Document:

Document

Certain portions of this exhibit (indicated by “[*****]”) have been omitted pursuant to Item 601(b)(10) of Regulation S-K.

AMENDMENT NO. 1, dated as of February 2, 2022, to Convertible Senior Secured Delayed-Draw Credit Agreement, dated as of September 1, 2021 (as amended and supplemented from time to time, the “Credit Agreement”), by and among Atlas Financial Holdings, Inc., American Insurance Acquisition Inc., Anchor Group Management Inc., Anchor Holdings Group, Inc, optOn Digital IP Inc., optOn Insurance Agency Inc., Plainview Premium Finance Company, Inc., jointly and severally, the Lenders party thereto from time to time, and Sheridan Road Partners, LLC, as Administrative Agent.
The parties hereby agree as follows:
1.  Definitions, Etc. All terms used herein, unless otherwise defined, shall have the meanings ascribed thereto in the Credit Agreement. References to “Sections” in this letter are references to Sections of the Credit Agreement.
2.  Amendment. The Credit Agreement is hereby amended by deleting Section 6.11(k) (Organization Documents) and replacing it in its entirety as follows (newly added language in bold italics):
(k) Organization Documents. No Credit Party shall permit any or agree to any amendment, restatement, supplement or other modification to, or waiver of, any of its Organization Documents after the Closing Date in a manner that would adversely affect in any material respect the ability of such Credit Party to perform its obligations under the Credit Documents or adversely affect in any material respect the rights, remedies and benefits available to, or conferred upon, the Administrative Agent and any Lender under any Credit Document (it being understood that unless agreed in writing by the Lenders in advance, any amendment, restatement, supplement or other modification to any of the Credit Parties’ respective Organization Documents that would have the effect of issuing, reserving or authorizing any new class of stock or other ownership interests other than such classes as were authorized as of the Closing Date (and in the case of AFHI, any stock or other ownership interests other than the AFHI Common Stock) shall be deemed to be material and adverse to the Administrative Agent and the Lenders in violation of this Section 6.11(k)).
3.  Miscellaneous.
(a)Except as expressly provided in this Amendment No. 1 and in the letters, dated as of September 30, 2021 and January 1, 2022, respectively(the “Waiver Letters”), from the Administrative Agent to the Credit Parties, the Credit Documents shall remain unmodified and in full force and effect.
(b)From and after the date hereof, all references to the Credit Agreement in the Credit Documents hall be deemed references to the Credit Agreement as amended and supplemented by this Amendment No. 1 and the Waiver Letters.
(c)This Amendment No. 1 is a Credit Document and the provisions of Sections 9.11, 9.14, 9.15, 9.16, 9.19 and 9.20 are incorporated herein by reference adjusted mutatis mutandis so that references to the Credit Agreement shall be deemed references to this Amendment No.1.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be duly executed and delivered as of the date first above written.

						
	ATLAS FINANCIAL HOLDINGS, INC., 
a Cayman Islands exempted company limited by shares
By:    /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
ANCHOR GROUP MANAGEMENT INC., 
a New York corporation
By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
optON DIGITAL IP INC., 
a Delaware corporation
By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
UBI HOLDINGS INC., 
a Delaware corporation
By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
	AMERICAN INSURANCE ACQUISITION INC., a Delaware corporation
By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
ANCHOR HOLDINGS GROUP, INC., 
a New York corporation
By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
optON INSURANCE AGENCY INC., 
a Delaware corporation 
By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
PLAINVIEW PREMIUM FINANCE COMPANY, INC., a Delaware corporation

By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO

[*****]
[Lender Signature Pages Omitted]

    - 2 -Document

Certain portions of this exhibit (indicated by “[*****]”) have been omitted pursuant to Item 601(b)(10) of Regulation S-K.

AMENDMENT NO. 2, dated as of March 25, 2022, to  CONVERTIBLE SENIOR SECURED DELAYED-DRAW CREDIT AGREEMENT (as amended by Amendment No. 1 thereto, dated as of February 2, 2022 and as further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among Atlas Financial Holdings, Inc., American Insurance Acquisition Inc., Anchor Group Management Inc., Anchor Holdings Group, Inc, optOn Digital IP Inc., optOn Insurance Agency Inc., Plainview Premium Finance Company, Inc., jointly and severally (collectively, the “Credit Parties”), the Lenders (defined below) party hereto, and Sheridan Road Partners, LLC, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”). 
The parties hereby agree as follows:
1.  Definitions, Etc. All terms used herein, unless otherwise defined, shall have the meanings ascribed thereto in the Credit Agreement. References to “Sections” in this Amendment are references to Sections of the Credit Agreement.
2.  Amendment. The Credit Agreement is hereby amended by deleting Section 2.9(b) (Delayed Draws) and replacing it in its entirety as follows (newly added language in bold, italics, and underlined and deleted language in bold and stricken):
(b) Delayed Draws. Concurrently with the funding of each Delayed-Draw Loan, if any, AFHI will issue to the Lenders in accordance with their respective Commitment Percentages, a fee (the “Delayed Draw Fee”) payable in the form of 1,125,000 1,250,000 shares of AFHI Common Stock (the “Draw Fee Shares”) in accordance with delivery instructions provided by the Lender. The Delayed Draw Fee Shares shall, when issued, be fully paid and non-assessable and shall not be subject to any Lien or restriction on transfer other than restrictions arising by operation of law or included in AFHI’s Organization Documents. The Delayed Draw Fee shall be fully earned on the date of issuance of each Delayed-Draw Loan, and payable together with the issuance of each Delayed-Draw Loan.
3.  Miscellaneous.
(a)Except as expressly provided in this Amendment No. 2, the Credit Documents in existence prior to the date hereof shall remain unmodified and in full force and effect.
(b)From and after the date hereof, all references to the Credit Agreement in the Credit Documents shall be deemed references to the Credit Agreement as amended and supplemented by this Amendment No. 2 and the Waiver Letters. 
(c)This Amendment No. 2 is a Credit Document and the provisions of Sections 9.11, 9.14, 9.15, 9.16, 9.19 and 9.20 are incorporated herein by reference adjusted mutatis mutandis so that references to the Credit Agreement shall be deemed references to this Amendment No. 2.

