Document:

Managing General Agency Agreement

 Exhibit 10.16 
 MANAGING GENERAL AGENCY AGREEMENT 
 (“Agreement”) 
 Between 
 Homeowners Choice Managers,
Inc. 
 (Hereinafter, individually or collectively, the “MGA”) 
 And 
 Homeowners Choice Property and Casualty Insurance Company, Inc.

 (Hereinafter called the “Company”) 
 Made as of the 30th day of March, 2007. 
 WHEREAS, the Company is admitted to transact
insurance business in the State of Florida, and issue policies of insurance in that state; and 
 WHEREAS, the Company desires MGA to
act as its exclusive managing general agent with respect to insurance policies for the authorized insurance coverages (the “Authorized Coverages”) set forth in Schedule I to this Agreement (the applied for, issued coverages are sometimes
referred to as the “Policy(ies)”) in the State of Florida, including renewals, issued from the Effective Date of this Agreement until terminated as hereinafter set forth; and 
 WHEREAS, MGA desires to produce, administer and manage the Policies and to adjust claims and provide other services in connection with such
policies including, but not limited to, marketing, claims analysis, general ledger accounting, information services, product and underwriting development and management, and catastrophe risk management on behalf of the Company. 
 NOW, THEREFORE, in consideration of the promises and the mutual covenants hereinafter contained, the parties have agreed that the terms of this
Agreement shall be 3 years effective as of March 30, 2007 (the “Effective Date”), renewable annually, thereafter and do otherwise agree as follows: 
 ARTICLE I—GENERAL PRINCIPLES 
 1.1. In accordance with § 626.7451, Florida Statutes
(“F.S.”), the Company appoints MGA for the purpose of producing and handling Policies for the Authorized Coverages of business set forth in Schedule I and issued or renewed on or after the Effective Date of this Agreement. MGA agrees to
produce the Authorized Coverages of business in accordance with the territory and limits of liability set forth in Schedule I hereto and the Company’s established and approved underwriting requirements and premiums for the Authorized Coverages
of business. 

 1.2. The Company, relying upon the expertise of MGA, grants authority to MGA hereunder solely with
respect to the Policies. Nonetheless, the Company being at risk and having ultimate responsibility and authority for the Policies issued by MGA, at all times shall have the ultimate responsibility and discretion with respect to all matters
pertaining to the Polices and to the general welfare of the Company. 
 1.3. Consistent with the intention of the parties to produce an
operating profit for the Company, MGA shall manage its affairs in accordance with the terms of the Agreement in an ethical and professional manner and in accordance with all applicable laws and regulations of the State of Florida. 
 1.4. The Company, relying upon the expertise of MGA, grants authority to MGA to solicit and negotiate reinsurance with respect to the programs authorized
by the Company. Nonetheless, the Company being at risk and having ultimate responsibility for all reinsurance contracts issued, will have the ultimate responsibility and discretion with respect to the approval and contracting for all reinsurance.

 1.5 The Term of this Agreement shall commence as of the effective date of this Agreement and shall continue for a period of three
(3) years thereafter unless sooner terminated pursuant to the terms of this Agreement. The MGA shall have the option to renew the term of this Agreement for an additional one (1) year period commencing after the initial three (3) year
term and any renewal term by providing written notice to the Company at least ninety (90) days prior to the expiration of the initial three (3) year term or any renewal thereof. 
 ARTICLE II—UNDERWRITING AUTHORITY 
 2.1. Agents. The Company hereby
grants to MGA authority to accept applications to issue the Policies received through appointed licensed insurance agents (“Producing Agents”) and agents authorized as “Brokering Agents” (as defined in Section 626.752,
F.S.). MGA may not authorize or facilitate the appointment of any insurance broker or agent, or any other entity, to issue Policies on behalf of the Company without the prior written consent of the Company. The MGA may not appoint a sub-managing
general agent for the business of the Company. The MGA may not permit any of its sub-producers to serve on its Board of Directors. 
  

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 2.2. Agent Agreements. Any and all agreements with any insurance broker, agent, Producing Agent,
Brokering Agent or other entity (hereinafter collectively called the “Agent”) shall be made directly between MGA and such Agent. Such agreements shall provide that with respect to any action taken or not taken by MGA in connection with a
Policy(ies) or this Agreement, the Agent shall look solely to MGA for any and all expenses, costs, causes of action and damages suffered by the Agent. Nothing in this Section is intended to create a cause or claim against MGA that the Agent would
not otherwise have against the Company. 
 2.3. Agent Responsibility. MGA shall bear sole responsibility to oversee the placement of
business through Agents. With respect to a Policy(ies) or this Agreement, MGA shall hold the Company harmless and reimburse the Company for any and all fines and expenses levied against or incurred by the Company as a result of MGA accepting
business from an unlicensed Agent, or the failure of the Company, MGA, or any Brokering Agent to comply with Section 626.752, F.S. regulating the exchange of business between Insurer and Brokering Agents, unless such costs and expenses result
solely from the Company’s failure to take legally required or reasonably necessary specific actions recommended to the Company by MGA. 
 2.4. Policy Services. Pursuant to the terms and provisions of this Agreement, the Company hereby grants to MGA authority to receive and accept proposals of insurance from the Effective Date of this Agreement until the termination of
this Agreement for the Authorized Coverages. Such authority shall include the binding of coverage, the issuing and endorsing of Policies in the name of the Company, and the canceling and non-renewing of such binders and contracts when the best
judgment of MGA dictates. 
 2.5. Underwriting. The Company grants MGA authority to provide the Policies pursuant to the underwriting
guidelines provided in writing to MGA by the Company. Such underwriting guidelines shall include, but not be limited to, guidelines pertaining to the basis of the rates to be charged, types of risks to be written, maximum limits of liability,
applicable exclusions, territorial limitations, policy cancellation provisions, and maximum policy period. All underwriting guidelines that the Company provides the MGA, in writing, shall be deemed incorporated in this Agreement by reference and
adoptions. The Company grants MGA authority to operate within written guidelines approved in writing by the Company, subject, however, to the professional judgment of supervisory underwriting personnel; and any Policy issued by or at 

  

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the request of MGA which does not fall within such guidelines shall, at the Company’s request, be promptly terminated, and MGA shall indemnify the
Company from and against any liability thereunder. 
 2.6. One-Year Terms. The Company grants MGA authority to issue or have issued
Policies having a maximum term of one year. 
 2.7. Policy Language. The Company grants MGA authority to utilize only insurance
contract wordings, endorsement wordings and rates that are approved by the Company and are properly filed and approved, to the extent necessary, by appropriate regulatory authorities of the State of Florida. 
 2.8. MGA Appointment: Maximum Annual Net Written Premium Production. The Company appoints MGA to issue Policies on behalf of the Company in the
State of Florida. Other than through MGA, Company agrees not to write the Authorized Coverages of business that the Company is duly licensed to write, or to appoint another managing general agent to write the Authorized Coverages of business that
the Company is duly licensed to write, in the State of Florida for during the term of this Agreement as set forth in paragraph 1.5 herein (the “Term”). Under no circumstances shall the MGA produce from the Authorized Coverages Net Written
Premium in excess of $150 million in any year without the express written approval of the Company for any Net Written Premium written in excess of the aforestated amount. 
 2.9. Policyholder Information. The Company shall not disclose, share, or otherwise make available to any other person, partnership, corporation, managing agent, agent, broker, independent agent or broker,
underwriting manager, or other insurer information regarding the Company’s policyholders who have been issued Policies pursuant to MGA’s authority under this Agreement until one year after the termination of this Agreement. The foregoing
limitation shall not prohibit the Company from disclosing such information to its independent accountants or auditors, insurance department examiners, or as otherwise required in the normal course of the Company’s business. Company and MGA
shall fully comply with the provisions of any applicable Federal laws and the laws of the State of Florida applicable to policyholder information. 
 2.10. Expirations. In the event of the termination of this Agreement, MGA’s records and the use and control of expirations of the Company’s business produced by Agents registered or appointed by the Company shall remain the
property of the MGA, subject to any rights in the Agents pursuant to the terms of any agreement between MGA and the Agent. 
  

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 2.11. Premium Financing. With respect to Policies, MGA shall have the authority to enter into
agreements with premium finance companies (“PFCs”), to receive notices of premium financing, to receive proceeds of premium financing, and to receive and act upon notices and requests of cancellations from PPCs. The MGA shall not delegate
this authority to any Agent. Subject to the PFCs contracts with the insureds and applicable statutes (e.g. F.S. §627.848) and rules, and to the extent of the contract balances due the PFCs from the insureds, the MGA shall return all unearned
premium directly to the PFCs to the extent held by MGA and shall cause the Agents to return all unearned commission to the PFCs to the extent held by the Agents. 
 ARTICLE III—HANDLING OF FUNDS 
 3.1. Depository Account. MGA shall accept in a fiduciary
capacity, on behalf of the Company, all premiums, policies, fees, interest, and service charges collected and other funds relating to the business written under this Agreement. The Company shall establish and maintain a “Depository
Account” in a bank mutually agreed upon by MGA and the Company. The bank must be a member of the Federal Reserve System whose accounts are insured by the Federal Deposit Insurance Corporation. All premiums, policy fees, interest, and service
charges collected by MGA shall be deposited into the Depository Account. Deposits to the Depository Account are to be made daily or no less seldom than weekly if daily determination of deposit amount required is not feasible. Subject to the terms of
this Agreement, the proceeds of the Depository Account shall be used for payments as directed by the Company. It is acknowledged and agreed that any investment income earned and costs assessed in connection with the Depository Account belong to the
Company. 
 3.2. No Commingling. The MGA shall not commingle any premium or escrow trust funds with personal accounts or other funds
held by MGA in any other capacity. 
 3.3. Premiums. MGA assumes responsibilities for, and shall promptly, on no less than a monthly
basis, pay the Company all premiums collected on Policies issued by or through MGA or on MGA’s behalf for the Company. 
 3.4.
Disbursement Account. The Company will maintain and adequately fund a Disbursement Account (“Disbursement Account”) for 

  

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the payment by MGA of unearned premiums arising due to cancellation or endorsement of the Company’s Policies produced by MGA. The Company and MGA shall
each have signature authority over this account. 
 3.5. Bank Failure. MGA shall not be liable for any loss which occurs by reason of
the default or failure of the bank in which the Depository Account and Disbursement Account are maintained and such loss shall not affect MGA’s obligations under this Agreement. 
 3.6. Return Commissions. MGA shall refund to the Company, unearned commissions on policy cancellations, reductions in premiums or any other return
premiums at the same rate of which such commissions were originally retained. 
 3.7. Policy Fee. MGA shall comply with the provisions
of Section 626.7451(11), F.S., and shall be entitled to retain as fully earned upon collection any duly authorized and collected per-policy fee pursuant to such section. The per-policy fee shall not exceed $25.00 or such other greater amount as
may be authorized under Florida law. In no instance shall the aggregate of the per-policy fees for a placement of business authorized under Section 626.7451(11), Florida Statutes, when combined with any other per-policy fee charged by the
Company, result in per-policy fees which exceed the aggregate amount of $25.00 or such other greater amount as may be authorized by Florida law. The per-policy fee shall be a component of the Company’s rate filing. 
 ARTICLE IV—OTHER REPORTS & REQUIREMENT 
 4.1. Underwriting Records. MGA shall maintain separate, complete and orderly underwriting files or electronic files, records and accounts of all transactions involving the Company in accordance with generally
accepted insurance and accounting practices. 
 4.2. Inspection. The Company or its authorized representatives shall have the right
(but not the obligation) at all reasonable times during business hours of operations to inspect MGA’s books, records and bank accounts, whether located, which pertain to the business which is the subject of this Agreement and shall have the
right to copy or make abstracts from such books and records. 
  

