Document:

sgby_ex102.htm

  EXHIBIT 10.2

 

REGISTRATION RIGHTS AGREEMENT 

 

This Registration Rights Agreement ("Agreement"), dated July 31, 2015, is made by and between SIGNAL BAY, INC., a Colorado corporation ("Company"), and KODIAK CAPITAL GROUP, LLC a Delaware limited liability company (the "Investor"). 

 

RECITALS 

 

WHEREAS, upon the terms and subject to the conditions of the Equity Purchase Agreement ("Purchase Agreement"), between the Investor and the Company, the Company has agreed to issue and sell to the Investor shares (the "Put Shares") of its common stock, $0.0001 par value per share (the "Common Stock") from time to time for an aggregate investment price of up to One Million Dollars ($1,000,000) (the "Registered Securities"); and 

 

WHEREAS, to induce the Investor to execute and deliver the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "Securities Act"), and applicable state securities laws with respect to the Registered Securities; 

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows: 

 

1. Definitions. 

 

(a) As used in this Agreement, the following terms shall have the following meaning: 

 

(i) "Subscription Date" means the date of this Agreement. 

 

(ii) "Investor" has the meaning set forth in the preamble to this Agreement. 

 

(iii) "Register," "registered" and "registration" refer to a registration effected by preparing and filing a Registration Statement or Statements in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a delayed or continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement by the United States Securities and Exchange Commission (the "SEC"). 

 

(iv) "Registered Securities" will have the same meaning as set forth in the Purchase Agreement. 

 

(v) "Registration Statement" means the Company's registration statement on Form S-1, or any similar registration statement of the Company filed with SEC under the Securities Act with respect to the Registered Securities. 

 

(vi) "EDGAR" means the SEC's Electronic Data Gathering, Analysis and Retrieval System. 

 

(vii) "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same will then be in effect. 

 

(b) Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement. 

 

	 
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2. Obligation of the Company. In connection with the registration of the Registered Securities, the Company shall do each of the following: 

 

(a) Prepare promptly and file with the SEC within thirty (30) days after the date hereof, a Registration Statement with respect to not less than the maximum allowable under Rule 415 of Registered Securities, and thereafter use all commercially reasonable efforts to cause such Registration Statement relating to the Registered Securities to become effective within five (5) business days after notice from the Securities and Exchange Commission that such Registration Statement may be declared effective, and keep the Registration Statement effective at all times prior to the termination of the Purchase Agreement until the earliest of (i) the date that is three months after the completion of the last Closing Date under the Purchase Agreement, (ii) the date when the Investor may sell all Registered Securities under Rule 144 without volume limitations, or (iii) the date the Investor no longer owns any of the Registered Securities (collectively, the "Registration Period"), which Registration Statement (including any amendments or supplements, thereto and prospectuses contained therein) shall not contain any 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; 

 

(b) Prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective at all times during the Registration Period, and to comply with the provisions of the Securities Act with respect to the disposition of all Registered Securities of the Company covered by the Registration Statement until the expiration of the Registration Period. 

 

(c) With respect to the Registered Securities, upon written request by the Investor, permit counsel designated by Investor to review the Registration Statement and all amendments and supplements thereto a reasonable period of time (but not less than two (2) business days) prior to their filing with the SEC, and not file any document in a form to which such counsel reasonably objects. 

 

(d) As promptly as practicable after becoming aware of the following facts, the Company shall notify Investor and Investor's legal counsel identified to the Company and (if requested by any such person) confirm such notice in writing no later than one (1) business day thereafter (i): (A) when a prospectus or any prospectus supplement or post-effective amendment to the Registration Statement is filed; (B) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registered Securities or the initiation of any proceedings for that purpose; and (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registered Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose. 

 

(e) Unless available to the Investor without charge through EDGAR, the SEC's website or the Company's website, furnish to Investor, promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one (1) copy of the Registration Statement, each preliminary prospectus and the prospectus, and each amendment or supplement thereto; 

 

(f) Use all commercially reasonable efforts to (i) register and/or qualify the Registered Securities covered by the Registration Statement under such other securities or blue sky laws of such jurisdictions as the Investor may reasonably request and in which significant volumes of shares of Common Stock are traded, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof at all times during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualification in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registered Securities for sale in such jurisdictions: provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (A) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), (B) subject itself to general taxation in any such jurisdiction, (C) file a general consent to service of process in any such jurisdiction, (D) provide any undertakings that cause more than nominal expense or burden to the Company or (E) make any change in its charter or by-laws or any then existing contracts, which in each case the Board of Directors of the Company determines to be contrary to the best interests of the Company and its stockholders; 

 

	 
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(g) As promptly as practicable after becoming aware of such event, notify the Investor of the happening of any event of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes any untrue statement of a material fact or omits 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 ("Registration Default"), and promptly prepare a supplement or amendment to the Registration Statement or other appropriate filing with the SEC to correct such untrue statement or omission, and take any other commercially reasonable steps to cure the Registration Default, and, unless available to the Investor without charge through EDGAR, the SEC's website or the Company's website, deliver a number of copies of such supplement or amendment to the Investor as the Investor may reasonably request. 

 

(h) Use its commercially reasonable efforts, if eligible, either to (i) cause all the Registered Securities covered by the Registration Statement to be listed on a national securities exchange and on each additional national securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registered Securities is then permitted under the rules of such exchange, or (ii) secure designation of all the Registered Securities covered by the Registration Statement as a National Association of Securities Dealers Automated Quotations System ("Nasdaq") security within the meaning of Rule 11Aa2-1 of the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the quotation of the Registered Securities on the Nasdaq Capital Market; or if, despite the Company's commercially reasonable efforts to satisfy the preceding clause (i) or (ii), the Company is unsuccessful in doing so, to use its commercially reasonable efforts to secure authorization of the Financial Industry Regulatory Authority ("FINRA") and quotation for such Registered Securities on the over-the-counter bulletin board or on the OTC Markets and, without limiting the generality of the foregoing; 

 

(i) Provide a transfer agent for the Registered Securities not later than the Subscription Date under the Purchase Agreement; 

 

(j) Cooperate with the Investor to facilitate the timely preparation and delivery of certificates for the Registered Securities to be offered pursuant to the Registration Statement and enable such certificates for the Registered Securities to be in such denominations or amounts as the case may be, as the Investor may reasonably request and registration in such names as the Investor may request; and, within five (5) business days after a Registration Statement which includes Registered Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Registered Securities (with copies to the Investor) an appropriate instruction and opinion of such counsel, if so required by the Company's transfer agent; and 

 

(k) Take all other commercially reasonable actions necessary to expedite and facilitate distribution to the Investor of the Registered Securities pursuant to the Registration Statement. 

 

3. Obligations of the Investor. In connection with the registration of the Registered Securities, the Investor shall have the following obligations; 

 

(a) It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registered Securities of the Investor that the Investor shall timely furnish to the Company such information regarding itself, the Registered Securities held by it, and the intended method of disposition of the Registered Securities held by it, as shall be reasonably required to effect the registration of such Registered Securities and shall timely execute such documents in connection with such registration as the Company may reasonably request. 

 

(b) The Investor by such Investor's acceptance of the Registered Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder; and 

 

(c) The Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(d)(ii) or (iii) or 3(g) above, the Investor will immediately discontinue disposition of Registered Securities pursuant to the Registration Statement covering such Registered Securities until the Investor receives the copies of the supplemented or amended prospectus contemplated by Section 3(d)(ii) or (iii) or 3(g) and, if so directed by the Company, the Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Investor's possession, of the prospectus covering such Registered Securities current at the time of receipt of such notice. 

 

	 
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4. Expenses of Registration.All reasonable expenses incurred in connection with registrations, filings or qualifications pursuant to Section 3, including, without limitation, all registration, listing, and qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the Company shall be borne by the Company. 

