other similar provision of applicable Law or of conferring upon FedNat beneficial ownership  of any Shares.          (i)   Entire  Agreement.   This  Agreement  and  the  Purchase  Agreement  collectively  embody  the  entire  agreement  and  understanding  among  the  parties  hereto  relating  to  the  subject  matter  hereof  and  supersedes  all  other  prior  agreements,  understandings,  representations  and  warranties, both written and oral, among the parties, with respect to the subject matter hereof.  The  effectiveness  of  this  Agreement  shall  be  conditioned  upon  the  execution  and  delivery  of  the  Purchase Agreement by all of the parties thereto.          (j)   Capacity as Stockholder.  This Agreement shall apply to the Stockholder solely in its  capacity as a stockholder of PIH, and it shall not apply in any manner to the Stockholder or any of  its Affiliates in any capacity as a director, officer or employee of PIH or any of the Companies or in  any other capacity, and shall not limit or affect any actions taken by the Stockholder in any such  other capacity.                                     -6-              

 

                                                                                         (k)   Severability.  The provisions of this Agreement shall be deemed severable, and the  invalidity or unenforceability of any provision  shall not affect the validity or enforceability of the  other  provisions  hereof.   If  any  provision  of  this  Agreement,  or  the  application  thereof  to  any  Person  or  any  circumstance,  is  determined  by  a  court  of  competent  jurisdiction  to  be  invalid  or  unenforceable, (i) a suitable and equitable provision shall be substituted therefor in order to carry  out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable  provision and (ii) the remainder of this Agreement and the application of such provision to other  Persons or circumstances shall not be affected by such invalidity or unenforceability.          (l)   Specific Performance.  The parties agree that irreparable damage for which monetary  damages,  even  if  available,  would  not  be  an adequate  remedy,  would  occur  in  the  event  that  the  parties  hereto  do  not  perform  the  provisions  of  this  Agreement  in  accordance  with  its  specified  terms or otherwise  breach  such  provisions.  The  parties acknowledge and agree that prior to the  valid termination of this Agreement in accordance with Section 5, the parties hereto shall be entitled,  in addition to any other remedy to which they are entitled under this Agreement, to an injunction,  specific  performance  and  other  equitable  relief  to  prevent  breaches  of  this  Agreement  and  to  enforce  specifically  the  terms  and  provisions  hereof  in  the  Chosen  Courts  (as  defined  below).   Without limiting the foregoing, each of the parties agrees that it will not oppose the granting of an  injunction,  specific  performance  and  other  equitable  relief  on  the  basis  that  (i)  there  is  adequate  remedy at law or (ii) an award of specific performance is not an appropriate remedy for any reason  at law or in equity.  Any party seeking an order or injunction to prevent breaches and to enforce  specifically the terms and provisions of this Agreement in accordance with this Section 6(l) shall not  be required to provide any bond or other security in connection with any such order or injunction.                (m)   No Waiver.  The failure  of any party to this Agreement to assert any of its rights  under this Agreement or otherwise shall not constitute a waiver of such rights or any of its rights  with respect to any other matter relating to this Agreement.          (n)   Governing Law.  This Agreement and all Actions (whether at law, in contract or in  tort) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution  or performance hereof, shall be governed by and construed in accordance with the laws of the State  of Delaware without regard to principles of conflicts of law.          (o)   Submission to Jurisdiction.  Each party hereto agrees that it shall bring any Action  between the parties arising out of or related to this Agreement or the transactions contained in or  contemplated by this Agreement exclusively in the United States District Court for the District of  Delaware or another court sitting in the State of Delaware (the “Chosen Courts”), and with respect  to  any  such  Action  (i) irrevocably  submits  to  the  exclusive  jurisdiction  of  the  Chosen  Courts,  (ii) waives any objection to laying venue in any such Action in the Chosen Courts, (iii) waives any  objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any  party  hereto  and  (iv) agrees  that  service  of  process  upon  such  party  in  any  such  Action  shall  be  effective if notice is given in accordance with Section 6(b).          (p)   Waiver of Jury Trial.  EACH PARTY ACKNOWLEDGES AND AGREES THAT  ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO  INVOLVE  COMPLICATED  AND  DIFFICULT  ISSUES,  AND  THEREFORE  EACH  SUCH  PARTY  HEREBY  IRREVOCABLY  AND  UNCONDITIONALLY  WAIVES  ANY  RIGHT  SUCH  PARTY  MAY  HAVE  TO  A  TRIAL  BY  JURY  IN  RESPECT  OF  ANY  LITIGATION                                     -7-              

 

                                                                                 DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,  OR  THE  TRANSACTIONS  CONTEMPLATED  BY  THIS  AGREEMENT.   EACH  PARTY  CERTIFIES  AND  ACKNOWLEDGES  THAT  (I) NO  REPRESENTATIVE,  AGENT  OR  ATTORNEY  OF  ANY  OTHER  PARTY  HAS  REPRESENTED,  EXPRESSLY  OR  OTHERWISE,  THAT  SUCH  OTHER  PARTY  WOULD  NOT,  IN  THE  EVENT  OF  LITIGATION,  SEEK  TO  ENFORCE  THE  FOREGOING  WAIVER,  (II) EACH  PARTY  UNDERSTANDS  AND  HAS  CONSIDERED  THE  IMPLICATIONS  OF  THIS  WAIVER,  (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) EACH PARTY HAS  BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,  THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6(P).          (q)   Construction.  The parties have participated jointly in negotiating and drafting this  Agreement.   In  the  event  that  an  ambiguity  or  a  question  of  intent  or  interpretation  arises,  this  Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of  proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of  this  Agreement.   Where  a  reference  in  this  Agreement  is  made  to  a  Section  or  Exhibit,  such  reference  shall  be  to  a  Section of  or  Exhibit to  this  Agreement  unless  otherwise  indicated.   Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be  deemed  to  be  followed  by  the  words  “without  limitation.”   The  words  “hereof,”  “herein”  and  “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement  as a whole and not to any particular provision of this Agreement.  The word “or” shall be deemed to  mean “and/or.”  Terms defined in the text of this Agreement as having a particular meaning have  such  meaning throughout this Agreement,  except as otherwise  indicated  in this Agreement.  The  definitions contained in this Agreement are applicable to the singular as well as the plural forms of  such terms and to the masculine as well as to the feminine and neuter genders of such term.  Any  statute or Contract defined or referred to herein or in any agreement, instrument, exhibit or schedule  that is referred to or defined herein means such statute or Contract as from time to time amended,  modified or supplemented, including by succession of comparable successor statutes and references  to all attachments thereto and instruments incorporated therein.                 (r)   Name, Captions, Gender.  Section headings of this Agreement are for convenience  of  reference  only,  do  not  constitute  part  of  this  Agreement  and  shall  not  be  deemed  to  limit  or  otherwise affect any of the provisions hereof.          (s)   Counterparts.  This Agreement and any signed agreement or instrument entered into  in connection with this Agreement, and any amendments or waivers hereto or thereto, to the extent  signed and delivered by means of a facsimile machine or by e-mail delivery of a “.pdf” format data  file, shall be treated in all manner and respects as an original agreement or instrument and shall be  considered  to  have  the  same  binding  legal  effect  as  if  it  were  the  original  signed  version  thereof  delivered in person.  No party hereto or to any such agreement or instrument shall raise the use of a  facsimile  machine  or  e-mail  delivery  of  a  “.pdf”  format  data  file  to  deliver  a  signature  to  this  Agreement  or  any  amendment  or  consent  hereto  or  thereto  or  the  fact  that  any  signature  or  agreement or instrument was transmitted or communicated through the use of a facsimile machine  or e-mail delivery of a “.pdf” format data file as a defense to the formation of a contract and each  party hereto forever waives any such defense.                                       [Remainder of Page Intentionally Blank.  Signature Page Follows.]                                     -8-              

 

                                                                                       IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  and  delivered  this  Agreement as of the date and year first written above.                                              FEDNAT:                                                                            FEDNAT  HOLDING  COMPANY,  a  Florida                                      corporation                                                                                                                  By:   /s/ Michael H. Braun                                                      Name: Michael H. Braun                                                          Title: Chief Executive Officer                                                                                                                                          [INVESTMENT MANAGER:                                                                            [Investment Manager]                                                                            By:                                                                             Name:                                                                           Title:                                                                                                                STOCKHOLDER:                                                                            [Stockholder]                                                                            By:                                                                             Name:                                                                           Title:                                                                            [End of Agreement.]                        SIGNATURE PAGE TO VOTING AGREEMENTexhibit102formofnotepurc

                                                                                                                                                                 FEDNAT HOLDING COMPANY,                as Issuer                       SENIOR UNSECURED NOTES DUE 2029          PURCHASE AGREEMENT             FEBRUARY 25, 2019  

 

