Document:

quotasharereinsurancecon

Exhibit 10.2                                        PROPERTY QUOTA SHARE REINSURANCE CONTRACT  issued to  UNITED PROPERTY AND CASUALTY INSURANCE COMPANY  St. Petersburg, Florida         

 

        Effective: December 31, 2020      2 of 23     PROPERTY QUOTA SHARE REINSURANCE CONTRACT    TABLE OF CONTENTS  Article  Page          Preamble ..................................................................................... 3   1  Business Covered ....................................................................... 3   2  Retention and Limit.................................................................... 3   3  Term ........................................................................................... 4   4  Special Termination ................................................................... 4   5  Territory ..................................................................................... 5   6  Exclusions .................................................................................. 5   7  Special Acceptance .................................................................... 6   8  Premium ..................................................................................... 6   9  Ceding Commission ................................................................... 6   10  Reports and Remittances ............................................................ 7   11  Definitions .................................................................................. 8   12  Extra Contractual Obligations/Excess of Policy Limits ............ 11   13  Net Retained Liability ................................................................ 12   14  Original Conditions .................................................................... 12   15  No Third Party Rights ................................................................ 12   16  Loss Settlements ........................................................................ 12   17  Commutation .............................................................................. 13   18  Salvage and Subrogation ............................................................ 13   19  Currency ..................................................................................... 14   20  Security ...................................................................................... 14   21  Taxes .......................................................................................... 16   22  Access to Records ...................................................................... 17   23  Confidentiality ........................................................................... 17   24  Indemnification and Errors and Omissions ................................ 18   25  Insolvency .................................................................................. 18   26  Arbitration  ............................................................................... 19      27  Governing Law........................................................................... 20   28  Entire Agreement ....................................................................... 20   29  Non-Waiver ................................................................................ 21   30  Mode of Execution ..................................................................... 21     Company Signing Block  ........................................................... 22               Exhibit A          Trust Agreement  23   

 

        Effective: December 31, 2020      3 of 23     PROPERTY QUOTA SHARE REINSURANCE CONTRACT  issued to  UNITED PROPERTY AND CASUALTY INSURANCE COMPANY  St Petersburg, Florida  (the “Company”)  by  HOMEOWNERS CHOICE PROPERTY AND CASUALTY INSURANCE COMPANY   (the “Reinsurer”)    ARTICLE 1  BUSINESS COVERED  This Contract is to indemnify the Company in respect of the liability that may accrue to the  Company as a result of loss or losses under Policies classified by the Company as Northeast  Property, in force at the inception of this Contract, or written or renewed during the term of this  Contract by or on behalf of the Company, subject to the terms and conditions herein contained.    ARTICLE 2  RETENTION AND LIMIT  A. The Company shall cede, and the Reinsurer shall accept as reinsurance, a 69.50% share of  all business covered hereunder.  The Reinsurer shall pay to the Company the Reinsurer’s  quota share of losses under the Policies and of Loss Adjustment Expense associated  therewith.  The Reinsurer shall also pay to the Company the Reinsurer’s quota share of Extra  Contractual Obligations and Loss in Excess of Policy Limits covered under this Contract.  B. Notwithstanding the provisions of paragraph A above, the limit of the Reinsurer’s liability  for the Company’s gross liability for losses Loss Adjustment Expense, Extra Contractual  Obligations and Loss in Excess of Policy Limits arising out of any one Catastrophe Loss  Occurrence, shall not exceed 69.5% of $25,000,000.     

 

        Effective: December 31, 2020      4 of 23     ARTICLE 3  TERM  A. This Contract shall take effect at 11:59 p.m. Eastern Time, December 31, 2020, and shall  remain in effect until 12:01 a.m. Eastern Time June 1, 2021, in respect of losses occurring  during the term of this Contract.  B. At expiration of this Contract, the Reinsurer shall return to the Company the ceded unearned  portion of the Subject Written Premium, net of provisional ceding commission, as of the date  of expiration, on business in force at that time and date. The Reinsurer shall have no liability  for losses occurring after expiration.  C. However, at expiration of this Contract, by mutual agreement, the contract may be extended  such that Reinsurer shall remain liable for all Policies covered by this Contract that are in  force at expiration, until the termination, expiration or renewal of such Policies, whichever  occurs first.  D. In the event this Contract expires on a run-off basis, the Reinsurer’s liability hereunder shall  continue if the Company is required by statute or regulation to continue coverage for a Policy,  until the earliest date on which the Company may cancel the Policy.   ARTICLE 4  SPECIAL TERMINATION  A. The Company may terminate a Reinsurer’s percentage share in this Contract at any time by  giving written notice to the Reinsurer in the event of any of the following circumstances:  1. The Reinsurer ceases underwriting operations.  2. A state insurance department or other legal authority orders the Reinsurer to cease  writing business, or the Reinsurer is placed under regulatory supervision.  3. The Reinsurer has become insolvent or has been placed into liquidation or receivership  (whether voluntary or involuntary), or there have been instituted against it proceedings  for the appointment of a receiver, liquidator, rehabilitator, conservator, trustee in  bankruptcy, or other agent known by whatever name, to take possession of its assets or  control of its operations.  4. The Reinsurer has merged with or has become acquired or controlled by any company,  corporation, or individual(s) not controlling the Reinsurer’s operations at the inception  of this Contract.  B. Termination shall be effected on a run-off or cut-off basis as set forth in the Term Article, at  the sole discretion of the Company.  The reinsurance premium due the Reinsurer hereunder  

 

        Effective: December 31, 2020      5 of 23     shall be pro rated based on the period of the Reinsurer’s participation hereon, and the  Reinsurer shall immediately return any unearned reinsurance premium received.  C. Additionally, in the event of any of the circumstances listed in paragraph A of this Article,  the Company shall have the option to commute the Reinsurer’s liability for losses on Policies  covered by this Contract.  In the event the Company and the Reinsurer cannot agree on the  commutation amount, they shall appoint an actuary and/or appraiser to assess such amount  and shall share equally any expense of the actuary and/or appraiser.  If the Company and the  Reinsurer cannot agree on an actuary and/or appraiser, the Company and the Reinsurer each  shall nominate three individuals, of whom the other shall decline two, and the final  appointment shall be made by drawing lots.  Payment by the Reinsurer of the amount of  liability ascertained shall constitute a complete and final release of both parties in respect of  liability arising from the Reinsurer’s participation under this Contract.  D. The Company’s option to require commutation under paragraph C above shall survive the  termination or expiration of this Contract.    ARTICLE 5  TERRITORY  The territorial limits of this Contract shall be identical with those of the Company’s Policies.    ARTICLE 6  EXCLUSIONS  A. This Contract shall not apply to and specifically excludes:  1. Liability of the Company arising by contract, operation of law, or otherwise, from its  participation or membership, whether voluntary or involuntary, in any Insolvency  Fund.  “Insolvency Fund” includes any guaranty fund, insolvency fund, plan, pool,  association, fund or other arrangement, howsoever denominated, established or  governed, that provides for any assessment of or payment or assumption by the  Company of part or all of any claim, debt, charge, fee, or other obligation of an insurer,  or its successors or assigns, that has been declared by any competent authority to be  insolvent, or that is otherwise deemed unable to meet any claim, debt, charge, fee or  other obligation in whole or in part.    2. Any premium and liability arising from Policies in respect of coverage classified as  (“Excluded Coverage”):  a. Flood (including National Flood Insurance Program and private coverage);  b.  Identity Theft;  

 

        Effective: December 31, 2020      6 of 23     c.  Equipment Breakdown  ARTICLE 7  SPECIAL ACCEPTANCE  Business that is not within the scope of this Contract may be submitted to the Reinsurer for special  acceptance hereunder, and such business, if accepted by the Reinsurer shall be covered hereunder,  subject to the terms and conditions of this Contract, except as modified by the special acceptance.       ARTICLE 8  PREMIUM  The Company shall cede to the Reinsurer its exact proportion of the unearned portion of the Subject  Written Premium for business in force at the inception of this Contract, and the Subject Written  Premium of the Company for Policies written or renewed after said inception.    ARTICLE 9  CEDING COMMISSION  A. The Reinsurer shall allow the Company a 25.00% provisional commission on all Subject  Written Premiums ceded to the Reinsurer hereunder.  The Company shall allow the Reinsurer  return commission on return premiums at the same rate as such rate may be adjusted under  this Article.   B. The provisional commission allowed the Company shall be adjusted in accordance with the  provisions set forth herein.  C. The adjusted commission rate shall be calculated as follows and be applied to Premiums  Earned hereunder:  1. If the ratio of Losses Incurred to Premiums Earned is 53.00% or greater, the adjusted  commission rate shall be 25.00%;  2. If the ratio of Losses Incurred to Premiums Earned is less than 53.00% but greater than  40.0%, the adjusted commission rate shall be 25.00%, plus one half of the difference  in percentage points between 53.00% and the actual ratio of Loses Incurred to  Premiums Earned;  3. If the ratio of Losses Incurred to Premiums Earned is 40.00% or less, the adjusted  commission rate shall be 31.50%.  