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 4.3. Written Operating Procedures. MGA shall establish and maintain written operating procedures
regarding the issuance of all Policies and endorsements, as well as the collection of premiums related thereto. Such procedures shall be forwarded to the Company and shall be subject to the Company’s review and written approval. 
 4.4. Financial Statement. Within one hundred fifty (150) days after the end of each fiscal year of MGA, MGA shall furnish the Company with
true copies of its unaudited financial statements and the audited, certified balance sheet and related statement of operations of MGA for such fiscal year. 
 4.5. Records. MGA shall maintain permanent physical or electronic copies of all Policies and applications or correspondence related to the Policies, either as hard copies, on microfiche or archived in
electronic media. The Company shall have access and the right to copy all accounts and records related to business written hereunder in a form usable by the Company. MGA shall provide access to all MGA’s books, bank accounts, and records to the
Department of Financial Services and Office of Insurance Regulation (collectively the “Department”) of the State of Florida in a form usable by the Department. All records shall be retained by the MGA according to the provisions of
Section 626.561, F.S. MGA will not destroy these permanent copies without the written permission of the Company for the longer of five (5) years from the termination date of the Policy or the period specified by the applicable Florida
statute regulating preservation of records. 
 4.6. Complaints: Company’s Duty to Forward Complaints. The MGA shall maintain and
make available for inspection by the Company, complaint log(s) of all written: (i) complaints and requests for assistance filed with MGA or the Company by the Department or any other agency or department of the State of Florida or any other
state or jurisdiction, at the request of an insured, claimant, lienholder, or any other interested party to a Policy or claim thereunder; and (ii) lawsuits and arbitrations. The log(s) will include the name of the complainant, the Policy number
and/or claim number, and the date the complaint was received. MGA shall maintain copies of the complaints and MGA’s written response regarding resolution and remedy of said complaint. The Company shall forward to MGA, by next day delivery
service, all complaints, time-demand correspondence, and subpoenas received by the Company relevant to the MGA on this Agreement. 
 4.7.
Licenses. The Company and MGA shall maintain all licenses and regulatory approvals necessary to conduct the business 

  

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covered under this Agreement. MGA represents that it holds a currently effective managing agent’s license in Florida and agrees to maintain such license
during the Term of this Agreement and any extensions thereof. 
 4.8. Cancellations. Notwithstanding the authority granted to MGA by
the Company, the Company may require MGA to terminate coverage provided by any Policy so long as such termination does not violate Florida law. If the Company exercises this right, the Company shall do so in a writing which includes the reasons for
such termination and which instructs MGA to send appropriate non-renewal or cancellation notice as required by contract wording or relevant regulatory or statutory authority to terminate coverage. 
 4.9. Agent Licensing. MGA is required and agrees to be in compliance with, and MGA shall make reasonable inquiry and take all reasonable steps to
ascertain that all Agents are in compliance with, all state laws and regulations, which affect the Policies and the Agents. MGA will utilize the E-APPOINT System through Agent and Agency Service division weblink. 
 4.10. IRS Forms. MGA shall prepare and furnish each Agent with an IRS form 1099 each year when required. 
 4.11. Advertisement. MGA shall obtain the approval of the Company before issuing any advertisement, circular, pamphlet or other publication, which
refers to the Company. 
 4.12. Report of Accounts. MGA shall render accounts to the Company detailing all transactions and remit all
funds due under the terms of this Agreement to the Company on a monthly or more frequent basis. 
 4.13. Additional Limitations on
Authority. The Company does not grant MGA authority to, and MGA shall not: 
 a. Cede, purchase, or bind any reinsurance or
retrocession, including but not limited to facultative or treaty, on behalf of the Company without approval by the Company. 
 b.
Commit the Company to participate in insurance or reinsurance syndicates. 
 c. Appoint any Agent or producer without assuring that
such Agent is lawfully licensed to transact the type of insurance for which such Agent is appointed. 
 d. Collect any payment from a
reinsurer or commit the insurer to any claims settlement with a reinsurer 

  

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without the Company’s prior approval. If prior approval is given, a report must be promptly forwarded to the Company. 
 e. Without the prior approval of the Company, pay or commit the Company to pay a claim over a specified amount, net of reinsurance, which exceeds
one (1%) percent of the Company’s policyholder’s surplus as of December 31 of the last completed calendar year. 
 ARTICLE V—MGA’S COMPENSATION 
 5.1. Compensation. The Company shall pay to MGA, as its sole and full
compensation for all authorized business placed with the Company under this Agreement, and not including the fees and expenses to be paid to MGA for those claim adjustment services provided in Article VII herein, the commission, profit sharing and
policy fee set forth in Schedule II to this Agreement (hereinafter the “Compensation”). 
 ARTICLE VI—EXPENSES

 6.1. MGA’s Expenses. Except as otherwise provided in this Agreement, MGA shall pay all expenses incurred by MGA in
connection with the underwriting, production, marketing and servicing of the Policies, including but not limited to the following: 
  

	 	a.	Printing of proposals, policy jackets, contracts of insurance, endorsements, cancellation notices, premium notices, records and reports, and all other documents required to fulfill
the obligations of MGA under this Agreement. 

  

	 	b.	Advertising and public relations expenses authorized by MGA. The Company’s prior written approval shall be required with respect to any advertising or public relations material
that contains the Company’s name and logo. 

  

	 	c.	MGA’s general office expenses, including rent, salaries, utilities, data processing performed by MGA, transportation, furniture, fixtures, equipment, supplies, telephone,
postage, and other general overhead expenses. 

  

	 	d.	Any commissions payable to MGA’s sub-producers. 

 6.2. Company’s Expenses. The Company shall pay directly all charges and expenses directly attributable to its operations, including but not being limited to the following: Board and Bureau fees; Florida guaranty funds
assessments and other assessments for, 

  

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or based on, business written pursuant to this Agreement; premium taxes and any other assessments levied by a state or local governmental authority on
business written hereunder; cost of reinsurance; legal and auditing expenses incurred at the direction of the Company. 
 6.3.
Reimbursement by MGA. In addition to any rights granted to the Company hereunder, the Company shall be entitled to immediate reimbursement or payment from MGA for all ordinary, reasonable and necessary costs, charges and expenses
(collectively called “Expenses”) paid or incurred by the Company by reason of or in connection with (i) the termination pursuant to Section 9.2 of this Agreement, or (ii) the breach or non-performance of any covenant or
obligation to be observed or performed by MGA or any Agent; provided, however that in the case of a breach or non-performance by MGA, the Company shall have given MGA written notice of the breach or non-performance and MGA shall not have cured same
within thirty (30) days after the date of the notice, or if same is of such a nature that it cannot reasonably be cured within such time, if MGA has not within such time commenced to cure same and does not diligently continue to and actually
cure same. Any expenses incurred by the Company after the giving of such notice shall be promptly reimbursed by MGA. Without limiting the generality of the foregoing, MGA’s covenants and obligations as referred to herein shall include but not
be limited to: 
  

	 	a.	the obligation to deposit, report and remit premiums to the company; 

  

	 	b.	the obligation to remit return premiums to the insureds when due; 

  

	 	c.	the obligation to process all policies, endorsements and notices of cancellation and/or non-renewal pursuant to the Company’s underwriting guidelines; 

 

	 	d.	the obligation to observe and comply with underwriting guidelines and sub-agent appointment procedures; 

  

	 	e.	the obligation to observe and comply with all statutes, regulations, rules and rates; 

  

	 	f.	the obligation to comply with the requirements of Article III hereinabove; and 

  

	 	g.	 The writing, binding or issuance of policies and risks by MGA not in accordance with the conditions set forth in this Agreement and any Addenda hereto constitutes a
breach of this Agreement, and any loss and expense incurred by the Company resulting from such breach shall be assumed by MGA. In the event the Company sustains a loss on a Policy or 

  

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risk which the MGA has written, issued or bound which is not within the scope of its authority under this Agreement and any addendum hereto, MGA shall
reimburse the Company for the amount of the loss plus the expenses incurred by the Company because of the loss. 

 6.4.
Coverage. In the event that any obligation to grant or extend insurance coverage is imposed on the Company by a Court or the Department or any other state or jurisdiction as a result of any breach or non-performance by MGA or any Agent of its
or their obligations under Policies, then and in that event, MGA shall (a) pay any fine or penalty imposed upon the Company and all Expenses incurred by the Company. MGA may seek reimbursement for such fine, penalty, or Expenses from the
responsible Agent or cause such Agent to pay such fine, penalty, or Expense. 
 ARTICLE VII—CLAIMS ADMINISTRATION SERVICES

 7.1. General Authority. The Company appoints MGA for the purpose of investigating, evaluating, handling, adjusting, and
settling each claim which may arise during the term of this Agreement under the Policies (“Claims Services”) within the established authority for claims as set forth in Schedule III which is incorporated herein by reference. 
 7.2. Duties of MGA. In addition to, and without limiting, any duties which may be owed by MGA pursuant to Florida law and the applicable
regulations pertaining thereto, MGA shall: 
  

	 	a.	Utilize and enter the Company claims data into the claims administrative system as directed by Company in a timely manner. 

  

	 	b.	Dedicate sufficient and appropriate human, equipment and computer resources to provide Company with the Claims Services enumerated in Schedule III to this Agreement. The Claims
Services shall use only Florida licensed adjusters (as defined in F.S. Chapter 626, Part VI), and licensed private investigators (as described in Chapter 493, F.S.), or catastrophic adjusters, where applicable (as defined in F.S. §626.859), and
such adjusters and investigators shall conform to the provisions of Rule 690-220.201, Florida Administrative Code (Ethical Requirements), Florida Statutes and any applicable rules, orders, or written interpretations of the Controlling Documents
issued by the Department. 

  

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	 	c.	Investigate, evaluate, handle, adjust and settle each claim assigned MGA within the authority established for claims as set forth in Schedule III, which authority is subject to
termination for cause or upon termination of this agreement in accordance with §626.7451(7)(d). 

  

	 	d.	Designate an employee to act as liaison with Company to facilitate the provision of the Claims Services. 

  

	 	e.	Maintain the confidentiality of data or information which is the property of Company and which is directly accessible to MGA in the implementation and performance of the Claims
Services. 

  

	 	f.	Maintain complete, accurate and orderly claims books, files, records and accounts of all transactions in accordance with generally accepted insurance and accounting practices, which
files shall be the joint property of the Company and MGA. The data in any electronic claims files maintained by the MGA shall be transmitted to the Company in a timely manner as reasonably directed by the Company. 

  

	 	g.	Maintain during the term of this Agreement copies of all claims and correspondence related to the claims for a period of six (6) years after the date of closure of such claim.
MGA shall not destroy these copies without the written permission of the Company. MGA may, with permission from Company, use magnetic, optical, and other types of technology to store such data. At the end of such six (6) year period relevant to
any claim, the Company shall authorize MGA to either (a) destroy the closed file or (b) return such file to Company at Company's expense. Upon an order of liquidation of the Company, the claims files shall become the sole property of the
Company or its estate once MGA has been paid for the services rendered. MGA shall have reasonable access to and the right to copy all files, books and records on a timely basis. 

  

	 	h.	 The MGA shall adjust and handle all claims still open upon termination or cancellation of this Agreement for an agreed upon fee per claim. Company shall continue to
be responsible for the payment and reimbursement of expenses for such claims as provided in this Article VII. Notwithstanding the foregoing, any settlement 

  

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authority granted to the MGA may be terminated for cause upon the Company’s written notice to the MGA or upon termination of this Agreement. The Company
may suspend the MGA’s settlement authority during the pendency of any dispute regarding the cause for termination. 

  

	 	i.	MGA agrees that all claims occurring during the Term of this Agreement will be reported to the Company and will be assigned to properly licensed persons. 

 

	 	j.	MGA agrees that Notice shall be sent by the MGA to the Company as soon as it becomes known that a claim: 

 a. Exceeds the limit set by the insurer; 
 b. Involves a coverage dispute; 
 c. Exceeds the managing general agent’s claims
settlement authority; 
 d. Is open for more than 6 months; or 
 e. Is closed by payment of an amount set by the Department or an amount set by the insurer, whichever is less. 
 7.3. Company Discretion. MGA acknowledges and agrees that Company, as the party at risk and having ultimate responsibility for the claims to be
administered by MGA, shall at all times have ultimate discretion and authority with respect to all matters pertaining to the claims including, without limitation, the processing, handling, disposition, settlement, defense and litigation of all
claims. The exercise or failure to exercise such discretion and authority shall not in any way diminish, impair or otherwise affect the obligations of MGA hereunder, including, without limitation, the obligations to exercise reasonable care, to act
in good faith, and to otherwise act in a prudent, fair and appropriate manner with regard to the Claims Services. 
 7.4. Duties of Company.

  

	 	a.	Company agrees that all claims occurring during the Term of, and under, this Agreement will be reported and assigned to MGA, unless Company otherwise notifies MGA. Company will
provide all information, in its possession, relevant to particular claims assigned to MGA in order for MGA to fulfill its duties and obligations as set out in Schedule III. MGA shall notify Company, in writing, should Company fail to provide any
relevant information requested by MGA regarding any specific claim. 

  

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	 	b.	Company shall appoint an individual with sufficient authority within Company’s organization to facilitate MGA’s performance of the Claims Services enumerated in Schedule
III. 

  

	 	c.	Company has ultimate authority and responsibility for authorizing claims payment and settlement over MGA’s authority of Twenty- five Thousand Dollars ($25,000.00).

  

	 	d.	Company shall provide to MGA at no cost to MGA access to the policy or claims administrator system of Company on a twenty-four (24) hours a day, seven (7) days a week
basis. 

 7.5. Audit Provisions. The Company, its employees, and/or its authorized agents shall have the right, at any
reasonable time during normal business hours and with reasonable notice to the MGA, to review and/or audit Company’s claim files maintained by the MGA. 
 7.6. Price and Payment. 
  

	 	a.	Company agrees to pay Claim Services, Fees and Rates as specified in Schedule III A through Schedule III C of this Agreement. Schedule III A shall govern the Service Fees and Rates
payable to MGA by Company on all new and renewal business written by Company. Schedule III B shall govern the Services Fees and Rates payable to MGA by Company for subrogation and salvage activities. Schedule III C shall govern the Services Fees and
Rates payable to MGA by Company for catastrophic management services. 

  

	 	b.	The Service Fees and Rates may increase or decrease by mutual written agreement, if changes in the Claims Services mutually agreed to in writing substantially alter the servicing
personnel, equipment, or result in the servicing being done on a different system. 

