Document:

exhibit102-standstillagr

                                                         EXECUTION VERSION                                STANDSTILL AGREEMENT                THIS STANDSTILL AGREEMENT       (this “Agreement”) is  made  as  of December 2,  2019  (the “Effective  Date”) by  and  between FEDNAT  HOLDING  COMPANY,  a  Florida  corporation (“FedNat”), and 1347 PROPERTY INSURANCE HOLDINGS, INC., a Delaware  corporation (“PIH”). Each of FedNat and PIH are, at times, individually referred to herein as a  “Party,” and collectively referred to herein as the “Parties.”          WHEREAS,  FedNat,  PIH,  Maison  Managers,  Inc.,  a  Delaware  corporation (“MM”),  Maison  Insurance  Company, a  Louisiana  corporation (“MIC”), and  ClaimCor,  LLC,  a  Florida  limited  liability  company (“CC” and,  together  with  MM  and  MIC,  each,  a “Company” and,  collectively,  the “Companies”) have  entered  into  an  Equity  Purchase  Agreement  dated  as  of  February  25,  2019  (as  it  may  be  amended  or  modified  from  time  to  time,  the “Purchase  Agreement”) pursuant  to  which  FedNat  agreed  to  purchase  all  of  the  issued  and  outstanding  capital stock and membership interest, as applicable, of the Companies (the “Acquisition”); and                WHEREAS, pursuant to the Acquisition and as partial consideration therefor, PIH will  receive certain shares of FedNat Common Stock (as defined below); and                WHEREAS,  in  connection  with  the closing  of  the  transactions  contemplated  by  the  Purchase Agreement (collectively, the “Transactions”), PIH agrees to certain matters set forth in  this Agreement, all upon the terms and conditions set forth herein.                NOW,  THEREFORE,  in  consideration  of  the premises  and  mutual  covenants,  agreements,  representations  and  warranties  contained  herein,  and  other  good  and  valuable  consideration, the receipt of which is hereby acknowledged, the Parties agree as follows:                1.    Definitions.  As  used  in  this  Agreement,  the following  terms  shall  have  the  indicated meanings (such meanings to be equally applicable to both the singular and plural forms  of the terms defined):               (a)   “Board” means the Board of Directors of FedNat, as it is constituted from  time to time.               (b)   “FedNat Common Stock” means the authorized shares of common stock  of FedNat, par value of one cent ($0.01) per share.               (c)   “Solicitation” has  the  same  meaning  as  set  forth  in  Rule  14a-1  promulgated under the Exchange Act and shall include, without limitation, any action that causes  a Person to become a participant in such a Solicitation within the meaning of Instruction 3 of  Item 4 of Schedule 14A promulgated under the Exchange Act.               (d)   “Voting Securities” means (i) all shares of FedNat Common Stock, (ii) all  other equity securities issued by FedNat pursuant to which the holder thereof has the right to vote  on any matter relating to FedNat (whether such right is conveyed by the terms of the securities,  by  Law,  or  otherwise), and  (iii)  all  securities  and  other  instruments  of  any  type  that  are  convertible into the securities described in items (i) and (ii) of this Section 1(e), in each case that      4814-7719-5910.4  

 

are owned or held, whether direct or indirectly, and whether beneficially or of record, by PIH at  any  time,  regardless  of  when  they  were  acquired  and  regardless  of  whether  they  were  issued  pursuant to the Acquisition.               (e)   All other capitalized terms used, but not defined, in this Agreement shall  have the meanings ascribed to such terms in the Purchase Agreement.         2.    Limitations  on  PIH’s  Actions.   Commencing  on  the  Effective  Date  and  continuing for the Term (as defined in Section 8), PIH agrees to vote all of the Voting Securities  beneficially owned by each of them in accordance with the recommendation of the Board with  respect to any matter that is before the stockholders of FedNat for a vote by such stockholders  whenever the Board has made a recommendation to the stockholders regarding such matter (a  “Board Recommended Matter”).  In addition, commencing on the Effective Date and at all times  during the Term, PIH shall not, directly or indirectly, do any of the following:               (a)   Acquire, offer, propose to acquire, agree to acquire, purchase, or make a  tender or exchange offer to acquire, any Voting Securities (other than a direct issuance of Voting  Securities by FedNat that is approved in writing, in advance by FedNat);                            (b)   Sell, offer, propose to sell, agree to sell, or accept any tender or exchange  offer for, in any one (1) transaction or in any series of related transactions, any Voting Securities  in  excess  of:  (i)  two  and  one  half  percent  (2.5%)  of  all Voting  Securities  that  are  issued  and  outstanding at the time of such sale; or (ii) with respect to PIH only, in any three (3) consecutive  month  period,  twenty-five  percent  (25.0%)  of  the  shares  of  FedNat  Common  Stock  that  were  issued to PIH pursuant to the Acquisition;                      (c)   Engage or participate in any Solicitation of proxies or consents regarding  the  FedNat  Common  Stock,  make  any  stockholder  proposals  at  a  meeting  of  FedNat’s  stockholders,  or  induce  or  attempt  to  induce  any  other  Person  to  initiate  any  stockholder  proposals at any meeting of FedNat’s stockholders;                      (d)   Publicly advise, seek to advise, encourage, seek to encourage, influence or  seek to influence any Person with respect to the voting of any shares of FedNat Common Stock  held by other stockholders of FedNat;                      (e)   Take action to nominate or present any Person for election to the Board at  any  annual  meeting  of  FedNat’s  stockholders  or  any  other  meeting  of  FedNat’s  stockholders  called for the purpose of electing directors;                      (f)   Seek, propose or make any public statements with respect to any FedNat  action requiring approval of FedNat’s stockholders;                      (g)   Deposit  any  Voting  Securities  in  any  voting  trust  or  subject  any  Voting  Securities to any arrangement or agreement with respect to the voting of any Voting Securities;                      (h)   Propose,  or  make  any  public  statement  with  respect  to,  any  form  of  business combination, restructuring, recapitalization, dissolution or similar transaction involving                                        -2- 

 