 

        Effective: December 31, 2020      7 of 23     D. Within 45 days after the expiration of this Contract, and annually thereafter until all losses  subject hereto have been finally settled, the Company shall calculate and report the adjusted  commission on Premiums Earned.  If the adjusted commission on Premiums Earned is less  than commissions previously allowed by the Reinsurer on Premiums Earned, the Company  shall remit the difference to the Reinsurer with its report.  If the adjusted commission on  Premiums Earned is greater than commissions previously allowed by the Reinsurer on  Premiums Earned, the Reinsurer shall remit the difference to the Company as promptly as  possible after receipt and verification of the Company’s report.  E. “Losses Incurred” means ceded losses and Loss Adjustment Expense paid as of the effective  date of calculation, plus the ceded reserves for losses and Loss Adjustment Expense  outstanding as of the same date.  F. “Premiums Earned” means ceded unearned portion of the Subject Written Premium at the  inception of this Contract, plus ceded Subject Written Premium during the Contract term,  less ceded unearned portion of the Subject Written Premium at the expiration of this Contract.   ARTICLE 10  TRUST ACCOUNT  A. The Reinsurer agrees to establish a Trust Account in accordance with the Trust Agreement  entered into by the Company and the Reinsurer, a copy of which is attached hereto as  Exhibit A.    B. Within 30 days following expiration of this Contract, the Company and the Reinsurer shall  mutually agree to release from the Trust Account any excess balance, calculated as follows:    1. Losses and loss adjustment expenses paid by the Company, but not recovered from the  Reinsurer as of the applicable Calculation Date; plus  2. Reserves for losses and loss adjustment expense reported and outstanding as of the  applicable Calculation Date; plus  3. Reserves for losses and loss adjustment expenses incurred by not reported (IBNR) as  of the applicable Calculation Date    ARTICLE 11  REPORTS AND REMITTANCES  A. 1. As promptly as possible after the effective date of this Contract, but no later than 30  days thereafter, the Company shall remit to the Trust Account, established in accordance  with the Trust Account Article, the Reinsurer’s share of the unearned portion of the Subject  Written Premium, less provisional commission thereon and less the Catastrophe Cost  Allowance thereon applicable to subject business in force at the effective time and date of  this Contract.  

 

        Effective: December 31, 2020      8 of 23      2.   As promptly as possible after the effective date of this Contract, but no later than 30  days thereafter, the Reinsurer will pay $6,000,000 into the Trust Account.  B. 1. Within 15 calendar days following the end of each month, the Company shall furnish  the Reinsurer with a report summarizing:  a. reinsurance premium on Subject Written Premium during the month; less  b. the provisional ceding commission as provided for in this Contract; less  c. the Catastrophe Cost Allowance as provided for in this Contract; less  d. ceded loss and Loss Adjustment Expense paid during the month; plus  e. ceded subrogation, salvage, or other recoveries during the month; and  f. the net balance due either party.  2. The net balance shall be paid into the Trust Account as promptly as possible.  3. In addition, the Company shall furnish the Reinsurer with a monthly statement showing  the unearned premium reserves, and the reserves for outstanding losses including Loss  Adjustment Expense.  The Company shall also provide the Reinsurer with such other  information as may be required by the Reinsurer for completion of its financial  statements.       ARTICLE 12  DEFINITIONS  A. “Northeast Property” means residential property and liability business written in the states  of Massachusetts, Rhode Island, New Jersey and Connecticut.   B. “Loss Adjustment Expense” means costs and expenses incurred by the Company in  connection with the investigation, appraisal, adjustment, settlement, litigation, defense or  appeal of a specific claim or loss, or alleged loss, including but not limited to:  1. court costs;  2. costs of supersedeas and appeal bonds;  3. monitoring counsel expenses;  

 

        Effective: December 31, 2020      9 of 23     4. legal expenses and costs incurred in connection with coverage questions and legal  actions connected thereto, including but not limited to declaratory judgment actions,  arbitration and mediation actions;  5. post-judgment interest;  6. pre-judgment interest, unless included as part of an award or judgment;  7. a pro rata share of salaries and expenses of Company field employees, calculated in  accordance with the time occupied in adjusting such loss, and expenses of other  Company employees who have been temporarily diverted from their normal and  customary duties and assigned to the field adjustment of losses covered by this  Contract; and  8. subrogation, salvage and recovery expenses.  “Loss Adjustment Expense” does not include salaries and expenses of the Company’s  employees, except as provided in subparagraph (7) above, and office and other overhead  expenses.  C. “Subject Written Premium” means gross written premium of the Company for the classes of  business reinsured hereunder, less cancellations and return premiums, and less installment  fees, MGA fees, inspection fees, Policy fees, Policy taxes or any other taxes, EMPAT fees,  and pass through assessments or any recoupments of assessments.  D. “Subject Earned Premium” means the gross earned premium, less cancellations and return  premiums, and less the earned portion of installment fees, MGA fees, inspection fees, Policy  fees, Policy taxes or any other taxes, EMPAT fees, and pass through assessments or any  recoupments of assessments.  E. “Policy” means any binder, policy, or contract of insurance issued, accepted or held covered  provisionally or otherwise, by or on behalf of the Company in respect of Northeast Property.    F.  “Catastrophe Loss Occurrence” means a Named Storm Loss Event or Earthquake Event.  G. “Named Storm Loss Event” means any Named Storm that commences during the Term of  this Contract and results in loss under one or more Policies caused by, occasioned by, arising  out of or resulting from the Named Storm and may include, by way of example and not  limitation, wind, gusts, hail, rain, lightning, tornadoes and cyclones and storm surge, and  further includes all ensuing damage (including but not limited to fire following, flood, mold,  riots, looting and vandalism). Notwithstanding the foregoing, in the event a Named Storm  commences during the term of this Contract but there is no recorded individual loss arising  from such Named Storm during the term of this Contract, such Named Storm will be deemed  to have commenced no earlier than the date of the first recorded individual loss arising from  such Named Storm.  

 

        Effective: December 31, 2020      10 of 23     H.  “Named Storm” means any storm or storm system that has been declared by the Reporting  Service (by being given a name or a number) to be a hurricane and/or a tropical storm and/or  a tropical depression and/or extra-tropical cyclone and/or post tropical cyclone and/or  subtropical cyclone at any time and any place (whether inside or outside the territorial limits  set forth in the Territory Article, and including the merging with one or more separate storms  or storm systems into a combined storm or storm system). The duration of the Named Storm  includes the time period:   1.  Beginning at 12:00:01 a.m., Eastern Time, on the date when a “watch,” “warning,”  advisory or bulletin in respect of such Named Storm is first issued by the Reporting  Service. Notwithstanding the foregoing, in the event a “watch” is issued prior to the  effective date of this Contract, but no losses resulting therefrom occur prior to the  effective date of this Contract, the Named Storm will be deemed to begin during the  term of this Contract;  2.  Continuing for the time period thereafter during which such Named Storm continues,  regardless of its category rating and regardless of whether a “watch,” “warning,”  advisory or bulletin remains in force for such Named Storm; and  3.  Ending at 11:59:59 p.m., Eastern Time, on the fourth calendar day following the day  of issuance of the last “watch,” “warning,” advisory or bulletin in respect of such  Named Storm issued by the Reporting Service.  4.  Notwithstanding the foregoing, the period of consecutive hours applicable to a Named  Storm shall not be less than 168 hours.  I.  “Reporting Service” means the National Hurricane Center, Weather Prediction Center or  other support center or agency of the National Weather Service or its successor(s).  J.  “Earthquake” means any Earthquake reported by the United States Geological Survey or any  successor thereto and/or the Global Seismic Network.  K.  “Earthquake Event” means an Earthquake (including an Earthquake occurring outside the  territorial limits set forth in the Territory Article) selected by the Company (hereinafter the  “Principal Earthquake”) that commences during the term of this Contract and results in loss  under one or more Policies during the Earthquake Period caused by, occasioned by, arising  out of or resulting from the peril of earth shake and further includes all ensuing damage  caused therefrom, or as a consequence thereof (including, without limitation, damage from  fire following, sprinkler leakage, tsunami, landslide and/or volcanic eruption), if such  ensuing events/perils are caused by, occasioned by, arising out of or resulting from the  Principal Earthquake. The Company may deem one or more subsequent Earthquakes to be  part of the Principal Earthquake, provided that such subsequent Earthquakes and aftershocks  occur within the applicable Earthquake Period.  L.  “Earthquake Period” means the period beginning on the date reported by the United States  Geological Survey or any successor thereto and/or the Global Seismic Network (as adjusted  

 

        Effective: December 31, 2020      11 of 23     to the date in the Eastern Time Zone, if applicable) of the Principal Earthquake which  commenced during the Term of this Contract (or, at the Company’s discretion, on the date  of any foreshock assigned to said Principal Earthquake), as selected by the Company in its  sole discretion, and ending seven consecutive days following such date.  M.  “Catastrophe Cost Allowance” as used herein means an allowance equal to 11.528% of the  Company’s Subject Written Premiums ceded, subject to a maximum ceded amount of  $4,400,000.  ARTICLE 13  EXTRA CONTRACTUAL OBLIGATIONS/EXCESS OF POLICY LIMITS  A. This Contract shall cover Extra Contractual Obligations, as provided in the Retention and  Limit Article.  “Extra Contractual Obligations” shall be defined as those liabilities not  covered under any other provision of this Contract and that arise from the handling of any  claim on business covered hereunder, such liabilities arising because of, but not limited to,  the following:  failure by the Company to settle within the Policy limit, or by reason of  alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the  preparation of the defense or in the trial of any action against its insured or reinsured or in  the preparation or prosecution of an appeal consequent upon such action.  B. This Contract shall cover Loss in Excess of Policy Limits, as provided in the Retention and  Limit Article.  “Loss in Excess of Policy Limits” shall be defined as Loss in excess of the  Policy limit, having been incurred because of, but not limited to, failure by the Company to  settle within the Policy limit or by reason of alleged or actual negligence, fraud or bad faith  in rejecting an offer of settlement or in the preparation of the defense or in the trial of any  action against its insured or reinsured or in the preparation or prosecution of an appeal  consequent upon such action.  C. An Extra Contractual Obligation and/or Loss in Excess of Policy Limits shall be deemed to  have occurred on the same date as the loss covered under the Company’s Policy, and shall  constitute part of the original loss.  D. For the purposes of the Loss in Excess of Policy Limits coverage hereunder, the word "Loss"  shall mean any amounts for which the Company would have been contractually liable to pay  had it not been for the limit of the original Policy.  E. Loss Adjustment Expense in respect of Extra Contractual Obligations and/or Loss in Excess  of Policy Limits shall be covered hereunder in the same manner as other Loss Adjustment  Expense.  F. However, this Article shall not apply where the loss has been incurred due to final legal  adjudication of fraud of a member of the Board of Directors or a corporate officer of the  Company acting individually or collectively or in collusion with any individual or  