                                                                   February 25, 2019    [Name of Purchaser]  [As Investment Manager, acting for and on behalf of the Purchaser]      Ladies and Gentlemen:      Pursuant to the terms of this Note Purchase Agreement (this “Agreement”), FedNat Holding  Company (the “Issuer”), proposes to issue and sell to the [several purchasers] [purchaser] named on  Schedule I hereto and identified on the signature pages hereto (the [“Purchasers”] [“Purchaser”]),  $[●] aggregate principal amount of the Issuer’s Senior Notes due 2029 (the “Notes ”).      The Notes will be issued pursuant to the provisions of an indenture, to be dated as of March 5,  2019, (the “Indenture”) between the Issuer and The Bank of New York Mellon, as trustee (together  with its successors and assigns, in such capacity, the “Trustee”).      The Notes will be offered and sold without being registered under the Securities Act of 1933, as  amended (the “Securities Act”), pursuant to the exemption from registration set forth in Section  4(a)(2) of the Securities Act solely to Purchasers that are either (i) “qualified institutional buyers” as  such term is defined in Rule 144A of the Securities Act (“Rule 144A”) or (ii) institutional  “accredited investors” within the meaning of Rule 501(a) of Regulation D and as contemplated by  subsections (1), (2), (3) or (7) of Rule 501(a) of Regulation D, that have no less than $5,000,000 in  total assets [(“Institutional Accredited Investors”)].      Concurrently with the execution of this Agreement, the Issuer proposes to issue and sell to one  or more investors other than the [Purchasers] [Purchaser] (the “Other Purchasers”) up to $[●]  aggregate principal amount of the Issuer’s Notes, pursuant to one or more purchase agreements  (“Other Purchase Agreements”) substantially in the same form as this Agreement, to be entered into  by the Issuer and the Other Purchasers.  Raymond James & Associates, Inc. (in such capacity, the  “Placement Agent”), has been appointed by the Issuer to act as its  exclusive placement agent,  pursuant to an Amended and Restated Placement Agency Agreement dated February 22, 2019,  between the Issuer and the Placement Agent (the “Placement Agency Agreement”).      The holders of the Notes will be entitled to the benefits of a Registration Rights Agreement, in  the form to be agreed by the Issuer, the Placement Agent, the Purchaser and the Other Purchasers,  to be dated as of the Closing Date (as defined herein), among the Issuer, the Purchasers and the  Other Purchasers (the “Registration Rights Agreement”), pursuant to which the Issuer will agree  to file with the U. S. Securities and Exchange Commission (the “SEC”), under the circumstances set  forth therein, (i) a registration statement (“Exchange Offer Registration Statement”) under the  Securities Act relating to the Issuer’s Senior Unsecured Notes due 2029 (the “Exchange Notes”),  to be offered in exchange for the Notes (the “Exchange Offer”), or (ii) a shelf registration  statement relating to the resale of the Notes under the Securities Act (“Resale Shelf Registration  Statement”).                                        - 1 -     

 

         1.    Representations and Warranties of the Issuer. The Issuer represents and warrants to, and  agrees with the [Investment Manager and each of the Purchasers] [Purchaser], as of the date hereof  and as of the Closing Date (as defined herein), that:               (a)   The Issuer has been duly incorporated, is validly existing as a corporation in        good standing under the laws of the State of Florida, has the corporate power and authority        to own its property and to conduct its business and is duly qualified to transact business and        is in good standing in each jurisdiction in which the conduct of its business or its ownership        or leasing of property requires such qualification, except to the extent that the failure to be        so qualified or be in good standing would not, singly or in the aggregate, result in a material        adverse change in the condition, financial or otherwise, or in the earnings, prospects,        business, properties, management, surplus, operations or results of operations of the Issuer        and its subsidiaries, taken as a whole (any such change, a “Material Adverse Change”).               (b)   Schedule II hereto contains a complete and correct list of (i) the Issuer’s        subsidiaries, showing, as to each subsidiary, the name thereof, the jurisdiction of its        organization, and the percentage of shares of each class of its capital stock or similar equity        interests outstanding owned by the Issuer and each other subsidiary and (ii) the Issuer’s        directors, chief executive officer and chief financial officer.  Each subsidiary of the Issuer has        been duly incorporated or organized, is validly existing as a corporation or limited liability        company in good standing under the laws of the jurisdiction of its incorporation or        organization, has the corporate or limited liability company power and authority to own its        property and to conduct its business and is duly qualified to transact business and is in good        standing in each jurisdiction in which the conduct of its business or its ownership or leasing        of property requires such qualification, except to the extent that the failure to be so qualified        or be in good standing would not have a Material Adverse Change.  All of the issued and        outstanding shares of capital stock or other equity interests of each subsidiary of the Issuer        have been duly and validly authorized and issued, are fully paid and non-assessable and are        owned directly or indirectly by the Issuer, free and clear of all liens, encumbrances, equities        or claims.               (c)   The audited consolidated financial statements of the Issuer and its        subsidiaries as of and for the fiscal years ended December 31, 2015, 2016 and 2017        contained in  the Issuer’s Form 10-Ks for the periods so indicated are true and complete,        and all of such financial statements (including in each case the related schedules and notes)        fairly present in all material respects the consolidated financial position of the Issuer and its        subsidiaries as of the respective dates specified therein and the results of their operations and        cash flows for the respective periods so specified and have been prepared in accordance with        U.S. generally accepted accounting principles (“GAAP”). The unaudited interim financial        statements of the Company as of and for the periods ended September 30, 2018 contained        in  the Company’s Form 10-Q for the period ended September 30, 2018 have been prepared        in conformity with GAAP (subject to normal year-end audit adjustments that are not        expected to be material in the aggregate, and the exclusion of footnotes required by GAAP)        and present fairly in all material respects the information required to be stated therein.               (d)   The execution, delivery, and performance by the Issuer of this Agreement,        the Indenture, the Notes, the Registration Rights Agreement and the Exchange Notes do                                       - 2 -     

 

                not and will not (i) violate any material provision of federal, state, or local law or regulation  applicable to the Issuer or its subsidiaries, or the governing documents of the Issuer or its  subsidiaries, (ii) result in or require the creation or imposition of any Lien (as such term is  defined in the Indenture) of any nature whatsoever upon any properties or assets of the  Issuer or its subsidiaries, other than Permitted Liens (as such term is defined in the  Indenture), or (iii) require any approval of interest holders of the Issuer or its subsidiaries,  other than consents or approvals that have been obtained and that are still in force and  effect.         (e)   This Agreement has been duly authorized, executed and delivered by the  Issuer and, assuming due execution and delivery hereof by the [Investment Manager and  each of the Purchasers] [Purchaser], will constitute a valid and binding agreement of the  Issuer, enforceable against the Issuer in accordance with its terms, except as the enforcement  thereof may be limited by applicable bankruptcy, insolvency and similar laws affecting  creditors’ rights generally and equitable principles of general applicability.         (f)   The Indenture has been duly authorized by the Issuer and, at the Closing  Date, will have been duly executed and delivered by the Issuer and, assuming due execution  and delivery thereof by the Trustee, will constitute a valid and binding agreement of the  Issuer, enforceable against the Issuer in accordance with its terms, except as the enforcement  thereof may be limited by applicable bankruptcy, insolvency and similar laws affecting  creditors’ rights generally and equitable principles of general applicability.         (g)   The Notes  have been duly authorized by the Issuer and, at the Closing Date,  will have been duly executed by the Issuer and when authenticated in accordance with the  provisions of the Indenture and delivered to and paid for by the Purchaser in accordance  with the terms of this Agreement, assuming due execution and delivery thereof by the  Trustee, will be valid and binding obligations of the Issuer, enforceable against the Issuer in  accordance with their terms, except as the enforcement thereof may be limited by applicable  bankruptcy, insolvency and similar laws affecting creditors’ rights generally and equitable  principles of general applicability, and will be entitled to the benefits of the Indenture.         (h)   The Registration Rights Agreement has been duly authorized by the Issuer,  and, when the Notes are delivered and paid for pursuant to this Agreement on the Closing  Date, the Registration Rights Agreement will have been duly executed and delivered by the  Issuer, and assuming due execution and delivery thereof by the [Investment Manager and  each of the Purchasers] [Purchaser] will constitute a valid and binding agreement of the  Issuer, enforceable against the Issuer in accordance with its terms, except as the enforcement  thereof may be limited by applicable bankruptcy, insolvency and similar laws affecting  creditors’ rights generally and equitable principles of general applicability.          (i)   The Exchange Notes have been duly authorized by the Issuer and, when the  Exchange Notes are delivered as contemplated in the Registration Rights Agreement, such  Exchange Notes will have been duly executed by the Issuer and when authenticated in  accordance with the provisions of the Indenture, assuming due execution and delivery  thereof by the Trustee, will be valid and binding obligations of the Issuer, enforceable  against the Issuer in accordance with their terms, except as the enforcement thereof may be                                 - 3 -                  

 

                limited by applicable bankruptcy, insolvency and similar laws affecting creditors’ rights  generally and equitable principles of general applicability, and will be entitled to the benefits  of the Indenture.         (j)   The Notes  to be purchased by the [Purchasers] [Purchaser] from the Issuer  on the Closing Date will be in the form contemplated by the Indenture.         (k)   The execution and delivery by the Issuer of, and the performance by the  Issuer of its obligations under, this Agreement, the Indenture and the Notes  will not  contravene (i) the certificate of incorporation, bylaws or other organizational documents of  the Issuer; (ii) any agreement or other instrument binding upon the Issuer or any of its  subsidiaries that is material to the Issuer and its subsidiaries, taken as a whole; (iii) any  provision of applicable law or regulation; or (iv) any judgment, injunction, order or decree of  any governmental body, agency or court having jurisdiction over the Issuer or any subsidiary,  except, in the case of clauses (ii), (iii) and (iv) above, for any such contravention that would  not have a Material Adverse Change.         (l)   There are no legal or governmental actions, suits, investigations or  proceedings, pending or threatened, to which the Issuer or any of its subsidiaries is a party or  to which any of the properties of the Issuer or any of its subsidiaries is subject that would, if  adversely determined, result in a Material Adverse Change or have a material adverse effect  on the power or ability of the Issuer to perform its obligations under this Agreement, the  Indenture or the Notes .         (m)   No consent, approval or authorization of, or registration, filing or declaration  with, any Governmental Authority (as defined in the Indenture) in the United States, any  state or other political subdivision thereof, any other jurisdiction in which the Issuer or any  subsidiary conducts all or any part of its business, or which asserts jurisdiction over any  properties of the Issuer or any subsidiary, or any entity exercising executive, legislative,  judicial, regulatory or administrative functions of, or pertaining to, any such Governmental  Authority is required by the Issuer in connection with the execution, delivery or  performance by the Issuer of this Agreement, the Indenture or the Notes .         (n)   The Issuer and its subsidiaries are in compliance with any and all applicable  foreign, federal, state and local laws and regulations, have received all permits, licenses or  other approvals required of them under applicable laws, to conduct their respective  businesses and are in compliance with all terms and conditions of any such permit, license or  approval, except where such noncompliance with laws, failure to receive required permits,  licenses or other approvals or failure to comply with the terms and conditions of such  permits, licenses or approvals would not, singly or in the aggregate, result in a Material  Adverse Change.         (o)   The Issuer and its subsidiaries own or possess or have a right to use all  licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service  marks, trademarks and trade names without known conflict with the rights of others.                                  - 4 -                  