IN WITNESS WHEREOF, the parties have caused this Amendment No. 2 to be duly executed and delivered as of the date first above written.
						
	ATLAS FINANCIAL HOLDINGS, INC., 
a Cayman Islands exempted company limited by shares
By:    /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
ANCHOR GROUP MANAGEMENT INC., 
a New York corporation
By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
optON DIGITAL IP INC., 
a Delaware corporation
By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
UBI HOLDINGS INC., 
a Delaware corporation
By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
	AMERICAN INSURANCE ACQUISITION INC., a Delaware corporation
By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
ANCHOR HOLDINGS GROUP, INC., 
a New York corporation
By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
optON INSURANCE AGENCY INC., 
a Delaware corporation 
By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO
PLAINVIEW PREMIUM FINANCE COMPANY, INC., a Delaware corporation

By:     /s/ Scott D. Wollney        
Name:    Scott D. Wollney
Title:    President & CEO

[*****]
[Lender Signature Pages Omitted]

    - 2 -Document

Executive Management Incentive Plan
Approved March 30, 2022

This compensation arrangement is intended for calendar year 2022 only and is governed by the Company’s Equity Incentive Plan approved by shareholders in 2013 (the “Plan”).  
Salary
The Company’s CEO, COO, CFO and VP Underwriting & Product Development (which represent the highest salaries paid by the Company) have agreed to reduce their bi-weekly cash salary by 20%.  In addition, they have each agreed to forfeit their options in connection with the structuring of new compensation arrangements which include cash bonuses upon the achievement of certain performance metrics described below, which will allow executives to earn performance-based compensation.  
During 2022, this reduction equals an annual savings for the Company of $271,000 in compensation costs compared to 2021 salaries.  In exchange for reducing their cash compensation, these executives will receive fully vested common stock awards pursuant to the schedule below, which, at the Company’s ten-day trailing value weighted average stock price as of the approval date of March 30, 2022, represents approximately fifty percent of the dollar amount of salary reduction. 

						
	Officer Stock Grants	Shares
	Giles	51,855
	Romano	57,512
	Shugrue	61,283
	Wollney	84,854

Shares in treasury will be used to fund these awards and no shares shall be issued under the Plan to these executives in connection with these 2022 Arrangements.   
The Company’s budgeting process includes a minimum liquidity level (“Minimum Liquidity Goal”).
At such time as the Company’s MGA operation (“AGMI”) is cash flow positive on a monthly run-rate basis, each executive’s salary will be increased from 80% of 2021 salary to 90% of 2021 salary.  At such time as AGMI is cash flow positive on a year-to-date basis, each executive’s salary will be increased from 90% of 2021 salary to 100% of 2021 salary.  If the Minimum Liquidity Goal is achieved in 2022, the amount of reduced salary for each executive will be paid in cash or fully vested stock awards (as determined by the Company), if available for issuance under the Plan (subject to confirmation that there are sufficient registered shares , or sufficient shares that will be registered within appropriate parameters), at the executive’s discretion. 
Incentive Compensation

It is anticipated that bonuses earned will be “paid” subject to availability of cash or equity.    
If the Plan does not have sufficient equity available for stock issuance at the time any given milestone is achieved, or the Company otherwise decides, such equity will be issued when and if shares are available.    Should the Company’s Minimum Liquidity Goal be achieved at the time any given milestone is achieved, or if earned bonuses have not yet been paid in equity due to available equity share constraints, each executive will have the choice to receive a cash payment of 80% of a given earned bonus as an alternative to receiving stock provided that such cash payments would not result in the Company falling below the Minimum Liquidity Goal level (with the full amount of value being paid if issued in equity).  All such payments will occur on or before December 31, 2022.
Milestone based bonuses will be paid as follows:
Bond Exchange via Cayman Scheme of Arrangement completed by April 15, 2022
Upon a successful outcome, bonus will be earned by each executive equal to 25% of such executive’s full annual salary
    Gross Written Premium
For every $10 million of gross written premium generated by AGMI in 2022, a bonus will be earned by each executive equal to 15% of such executive’s full annual salary.  
    AGMI EBIDTA
25% of AGMI’s EBIDTA, net of any cash bonuses paid under this plan other than in connection with this metric, will be earned as a collective bonus to the executive team (to be allocated proportionately based on CEO recommendation and Compensation Committee agreement).
The total incentive for all three milestones combined will be capped at 100% of full annual salary per person.
While specific incentives are not being proposed in connection with the sale of the Company’s building in Schaumburg, a successful sale would likely increase liquidity and help to achieve the Minimum Liquidity Goal.
Earned bonuses will be paid by December 31, 2022 to the extent possible based on available equity and/or cash above the Minimum Liquidity Goal.  If limitations prevent 100% of earned bonuses to be paid in full, consideration will be pro-rated consistently across all executives with no carryover of bonus payments or obligations into 2023.

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