  

	 	c.	Company agrees to pay all tariffs and taxes that are now or may become applicable to the Claims Services rendered. 

  

	 	d.	Service Fees and Rates for Claims Services will be due and payable fifteen (15) days after the close of the month in which Claims Services are performed in amounts pursuant to
Schedules III A through III D attached to this Agreement. 

  

	 	e.	 MGA and Company will renegotiate, in good faith, the Claims Services Fees in the event of 

  

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statutory, regulatory, or judicial changes that require additional activities not contemplated at the inception of this Agreement. Should the parties be
unable to reach an agreement, either party may terminate this Agreement upon advance written notice to the other party at least ninety (90) days prior to the effective date of termination. 

 7.7. Definition and Payment of “Allocated Loss Adjustment Expense.” All Allocated Loss Adjustment Expenses shall be paid by the Company.
For purposes of this Agreement, Allocated Loss Adjustment Expense(s) shall mean any expense which is chargeable or attributable to the investigation, coverage analysis, adjustment, negotiation, settlement, defense or general handling of any
Claim(s) or action(s) related thereto, or to the protection and/or perfection of the Company’s and/or its insured’s right of subrogation, contribution or indemnification. Allocated Loss Adjustment Expense(s) includes, but is not
limited to, the following: 
  

	 	a.	Attorney’s fees and disbursements incurred in connection with the determination of coverage and/or the adjustment, defense, negotiation or settlement of any Claim;
attorney’s fees incurred for representation at depositions, hearings, pretrial conferences and/or trials; 

  

	 	b.	Costs incurred in handling any Alternative Dispute resolution proceeding (“ADR”), legal actions, including trials or appeals, or in pursuing any declaratory judgment
action, including deposition fees, cost of appeal bonds, court reporter or stenographic service fees, filing fees, and other court costs, fees and expenses, transcript or printing costs and all discovery expenses; fees for service of process; fees
for witnesses’ testimony, opinions, or attendance at hearings or trial; 

  

	 	c.	Statutory fines or penalties; pre- and post-judgment interest paid as a result of litigation, unless legal requirements define such interest as indemnity payments;

  

	 	d.	Subcontractors’ fees and travel expenses, including independent adjusters, automobile and property appraisers, to the extent that same are incurred in the adjustment,
negotiation, settlement or defense of any Claim (excluding MGA’s employees); 

  

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	 	e.	Experts’ fees including reconstruction experts, engineers, cause and origin reports, photographers, accountants, economists, metallurgists, cartographers, architects,
handwriting experts, physicians, appraisers and other natural and physical science experts, plus the costs associated with preparation of expert reports, depositions, and testimony; 

  

	 	f.	Fees for surveillance, undercover operative and detective services or any other investigations; 

  

	 	g.	Costs for medical examinations, or autopsies, including diagnostic services, and related transportation costs, fees for medical reports and rehabilitation evaluations;

  

	 	h.	Costs for any public records, medical records, credit bureau reports, and other like reports; 

  

	 	i.	Costs and expenses incurred where MGA determines it is reasonable to pursue the rights of contribution, indemnification or subrogation of the Company and/or its insured, including
attorney and collection agency fees and/or expenses; 

  

	 	j.	Medical or vocational rehabilitation expenses, and all other medical cost containment services, including, but not limited to, utilization review, pre-audit admission authorization,
hospital bill audit or adjudication, provider bill audit or adjudication, and review of medical case management; 

  

	 	k.	Extraordinary travel and related expenses incurred by MGA at the express written request and approval of a Company officer, which are not otherwise payable under this Agreement; and

  

	 	l.	With respect to MGA’s determination that an expense(s) incurred pursuant to this Agreement is an Allocated Loss Adjustment Expense, MGA makes no representation or warranty and
assumes no responsibility that such determination (i) is in compliance with or meets the requirements of any statistical plan filing, statutory, regulatory, or insurance industry reporting scheme or the definition of the Allocated Loss
Adjustment Expense thereunder; (ii) is or could be characterized as payment of loss or indemnity; or (iii) is or is not subject to insurance or reinsurance coverage or limits. Company agrees that it is responsible for making all such
judgments and for complying with any and all such requirements. 

  

 16 

 7.8. Limitation of Liability and Remedies. 
  

	 	a.	In providing the Claims Services hereunder, MGA shall have a duty to act with a reasonable due care and caution, in good faith, and in a prudent manner. MGA shall be liable to
Company for any loss or damage sustained by Company as a result of, or related in whole or part to, the bad faith, negligence or other intentional or unintentional misconduct on the part of MGA, or its officers, directors, employees or agents.

  

	 	b.	MGA agrees to indemnify, defend and hold harmless Company, its officers, directors, employees, agents, designees and affiliates (collectively “Indemnified Parties”), from
and against any and all claims, causes of action, liabilities, liens, fines, penalties, demands, costs, fees, expenses (including reasonable attorney’s fees), suits, judgments, adjudications and losses of whatever kind or nature incurred by, or
claimed against, any of the Indemnified Parties by reason of any bad faith, negligence, or other misconduct by MGA, or any of its officers, directors, employees or agents, or by reason of any breach of this Agreement by MGA.

  

	 	c.	MGA shall have no indemnity obligation under this Agreement for any act or omission of the MGA taken or omitted to be taken at the express direction of Company.

  

	 	d.	All indemnity obligations of MGA under this Agreement shall survive the termination or expiration of this Agreement. 

  

	 	e.	MGA warrants that it now has and shall maintain during the term of this Agreement for the protection and benefit of the Company and MGA liability insurance coverage in an amount of
not less than One Million Dollars ($1,000,000) for any one event and in an amount of not less than Two Million Dollars ($2,000,000) in the aggregate. Such coverages shall be in a form and with a company acceptable to Company and proof of such
coverages shall be provided to Company upon request. 

 ARTICLE VIII – PROFIT SHARING ARRANGEMENT 
 8.1. Not Applicable 
 ARTICLE IX- TERMINATION

  

 17 

 9.1. Continuing Authority. The authority of MGA to issue Policies under this Agreement shall be
continuous until terminated, except for mandatory renewals of existing Policies. This Agreement may be terminated by either party, at the end of any calendar quarter, without cause, by giving the other party not less than one hundred twenty
(120) days prior written notice of such termination. 
 9.2. Termination By Company with Cause. This Agreement shall terminate:

  

	 	a.	Automatically and immediately at the written election of the Company, if any public authority cancels or declines to renew any of the licenses of MGA necessary to fulfill the terms
of this Agreement. 

  

	 	b.	Automatically and immediately in the event of a transfer, sale or pledge of the majority of the stock or a substantial portion of the assets of MGA, unless this Agreement is
assigned with the express written consent of the Company, or unless the pledge of stock is to a federal or state charted bank to secure loans from the bank to MGA, provided in the event of such permitted pledge that this Agreement shall terminate if
the pledged stock is foreclosed upon or otherwise acquired by the pledgee. 

  

	 	c.	At the election of the Company upon MGA’s material violation of any provision of this Agreement; provided, however, that MGA will be allowed thirty (30) days, after written
notice, to cure any non-monetary breach or default. 

  

	 	d.	Immediately, at the election of the Company for the occurrence of any failure by MGA to comply with the provisions of Section 6.3 a. or b. 

 9.3. Termination by MGA. This Agreement may be terminated at the election of and upon written notice from MGA upon the failure of the Company:
(a) to remain licensed in the State of Florida; (b) to comply with Florida laws and Department Rules and Regulations; or (c) to comply with the material provisions of this Agreement; provided, however, that Company will be allowed
thirty 

	(30)	days, after written notice, to cure any non-monetary breach or default. 

 9.4. Suspension and Revocation of Authority. The Company may suspend MGA’s underwriting authority during the pendency of any dispute regarding the termination of this Agreement. The Company 

  

 18 

 
and MGA shall fulfill their obligations under the Policies regardless of any dispute. 
 9.5. Effect of Termination. In the event of proper termination of this Agreement: 
  

	 	a.	Except as set forth in Section 7.2.h. herein, the obligations of MGA and the Company under this Agreement shall be discharged promptly; 

  

	 	b.	No party shall have a claim upon the other for loss of prospective profit or damage to the business arising therefrom; and 

  

	 	c.	MGA’s records shall remain the property of MGA and left in MGA’s possession, provided MGA is in compliance with all of its obligations to the Company. Copies of such
documents shall be furnished Company by MGA upon written request of Company. 

 9.6. Run-off. 
  

	 	a.	The Company shall, concurrent with its notice of termination or within thirty (30) days of MGA’s notice of termination, notify MGA of whether the Company intends to have MGA
service the Policies through their run-off, or whether it intends to manage the run-off itself. Except as set forth in Section 7.2.h. herein, MGA’s compensation in either event is set forth in Schedule II to this Agreement. For purposes of
this Agreement, the term “run-off” shall mean confirming coverage under the Polices to claims adjusters, administering the in-force Policies and any required renewals and endorsement thereof, providing reports to the Company as elsewhere
required by this Agreement, paying premium to the Company and return premium to the insureds, collecting all sums due from Agents, including return commissions, and such other activities of MGA specifically required by this Agreement.

  

	 	b,	MGA shall upon demand return to the Company any Policies, forms or other supplies imprinted with the Company’s name regardless of who incurred the cost for same, or any
Policies, forms or other supplies furnished to MGA by the Company, with the exception of any forms which in MGA’s reasonable 

  

 19 

	 	 
opinion are required to complete an orderly run-off of operations. 

  

	 	c.	In the event this Agreement terminates and/or MGA refuses or is unable to administer and run-off business produced under this Agreement, then in that event MGA shall immediately
provide the Company with a tape back-up of all programs and data libraries, including updated source code and data files, used in the production and administration of business hereunder (the “Data”). The Company agrees that it shall
utilize the Data solely for the purpose of administering and running off the business produced hereunder. 

  

	 	d.	MGA hereby grants, at no cost to the Company, a limited license to the Company to use MGA’s Software in connection with the administration and run-off of the business produced
hereunder. MGA shall deliver the Software, together with the source and object code for the Software, as well as all available related manuals, immediately upon delivery of the Data to the Company as provided in the preceding Section.

 ARTICLE X—ARBITRATION 
 10.1. Any controversy, claim or dispute arising out of or relating to this Agreement, including questions regarding the arbitrability of any issues or the scope, applicability, enforceability, validity or breach of
this or any other provision of this Agreement or differences of opinion as to the interpretation of this Agreement, shall be submitted to arbitration, one arbitrator to be chosen by the Company, one by MGA, and an umpire by the two arbitrators (the
arbitrators and umpire are referred to as the “Panel”). 
 10.2. The Panel shall, unless the parties otherwise agree, shall meet in
Port St. Lucie, Florida. Members of the Panel shall be disinterested officers or former officers of property and casualty insurance companies or insurance agencies authorized to transact business in the State of Florida. 
 10.3. The arbitration shall be instituted by the claimant serving a notice upon the respondent setting forth a statement of the nature of the dispute and
the name, address and current (or last, if retired) employment position of the arbitrator appointed by the claimant. The respondent shall appoint its arbitrator within twenty (20) days after service of claimant’s notice and shall, within
such time, similarly notify claimant of the name, 

  

 20 

 
address and current (or last, if retired) employment position of the respondent’s arbitrator. If the respondent fails to appoint its arbitrator within
such twenty (20) day period, the claimant shall also appoint the second arbitrator within ten (10) days after the expiration of the twenty (20) days for respondent to appoint its arbitrator. If the two arbitrators fail to agree upon
the appointment of an umpire at the end of the twenty (20) days following the last date of the appointment of the arbitrators, then they each shall, within ten (10) days thereafter, name three (3) candidates who serve as umpire, and
within ten (10) days thereafter each shall decline two (2) of the candidates named by the other; within five (5) days thereafter, a decision shall be made by drawing lots as to which of the last two (2) candidates shall be the
umpire. 
 10.4. The respondent shall submit its statement within twenty (20) days after receipt of the claimant’s statement, and
the claimant may submit a reply statement within ten (10) days after the receipt of the respondent’s statement. Copies of all statements shall be sent to the parties and the Panel. 
 10.5. Any hearing shall commence within thirty (30) days following the selection of the umpire. The Panel shall render its decision within thirty
(30) days following the termination of the hearings unless the parties consent to an extension. 
 10.6. The Panel shall consider this
Agreement an honorable engagement rather than merely a legal obligation and shall make its decision with regard to the custom and usage of the insurance and reinsurance business. The Panel shall issue its decision in writing upon evidence introduced
at a hearing or by other means of submitting evidence in which strict rules of evidence need not be followed, but in which cross examination and rebuttal shall be allowed if requested. The majority decision of the Panel shall be final and binding
upon all parties to the proceeding. Judgment may be entered confirming the award of the Panel in any court having jurisdiction thereof. 
 10.7. Each party shall bear the expense of its own arbitrator and shall jointly and equally bear the expense of the umpire. The remaining costs of the arbitration proceedings shall be allocated by the Panel. 
 10.8. In the event of subsequent actions or proceedings necessary to enforce the judgment entered thereon or any other rights flowing therefrom, the
prevailing party shall be entitled to recover its reasonable attorney’s fees. 
  