 

                      (p)   Each of the Issuer and its subsidiaries holds, and has at all times since  December 31, 2015 held, all material permits, licenses or other approvals required of them  from all Governmental Authorities that are necessary for the operation and conduct of their  respective businesses as such business is presently or was at the relevant time operated and  conducted (collectively, the “Business Licenses”).  No such Business Licenses are subject  to a regulatory proceeding, there exists no basis for such a regulatory proceeding with  respect to the Business Licenses, and to the Issuer's knowledge, there is no regulatory action  pending or contemplated with respect to such Business Licenses, in each case to the extent  such regulating proceeding or regulatory action would, if adversely determined result in a  Material Adverse Change.         (q)   Each of the Issuer and its subsidiaries is, and has at all times since December  31, 2015 been, in compliance in all respects with Applicable Law, except to the extent that  such nonperformance would not be reasonably expected to result in a Material Adverse  Change.  “Applicable Law” means all applicable provisions of all (i) constitutions, treaties,  statutes, laws, rules, regulations, codes, guidelines and ordinances of any Governmental  Authority, (ii) approvals of Governmental Authorities and (iii) orders, decisions, directed  duties, judgments, awards and decrees of any Governmental Authority (including common  law and principles of public policy).         (r)   The Issuer is not, and after giving effect to the sale of the Notes  and the  application of the proceeds thereof will not be, required to register as an “investment  company” as such term is defined in the Investment Company Act of 1940, as amended.         (s)   Subject to the accuracy of [each] [the] Purchaser’s representations and  warranties set forth herein, the offer, issuance, sale and delivery of the Notes  is exempt  from the provisions of Section 5 of the Securities Act. Neither the Issuer nor any of its  subsidiaries or affiliates, nor any director, manager, officer, or employee, nor, to the Issuer’s  knowledge, any agent or representative of the Issuer or of any of its subsidiaries or affiliates,  has taken any action, with respect to the Notes  or otherwise, that would bring the offer,  issuance and sale of the Notes  within the provisions of Section 5 of the Securities Act.  It is  not necessary in connection with the sale and delivery of the Securities to the [Purchasers]  [Purchaser] in the manner contemplated by this Agreement to qualify the Indenture under  the Trust Indenture Act of 1939, as amended.         (t)   In the case of each offer or sale of the Notes, no form of general solicitation  or general advertising (within the meaning of Regulation D under the Securities Act  (“Regulation D”)) was used by Issuer nor any of its subsidiaries or affiliates, nor any  director, manager, officer, or employee (as applicable), nor, to the Issuer’s knowledge, any  agent or representative of the Issuer or of any of its subsidiaries or affiliates, including,  without limitation, any advertisement, article, notice or other communication published in  any newspaper, magazine or similar medium or broadcast over television or radio, or any  seminar or meeting whose attendees have been invited by any general solicitation or general  advertising.         (u)   Neither the Issuer nor any of its subsidiaries or affiliates, nor any director,  manager, officer, or employee (as applicable), nor, to the Issuer’s knowledge, any agent or                                 - 5 -                  

 

                representative of the Issuer or of any of its subsidiaries or affiliates, has taken or will take any  action in furtherance of an offer, payment, promise to pay, or authorization or approval of  the payment or giving of money, property, gifts or anything else of value, directly or  indirectly, to any (i) “government official” (including any officer or employee of a  government or government-owned or controlled entity or of a public international  organization, or any individual or entity (each, a “Person”) acting in an official capacity for  or on behalf of any of the foregoing, or any political party or party official or candidate for  political office) or (ii) to any “foreign official” (as defined in the Foreign Corrupt Practices  Act of 1977, as amended) or any foreign political party or official thereof or any candidate  for foreign political office, in each case, to influence official action or secure an improper  advantage; and the Issuer and its subsidiaries and affiliates have conducted their businesses  in compliance with applicable anti-corruption laws.         (v)   The operations of the Issuer and its subsidiaries are and have been  conducted at all times in material compliance with all applicable financial recordkeeping and  reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of  the Uniting and Strengthening America by Providing Appropriate Tools Required to  Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable  anti-money laundering statutes of jurisdictions where the Issuer and its subsidiaries conduct  business, the rules and regulations thereunder and any related or similar rules, regulations or  guidelines, issued, administered or enforced by any Governmental Authority (collectively,  the “Anti-Money Laundering Laws”), and no action, suit or proceeding by or before any  Governmental Authority or any arbitrator involving the Issuer or any of its subsidiaries with  respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Issuer,  threatened.  The Issuer has established procedures and controls which it reasonably believes  are adequate (and otherwise comply with applicable law) to ensure that the Issuer and each  of its subsidiaries is and will continue to be in compliance with all Anti-Money Laundering  Laws.         (w)   (i)   The Issuer, represents that neither the Issuer nor any of its  subsidiaries (collectively, the “Entity”) or, to the knowledge of the Issuer, any director,  officer, employee, agent, affiliate or representative of the Entity, is a Person that is, or is  owned or controlled by a Person that is:                     (A)   the subject of any sanctions administered or enforced by the              U.S. Department of Treasury’s Office of Foreign Assets Control, the United              Nations Security Council, the European Union, Her Majesty’s Treasury, or              other relevant sanctions authority (collectively, “Sanctions”), nor                     (B)   located, organized or resident in a country or territory that is              the subject of Sanctions (including, without limitation, Burma/Myanmar,              Cuba, Iran, North Korea, Somalia, Sudan, Syria, Ukraine and Russia).               (ii)  The Issuer represents and covenants that the Entity will not, directly        or indirectly, use the proceeds of the sale of the Notes , or lend, contribute or        otherwise make available such proceeds to any subsidiary, joint venture partner or        other Person:                                 - 6 -                  

 

                                  (A)   to fund or facilitate any activities or business of or with any              Person or in any country or territory that, at the time of such funding or              facilitation, is the subject of Sanctions; or                     (B)   in any other manner that will result in a violation of Sanctions              by any Person (including any Person participating in the offering, whether as              underwriter, advisor, investor or otherwise).               (iii) The Issuer represents and covenants that for the past five years, the        Entity has not knowingly engaged in, is not now knowingly engaged in, and will not        knowingly engage in, any dealings or transactions with any Person, or in any country        or territory, that at the time of the dealing or transaction is or was the subject of        Sanctions.         (x)   The Issuer and each of its subsidiaries possess such valid and current  certificates, authorizations or permits issued by the appropriate state, federal or foreign  regulatory agencies or bodies necessary to conduct their respective businesses, and neither  the Issuer nor any of its subsidiaries have received any notice of proceedings relating to the  revocation or modification of, or noncompliance with, any such certificate, authorization or  permit that, singly or in the aggregate, if the subject of an unfavorable decision, ruling or  finding, would result in a Material Adverse Change.         (y)   The Issuer is, and immediately after the Closing Date will be, Solvent.  As  used herein, the term “Solvent” means, with respect to any Person on a particular date, that  on such date (i) the fair market value of the assets of such Person is greater than the total  amount of liabilities (including contingent liabilities) of such Person, (ii) the present fair  salable value of the assets of such Person is greater than the amount that will be required to  pay the probable liabilities of such Person on its debts as they become absolute and matured  and (iii) such Person is able to realize upon its assets and pay its debts and other liabilities,  including contingent obligations, as they mature.         (z)   The Issuer and its subsidiaries maintain a system of accounting controls that  is sufficient to provide reasonable assurances that: (i) transactions are executed in accordance  with management’s general or specific authorization; (ii) transactions are recorded as  necessary to permit preparation of financial statements in conformity with GAAP, and to  maintain accountability for assets; (iii) access to assets is permitted only in accordance with  management’s general or specific authorization; and (iv) the recorded accountability for  assets is compared with existing assets at reasonable intervals and appropriate action is taken  with respect to any differences.         (aa)  The Issuer has established and maintains controls and procedures that are  designed to ensure that material information relating to the Issuer and its subsidiaries is  made known to the chief executive officer and chief financial officer of the Issuer by others  within the Issuer or any of its subsidiaries, and such controls and procedures are reasonably  effective to perform the functions for which they were established subject to the limitations  of any such control system; the Issuer’s auditors have been advised of: (i) any significant  deficiencies or material weaknesses in the design or operation of internal controls which                                 - 7 -                  