 

5. Indemnification.After Registered Securities are included in a Registration Statement under this Agreement: 

 

(a) To the extent permitted by law, the Company will indemnify and hold harmless, the Investor, the directors, if any, of such Investor, the officers, if any, of such Investor, each person, if any, who controls the Investor within the meaning of the Securities Act or the Exchange Act (each, an "Indemnified Person"), against any losses, claims, damages, liabilities or expenses (joint or several) incurred (collectively, "Claims") to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law (the matters in the foregoing clauses (i) through (iii) being collectively referred to as "Violations"). Subject to Section 6(b) hereof, the Company shall reimburse the Investor, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a) shall not (i) apply to any Claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(b) hereof; (ii) with respect to any preliminary prospectus, inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registered Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or supplemented, if such prospectus was timely made available by the Company pursuant to Section 3(b) hereof; (iii) be available to the extent such Claim is based on a failure of the Investor to deliver or cause to be delivered the prospectus made available by the Company; or (iv) apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. The Investor will indemnify the Company, its officers, directors and agents (including legal counsel) against any claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company, by or on behalf of the Investor, expressly for use in connection with the preparation of the Registration Statement, subject to such limitations and conditions set forth in the previous sentence. 

 

(b) Promptly after receipt by an Indemnified Person under this Section 6 of notice of the commencement of any action (including any governmental action), such Indemnified Person shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person, as the case may be; provided, however, that an Indemnified Person shall have the right to retain its own counsel with the reasonable fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person and any other party represented by such counsel in such proceeding. In such event, the Company shall pay for only one separate legal counsel for the Investor selected by the Investor. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable.

 

	 
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6. Contribution. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that (a) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6 and; (b) no seller of Registered Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registered Securities who was not guilty of such fraudulent misrepresentation. 

 

7. Reports under Exchange Act. With a view to making available to the Investor the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to use its commercially reasonable efforts to: 

 

(a) make and keep public information available, as those terms are understood and defined in Rule 144; 

 

(b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act for so long as the Company remains subject to such requirements, and the filing of such reports is required for sales under Rule 144; 

 

(c) furnish to the Investor so long as the Investor owns Registered Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) unless available to the Investor without charge through EDGAR, the SEC's website or the Company's website, a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration; and 

 

(d) at the request of any Investor of Registered Securities, give its Transfer Agent instructions (supported by an opinion of Company counsel, if required or requested by the Transfer Agent) to the effect that, upon the Transfer Agent's receipt from such Investor of: 

 

(i) a certificate (a "Rule 144 Certificate") certifying (A) that such Investor has held the shares of Registered Securities which the Investor proposes to sell (the "Securities Being Sold") for a period of not less than (6) months and (B) as to such other matters as may be appropriate in accordance with Rule 144 under the Securities Act, and 

 

(ii) an opinion of counsel acceptable to the Company (for which purposes it is agreed that the initial Investor's counsel shall be deemed acceptable if such opinion is not given by Company counsel) that, based on the Rule 144 Certificate, Securities Being Sold may be sold pursuant to the provisions of Rule 144, even in the absence of an effective Registration Statement, the Transfer Agent is to effect the transfer of the Securities Being Sold and issue to the buyer(s) or transferee(s) thereof one or more stock certificates representing the transferred Securities Being Sold without any restrictive legend and without recording any restrictions on the transferability of such shares on the Transfer Agent's books and records (except to the extent any such legend or restriction results from facts other than the identity of the Investor, as the seller or transferor thereof, or the status, including any relevant legends or restrictions, of the shares of the Securities Being Sold while held by the Investor). If the Transfer Agent requires any additional documentation at the time of the transfer, the Company shall deliver or cause to be delivered all such reasonable additional documentation as may be necessary to effectuate the issuance of an unlegended certificate.

 

	 
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8. Miscellaneous. 

 

(a) Registered Owners. A person or entity is deemed to be a holder of Registered Securities whenever such person or entity owns of record such Registered Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registered Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registered Securities. 

 

(b) Rights Cumulative; Waivers. The rights of each of the parties under this Agreement are cumulative. The rights of each of the parties hereunder shall not be capable of being waived or varied other than by an express waiver or variation in writing. Any failure to exercise or any delay in exercising any of such rights shall not operate as a waiver or variation of that or any other such right. Any defective or partial exercise of any of such rights shall not preclude any other or further exercise of that or any other such right. No act or course of conduct or negotiation on the part of any party shall in any way preclude such party from exercising any such right or constitute a suspension or any variation of any such right. 

 

(c) Benefit; Successors Bound. This Agreement and the terms, covenants, conditions, provisions, obligations, undertakings, rights, and benefits hereof, shall be binding upon, and shall inure to the benefit of, the undersigned parties and their successors. 

 

(d) Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof. There are no promises, agreements, conditions, undertakings, understandings, warranties, covenants or representations, oral or written, express or implied, between them with respect to this Agreement or the matters described in this Agreement, except as set forth in this Agreement and in the other documentation relating to the transactions contemplated by this Agreement. Any such negotiations, promises, or understandings shall not be used to interpret or constitute this Agreement. 

 

(e) Amendment. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investor. Any amendment or waiver affected in accordance with this Section 9 shall be binding upon the Company. 

 

(f) Severability. Each part of this Agreement is intended to be severable. In the event that any provision of this Agreement is found by any court or other authority of competent jurisdiction to be illegal or unenforceable, such provision shall be severed or modified to the extent necessary to render it enforceable and as so severed or modified, this Agreement shall continue in full force and effect. 

 

(g) Notices. Notices required or permitted to be given hereunder shall be in writing and shall be deemed to be sufficiently given when personally delivered (by hand, by courier, by telephone line facsimile transmission, receipt confirmed, email or other means) or sent by certified mail, return receipt requested, properly addressed and with proper postage pre-paid (i) if to the Company, at its executive office and (ii) if to the Investor, at the address set forth under its name in the Purchase Agreement, with a copy to its designated attorney, or at such other address as each such party furnishes by notice given in accordance with this Section 9(g), and shall be effective, when personally delivered, upon receipt and, when so sent by certified mail, five (5) business days after deposit with the United States Postal Service. 

 

	 
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(h) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of California without regard to the principles of conflicts of law. Each of the Company and Investor hereby submit to the exclusive jurisdiction of the United States Federal and state courts located in Orange County, California with respect to any dispute arising under this Agreement, the agreements entered into in connection herewith or the transactions contemplated hereby or thereby. 

 

(i) Consents. The person signing this Agreement on behalf of each party hereby represents and warrants that he has the necessary power, consent and authority to execute and deliver this Agreement on behalf of that party. 

 

(j) Further Assurances. In addition to the instruments and documents to be made, executed and delivered pursuant to this Agreement, the parties hereto agree to make, execute and deliver or cause to be made, executed and delivered, to the requesting party such other instruments and to take such other actions as the requesting party may reasonably require to carry out the terms of this Agreement and the transactions contemplated hereby. 

 

(k) Section Headings. The Section headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 

 

(l) Construction. Unless the context otherwise requires, when used herein, the singular shall be deemed to include the plural, the plural shall be deemed to include each of the singular, and pronouns of one or no gender shall be deemed to include the equivalent pronoun of the other or no gender. 

 

(m) Execution in Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by email of a .pdf or telephone line facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. A facsimile transmission or email of a .pdf of this signed Agreement shall be legal and binding on all parties hereto. 

 

[-Signature page follows-] 

 

	 
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. 

 

	
 
	COMPANY: 
 

SIGNAL BAY, INC.  
	
 

	 	 	 	 
		By:	/s/ William Waldrop	
 

	
 
	
Name:
	William Waldrop	
 

	
 
	
Title:
	Chief Executive Officer 	
 

 

	
 
	INVESTOR: 
 

KODIAK CAPITAL GROUP, LLC 
	
 

	 	 	 	 
		By:	/s/ Ryan C. Hodson	
 

	
 
	
Name:
	Ryan C. Hodson 	
 

	
 
	
Title:
	Managing Member 	
 

	
 
	
 
	
 
	
 

 

[-Signature page to Registration Rights Agreement-]

 

 

8Reimbursement Contract

 Exhibit 10.88 
  

					
	

	  	Florida Hurricane Catastrophe Fund	  	 RICK SCOTT

GOVERNOR
 CHAIR

 
 JEFF ATWATER

CHIEF FINANCIAL OFFICER
  

PAM BONDI
 ATTORNEY
GENERAL
  
 ASH WILLIAMS

EXECUTIVE DIRECTOR & CIO

 July 28, 2015 

Mr. Richard Allen 
 CFO 

Homeowners Choice Property and Casualty Insurance Company 
 5300
W. Cypress St. # 100 
 Tampa, FL 33622 

Florida Hurricane Catastrophe Fund 

Reimbursement Contract and Amendment No.1 

Effective: June 1, 2015 
 Dear
Mr. Allen: 
 We are pleased to enclose a fully executed copy of the Reimbursement Contract and Amendment No.1 for your company’s participation in
the Florida Hurricane Catastrophe Fund for the 2015/2016 contract year. Please retain these documents in a secure location for your permanent reference. 