FedNat,  including, without  limitation,  a merger, tender or  exchange offer, share repurchase or  liquidation of FedNat’s assets;                (i)   Seek, alone or in concert with others, (i) to call a meeting of stockholders  of  FedNat;  (ii)  representation  on  the  Board;  (iii)  the  removal  of  any  FedNat  officer  and/or  director;  or  (iv)  to  support  financially,  or  through  the  giving  of  services  or  information,  any  Person who is suing or contemplating suing FedNat or any of its Affiliates, or is conducting or  contemplating a Solicitation in opposition to a proposal by the Board or FedNat’s management;  or                (j)   Enter  into,  engage  in,  encourage  or  otherwise  participate  in  any   transaction designed to circumvent any of the restrictions set forth in this Agreement.          Nothing  in  this  Agreement  shall  prevent  PIH  from  engaging  in  private  discussions  with  the  Board, management or stockholders of FedNat regarding the FedNat business.                3.    Exception.   At  all  times  during  the  Term,  PIH  shall  be  permitted  (and  the  provisions of Section 2 shall not  apply) to  provide information  or assistance to  any Person in  response  to  a  request  by  a  governmental  agency  with  jurisdiction  or  authority  over  the  Stockholder, a validly issued subpoena or otherwise as required by law; provided, that in each  such  instance,  to  the  greatest  extent  permitted  by  applicable law,  PIH  shall  provide  as  much  advance  notice  to  FedNat  of  such  response  as  reasonably  possible  and  provide  reasonable  assistance  to  FedNat  to  obtain  any  protective  order  sought  by  FedNat  with  respect  to  such  response.  PIH shall be permitted to file a Statement on Schedule 13G with the SEC disclosing  its  investment  in  FedNat  Common  Stock,  describing  and  filing  a  copy  of  this Agreement,  if  required by applicable law, and otherwise complying with the requirements of such Statement  and the rules and regulations of the SEC relating to such Statement.         4.    Other Acknowledgements.               (a)   PIH  understands  and  agrees  that,  if  it  votes  its  Voting  Securities  in  violation  of Section  2 or  of  this Agreement,  then  PIH  hereby  unconditionally  and  irrevocably  instructs FedNat not to record the amount of Voting Securities so voted; and (ii) if all of PIH’s  Voting Securities are not voted in favor of any Board Recommended Matter (whether by virtue  of  a  negative  vote  or  abstention),  then  the  number  of  shares  not  voted  in  favor  of  the  Board  Recommended Matter shall be automatically voted, and deemed for all purposes to have been  voted by PIH in favor of such Board Recommended Matter.                (b)   If  and  to  the  extent  that  it  is  determined  that Section  4(a) hereof  is  unenforceable, then PIH covenants and agrees that PIH will cause all of its Voting Securities to  be  voted  at  any  meeting  of  FedNat’s  stockholders  or  at  any  adjournments  or  postponements  thereof:  (i)  in  favor  of  each  Board  Recommended  Matter;  and  (ii)  against  any  stockholder  nominations for director.                      (c)   In the event that the Voting Securities are sold or otherwise transferred in a  privately  negotiated  transaction,  the  purchaser  or  transferee  shall  take  the  Voting  Securities                                         -3- 

 

subject to all of the restrictions set forth in this Agreement. PIH agrees to provide FedNat with  five (5) Business Days’ prior written notice of any such transaction.                5.    Equitable Remedies; Remedies for Certain Breaches.                 (a)   The Parties acknowledge and agree that money damages would not be a  sufficient remedy for any breach or threatened breach of the provisions of Sections 2 or 4 of this  Agreement,  and  that  the  non-breaching  Party  shall  be  entitled  to  specific  performance  and  injunctive (preliminary or permanent) or other equitable relief as remedies for any breach of any  such section.  Such remedies shall not be deemed to be the exclusive remedies but shall be in  addition to all other remedies available at law or in equity.  Each Party waives any requirement  for the securing or posting of any bond in connection with any such remedy.                (b)   The  rights  and  remedies  of  the  Parties  under  this  Agreement  shall  be  cumulative  and  concurrent  and  may  be  pursued  and  exercised  singularly,  successively  or  concurrently at the sole discretion of the exercising Party and may be exercised as often as such  Party shall deem necessary or desirable, and the non-exercise by a Party of any such rights and  remedies in any particular instance shall not in any way constitute a waiver or release thereof in  that or any subsequent instance.                6.    Additional  Representations,  Warranties,  and  Covenants.   PIH  hereby  represents, warrants, and covenants to and in favor of FedNat that:               (a)   PIH  has  all  requisite  capacity,  power  and authority  to  enter  into  and  perform PIH’s obligations under this Agreement.  No filing with, and no permit, authorization,  consent or approval of, any Person is necessary on the part of PIH for the execution, delivery and  performance  of  this Agreement  by  PIH  or  the  consummation  by  PIH  of  the  transactions  and  agreements contemplated hereby.                            (b)   This  Agreement  has  been  duly  executed  and  delivered  by  PIH  and  the  execution,  delivery  and  performance  of  this Agreement  by  PIH  and  the  consummation  of  the  transactions contemplated hereby have been duly authorized by all necessary action on the part  of PIH.                      (c)   Assuming the due authorization, execution and delivery of this Agreement  by  FedNat,  this  Agreement  constitutes  the  valid  and  binding  agreement  of  PIH,  enforceable  against PIH in accordance with its terms.                      (d)   Except  as  contemplated by this Agreement, PIH  has  not  been a party to  any grant of proxy or power of attorney, deposited any of its Voting Securities into a voting trust  or similar arrangement, entered into any Contract with any Person (including, without limitation,  any  voting  agreement  or  similar  arrangement),  or  otherwise,  granted,  delegated  or  otherwise  assigned any of its voting power as a holder of Voting Securities, whether directly or indirectly,  in  any  manner  that  is  inconsistent  with  PIH’s  obligations  under  this Agreement.   Neither  the  execution  and  delivery  of  this  Agreement  by  PIH  nor  the  consummation  by  PIH  of  the  transactions  and  agreements  contemplated  hereby  or  compliance  by  PIH  with  any  of  the  provisions hereof shall: (i) conflict with or violate any provision of the organizational documents                                        -4- 

 