 

                could adversely affect the Issuer’s ability to record, process, summarize, and report financial  data; and (ii) any fraud, whether or not material, that involves management or other  employees who have a role in the Issuer’s internal controls.         (bb)  The Disclosure Package did not, and as of the Closing Date will not, contain  any untrue statement of a material fact or omit to state any material fact necessary in order to  make the statements therein, in the light of the circumstances under which they were made,  not misleading.  “Disclosure Package” means the document titled “Senior Notes Private  Placement Presentation” (the “Investor Presentation”) and “Indicative Term Sheet” (the “Term  Sheet”), each provided by the Issuer to the [Purchasers] [Purchaser] in February 2019. All  projections included in the Disclosure Package are based upon good faith estimates and  assumptions believed by the Issuer to be reasonable at the time made. The terms and  provisions of the Term Sheet shall be incorporated, as applicable, into the Indenture.         (cc)  The Issuer has timely filed, or cured any defect relating to timely filing, all  reports, schedules, forms, statements and other documents required to be filed by the Issuer  under the Securities Act and the Securities Exchange Act of 1934, as amended (the  “Exchange Act”) (collectively, “SEC Reports”) .The SEC Reports (i) as of the time they were  filed (or if subsequently amended, when amended, and as of the date hereof), complied in all  material respects with the requirements of the Securities Act or the Exchange Act, as the  case may be, and (ii) did not, at the time they were filed (or if subsequently amended or  superseded by an amendment or other filing, then, on the date of such subsequent filing),  contain any untrue statement of a material fact or omit to state a material fact required to be  stated therein or necessary in order to make the statements made therein, in light of the  circumstances under which they were made, not misleading.         (dd)  The Issuer has timely filed or caused to be filed all United States federal tax  returns and state tax returns (including, but not limited to, those filed on a consolidated,  combined or unitary basis) required to have been filed with respect to the Issuer prior to the  date hereof, or requests for extensions to file such returns and reports have been timely filed  (“Tax Returns”).  All such Tax Returns are true, correct, and complete in all material  respects.  All material taxes required to be shown on such Tax Returns have been paid,  except to the extent that such tax payments are being contested in good faith by appropriate  proceedings and for which the Issuer has set aside on its books adequate reserves.         (ee)  The offer, issuance and sale of the Notes by the Issuer to the [Purchasers]  [Purchaser] shall not result in an event, condition, or default that, with the giving of notice or  the passage of time, or both, would constitute a default or event of default under any  indebtedness of any subsidiaries of the Issuer.         (ff)  None of the Issuer or its subsidiaries has any material liability that is required  to be reflected in a consolidated balance sheet (or the notes thereto) of the Issuer or its  subsidiaries prepared in accordance with GAAP, except (i) those liabilities provided for or  disclosed in the GAAP financial statements or in the notes thereto, (ii) liabilities incurred in  the ordinary course of business since December 31, 2017, (iv) liabilities under this  Agreement or incurred in connection with the transactions contemplated hereby (v) tax                                  - 8 -                  

 

                liabilities and (vi) other liabilities that, individually or in the aggregate, would not have a  Material Adverse Change.         (gg)  From December 31, 2017 through the date hereof, the Issuer and its  subsidiaries have conducted their business in the ordinary course, and there has not been any  event, occurrence or condition of any character that has had, or which would, individually or  in the aggregate, reasonably be expected to have, a Material Adverse Change, except as  disclosed in the Issuer’s reports filed with the SEC.  Without limiting the generality of the  foregoing, from December 31, 2017 through the date hereof, none of the Issuer or its  subsidiaries has, made any material change in the material accounting, actuarial, investment,  reserving, underwriting or claims administration policies, practices or principles, except as  may have been required by applicable law, GAAP or entered into any binding agreement to  take any of the foregoing actions.         (hh)  To the Issuer’s knowledge after reasonable inquiry, the information furnished  by, or on behalf of the Issuer to the Purchaser via telephonic conversations, e-mail  communications, electronic attachments, and in-person conversations with employees and  agents of Issuer prior to the date hereof, taken as a whole, was accurate in all material  respects as of its respective date.  The Issuer has not intentionally failed to disclose to the  Purchaser prior to the date hereof, any fact about the Issuer or its subsidiaries known by the  Issuer to be material to the Issuer and its subsidiaries as a whole, when taken together with  the other disclosures made to the Purchaser by or on behalf of the Issuer.         (ii)  Insurance Matters               (i)   The Issuer and each of the Issuer’s subsidiaries that are engaged in        the business of insurance or reinsurance (each, an “Insurance Subsidiary”) have        filed all material reports, statements, registrations, filings or submissions that relate,        in whole or in part to such company’s business, and that were required to be filed by        it with any Governmental Authority since January 1, 2014, and all such reports,        statements, documents, registrations, filings or submissions were true, complete and        accurate when filed in all material respects.  The Issuer has made available to each        Purchaser copies of all material reports on financial examination, market conduct        reports and other reports delivered by any Governmental Authority since January 1,        2014 in respect of the Issuer and Insurance Subsidiary.               (ii)  All of the insurance contracts and policies of each Insurance        Subsidiary are, and have been, to the extent required under applicable law, issued on        forms approved by the applicable insurance regulatory authority or filed and not        objected to by such insurance regulatory authority within the period provided for        objection, in each case except as would not reasonably be expected, individually or in        the aggregate, to have a Material Adverse Change.  No material deficiencies have        been asserted by any Governmental Authority with respect to any such filings that        have not been cured or otherwise resolved.               (iii) Since January 1, 2016, (x) all of the insurance contracts and policies        of each Insurance Subsidiary have been administered in all material respects in                                 - 9 -                  

 

                      accordance with the applicable policy forms and requirements of applicable law, (y)        all benefits claimed by any Person, and all charges and other amounts required to be        calculated, under any such insurance policy, have in all material respects been paid        (or provision for payment thereof has been made) or calculated, as the case may be,        in accordance with the terms of the applicable policy forms under which they arose,        and (z) any such payments were not materially delinquent and were paid (or will be        paid) without fines or penalties, except for any such claim for benefits for which        such Insurance Subsidiary reasonably believes or believed that there is a reasonable        basis to contest payment and is taking such action.               (iv)  Each producer, at the time such producer solicited, negotiated,        placed, sold or produced business constituting any insurance contract or policy of        each Insurance Subsidiary, to the extent required by applicable law, was duly and        appropriately licensed as a producer (for the type of business solicited, negotiated,        sold or produced by such producer), in each case in the particular jurisdiction in        which such producer solicited, negotiated, sold or produced such business for the        Insurance Subsidiary, except where the failure to be so licensed would not,        individually or in the aggregate, reasonably be expected to be material to such        Insurance Subsidiary.  Each such producer was duly and appropriately appointed by        the Insurance Subsidiary to act as a producer for such company, except where the        failure to be so appointed would not, individually or in the aggregate, reasonably be        expected to result in a Material Adverse Change.           (jj)  The Equity Purchase Agreement, to be dated on or about February 25, 2019  (the “Acquisition Agreement”) among Maison Insurance Company, Maison Managers,  Inc. and ClaimCor, LLC (collectively, the “Target Companies”), 1347 Property Insurance  Holdings, Inc. (the “Target Parent”) and the Issuer, has been duly authorized by the Issuer  and, at the Closing Date, will have been duly executed and delivered by the Issuer and,  assuming due execution and delivery thereof by the Target Companies and the Target  Parent, will constitute a valid and binding agreement of the Issuer, enforceable against the  Issuer in accordance with its terms, except as the enforcement thereof may be limited by  applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and  equitable principles of general applicability.         (kk)  Based on the Issuer’s review of the Parent Disclosure Letter (as defined in  the Acquisition Agreement), and to the best knowledge of the Issuer, after due inquiry, each  of the representations and warranties of the Target Companies and the Target Parent  included in the Acquisition Agreement were true and correct in all material respects as of the  date of the Acquisition Agreement, are true and correct on the date hereof and on the  Closing Date.         (ll)  To the best of the Issuer’s knowledge, after due inquiry, all information  about the Target Companies (as defined herein) and the Target Parent (as defined herein)  that are included in the Disclosure Package are true and correct.         (mm)  The Issuer and its subsidiaries and any “employee benefit plan” (as defined  under the Employee Retirement Income Security Act of 1974 (“ERISA”)) established or                                - 10 -                  

 

         maintained by the Issuer, its subsidiaries or their “ERISA Affiliates” (as defined below) are        in compliance in all material respects with ERISA and all other similar applicable state and        federal laws. “ERISA Affiliate” means, with respect to the Issuer or a subsidiary, any        member of any group or organization described in Sections 414(b), (c), (m) or (o) of the        Internal Revenue Code of 1986, as amended (“Code”) of which the Issuer or such subsidiary        is a member. No “reportable event” (as defined in ERISA) has occurred or is reasonably        expected to occur with respect to any “employee benefit plan” established or maintained by        the Issuer, its subsidiaries or any of their ERISA Affiliates. No “employee benefit plan”        established or maintained by the Issuer, its subsidiaries or any of their ERISA Affiliates, if        such “employee benefit plan” were terminated, would have any “amount of unfunded        benefit liabilities” (as defined in ERISA). Neither the Issuer, its subsidiaries nor any of their        ERISA Affiliates has incurred or reasonably expects to incur any liability under (i) Title IV of        ERISA with respect to termination of, or withdrawal from, any “employee benefit plan” or        (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee benefit plan”        established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates        that is intended to be qualified under Section 401(a) of the Code is so qualified and nothing        has occurred, whether by action or failure to act, that would cause the loss of such        qualification.               (nn)  Except as set forth in the Disclosure Package and the SEC Reports, there are        no transactions with “affiliates” (as defined in Rule 405 under the Securities Act) or any        officer, director or security holder of the Issuer (whether or not an affiliate) that are required        by the Securities Act to be disclosed in the SEC Reports. Additionally, no relationship, direct        or indirect, exists between the Issuer or any of its Subsidiaries on the one hand, and the        directors, officers, shareholders, customers or suppliers of the Issuer or any Subsidiary on        the other hand that is required by the Securities Act to be disclosed in the SEC Reports and        Disclosure Package that is not so disclosed.         2.    Agreements to Sell and Purchase.  The Issuer hereby agrees to sell to the [several  Purchasers] [Purchaser], and [each] [the] Purchaser, upon the basis of the representations and  warranties herein contained, but subject to the conditions hereinafter stated, agrees[, severally and  not jointly,] to purchase from the Issuer the respective principal amount of Notes  set forth in  Schedule I hereto opposite its name and on the signature pages hereto, at a purchase price of 100%  of the principal amount thereof (the “Purchase Price”), in each case, on the Closing Date.         3.    Payment and Delivery.          (a)   The closing of the purchase and sale of the Notes (the “Closing”) shall occur at the  offices of Nelson Mullins Riley & Scarborough LLP, counsel for the Issuer, located at 2 South  Biscayne Blvd, 21st Floor, Miami, Florida 33131, on the third Business Day following the execution  of this Agreement, or on such later date or at such different location as the parties hereto shall  agree in writing, but not prior to the date that the conditions for Closing set forth in Section 4  hereto (other than with respect to the actual issuance and delivery of the Notes) have been satisfied  or waived by the appropriate party (the date of such Closing being herein called the “Closing  Date”).                                        - 11 -     