 

        Effective: December 31, 2020      12 of 23     corporation or any other organization or party involved in the presentation, defense or  settlement of any claim covered hereunder.  G. In no event shall coverage be provided to the extent not permitted under law.   ARTICLE 14  NET RETAINED LIABILITY  A. This Contract applies only to that portion of any loss that the Company retains net for its own  account (prior to deduction of any reinsurance that inures solely to the benefit of the  Company).  B. The amount of the Reinsurer’s liability hereunder in respect of any loss or losses shall not be  increased by reason of the inability of the Company to collect from any other reinsurer(s),  whether specific or general, any amounts that may have become due from such reinsurer(s),  whether such inability arises from the insolvency of such other reinsurer(s) or otherwise.     ARTICLE 15  ORIGINAL CONDITIONS  All reinsurance under this Contract shall be subject to the same rates, terms, conditions, waivers  and interpretations, and to the same modifications and alterations as the respective Policies of the  Company.  However, in no event shall this be construed in any way to provide coverage outside  the terms and conditions set forth in this Contract.     ARTICLE 16  NO THIRD PARTY RIGHTS  This Contract is solely between the Company and the Reinsurer, and in no instance shall any  insured, claimant or other third party have any rights under this Contract except as may be  expressly provided otherwise herein.     ARTICLE 17  LOSS SETTLEMENTS  A. The Company alone and at its full discretion shall adjust, settle or compromise all claims and  losses.  B. As respects losses subject to this Contract, all loss settlements made by the Company,  whether under strict Policy terms or by way of compromise, and any Extra Contractual  Obligations and/or Loss in Excess of Policy Limits, shall be binding upon the Reinsurer, and  

 

        Effective: December 31, 2020      13 of 23     the Reinsurer agrees to pay or allow, as the case may be, its share of each such settlement in  accordance with this Contract.      ARTICLE 18  COMMUTATION  A.     If mutually agreed upon after termination of the Contract, the Company shall notify the  Reinsurer in writing of their intent to commute and propose a commutation amount.  Each  party shall provide to the other party any reasonable information requested by such party in  connection with such commutation.  The Reinsurer will not refuse to consider any reasonable  requests for commutation.  B.     In the event that the Reinsurer and the Company cannot reach a mutual agreement on the  commutation amount within 60 days after notification, then the Reinsurer and the Company  shall mutually appoint an independent actuary within 30 days after the end of such 60 day  period.  Such independent actuary shall investigate and determine the risk-adjusted,  discounted present value of any such unsettled claims or unreported claims under this  Contract.  The fees and reasonable expenses of such independent actuary shall be shared  equally by the Reinsurer and the Company.  C.     In the event the Reinsurer and the Company cannot reach an agreement on an independent  actuary within such 30 day period, then each party shall have a further 30 days in which to  appoint an actuary.  If either party refuses or neglects to appoint an actuary within such 30  day period, the other party may appoint the second actuary within 10 days after the end of  such 30 day period.  The two chosen actuaries shall then select a third actuary within 30 days  after the selection of the second actuary.  If the two actuaries fail to agree on the selection of  the third actuary within such 30 day period, then each actuary shall name three individuals,  of whom the other shall decline two, and the decision shall be made by drawing lots.  Each  actuary selected shall be disinterested in the outcome of the commutation and shall be either  a Fellow or an Associate of the Casualty Actuarial Society.  The parties hereby agree that the  decision in writing of the third actuary, when filed with the parties hereto, shall be final and  binding on both parties.  The expenses of the actuaries and of the commutation shall be  equally divided between the two parties.  D.     Complete payment of the commutation amount by the Reinsurer under this Article shall  constitute a complete release of the Reinsurer for its liability under this Contract.     ARTICLE 19  SALVAGE AND SUBROGATION  A. Salvages and all recoveries (including amounts due from all reinsurances that inure to the  benefit of this Contract, whether recovered or not), shall be first deducted from any loss to  

 

        Effective: December 31, 2020      14 of 23     the extent received prior to loss settlement hereunder to arrive at the amount of liability  attaching hereunder.  B. All salvages, recoveries or payments recovered or received subsequent to loss settlement  hereunder shall be applied as if recovered or received prior to the aforesaid settlement, and  all necessary adjustments shall be made by the parties hereto.  ARTICLE 20  CURRENCY  A. Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United  States Dollars, and all payments hereunder shall be in United States Dollars.  B. For purposes of this Contract, where the Company receives premiums or pays losses in  currencies other than United States Dollars, such premiums or losses shall be converted into  United States Dollars at the actual rates of exchange at which these premiums or losses are  entered in the Company’s books.    ARTICLE 21  SECURITY  A. This Article applies only to the extent a Reinsurer does not qualify for credit with any  insurance regulatory authority having jurisdiction over the Company’s reserves   B. The Company agrees, in respect of its Policies or bonds falling within the scope of this  Contract, that when it files with its insurance regulatory authority, or sets up on its books  liabilities as required by law, it shall forward to the Reinsurer a statement showing the  proportion of such liabilities applicable to the Reinsurer.  The “Reinsurer’s Obligations” shall  be defined as follows:  1. the Reinsurer’s share of the unearned portion of the Subject Written Premium;  2. known outstanding losses that have been reported to the Reinsurer and Loss Adjustment  Expense relating thereto;  3. losses and Loss Adjustment Expense paid by the Company but not recovered from the  Reinsurer;  4. losses incurred but not reported and Loss Adjustment Expense relating thereto;  5. all other amounts for which the Company cannot take credit on its financial statements  unless funding is provided by the Reinsurer.  C. The Reinsurer’s Obligations shall be funded by funds withheld, cash advances, Trust  Agreement or a Letter of Credit (LOC).  The Company shall have the option of determining  

 

        Effective: December 31, 2020      15 of 23     the method of funding provided it is acceptable to the insurance regulatory authorities having  jurisdiction over the Company’s reserves.  D. When funding by Trust Agreement, the Reinsurer shall ensure that the Trust Agreement  complies with the provisions of the “Trust Agreement Requirements Clause” attached hereto.   When funding by an LOC, the Reinsurer agrees to apply for and secure timely delivery to  the Company of a clean, irrevocable and unconditional LOC issued by a bank and containing  provisions acceptable to the insurance regulatory authorities having jurisdiction over the  Company’s reserves in an amount equal to the Reinsurer’s Obligations.  Such LOC shall be  issued for a period of not less than one year, and shall be automatically extended for one year  from its date of expiration or any future expiration date unless 30 days (or such other time  period as may be required by insurance regulatory authorities), prior to any expiration date  the issuing bank shall notify the Company by certified or registered mail that the issuing bank  elects not to consider the LOC extended for any additional period.  E. The Reinsurer and the Company agree that any funding provided by the Reinsurer pursuant  to the provisions of this Contract may be drawn upon at any time, notwithstanding any other  provision of this Contract, and be utilized by the Company or any successor, by operation of  law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or  conservator of the Company, for the following purposes, unless otherwise provided for in a  separate Trust Agreement:  1. to reimburse the Company for the Reinsurer’s Obligations, the payment of which is due  under the terms of this Contract and that has not been otherwise paid;  2. to make refund of any sum that is in excess of the actual amount required to pay the  Reinsurer’s Obligations under this Contract (or in excess of 102% of the Reinsurer’s  Obligations, if funding is provided by a Trust Agreement);  3. to fund an account with the Company for the Reinsurer’s Obligations.  Such cash  deposit shall be held in an interest bearing account separate from the Company’s other  assets, and interest thereon not in excess of the prime rate shall accrue to the benefit of  the Reinsurer.  Any taxes payable on accrued interest shall be paid out of the assets in  the account that are in excess of the Reinsurer’s Obligations (or in excess of 102% of  the Reinsurer’s Obligations, if funding is provided by a Trust Agreement).  If the assets  are inadequate to pay taxes, any taxes due shall be paid or reimbursed by the Reinsurer;  4. to pay the Reinsurer’s share of any other amounts the Company claims are due under  this Contract.  F. If the amount drawn by the Company is in excess of the actual amount required for E(1) or  E(3), or in the case of E(4), the actual amount determined to be due, the Company shall  promptly return to the Reinsurer the excess amount so drawn.  All of the foregoing shall be  applied without diminution because of insolvency on the part of the Company or the  Reinsurer.  