of PIH; (ii) result in any breach or violation of, or constitute a default (or an event which, with  notice or lapse of time or both, would become a default) under, or give to others any rights of  termination, amendment, acceleration or cancellation of, or result in the creation of any Lien on  any property or asset of PIH pursuant to any Contract to which PIH is a party or by which PIH or  any property or asset of PIH is bound or affected; or (iii) violate any law or judgment, order,  injunction,  ruling  or  decree  of  any  Governmental  Entity  applicable  to  PIH  or  any  of  PIH’s  properties or assets.                              (e)   Except for restrictions in favor of FedNat pursuant to this Agreement and  in any other agreement entered into by PIH in connection with the Transactions, and except for  such transfer restrictions of general applicability as may be provided under the Securities Act and  the “blue  sky” laws  of  the  various  States  of  the  United  States,  PIH  is  the  sole  record  and  beneficial owner of all of PIH’s Voting Securities, in each case free and clear of Liens, and has  the full and exclusive power to vote or direct the vote with respect to the Voting Securities.  As  used  in  this  Agreement,  the terms “beneficial  owner,”  “beneficially  own” and “beneficial  ownership” shall have the meaning set forth in Rule 13d-3 promulgated by the SEC under the  Exchange Act; provided, that, for purposes of determining whether a Person is a beneficial owner  of  any Voting  Securities,  a  Person  shall  be  deemed  to  be  the  beneficial  owner  of  any  Voting  Securities which may be acquired by such Person pursuant to any Contract or upon the exercise  of conversion rights, exchange rights, warrants or options, or otherwise (irrespective of whether  the right to acquire such Voting Securities is exercisable immediately or only after the passage of  time,  including  the  passage  of  time  in  excess  of  sixty  (60)  days,  the  satisfaction  of  any  conditions, the occurrence of any event or any combination of the foregoing).                              (f)   There  is  no  Action  pending  or,  to  the  knowledge  of  PIH,  threatened,  against  or  affecting  such  Party  before  or  by  any  Governmental  Entity,  except,  as  is  not,  and  would not reasonably be, expected, either individually or in the aggregate, to impair the ability of  PIH to perform PIH’s obligations hereunder in any respect.                      (g)   PIH  understands  and  acknowledges  that  FedNat  is  entering  into  the  Purchase Agreement in reliance upon PIH’s execution and delivery of this Agreement and the  representations, warranties, covenants, and agreements of PIH contained herein.                      (h)   PIH  shall  not  take  any  action  that  would  make  any  representation  or  warranty  of  PIH  contained  herein  untrue  or  incorrect  in  any  material  respect,  or  that  would  prohibit PIH from performing all of PIH’s covenants and obligations contained herein.                7.    No  Reliance.   Except  as  expressly  set  forth  in  any  representation,  warranty, or  covenant  made by  a Party in  this Agreement,  each Party  expressly disclaims and shall not be  deemed to have made any representation, warranty or covenant, express or implied, to the other  Party, in connection with or related to the transactions contemplated by this Agreement.         8.    Term.  This Agreement shall terminate and shall be of no further force or effect as  of  the  date  that  is  the  fifth  (5th)  anniversary  of  the  Effective  Date.   Notwithstanding  the  foregoing,  nothing  herein  shall  relieve  any  party  hereto  from  liability  for  any  breach  of  this  Agreement prior to the expiration of the Term.                                         -5- 

 

      9.    Miscellaneous.               (a)   Expenses.  All expenses incurred in connection with this Agreement and  the  transactions  contemplated  by  this  Agreement  shall  be  paid  by  the  Party  incurring  such  expenses.                            (b)   Notices.  All notices, demands and other communications to be given or  delivered under or by reason of the provisions of this Agreement shall be in writing and shall be  deemed to have been given: (i) if personally delivered, on the date of delivery; (ii) if delivered by  express  courier  service  of  national  standing  (with  charges  prepaid),  on  the  Business  Day  following the date of delivery to such courier service; (iii) if deposited in the United States mail,  first class postage prepaid, on the fifth (5th) Business Day following the date of such deposit; or  (iv)  if  delivered  by  email  transmission,  on  the  date  of  such  transmission,  provided,  that  confirmation of such transmission is received within one (1) Business Day.  All notices, demands  and other communications hereunder shall be delivered as set forth below, or pursuant to such  other instructions as may be designated in writing by the Party to receive such notice:                            If to FedNat, to:                             FedNat Holding Company              14050 NW 14th Street, Suite 180              Sunrise, FL 33323              Attention: Michael H. Braun, CEO and President              E-Mail: mbraun@fednat.com                            with a copy (which shall not constitute notice) to:                             Nelson Mullins Broad and Cassel              2 S. Biscayne Blvd., Suite 2100              Miami, FL 33131              Attention:  Nina S. Gordon, Esq.              E-Mail:  nina.gordon@nelsonmullins.com                            If to PIH, to:                             D. Kyle Cerminara              Fundamental Global Investors, LLC              4201 Congress Street, Suite 140              Charlotte, North Carolina 28209              E-Mail:  kyle@fundamentalglobal.com                            with a copy (which shall not constitute notice) to:                                               Thompson Hine LLP              3900 Key Center              127 Public Square              Cleveland, OH 44114                                        -6- 

 

            Attention:  Derek D. Bork, Esq.              E-Mail:  derek.bork@thompsonhine.com                            (c)   Amendments,  Waivers,  Etc.   This  Agreement  may  not  be  amended,  changed, supplemented, waived or otherwise modified or terminated except by an instrument in  writing signed by the Parties.                            (d)   Successors and Assigns.  No Party may assign any of its rights or delegate  any of its obligations under this Agreement without the prior written consent of the other Parties.   Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the  benefit  of  and  be  enforceable  by  the  Parties  and  their  respective  successors  and  assigns,  including without limitation any corporate successor by merger or otherwise.                            (e)   Third  Party  Beneficiaries.   Nothing  expressed  or  referred  to  in  this  Agreement will be construed to give any Person, other than the Parties to this Agreement and  their respective successors and permitted assigns, any legal or equitable right, remedy or claim  under or with respect to this Agreement or any provision of this Agreement.                            (f)   No Partnership, Agency, or Joint Venture.  This Agreement is intended to  create, and creates, a contractual relationship and is not intended to create, and does not create,  any agency, partnership, joint venture or any like relationship between the Parties.                              (g)   Further  Assurances;  Ownership.   From  time  to  time  at  the  request  of  FedNat, and without further consideration, PIH shall execute and deliver, or cause to be executed  and delivered, such additional documents and instruments and take all such further action as may  be reasonably necessary or desirable to carry out and fully effectuate the actions required by it  under this Agreement.                             (i)   No Group.  Nothing in this Agreement shall be interpreted as creating or  forming a “group” with any Person, including FedNat, for purposes of Rule 13d-5(b)(1) of the  Exchange Act  or any other similar provision  of applicable  Law or of conferring upon FedNat  beneficial ownership of any Voting Securities.                            (j)   Entire  Agreement.   This  Agreement  and  the  Purchase  Agreement  collectively embody the entire agreement and understanding among the parties hereto relating to  the  subject  matter  hereof  and  supersedes  all  other  prior  agreements,  understandings,  representations  and  warranties,  both  written  and  oral,  among  the  parties,  with  respect  to  the  subject matter hereof.                (k)   Severability.  The provisions of this Agreement shall be deemed severable,  and  the  invalidity  or  unenforceability  of  any  provision  shall  not  affect  the  validity or  enforceability  of  the  other  provisions  hereof.   If  any  provision  of  this  Agreement,  or  the  application thereof to  any  Person or any circumstance, is  determined by  a court of  competent  jurisdiction  to  be  invalid  or  unenforceable,  (i)  a  suitable  and  equitable  provision  shall  be  substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and  purpose of such invalid or unenforceable provision and (ii) the remainder of this Agreement and                                         -7- 