 

         (b)   Subject to Section 3(c) below, (i) on or prior to the Business Day immediately  preceding the Closing Date, the Purchaser shall pay, in immediately available funds, the  full  amount of the purchase price for the Notes being purchased hereunder, by wire transfer to an  account specified by Raymond James & Associates, Inc., acting as settlement agent for the Issuer  (in such capacity, the “Settlement Agent”) and established by the Settlement Agent, on behalf of  the Issuer (“Settlement Account”), and (ii) on the Closing Date, the Purchaser shall instruct its  custodian to post a DWAC request for free receipt to the Trustee for the Purchaser’s aggregate  principal amount of Notes (CUSIP 31431B [AA7] [AB5] / ISIN [US31431BAA70]  [US31431BAB53], which request shall be made through the facilities of The Depository Trust  Company (“DTC”).  The name(s) in which the book-entry Notes are to be registered are set forth  in the Purchaser’s “Purchaser Questionnaire” attached as Annex A hereto, which annex shall be  completed by the Purchaser and submitted to the Placement Agent, with a copy to the Issuer, on or  prior to the Business Day immediately preceding the Closing Date.          (c)   The Purchaser shall observe the closing mechanics specified in this Section 3(c) and  the instructions provided in the “Summary Instruction Sheet for Purchaser” set forth in Annex B  hereto. The Purchaser shall submit fully completed                     (i)   On or prior to 3:00 p.m., New York City time, on the Business Day              immediately preceding the Closing Date, the Purchaser will pay the full amount of the              purchase price for the Notes being purchased hereunder to the Settlement Agent as              required by Section 3(b) above.                                          (ii)  The receipt of funds by the Settlement Agent from the Purchaser shall              be deemed to be an acknowledgement by the Purchaser to the Settlement Agent that              the conditions to the Closing have been satisfied.                                        (iii)  Funds received by the Settlement Agent, in the Settlement Account,              on behalf of the  Issuer pursuant to this Section 3 will be held in trust and not as              property or in the title of the Settlement Agent.  On the Closing Date, or as soon as              reasonably practicable thereafter, the Settlement Agent will disburse such funds (net              of the agreed amount of fees and expenses of the Placement Agent set forth in the              Placement  Agency  Agreement)  by  wire  transfer  of  immediately  available  funds  in              accordance with the Issuer’s written wire instructions (which shall be provided to the              Settlement  Agent  at  least  one  Business  Day  prior  to  the  Closing  Date),  unless              otherwise agreed to by the Issuer and the Settlement Agent.                                        (iv)  Immediately following the Issuer’s receipt of such funds, the Notes              purchased by the Purchaser (as specified on Schedule I and the Purchaser’s signature              page hereto) will be issued by the Issuer and delivered pursuant to Section 3(b) above.         (d)    “Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday  or a day on which banking institutions or trust companies are authorized or obligated by law to  close in New York City.         (e)   The Notes will be represented by one or more global notes as provided in the  Indenture, and will be issued in minimum denominations of $100,000 principal amount and integral                                      - 12 -     

 

   multiples of $10,000 thereafter.  The Notes shall bear an appropriate restrictive legend referring to  the fact that the Notes were sold in reliance upon the exemption from registration under the  Securities Act provided by Section 4(a)(2) thereof and are eligible for resale pursuant to Rule 144A.         4.    Conditions to the [Purchasers’] [Purchaser’s] Obligations.  The [several] obligations of the  [Purchasers] [Purchaser] to purchase and pay for the Notes  on the Closing Date are subject to the  following conditions:               (a)   Subsequent to the execution and delivery of this Agreement and prior to the        Closing Date, there shall not have occurred any downgrading, nor shall any notice have been        given of any intended or potential downgrading or of any review for a possible change that        does not indicate the direction of the possible change, in the rating accorded the Issuer or        any of the securities of the Issuer or the financial strength rating of any of its Insurance        Subsidiaries or in the rating outlook for the Issuer by any rating agency.               (b)   The representations and warranties of the Issuer contained in this Agreement        shall be true and correct in all material respects (except to the extent already qualified by        materiality) on and as of the date of this Agreement and on and as of the Closing Date as if        made on and as of the Closing Date; the statements of the Issuer’s officers made pursuant to        any certificate delivered in accordance with the provisions hereof shall be true and correct in        all material respects (except to the extent already qualified by materiality) on and as of the        date made and on and as of the Closing Date; the Issuer shall have performed all covenants        and agreements and satisfied all conditions on its part to be performed or satisfied hereunder        at or prior to the Closing Date.               (c)   The [Purchasers] [Purchaser] shall have received on the Closing Date a        certificate, dated the Closing Date and signed by an executive officer of the Issuer, to the        effect set forth in Section 4(a) and to the effect that the representations and warranties of the        Issuer contained in this Agreement are true and correct in all material respects (except to the        extent already qualified by materiality) as of the Closing Date and that the Issuer has        complied with all of the agreements and satisfied all of the conditions on its part to be        performed or satisfied hereunder on or before the Closing Date.  The officer signing and        delivering such certificate may rely upon the best of his or her knowledge as to proceedings        threatened.               (d)   The Purchaser shall have received on the Closing Date an opinion of counsel        of the Issuer, dated the Closing Date, covering the matters set forth in Schedule III hereto,        with customary qualifications, limitations and assumptions satisfactory to the [Purchasers]        [Purchaser] acting in good faith.  Such opinion shall be rendered to the [Purchasers]        [Purchaser] at the request of the Issuer and shall so state therein.               (e)   The Issuer shall have executed and delivered the Indenture, in form and        substance consistent with the Term Sheet, and each of the [Purchasers] [Purchaser] shall        have received an executed copy thereof.               (f)   The Notes  shall be eligible for clearance and settlement through DTC.                                       - 13 -     

 

               (g)   The sale of the Notes  shall not be enjoined (temporarily or permanently) on        the Closing Date.               (h)   There shall not exist any action, suit, investigation, litigation or proceeding        pending or (to the knowledge of the Issuer) threatened in or before any Governmental        Authority or any order, injunction or decree of any Governmental Authority, on the Closing        Date, that, either separately or in the aggregate, would reasonably be expected to have a        Material Adverse Effect on the Issuer or any of its Subsidiaries or adversely affect the        issuance, sale or payment of the Notes, or challenges the sale of the Notes hereunder.                (i)   Since the date of this Agreement, there shall not have been any event,        change, occurrence, development, condition or state of circumstances or facts that has had        or would, individually or in the aggregate, reasonably be expected to have, a Material        Adverse Change.         5.    Covenants of the Issuer.  The Issuer covenants with [each] [the] Purchaser [and the  Investment Manager] as follows:               (a)   Whether or not the transactions contemplated in this Agreement are        consummated or this Agreement is terminated, to pay or cause to be paid all expenses        incident to the performance of its obligations under this Agreement, including: (i) the fees,        disbursements and expenses of the Issuer’s counsel and the Issuer’s accountants in        connection with the issuance and sale of the Notes, (ii) the fees, disbursements and        reasonable expenses of [counsel of the Investment Manager and the Purchasers] [one        outside legal counsel acting for the Purchaser and the Other Purchasers], (iii) all costs and        expenses related to the transfer and delivery of the Notes  to the [Purchasers] [Purchaser],        including any transfer or other taxes payable thereon, (iv) the costs and charges of the        Trustee, the paying agent and any transfer agent, registrar or depositary, (v) the cost of the        preparation, issuance and delivery of the Notes, and (vi) all other cost and expenses incident        to the performance of the obligations of the Issuer hereunder for which provision is not        otherwise made in this Section.                 (b)   Neither the Issuer nor any “affiliate” (as defined in Rule 144 (“Affiliate”))        will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security        (as defined in the Securities Act) that could be integrated with the sale of the Notes  in a        manner that would require the registration under the Securities Act of the Notes .               (c)   Not to solicit any offer to buy or offer or sell the Notes  by means of any        form of general solicitation or general advertising (as those terms are used in Regulation D        under the Securities Act) or in any manner involving a public offering within the meaning of        Section 4(a)(2) of the Securities Act.               (d)   While any of the Notes  remain “restricted securities” as defined in Rule 144,        to make available, upon request, to any seller of such Notes  the information specified in        Rule 144A(d)(4) under the Securities Act, unless the Issuer is then subject to Section 13 or        15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).                                       - 14 -     

 