 

        Effective: December 31, 2020      16 of 23     G. The issuing bank shall have no responsibility whatsoever in connection with the propriety of  withdrawals made by the Company or the disposition of funds withdrawn, except to ensure  that withdrawals are made only upon the order of properly authorized representatives of the  Company.  H. At annual intervals, or more frequently at the discretion of the Company, but never more  frequently than monthly, the Company shall prepare a specific statement of the Reinsurer’s  Obligations for the sole purpose of amending the LOC or other method of funding, in the  following manner:  1. If the statement shows that the Reinsurer’s Obligations exceed the balance of the LOC  as of the statement date, the Reinsurer shall, within 30 days after receipt of the  statement, secure delivery to the Company of an amendment to the LOC increasing the  amount of credit by the amount of such difference.  Should another method of funding  be used, the Reinsurer shall, within the time period outlined above, increase such  funding by the amount of such difference.  2. If, however, the statement shows that the Reinsurer’s Obligations are less than the  balance of the LOC (or that 102% of the Reinsurer’s Obligations are less than the trust  account balance if funding is provided by a Trust Agreement), as of the statement date,  the Company shall, within 30 days after receipt of written request from the Reinsurer,  release such excess credit by agreeing to secure an amendment to the LOC reducing  the amount of credit available by the amount of such excess credit.  Should another  method of funding be used, the Company shall, within the time period outlined above,  decrease such funding by the amount of such excess.  I. Should the Company or the Reinsurer be in breach of its obligations under this Article, or  any Trust Agreement entered into to collateralize the Reinsurer’s Obligations hereunder,  notwithstanding anything to the contrary elsewhere in this Contract, including but not limited  to the Arbitration Article, the Company or the Reinsurer may seek immediate relief in respect  of said breach from any court sitting in Pinellas County, Florida having competent  jurisdiction of the parties hereto or the state and federal courts having jurisdiction for disputes  from Pinellas County, as determined by the Company, and the parties consent to jurisdiction  of such court. The Company and the Reinsurer agree that in addition to obeying the order of  such court, each will bear its own costs, including reasonable attorneys’ fees and court costs,  incurred in seeking the relief sought from such breach. In the alternative, the Company or  the Reinsurer may elect to demand arbitration of such dispute pursuant to the provisions of  the Arbitration Article hereunder.      ARTICLE 22  TAXES  A. In consideration of the terms under which this Contract is issued, the Company undertakes  not to claim any deduction of the premium hereon when making Canadian tax returns.  

 

        Effective: December 31, 2020      17 of 23     B. 1. The Reinsurer has agreed to allow, for the purpose of paying the Federal Excise Tax,  the applicable percentage of the premium payable hereon (as imposed under the  Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.  2. In the event of any return of such premium becoming due hereunder, the Reinsurer shall  deduct the applicable percentage of such premium from the amount of the return, and  the Company or its agent should take steps to recover the Tax from the U.S.  Government.  ARTICLE 23  ACCESS TO RECORDS  The Reinsurer or its duly authorized representatives shall have the right to visit the offices of the  Company to inspect, examine, audit, and verify any of the policy, accounting or claim files  (“Records”) relating to the Policies reinsured under this Contract during regular business hours  after giving five working days’ prior notice; provided, that the Company shall be permitted to  exclude from such inspection, examination or audit information that is not primarily related to the  Policies to the extent any such information related to the Policies cannot be segregated or  separated, without material cost or effort, from information that the Company believes in good  faith is not permitted to be disclosed or transferred to the Reinsurer or its affiliates pursuant to  applicable law or that would otherwise reveal sensitive competitive information concerning the  business of the Company and its affiliates (other than the Policies). This right shall be exercisable  during the term of this Contract or after the expiration of this Contract.  ARTICLE 24  CONFIDENTIALITY  A. The Reinsurer hereby acknowledges that the documents, information and data provided to it  by the Company, whether directly or through an authorized agent, in connection with the  placement and execution of this Contract ("Confidential Information") are proprietary and  confidential to the Company. Confidential Information shall not include documents,  information or data that the Reinsurer can show:  1. are publicly known or have become publicly known through no unauthorized act of the  Reinsurer;  2. have been rightfully received from a third person without obligation of confidentiality;  or  3. were known by the Reinsurer prior to the placement of this Contract without an  obligation of confidentiality.  B. Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential  Information to any third parties, including any affiliated companies, except:  

 

        Effective: December 31, 2020      18 of 23     1. when required by retrocessionaires as respects business ceded to this Contract;  2. when required by regulators performing an audit of the Reinsurer’s records and/or  financial condition; or  3. when required by external auditors performing an audit of the Reinsurer’s records in  the normal course of business.  Further, the Reinsurer agrees not to use any Confidential Information for any purpose not  related to the performance of its obligations or enforcement of its rights under this Contract.  C. Notwithstanding the above, in the event that the Reinsurer is required by court order, other  legal process or any regulatory authority to release or disclose any or all of the Confidential  Information, the Reinsurer agrees to provide the Company with written notice of same at  least 10 days prior to such release or disclosure and to use its best efforts to assist the  Company in maintaining the confidentiality provided for in this Article.  D. The provisions of this Article shall extend to the officers, directors and employees of the  Reinsurer and its affiliates, and shall be binding upon their successors and assigns.     ARTICLE 25  INDEMNIFICATION AND ERRORS AND OMISSIONS  A. The Reinsurer is reinsuring, subject to the terms and conditions of this Contract, the  obligations of the Company under any Policy.  The Company shall be the sole judge as to:  1. what shall constitute a claim or loss covered under any Policy;  2. the Company’s liability thereunder;  3. the amount or amounts that it shall be proper for the Company to pay thereunder.  B. The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and  liability(ies) of the Company under any Policy.  C. Any inadvertent error, omission or delay in complying with the terms and conditions of this  Contract shall not be held to relieve either party hereto from any liability that would attach  to it hereunder if such error, omission or delay had not been made, provided such error,  omission or delay is rectified immediately upon discovery.     ARTICLE 26  INSOLVENCY  A. If more than one reinsured company is referenced within the definition of “Company” in the  Preamble to this Contract, this Article shall apply severally to each such company.  Further,  

 

        Effective: December 31, 2020      19 of 23     this Article and the laws of the domiciliary state shall apply in the event of the insolvency of  any company covered hereunder.  In the event of a conflict between any provision of this  Article and the laws of the domiciliary state of any company covered hereunder, that  domiciliary state’s laws shall prevail.  B. In the event of the insolvency of the Company, this reinsurance (or the portion of any risk or  obligation assumed by the Reinsurer, if required by applicable law) shall be payable directly  to the Company, or to its liquidator, receiver, conservator or statutory successor, either:   (1) on the basis of the liability of the Company, or (2) on the basis of claims filed and allowed  in the liquidation proceeding, whichever may be required by applicable statute, without  diminution because of the insolvency of the Company or because the liquidator, receiver,  conservator or statutory successor of the Company has failed to pay all or a portion of any  claim.  It is agreed, however, that the liquidator, receiver, conservator or statutory successor  of the Company shall give written notice to the Reinsurer of the pendency of a claim against  the Company indicating the Policy or bond reinsured, which claim would involve a possible  liability on the part of the Reinsurer within a reasonable time after such claim is filed in the  conservation or liquidation proceeding or in the receivership, and that during the pendency  of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in  the proceeding where such claim is to be adjudicated any defense or defenses that it may  deem available to the Company or its liquidator, receiver, conservator or statutory successor.   The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of  the court, against the Company as part of the expense of conservation or liquidation to the  extent of a pro rata share of the benefit that may accrue to the Company solely as a result of  the defense undertaken by the Reinsurer.  C. Where two or more reinsurers are involved in the same claim and a majority in interest elect  to interpose defense to such claim, the expense shall be apportioned in accordance with the  terms of this reinsurance Contract as though such expense had been incurred by the  Company.  ARTICLE 27  ARBITRATION  A. Except as may be elected by the Company pursuant to paragraph I of the Security Article of  this Contract, any dispute arising out of the interpretation, performance or breach of this  Contract, including the formation or validity thereof, shall be submitted for decision to a  panel of three arbitrators.  Notice requesting arbitration shall be in writing and sent certified  or registered mail, return receipt requested.  B. One arbitrator shall be chosen by each party and the two arbitrators shall then choose an  impartial third arbitrator who shall preside at the hearing.  If either party fails to appoint its  arbitrator within 30 days after being requested to do so by the other party, the latter, after  10 days’ prior notice by certified or registered mail of its intention to do so, may appoint the  second arbitrator.  

 

        Effective: December 31, 2020      20 of 23     C. If the two arbitrators do not agree on a third arbitrator within 60 days of their appointment,  the third arbitrator shall be chosen in accordance with the procedures for selecting the third  arbitrator in force on the date the arbitration is demanded, established by the AIDA  Reinsurance and Insurance Arbitration Society – U.S. (ARIAS).  The arbitrators shall be  persons knowledgeable about insurance and reinsurance who have no personal or financial  interest in the result of the arbitration.  If a member of the panel dies, becomes disabled or is  otherwise unwilling or unable to serve, a substitute shall be selected in the same manner as  the departing member was chosen and the arbitration shall continue.  D. Within 30 days after all arbitrators have been appointed, the panel shall meet and determine  timely periods for briefs, discovery procedures and schedules of hearings. The arbitration  hearing and any pre-hearing conferences shall be held in St. Petersburg, Florida, on the  date(s) fixed by the arbitrators, provided that the arbitrators may call for pre-hearing  conferences by means of teleconference or videoconference as they may deem appropriate.  E. The panel shall be relieved of all judicial formality and shall not be bound by the strict rules  of procedure and evidence.  Notwithstanding anything to the contrary in this Contract, the  arbitrators may at their discretion, consider underwriting and placement information  provided by the Company to the Reinsurer, as well as any correspondence exchanged by the  parties that is related to this Contract.  The arbitration shall take place in St Petersburg,  Florida, or at such other place as the parties shall agree.  The decision of any two arbitrators  shall be in writing and shall be final and binding.  The panel is empowered to grant interim  relief as it may deem appropriate.  F. The panel shall interpret this Contract as an honorable engagement rather than as merely a  legal obligation and shall make its decision considering the custom and practice of the  applicable insurance and reinsurance business as promptly as possible after the hearings.   Judgment upon an award may be entered in any court having jurisdiction thereof.  G. Each party shall bear the expense of its own arbitrator and shall jointly and equally bear with  the other party the cost of the third arbitrator.  The remaining costs of the arbitration shall be  allocated by the panel.  The panel may, at its discretion, award such further costs and  expenses as it considers appropriate, including but not limited to attorneys’ fees, to the extent  permitted by law.  ARTICLE 28  GOVERNING LAW  This Contract shall be governed as to performance, administration and interpretation by the laws  of the State of Florida, exclusive of conflict of law rules.  However, with respect to credit for  reinsurance, the rules of all applicable states shall apply.    