 

the application of such provision to other Persons or circumstances shall not be affected by such  invalidity or unenforceability.                      (l)   No Waiver.  The failure of any Party to assert any of its rights under this  Agreement  or  otherwise  shall  not  constitute  a  waiver  of  such  rights  or  any  of  its  rights  with  respect to any other matter relating to this Agreement.                      (m)   Governing  Law.   This  Agreement  and  all  Actions  (whether  at  law,  in  contract  or  in  tort)  that  may  be  based  upon,  arise  out  of  or  relate  to  this Agreement,  or  the  negotiation, execution or performance hereof, shall be governed by and construed in accordance  with the laws of the State of Delaware without regard to principles of conflicts of law.                      (n)   Submission  to  Jurisdiction.   Each  Party  agrees  that  it  shall  bring  any  Action  between  the  parties arising  out  of  or  related  to  this  Agreement  or  the  transactions  contained in or contemplated by this Agreement exclusively in the United States District Court  for  the  District  of  Delaware  or  another  court  sitting  in  the  State  of  Delaware  (the “Chosen  Courts”), and with respect to any such Action (i) irrevocably submits to the exclusive jurisdiction  of the Chosen Courts, (ii) waives any objection to laying venue in any such Action in the Chosen  Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not  have jurisdiction over any Party and (iv) agrees that service of process upon such Party in any  such Action shall be effective if notice is given in accordance with Section 9(b).                      (o)   Waiver of Jury Trial.  EACH PARTY ACKNOWLEDGES AND AGREES  THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY  TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH  PARTY  HEREBY  IRREVOCABLY  AND  UNCONDITIONALLY  WAIVES  ANY  RIGHT  SUCH  PARTY  MAY  HAVE  TO A  TRIAL  BY  JURY  IN  RESPECT  OF ANY  LITIGATION  DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,  OR  THE  TRANSACTIONS  CONTEMPLATED  BY  THIS  AGREEMENT.   EACH  PARTY  CERTIFIES  AND  ACKNOWLEDGES  THAT  (I)  NO  REPRESENTATIVE,  AGENT  OR  ATTORNEY  OF  ANY  OTHER  PARTY  HAS  REPRESENTED,  EXPRESSLY  OR  OTHERWISE,  THAT  SUCH  OTHER  PARTY  WOULD  NOT,  IN  THE  EVENT  OF  LITIGATION,  SEEK  TO  ENFORCE  THE  FOREGOING  WAIVER,  (II)  EACH  PARTY  UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III)  EACH  PARTY  MAKES  THIS  WAIVER  VOLUNTARILY  AND  (IV)  EACH  PARTY  HAS  BEEN  INDUCED  TO  ENTER  INTO  THIS AGREEMENT  BY, AMONG  OTHER  THINGS,  THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9(o).                      (p)   Construction.   The  Parties  have  participated  jointly  in  negotiating  and  drafting this Agreement.  In the event that an ambiguity or a question of intent or interpretation  arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption  or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any  provision  of  this  Agreement.   Where  a  reference  in  this  Agreement  is  made  to  a  Section,  schedule, or exhibit, such reference shall be to a Section, schedule, or exhibit to this Agreement  unless otherwise indicated.  Whenever the words “include,” “includes” or “including” are used in  this Agreement, they shall be deemed to  be followed by the  words “without  limitation.”  The                                         -8- 

 

words “hereof,”  “herein” and “hereunder” and  words  of  similar  import  when  used  in  this  Agreement shall refer to this Agreement as a whole and not to any particular provision of this  Agreement.  The word “or” shall be deemed to mean “and/or.”  Terms defined in the text of this  Agreement as having a particular meaning have such meaning throughout this Agreement, except  as  otherwise  indicated  in  this  Agreement.   The  definitions  contained  in  this  Agreement  are  applicable to the singular as well as the plural forms of such terms and to the masculine as well  as to the feminine and neuter genders of such term.  Any statute or Contract defined or referred  to herein or in any agreement, instrument, exhibit or schedule that is referred to or defined herein  means  such  statute  or  Contract  as  from  time  to  time  amended,  modified  or  supplemented,  including  by  succession  of  comparable  successor statutes  and  references  to  all  attachments  thereto and instruments incorporated therein.                             (q)   Name,  Captions,  Gender.   Section  headings  of  this  Agreement  are  for  convenience of reference only, do not constitute part of this Agreement and shall not be deemed  to limit or otherwise affect any of the provisions hereof.                      (r)   Counterparts.   This Agreement  and  any  signed  agreement  or  instrument  entered  into  in  connection  with  this  Agreement,  and  any  amendments  or  waivers  hereto  or  thereto, to the extent signed and delivered by means of a facsimile machine or by e-mail delivery  of a “.pdf” format data file, shall be treated in all manner and respects as an original agreement  or  instrument  and  shall  be  considered  to  have  the  same  binding  legal  effect  as  if  it  were  the  original  signed  version  thereof  delivered  in  person.   No  Party  to  any  such  agreement  or  instrument shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data  file to deliver a signature to this Agreement or any amendment or consent hereto or thereto or the  fact that any signature or agreement or instrument was transmitted or communicated through the  use  of  a  facsimile  machine  or  e-mail  delivery  of  a “.pdf” format  data  file  as  a  defense  to  the  formation of a contract and each Party forever waives any such defense.                                         [Signatures appear on the following page.]                                                                                  -9- 

 

      IN WITNESS WHEREOF, each of the Parties  has  caused this Agreement  to  be duly  executed to be effective as of the Effective Date.                                        FEDNAT:                                                                            FEDNAT  HOLDING  COMPANY,  a  Florida                                      corporation                                                                                                                  By:  /s/ Michael Braun                                                          Name:  Michael Braun                                                            Title:  Chief Executive Officer                                                                                                                             PIH:                                                                            1347  PROPERTY  INSURANCE     HOLDINGS,                                      INC., a Delaware corporation                                                                                                                  By:  /s/ John S. Hill                                                           Name:  John S. Hill                                                             Title:  V-P, CFO & Secretary                                                                                                                            [End of Agreement.]                          SIGNATURE PAGE TO STANDSTILL AGREEMENTexhibit103-reinsuranceca