Should you have any questions, please call me at the number below. We appreciate your assistance in completing this documentation. 

Cordially, 
 Holly Bertagnolli 

FHCF Contracts Coordinator 
 Enclosure 

ADMINISTERED FOR 
 THE
STATE BOARD OF ADMINISTRATION BY 
 PARAGON STRATEGIC SOLUTIONS INC. 

8200 TOWER • 5600 W. 83RD STREET, SUITE 1100 • MINNEAPOLIS, MN 55437 

PHONE: 800-689-FUND (3863) • FACSIMILIE: 800-264-0492 

					
	

	  	 STATE BOARD OF ADMINISTRATION

OF FLORIDA
  

1801 HERMITAGE BOULEVARD

TALLAHASSEE, FLORIDA 32308

(850) 488-4406
  

POST OFFICE BOX 13300

32317-3300
  

REIMBURSEMENT CONTRACT
  

Effective: June 1, 2015

(Contract)
  

between
	  	 RICK SCOTT

GOVERNOR
 CHAIR

 
 JEFF ATWATER

CHIEF FINANCIAL OFFICER
  

PAM BONDI
 ATTORNEY
GENERAL
  
 ASH WILLIAMS

EXECUTIVE DIRECTOR & CIO

 HOMEOWNERS CHOICE PROPERTY AND CASUALTY INSURANCE COMPANY 

(Company) 
  

					
		 	 NAIC # 12944
  

and
	  	

 THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA (SBA) 

WHICH ADMINISTERS THE FLORIDA HURRICANE CATASTROPHE FUND (FHCF) 

PREAMBLE 
 The Legislature of the State of Florida has
enacted Section 215.555, Florida Statutes (Statute), which directs the SBA to administer the FHCF. This Contract, consisting of the principal document entitled Reimbursement Contract, addressing the mandatory FHCF coverage, and Addenda, is
subject to the Statute and to any administrative rule adopted pursuant thereto, and is not intended to be in conflict therewith. All provisions in the principal document are equally applicable to each Addendum unless specifically superseded by one
of the Addenda. 
 In consideration of the promises set forth in this Contract, the parties agree as follows: 

ARTICLE I - SCOPE OF AGREEMENT 
 As a condition precedent
to the SBA’s obligations under this Contract, the Company, an Authorized Insurer or an entity writing Covered Policies under Section 627.351, Florida Statutes, in the State of Florida, shall report to the SBA in a specified format the
business it writes which is described in this Contract as Covered Policies. 
 The terms of this Contract shall determine the rights and obligations of the
parties. This Contract provides reimbursement to the Company under certain circumstances, as described herein, and does not provide or extend insurance or reinsurance coverage to any person, firm, corporation or other entity. The SBA shall reimburse
the Company for its Ultimate Net Loss on Covered Policies, which were in force and in effect at the time of the Covered Event causing the loss, in excess of the Company’s Retention as a result of each Loss Occurrence commencing during the
Contract Year, to the extent funds are available, all as hereinafter defined. 

  

					
		 	1	  	FHCF-2015K
		 		  	Rule 19-8.010 F.A.C.

 ARTICLE II - PARTIES TO THE CONTRACT 

This Contract is solely between the Company and the SBA which administers the FHCF. In no instance shall any insured of the Company or any claimant against an
insured of the Company, or any other third party, have any rights under this Contract, except as provided in Article XIV. The SBA will only disburse funds to the Company, except as provided for in Article XIV. The Company shall not, without the
prior approval of the Office of Insurance Regulation, sell, assign, or transfer to any third party, in return for a fee or other consideration any sums the FHCF pays under this Contract or the right to receive such sums. 

ARTICLE III - TERM 
  

	(1)	The term of this Contract shall apply to Loss Occurrences which commence during the period from 12:00:01 a.m., Eastern Time, June 1, 2015, to 12:00 midnight, Eastern Time, May 31, 2016 (Contract Year).
Pursuant to the terms of this Contract, the SBA shall not be liable for Loss Occurrences which commence after the effective time and date of expiration or termination. Should this Contract expire or terminate while a Loss Occurrence covered
hereunder is in progress, the SBA shall be responsible for such Loss Occurrence in progress in the same manner and to the same extent it would have been responsible had the Contract expired the day following the conclusion of the Loss Occurrence in
progress. 

  

	(2)	The Company is required to designate a coverage level, make the required selections, and return this fully executed Contract (two originals) to the FHCF Administrator so that the Contract is received by the FHCF
Administrator no later than 5 p.m., Central Time, March 1, 2015. Failure to do so shall result in the Company’s coverage level under this Contract being deemed as follows: 

 

	 	(a)	For Companies that are a member of a National Association of Insurance Commissioners (NAIC) group, the same coverage level selected by the other Companies of the same NAIC group shall be deemed. If executed Contracts
for none of the members of an NAIC group have been received by the FHCF Administrator, the coverage level from the prior Contract Year shall be deemed. 

  

	 	(b)	For Companies that are not a member of an NAIC group under which other Companies are active participants in the FHCF, the coverage level from the prior Contract Year shall be deemed. 

 

	 	(c)	For New Participants, as that term is defined in Article V(21), that are a member of an NAIC group, the same coverage level selected by the other Companies of the same NAIC group shall be deemed. 

 

	 	(d)	For New Participants that are not a member of an NAIC group under which other Companies are active participants in the FHCF, the 45%, 75% or 90% coverage levels may be selected providing that the FHCF Administrator
receives executed Contracts within 30 calendar days of the effective date of the first Covered Policy, otherwise, the 45% coverage level shall be deemed. 

  

	(3)	Failure by the Company to meet the requirements of this Article may result in referral to the Office of Insurance Regulation. 

ARTICLE IV - LIABILITY OF THE FHCF 
  

	(1)	The SBA shall reimburse the Company, with respect to each Loss Occurrence commencing during the Contract Year for the “Reimbursement Percentage” elected, this percentage times the amount of Ultimate Net Loss
paid by the Company in excess of the Company’s Retention, as adjusted pursuant to Article V(28), plus 5% of the reimbursed losses for Loss Adjustment Expense Reimbursement. 

 

	(2)	The Reimbursement Percentage will be 45% or 75% or 90%, at the Company’s option as elected under Article XVIII. 

  

					
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	(3)	The aggregate liability of the FHCF with respect to all Reimbursement Contracts covering this Contract Year shall not exceed the limit set forth under Section 215.555(4)(c)1., Florida Statutes. For specifics
regarding loss reimbursement calculations, see section (3)(c) of Article X. 

  

	(4)	Upon the occurrence of a Covered Event, the SBA shall evaluate the potential losses to the FHCF and the FHCF’s capacity at the time of the event. The initial
Projected Payout Multiple used to reimburse the Company for its losses shall not exceed the Projected Payout Multiple as calculated based on the capacity needed to provide the FHCF’s mandatory coverage. If it appears that the Estimated
Claims-Paying Capacity may be exceeded, the SBA shall reduce the projected payout factors or multiples for determining each participating insurer’s projected payout uniformly among all insurers to reflect the Estimated Claims-Paying Capacity.

  

	(5)	Reimbursement amounts shall not be reduced by reinsurance paid or payable to the Company from other sources. Once the Company’s limit of coverage has been exhausted, the Company will not be entitled to further
reimbursements. 

  

	(6)	After the end of the calendar year, the SBA shall notify insurers of the estimated Borrowing Capacity and the Balance of the Fund as of December 31. In May and October of each year, the SBA shall publish in the
Florida Administrative Weekly a statement of the FHCF’s estimated Borrowing Capacity, Estimated Claims-Paying Capacity, and the projected Balance of the Fund as of December 31. 