 

        Effective: December 31, 2020      21 of 23     ARTICLE 29  ENTIRE AGREEMENT  This Contract sets forth all of the duties and obligations between the Company and the Reinsurer  and supersedes any and all prior or contemporaneous written agreements with respect to matters  referred to in this Contract.  This Contract may not be modified or changed except by an  amendment to this Contract in writing signed by both parties.  However, this Article shall not be  construed as limiting the admissibility of evidence regarding the formation, interpretation, purpose  or intent of this Contract.     ARTICLE 30  NON-WAIVER  The failure of the Company or the Reinsurer to insist on compliance with this Contract or to  exercise any right or remedy hereunder shall not constitute a waiver of any rights contained in this  Contract nor prevent either party from thereafter demanding full and complete compliance nor  prevent either party from exercising such remedy in the future.     ARTICLE 31  MODE OF EXECUTION  A. This Contract may be executed by:  1. an original written ink signature of paper documents;  2. an exchange of electronic copies showing the original written ink signature of paper  documents;  3. electronic signature technology employing computer software and a digital signature  or digitizer pen pad to capture a person’s handwritten signature in such a manner that  the signature is unique to the person signing, is under the sole control of the person  signing, is capable of verification to authenticate the signature and is linked to the  document signed in such a manner that if the data is changed, such signature is  invalidated.  B. The use of any one or a combination of these methods of execution shall constitute a legally  binding and valid signing of this Contract.  This Contract may be executed in one or more  counterparts, each of which, when duly executed, shall be deemed an original.      

 

        Effective: December 31, 2020      22 of 23       IN WITNESS WHEREOF, the Company has caused this Contract to be executed by its duly  authorized representative.  This 18th day of January, 2021.       United Property & Casualty Insurance Company    By: __________________________________________       Name: Bennett Bradford Martz    Title: President & Chief Financial Officer    Homeowners Choice Property & Casualty Insurance Company    By: _________________________________________    Name: _______________________________________  Title: ________________________________________    

 

        Effective: December 31, 2020      23 of 23               EXHIBIT A  TRUST AGREEMENTregistrationrightsagreem

Exhibit 10.3  4815-0695-2917.4  1006410186v8  REGISTRATION RIGHTS AGREEMENT  dated as of  January 18, 2021  by and among  HCI GROUP, INC.  and  UNITED PROPERTY AND CASUALTY INSURANCE COMPANY 

 

  4815-0695-2917.4  1006410186v8  REGISTRATION RIGHTS AGREEMENT  This REGISTRATION RIGHTS AGREEMENT dated as of January 18, 2021 (this  “Agreement”), is entered into by and among HCI Group, Inc., a Florida corporation (the  “Company”), and United Property and Casualty Insurance Company, an insurance company  organized under the laws of the State of Florida (the “Seller”).  WHEREAS, the Company, the Seller and Homeowners Choice Property & Casualty  Insurance Company, Inc. have entered into a Renewal Rights Agreement (the “Renewal Rights  Agreement”) dated as of January 18, 2021;  WHEREAS, the Seller will receive an aggregate of 100,000 shares of common stock, no  par value, of the Company (the “Common Stock”), pursuant to the Renewal Rights Agreement;  and  WHEREAS, the Company has agreed to grant the Seller certain rights to have such  shares of Common Stock registered for resale to the public on the terms and subject to the  conditions set forth in this Agreement.  In consideration of the mutual promises made herein and other good and valuable  consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto  agree as follows:  ARTICLE 1  DEFINITIONS  Section 1.01. Definitions.  The following terms, as used herein, have the following  meanings:  “Affiliate” of any Person means another Person that directly or indirectly, through one or  more intermediaries, Controls, is Controlled by or is under common Control with, such first  Person.  “Agreement” has the meaning specified in the preamble hereto.  “Applicable Law” means any United States federal, state, local or foreign law, statute,  regulation, rule, ordinance, order, injunction, judgment, decree, principle of common law,  constitution or treaty enacted, promulgated, issued, enforced or entered by any Governmental  Entity applicable to a party hereto, or any of its respective businesses, properties or assets, as  may be amended from time to time.   “Business Day” means any day other than a Saturday, a Sunday or any other day on  which banking institutions in New York, New York or St. Petersburg, Florida are required or  authorized by Applicable Law to be closed.  “Common Stock” has the meaning specified in the preamble hereto.  “Company” has the meaning specified in the recitals hereto.  

 

  3  4815-0695-2917.4  1006410186v8  “Control” or “Controlled” means the possession, directly or indirectly, of the power to  direct or cause the direction of the management and policies of a Person, whether through the  ownership of voting securities or partnership or other interests, by contract or otherwise.  “Damages” has the meaning set forth in Section 4.01.  “Effective Date” means the date that is the six month anniversary of the date hereof or, if  such date is not a Business Day, the next date that is a Business Day.  “Effectiveness Period” has the meaning set forth in Section 3.01(b).    “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any  successor federal law, and the rules and regulations promulgated thereunder, all as the same may  from time to time be in effect.  “Filing Date” means the date that is thirty (30) days following a written request by Seller  to file a Registration Statement, but in no event shall the Filing Date be prior to the Effective  Date.  “Free Writing Prospectus” has the meaning set form in Rule 405 of the Securities Act.  “Governmental Entity” means any foreign, federal, state, local or other governmental,  legislative, judicial, administrative or regulatory authority, agency, commission, board, body,  court or entity or any instrumentality thereof or any self-regulatory body or arbitral body or  arbitrator.  “Indemnified Party” has the meaning set forth in Section 4.03.  “Indemnifying Party” has the meaning set forth in Section 4.03.  “Permitted Transferee” means any Affiliate of the Seller.  “Person” means an individual, corporation, partnership, joint venture, limited liability  company, association, trust, unincorporated organization or other entity.  “Prospectus” means the prospectus included in the Registration Statement (including,  without limitation, a prospectus that includes any information previously omitted from a  prospectus filed as part of an effective registration statement in reliance upon Rule 430A  promulgated under the Securities Act), as amended or supplemented by any prospectus  supplement, with respect to the terms of the offering of any portion of the Registrable Securities  covered by the Registration Statement, and all other amendments and supplements to the  Prospectus including post-effective amendments, and all material incorporated by reference or  deemed to be incorporated by reference in such Prospectus.  “Registrable Securities” means, at any time, any Common Stock held by the Seller that  were issued pursuant to the Renewal Rights Agreement, together with any securities issued or  issuable upon any stock split, dividend or other distribution, recapitalization, exchange or similar  event with respect to the foregoing.  As to any particular Registrable Securities, once issued such  

 

  4  4815-0695-2917.4  1006410186v8  securities shall cease to be Registrable Securities when (i) they are disposed of pursuant to an  effective Registration Statement under the Securities Act, (ii) they are sold to the public pursuant  to Rule 144 or Rule 145 (or other exemption from registration under the Securities Act), (iii)  they shall have ceased to be outstanding, or (iv) they have been sold in a private transaction to a  Person other than a Permitted Transferee.  “Registration Statement” means each registration statement required to be filed under  Section 3 with respect to the Registrable Securities, including (in each case) the Prospectus,  amendments and supplements to such registration statement or Prospectus, including pre- and  post-effective amendments, all exhibits thereto, and all material incorporated by reference or  deemed to be incorporated by reference in such registration statement.  “Renewal Rights Agreement” has the meaning specified in the recitals hereto.  “Rule 144,” “Rule 144A,” “Rule 172,” “Rule 405,” “Rule 415,” and “Rule 424” means  Rule 144, Rule 144A, Rule 172, Rule 405, Rule 415 and Rule 424, respectively, promulgated by  the SEC pursuant to the Securities Act, as such rules may be amended from time to time, or any  similar rule or regulation hereafter adopted by the SEC having substantially the same effect as  such Rule.  “SEC” means the United States Securities and Exchange Commission.  “Securities Act” means the Securities Act of 1933, as amended, or any successor federal  law, and the rules and regulations promulgated thereunder, all as the same may from time to time  be in effect.  “Seller” has the meaning specified in the preamble hereto.  “Seller’s Counsel” has the meaning set forth in Section 3.02(a).  “Selling Expenses” means all underwriting discounts, selling fees or commissions,  brokerage fees or commissions and stock transfer taxes applicable to any sale of Registrable  Securities, as well as all legal fees, accounting expenses and other advisory fees for legal  counsel, accountants and advisors retained by the Seller in connection with the sale of  Registrable Securities.  “Selling Stockholder Information” means the name of the Seller, the number of offered  shares of common stock and the address and other information with respect to the Seller required  to be included in the “Principal and Selling Stockholders” (or similarly titled) section of the  Registration Statement.  “Transaction Documents” has the meaning specified in the Renewal Rights Agreement.  “Transfer” means, with respect to any Registrable Securities, (a) when used as a verb, to  sell, assign, dispose of, exchange, pledge, encumber, hypothecate or otherwise transfer such  Registrable Securities or any participation or interest therein, whether directly or indirectly  (including through any hedging, swap, or other agreement or transaction that transfers, in whole  or in part, the economic consequences of the Registrable Securities), or agree or commit to do  

 