                                                         EXECUTION VERSION        REINSURANCE CAPACITY RIGHT OF FIRST REFUSAL AGREEMENT                THIS REINSURANCE CAPACITY RIGHT OF FIRST REFUSAL AGREEMENT  (this “Agreement”), dated December 2, 2019 (the “Effective Date”), is entered into by and between  FEDNAT HOLDING COMPANY, a Florida corporation (“FedNat”), and 1347 PROPERTY  INSURANCE HOLDINGS INC., a company organized and existing under the laws of Delaware  (“PIH”).  Each of FedNat and PIH are, at times, each individually referred to in this Agreement as  a “Party,” and collectively referred to in this Agreement as the “Parties.”          WHEREAS,  insurance  company  subsidiaries  of  FedNat  (each,  a  “FedNat  Insurance  Company”  and,  collectively,  the  “FedNat  Insurance  Companies”)  may,  from  time  to  time,  negotiate and procure reinsurance in such amounts and on such terms that the FedNat Insurance  Companies deem to be appropriate; and          WHEREAS,  on  the  Effective  Date,  FedNat  is  entering  into  a  transaction  with  PIH,  pursuant to which FedNat will acquire one hundred percent (100%) of the issued and outstanding  capital stock of three subsidiaries of PIH (the “Acquisition”); and                WHEREAS, after the closing of the Acquisition, PIH may provide reinsurance coverage  to insurance providers through its insurance company subsidiaries, and PIH desires to obtain the  opportunity to provide reinsurance coverage to the FedNat Insurance Companies pursuant to the  terms and conditions set forth in this Agreement; and          WHEREAS, it is a condition precedent to the consummation of the Acquisition for the  Parties to enter into this Agreement upon the terms and conditions set forth herein.       NOW, THEREFORE, in consideration of the promises and the mutual covenants contained  herein, and for other good and valuable consideration, the receipt and sufficiency of which are  hereby acknowledged, the Parties agree as follows:          1.    Right of First Refusal.                              (a)   With respect to each purchase after the Effective Date until the conclusion  of the Term (as defined in Section 2) by one or more of the FedNat Insurance Companies of each  layer (each, a “Reinsurance Coverage Layer”) of their annual property catastrophe excess of loss  reinsurance program (the “CAT Reinsurance Program”), PIH shall have a right of first refusal  (each,  a  “Right of  First  Refusal”)  to  sell  through  any  of  its  insurance  company  subsidiaries  a  maximum  of  seven  and  one-half  percent  (7.5%)  of  annual  in  force  limit  of  any  and  each  Reinsurance  Coverage  Layer  so  purchased  by  the  FedNat  Insurance  Companies  (the  “ROFR  Reinsurance Maximum”); provided, that in no event shall PIH have the right to exercise a Right  of First Refusal such that, immediately after the exercise thereof, PIH and its affiliates collectively  would have an annual aggregate in force amount of all reinsurance coverage sold to the FedNat  Insurance  Companies,  in  the  aggregate,  of  greater  than  Fifteen  Million  and  No/100  Dollars  ($15,000,000.00) (the “Reinsurance Limit”).  Each sale by PIH pursuant to a Right of First Refusal  shall be documented under the corresponding Firm Order Terms or Modified Firm Order Terms,  as applicable (each as defined below), and subject in every case to: (I) the terms, conditions, and    4812-0918-3365 

 

requirements  of  all  applicable  regulations,  rules,  and  laws  (including,  without  limitation,  the  applicable regulations and laws of the State of Florida) (collectively, “Applicable Laws”) (it being  acknowledged and agreed that PIH has no right  to exercise a Right of First Refusal or to sell  reinsurance  to  any  FedNat  Insurance  Company  pursuant  to  this  Agreement  if  doing  so  would  violate  any  Applicable  Laws);  and  (II)  the  other  terms  and  conditions  of  this Section  1.   All  reinsurance sold by PIH pursuant to a Right of First Refusal shall be memorialized by an agreement  in such form and subject to such terms and conditions as are customary in the property and casualty  insurance industry (each, a “Reinsurance Agreement”).  If any Reinsurance Agreement is entered  into  by  PIH  prior  to  the  conclusion  of  the  Term,  but  the  term  of  the  applicable  Reinsurance  Agreement (the “Reinsurance Period”) otherwise ends after the conclusion of the Term, then such  Reinsurance Agreement shall remain in full force and effect after the Term in accordance with the  terms and provisions of the applicable Reinsurance Agreement.                            (b)   FedNat shall cause the FedNat Insurance Companies, either through one or  more reinsurance brokers selected by FedNat (each, a “Broker” and, collectively, the “Brokers”)  or directly through a third party reinsurer of FedNat’s choosing, in each case in FedNat’s sole  discretion  from  time  to  time,  to  seek  written  quotes  for,  and  terms  and  conditions  of,  each  Reinsurance  Coverage  Layer  to  be  purchased  pursuant  to  the  CAT  Reinsurance  Program  in  appropriate reinsurance markets and from potentially eligible third party reinsurers (including PIH)  for a reasonable period of time, and to concurrently provide all exposure and related information  materially  relevant  and  customarily  requested  for  such  Reinsurance  Coverage  Layer  to  such  potential third party reinsurers (including PIH), subject to such third party reinsurers’ (and PIH’s)  execution and delivery to FedNat of a Standard Non-Disclosure Agreement.  Thereafter, FedNat  shall  cause  the  applicable  FedNat  Insurance  Company  to  determine  firm  order  terms  for  the  Reinsurance Coverage Layer (the “Firm Order Terms”) and communicate those Firm Order Terms  to  the  potential  third  party  reinsurers  (including  PIH).  The  final  executed  terms  of  the  CAT  Reinsurance Program for each Reinsurance Coverage Layer entered into by applicable FedNat  Insurance Company shall be the same as described in the Firm Order Terms or Modified Firm  Order Terms (as defined below), as applicable. PIH shall have a period of three (3) business days  after its receipt of Firm Order Terms to elect in writing (in the manner provided in Section 11) to  provide all or a portion  of the ROFR Reinsurance Maximum with respect to that Reinsurance  Coverage Layer at the Firm Order Terms without any additional terms, conditions, or stipulations,  but only if the exercise of the Right of First Refusal and the sale of reinsurance pursuant thereto  would  not  cause  PIH  and  its  affiliates  to  collectively  exceed  the  Reinsurance  Limit  as  of  the  applicable time. For the avoidance of doubt, PIH may exercise the Right of First Refusal for only  a portion of a ROFR Reinsurance Maximum applicable to any or each of the Reinsurance Coverage  Layer in order to comply with the Reinsurance Limit. Any such election of a Right of First Refusal  by PIH shall be irrevocable once it has been made, but shall be subject to the terms of the applicable  Reinsurance Agreement as of the applicable time.                             (c)   To the extent that PIH elects not to provide or participate in a Reinsurance  Coverage Layer at the Firm Order Terms, or fails to notify FedNat of its election within the three  (3)  business  day  time  frame  set  forth  in Section  1(b), then  the  applicable  FedNat  Insurance  Company shall have the right to accept PIH’s allotment of such Reinsurance Coverage Layer at  the Firm Order Terms from any combination of other eligible reinsurers willing to offer coverage  at the Firm Order Terms; provided, that in the event that the Firm Order Terms are materially                                         -2- 