 

	(7)	The obligation of the SBA with respect to all Contracts covering a particular Contract Year shall not exceed the Balance of the Fund as of December 31 of that Contract Year, together with the maximum amount the SBA
is able to raise through the issuance of revenue bonds or through other means available to the SBA under Section 215.555, Florida Statutes, up to the limit in accordance with Section 215.555(4)(c)1., Florida Statutes. The obligations and
the liability of the SBA are more fully described in Rule 19-8.013, Florida Administrative Code (F.A.C.). 

 ARTICLE V - DEFINITIONS

  

	(1)	Actual Claims-Paying Capacity of the FHCF 

 This term means the sum of the Balance of the
Fund as of December 31 of a Contract Year, plus any reinsurance purchased by the FHCF, plus the amount the SBA is able to raise through the issuance of revenue bonds, or through other means available by law to the SBA, up to the limit in
accordance with Section 215.555(4)(c)1. and (6), Florida Statutes. 
  

	(2)	Actuarially Indicated 

 This term means, with respect to Premiums paid by Companies for
reimbursement provided by the FHCF, an amount determined in accordance with the definition provided in Section 215.555(2)(a), Florida Statutes. 
  

	(3)	Additional Living Expense (ALE) 

 ALE losses covered by the FHCF are not to exceed 40
percent of the insured value of a Residential Structure or its contents based on the coverage provided in the policy. Fair rental value, loss of rents, or business interruption losses are not covered by the FHCF. 

 

	(4)	Administrator 

 This term means the entity with which the SBA contracts to perform
administrative tasks associated with the operations of the FHCF. The Administrator is Paragon Strategic Solutions Inc., 8200 Tower, 5600 West 83rd Street, Suite 1100, Minneapolis, Minnesota 55437.
The telephone number is (800) 689-3863, and the facsimile number is (800) 264-0492. 
  

	(5)	Authorized Insurer 

 This term is defined in Section 624.09(1), Florida Statutes.

  

					
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	(6)	Borrowing Capacity 

 This term means the amount of funds which are able to be raised by
the issuance of revenue bonds or through other financing mechanisms, less bond issuance expenses and reserves. 
  

	(7)	Citizens Property Insurance Corporation (Citizens) 

 This term means Citizens Property
Insurance Corporation as created under Section 627.351(6), Florida Statutes. For the purposes of the FHCF, Citizens Property Insurance Corporation incorporates two accounts, (a) the coastal account and (b) the personal lines and
commercial lines accounts. Each account is treated by the FHCF as if it were a separate participating insurer with its own reportable exposures, Reimbursement Premium, Retention, and Ultimate Net Loss. 

 

	(8)	Contract 

 This term means this Reimbursement Contract for the current Contract Year.

  

	(9)	Covered Event 

 This term means any one storm declared to be a hurricane by the National
Hurricane Center which causes insured losses in Florida. A Covered Event begins when a hurricane causes damage in Florida while it is a hurricane and continues throughout any subsequent downgrades in storm status by the National Hurricane Center
regardless of whether the hurricane makes landfall. Any storm, including a tropical storm, which does not become a hurricane is not a Covered Event. 
  

	(10)	Covered Policy or Covered Policies 

  

	 	(a)	Covered Policy, as defined in Section 215.555(2)(c), Florida Statutes, is further clarified to mean only that portion of a binder, policy or contract of insurance that insures real or personal property located in
the State of Florida to the extent such policy insures a Residential Structure or the contents of a Residential Structure, located in the State of Florida. 

  

	 	(b)	Due to the specialized nature of the definition of Covered Policies, Covered Policies are not limited to only one line of business in the Company’s annual statement required to be filed by Section 624.424,
Florida Statutes. Instead, Covered Policies are found in several lines of business on the Company’s annual statement. Covered Policies will at a minimum be reported in the Company’s statutory annual statement as: 

 

	 	1.	Fire 

  

	 	2.	Allied Lines 

  

	 	3.	Farmowners Multiple Peril 

  

	 	4.	Homeowners Multiple Peril 

  

	 	5.	Commercial Multiple Peril (non liability portion, covering condominiums and apartments) 

  

	 	6.	Inland Marine 

 Note that where particular insurance exposures, e.g., mobile homes, are reported
on an annual statement is not dispositive of whether or not the exposure is a Covered Policy. 
  

	 	(c)	This definition applies only to the first-party property section of a policy pertaining strictly to the structure, its contents, appurtenant structures, or ALE coverage. 

 

	 	(d)	Covered Policy also includes any collateral protection insurance policy covering personal residences which protects both the borrower’s and the lender’s financial interest, in an amount at least equal to the
coverage for the dwelling in place under the lapsed homeowner’s policy, if such policy can be accurately reported as required in Section 215.555(5), Florida Statutes. A Company will be deemed to be able to accurately report data if the
required data, as specified in the Premium Formula adopted in Section 215.555(5), Florida Statutes, is available. 

  

	 	(e)	See Article VI for specific exclusions. 

  

	(11)	Deductible Buy-Back Policies 

 This term means a specific policy that provides coverage
to a policyholder for some portion of the policyholder’s deductible under a policy issued by another insurer. 

  

					
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	(12)	Estimated Claims-Paying Capacity of the FHCF 

 This term means the sum of the projected
Balance of the Fund as of December 31 of a Contract Year, plus any reinsurance purchased by the FHCF, plus the most recent estimate of the Borrowing Capacity of the FHCF, determined pursuant to Section 215.555(4)(c), Florida Statutes. 

 

	(13)	Excess Policies 

 This term, for the purposes of this Contract, means a policy that
provides insurance protection for large commercial property risks and that provides a layer of coverage above a primary layer (which is insured by a different insurer) that acts much the same as a very large deductible. 

 

	(14)	Florida Department of Financial Services (Department) 

 This term means the Florida
regulatory agency, created pursuant to Section 20.121, Florida Statutes, which is charged with regulating the Florida insurance market and administering the Florida Insurance Code. 

 

	(15)	Florida Insurance Code 

 This term means those chapters identified in
Section 624.01, Florida Statutes, which are designated as the Florida Insurance Code. 
  

	(16)	Formula or the Premium Formula 

 This term means the Formula approved by the SBA for the
purpose of determining the Actuarially Indicated Premium to be paid to the FHCF. The Premium Formula is defined as an approach or methodology which leads to the creation of premium rates. The resulting rates are therefore incorporated as part of the
Premium Formula. The Formula, shall, pursuant to Section 215.555(5)(b), Florida Statutes, include a cash build-up factor in the amount specified therein. 
  

	(17)	Fund Balance or Balance of the Fund as of December 31 

 These terms mean the amount
of assets available to pay claims, not including any bonding proceeds, resulting from Covered Events which occurred during the Contract Year. 
  

	(18)	Insurer Group 

 For purposes of the coverage option election in
Section 215.555(4)(b), Florida Statutes, Insurer Group means the group designation assigned by the National Association of Insurance Commissioners (NAIC) for purposes of filing consolidated financial statements. A Company is a member of a group
as designated by the NAIC until such Company is assigned another group designation or is no longer a member of a group recognized by the NAIC. 
  

	(19)	Loss Occurrence 

 This term means the sum of individual insured Losses incurred under
Covered Policies resulting from the same Covered Event. “Losses” means all incurred losses under Covered Policies, including Additional Living Expenses not to exceed 40 percent of the insured value of a Residential Structure or its
contents and amounts paid as fees on behalf of or inuring to the benefit of a policyholder, and excludes allocated or unallocated Loss Adjustment Expenses. 
  

	(20)	Loss Adjustment Expense Reimbursement 

  

	 	(a)	Loss Adjustment Expense Reimbursement shall be 5% of the reimbursed losses under this Contract as provided in Article IV, pursuant to Section 215.555(4)(b)1., Florida Statutes. 

 

	 	(b)	To the extent that loss reimbursements are limited to the Payout Multiple applied to each Company, the 5% Loss Adjustment Expense is included in the total Payout Multiple applied to each Company. 