  5  4815-0695-2917.4  1006410186v8  any of the foregoing and (b) when used as a noun, a direct or indirect sale, assignment,  disposition, exchange, pledge, encumbrance, hypothecation, or other transfer of such Registrable  Securities or any participation or interest therein or any agreement or commitment to do any of  the foregoing.  Section 1.02. Construction.  The words “hereof”, “herein” and “hereunder” and words  of like import used in this Agreement shall refer to this Agreement as a whole and not to any  particular provision of this Agreement.  The captions herein are included for convenience of  reference only and shall be ignored in the construction or interpretation hereof.  References to  Articles, Sections and Exhibits are to Articles, Sections and Exhibits of this Agreement unless  otherwise specified.  All Exhibits annexed hereto or referred to herein are hereby incorporated in  and made a part of this Agreement as if set forth in full herein.  Any capitalized term used in any  Exhibit but not otherwise defined therein shall have the meaning given to such term in this  Agreement.  Any singular term in this Agreement shall be deemed to include the plural, and any  plural term the singular.  Whenever the words “include”, “includes” or “including” are used in  this Agreement, they shall be deemed to be followed by the words “without limitation”, whether  or not they are in fact followed by those words or words of like import.  “Writing”, “written” and  comparable terms refer to printing, typing and other means of reproducing words (including  electronic media) in a visible form.  References to any agreement or contract are to that  agreement or contract as amended, modified or supplemented from time to time in accordance  with the terms hereof and thereof.  References to any contract are to that contract as amended,  modified or supplemented from time to time in accordance with the terms hereof and thereof.  References to any Person include the successors and permitted assigns of that Person.   References from or through any date mean, unless otherwise specified, from and including or  through and including, respectively.  Any reference to “days” means calendar days unless  Business Days are expressly specified.  If any action under this Agreement is required to be done  or taken on a day that is not a Business Day, then such action shall be required to be done or  taken not on such day but on the first succeeding Business Day thereafter.  ARTICLE 2  LOCK-UP AGREEMENT  Section 2.01. Lock-up Agreement.  The Seller agrees not to effect any Transfer, sale or  distribution of Registrable Securities, including, but not limited to, any sale pursuant to Rule 144,  or make any short sale of, loan, grant any option for the purchase of, or otherwise transfer or  dispose of, any Registrable Securities for a period that shall expire on the Effective Date.  The  restrictions on Transfer, sale or distribution of Registrable Securities under this Section 2.01  shall not apply to any Transfer, sale or distribution to a Permitted Transferee, provided that such  Permitted Transferee shall have delivered to the Company concurrently with such Transfer, sale  or distribution of such Registrable Shares a written agreement to be bound by the terms and  provisions of this Agreement.     

 

  6  4815-0695-2917.4  1006410186v8  ARTICLE 3  REGISTRATION RIGHTS  Section 3.01. Registration Statement.  (a) Upon the written request of Seller, on or prior to the Filing Date and so long as  any Registrable Securities are then outstanding, the Company shall prepare and file with the SEC  a Registration Statement or, if a Registration Statement is then effective, a supplement to the  Prospectus, in either case covering the resale of all applicable Registrable Securities for an  offering to be made on a continuous basis pursuant to Rule 415 (or any successor provision).   The plan of distribution included in the Prospectus at any time that a Registration Statement is  effective, shall permit the Seller to sell all or part of the Registrable Securities included on the  Registration Statement directly or indirectly, subject in each case to the following sentence,  through one or more broker-dealers or agents or other intermediaries through any method  permitted pursuant to Applicable Law; provided that the Company shall not be required to enter  into an underwriting or other purchase agreement, provide any comfort letter, provide any  opinion of counsel (other than as required by the transfer agent), provide any due diligence,  provide any marketing assistance or make any representations to Seller or any broker-dealer,  agent or other intermediary.  Notwithstanding the foregoing or the substance of such plan of  distribution, Seller shall not have the right to Transfer, sell or distribute any Registrable  Securities in any underwritten offering of the Registrable Securities. For purposes of clarity, the  Company shall not be required to file a Registration Statement in the event that the securities  issued to Seller under the Renewal Rights Agreement cease to be Registrable Securities as of the  Effective Date.  For the purposes of further clarity, the Seller shall be permitted to make the  written request referred to in the first sentence of this subsection prior to the Effective Date.  (b) The Company shall use its commercially reasonable efforts to (i) if the Company  is not filing a Prospectus under a then-effective Registration Statement, cause such Registration  Statement to be declared effective under the Securities Act as promptly as practicable after such  Registration Statement is filed and (ii) keep such Registration Statement (or a replacement  Registration Statement) continuously effective under the Securities Act, until the date that all  Registrable Securities covered by such Registration Statement have been sold pursuant to such  Registration Statement or under Rule 144 (the “Effectiveness Period”).  (c) Notwithstanding anything in this Agreement to the contrary the Company may, by  written notice to the Seller, either (i) delay the initial filing (but not the preparation) of the  Registration Statement or (ii) or suspend sales under a Registration Statement after the Filing  Date thereof and require that the Seller immediately cease the sale of Registrable Securities  pursuant thereto and defer the filing of any subsequent Registration Statement if, in either of  such events, the Company becomes aware of any material non-public information or is engaged  in any material activity and the Board of Directors determines in good faith, by appropriate  resolutions, that, as a result of such information or activity, (a) it would be materially detrimental  to the Company to file or maintain a Registration Statement at such time or (b) disclosure of such  material non-public information or material activity would not be required to be made at such  time but for the filing, effectiveness or continued use of such Registration Statement.  Upon  receipt of such notice following the effectiveness of the Registration Statement, the Seller shall  immediately discontinue any sales of Registrable Securities pursuant to such Registration  

 

  7  4815-0695-2917.4  1006410186v8  Statement until the Seller is advised in writing by the Company that the current Prospectus or  amended Prospectus, as applicable, may be used.  The Company’s rights under this Section  3.01(c) may be exercised in any twelve-month period for a period of no more than an aggregate  of sixty days.  Immediately after the end of any suspension period under this Section 3.01(c), the  Company shall use its commercially reasonable efforts to take all necessary actions (including  filing any required supplemental Prospectus) to, as applicable, file the Registration Statement or  restore the effectiveness of the applicable Registration Statement and the ability of the Seller to  publicly resell its Registrable Securities pursuant to such effective Registration Statement.    Section 3.02. Registration Procedures.  In connection with the Company’s registration obligations hereunder, the Company shall:  (a) Not less than ten Business Days prior to the filing of a Registration Statement or  any related Prospectus or any amendment or supplement thereto, furnish to the Seller and its  counsel (“Seller’s Counsel”) copies of all such documents proposed to be filed, which  documents (other than any document that is incorporated or deemed to be incorporated by  reference therein) will be subject to the review of the Seller and the Seller’s Counsel.  The  Company shall use its commercially reasonable efforts to address in each such document prior to  being so filed with the SEC all reasonable comments as the Seller may reasonably and promptly  propose no later than five Business Days after such Seller has been so furnished with copies of  such documents as aforesaid; provided that the Company shall not have any obligation to modify  any information if the Company reasonably believes in good faith that so doing would cause (i)  the Registration Statement or any amendment or supplement thereto, to contain an untrue  statement of a material fact or omit to state any material fact required to be stated therein or  necessary to make the statements therein not misleading or (ii) the Prospectus or any amendment  or supplement thereto, to contain an untrue statement of a material fact or to omit to state a  material fact necessary in order to make the statements made, in light of the circumstances under  which they were made, not misleading;  (b) (i) Subject to Section 3.01(c), prepare and file with the SEC such amendments,  including post-effective amendments, to each Registration Statement and the Prospectus used in  connection therewith as may be necessary to keep the Registration Statement continuously  effective, as to the applicable Registrable Securities for the Effectiveness Period and prepare and  file with the SEC such additional Registration Statements in order to register for resale under the  Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or  supplemented by any required Prospectus supplement, and as so supplemented or amended to be  filed pursuant to Rule 424; and (iii) comply in all material respects with the provisions of the  Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities  covered by the Registration Statement during the applicable period in accordance with the  intended methods of disposition by the Seller thereof set forth in the Registration Statement as so  amended or in such Prospectus as so supplemented.  (c) Notify the Seller as promptly as reasonably possible of any of the following  events: (i) the SEC issues any stop order suspending the effectiveness of any Registration  Statement or initiates any proceedings for that purpose; (ii) the Company receives notice of any  suspension of the qualification or exemption from qualification of any Registrable Securities for  

 

  8  4815-0695-2917.4  1006410186v8  sale in any jurisdiction, or the initiation or threat of any proceeding for such purpose; or (iii) the  financial statements included in any Registration Statement become ineligible for inclusion  therein or any Registration Statement or Prospectus or other document contains any untrue  statement of a material fact or omits to state any material fact required to be stated therein or  necessary to make the statements therein, in the light of the circumstances under which they were  made, not misleading.  (d) Use its commercially reasonable efforts to avoid the issuance of or, if issued,  obtain the withdrawal of (i) any order suspending the effectiveness of any Registration  Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of  the Registrable Securities for sale in any jurisdiction, as soon as possible.  (e) Promptly deliver to the Seller, as many copies of the Prospectus or Prospectuses  (including each form of prospectus) and each amendment or supplement thereto as the Seller  may reasonably request.  The Company hereby consents to the use of such Prospectus and each  amendment or supplement thereto by the Seller in connection with the offering and sale of the  Registrable Securities covered by such Prospectus and any amendment or supplement thereto to  the extent permitted by federal and state securities laws and regulations.  (f) Prior to any public offering of Registrable Securities, use its commercially  reasonable efforts to register or qualify or cooperate with the Seller in connection with the  registration or qualification (or exemption from such registration or qualification) of such  Registrable Securities for offer and sale under the securities or Blue Sky laws of such  jurisdictions within the United States as the Seller requests in writing, to keep each such  registration or qualification (or exemption therefrom) effective for so long as required, but not to  exceed the duration of the Effectiveness Period, and to do any and all other acts or things  reasonably necessary or advisable to enable the disposition in such jurisdictions of the  Registrable Securities covered by a Registration Statement; provided, however, that the  Company shall not be obligated to file any general consent to service of process or to qualify as a  foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or  to subject itself to taxation in respect of doing business in any jurisdiction in which it is not  otherwise so subject.  (g) Cooperate with the Seller to facilitate the timely preparation and delivery of  certificates or book-entry records, as required by the Seller, representing Registrable Securities to  be delivered to a transferee pursuant to a Registration Statement, which certificates or records, as  applicable, shall be free, to the extent permitted by the Transaction Documents and under law, of  all restrictive legends, and to enable such certificates to be in such denominations and registered  in such names as the Seller may reasonably request. In connection therewith, if required by the  Company’s transfer agent, the Company shall promptly after the effectiveness of the Registration  Statement cause an opinion of counsel as to the effectiveness of the Registration Statement to be  delivered to and maintained with such transfer agent, together with any other authorizations,  certificates and directions required by such transfer agent, which authorize and direct such  transfer agent to issue such Registrable Securities without legend upon sale by the holder thereof  under the Registration Statement.  