 

modified with respect to a Reinsurance Coverage Layer (which, for the avoidance of doubt, shall  mean any change that materially changes the price or any material coverage terms or conditions  of such Firm Order Terms that are more favorable to reinsurance providers) (the “Modified Firm  Order Terms”), FedNat shall cause the applicable FedNat Insurance Company to first provide PIH  with a new Right of First Refusal with respect to that Reinsurance Coverage Layer at the Modified  Firm Order Terms.  In such case, PIH shall have two (2) business days following its receipt of the  Modified Firm Order Terms to elect in writing (in the manner provided in Section 11) to exercise  the Right of First Refusal to provide all or a portion of the ROFR Insurance Maximum for the  applicable  Reinsurance  Coverage  Layer  on  such  Modified  Firm  Order  Terms;  otherwise,  the  applicable  FedNat  Insurance  Company  shall  have  the  right  to  accept  PIH’s  allotment  of  such  Reinsurance Coverage Layer at the Modified Firm Order Terms from any combination of other  eligible reinsurers willing to offer coverage at the Modified Firm Order Terms.  Notwithstanding  any provision of this Agreement to the contrary, in no event shall PIH be eligible to sell reinsurance  to any FedNat Insurance Company in excess of the ROFR Reinsurance Maximum with respect to  any Reinsurance Coverage  Layer, or make any  sale that would cause PIH and its  affiliates  to  collectively exceed the Reinsurance Limit.                      (d)   Upon entry into any Reinsurance Agreement, and as a condition precedent  to the exercise of a Right of First Refusal, the applicable PIH insurance company that has entered  into any Reinsurance Agreement shall both: (i) be duly licensed and accredited in all applicable  jurisdictions  to  provide  all  reinsurance  coverage  that  is  contemplated  by  the  Reinsurance  Agreement; and (ii) either – (A) both maintain an insurer financial strength rating from A.M. Best  Company, Inc. of not less than “A-” and be an accredited insurer in Florida such that FedNat can  take credit for reinsurance in accordance with all Applicable Laws, or (B) fully collateralize with  cash, letters of credit, or appropriate trust agreement equal in value to one hundred percent (100%)  of its share of the total limit of each applicable Reinsurance Coverage Layer in a manner acceptable  to the applicable FedNat Insurance Company and acceptable to any applicable insurance regulator  pursuant to Applicable Laws; provided, that, if PIH utilizes a trust agreement, whether in whole  or in part, to satisfy this condition precedent, then – (Y) no more than one trust agreement shall be  used by PIH to satisfy this condition with respect to all Insurance Coverage Layers, and (Z) the  materials terms and provisions of the Trust that relate to the availability and release of funds to  satisfy reinsurance obligations shall be in form and substance reasonably satisfactory to FedNat.   The applicable PIH insurance company shall have seventy two (72) hours from such election, or  until  the  effective  date  of  the  applicable  CAT  Reinsurance  Program  (whichever  is  sooner),  to  satisfy the condition set forth in Section 1(d)(ii) and provide reasonable proof thereof to FedNat;  otherwise, PIH’s election to exercise the Right of First Refusal shall be deemed by the Parties to  be waived and declined with respect to the Reinsurance Coverage Layers in question.  Each year  during  the  Term,  within  a  reasonable  period  of  time  prior  to  the  implementation  of  the  CAT  Reinsurance  Program  for  that  year,  FedNat  may  request  that  PIH  reasonably  demonstrate  to  FedNat that either of the conditions listed in subparts (i) and (ii) of this Section 1(d) will be satisfied  prior to the effective date of such CAT Reinsurance Program.                      (e)   PIH’s right to exercise a Right of First Refusal shall exist each time that  FedNat  or  a  FedNat  Insurance  Company  desires  to  purchase   Reinsurance  Coverage  Layers  pursuant to the CAT Reinsurance Program during the Term. For the avoidance of doubt, neither  FedNat nor any FedNat Insurance Company shall purchase Reinsurance Coverage Layers from                                         -3- 

 

any other third party reinsurer unless and until it has complied with the obligations to PIH in this  Section 1.                2.    Term.  Subject to the terms of Section 17 below, PIH shall have a Right of First  Refusal  with  respect  to  any  Reinsurance  Coverage  Layer  purchased  by  a  FedNat  Insurance  Company pursuant to the CAT Reinsurance Program, pursuant to the terms and conditions set  forth in Section 1, for any Reinsurance Period commencing on or after the Effective Date and prior  to the fifth (5th) anniversary of the Effective Date (the “Term”) only.                 3.    Confidential and Proprietary Information.  The Parties acknowledge and agree  that this Agreement does not constitute a sale, lease, license or other transfer by either Party of any  proprietary systems  or intellectual property of the other Party.  FedNat  shall have the right  to  require, as a condition precedent to providing exposure and related information (including, without  limitation, reinsurance submission and modelling data) that is materially relevant and customarily  requested for any Reinsurance Layer, to require all third party reinsurers (including PIH) to execute  and deliver to FedNat non-disclosure agreements in reasonable form and substance provided by  FedNat (with no material deviation with respect to any individual reinsurer or PIH) with respect  to such information (a “Standard Non-Disclosure Agreement”).                4.    Relationship among the Parties; Enforceability.  The terms of this Agreement  are not intended to make any of the Parties, or any of their respective subsidiaries or affiliates, a  joint employer for any purpose. Each of the Parties agrees that the provisions of this Agreement  as a whole are not intended to, and do not, constitute control by one Party of the other Party or any  subsidiaries or affiliates of the other Party, or provide a Party with the ability to control the other  Party or any subsidiaries or affiliates of the other Party, and each Party expressly disclaims any  right or power under this Agreement to exercise any power whatsoever over the management or  policies  of  the  other  Party  or  any  subsidiaries  or  affiliates  of  the  other  Party.   The  Parties  acknowledge and agree that FedNat and the FedNat Insurance Companies have sole and absolute  discretion over whether (a) to purchase reinsurance, and (b) the timing, amount, and types of any  reinsurance  and  Reinsurance  Coverage  Layers  they  purchase  (subject  to  the  terms  of  this  Agreement).  Nothing in this Agreement shall be construed to oblige either Party to act in breach  of the requirements of any Applicable Laws, including, without limitation, securities, insurance  and trade regulation laws and regulations, written policy statements of securities commissions,  insurance and other regulatory authorities, and the bylaws, rules, regulations and written policy  statements  of  relevant  securities  and  self-regulatory  organizations.   Each  Party  represents,  warrants, covenants and agrees to and in favor of the other Party that this Agreement, and the  obligations contained herein, are valid, binding and enforceable against it, and that the execution,  delivery and performance of the obligations set forth herein will not violate any law, rule, order,  judgment, decree, lien, regulation, contract, agreement or other restriction of any kind binding on  it.                5.    Governing Law.  This Agreement and all actions and proceedings (whether at law,  in contract or in tort) that may be based upon, arise out of or relate to this Agreement, or the  negotiation, execution or performance hereof, shall be governed by and construed in accordance  with the laws of the State of Florida without regard to principles of conflicts of law.                                                 -4- 