 21 

 10.9. Any suit, action, or other proceeding by or against either party to this Agreement, including any
proceeding to compel arbitration, to confirm the arbitration award, or to enforce any remedy available to either party may be brought in the Circuit Court of the State of Florida, County of St. Lucie, or in the Untied States District Court for the
Middle District of Florida, and each of the parties hereto submits and consents to the nonexclusive jurisdiction of each such court for the purpose of any such suit, action or proceeding. The parties agree that process in any action or proceeding
shall be personally served and that such service shall be sufficient to confer in personam jurisdiction over the party so served. 
 ARTICLE XI—INDEMNITY AGREEMENT 
 11.1. MGA shall indemnify the Company and its subsidiaries, successors, reinsurers and
assignees, as well as their shareholders, directors, officers and agents against and in respect of any and all liabilities (as defined below), made or instituted against or incurred by the Company or such other indemnitees and which arise, either
directly or indirectly, out of any action or inaction of MGA or any Agent, or their employees or representatives, in connection with any obligations of MGA arising out of this Agreement including, but not limited to, any action or inaction of MGA
concerning the termination of Agent(s) pursuant to all applicable laws. This Section 11.1 does not apply to the extent that the loss resulted from action or inaction of MGA, which is a result of acting in accordance with the written
instructions of the Company. 
 11.2. The Company shall indemnify MGA and its subsidiaries, successors, reinsurers and assignees, as well as
their shareholders, directors, officers and agents against and in respect of any and all liabilities (as defined below) made or instituted against or incurred by MGA or such other indemnitees and which arise, either directly or indirectly, out of
any action or inaction of the Company, or their employees or representatives, in connection with any obligations of the Company arising out of this Agreement. 
 11.3. For purposes of this Article XI, “liabilities” means all claims, demands, actions, proceedings, liability, losses, damages, costs or expenses, including without limitation, attorneys’ fees,
disbursements and court costs. 
  

 22 

 11.4. The indemnification provisions of this Article XI do not apply to covered claims made under any
policy issued in accordance with this Agreement nor with regard to the Claims Services, as set forth in Section 7.8. herein. 
 11.5.
All indemnity obligations herein shall survive the termination or expiration of this Agreement. 
 ARTICLE XII - GENERAL PROVISIONS 

 12.1. Survival. Article X on Arbitration, Section 9.6 on “run-off”, and all other provisions of this Agreement that
are pertinent to the “run-off” and the Claims Services to be rendered under Section 7.2.h. shall survive the termination of this Agreement. 
 12.2. Independent Contractor Relationship. Nothing herein shall create the relationship of employer and employee between the Company and MGA, it being understood and agreed that MGA is an independent contractor
of the Company for the purposes set forth herein with all rights, powers and duties as such. 
 12.3. Non-Assignable. Neither Company
nor MGA may assign this Agreement or any part thereof to another person or entity. 
 12.4. Subcontracting. MGA may subcontract or
delegate its duties under this Agreement with other persons or entities, subject to the prior written consent of the Company, which consent may not be unreasonably withheld. 
 12.5. Modification. This Agreement may not be changed, nor may any provision hereof be waived, except by a written document signed by both parties
hereto. 
 12.6. Non-Waiver. The failure of the Company or MGA to insist on strict compliance with this Agreement, or to exercise any
right or remedy hereunder, shall not constitute a waiver of any rights contained herein or estop the parties from thereafter demanding full and complete compliance therewith, or prevent the parties from thereafter demanding full and complete
compliance therewith, nor prevent the parties from exercising any right or remedy in the future. 
  

 23 

 12.7. Notice. Any notice required or permitted to be given under this Agreement shall be in
writing and shall be deemed duly given if delivered personally, or by a recognized courier service, or by registered or certified mail, return receipt requested, to the party for whom it is intended at the following address or such other address as
the party may designate from time to time. 
  

					
	For MGA:	  	Homeowners Choice Managers, Inc	  	
		  	 145 NW Central Park Plaza #110
 Port St. Lucie, FL
34986
	  	
			
		  	Attn: Ronald E. Chapman	  	
			
	For the Company:	  	Homeowners Choice Property and Casualty	  	
		  	 Insurance Company
 145 NW Central Park Plaza
#110
 Port St. Lucie, FL 34986
	  	
			
		  	Attn: Francis X. McCahill III	  	

 Notices shall be deemed given when delivered, or three (3) days after delivery to the courier or mailing, as
above provided. 
 12.8. Invalidity. If any provision of this Agreement should be found to be invalid or unenforceable, the remaining
provisions of this Agreement shall remain in full force and effect. 
 12.9. Governing Law. This Agreement shall be interpreted under
and pursuant to the laws of the State of Florida. 
 12.10. Assigns. Subject to the provisions of 12.3 hereof, this Agreement shall
bind and benefit the successors and permitted assigns of the parties. 
  

 24 

 12.11. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same agreement. 
 IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written. 
  

							
	HOMEOWNERS CHOICE MANAGERS, Inc.
				
	 BY:
	 	 

	 		 	Date: 3/27/07
	 Its:
	 	Chief Operating Officer	 		 	
	
	HOMEOWNERS CHOICE Property and Casualty Insurance Company, Inc.
				
	 BY:
	 	 

	 		 	Date: 3/27/07
	 Its:
	 	President	 		 	

  

 25 

 SCHEDULE I 
 AUTHORIZED COVERAGES, TERRITORY 
 AND LIMITS OF COVERAGE 
 The MGA is authorized as respects: 
 Coverages: The MGA is authorized for all
coverages for which the Company is licensed. 
 Territory: The MGA is authorized to represent the Company in all territories in which the Company and MGA
have valid licenses and/or certificates of authority. 
 Limits: The MGA is authorized to commit the Company to all coverages and limits as further described
in the Company’s Underwriting Manual as filed by the Company with its rate and form filing with the Department. 
  

 26 

 SCHEDULE II 
 COMPENSATION 
 for MGA Services 
 Company and MGA agree to the following commission schedule for the Managing General Agent Services, excluding Claims Services, described in this Agreement and its Schedules with respect to Company’s new
and renewal business. 
 MGA shall retain Twenty-one and one half Percent (21.5 %) of the Company’s Total Written Annual Premium as commission for its
Managing General Agent Services, excluding Claims Services and policies assumed from Citizens. Such commission shall be deducted from the premiums remitted to Company by MGA and adjusted on the 15th day after the end of each month beginning March,
2007 and each and every consecutive month thereafter during the Term of the Agreement. These commissions will be adjusted when the Company’s Total Written Annual Premium is determined and identified on the Company’s annual report filed
with the Department. Any balance due from these adjustments shall be paid to the other party no later than March 15th of the year in which such annual report is due and filed. 
 Total Written Annual Premium shall exclude the MGA policy fee of $25.00 per policy, or other non-commissionable fees. 
  

 27 

 SCHEDULE III 
 To the 
 MANAGING GENERAL AGENCY AGREEMENT 
 By and between 
 Homeowners Choice Managers, Inc. 
 And 
 Homeowners Choice Property and Casualty
Insurance Company, Inc. 
  

	A.	SERVICES 

 During the term of this Agreement, MGA shall be the exclusive
provider of the claims administration services (the “Claims Services”) defined below for all reported and assigned claims of the Company for policies of insurance written by or through Company. MGA will provide the services and general
management of these Claims Services described herein for subject claims as follows: 
 1. Company grants MGA the authority to investigate,
evaluate, handle, adjust and settle each claim assigned according to applicable state law, the terms and conditions of the policy and any written standards that may be provided by Company in addition to the provisions of this Agreement. 

2. Loss reporting will be by Internet, fax, or phone. Losses may be reported 24 hours a day. The Internet, fax and phone reporting will be checked for
new losses every two (2) hours from 8:00 AM until 11:00 PM. 
 3. Coverage will be verified on all cases through the Company by
procedures mutually agreed upon, in writing, by the parties. Contact will be made with claimant or insured within twenty-four (24) hours of loss reporting, excluding catastrophic events. 
 4. MGA will administer the appraisal/assessment process and will use in this endeavor a combination of staff, adjusters, and appraisers. 
 5. MGA will perform all reasonable, necessary and customary administrative and clerical work in connection with claim or loss reports. 
  

 28 

 6. MGA will establish and maintain a claim file for each reported claim or loss with a copy of the policy
for each reported claim. The claim file will have an activity log which shall be reviewable at any and all reasonable times by the Company subject to the provisions of Section 7.5 of this Agreement. Catastrophe claims will not require an
activity log. 
 7. MGA will provide the Company with litigation management. MGA will work with counsel to determine the best course of
action within a reasonable budget within the scope of authority granted by the Company. The selection and retention of legal counsel shall be the Company’s sole prerogative. 
 8. For non-catastrophic claims, the MGA will enter in the Company’s designated claims administration system each claim and a recommended reserve
within forty-eight (48) hours which initial reserves will be a statistical reserve and adjusted within fourteen (14) days based upon adjuster’s inspection of damages. The Company shall have the ultimate authority in establishing all
reserves and all component aspects thereof. MGA shall consult with Company and provide written notice to Company in a timely manner with respect to any of the following: 
 (a) Any loss or claim resulting in legal action being instituted against MGA or the Company; 
 (b) Any loss
or claim causing a complaint to be filed with any regulatory authority; 
 (c) Any inquiry from any regulatory authority, including but not
limited to, any insurance department, with respect to any claim or claims. 
 (d) Any claim MGA deems appropriate to deny policy coverage or
involves a coverage dispute; 
 (e) Any claim which might ultimately result in the payment(s) in excess of Twenty-five Thousand Dollars
($25,000.00). MGA shall forward a copy of such claim file to Company at its request. Company grants MGA claims settlement authority up to Twenty-five Thousand Dollars $25,000.00; 
 (f) Any open claim that involves an allegation of extra-contractual obligations; 
  

 29 

 (g) Any claim involving a fatality, amputation, spinal cord or brain damage, loss of eyesight, extensive
burns, poisoning, or multiple fractures; 
 (h) Any claim involving a minor; or 
 (i) any claim involving a claim of bad faith or seeking class action certification. 
 9. MGA will perform periodic review (at least semi-annually) at mutually agreed upon intervals of outstanding claim reserves, and recommend changes to
outstanding claim reserves. 
 10. MGA will order checks and vouchers from Company and will prepare all compromises, releases, agreements and
any other documents reasonably necessary to finalize and close claims. For settlements of less than Twenty-five Thousand Dollars ($25,000.00), MGA will issue payments of claims and allocated loss adjustment expenses only on checks of, and as
authorized by, the Company. A check in payment of a claim shall be issued within forty-eight (48) hours after claim is determined payable by MGA, except in the event of a catastrophic event. 
 For purposes of settling claims and paying claim-related expenses for claims of Twenty-five Thousand Dollars ($25,000.00) or less, Company has agreed to
establish, maintain and fund a separate bank account from which MGA may draw against as hereinafter set forth (the “Claim Account”). MGA shall not retain more than sixty (60) days of estimated claims payments and allocated loss
adjustment expenses in the Claim Account. 
 Company agrees to deposit additional funds into the Claim Account on a weekly basis if necessary
to maintain it at a level sufficient to allow MGA to carry out its obligations under this Agreement. Company shall provide to MGA such information as is necessary for MGA to draw checks on the Claim Account. 
 MGA AND COMPANY WILL PREPARE PROCEDURES FOR THE PAYMENT OF CLAIMS IN EXCESS OF TWENTY-FIVE THOUSAND DOLLARS ($25,000.00) WHICH WRITTEN PROCEDURES SHALL
BE ATTACHED TO THIS AGREEMENT AND BE DEEMED INCORPORATED HEREIN BY REFERENCE. 
 MGA hereby agrees to prepare, sign and issue checks in
accordance with the procedures adopted by Company. Any check prepared by MGA on the Claim Account must be signed by authorized individuals. 
  

 30 

 MGA shall promptly transmit any monies collected through salvage and subrogation to the Company, and
maintain a register of all such collections in a register (the “Salvage and Subrogation Register”). The Salvage and Subrogation Register shall include, but shall not be limited to, the following information: date of receipt of funds, the
claim number, the payer, and the amount of such payment. 
 The MGA shall have a duty of fiduciary responsibility to Company as to all money
of the Company coming into the possession or control of the MGA. 
 11. Service standards and claims documentation will be in compliance with
all state regulations dealing with the adjusting and handling of claims. MGA will periodically review the development of the claims handling procedure with the Company to identify problems and recommend corrective action. 
 12. MGA will diligently pursue and prosecute Company’s salvage and subrogation rights relating to any losses. MGA will use reasonable efforts to
collect funds arising from the enforcement of such rights. 
  

	B.	LOCATION OF PROVISION OF SERVICES: 

 As mutually
agreed upon by the Company and MGA. 
  