 

  9  4815-0695-2917.4  1006410186v8  (h) Upon the occurrence of any event described in Section 3.02(c), as promptly as  reasonably possible, prepare a supplement or amendment, including a post-effective amendment,  to the Registration Statement or a supplement to the related Prospectus or any document  incorporated or deemed to be incorporated therein by reference, and file any other required  document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus  will contain an untrue statement of a material fact or omit to state a material fact required to be  stated therein or necessary to make the statements therein, in the light of the circumstances under  which they were made, not misleading.  (i) Comply with all rules and regulations of the SEC applicable to the registration of  the Registrable Securities.  (j) Comply with all applicable rules and regulations of the SEC under the Securities  Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file  any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to  Rule 424 under the Securities Act, reasonably promptly inform the Seller in writing if, at any  time during the Effectiveness Period, the Company does not satisfy the conditions specified in  Rule 172 and, as a result thereof, the Seller is required to make available a Prospectus in  connection with any disposition of Registrable Securities and take such other actions as may be  reasonably necessary to facilitate the registration of the Registrable Securities hereunder.  (k) Use its commercially reasonable efforts to cause all Common Stock included in  the Registrable Securities to be listed on the national securities exchange on which similar  securities issued by the Company are then listed.  (l) As expeditiously as possible and within the deadlines specified by the Securities  Act, make all required filings of all prospectuses and Free Writing Prospectuses with the SEC.  (m) As expeditiously as possible and within the deadlines specified by the Securities  Act, make all required filing fee payments, subject to Section 3.04, in respect of any registration  statement or prospectus used under this Agreement (and any offering covered thereby).  (n) To take all other reasonable steps necessary to effect the registration and  disposition of the Registrable Securities contemplated hereby.  Section 3.03. Seller Information.  It shall be a condition precedent to the obligations of  the Company to complete the registration or Prospectus supplement filing pursuant to this  Agreement with respect to the Registrable Securities of the Seller that the Seller furnishes to the  Company the Selling Stockholder Information, and such other information regarding itself, the  Registrable Securities and other Common Stock held by it and the intended method of  disposition of the Registrable Securities held by it as shall be reasonably required to effect the  registration of such Registrable Securities or file a Prospectus supplement with respect to the  Registrable Securities and shall complete and execute such documents in connection with the  foregoing as the Company may reasonably request (and Seller will promptly notify the Company  of any material changes in such information set forth in a Registration Statement prior to and  during the effectiveness of such Registration Statement).  

 

  10  4815-0695-2917.4  1006410186v8  Section 3.04. Registration Expenses.  All fees and expenses incident to the Company’s  performance of or compliance with its obligations under this Agreement (excluding any Selling  Expenses) shall be borne by the Company whether or not any Registrable Securities are sold  pursuant to a Registration Statement.  The fees and expenses referred to in the foregoing  sentence shall include, without limitation, (i) all registration and filing fees (including, without  limitation, fees and expenses (A) with respect to filings required to be made with the securities  exchanges on which the Common Stock is then listed for trading, and (B) in compliance with  applicable state securities or Blue Sky laws (including fees with respect to filings required to be  made with the Financial Industry Regulatory Authority, if any)), (ii) messenger, telephone and  delivery expenses, (iii) fees and disbursements of counsel for the Company, (iv) fees and  expenses of accountants retained by the Company and all other Persons retained by the Company  in connection with the consummation of the transactions contemplated by this Agreement.  In  addition, the Company shall be responsible for all of its internal expenses incurred in connection  with the consummation of the transactions contemplated by this Agreement (including, without  limitation, all salaries and expenses of its officers and employees performing legal or accounting  duties), the expense of any annual audit and the fees and expenses incurred in connection with  the listing of the Registrable Securities on any securities exchange as required hereunder.  Section 3.05. Rule 144 Compliance.  The Company covenants that it will use its  commercially reasonable efforts to timely file the reports required to be filed by the Company  under the Securities Act and the Exchange Act (or, if the Company is not required to file such  reports, will make and keep public information available as those terms are understood and  defined in Rule 144) and take such further action as the Seller may reasonably request (including  providing any information necessary to comply with Rule 144), so as to enable the Seller to sell  the Registrable Securities pursuant to Rule 144.  In connection with any sale, transfer or other  disposition by the Seller of any Registrable Securities pursuant to Rule 144 under the Securities  Act, the Company shall cooperate with the Seller to facilitate the timely preparation and delivery  of certificates representing the Registrable Securities to be sold and not bearing any Securities  Act legend, including delivering any opinion, instruction letter or other documents to the  Transfer Agent and enable certificates for such Registrable Securities to be for such number of  shares and registered in such names as the Seller may reasonably request at least two Business  Days prior to any sale of Registrable Securities hereunder.  ARTICLE 4  INDEMNIFICATION AND CONTRIBUTION  Section 4.01. Indemnification by the Company.  The Company agrees to indemnify and  hold harmless the Seller and its Affiliates from and against any and all losses, claims, damages,  liabilities and expenses (including reasonable expenses of investigation and reasonable attorneys’  fees and expenses) (collectively, “Damages”) caused by or relating to any untrue statement or  alleged untrue statement of a material fact contained or incorporated by reference in any  registration statement or prospectus or any filing or document incidental to the registration of the  Registrable Securities (as amended or supplemented if the Company shall have furnished any  amendments or supplements thereto) or free-writing prospectus (as defined in Rule 405), or  caused by or relating to any omission or alleged omission to state therein a material fact required  to be stated therein or necessary to make the statements therein not misleading, except insofar as  such Damages are caused by or related to any such untrue statement or omission or alleged  

 

  11  4815-0695-2917.4  1006410186v8  untrue statement or omission so made based upon information, including the Selling Stockholder  Information, furnished in writing to the Company by the Seller expressly for use therein.    Section 4.02. Indemnification by Seller.  The Seller agrees to indemnify and hold  harmless the Company, its officers, directors, employees, partners and agents and each Person, if  any, who controls the Company within the meaning of Section 15 of the Securities Act or  Section 20 of the Exchange Act to the same extent as the indemnity from the Company to the  Seller provided in Section 4.01, but only with respect to information, including the Selling  Stockholder Information, furnished in writing by the Seller expressly for use in any registration  statement or prospectus relating to the Registrable Securities (as amended or supplemented  thereto) or free-writing prospectus.    Section 4.03. Conduct of Indemnification Proceedings.  If any proceeding (including  any governmental investigation) shall be instituted involving any Person in respect of which  indemnity may be sought pursuant to this Article 4, such Person (an “Indemnified Party”) shall  promptly notify the Person against whom such indemnity may be sought (the “Indemnifying  Party”) in writing and the Indemnifying Party shall assume the defense thereof, including the  employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the  payment of all fees and expenses, provided that the failure or delay of any Indemnified Party to  notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations  hereunder except to the extent that the Indemnifying Party is materially prejudiced by such  failure or delay.  In any such proceeding, any Indemnified Party shall have the right to retain its  own counsel, but the fees and expenses of such counsel shall be at the expense of such  Indemnified Party unless (a) the Indemnifying Party and the Indemnified Party shall have  mutually agreed, in writing, to the retention of such counsel, (b) in the reasonable judgment of  such Indemnified Party representation of both parties by the same counsel would be  inappropriate due to actual or potential differing interests between them, including one or more  defenses or counterclaims that are different from or in addition to those available to the  Indemnifying Party, or (c) the Indemnifying Party shall have failed to assume the defense within  thirty (30) days of notice pursuant to this Section 4.03.  It is understood that, in connection with  any proceeding or related proceedings in the same jurisdiction, the Indemnifying Party shall not  be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in  addition to any local counsel) at any time for all such Indemnified Parties, and that all such fees  and expenses shall be reimbursed as they are incurred.  In the case of any such separate firm for  the Indemnified Parties, such firm shall be designated in writing by the Indemnified Parties.  The  Indemnifying Party shall not be liable for any settlement of any proceeding effected without its  written consent (which consent shall not be unreasonably withheld, delayed or conditioned), but  if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying  Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or  liability (to the extent stated above) by reason of such settlement or judgment.  Without the prior  written consent of the Indemnified Party, no Indemnifying Party shall effect any settlement of  any pending or threatened proceeding in respect of which any Indemnified Party is or could have  been a party and indemnity could have been sought hereunder by such Indemnified Party, unless  such settlement (a) includes an unconditional release of such Indemnified Party from all  liabilities and obligations arising out of such proceeding, (b) does not include any injunctive or  other equitable or non-monetary relief applicable to or affecting such Indemnified Party, and (c)  

 