 

      6.    Submission to Jurisdiction.  Each Party agrees that it shall bring any action or  proceeding  between  the  Parties  arising  out  of  or  related  to  this  Agreement  or  the  transactions  contained in or contemplated by this Agreement exclusively in the United States District Court for  the Southern District of Florida or another court sitting in Broward County, Florida (the “Chosen  Courts”),  and  with  respect  to  any  such  action  or  proceeding:  (a)  irrevocably  submits  to  the  exclusive jurisdiction of the Chosen Courts; (b) waives any objection to laying venue in any such  action or proceeding in the Chosen Courts; (c) waives any objection that the Chosen Courts are an  inconvenient forum or do not have jurisdiction over any party hereto; and (d) agrees that service  of process upon such party in any such action or proceeding shall be effective if notice is given in  accordance with Section 11.                7.    Waiver  of  Jury  Trial.   EACH  PARTY  ACKNOWLEDGES  AND  AGREES  THAT  ANY  CONTROVERSY  WHICH  MAY  ARISE  UNDER  THIS  AGREEMENT  IS  LIKELY  TO  INVOLVE  COMPLICATED  AND  DIFFICULT  ISSUES,  AND  THEREFORE  EACH  SUCH  PARTY  HEREBY  IRREVOCABLY  AND  UNCONDITIONALLY  WAIVES  ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY  LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS  AGREEMENT,  OR  THE  TRANSACTIONS  CONTEMPLATED  BY  THIS  AGREEMENT.   EACH  PARTY  CERTIFIES  AND  ACKNOWLEDGES  THAT  (I)  NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR  OTHERWISE,  THAT  SUCH  OTHER  PARTY  WOULD  NOT,  IN  THE  EVENT  OF  LITIGATION,  SEEK  TO  ENFORCE  THE  FOREGOING  WAIVER,  (II)  EACH    PARTY  UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III)  EACH  PARTY  MAKES  THIS  WAIVER  VOLUNTARILY,  AND  (IV)  EACH  PARTY  HAS  BEEN  INDUCED  TO  ENTER  INTO  THIS  AGREEMENT  BY,  AMONG  OTHER  THINGS,  THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.                8.    Assignment.                        (a)   Definitions.   As  used  in  this  Agreement,  the  term  “affiliate(s)”  or  “affiliated” shall mean any entity that controls, is controlled by or is under common control with  the other entity. As used in this Agreement, the term “subsidiary” or “subsidiaries” with respect to  any person means any entity of which (or in which) more than 50% of the issued and outstanding  voting interests are directly or indirectly owned by that person or the entity is otherwise controlled  by that person. The term “person” means any individual, corporation, limited liability company,  partnership, joint venture, association, trust, or any such entity.                            (b)   Prohibition on Assignment; Exceptions.  Neither this Agreement nor the  rights or obligations hereunder shall be assignable by FedNat or FedNat Insurance Companies or  their affiliates without the prior written consent of PIH.  Except as expressly set forth in this Section  8(b), neither this Agreement nor the rights or obligations hereunder shall be assignable by PIH, its  affiliates,  or  its  successors  and  assigns  without  the  prior  written  consent  of  FedNat.   Notwithstanding anything to the contrary contained in Section 10 hereof, this Agreement may be  assigned, sold or otherwise transferred by PIH without any consideration to FedNat or FedNat  Insurance Companies in the following manners, subject to the terms and conditions of Section 8(c)                                         -5- 

 

and subject to the approval of FedNat (such approval not to be unreasonably withheld, conditioned,  or delayed so long as the terms and requirements of Section 8(c) are satisfied):                            (i)   PIH may assign this entire Agreement (but not a portion hereof) to        any one of its subsidiaries or affiliates.                                        (ii)  PIH may sell assign or otherwise transfer (“Transfer”) this entire        Agreement  (but  not  a portion  hereof)  to  an  unaffiliated  party  (“Transferee”).  The        consideration for the Transfer will be at the sole discretion of PIH and the Transferee.                      (c)   Conditions to Assignment.                                  (i)   As a condition precedent to PIH’s or any successor’s or permitted        assign’s (an “Assignor”) assignment of this Agreement to one of the persons set forth in        Section  8(b) (an  “Assignee”),  the  Assignor  shall  deliver  to  FedNat  prior  to  such        assignment:  (A)  an  assignment  and  assumption  agreement  in  form  and  substance        reasonably satisfactory to FedNat and pursuant to which Assignee agrees to be bound by        all of the terms and provisions of this Agreement in its entirety as “PIH” (including all of        the conditions required for the exercise of a Right of First Refusal), without condition or        reservation;  and  (B)  a  Standard  Non-Disclosure  Agreement  provided  by  FedNat  and        executed by the Assignee pursuant to which Assignee agrees to maintain the confidentiality        of  all  exposure  and  related  information  (including,  without  limitation,  reinsurance        submission and modelling data).                                        (ii)  In the event that an Assignor elects to assign this Agreement to a        person who is not an affiliate or subsidiary of PIH (a “Proposed Third-Party Assignee”),        prior to such assignment and as a condition precedent thereof, the Assignor shall deliver        written notice (in the manner required by Section 11) to FedNat of all material terms and        conditions of such assignment (the “Assignment Terms”). FedNat shall then have a period        of  three  (3)  business  days  after  its  receipt  of  written  notice  of  all  material  terms  and        conditions to elect in writing (in the manner provided in Section 11) to elect to assume this        Agreement from the Assignor pursuant to the Assignment Terms, without any additional        terms, conditions, or stipulations.  Any such election by FedNat shall be irrevocable once        it has been made.  To the extent that FedNat elects not to exercise its right to assume this        Agreement pursuant to the Assignment Terms, or fails to notify Assignor of its election        within the three (3) business day time frame set forth above in this Section 8(c)(ii), then        Assignor shall have the right for a period of thirty (30) days to assign this Agreement to        the Proposed Third-Party Assignee pursuant to the Assignment Terms (subject to the other        conditions  precedent  set  forth  in  this Section  8); provided,  that  in the  event  that  the        assignment  is  not  consummated  within  such  thirty  (30)  day  period,  or  the  Assignment        Terms are materially modified (which, for the avoidance of doubt, shall mean any change        that materially  affects  the price or any material terms or conditions  of the Assignment        Terms  that  are  more  favorable  to  the  Proposed  Assignee)  (the  “Modified  Assignment        Terms”), the Assignor shall again provide FedNat with a new right of first refusal with        respect to the assignment of this Agreement at the Modified Assignment Terms.  In such        case,  FedNat  shall  have  two  (2)  business  days  following  its  receipt  of  the  Modified                                         -6- 

 