 

	(21)	New Participant(s) 

 This term means all Companies which begin writing Covered Policies
on or after the beginning of the Contract Year. A Company that removes exposure from Citizens pursuant to an assumption agreement effective on or after June 1 and had written no other Covered Policies before June 1 is also considered a New
Participant. 

  

					
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	(22)	Office of Insurance Regulation 

 This term means that office within the Department of
Financial Services and which was created in Section 20.121(3), Florida Statutes. 
  

	(23)	Payout Multiple 

 This term means the multiple as calculated in accordance with
Section 215.555(4)(c), Florida Statutes, which is derived by dividing the single season Claims-Paying Capacity of the FHCF by the total aggregate industry Reimbursement Premium for the FHCF for the Contract Year billed as of December 31 of
the Contract Year. The final Payout Multiple is determined once Reimbursement Premiums have been billed as of December 31 and the amount of bond proceeds has been determined. 

 

	(24)	Premium 

 This term means the same as Reimbursement Premium. 

 

	(25)	Projected Payout Multiple 

 The Projected Payout Multiple is used to calculate a
Company’s projected payout pursuant to Section 215.555(4)(d)2., Florida Statutes. The Projected Payout Multiple is derived by dividing the estimated single season Claims-Paying Capacity of the FHCF by the estimated total aggregate industry
Reimbursement Premium for the FHCF for the Contract Year. The Company’s Reimbursement Premium as paid to the SBA for the Contract Year is multiplied by the Projected Payout Multiple to estimate the Company’s coverage from the FHCF for the
Contract Year. 
  

	(26)	Reimbursement Premium 

 This term means the Premium determined by multiplying each $1,000
of insured value reported by the Company in accordance with Section 215.555(5)(b), Florida Statutes, by the rate as derived from the Premium Formula, as described in Rule 19-8.028, F.A.C. 

 

	(27)	Residential Structures 

 This term means units or buildings used for dwelling or
habitational occupancies, including the primary structure and appurtenant structures insured under the same policy and any other structures covered under endorsements associated with a policy covering a residential structure. Covered
Residential Structures do not include any structures listed under Article VI or structures used solely for non-residential purposes. 
  

	(28)	Retention 

 The Company’s Retention means the amount of hurricane losses under
Covered Policies which must be incurred by the Company before it is eligible for reimbursement from the FHCF. 
  

	 	(a)	When the Company experiences covered losses from one or two Covered Events during the Contract Year, the Company’s full Retention shall be applied to each of the Covered Events. 

 

	 	(b)	When the Company experiences covered losses from more than two Covered Events during the Contract Year, the Company’s full Retention shall be applied to each of the two Covered Events causing the largest covered
losses for the Company. For each other Covered Event resulting in covered losses, the Company’s Retention shall be reduced to one-third of its full Retention and applied to all other Covered Events. 

 

	 	1.	All reimbursement of covered losses for each Covered Event shall be based on the Company’s full Retention until December 31 of the Contract Year. Adjustments to reflect a reduction to one-third of the full
Retention shall be made on or after January 1 of the Contract Year provided the Company reports its losses as specified in this Contract. 

  

	 	2.	 Adjustments to the Company’s Retention shall be based upon its paid and outstanding losses as reported on the Company’s Proof of Loss
Reports but shall not include incurred but not reported losses. The Company’s Proof of Loss Reports shall be used to determine which Covered Events constitute the Company’s two largest Covered Events, and the reduction to one-third of the
full Retention shall be applied to all other Covered Events for 

  

					
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the Contract Year. After this initial determination, any subsequent adjustments shall be made quarterly by the SBA only if the loss reports reveal that loss development patterns have resulted in
a change in the order of Covered Events entitled to the reduction to one-third of the full Retention. 

  

	 	(c)	The Company’s full Retention is established in accordance with the provisions of Section 215.555(2)(e), Florida Statutes, and shall be determined by multiplying the Retention Multiple by the Company’s
Reimbursement Premium for the Contract Year. 

  

	(29)	Retention Multiple 

  

	 	(a)	The Retention Multiple is applied to the Company’s Reimbursement Premium to determine the Company’s Retention. The Retention Multiple for the 2014/2015 Contract Year shall be equal to $4.5 billion, adjusted
based upon the reported exposure for the 2012/2013 Contract Year to reflect the percentage growth in exposure to the FHCF since 2004, divided by the estimated total industry Reimbursement Premium at the 90% reimbursement percentage level for the
Contract Year as determined by the SBA. 

  

	 	(b)	The Retention Multiple shall be adjusted to reflect the reimbursement percentage elected by the Company under this Contract as follows: 

 

	 	1.	If the Company elects a 90% reimbursement percentage, the adjusted Retention Multiple is 100% of the amount determined under (29)(a) above; 

 

	 	2.	If the Company elects a 75% reimbursement percentage, the adjusted Retention Multiple is 120% of the amount determined under (29)(a) above; or 

 

	 	3.	If the Company elects a 45% reimbursement percentage, the adjusted Retention Multiple is 200% of the amount determined under (29)(a) above. 

 

	(30)	Ultimate Net Loss 

  

	 	(a)	This term means all Losses of the Company under Covered Policies in force at the time of a Covered Event prior to the application of the Company’s FHCF Retention and reimbursement percentage, and excluding loss
adjustment expense and any exclusions under Article VI, arising from each Loss Occurrence during the Contract Year, provided, however, that the Company’s Ultimate Net Loss shall be determined in accordance with the deductible level written
under the policy sustaining the loss. 

  

	 	(b)	Salvages and all other recoveries, excluding reinsurance recoveries, shall be first deducted from such loss to arrive at the amount of liability attaching hereunder. 

 

	 	(c)	All salvages, recoveries or payments recovered or received subsequent to a loss settlement under this Contract shall be applied as if recovered or received prior to the aforesaid settlement and all necessary adjustments
shall be made by the parties hereto. 

  

	 	(d)	Nothing in this clause shall be construed to mean that losses under this Contract are not recoverable until the Company’s Ultimate Net Loss has been ascertained. 

 

	 	(e)	The SBA shall be subrogated to the rights of the Company to the extent of its reimbursement of the Company. The Company agrees to assist and cooperate with the SBA in all respects as regards such subrogation. The
Company further agrees to undertake such actions as may be necessary to enforce its rights of salvage and subrogation, and its rights, if any, against other insurers as respects any claim, loss, or payment arising out of a Covered Event.

 ARTICLE VI - EXCLUSIONS 
 This Contract
does not provide reimbursement for: 
  

	(1)	Any losses not defined as being within the scope of a Covered Policy. 

  

	(2)	Any policy which excludes wind or hurricane coverage. 

  

					
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	(3)	Any Excess Policy or Deductible Buy-Back Policy that requires individual ratemaking, as determined by the FHCF. 

  

	(4)   (a)	Any policy for Residential Structures that provides a layer of coverage underneath an Excess Policy issued by a different insurer; 

  

	 	(b)	Any policy providing a layer of windstorm or hurricane coverage for a particular structure above or below a layer of windstorm or hurricane coverage under a separate policy issued by a different insurer, or any other
circumstance in which two or more insurers provide primary windstorm or hurricane coverage for a single structure using separate policy forms; or 

  

	 	(c)	Any other policy providing a layer of windstorm or hurricane coverage for a particular structure below a layer of self-insured windstorm or hurricane coverage for the same structure. 

 

	 	(d)	The exclusions in this subsection do not apply to primary quota share policies written by Citizens Property Insurance Corporation under Section 627.351(6)(c)2., Florida Statutes. 

 

	(5)	Any liability of the Company attributable to losses for fair rental value, loss of rent or rental income, or business interruption. 

  

	(6)	Any collateral protection policy that does not meet the definition of Covered Policy as defined in Article V(10)(d). 

  

	(7)	Any reinsurance assumed by the Company. 

  

	(8)	Any exposure for hotels, motels, timeshares, shelters, camps, retreats, and any other rental property used solely for commercial purposes. 

 

	(9)	Any exposure for homeowner associations if no habitational structures are insured under the policy. 