 31 

 SCHEDULE III A 
 Fees Applicable to New and Renewal Business for Claims Services 
 Company and MGA agree to the following fee schedule
for the Claims Services described in this Agreement and its Schedules with respect to Company’s new and renewal business. 
 Company shall pay MGA 3.5% of the Company’s Total Written Annual Premium including premiums assumed from Citizens for Claims Services rendered by MGA. Such fees shall be payable on the 15th day of each month
beginning April, 2007 and each and every consecutive month thereafter during the Term of the Agreement. These fees will be adjusted when the Company’ s Total Written Annual Premium is determined and identified on the Company’s annual report filed with the Department. Any balance due from these adjustments shall be paid to the other party no later than March 15th of the
year in which such annual report is due and filed. 
 The above fees do not include Allocated Loss Adjustment Expenses as defined in Section 7.7. of the
Agreement. The above fees do not apply to class action suits, catastrophic events or subrogation or salvage activities. 
 Total Written Annual Premium shall
exclude the MGA policy fee of $25.00 per policy, or other non-commissionable fees. 
  

 32 

 SCHEDULE III B 
 Additional Compensation 
 On a monthly basis, the Company shall pay MGA 50% of all subrogation and salvage amounts
recovered by MGA. 
  

 33 

 SCHEDULE III C 
 Catastrophe Management Services & Fees 
 Catastrophe Loss expense shall be reimbursed as follows:

 A. MGA will be reimbursed monthly per the schedule below for catastrophe administration expenses. 
  

							
	 GROSS LOSS
	  	 SERVICE FEE
	  	 
	$           .01 - $    2,500.00	  	    $   325.00	  
	$  2,501.00 - $    5,000.00	  	    $   450.00	  
	$  5,001.00 - $    7,500.00	  	    $   575.00	  
	$  7,501.00 - $  10,000.00	  	    $   650.00	  
	$10,001.00 - $  15,000.00	  	    $   900.00	  
	$15,001.00 - $  20,000.00	  	    $1,100.00	  
	$20,001.00 - $  25.000.00	  	    $1,375.00	  
	$25,001.00 - $  50,000.00	  	    $1,575.00	  
	$50,001.00 - $100,000.00	  	    3% of Gross loss	  
	 Over $100,001.00
	  	    2% of Gross loss	  

 In addition to the above: 0.5% of written premium for catastrophe response preparation fees. 
 GROSS LOSS: Gross loss shall mean the agreed RCV loss before the application of the deductible or other limiting clauses. 
  
  

					
	File Set Up and Administration:	  	$0	  	 
	  
 Photographs
	  	  
 Includes 2, then $2.00/ea.
	  
	  
 Mileage
	  	  
 First 50 miles included $1.00 per mile thereafter
	  
	  
 Miscellaneous Expense
	  	  
 Actual Cost
	  

 Time and Expense charges are applicable to re-inspections and/or inspections wherein a known coverage concern is
advised at assignment (i.e.—wind/hail exclusion). Time and expense charged at $75.00 per hour. All additional charges and expenses charged at cost. 
  

 34Investor Rights Agreement, dated June 11, 2008

 Exhibit 10.1 
 EXECUTION VERSION 
  
  
  
 INVESTOR RIGHTS AGREEMENT 
 between 
 UNITED ENERGY GROUP LIMITED 
 and 
 TRANSMERIDIAN EXPLORATION INCORPORATED

 Dated as of June 11, 2008 
  
  

 TABLE OF CONTENTS 
  

					
		
	ARTICLE I	  	
		
	DEFINITIONS	  	
			
	SECTION 1.01	  	Certain Defined Terms	  	2
			
	SECTION 1.02	  	Additional Defined Terms	  	3
		
	ARTICLE II	  	
		
	REGISTRATION RIGHTS	  	
			
	SECTION 2.01	  	Demand Registration	  	4
			
	SECTION 2.02	  	Shelf Registration	  	5
			
	SECTION 2.03	  	Limitations on Demand/Shelf Registrations	  	5
			
	SECTION 2.04	  	Piggy-Back Registration	  	6
			
	SECTION 2.05	  	Blackout Periods	  	7
			
	SECTION 2.06	  	Registration Procedures	  	8
			
	SECTION 2.07	  	Expenses	  	12
			
	SECTION 2.08	  	Rule 144 Information	  	13
			
	SECTION 2.09	  	Indemnification and Contribution	  	13
			
	SECTION 2.10	  	Certain Additional Limitations on Registration Rights	  	16
			
	SECTION 2.11	  	Limitations on Registration of Other Securities; Representation	  	16
			
	SECTION 2.12	  	No Inconsistent Agreements	  	16
			
	SECTION 2.13	  	Selection of Managing Underwriters	  	16
		
	ARTICLE III	  	
		
	ADDITIONAL AGREEMENTS	  	
			
	SECTION 3.01	  	Oversight Committee	  	17
			
	SECTION 3.02	  	Notification of Initiation of Sale or Acquisition Proposal	  	17

  

 i 

					
	SECTION 3.03	  	Certificate of Incorporation and Bylaws to be Consistent	  	18
		
	ARTICLE IV	  	
		
	MISCELLANEOUS	  	
			
	SECTION 4.01	  	Effectiveness	  	19
			
	SECTION 4.02	  	Termination	  	19
			
	SECTION 4.03	  	Specific Performance	  	19
			
	SECTION 4.04	  	Amendments and Waivers	  	19
			
	SECTION 4.05	  	Notice Generally	  	19
			
	SECTION 4.06	  	Successors and Assigns; Third Party Beneficiaries	  	20
			
	SECTION 4.07	  	Headings	  	21
			
	SECTION 4.08	  	Governing Law; Jurisdiction	  	21
			
	SECTION 4.09	  	Waiver of Jury Trial	  	21
			
	SECTION 4.10	  	Severability	  	21
			
	SECTION 4.11	  	Entire Agreement	  	21
			
	SECTION 4.12	  	Cumulative Remedies	  	21
			
	SECTION 4.13	  	Construction	  	22
			
	SECTION 4.14	  	Counterparts	  	22

  

 ii 

 INVESTOR RIGHTS AGREEMENT, dated as of June 11, 2008 (this “Agreement”), by and
between UNITED ENERGY GROUP LIMITED, an exempted company with limited liability existing under the laws of Bermuda (“Investor”), and TRANSMERIDIAN EXPLORATION INCORPORATED, a Delaware corporation (the “Company”).
All capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Investment Agreement (as defined below). 
 WHEREAS, Investor and the Key Senior Preferred Stockholders have entered into those certain Senior Preferred Stock Purchase Agreements, dated as of the date hereof, pursuant to which Investor has agreed to purchase
from each of the Key Senior Preferred Stockholders, and each Key Senior Preferred Stockholder has agreed to sell to Investor, all of the shares of the Senior Preferred Stock owned of record and beneficially by such Key Senior Preferred Stockholder,
upon the terms and subject to the conditions set forth in the Senior Preferred Stock Purchase Agreements (collectively, the “Rollover Transactions”); 
 WHEREAS, Investor and the Key Junior Preferred Stockholders have entered into that certain Junior Preferred Stock Purchase Agreement, dated as of the date hereof, pursuant to which Investor has agreed to purchase from
each Key Junior Preferred Stockholder, and each Key Junior Preferred Stockholder has agreed to sell to Investor, all of the shares of the Junior Preferred Stock owned of record and beneficially by such Key Junior Preferred Stockholder, upon the
terms and subject to the conditions set forth in the Junior Preferred Stock Purchase Agreement (the “Sale and Purchase Transactions”); 
 WHEREAS, Investor and the Company have entered into that certain Investment Agreement, dated as of the date hereof (the “Investment Agreement”), pursuant to which (a) Investor intends to make a
cash tender offer (the “Tender Offer”) to acquire the Remaining Shares of Senior Preferred Stock and the Remaining Shares of Junior Preferred Stock, and (b) if requested by Investor, the Company intends to cause the 12% Senior
Notes Issuer to (i) conduct an offer to exchange New Senior Notes and the 12% Senior Notes Cash Payments for the 12% Senior Notes and (ii) concurrently with the exchange offer, solicit consents from holders of the 12% Senior Notes to adopt
certain amendments to the Indenture, in each case upon the terms and subject to the conditions set forth in the Investment Agreement (such exchange offer and consent solicitation being collectively referred to herein as the “Exchange
Offer”, and together with the Tender Offer, the “Offers”); 
 WHEREAS, pursuant to the Investment Agreement, upon
the consummation of the Offers, the Rollover Transactions and the Sale and Purchase Transactions, the Company intends to issue to Investor (a) the Series B-1 Preferred Stock; (b) the Series B-2 Preferred Stock; and (c) the Warrants in
exchange for (i) the Preferred Stock tendered pursuant to the Tender Offer; (ii) the Senior Preferred Stock purchased by Investor pursuant to the Senior Preferred Stock Purchase Agreements; (iii) the Junior Preferred Stock purchased
by Investor pursuant to the Junior Preferred Stock Purchase Agreement; (iv) the First Tranche Price; (v) the Second Tranche Price; and (vi) the Additional Returns, in each case upon the terms and subject to the conditions set forth in
the Investment Agreement (collectively, the “Swap”, and together with the Rollover Transactions, the Sale and Purchase Transactions and the Offers, the “Transactions”); and 

 WHEREAS, the parties hereto desire to enter into this Agreement to establish certain rights and
obligations of Investor and the Company with respect to the New Preferred Stock. 
 NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, it is agreed as follows: 
 ARTICLE I 
 DEFINITIONS 

 SECTION 1.01 Certain Defined Terms. Unless otherwise defined herein, the terms below shall have the following meanings (such
meanings being equally applicable to both the singular and plural form of the terms defined): 
 “Certificate(s) of
Designations” means the Certificate of Designations with respect to the Series B-1 Preferred Stock and/or the Certificate of Designations with respect to the Series B-2 Preferred Stock, as the case may be. 
 “Holder” means Investor, and any transferee of Investor to whom Registrable Securities are permitted to be transferred in accordance
with the terms of this Agreement and the Certificates of Designations, and, in each case, who continues to be entitled to the rights of a Holder hereunder. 
 “Pro Rata Percentage” means, for each class or type of securities being offered in an underwritten public offering, (i) the number of unregistered securities of such class or type held by a
selling equity holder divided by (ii) the total number of unregistered securities of such class or type proposed to be sold by all selling equity holders. 
 “Registrable Securities” means (i) the New Preferred Stock and the Common Stock issuable upon conversion of any shares of the New Preferred Stock or upon exercise of any of the Warrants, and any
shares of New Preferred Stock or Common Stock issued in lieu of cash dividends on the New Preferred Stock and (ii) any securities issuable or issued or distributed in respect of any of the New Preferred Stock or Common Stock identified in
clause (i) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, reorganization, merger, consolidation or otherwise. For purposes of this Agreement, (A) Registrable Securities shall cease
to be Registrable Securities when a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act by the SEC and such Registrable Securities have been disposed of pursuant to such effective
Registration Statement and (B) the Registrable Securities of a Holder shall not be deemed to be Registrable Securities at any time when the entire amount of such Registrable Securities proposed to be sold by such Holder in a single sale
(i) constitute less than 1% of the then outstanding shares of Common Stock, (ii) are or, in the opinion of counsel satisfactory to the Company and such Holder, each in their reasonable judgment, may be, so distributed to the public
pursuant to Rule 144 (or any successor provision then in effect) under the Securities Act in any three month period or (iii) any such Registrable Securities have been sold in a sale made pursuant to Rule 144 under the Securities Act (or any
successor provision then in effect). 
  