                      (e)   During the period of one year after the Closing Date the Issuer will not, and  will not permit any of its Affiliates to resell any of the Notes  which constitute “restricted  securities” under Rule 144 that have been reacquired by any of them.         (f)   To apply the net proceeds from the sale of the Notes to repay the Issuer’s  existing indebtedness, fund the cash portion of the Issuer’s acquisition of the Target  Companies, infuse capital into one or more of the Target Companies, and/or for other  general corporate purposes.         (g)   For so long as the Notes remain outstanding, to provide to the [Investment  Manager] [Purchaser]:               (i)   within 15 days of the applicable time periods specified in the relevant        forms: (A) all quarterly and annual financial information that would be required to be        contained in a filing with the SEC on Forms 10-Q and 10-K if the Issuer were        required to file such Forms (but without any requirement to provide separate        financial statements of any subsidiary of the Issuer), including a “Management’s        Discussion and Analysis of Financial Condition and Results of Operations” and,        with respect to the annual information only, a report on the annual financial        statements by the Issuer’s independent registered public accounting firm; and (B) all        current reports that would be required to be filed with the SEC on Form 8-K if the        Issuer were required to file such reports; provided, however, that to the extent such        reports described in clauses (A) or (B) are filed with the SEC and publicly available,        such reports shall have been deemed to have been provided to the [Investment        Manager] [Purchaser];                (ii) no later than 45 days following the end of each fiscal quarter of each        fiscal year, except that with respect to the final fiscal quarter of each fiscal year no        later than 75 days after the end of such final fiscal quarter, unaudited quarterly        financial statements of the Issuer and each of its Insurance Subsidiaries prepared in        accordance with GAAP; and               (iii) (x) no later than 45 days following the end of each fiscal quarter,        except that with respect to the final fiscal quarter of each fiscal year no later than 75        days after the end of such final fiscal quarter, a copy of the relevant compliance        certificate and officers’ certificate required to be delivered to the Trustee under        Section 3.10 of the Indenture, (y) no later than 45 days following the end of each        fiscal quarter, except that with respect to the final fiscal quarter of each fiscal year no        later than 75 days after the end of such final fiscal quarter, access to the management        of the Issuer and the Insurance Subsidiaries through a conference call held to discuss        the results of operations for such fiscal quarter and (z) no later than 45 days        following the end of each fiscal quarter, except that with respect to the final fiscal        quarter of each fiscal year no later than 75 days after the end of such final fiscal        quarter, a management report from the Issuer detailing the performance of the        Issuer and its subsidiaries, including specific information on premiums, claims,        expenses, loss and expense ratios per line of business (both gross and net),        performance by agent and any other relevant information.                                - 15 -                  

 

               (h)   Upon the occurrence and during the continuance of (i) a dispute evidenced        in writing between the Issuer and any Purchaser, (ii) a Default or (iii) an Event of Default (as        both such terms are defined in the Indenture), the Issuer and each subsidiary, shall make        available to such Purchaser, at the Issuer’s relevant facilities during normal business hours,        upon reasonable written notice by such Purchaser, its books and records and the books and        records of any of its subsidiaries.               [(i)  On the Closing Date and at all times thereafter, the terms and provisions of        this Agreement shall be no less favorable to the Purchaser than the terms and provisions of        any Other Purchase Agreement are to the applicable Other Purchaser.]         6.    Representations and Warranties of the [Purchasers] [Purchaser].  [Each] [The] Purchaser  hereby[, severally and not jointly,] represents and warrants to the Issuer, as of the date hereof and as  of the Closing Date, that:               (a)   Such Purchaser is a corporation, limited liability company or partnership (and        where such partnership is not a separate legal entity from the partners thereof, the general or        managing partner thereof), duly organized, validly existing and in good standing under the        laws of its jurisdiction of organization.               (b)   This Agreement has been duly authorized, executed and delivered by such        Purchaser and, assuming due authorization, execution and delivery by the Issuer, constitutes        a legal, valid and binding obligation of each Purchaser enforceable against each Purchaser in        accordance with its terms, except as the enforcement thereof may be limited by applicable        bankruptcy, insolvency and similar laws affecting creditors’ rights generally and equitable        principles of general applicability.               (c)   Such Purchaser is acquiring the Notes  for its own account or for one or        more separate accounts maintained by it or for the account of one or more pension or trust        funds of which it is trustee, in each case, for investment purposes only and not with a view        to distribution thereof, in whole or in part.  If the Notes  are acquired for the account of one        or more pension or trust funds, the relevant Purchaser represents that it is acting as sole        trustee and has sole investment discretion with respect to its acquisition of the Notes  and        that the determination and decision on its behalf to acquire the Notes  for such pension or        trust funds is being made by the same individual or group of individuals who customarily        pass on such investments.  Such Purchaser understands that the Notes  have not been, and        will not be, registered under the Securities Act by reason of a specific exemption from the        registration provisions of the Securities Act that depends upon, among other things, the bona        fide nature of the investment intent and the accuracy of such Purchaser’s representations as        expressed herein.               (d)   Each Purchaser acknowledges and agrees that (i) neither the Issuer nor the        Placement Agent is acting as a fiduciary or financial or investment adviser to the Purchaser;        (ii) the Issuer, the Placement Agent and their respective officers, directors, employees, agents        and representatives do not make, have not made nor shall be deemed to have made any        representation or warranty to the Purchaser, express or implied, at law or in equity, with        respect to projections, estimates, forecasts or plans, except, with respect to the Issuer, as                                      - 16 -     

 

                expressly set forth herein; (iii) the Purchaser has consulted with the Purchaser’s own legal,  regulatory, tax, business, investment, actuarial, financial and accounting advisers to the extent  the Purchaser has deemed necessary, and the Purchaser has made the Purchaser’s own  decisions with respect to entering into this Agreement based upon the Purchaser’s own  judgment and upon any advice from such advisers the Purchaser has deemed necessary; and  (iv) the Purchaser is a sophisticated investor familiar with transactions similar to those  contemplated by this Agreement and has such knowledge and experience in financial and  business affairs that the Purchaser is capable of evaluating the merits and risks of purchasing,  and other considerations relating to, the Notes to be purchased by the Purchaser pursuant to  this Agreement.  The Purchaser is not relying on the Issuer, the Placement Agent or any of  their respective officers, directors, shareholders, employees, counsel, agents or  representatives for legal or tax advice.  The Purchaser understands that no U.S. or non-U.S.  federal or state agency has recommended or endorsed the purchase of Notes  or made any  determination or finding as to the fairness of the provisions of this Agreement.         (e)   Such Purchaser will comply with all applicable laws and regulations in each  jurisdiction in which it acquires the Notes.         (f)   Such Purchaser is a resident of, and purchasing in, a jurisdiction that would  not, as a result of such residence or purchase result in such [Purchasers] [Purchaser] being  subject to regulation as an insurer or reinsurer.         (g)   Such Purchaser understands that no action has been or will be taken in any  jurisdiction by the Issuer that would permit a public offering of the Notes  in the United  States or any offer of the Notes  to the public in any Member State of the European  Economic Area, or possession or distribution of any offering or publicity material relating to  the Notes , in any other country or jurisdiction where action for that purpose is required.         (h)   Such Purchaser understands that the Notes  have not been registered under  the Securities Act and may not be transferred except in accordance with Rule 144A or  pursuant to another exemption from the registration requirements of the Securities Act.         (i)   Such Purchaser represents that it is [a “qualified institutional buyer” as such  term is defined in Rule 144A] [an Institutional Accredited Investor].         (j)   Such Purchaser agrees to purchase the Notes  for its own account (or  accounts managed by it) without a view to distribution thereof within the meaning of the  Securities Act and agrees not to reoffer or resell the Notes  except pursuant to an exemption  from registration under the Securities Act or pursuant to an effective registration statement  thereunder and in any case in compliance to the satisfaction of the Issuer with all applicable  U.S. state securities or “Blue Sky” laws (it being understood, however, that the disposition of  such Person’s property shall at all times be within such Person’s control).         (k)   Each Purchaser has been furnished with a copy of the Disclosure Package  and has reviewed the documents contained therein.                                 - 17 -                  

 

               (l)   Each Purchaser acknowledges that it and its representatives and agents have        been provided an opportunity to ask questions of, and have received answers thereto        satisfactory to the Purchaser from, the Issuer and its representatives regarding the terms and        conditions of the offering of the Notes , and the Purchaser has obtained any and all        additional information requested by the Purchaser, its representatives and agents of the        Issuer and its representatives to verify the accuracy of all information furnished to the        Purchaser regarding the offering of the Notes .                 (m)   Each Purchaser has, in connection with its decision to purchase the principal        amount of Notes set forth on the signature page to this Agreement, relied solely upon the        Disclosure Package and the representations and warranties of the Company contained        herein, and such Purchaser has not relied on the Placement Agent or the Settlement Agent in        negotiating the terms of its investment in the Notes, and, in making a decision to purchase        the Notes, such Purchaser has not received or relied on any communication, investment        advice or recommendation from the Placement Agent or the Settlement Agent.                               (n)   Neither the [Purchasers] [Purchaser] nor any of [their respective] [its]        subsidiaries (collectively, the “Purchaser Entity”) or, to the knowledge of the [Purchasers]        [Purchaser] or any director, officer, employee, agent, affiliate or representative of the        Purchaser Entity, is a Person that is, or is owned or controlled by a Person that is:                           (A)   the subject of any Sanctions, nor                           (B)   located, organized or resident in a country or territory that is                    the subject of Sanctions (including, without limitation, Burma/Myanmar,                    Cuba, Iran, North Korea, Somalia, Sudan, Syria, Ukraine and Russia).               (o)   There is no action, suit, proceeding or investigation pending or, to the        knowledge of the Purchaser, threatened against the Purchaser which is reasonably likely to        materially adversely affect the ability of such Purchaser to perform its obligations hereunder.               (p)   Each Purchaser will have at the Closing Date sufficient capital to satisfy the        Purchaser’s obligation to purchase the Notes  pursuant to this Agreement.         [7.   Special Mandatory Redemption Feature of Notes Not Applicable; Related Transfer Restriction.  Each of the Investment Manager and the Purchasers agrees and acknowledges that Section 5.8 of  the Indenture does not and will not, apply to the Notes purchased by the Purchasers under this  Agreement.  Notwithstanding anything in this Agreement or in the Indenture to the contrary, until  the Specified Date (as defined below), no Purchaser shall, directly or indirectly, sell, transfer or  otherwise dispose of any of the Notes hereunder (i) without the Issuer’s prior written consent, or (ii)  unless such Purchaser provides prompt written notice to the Issuer of such transfer, including the  name and contact information of the transferee, and such transferee agrees in writing to be bound  by the terms of this Agreement (including this Section 7), and the Indenture, which agreement shall  be provided to the Issuer together with such notice. Notwithstanding the immediately preceding  sentence, each of the Purchasers may sell, transfer or otherwise dispose of any of the Notes  hereunder, without the Issuer’s prior written consent, to such Purchaser’s affiliate or affiliates,  including any ERISA Affiliate, or any Persons which are cedents of any Purchaser, the Investment                                      - 18 -     