  

	(10)	Any exposure for homes and condominium structures or units that are non-owner occupied and rented for six (6) or more rental periods by different parties during the course of a twelve (12) month period.

  

	(11)	Commercial healthcare facilities and nursing homes; however, a nursing home which is an integral part of a retirement community consisting primarily of habitational structures that are not nursing homes will not be
subject to this exclusion. 

  

	(12)	Any exposure under commercial policies covering only appurtenant structures or structures that do not function as a habitational structure (e.g., a policy covering only the pool of an apartment complex).

  

	(13)	Policies covering only Additional Living Expense. 

  

	(14)	Any exposure for barns or barns with apartments or living quarters. 

  

	(15)	Any exposure for builders risk coverage or new Residential Structures still under construction. 

  

	(16)	Any exposure for recreational vehicles, golf carts, or boats (including boat related equipment) requiring licensing and written on a separate policy or endorsement. 

 

	(17)	Any liability of the Company for extra contractual obligations or liabilities in excess of original policy limits. This exclusion includes, but is not limited to, amounts paid as bad faith awards, punitive damages
awards, or other court-imposed fines, sanctions, or penalties; or other amounts in excess of the coverage limits under the Covered Policy. 

  

	(18)	Any losses paid in excess of a policy’s hurricane limit in force at the time of each Covered Event, including individual coverage limits (i.e., building, appurtenant structures, contents, and additional living
expense), or other amounts paid as the result of a voluntary expansion of coverage by the insurer, including, but not limited to, a waiver of an applicable deductible. This exclusion includes overpayments of a specific individual coverage limit even
if total payments under the policy are within the aggregate policy limit. 

  

	(19)	Any losses paid under a policy for Additional Living Expense, written as a time element coverage, in excess of the Additional Living Expense exposure reported for that policy under the Data Call for the applicable
Contract Year (unless policy limits have changed effective after June 30 of the Contract Year). 

  

					
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	(20)	Any losses for which the Company’s claims files do not adequately support. Claim file support shall be deemed adequate if in compliance with the Records Retention Requirements outlined on the Form FHCF-L1B (Proof
of Loss Report) applicable to the Contract Year. 

  

	(21)	Any exposure for, or amounts paid to reimburse a policyholder for, condominium association loss assessments or under similar coverages for contractual liabilities. 

 

	(22)	Losses in excess of the sum of the Balance of the Fund as of December 31 of the Contract Year and the amount the SBA is able to raise through the issuance of revenue bonds or by the use of other financing
mechanisms, up to the limit pursuant to Section 215.555(4)(c), Florida Statutes. 

  

	(23)	Any liability assumed by the Company from Pools, Associations, and Syndicates. Exception: Covered Policies assumed from Citizens under the terms and conditions of an executed assumption agreement between the Authorized
Insurer and Citizens are covered by this Contract. 

  

	(24)	All 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, which 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, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole
or in part. 

  

	(25)	Property losses that are proximately caused by any peril other than a Covered Event, including, but not limited to, fire, theft, flood or rising water, or windstorm that does not constitute a Covered Event, or any
liability of the Company for loss or damage caused by or resulting from nuclear reaction, nuclear radiation, or radioactive contamination from any cause, whether direct or indirect, proximate or remote, and regardless of any other cause or event
contributing concurrently or in any other sequence to the loss. 

  

	(26)	The FHCF does not provide coverage for water damage which is generally excluded under property insurance contracts and has been defined to mean flood, surface water, waves, tidal water, overflow of a body of water,
storm surge, or spray from any of these, whether or not driven by wind. 

  

	(27)	Policies and endorsements predominantly covering Specialized Fine Arts Risks or collectible types of property meeting the following requirements: 

 

	 	(a)	A policy or endorsement covering Specialized Fine Arts Risks and not covering any Residential Structure and/or contents thereof (other than such specialized fine arts items covered in the Specialized Fine Arts policy or
endorsement) if it meets the description in subparagraph 1 and if all the conditions in subparagraphs 2. through 4. immediately below are met. 

  

	 	1.	For purposes of this exemption, a Specialized Fine Arts Risk policy or endorsement is a policy or endorsement that: 

  

	 	a.	Insures works of art, of rarity, or of historic value, such as paintings, works on paper, etchings, art glass windows, pictures, statuary, sculptures, tapestries, antique furniture, antique silver, antique rugs, rare
books or manuscripts, jewelry, or other similar items; 

  

	 	b.	Charges a minimum premium of $500; 

  

	 	c.	Insures scheduled items valued, in the aggregate, at no less than $100,000; and 

  

	 	d.	Requires an investment by the insured in loss control measures to protect the Specialized Fine Arts Risks being insured. 

  

	 	2.	The insurer must perform a periodic and thorough specialized inspection and must provide a specialized loss prevention service designed to prevent or minimize loss. 

  

					
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	 	3.	The structure and its fine arts contents must be provided with satisfactory watchman or alarm service or its equivalent where necessary. 

 

	 	4.	The insurer must maintain a force of trained and competent loss prevention specialists, who perform the following tasks: 

  

	 	a.	Make loss prevention surveys of each Specialized Fine Arts Risk; 

  

	 	b.	Make available a specialized loss prevention service for the purpose of providing consultation regarding hazards to the fine arts being insured; 

 

	 	c.	Confirm through periodic inspections that loss prevention devices are properly maintained; 

  

	 	d.	Investigate reported losses; and 

  

	 	e.	Confer with the policyholder and confirm through periodic and unannounced inspections that recommended safety and loss control improvements are actually made. 

 

	 	(b)	A policy or endorsement written to solely cover personal property, scheduled or written under a blanket limit, with a policy limit equal to or exceeding $500,000 and which predominantly covers one or more classes of
collectible types of property shall be exempt from coverage under the Fund. Generally such classes of collectible property have unusually high values due to their investible, artistic, or unique intrinsic nature. Additionally, such exempt policy may
also include coverage for incidental items of personal property that may also be scheduled although such property may not be considered as a collectible. The predominant class of property covered under such excluded policy represents an unusually
high exposure value and such policy is intended to provide coverage for a class or classes of property that is not typical for the contents coverage under residential property insurance policies. In many cases property may be located at various
locations either in or outside the state of Florida or the location of the property may change from time to time. The investment nature of such property distinguishes this type of exposure from the typical contents associated with a Covered Policy.

  

	(28)	Any losses under liability coverages. 

 ARTICLE VII - MANAGEMENT OF CLAIMS AND LOSSES 

The Company shall investigate and settle or defend all claims and losses. All payments of claims or losses by the Company within the terms and limits of the
appropriate coverage parts of Covered Policies shall be binding on the SBA, subject to the terms of this Contract, including the provisions in Article XIII relating to inspection of records and examinations. 

ARTICLE VIII - LOSS REIMBURSEMENT ADJUSTMENTS 
  

	(1)	Offsets 

 The SBA reserves the right to offset amounts payable to the SBA from the
Company, including amounts payable under any Contract Year and the Company’s full Premium for the current Contract Year (regardless of installment due dates), against any reimbursement or advance amounts, or amounts agreed to in a commutation
agreement, which are due and payable to the Company from the SBA as a result of the liability of the SBA. 
  

	(2)	Reimbursement Adjustments 

 Section 215.555(4)(d) and (e), Florida Statutes,
provides the SBA with the right to seek the return of excess loss reimbursements which have been paid to the Company along with interest thereon. Excess loss reimbursements are those payments made to the Company by the SBA that are in excess of the
Company’s coverage under the Contract Year. Excess loss reimbursements may result from adjustments to the Projected Payout Multiple or the Payout Multiple, incorrect exposure (Data Call) submissions or resubmissions, incorrect calculations of
Reimbursement Premiums or Retentions, incorrect Proof of Loss Reports, incorrect calculation of reinsurance recoveries, or subsequent readjustment of policyholder claims, including subrogation and salvage, or any combination of the

  

					
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foregoing. The Company will be sent an invoice showing the due date for adjustments along with the interest due thereon through the due date. The applicable interest rate for interest credits,
and for interest charges for adjustments beyond the Company’s control, will be the average rate earned by the SBA for the FHCF for the first four months of the Contract Year. The applicable interest rate for interest charges on excess loss
reimbursements due to adjustments resulting from incorrect exposure submissions or Proof of Loss Reports will accrue at this rate plus 5%. All interest will continue to accrue if not paid by the due date. 