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 “Registration Statement” means a Demand Registration Statement, Piggy-Back Registration
Statement and/or Shelf Registration Statement, as the case may be. 
 SECTION 1.02 Additional Defined Terms. The following terms have
the meanings set forth in the Section set forth opposite such term: 
  

			
	Agreement	  	Preamble
	Blackout Period	  	2.05
	Company	  	Preamble
	Demand for Registration	  	2.03
	Demand Registration	  	2.01(a)
	Demand Registration Statement	  	2.01(a)
	Exchange Offer	  	Recitals
	Holder Offer	  	3.02(d)
	Indemnified Party	  	2.09(d)
	Indemnifying Party	  	2.09(d)
	Investment Agreement	  	Recitals
	Investor	  	Preamble
	Investor Designees	  	3.01
	Maximum Number of Securities	  	2.01(b)
	Negotiation Period	  	3.02(d)
	Notice	  	3.02(a)
	Offers	  	Recitals
	Oversight Committee	  	3.01
	Participating Demand Holders	  	2.01(a)
	Participating Piggy-Back Holders	  	2.04(b)
	Piggy-Back Registration	  	2.04(a)
	Piggy-Back Registration Statement	  	2.04(a)
	Rollover Transactions	  	Recitals
	Sale and Purchase Transactions	  	Recitals
	Sale Transaction	  	3.02(b)
	Shelf Registration	  	2.02(a)
	Shelf Registration Period	  	2.02(b)
	Shelf Registration Statement	  	2.02(a)
	Swap	  	Recitals
	Tender Offer	  	Recitals
	Third Party Offer	  	3.02(a)
	Transactions	  	Recitals

  

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 ARTICLE II 
 REGISTRATION RIGHTS 
 SECTION 2.01 Demand Registration. (a) Upon receipt of a
written request from a Holder holding at least 25% of the Registrable Securities at such time (on an as converted basis) requesting that the Company effect a registration (a “Demand Registration”) under the Securities Act covering
all or part of the Registrable Securities which specifies the intended method or methods of disposition thereof, the Company shall promptly notify all Holders in writing of the receipt of such request and each such Holder, in lieu of exercising its
rights under Section 2.04 hereof may elect (by written notice sent to the Company within ten (10) Business Days from the date of such Holder’s receipt of the aforementioned notice from the Company) to have all or part of such
Holder’s Registrable Securities included in such registration thereof pursuant to this Section 2.01, and such Holder shall specify in such notice the number of Registrable Securities that such Holder elects to include in such registration.
Thereupon the Company shall, as expeditiously as is possible, but in any event no later than thirty (30) days (excluding any days which occur during a permitted Blackout Period under Section 2.05 below) after receipt of a written request
for a Demand Registration, file with the SEC and use its reasonable best efforts to cause to be declared effective, a registration statement (a “Demand Registration Statement”) relating to all shares of Registrable Securities which
the Company has been so requested to register by such Holders (“Participating Demand Holders”) for sale, to the extent required to permit the disposition (in accordance with the intended method or methods thereof, as aforesaid) of
the Registrable Securities so registered. 
 (b) If the Participating Demand Holders in a Demand Registration relating to a public offering
holding a majority in interest of Registrable Securities (on an as converted basis) for which such Demand Registration was requested request that the offering be underwritten with a managing underwriter selected in the manner set forth in
Section 2.13 below and such managing underwriter of such Demand Registration advises the Company in writing that, in its opinion, the number of securities to be included in such offering is greater than the total number of securities which can
be sold therein without having a material adverse effect on the distribution of such securities or otherwise having a material adverse effect on the marketability thereof (the “Maximum Number of Securities”), then the Company shall
include in such Demand Registration the Registrable Securities that the Participating Demand Holders have requested to be registered thereunder only to the extent the number of such Registrable Securities does not exceed the Maximum Number of
Securities. If such amount exceeds the Maximum Number of Securities, the number of Registrable Securities included in such Demand Registration shall be allocated among all of the Participating Demand Holders on a pro rata basis (based on the number
of Registrable Securities held by each Participating Demand Holder). If the amount of such Registrable Securities does not exceed the Maximum Number of Securities, the Company may include in such Demand Registration any other securities of the
Company held by other security holders of the Company in an amount not to exceed the difference between (i) the Maximum Number of Securities and (ii) the Registrable Securities which the Company has been requested to register by the
Participating Demand Holders, as the Company may in its reasonable discretion determine or be obligated to allow, in an amount which together with the Registrable Securities included in such Demand Registration shall not exceed the Maximum Number of
Securities. 
  

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 (c) Registrations under this Section 2.01 shall be on such appropriate form of the SEC (i) as
shall be selected by the Company and (ii) as shall permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the applicable Holders’ request for such registration.

 (d) Notwithstanding anything to the contrary contained herein, the Company shall not be required to prepare and file (i) more than
two (2) Demand Registration Statements in any 12-month period or (ii) any Demand Registration Statement within ninety (90) days following the date of effectiveness of any other Registration Statement. 
 SECTION 2.02 Shelf Registration. (a) Any Demand Registration Statement may be required by Participating Demand Holders constituting a
majority of the Registrable Securities (on an as converted basis) for which such Demand Registration was requested to be in an appropriate form under the Securities Act (a “Shelf Registration Statement”) relating to any or all of
the Registrable Securities in accordance with the methods and distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (the “Shelf Registration”). 
 (b) The Company shall use its reasonable best efforts to have such Shelf Registration Statement declared effective, subject to Section 2.05 below,
and to keep such Shelf Registration Statement continuously effective, supplemented and amended to the extent necessary to ensure that it (i) is available for resales of Registrable Securities by such Holders; (ii) conforms with the
requirements of this Agreement, the Securities Act and the policies, rules, regulations and other applicable requirements of the SEC as announced from time to time; and (iii) does not 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 therein, in light of the circumstances under which they were made, not misleading (provided, however, that the Company shall have no such
obligations or liabilities with respect to any written information pertaining to any Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein), in each case until such time as all of the Registrable
Securities covered by the Shelf Registration Statement (A) have been sold in the manner provided for therein and pursuant thereto, (B) have been distributed to the public pursuant to Rule 144 under the Securities Act (or any successor rule
thereof), or (C) cease to be outstanding (the “Shelf Registration Period”). A request of a Demand Holder under this Section 2.02 shall be deemed to be a request for a Demand Registration for the purposes of
Section 2.01(d). 
 (c) Registrations under this Section 2.02 shall be on such appropriate form of the SEC (i) as shall be
selected by the Company and (ii) as shall permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the applicable Holders’ request for such registration. 

SECTION 2.03 Limitations on Demand/Shelf Registrations. Holders shall be entitled to an aggregate of three (3) Registrations of
Registrable Securities pursuant to Section 2.01 or Section 2.02 (each, a “Demand for Registration”); provided, that a registration requested pursuant to Section 2.01 or Section 2.02 shall not be deemed to
have been effected for purposes of this Section 2.03 unless (i) it has been declared effective by the SEC; (ii) it has remained effective for the period set forth in Section 2.06(a), subject to Section 2.05 and
Section 2.06(i); and (iii) the offering of Registrable Securities pursuant to such registration is not subject to any 

  

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stop order, injunction or other order or requirement of the SEC (for any reason other than the acts or omissions of Holders) unless such stop order,
injunction or other order or requirement of the SEC has been withdrawn, vacated or otherwise removed. 
 SECTION 2.04 Piggy-Back
Registration. (a) If the Company proposes to file on its behalf and/or on behalf of any holder of its securities (other than a Holder) a registration statement under the Securities Act on any form (other than a registration statement on
Form S-4 or S-8 or any successor form for securities to be offered in a transaction of the type referred to in Rule 145 under the Securities Act or to employees of the Company pursuant to any employee benefit plan, respectively) for the registration
of Common Stock or preferred stock that is convertible to Common Stock (a “Piggy-Back Registration”), it will give written notice to all Holders at least thirty (30) days before the initial filing with the SEC of such
piggy-back registration statement (a “Piggy-Back Registration Statement”), which notice shall set forth the intended method of disposition of the securities proposed to be registered by the Company. The notice shall offer such
Holders the opportunity to include in such filing such number of Registrable Securities as each such Holder may request. 
 (b) Each Holder
desiring to have Registrable Securities registered under this Section 2.04 (“Participating Piggy-Back Holders”) shall advise the Company in writing within fifteen (15) days after the date of receipt of such offer from the
Company, setting forth the amount of such Registrable Securities for which registration is requested. The Company shall thereupon include in such filing the number or amount of Registrable Securities for which registration is so requested, subject
to paragraph (c) below, and shall use its reasonable best efforts to effect registration of such Registrable Securities under the Securities Act. 
 (c) If the Piggy-Back Registration relates to an underwritten public offering and the managing underwriter of such proposed public offering advises in writing that, in its opinion, the amount of Registrable Securities
requested to be included in the Piggy-Back Registration in addition to the securities being registered by the Company would be greater than the Maximum Number of Securities (having the same meaning as defined in Section 2.01 but replacing the
term “Demand Registration” with “Piggy-Back Registration”), then: 
 (i) in the event that
the Company initiated the Piggy-Back Registration, the Company shall include in such Piggy-Back Registration first, the securities the Company proposes to register and second, the securities of all other selling equity holders,
including the Participating Piggy-Back Holders, to be included in such Piggy-Back Registration in an amount which together with the securities the Company proposes to register, shall not exceed the Maximum Number of Securities, such amount to be
allocated among such selling equity holders based on each such holder’s Pro Rata Percentage. 
 (ii) in the event any
holder of securities of the Company (other than a Holder) initiated the Piggy-Back Registration, the Company shall include in such Piggy-Back Registration first, the securities such initiating equity holder proposes to register,
second, the securities of any other selling equity holders (including Participating Piggy-Back Holders), in an amount which together with the securities the initiating equity holder proposes to register, shall not exceed the Maximum
Number of Securities, such 

  

 6 

 
amount to be allocated among such other selling equity holders based on each such holder’s Pro Rata Percentage; and third, any securities the
Company proposes to register, in an amount which together with the securities the initiating equity holder and the other selling equity holders propose to register, shall not exceed the Maximum Number of Securities. 
 (d) The Company will not hereafter enter into any agreement, which is inconsistent with the rights of priority provided in paragraph (c) above.

 SECTION 2.05 Blackout Periods. The Company shall have the right to delay the filing or effectiveness, or in the case of a Shelf
Registration Statement, to suspend the use, of a Registration Statement required pursuant to Section 2.01, Section 2.02 or Section 2.04 hereof during no more than two (2) periods aggregating to not more than forty-five
(45) days in any twelve-month period (except as a result of a review of any post-effective amendment by the SEC before declaring any post-effective amendment to a Registration Statement effective, provided that the Company has used its
reasonable best efforts to cause such post-effective amendment to be declared effective) (a “Blackout Period”) in the event that in the judgment of the Board, (i) there is a reasonable likelihood that such disclosure, or any
other action to be taken in connection with the prospectus, would materially and adversely affect or interfere with any financing, acquisition, merger, disposition of assets (not in the ordinary course of business), corporate reorganization or other
similar transaction in which the Company is engaged or in respect of which the Company proposes to engage in discussions or negotiations, or has proposed or taken a substantial step to commence, (ii) there is an event or state of facts relating
to the Company which is material to the Company the disclosure of which would, in the reasonable judgment of the Company be adverse to its interests or (iii) it is required by law, rule, regulation or published release or interpretation of the
SEC to supplement the Registration Statement or file a post-effective amendment to the Registration Statement in order to incorporate information into the Registration Statement for the purpose of (1) including in the Registration Statement any
prospectus required under Section 10(a)(3) of the Securities Act; (2) reflecting in the prospectus included in the Registration Statement any facts or events arising after the effective date of the Registration Statement (or of the
most-recent post-effective amendment) that, individually or in the aggregate, represents a fundamental change in the information set forth therein; or (3) including in the prospectus included in the Registration Statement any material
information with respect to the plan of distribution not disclosed in the Registration Statement or any material change to such information; provided, however, that the Company shall delay during such Blackout Period the filing or
effectiveness of any Registration Statement or suspend the use of any Registration Statement, as applicable, required pursuant to the registration rights of the holders of any securities of the Company. The Company shall promptly give the Holders
written notice of such determination containing a general statement of the reasons for such postponement and an approximation of the anticipated delay. 
  

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 SECTION 2.06 Registration Procedures. If the Company is required by the provisions of
Section 2.01, Section 2.02 or Section 2.04 to use its reasonable best efforts to effect the registration of any of its securities under the Securities Act, the Company will, as expeditiously as possible: 
 (a) prepare and file with the SEC a Registration Statement with respect to such securities and use its reasonable best efforts to cause such Registration
Statement to become effective as promptly as practicable and to remain effective for a period of time required for the disposition of such securities by the holders (including the Holders) thereof but not to exceed thirty (30) days (except with
respect to a Shelf Registration Statement which shall remain effective for the Shelf Registration Period); provided, however, that before filing such Registration Statement or any amendments or supplements thereto (including in each
case all exhibits), the Company shall furnish the representatives of the Holders referred to in Section 2.06(m) copies of all documents proposed to be filed, which documents will be subject to the review of such Holders and their respective
representatives. The Company shall not be deemed to have used its reasonable best efforts to keep a Registration Statement effective during the applicable period if it voluntarily takes any action that would result in the Holders of such Registrable
Securities not being able to sell such Registrable Securities during that period, unless such action is required under applicable law or except to the extent contemplated by Section 2.05 or 2.06(i)(v); 
 (b) prepare and file with the SEC such amendments and supplements (including in each case all exhibits) to such Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such Registration
Statement until the earlier of such time as all of such securities have been disposed of in a public offering or the expiration of thirty (30) days (except with respect to the Shelf Registration Statement, for which such period shall be the
Shelf Registration Period); 
 (c) furnish to such selling security holders (including the Holders) such number of conformed copies of the
applicable Registration Statement and each such amendment and supplement thereto (including in each case all exhibits), such copies of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with the requirements
of the Securities Act, and such other documents, as such selling security holders (including the Holders) may reasonably request in order to facilitate the public sale or other disposition of the securities covered by such Registration Statement.
The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each Holder participating in the offering and sale of the Registrable Securities covered by the prospectus, or
any amendment or supplement thereto, included in the applicable Registration Statement; 
 (d) prior to any public offering of the securities
pursuant to the applicable Registration Statement, register or qualify the securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions within the United States as each Holder of such
securities shall reasonably request, to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to
consummate the disposition in such jurisdictions of the securities owned by such Holder, and do such other reasonable acts and things as may be required of it to enable such Holder to consummate the disposition in such jurisdiction of the securities
covered by such Registration Statement, provided that the Company shall not be required to qualify generally to do business in any jurisdiction or to register as a broker or dealer in such jurisdiction where it would not otherwise be required to
qualify but for this provision, or submit to the general service of process in any such jurisdiction; 
  