 

   Manager, or any of their respective affiliates, or a beneficiary under a trust agreement in which the  Investment Manager is the asset manager of the grantor under such trust agreement, provided that  such Purchaser provides written notice as soon as practicable to the Issuer of such transfer,  including the name and contact information of the transferee. Each of the Investment Manager and  the Purchasers agree that such transferee shall be bound by, and to the extent the transferee remains  a client of the Investment Manager, shall cause the transferee to comply with, the terms of this  Agreement (including this Section 7), and the Indenture. For the avoidance of doubt, any Notes  transferred to any transferee shall not be entitled to Section 5.8 of the Indenture and the special  mandatory redemption features described therein.           For purposes of this Section 7, the term “Specified Date” shall mean the earlier of: (1) the  date that is thirty (30) Business days after (a)  December 31, 2019, or (b) the date the Issuer publicly  announces that the closing of its acquisition of the Target Companies, as contemplated by the  Acquisition Agreement, will not be consummated, whichever is earlier; and (2) the Special  Mandatory Redemption Date (as defined in the Indenture), which is the date the Issuer completes its  redemption of the Notes held by Other Purchasers pursuant to Section 5.8 of the Indenture.         In furtherance of the foregoing, the Purchaser hereby authorizes the Issuer and the Trustee,  and any paying agent, transfer agent, registrar or depositary for the Notes, to decline to make or  effect make any transfer of the Notes if such transfer would constitute a violation or breach of this  Section 7.]         [8.]  Termination.  [Each] [The] Purchaser may terminate this Agreement by notice given to  the Issuer if after the execution and delivery of this Agreement and prior to the Closing Date (i)  trading generally shall have been suspended or materially limited on, or by, as the case may be, any  of the New York Stock Exchange, the Nasdaq Global Market or any other board or exchange on  which the Issuer’s securities are traded, (ii) trading of any securities of the Issuer shall have been  suspended on any exchange or in any over-the-counter market, (iii) a material disruption in securities  settlement, payment or clearance services in the United States shall have occurred, (iv) the Closing  Date has not occurred by March 31, 2019, except where such failure to close was due to the delay or  other fault of the Purchaser in breach of this Agreement, (v) any moratorium on commercial  banking activities shall have been declared by federal or New York State authorities or (vi) there  shall have occurred any outbreak or escalation of hostilities, or any change in financial markets or  any calamity or crisis that, in the [Purchasers’] [Purchaser’s] good faith judgment, is material and  adverse and that, singly or together with any other event specified in this clause (vi), makes it, in the  [Purchasers’] [Purchaser’s] good faith judgment, impracticable or inadvisable to proceed with the  sale or delivery of the Notes  on the terms and in the manner contemplated in this Agreement.         [9.]  Effectiveness.  This Agreement shall become effective upon the execution and delivery  hereof by the parties hereto.  The respective agreements, representations, warranties and other  statements of the Issuer and the [several Purchasers] [Purchaser] set forth in or made pursuant to  this Agreement will remain in full force and effect, regardless of any investigation made by or on  behalf of any Purchaser, the Issuer or any of their respective officers or directors or any controlling  person, as the case may be, and will survive delivery of and payment for the Notes  sold hereunder  and any termination of this Agreement.                                        - 19 -     

 

         If this Agreement shall be terminated by the [Purchasers, or any of them] [Purchaser],  because of any failure or refusal on the part of the Issuer to comply with the terms or to fulfill any  of the conditions of this Agreement, or if for any reason the Issuer shall be unable to perform its  obligations under this Agreement, the Issuer will reimburse the [Purchasers] [Purchaser] or such  [Purchasers] [Purchaser] as have so terminated this Agreement with respect to themselves[,  severally], for all out-of-pocket expenses (including the fees and disbursements of their counsel)  reasonably incurred by such [Purchasers] [Purchaser] in connection with this Agreement or the  offering contemplated hereunder.         [10.] Entire Agreement.  This Agreement, the Notes, the Indenture and the Registration  Rights Agreement represent the entire agreement between the Issuer and the [Purchasers]  [Purchaser] with respect to the purchase and sale of the Notes .  There are no oral agreements  among the parties hereto.  No modification, amendment or waiver of any of the terms of this  Agreement, nor any consent to any departure by the Issuer therefrom, will be effective unless made  in a writing signed by the party to be charged, and then such waiver or consent shall be effective  only in the specific instance and for the purpose for which given.         [11.] Counterparts.  This Agreement may be signed in two or more counterparts, each of  which shall be an original, with the same effect as if the signatures thereto and hereto were upon the  same instrument.  Delivery of an executed counterpart of a signature page to this Agreement by  telecopier, facsimile or other electronic transmission (i.e., a “pdf” or “tif”) shall be effective as  delivery of a manually executed counterpart thereof.         [12.] Successors.  This Agreement will inure to the benefit of and be binding upon the  parties hereto, and in each case their respective successors, and no other Person will have any right  or obligation hereunder.  The term “successors” shall not include any other subsequent purchaser of  the Notes  from [any of] the [Purchasers] [Purchaser].  This Agreement may not be transferred or  assigned without the prior written consent of the other parties hereto.         [13.] Applicable Law.  This Agreement shall be governed by and construed in accordance  with the internal laws of the State of New York.         [14.] Headings.  The headings of the sections of this Agreement have been inserted for  convenience of reference only and shall not be deemed a part of this Agreement.         [15.] Notices.  All communications hereunder shall be in writing and effective only upon  receipt and if to the [Investment Manager or the Purchasers] [Purchaser] shall be delivered in person  or sent by DHL or other recognized overnight courier delivery service, to [●Name and Address of  Purchaser]; and if to the Issuer shall be delivered in person or sent by DHL or other recognized  overnight courier delivery service, to 14050 N.W. 14th Street, Suite 180, Sunrise, Florida  33323,  Attention:  Chief Financial Officer.         [16.] Severability.  In the event that any provision of this Agreement shall be declared  invalid or unenforceable by any regulatory body or court having jurisdiction, such invalidity or  unenforceability shall not affect the validity or enforceability of the remaining portions of this  Agreement.                                       - 20 -     

 

         [17.] Interpretation.  For purposes of this Agreement, the words “hereof,” “herein,”  “hereby” and other words of similar import refer to this Agreement as a whole unless otherwise  indicated.  Whenever the singular is used herein, the same shall include the plural, and whenever the  plural is used herein, the same shall include the singular, where appropriate.  The term “including”  means “including but not limited to.”  The word “or” shall not be exclusive.  Whenever used in this  Agreement, the masculine gender shall include the feminine and neutral genders.  All references  herein to Articles, Sections, Subsections, Paragraphs and Exhibits shall be deemed references to  Articles and Sections and Subsections and Paragraphs of, and Exhibits to, this Agreement unless the  context shall otherwise require.  Any reference herein to any statute, agreement or document, or any  section thereof, shall, unless otherwise expressly provided, be a reference to such statute, agreement,  document or section as amended, modified or supplemented (including any successor section) and  in effect from time to time.  All terms defined in this Agreement shall have the defined meaning  when used in any Exhibit, Schedule, certificate or other documents attached hereto or made or  delivered pursuant hereto unless otherwise defined therein.  The parties acknowledge and agree that,  except as specifically provided herein, they may pursue judicial remedies at law or in equity in the  event of a dispute with respect to the interpretation or construction of this Agreement.  This  Agreement shall be interpreted and enforced in accordance with the provisions hereof without the  aid of any canon, custom or rule of law requiring or suggesting constitution against the party causing  the drafting of the provision in question.         [18.] Placement Agent as Third Party Beneficiary; No Other Third-Party Beneficiary.  The parties  agree and recognize the Placement Agent as an express third party beneficiary to Sections 1, 5 and 6  of this Agreement.  The Placement Agent shall be entitled to rely on the representations, warranties  and covenants made by the Issuer and the [Purchasers] [Purchaser] hereunder, as if such  representations, warranties and covenants were made directly to the Placement Agent. Except for  the two immediately preceding sentences, nothing in this Agreement is intended or shall be  construed to give any person, other than the parties, their successors and permitted assigns, any legal  or equitable right, remedy or claim under or in respect of this Agreement or any provision contained  herein.          [19.] Suits.  Any legal suit, action or proceeding arising out of, or based upon, this  Agreement or the transactions contemplated hereby, may be instituted in any state or federal court  located in the Borough of Manhattan, New York, New York (each, a “New York Court”), and each  party hereby waives, to the fullest extent it may effectively do so, any objection which it may now or  hereafter have, to the laying of venue of any such proceeding and submits to the exclusive  jurisdiction of such courts in any such legal suit, action or proceeding.  Each party hereby waives  irrevocably any immunity to jurisdiction to which it may otherwise be entitled or become entitled  (including sovereign immunity, immunity to pre-judgment attachment, post-judgment attachment  and execution), in any legal suit, action or proceeding against it arising out of, or based upon, this  Agreement or the transactions contemplated hereby, that is instituted in any New York Court.   Process in any such legal suit, action or proceeding may be served on any party anywhere in the  world, whether within or without the jurisdiction of any such court.         [20.] WAIVER OF JURY TRIAL.  EACH PARTY HEREBY IRREVOCABLY  WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND  ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR                                       - 21 -     

 

   BASED UPON THIS AGREEMENT, THE SECURITIES OR THE TRANSACTIONS  CONTEMPLATED HEREBY.                               [Signature Pages to Follow]                                        - 22 -     

 

                                       Very truly yours,                                       FEDNAT HOLDING COMPANY                                        By:                                                                                    Name:                                             Title:                                                                     [Signature Page to the Note Purchase Agreement]   731414507  

 