ARTICLE IX - REIMBURSEMENT PREMIUM 
  

	(1)	The Company shall, in a timely manner, pay the SBA its Reimbursement Premium for the Contract Year. The Reimbursement Premium for the Contract Year shall be calculated in accordance with Section 215.555, Florida
Statutes, with any rules promulgated thereunder, and with Article X(2). 

  

	(2)	The Company’s Reimbursement Premium is based on its June 30 exposure in accordance with Article X, except as provided for New Participants under Article X, and is not adjusted to reflect an increase or
decrease in exposure for Covered Policies effective after June 30 nor is the Reimbursement Premium adjusted when the Company cancels policies or is liquidated or otherwise changes its business status (merger, acquisition, or termination) or
stops writing new business (continues in business with its policies in a runoff mode). Similarly, new business written after June 30 will not increase or decrease the Company’s FHCF Reimbursement Premium or impact its FHCF coverage. FHCF
Reimbursement Premiums are required of all companies based on their writing Covered Policies in Florida as of June 30, and each company’s FHCF coverage as based on the definition in Section 215.555(2)(m), Florida Statutes, shall exist
for the entirety of the Contract Year regardless of exposure changes, except as provided for New Participants under Article X. 

  

	(3)	Since the calculation of the Actuarially Indicated Premium assumes that the Companies will pay their Reimbursement Premiums timely, interest charges will accrue under the following circumstances. A Company may choose to
estimate its own Premium installments. However, if the Company’s estimation is less than the provisional Premium billed, an interest charge will accrue on the difference between the estimated Premium and the final Premium. If a Company
estimates its first installment, the Administrator shall bill that estimated Premium as the second installment as well, which will be considered as an estimate by the Company. No interest will accrue regarding any provisional Premium if paid as
billed by the FHCF’s Administrator, except in the case of an estimated second installment as set forth in this Article. Also, if a Company makes an estimation that is higher than the provisional Premium billed but is less than the final
Premium, interest will not accrue. If the Premium payment is not received from a Company when it is due, an interest charge will accrue on a daily basis until the payment is received. Interest will also accrue on Premiums resulting from submissions
or resubmissions finalized after December 1 of the Contract Year. An interest credit will be applied for any Premium which is overpaid as either an estimate or as a provisional Premium. Interest shall not be credited past December 1 of the
Contract Year. The applicable interest rate for interest credits will be the average rate earned by the SBA for the FHCF for the first four months of the Contract Year. The applicable interest rate for interest charges will accrue at this rate plus
5%. 

 ARTICLE X - REPORTS AND REMITTANCES 
  

	(1)	Exposures 

  

	 	(a)	If the Company writes Covered Policies before June 1 of the Contract Year, the Company shall report to the SBA, unless otherwise provided in Rule 19-8.029, F.A.C., no later than the statutorily required date of
September 1 of the Contract Year, by ZIP Code or other limited geographical area as specified by the SBA, its insured values under Covered Policies as of June 30 of the Contract Year as outlined in the annual reporting of insured values
form, FHCF-D1A (Data Call) adopted for the Contract Year under Rule 19-8.029, F.A.C., and other data or information in the format specified by the SBA. 

  

					
		 	11	  	FHCF-2015K
		 		  	Rule 19-8.010 F.A.C.

	 	(b)	If the Company first begins writing Covered Policies on or after June 1 but prior to December 1 of the Contract Year, the Company shall report to the SBA, no later than February 1 of the Contract Year, by
ZIP Code or other limited geographical area as specified by the SBA, its insured values under Covered Policies as of November 30 of the Contract Year as outlined in the Supplemental Instructions for New Participants section of the Data Call
adopted for the Contract Year under Rule 19-8.029, F.A.C., and other data or information in the format specified by the SBA. 

  

	 	(c)	If the Company first begins writing Covered Policies on December 1 through and including May 31 of the Contract Year, the Company shall not report its exposure data for the Contract Year to the SBA.

  

	 	(d)	The requirement that a report is due on a certain date means that the report shall be received by the SBA no later than 4 p.m. Eastern Time on the due date. If the applicable due date is a Saturday, Sunday or legal
holiday, then the actual due date will be the day immediately following the applicable due date which is not a Saturday, Sunday or legal holiday. For purposes of the timeliness of the submission, neither the United States Postal Service postmark nor
a postage meter date is in any way determinative. Reports sent to the FHCF Administrator in Minneapolis, Minnesota, will be returned to the sender. Reports not in the physical possession of the SBA by 4 p.m., Eastern Time, on the applicable due date
are late. 

  

	(2)	Reimbursement Premium 

  

	 	(a)	If the Company writes Covered Policies before June 1 of the Contract Year, the Company shall pay the FHCF its Reimbursement Premium in installments due on or before August 1, October 1, and
December 1 of the Contract Year in amounts to be determined by the FHCF. However, if the Company’s Reimbursement Premium for the prior Contract Year was less than $5,000, the Company’s full provisional Reimbursement Premium, in an
amount equal to the Reimbursement Premium paid in the prior year, shall be due in full on or before August 1 of the Contract Year. The Company will be invoiced for amounts due, if any, beyond the provisional Reimbursement Premium payment, on or
before December 1 of the Contract Year. 

  

	 	(b)	If the Company is under administrative supervision, or if any control or oversight of the Company has been transferred through any legal or regulatory action to a state regulator or court appointed receiver or
rehabilitator (referred to in the aggregate as “state action”): 

  

	 	1.	The full annual provisional Reimbursement Premium as billed and any outstanding balances will be due and payable on August 1, or the date that such State action occurs after August 1 of the Contract Year.

  

	 	2.	Failure by such Company to pay the full annual provisional Reimbursement Premium as specified in 1. above by the applicable due date(s) shall result in the 45% coverage level being deemed for the complete Contract Year
regardless of the level selected for the Company through the execution of this Contract and regardless of whether a hurricane event occurred or triggered coverage. 

 

	 	3.	The provisions required in 1. and 2. above will not apply when the state regulator, receiver, or rehabilitator provides a letter of assurance to the FHCF that the Company will have the resources and will pay the full
Reimbursement Premium for the coverage level selected through the execution of this Contract. 

  

	 	4.	When control or oversight has been transferred, in whole or in part, through a legal or regulatory action, the controlling management of the Company shall specify by August 1 or as soon thereafter as possible (but
not to exceed two weeks after any regulatory or legal action) in a letter to the FHCF as to the Company’s intentions to either pay the full FHCF Reimbursement Premium as specified in 1. above, to default to the 45% coverage being deemed as
specified in 2. above, or to provide the assurances as specified in 3. above. 

  

					
		 	12	  	FHCF-2015K
		 		  	Rule 19-8.010 F.A.C.

	 	(c)	A New Participant that first begins writing Covered Policies on or after June 1 but prior to December 1 of the Contract Year shall pay the FHCF a provisional Reimbursement Premium of $1,000 upon execution of
this Contract. The Administrator shall calculate the Company’s actual Reimbursement Premium for the period based on its actual exposure as of November 30 of the Contract Year, as reported on or before February 1 of the Contract Year.
To recognize that New Participants have limited exposure during this period, the actual Premium as determined by processing the Company’s exposure data shall then be divided in half, the provisional Premium shall be credited, and the resulting
amount shall be the total Premium due for the Company for the remainder of the Contract Year. However, if that amount is less than $1,000, then the Company shall pay $1,000. The Premium payment is due no later than April 1 of the Contract Year.
The Company’s Retention and coverage will be determined based on the total Premium due as calculated above. 

  

	 	(d)	A New Participant that first begins writing Covered Policies on or after December 1 through and including May 31 of the Contract Year shall pay the FHCF a Reimbursement Premium of $1,000 upon execution of this
Contract. 