 8 

 (e) furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to
Section 2.01, Section 2.02 or Section 2.04, if the method of distribution is by means of an underwriting, on the date that the shares of Registrable Securities are delivered to the underwriters for sale pursuant to such registration,
or if such Registrable Securities are not being sold through underwriters, on the date that the Registration Statement with respect to such shares of Registrable Securities becomes effective, (1) a signed opinion, dated such date, of the
independent legal counsel representing the Company for the purpose of such registration, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holders making such request, as
to such matters as such underwriters or the Holders holding a majority of the Registrable Securities (on an as converted basis) included in such registration, as the case may be, may reasonably request; (2) such customary documents and
certificates executed and delivered by the Company’s officers, and any updates thereof, as requested by the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then the Holders making such request;
and (3) letters dated such date and the date the offering is priced from the independent certified public accountants of the Company, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through
underwriters, then to the Holders making such request (i) stating that they are independent certified public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other
financial data of the Company included in the Registration Statement or the prospectus, or any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Securities Act and
(ii) covering such other financial matters (including information as to the period ending not more than five (5) business days prior to the date of such letters) with respect to the registration in respect of which such letter is being
given as such underwriters or the Holders holding a majority of the Registrable Securities (on an as converted basis) included in such registration, as the case may be, may reasonably request and as would be customary in such a transaction;
provided that, to be an addressee of such letter, each Holder may reasonably be required to confirm that it is in the category of persons to whom a comfort letter may be delivered in accordance with applicable accounting literature;

 (f) enter into customary agreements (including if the method of distribution is by means of an underwriting, an underwriting agreement in
customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities; 
 (g) comply with all applicable rules and regulations of the SEC, and make earnings statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder generally available to the
Holders no later than 45 days after the end of any twelve-month period (or 90 days, if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in an underwritten
public offering, or (ii) if not sold to underwriters in such an offering, beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement, which statements shall cover
said twelve-month periods; 
  

 9 

 (h) use its reasonable best efforts to cause all such Registrable Securities to be listed on each
securities exchange or quotation system on which similar securities issued by the Company are listed or traded; 
 (i) give written notice to
the Holders: 
 (i) when such Registration Statement or any amendment thereto has been filed with the SEC and when such
Registration Statement or any post-effective amendment thereto has become effective; 
 (ii) of any request by the SEC for
amendments or supplements to such Registration Statement or the prospectus included therein or for additional information; 
 (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose; 
 (iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the
Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and 
 (v) of
the happening of any event that requires the Company to make changes in such Registration Statement or the prospectus in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of
the prospectus until the requisite changes have been made). 
 (j) use its reasonable best efforts to prevent the issuance or obtain the
withdrawal of any order suspending the effectiveness of such Registration Statement at the earliest possible time; 
 (k) furnish to each
Holder, without charge, at least one copy of such Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits (including those, if any,
incorporated by reference); 
 (l) upon the occurrence of any event contemplated by Section 2.06(i)(v) or Section 2.05(iii) above,
promptly prepare and file a post-effective amendment to such Registration Statement or a supplement to the related prospectus or prepare and file any other required document so that, as thereafter delivered to the Holders, the prospectus will not
contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance
with Section 2.06(i)(v) or 2.05(iii) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made or the post-effective amendment has become effective, as the case may be, then the Holders shall
suspend use of such prospectus, and the period of effectiveness of such Registration Statement 

  

 10 

 
provided for above shall be extended by the number of days from and including the date of the giving of such notice to the date Holders shall have received
such amended or supplemented prospectus pursuant to this Section 2.06(l); 
 (m) make reasonably available for inspection by the
Holders, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by such Holders or any such underwriter, all relevant financial and other records, pertinent
corporate documents and properties of the Company and cause the Company’s officers, directors and employees to supply all relevant information reasonably requested by any such Holder, underwriter, attorney, accountant or agent in connection
with the registration, in each case as shall be reasonably necessary to enable such persons to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that any such information
that the Company reasonably determines, in good faith, to be confidential and notifies such Holder, attorney, accountant, agent or any such underwriter is confidential shall not be used by the underwriters or the Holders as the basis for any market
transactions in the securities of the Company (unless and until such information is made generally available to the public through no violation of this Section 2.06(m)) and shall not be disclosed by such persons to any other person unless
(i) such information relates to a misstatement or omission in a Registration Statement, (ii) the release of such information is required by applicable law, legal process, or the rules of the SEC, a securities exchange, market or automated
quotation system, or (iii) such information has been generally made available to the public; 
 (n) in connection with any underwritten
offering, make appropriate officers of the Company available to the selling security holders for meetings with prospective purchasers of the Registrable Securities and prepare and present to potential investors customary “road show”
material, in each case in accordance with the recommendations of the underwriters and in all respects in a manner consistent with other new issuances of securities in an offering of a similar size to such offering of the Registrable Securities, in
connection with any proposed sale of the Registrable Securities in an aggregate offering of at least US$5,000,000; 
 (o) use its reasonable
best efforts to procure the cooperation of the Company’s transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical stock certificates into book-entry form in accordance with
any procedures reasonably requested by the Holders or the underwriters; 
 (p) (i) if requested by Investor, furnish, without charge,
prior to the filing thereof with the SEC, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that Investor (with respect to any portion of an unsold
allotment from the original offering) is participating in the Registration Statement, the Company shall use its reasonable best efforts to reflect in each such document, when so filed with the SEC, such comments as Investor reasonably may propose;
and (ii) in the case of a Shelf Registration Statement, file pursuant to Rule 424(b) under the Securities Act a supplement to the prospectus contained in the Shelf Registration Statement or, if required, file a post-effective amendment to the
Shelf Registration Statement, in each case, to cover new Holders of Registrable Securities or any additional Registrable Securities acquired by existing Holders upon at least seven (7) Business Days prior written notice by such new Holder

  

 11 

 
or existing Holder to such effect and the delivery by such new Holder or existing Holder of a duly completed questionnaire in customary form necessary for
the Company to comply with the disclosure requirements of the Securities Act and any other applicable governing or regulatory body having jurisdiction over the Registration Statement; 
 (q) cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold
pursuant to the Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Registrable Securities pursuant to the
Registration Statement, except in such cases where such Registrable Securities are required to be issued only in book-entry form pursuant to the terms of the applicable Certificate of Designations; and 
 (r) use its reasonable best efforts to take all other steps necessary to effect the registration of the Registrable Securities covered by any
Registration Statement contemplated hereby. 
 It shall be a condition precedent to the obligation of the Company to take any action pursuant
to this Agreement in respect of the Registrable Securities which are to be registered at the request of any Holder that such Holder shall furnish to the Company a questionnaire in customary form necessary for the Company to comply with the
disclosure requirements of the Securities Act and any other applicable governing or regulatory body having jurisdiction over the Registration Statement and such information regarding the securities held by such Holder and the intended method of
disposition thereof as the Company shall reasonably request and as shall be required in connection with the action taken by the Company. Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event described in
Section 2.05(iii) or Section 2.06(i) such Holder will as promptly as reasonably practicable discontinue disposition of Registrable Securities pursuant to a Registration Statement until (i) any such stop order is withdrawn, vacated or
otherwise removed or (ii) such Holder receives copies of the supplemented or amended prospectus, as the case may be. 
 SECTION 2.07
Expenses. All expenses incurred in connection with each registration pursuant to Section 2.01, Section 2.02 or Section 2.04 of this Agreement, excluding brokers’ and underwriters’ discounts and commissions and
transfer taxes, but including without limitation all registration, filing and qualification fees and expenses, word processing, duplicating, printers’ and accounting fees (including the expenses of any special audits or “comfort”
letters required by or incident to such performance and compliance), all application, listing and filing fees in connection with listing on a national securities exchange or automated quotation system pursuant to the requirements hereof, messenger
and delivery expenses, telephone usage expenses, all fees and expenses of complying with state securities or blue sky laws, fees and disbursements of counsel for the Company, and fees and expenses of the Company and the underwriters relating to
“road show” investor presentations, including the cost of any aircraft chartered for such purpose, and the reasonable fees and disbursements, which shall not exceed US$100,000, of one counsel for the selling Holders (which counsel shall be
a nationally recognized firm experienced in securities laws matters that is chosen by the Holders holding a majority in interest of the Registrable Securities being registered (on an as converted basis)), shall be paid by the Company, except that:

 (a) all such expenses in connection with any amendment or supplement to a Registration Statement or prospectus filed more than thirty
(30) (or in the case of a Shelf Registration Statement, ninety (90) days) days after the effective date of such Registration Statement because any Holder has not effected the disposition of the Securities requested to be registered shall
be paid by such Holder; 
  

 12 

 (b) the Holders shall bear and pay the underwriting commissions and discounts applicable to securities
offered for their account in connection with any registrations, filings and qualifications made pursuant to this Agreement; and 
 (c) the
Company will bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any person,
including special experts, retained by the Company. 
 SECTION 2.08 Rule 144 Information. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration, at all times after ninety (90) days after any Registration Statement covering
securities of the Company shall have become effective, the Company agrees to: 
 (a) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act; 
 (b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and 
 (c) furnish to each
Holder of Registrable Securities forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of such Rule 144 and of the Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed by the Company as such Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing such Holder to sell any Registrable Securities
without registration. 
 SECTION 2.09 Indemnification and Contribution. (a) The Company shall indemnify and hold harmless each
Holder, such Holder’s directors and officers, each person who participates in the offering of such Registrable Securities, including underwriters (as defined in the Securities Act), and each person, if any, who controls such Holder or
participating person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based on any untrue or alleged untrue statement of any material fact contained in such Registration Statement on the effective date thereof (including any prospectus filed under
Rule 424 under the Securities Act or any amendments or supplements thereto) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse each such Holder, such Holder’s directors and officers, such participating person or controlling 

  

 13 

 
person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this Section 2.09(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld); provided, further, that the Company shall not be liable to any Holder, such Holder’s directors and officers, participating person or controlling person
in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in connection with such Registration
Statement, preliminary prospectus, final prospectus or amendments or supplements thereto, in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, such
Holder’s directors and officers, participating person or controlling person. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any such Holder, such Holder’s directors and
officers, participating person or controlling person, and shall survive the transfer of such securities by such Holder. 
 (b) Each Holder
requesting or joining in a registration severally and not jointly shall indemnify and hold harmless the Company, each of its directors and officers, each person, if any, who controls the Company within the meaning of the Securities Act, and each
agent and any underwriter for the Company (within the meaning of the Securities Act) against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer, controlling person, agent or underwriter
may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material
fact contained in such Registration Statement on the effective date thereof (including any prospectus filed under Rule 424 under the Securities Act or any amendments or supplements thereto) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such Registration Statement, preliminary or final prospectus, or amendments or supplements thereto, in reliance upon and in conformity with written information furnished by or on behalf of such Holder
expressly for use in connection with such registration; and each such Holder shall reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, agent or underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 2.09(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld), and provided, further, that the liability of each Holder hereunder shall be limited to
the aggregate net proceeds received by such Holder in connection with any such registration under the Securities Act. 
 (c) If the
indemnification provided for in this Section 2.09 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such 

  

 14 

 
indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or
proceeding. If the allocation provided in this paragraph (c) is not permitted by applicable law, the parties shall contribute based upon the relevant benefits received by the Company from the initial offering of the Registrable Securities on
the one hand and the net proceeds received by the Holders from the sale of such Registrable Securities on the other. 
 The parties hereto
agree that it would not be just and equitable if contribution pursuant to this Section 2.09(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. 
 (d) Any Person entitled to indemnification hereunder (the “Indemnified Party”) agrees to give prompt
written notice to the indemnifying party (the “Indemnifying Party”) after the receipt by the Indemnified Party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in
writing for which the Indemnified Party intends to claim indemnification or contribution pursuant to this Agreement; provided, that the failure so to notify the Indemnified Party shall not relieve the Indemnifying Party of any liability that
it may have to the Indemnifying Party hereunder unless such failure is materially prejudicial to the Indemnifying Party. If notice of commencement of any such action is given to the Indemnifying Party as above provided, the Indemnifying Party shall
be entitled to participate in and, to the extent it may wish, to assume the defense of such action at its own expense, with counsel chosen by it and reasonably satisfactory to such Indemnified Party. The Indemnified Party shall have the right to
employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be paid by the Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii) the
Indemnifying Party fails to assume the defense of such action, or (iii) the named parties to any such action (including any impleaded parties) have been advised by such counsel that either (A) representation of such Indemnified Party and
the Indemnifying Party by the same counsel would be inappropriate under applicable standards of professional conduct or (B) there are one or more legal defenses available to it which are substantially different from or additional to those
available to the Indemnifying Party. No Indemnifying Party shall be liable for any settlement entered into without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent
of the Indemnified Party, effect any settlement of any pending or threatened action in respect of which any Indemnified Party is or 

  

 15 

 
could have been a party and indemnity could have been sought hereunder by such Indemnified Party unless such settlement (i) includes an unconditional
release of such Indemnified Party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Party. 
 (e) The agreements contained in this Section 2.09 shall survive the transfer of the Registered Securities by any
Holder and sale of all the Registrable Securities pursuant to any registration statement and shall remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or such director, officer or participating or
controlling Person. 
 SECTION 2.10 Certain Additional Limitations on Registration Rights. Notwithstanding the other provisions of
this Agreement, the Company shall not be obligated to register the Registrable Securities of any Holder (i) if such Holder or any underwriter of such Registrable Securities shall fail to furnish to the Company necessary information in respect
of such Person or the distribution of such Registrable Securities, or (ii) if such registration involves an underwritten offering, such Registrable Securities are not included in such underwritten offering on the same terms and conditions as
shall be applicable to the other securities being sold through underwriters in the registration or such Holder fails to enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwritten
offering. 
 SECTION 2.11 Limitations on Registration of Other Securities; Representation. From and after the date of this Agreement,
the Company shall not, without the prior written consent of a majority in interest of the Holders (on an as converted basis), enter into any agreement with any holder or prospective holder of any securities of the Company giving such holder or
prospective holder any registration rights the terms of which are as or more favorable taken as a whole than the registration rights granted to the Holders hereunder unless the Company shall also give such rights to the Holders hereunder.