      Additional Terms to elect in writing (in the manner provided in Section 11) to assume this        Agreement on such Modified Additional Terms.  No Assignor shall make any assignment        of this Agreement unless and until it has complied with the requirements of this Section        8(c)(ii).                                        (iii) Notwithstanding  anything  to  the  contrary  set  forth  in  this        Agreement, in no event shall PIH or any of its successors or permitted assigns assign this        Agreement  to  a  person  that  sells  residential  property  insurance  in  the  State  of  Florida        directly to the primary insured.                             (d)   Binding Effect.  This Agreement shall inure to the benefit of and be binding  upon the Parties and their respective successors and permitted assigns.                9.    Entire  Agreement.   This  Agreement  constitutes  the  entire  agreement,  and  supersedes all prior agreements and understandings (oral and written), by and among the Parties  with respect to the subject matter hereof.                10.   No Third Party Rights. Nothing contained in this Agreement, express or implied,  establishes or creates, or is intended or will be construed to establish or create, any right in or  remedy of, or any duty or obligation to, any third party.                11.   Notices.   All  notices,  requests,  claims,  demands,  and  other  communication  hereunder will be in  writing and shall be deemed to  have been duly  given:  (a) on the date of  delivery,  if  delivered  by  hand  to  the  address  below  (or  to  such  other  address  as  a  Party  may  designate by written notice to other Party); (b) on the date of confirmed receipt if delivered by  certified mail, postage prepaid and return receipt requested addressed as below (or to such other  address as a Party may designate by written notice to other Party); or (c) for the purposes of notices,  elections and other communications pursuant to the procedures set forth in Section 1, on the date  of transmittal via electronic mail to the e-mail addresses of the applicable person or party involved  with the reinsurance arrangements for the reinsurance coverage at such time, with a copy delivered  to the individuals identified below.                If to FedNat or any FedNat Insurance Company:                FedNat Holding Company        14050 NW 14th Street, Suite 180        Sunrise, FL 33323        Attention: Michael H. Braun, CEO and President        E-Mail: mbraun@fednat.com                      with a copy (which shall not constitute notice) to:                  Nelson Mullins Broad and Cassel        2 S. Biscayne Blvd., # 2100        Miami, FL 33131        Attention:  Nina Gordon, Esq.                                         -7- 

 

      E-Mail:  nina.gordon@nelsonmullins.com                        If to PIH:                D. Kyle Cerminara        Fundamental Global Investors, LLC        4201 Congress Street, Suite 140        Charlotte, North Carolina 28209        E-Mail:  kyle@fundamentalglobal.com          with a copy (which shall not constitute notice) to:                                   Thompson Hine LLP        3900 Key Center        127 Public Square        Cleveland, OH 44114        Attention:  Derek D. Bork, Esq.        E-Mail:  derek.bork@thompsonhine.com          12.   Counterparts.  This Agreement may be executed in one or more counterparts, and  may  be  exchanged  in  electronic  form  (including  by  PDF),  each  of  which  shall  be  deemed  an  original, but all of which shall constitute one and the same instrument.                13.   Amendment; Modification.  The Parties may by written agreement duly signed  by both Parties, subject to any regulatory approval that may be required: (a) extend the time for  the performance of any of the obligations or other acts of the Parties; (b) waive any inaccuracies  in the documents delivered pursuant to this Agreement; and (c) waive compliance with or modify,  amend or supplement  any  of the agreements  contained in this  Agreement  or waive or modify  performance of any of the obligations of any of the Parties. This Agreement may not be amended  or modified except by an instrument in writing duly signed on behalf of the Parties.                14.   Waiver. No failure by any Party to take any action or assert any right hereunder  shall be deemed to be a waiver of its right to take any action or assert any right hereunder with  respect to any future occurrence of those circumstances.                15.   Severability.  To the extent any provision of this Agreement shall be invalid or  unenforceable, it shall be considered deleted from this Agreement and the remaining provisions of  this Agreement shall be unaffected and shall continue in full force and effect. Notwithstanding any  implication in this Section 15 to the contrary, if any part of the Agreement is found to be unlawful  or impermissible by a court or administrative body of competent jurisdiction, the Parties shall use  reasonable efforts to amend this Agreement to address the concerns in a manner that results in a  lawful and permissible agreement.                16.   Headings.  Headings contained in this Agreement are for reference purposes only,  and they shall not affect in any way the meaning or interpretation of this Agreement.                                         -8- 

 

      17.   Termination.  This Agreement, the Right of First Refusal, and all rights of  PIH  (including  its  affiliates  and  assigns)  and  any  Transferee(s)  to  participate  in  any  Reinsurance  Coverage Layers shall terminate upon the expiration of the Term, except as set forth in Section  1(a). This Agreement may only otherwise be terminated by mutual consent of the Parties, or as  otherwise provided herein.  Either Party may terminate this Agreement in the event that the other  Party either: (a) commits a material breach of the terms of the Agreement and has been given  written notice and at least thirty (30) days’ prior opportunity to cure such breach, and fails to do  so; or (b) is deemed insolvent by applicable regulatory or judicial authorities, or is the subject of  conservation,  rehabilitation,  liquidation,  bankruptcy  or  other  similar  insolvency  proceedings,  which proceedings, if involuntarily instituted, are not dismissed within sixty (60) days after the  initiation  of  the  proceedings  (provided,  that  a  Party  may  elect  to  terminate  this Agreement  immediately if such proceedings are voluntarily initiated by the other Party with respect to itself).                18.   Survival.   The  provisions  of Sections  3  through  16,  and  this Section  18,  shall  survive the expiration or earlier termination of this Agreement.                19.   Attorneys’ Fees. In the event of any dispute or controversy between the Parties  relating to the interpretation of this Agreement or to the transactions contemplated hereby, the  prevailing Party shall be entitled to recover from the non-prevailing Party reasonable attorneys’  fees  and  expenses  incurred  by  the  prevailing  Party.   Such  award  shall  include  post-judgment  attorneys’ fees and costs.                  [Remainder of Page Intentionally Blank.  Signature Page Follows.]                                                      -9- 

 

         IN WITNESS WHEREOF, the Parties have caused to be executed and delivered by their  duly authorized officers this Agreement to be effective as of the Effective Date.                                          FEDNAT:                                                                            FEDNAT  HOLDING  COMPANY,        a  Florida                                      corporation                                                                                                                  By:  /s/ Michael Braun                                                          Name:  Michael Braun                                                            Title:  Chief Executive Officer                                                                                                                                                                   PIH:                                                                            1347  PROPERTY  INSURANCE  HOLDINGS,                                      INC., a Delaware corporation                                                                                                                  By:  /s/ John S. Hill                                                           Name:  John S. Hill                                                             Title:  V-P, CFO & Secretary                                                    [End of Agreement.]                                                                      SIGNATURE PAGE TO          REINSURANCE CAPACITY RIGHT OF FIRST REFUSAL AGREEMENT

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