  12  4815-0695-2917.4  1006410186v8  does not include a statement as to or an admission of fault, culpability or failure to act by or on  behalf of such Indemnified Party.   Section 4.04. Survival of Indemnification.  The indemnification provided for under this  Agreement shall remain in full force and effect regardless of any investigation made by or on  behalf of the Indemnified Party and shall survive the transfer of Registrable Securities by the  Seller or their Permitted Transferees.   Section 4.05. Contribution.  If the indemnification provided for in this Article 4 is  unavailable to the Indemnified Parties in respect of any Damages, then each Indemnifying Party,  in lieu of indemnifying the Indemnified Parties, shall contribute to the amount paid or payable by  such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the  Indemnifying Party and Indemnified Party in connection with the untrue or alleged untrue  statements of a material fact or omissions or alleged omissions of a material fact that resulted in  such Damages as well as any other relevant equitable considerations.  The relative fault of such  Indemnifying Party and Indemnified Party 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 of a material fact, has been taken or made by, or  relates to information supplied by, such Indemnifying Party or Indemnified Party, and the  parties’ relative intent, knowledge, access to information and opportunity to correct or prevent  such action, statement or omission.  The amount paid or payable by a party as a result of any  Damages shall be deemed to include, subject to the limitations set forth in this Agreement, any  reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection  with any proceeding to the extent such party would have been indemnified for such fees or  expenses if the indemnification provided for in this Article 4 was available to such party in  accordance with its terms.  The parties hereto agree that it would not be just and equitable if contribution pursuant to  this Section 4.05 were determined by pro rata allocation or by any other method of allocation  that does not take into account the equitable considerations referred to in the immediately  preceding paragraph.  Notwithstanding the provisions of this Section 4.05, the Seller shall not be  required to contribute, in the aggregate, any amount in excess of the amount by which the net  proceeds actually received by the Seller from the sale of the Registrable Securities subject to the  proceeding exceeds the amount of any damages that the Seller has otherwise been required to  pay by reason of such untrue or alleged untrue statement of a material fact or omission or alleged  omission of a material fact, except in the case of fraud by the Seller.   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.  The indemnity and contribution agreements contained in this  Article 4 are in addition to any liability that the Indemnifying Parties may have to the  Indemnified Parties.  

 

  13  4815-0695-2917.4  1006410186v8  ARTICLE 5  MISCELLANEOUS  Section 5.01. Binding Effect; Assignability.  Neither this Agreement nor any of the  rights, interests or obligations under it may be assigned or delegated, in whole or in part, by any  of the parties pursuant to any Transfer of Registrable Securities or otherwise without the prior  written consent of the other parties, and any attempted or purported assignment or delegation in  violation of this Section 5.01 shall be null and void; except to a Permitted Transferee, which  Permitted Transferee shall have delivered to the Company concurrently with the Transfer, sale or  distribution of Registrable Shares to such Permitted Transferee a written agreement to be bound  by the terms and provisions of this Agreement.  Subject to the preceding sentence, this  Agreement will be binding upon, inure to the benefit of, and be enforceable by the parties hereto  and their respective heirs, executors, administrators, successors, legal representatives and  permitted assigns.  The Seller shall cease to be bound by the terms hereof (other than the  provisions of Article 4 applicable to the Seller with respect to any offering of Registrable  Securities completed before the date the Seller ceased to own any Registrable Securities, and this  Article 5) when the Seller ceases to own beneficially any Registrable Securities.  Section 5.02. Notices.  All notices or other communications hereunder shall be deemed  to have been duly given and made if in writing and if served by personal delivery upon the party  for whom it is intended, if delivered by registered or certified mail, return receipt requested, or  by a national courier service, or if sent by e-mail; provided, that the e-mail is promptly  confirmed, to the Person at the address set forth below, or such other address as may be  designated in writing hereafter, in the same manner, by such Person.  Any such notice shall be  deemed given when so delivered personally by courier or by overnight delivery service or sent  by e-mail (and immediately after transmission, receipt of which has been confirmed by telephone  by the sender) or, if mailed, four (4) Business Days after the mailing as follows:  (a) if to the Company to:  HCI Group, Inc.  5300 West Cypress Street  Suite 100  Tampa, FL 33607  Telephone:   (813) 484-7331  E-mail:   agraham@HCIgroup.com  Attn: Andrew L. Graham, General Counsel  with a copy (which shall not constitute notice) to:  Foley & Lardner LLP  100 North Tampa Street  Suite 2700  Tampa, FL 33602   Telephone:   (813) 225-4122  E-mail:   ccreely@foley.com  Attn: Curt Creely, Esq.   

 

  14  4815-0695-2917.4  1006410186v8  (b) if to the Seller to:  United Property and Casualty Insurance Company  800 2nd Avenue S.  St. Petersburg, Florida 33701  Telephone: (727) 471-1479  Attention:  Brad S. Kalter  Email:  bkalter@uncinsurance.com    with a copy (which shall not constitute notice) to:    Debevoise & Plimpton LLP  919 Third Avenue  New York, NY 10022  Telephone: (212) 909-6301   (212) 909-7235  Attention:  Eric T. Juergens   Michael D. Devins  Email:  etjuergens@debevoise.com   mddevins@debevoise.com  Section 5.03. Waiver; Amendment.  No amendment or modification of this Agreement  shall be valid or binding unless set forth in writing and duly executed by all of the parties hereto.   No waiver hereunder shall be valid or binding unless set forth in writing and duly executed by  the party against whom enforcement of the waiver is sought.  Any such waiver shall constitute a  waiver only with respect to the specific matter described in such writing and shall in no way  impair the rights of the party granting such waiver in any other respect or at any other time.   Neither the waiver by any of the parties hereto of a breach of or a default under any of the  provisions of this Agreement, nor the failure by any of the parties, on one or more occasions, to  enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder,  shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of  any of such provisions, rights or privileges hereunder.  Section 5.04. Governing Law.  This Agreement and its enforcement will be governed  by, and interpreted in accordance with, the laws of the State of Florida applicable to agreements  made and to be performed entirely within such State, without regard to any principles of conflicts  of laws principles of such State that would provide for the application of the laws of any other  jurisdiction.  Section 5.05. Jurisdiction.  Each party hereby irrevocably and unconditionally submits  to the exclusive jurisdiction of the United States District Court for the Middle District of Florida  and of any Florida state court sitting in Hillsborough County, Florida, for purposes of all legal  proceedings arising out of or relating to this Agreement, or the transactions contemplated by this  Agreement, or for recognition and enforcement of any judgment in respect thereof.  In any such  action, suit or other proceeding, each party hereby irrevocably waives, to the fullest extent  permitted by Applicable Law, any objection that it may now or hereafter have to the laying of the  venue of any such proceedings brought in such court and any claim that any such proceeding  

 

  15  4815-0695-2917.4  1006410186v8  brought in such a court has been brought in an inconvenient forum.  Each party also agrees that  any final and unappealable judgment against a party in connection with any action, suit or other  proceeding shall be conclusive and binding on such party and that such award or judgment may  be enforced in any court of competent jurisdiction, either within or outside of the United States.   A certified or exemplified copy of such award or judgment shall be conclusive evidence of the  fact and amount of such award or judgment.    Section 5.06. 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, ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED IN  CONTRACT, TORT OR OTHERWISE) DIRECTLY OR INDIRECTLY ARISING OUT OF  OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED  HEREBY.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) 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,  (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF  THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D)  EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG  OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS  SECTION 5.06.  Section 5.07. Specific Enforcement.  The parties agree that irreparable damage would  occur if any provision of this Agreement were not performed in accordance with the terms hereof  and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this  Agreement or to enforce specifically the performance of the terms and provisions hereof in any  court specified in Section 5.05 in addition to any other remedy to which they are entitled at law  or in equity. The parties hereby waive, in any action for specific performance, the defense of  adequacy of a remedy at law and the posting of any bond or other security in connection  therewith.  Section 5.08. Cumulative Remedies.  The rights and remedies herein provided are  cumulative and none is exclusive of any other, or of any rights or remedies that any party may  otherwise have at law or in equity.  Section 5.09. Counterparts.  This Agreement may be executed in one or more  counterparts, each of which will be deemed to constitute an original, and may be delivered by  facsimile or other electronic means intended to preserve the original graphic or pictorial  appearance of a document.  Section 5.10. Entire Agreement; Third-Party Beneficiaries.  This Agreement and the  other Transaction Documents contain the entire agreement between the parties hereto with  respect to the subject matter of this Agreement and the other Transaction Documents and  supersede all prior agreements and understandings, oral or written, with respect to such matters.   

 

  16  4815-0695-2917.4  1006410186v8  This Agreement is for the sole benefit of the parties and their permitted successors and assigns  and nothing expressed or implied in this Agreement is intended to or shall confer any rights,  remedies, obligations or liabilities upon any Person other than the parties hereto and their  respective heirs, executors, administrators, successors, legal representatives and permitted  assigns.  Section 5.11. 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 entity or any circumstance, is found by a court or other  Governmental Entity of competent jurisdiction to be invalid or unenforceable, (a) 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 (b) the  remainder of this Agreement and the application of such provision to other Persons or  circumstances shall not be affected by such invalidity or unenforceability, nor shall such  invalidity or unenforceability affect the validity or enforceability of such provision, or the  application thereof, in any other jurisdiction.  [Signature pages follow.]  

 

  [Signature Page to Registration Rights Agreement]    1006410186v6  4815-0695-2917.4  1006410186v8  IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their  respective duly authorized officers, all on the date first written above.  Seller:  UNITED PROPERTY AND CASUALTY  INSURANCE COMPANY  By:     Name: Bennett Bradford Martz  Title: President & Chief Financial Officer    Company:  HCI GROUP, INC.  By:     Name:  Title:

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