 SECTION 2.12 No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to its securities,
which is inconsistent in any material respects with the rights granted to the Holders in this Agreement. 
 SECTION 2.13 Selection of
Managing Underwriters. In the event the Participating Demand Holders have requested an underwritten offering, the underwriter or underwriters shall be selected by the Company and shall be approved by the Holders of a majority of the shares being
so registered (on an as converted basis), provided, that (i) all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the
benefit of such Holders of Registrable Securities; (ii) any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement shall be conditions precedent to the obligations of such Holders of
Registrable Securities; and (iii) no Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder, the
Registrable Securities of such Holder and such Holder’s intended method of distribution and any other representations 

  

 16 

 
required by law or reasonably required by the underwriter. Subject to the foregoing, all Holders proposing to distribute Registrable Securities through such
underwritten offering shall enter into an underwriting agreement in customary form with the underwriter or underwriters. If any Holder of Registrable Securities disapproves of the terms of the underwriting, such Holder may elect to withdraw all its
Registrable Securities by written notice to the Company, the managing underwriter and the other Holders participating in such Registration. The securities so withdrawn shall also be withdrawn from Registration. 
 ARTICLE III 
 ADDITIONAL
AGREEMENTS 
 SECTION 3.01 Oversight Committee. As of the Swap Closing, the Board shall designate a committee of the Board
(the “Oversight Committee”) consisting of three directors, two of whom shall be directors designated by Investor (the “Investor Designees”). Any vacancy created by the resignation, removal or absence of any Investor
Designee shall be filled by another director designated by Investor. Meetings of the Oversight Committee shall be held at least monthly during each fiscal year. The Oversight Committee shall be solely responsible for determining the appropriate
allocation and use of the Proceeds by the Company. The Proceeds shall be allocated and used in accordance with the capital requirements schedule agreed by the parties, as reasonably determined by the Oversight Committee. All decisions of the
Oversight Committee shall require approval of a majority of its members. Notwithstanding the foregoing, if Investor reasonably determines that the use or allocation of Proceeds by the Company is materially inconsistent with such capital requirements
schedule, Investor shall be entitled to instruct the Escrow Agent to cease distribution of the Proceeds from the Escrow Account in accordance with the Escrow Agreement until such matter is resolved by the parties hereto to the satisfaction of
Investor. 
 SECTION 3.02 Notification of Initiation of Sale or Acquisition Proposal. 
 (a) If the Company (i) desires to initiate a Sale Transaction or (ii) receives and desires to pursue a bona fide offer from a third party to
effect a Sale Transaction (a “Third Party Offer”), the Company shall promptly, and in any event within five (5) Business Days, deliver to the Holders written notice of, as applicable, (x) its desire to initiate a Sale
Transaction or (y) the fact that a Third Party Offer has been made and that the Company desires to pursue such Third Party Offer (the “Notice”). 
 (b) As used herein, a “Sale Transaction” shall mean, whether accomplished through one or a series of related transactions, (i) a merger, consolidation or other business combination following
which the outstanding Common Stock immediately prior to such transaction will represent less than 50% of the outstanding Common Stock of the Company or other entity surviving such transaction or any entity controlling the Company immediately after
the completion of the transaction or (ii) a sale of all or substantially all of the assets of the Company and its Subsidiaries. 
 (c)
The Notice shall also include the general form of the Sale Transaction (i.e., to the extent then known, the form (stock, cash or other consideration) and approximate 

  

 17 

 
amount of consideration and structure of the Sale Transaction (merger, stock purchase or asset purchase)) and the identity of the other party. If the Sale
Transaction is with a named party, the Notice shall specify the identity of such named party and the amount and form of consideration offered. Until the later of (i) fifteen (15) Business Days after receipt of the Notice by the Holders and
(ii) if the Holders make a Holder Offer (as defined below) during such period, the expiration of the Negotiation Period (as defined below), the Company may not enter into a definitive agreement with respect to any Sale Transaction. 

(d) Each Holder shall have up to fifteen (15) Business Days following the date such Notice is received by such Holder to notify the Company in
writing if it wishes to make an offer for a Sale Transaction, which notice shall include the form and amount of consideration and the structure of the Sale Transaction proposed by such Holder (each, a “Holder Offer”). Any Holder
that fails to so notify the Company within such fifteen (15) Business Day period shall be deemed to have waived its rights under this Section 3.02 with respect to such Third Party Offer (provided that such waiver shall not affect
such Holder’s rights under this Section 3.02 with respect to any future Sale Transaction or Third Party Offer). If the Board in good faith determines that any Holder Offer is reasonably likely to result in a transaction that will be
competitive with the proposed transaction giving rise to the Notice, the Company and such Holder will negotiate in good faith for a period of twenty (20) days following the Company’s receipt of such Holder Offer (the “Negotiation
Period”) to reach mutual agreement on the terms of the Holder Offer. 
 (e) If, at the end of the Negotiation Period, the Holder and
the Company do not mutually agree to the terms of a Sale Transaction, then, and only then, such Holders’ right of negotiation hereunder shall expire with respect to the Third Party Offer and the Company shall be free thereafter (without
liability to the Holders) to enter into a definitive agreement formalizing the Third Party Offer with such third party; provided that in the event a new Sale Transaction is proposed by a third party other than the party initially notified by
the Company in the Notice, and the Company desires to pursue such Sale Transaction, the procedures of this Section 3.02 shall be repeated in respect of such newly proposed Sale Transaction. 
 SECTION 3.03 Certificate of Incorporation and Bylaws to be Consistent. The Company shall take or cause to be taken all lawful action necessary or
appropriate to ensure that at all times its amended and restated certificate of incorporation, amended and restated by-laws and any other organizational or constitutional documents, and any amendments or supplements thereto, contain provisions
consistent with the terms of this Agreement (including without limitation this Article III) and none of the foregoing or any of the corresponding constituent documents of the Subsidiaries contain any provisions inconsistent therewith or which
would in any way nullify or impair the terms of this Agreement or the rights of the Company or of the Holders hereunder. None of the Company, the Board, any committee thereof or the Holders shall take or cause to be taken any action inconsistent
with the terms of this Agreement (including without limitation this Article III) or the Holders’ or the Company’s rights hereunder. Without limiting the generality of the foregoing, any stockholders’ rights plan or other
anti-takeover measure adopted by the Company shall exclude the Holders from its operation in all respects, and shall not impair in any respect the rights of the Holders hereunder, including their rights under Section 3.02. 
  

 18 

 ARTICLE IV 
 MISCELLANEOUS 
 SECTION 4.01 Effectiveness. This Agreement shall become effective as of
the Swap Closing. 
 SECTION 4.02 Termination. This Agreement shall terminate only (a) by virtue of a written agreement to that
effect, signed by all parties hereto or all parties then possessing any rights hereunder, or (b) upon the expiration of (i) all rights created hereunder and (ii) all statutes of limitations applicable to the enforcement of claims
hereunder, provided that no termination of this Agreement pursuant to paragraph (a) or (b) above shall affect the right of any party to recover damages or collect indemnification for any breach of the representations, warranties or
covenants herein that occurred prior to such termination. Notwithstanding the foregoing, the Company shall not have any obligation to keep effective or file a Registration Statement after such time as there are no Registrable Securities outstanding.

 SECTION 4.03 Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this
Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. 
 SECTION 4.04 Amendments and Waivers. (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver
is in writing and signed, in the case of an amendment, by the Company and a majority in interest of the Holders (on an as converted basis and including any holders of Warrants), or, in the case of a waiver, by the party or parties against whom the
waiver is to be effective; provided, however, that waiver by the Holders shall require the consent of a majority in interest of the Holders (on an as converted basis and including any holders of Warrants). 
 (b) No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of time
specified herein) shall operate as a waiver thereof and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law. 
 SECTION 4.05 Notice Generally. All notices, requests,
claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by overnight courier, by facsimile upon written confirmation of delivery or
by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this
Section 4.05): 
  

 19 

					
	 (a)
	 	If to Investor, at:
		
		 	United Energy Group Limited
		 	Unit 2112, Two Pacific Place
		 	88 Queensway
		 	Central, Hong Kong
		 	Attention:	 	Rachel Zhang, Executive Director
		 	Facsimile:	 	+852 2522 6938
		
		 	with a copy to:
		
		 	Shearman & Sterling LLP
		 	 12th Floor Gloucester
Tower
 The Landmark, 11 Pedder Street
 Central, Hong
Kong

		 	Attention:	 	Paul Strecker
		 	Facsimile:	 	+852 2978 8099
		
	 (b)
	 	If to the Company, at:
		
		 	Transmeridian Exploration Incorporated
		 	5847 San Felipe, Suite 4300
		 	Houston, Texas 77057
		 	U.S.A.
		 	Attention:	 	Chief Financial Officer
		 	Facsimile:	 	+1 713 781 6593
		
		 	with a copy to:
		
		 	Akin Gump Strauss Hauer & Feld LLP
		 	 1111 Louisiana Street, 44th Floor

 Houston, Texas 77002-5200
 U.S.A.

		 	Attention:	 	James L. Rice III
		 	Facsimile:	 	+1 713 236 0822

 (c) If to any Holder (besides Investor), at its last known address appearing on the books of the
Company maintained for such purpose or at such other address as may be substituted by notice given as herein provided. 
 SECTION 4.06
Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto as hereinafter provided. The registration rights of any Holder with
respect to any Registrable Securities, and the other rights of the Holders contained herein, shall be transferred to any Person who is the transferee of such Registrable Securities. All of the obligations of the Company hereunder shall survive any
such transfer. Except as provided in Section 2.09, no Person other than the parties hereto, the Holders, and their successors and permitted assigns is intended to be a beneficiary of this Agreement. 
  

 20 

 SECTION 4.07 Headings. The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. 
 SECTION 4.08 Governing
Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed in that State (other than those provisions set forth herein that
are required to be governed by the DGCL). All actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in any New York state or federal court sitting in The City of New York. The parties hereto
hereby (a) submit to the exclusive jurisdiction of any state or federal court sitting in The City of New York for the purpose of any Action arising out of or relating to this Agreement brought by any party hereto, and (b) irrevocably
waive, and agree not to assert by way of motion, defense, or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or
execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions contemplated hereby may not be enforced in or by any of the above-named courts. 
 SECTION 4.09 Waiver of Jury Trial. Each of the parties hereto hereby waives to the fullest extent permitted by applicable law any right it may
have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby. Each of the parties hereto (a) certifies that 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 that foregoing waiver and (b) acknowledges that it and the other party hereto have been
induced to enter into this Agreement and the transactions contemplated hereby, as applicable, by, among other things, the mutual waivers and certifications in this Section 4.09. 
 SECTION 4.10 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. 
 SECTION 4.11 Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 
 SECTION 4.12 Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all
other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. 
  

 21 

 SECTION 4.13 Construction. Each party hereto acknowledges and agrees it has had the opportunity to
draft, review and edit the language of this Agreement and that no presumption for or against any party arising out of drafting all or any part of this Agreement will be applied in any Dispute relating to, in connection with or involving this
Agreement. Accordingly, the parties hereto hereby waive the benefit of any rule of Law, including California Civil Code Section 1654 and any successor or amended statute, or any legal decision that would require, in cases of uncertainty, that
the language of a contract should be interpreted most strongly against the party who drafted such language. 
 SECTION 4.14
Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same agreement. 
 [Signatures appear on next page] 

 

 22 

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

  

			
	TRANSMERIDIAN EXPLORATION INCORPORATED
		
	By:	 	 /s/ Lorrie T. Olivier

	Name:	 	Lorrie T. Olivier
	Title:	 	Chairman and CEO
	
	UNITED ENERGY GROUP LIMITED
		
	By:	 	 /s/ Zhang Hongwei

	Name:	 	Zhang Hongwei
	Title:	 	Chairman and Executive Director

 Investor Rights Agreement

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