   Accepted as of the date hereof:   [●Insert Purchaser’s Signature Block]       Print or Type:                                              Name of Purchaser                               (Individual or Institution)                                                                Jurisdiction of Purchaser’s Executive Offices                                                                Name of Individual representing Purchaser (if an Institution)                                                                Title of Individual representing Purchaser (if an Institution)                                                              $                                 Principal amount of Notes to Be Purchased    Signature by:               Individual Purchaser or Individual representing Purchaser:                                                                                                         Address:                                                                          Telephone:                                                                         Facsimile:                                                                         Email:                      *** Please note that if you are sub-allocating to multiple funds,                       you must execute a signature page for each fund. ***   731414507  

 

                                                                     SCHEDULE I                                                                                                                                          Principal Amount of                  [Purchasers] [Purchaser]               Notes to be Purchased   [●Name and Address of Purchaser]                   $[●]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               I-1   731414507  

 

                                                                   SCHEDULE II   List of the Issuer’s subsidiaries   FedNat Insurance Company (Florida; owned 100% by Issuer)   FedNat Underwriters, Inc. (Florida; owned 100% by Issuer)   Century Risk Insurance Services, Inc. (Florida; owned 100% by Issuer)   Insure-Link, Inc. (Florida; owned 100% by Century Risk Insurance Services, Inc.)   Southeast Catastrophe Consulting Company, LLC (Alabama; owned 49% by Century Risk Insurance  Services, Inc.)   Monarch National Insurance Company (Florida: owned 100% by FedNat Insurance Company)   List of the Issuer’s directors, chief executive officer and chief financial officer   Richard W. Wilcox Jr., Director   Jenifer G. Kimbrough, Director   William G. Stewart, Director   Thomas A. Rogers, Director   Bruce F. Simberg, Director   Roberta N. Young, Director   Michael H. Braun, Director and Chief Executive Officer   Ronald A. Jordan, Chief Financial Officer                                               II-1   731414507  

 

                                                                  SCHEDULE III                              Opinions of Issuer’s counsel                                                 1.    The Issuer and each of its Subsidiaries is validly existing and in good standing under  the laws of its respective jurisdiction of incorporation.          2.    The Issuer has the requisite corporate power and authority to issue and sell the  Notes and the Exchange Notes and to execute and deliver the Agreement, the Indenture and the  Registration Rights Agreement.          3.    The Agreement, the Indenture and the Registration Rights Agreement have been  duly authorized, executed and delivered by the Issuer, and are enforceable against the Issuer in  accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization,  moratorium or similar laws affecting creditors generally and to general principles of equity.           4.    The execution and delivery by the Issuer of the Agreement, the Indenture, the Notes  and the Exchange Notes do not conflict with applicable federal, Florida or New York laws or the  Certificate of Incorporation or Bylaws of the Issuer.                5.    The Notes  have been duly authorized and executed by the Issuer, and, when issued  and authenticated by the Trustee in accordance with the terms of the Indenture and delivered to and  paid for by the [Purchasers] [Purchaser] in accordance with the terms of the Agreement, the Notes   will constitute valid and binding obligations of the Issuer, enforceable against the Issuer in  accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization,  moratorium or similar laws affecting creditors generally and to general principles of equity, and will  be entitled to the benefits of the Indenture.                 6.    The Exchange Notes have been duly authorized by the Issuer and, when the  Exchange Notes are delivered as contemplated in the Registration Rights Agreement, such  Exchange Notes will have been duly executed by the Issuer and when authenticated in accordance  with the provisions of the Indenture, assuming due execution and delivery thereof by the Trustee,  will be valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with  their terms, except as the enforcement thereof may be limited by applicable bankruptcy, insolvency  and similar laws affecting creditors’ rights generally and equitable principles of general applicability,  and will be entitled to the benefits of the Indenture.          7.    All corporate consents required by the Issuer to issue and sell the Notes  and the  Exchange Notes and to execute and deliver the Agreement and the Indenture have been obtained.          8.    Assuming the accuracy of the respective representations and warranties of the Issuer  and of the [Purchasers] [Purchaser] set forth in the Agreement and the due performance by the  Issuer and by the [Purchasers] [Purchaser] of their respective covenants and agreements set forth in  the Agreement, the offer and sale of the Notes  does not require registration under the Securities                                                                                  III-1   731414507  

 

   Act and the Indenture does not require qualification under the Trust Indenture Act of 1939, as  amended.                9.    The Issuer is not an “investment company” or a company “controlled” by an  “investment company,” as such terms are defined in the Investment Company Act of 1940, as  amended.                This opinion may be relied upon by Raymond James & Associates, Inc., in its capacity as  Placement Agent for the Issuer in connection with the issuance and sale of the Notes.                                                                                       III-1   731414507  

 

                                                    ANNEX A                                             FedNat Holding Company                                             Purchaser Questionnaire   Pursuant to Section 3(b) of the Note Purchase Agreement, please provide us with the following information:    Legal Name of Purchaser:                      Address of Purchaser:                                                                       Attention:                                                                                  Telephone Number:                             Fax Number:                                     NOMINEE/CUSTODIAN (Name in which the Notes are to be registered if different than name of Purchaser):                                                                                              DTC Number:                                                  Tax I.D. Number or Social Security Number:     (If acquired in the name of a nominee/custodian, the taxpayer I.D. number of such nominee/custodian)                                                       A-1   731414507  

 

   Person to Receive Copies of Transaction Documents:   Name:                                        Telephone Number:                            Email:                                       Operations Contacts:   Primary:                                     Telephone Number:                            Email:                                                                                    Secondary:                                   Telephone Number:                            Email:                                          [Each Purchaser must be a “qualified institutional buyer” as defined in Rule 144A under the Securities Act.]   [Each Purchaser must be an institutional “accredited investor” within the meaning of Rule 501(a) of Regulation D and as contemplated by subsections  (1), (2), (3) or (7) of Rule 501(a) of Regulation D, that has no less than $5,000,000 in total assets.]      *** Please note that if you are sub-allocating to multiple funds, you must complete one of these forms for each fund.                                                         A-1   731414507  

 

                                     ANNEX B                             FedNat Holding Company                       Summary Instruction Sheet for Purchaser    (To be read in conjunction with the entire Note Purchase Agreement)   Each Purchaser must complete the following items in the Note Purchase Agreement:    1.   Provide  the  information  regarding  such  Purchaser  requested  on  the  signature  page  and        Purchaser  Questionnaire  attached  as Annex  A to  the  Note  Purchase  Agreement  (the        “Purchaser Questionnaire”). The Note Purchase Agreement must be executed by an individual        authorized to bind such Purchaser.      2.   On or prior to 3:00 p.m., New York City time, on March 1, 2019, return an executed original        Note  Purchase  Agreement  or  a  facsimile  transmission  (or  other  electronic  transmission)        thereof and the completed and executed Purchaser Questionnaire to:                                    Julian Bynum                          Julian.Bynum@RaymondJames.com                           Raymond James & Associates, Inc.                                535 Madison Avenue                                     10th Floor                                                                       With an electronic copy to:                                   Ronald Jordan                                RJordan@fednat.com                              FedNat Holding Company                            14050 N.W. 14th Street, Suite 180                                Sunrise, Florida 33323           3.   On or prior to 3:00 p.m., New York City time, on the business day immediately preceding the        Closing Date (as defined in the Note Purchase Agreement), such Purchaser shall transfer the        amount indicated below such Purchaser’s name on the applicable signature page to the Note        Purchase Agreement above the title “Principal Amount of Notes to be Purchased,” in United        States dollars and in immediately available funds, by wire transfer to the account of Raymond        James & Associates, Inc., as the Issuer’s settlement agent (in such capacity, the “Settlement        Agent”).  No payments will be accepted on a delivery-versus-payment, or “DVP,” basis.        4. On or prior to 10:00 a.m., New York City time, on the Closing Date, such Purchaser must        instruct its custodian(s) to post a DWAC request for free receipt to The Bank of New York        Mellon  for  such  Purchaser’s  aggregate  principal  amount* of  Notes  (CUSIP  31431B  [AA7]        [AB5]  /  ISIN  [US31431BAA70)]  [US31431BAB53].  It  is  important  that  this  request  be        submitted on the Closing Date. If the request is submitted before the Closing Date, it will     731414507                                        B-1     

 

         expire and need to be resubmitted on the Closing Date.           5.   Following the confirmation by the Settlement Agent that the conditions set forth in the Note        Purchase Agreement, other than with respect to the issuance of and delivery of the Notes,        have been satisfied or waived, (i) the Settlement Agent shall disburse on the Closing Date        funds received by the Settlement Agent on behalf of the Issuer (net of the agreed amount of        fees and expenses of the Placement Agent) by wire transfer of immediately available funds to        an account specified by the Issuer in accordance with the Issuer’s written wire instructions        (which shall be provided to the Settlement Agent by the Issuer at least one business day prior        to the Closing Date) and (ii) the principal amount of Notes to be purchased by such Purchaser        (as specified on such Purchaser’s signature page to the Note Purchase Agreement) to be issued        and delivered by electronic book entry through the facilities of DTC to the account specified        by such Purchaser in its Purchaser Questionnaire will be released by the Trustee, at the written        instruction  of  the  Issuer,  to  such  Purchaser  upon  receipt  of  Purchaser’s  DWAC  deposit        request.           6.   Please note that all wire transfers must be sent to the following account, and the name        of the purchasing entity must be included in the wire:                Wire Information         ABA Routing Number:           [●]        Bank Name:                    [●]        Account Name:                 [Raymond James & Associates, Inc.]        Account Number:               [●]        Re:                     [Insert  Purchaser’s  Account  Name  or  Sub-Account        Name]                   7.   If you have any questions, please contact Julian Bynum at (212)-508-5267.   * Note that the DWAC instruction should specify the principal amount, and not the number, of  Notes.                                                                     731414507                                        B-1

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