  

	 	(e)	The requirement that the Reimbursement Premium is due on a certain date means that the Premium shall be in the physical possession of the FHCF no later than 2 p.m., Eastern Time, on the due date applicable to the
particular installment. If remitted by check to the FHCF’s Post Office Box, the check shall be physically in the Post Office Box 100822, Atlanta, GA 30384-0822, as set out on the invoice sent to the Company. If remitted by check by hand
delivery, the check shall be physically on the premises of the FHCF’s bank in College Park, Georgia, as set out on the invoice sent to the Company. If remitted electronically, the wire transfer shall have been completed to the FHCF’s
account at its bank in Tampa, Florida, as set out on the invoice sent to the Company. If the applicable due date is a Saturday, Sunday or legal holiday, then the actual due date will be the day immediately following the applicable due date which is
not a Saturday, Sunday or legal holiday. For purposes of the timeliness of the remittance, neither the United States Postal Service postmark nor a postage meter date is in any way determinative. Premium checks sent to the SBA in Tallahassee,
Florida, or to the FHCF’s Administrator in Minneapolis, Minnesota, will be returned to the sender. Reimbursement Premiums not in the physical possession of the FHCF by 2 p.m., Eastern Time, on the applicable due date are late.

  

	 	(f)	Except as required by Section 215.555(7)(c), Florida Statutes, or as described in the following sentence, Reimbursement Premiums, together with earnings thereon, received in a given Contract Year will be used only
to pay for losses attributable to Covered Events occurring in that Contract Year or for losses attributable to Covered Events in subsequent Contract Years and will not be used to pay for past losses or for debt service on revenue bonds. Pursuant to
Section 215.555(6)(a)1., Florida Statutes, Reimbursement Premiums and earnings thereon may be used for payments relating to revenue bonds in the event emergency assessments are insufficient. If Reimbursement Premiums or earnings thereon are
used for debt service on revenue bonds, then the amount of the Reimbursement Premiums or earnings thereon so used shall be returned, without interest, to the Fund when emergency assessments or other legally available funds remain available after
making payment relating to the revenue bonds and any other purposes for which emergency assessments were levied. 

  

	(3)	Claims and Losses 

  

	 	(a)	In General 

  

	 	1.	Claims and losses resulting from Loss Occurrences commencing during the Contract Year shall be reported by the Company and reimbursed by the FHCF as provided herein and in accordance with the Statute, this Contract, and
any rules adopted pursuant to the Statute. 

  

					
		 	13	  	FHCF-2015K
		 		  	Rule 19-8.010 F.A.C.

 For a Company participating in a quota share primary insurance agreement(s) with Citizens
Property Insurance Corporation Coastal Account, Citizens and the Company shall report only their respective portion of losses under the quota share primary insurance agreement(s). Pursuant to Section 215.555(4)(c), Florida Statutes, the SBA is
obligated to pay for losses not to exceed the Actual Claims-Paying Capacity of the FHCF, up to the limit in accordance with Section 215.555(4)(c)1., Florida Statutes, for any one Contract Year. 

 

	 	2.	If the Company is in non-compliance with Section 215.555, Florida Statutes for any Contract Year, including deadlines for sending in Contracts, addenda or attachments to Contracts, Data Call submissions or
resubmissions, loss reports, or in responding to SBA exam requirements, the SBA reserves the right to withhold any payments or advances until such time the Company becomes compliant. 

 

	 	(b)	Loss Reports 

  

	 	1.	At the direction of the SBA, the Company shall report its projected Ultimate Net Loss from each Loss Occurrence to provide information to the SBA in determining any potential liability for possible reimbursable losses
under the Contract on the Interim Loss Report, Form FHCF-L1A, adopted for the Contract Year under Rule 19-8.029, F.A.C. Interim Loss Reports (including subsequent Interim Loss Reports if required by the SBA) will be due in no less than fourteen days
from the date of the notice from the SBA that such a report is required. 

  

	 	2.	FHCF loss reimbursements will be issued based on Ultimate Net Loss information reported by the Company on the Proof of Loss Report, Form FHCF-L1B, adopted for the Contract Year under Rule 19-8.029, F.A.C.

  

	 	a.	To qualify for reimbursement, the Proof of Loss Report must have the original or electronic signatures of two executive officers authorized by the Company to sign or submit the report. 

 

	 	b.	The Company must also submit a detailed claims listing (as outlined on the Proof of Loss Report) at the same time it submits its first Proof of Loss Report for a specific Covered Event that qualifies the Company for
reimbursement under that Covered Event, and should be prepared to supply a detailed claims listing for any subsequent Proof of Loss Report upon request. 

  

	 	c.	While a Company may submit a Proof of Loss Report requesting reimbursement at any time following a Loss Occurrence, all Companies shall submit a mandatory Proof of Loss Report for each Loss Occurrence no earlier than
December 1 and no later than December 31 of the Contract Year during which the Covered Event(s) occurs using the most current data available, regardless of the amount of Ultimate Net Loss or the amount of loss reimbursements or advances
already received. Reports may be faxed only if the Company does not qualify for a reimbursement. 

  

	 	d.	For the Proof of Loss Reports due by December 31 of the Contract Year, and the required subsequent quarterly and annual reports required under subparagraphs 3. and 4. below, the Company shall submit its Proof of
Loss Reports by each quarter-end or year-end using the most current data available. However, the date of such data shall not be more than sixty days prior to the applicable quarter-end or year-end date. 

 

	 	3.	Updated Proof of Loss Reports for each Loss Occurrence are due quarterly thereafter until all claims and losses resulting from a Loss Occurrence are fully discharged including any adjustments to such losses due to
salvage or other recoveries, or the Company has received its full coverage under the Contract Year in which the Loss Occurrence(s) occurred. Guidelines follow: 

  

					
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		 		  	Rule 19-8.010 F.A.C.

	 	a.	Quarterly Proof of Loss Reports are due by March 31 from an insurer whose losses exceed, or are expected to exceed, 50% of its FHCF Retention for a specific Loss Occurrence(s). 

 

	 	b.	Quarterly Proof of Loss Reports are due by June 30 from an insurer whose losses exceed, or are expected to exceed, 75% of its FHCF Retention for a specific Loss Occurrence(s). 

 

	 	c.	Quarterly Proof of Loss Reports are due by September 30 and quarterly thereafter from an insurer whose losses exceed, or are expected to exceed, its FHCF Retention for a specific Loss Occurrence(s).

 If the Company’s Retention must be recalculated as the result of an exposure resubmission, and if the recalculated
Retention changes the FHCF’s reimbursement obligations, then the Company shall submit additional Proof of Loss Reports for recalculation of the FHCF’s obligations. 
  

	 	4.	Annually after December 31 of the Contract Year, all Companies shall submit a mandatory year-end Proof of Loss Report for each Loss Occurrence, as applicable, using the most current data available, accompanied by a
detailed claims listing (as outlined on the Proof of Loss Report). This Proof of Loss Report shall be filed no earlier than December 1 and no later than December 31 of each year and shall continue until the earlier of the commutation
process described in (3)(d) below or until all claims and losses resulting from the Loss Occurrence are fully discharged including any adjustments to such losses due to salvage or other recoveries. 

 

	 	5.	The SBA, except as noted below, will determine and pay, within 30 days or as soon as practicable after receiving Proof of Loss Reports, the reimbursement amount due based on losses paid by the Company to date and
adjustments to this amount based on subsequent quarterly information. The adjustments to reimbursement amounts shall require the SBA to pay, or the Company to return, amounts reflecting the most recent determination of losses. 

 

	 	a.	The SBA shall have the right to consult with all relevant regulatory agencies to seek all relevant information, and shall consider any other factors deemed relevant, prior to the issuance of reimbursements.

  

	 	b.	The SBA shall require commercial self-insurance funds established under Section 624.462, Florida Statutes, to submit contractor receipts to support paid losses reported on a Proof of Loss Report, and the SBA may
hire an independent consultant to confirm losses, prior to the issuance of reimbursements. 

  

	 	c.	The SBA shall have the right to conduct a claims examination prior to the issuance of any advances or reimbursements submitted by Companies that have been placed under regulatory supervision by a State or where control
has been transferred through any legal or regulatory proceeding to a state regulator or court appointed receiver or rehabilitator. 

  

	 	6.	All Proof of Loss Reports received will be compared with the FHCF’s exposure data to establish the facial reasonableness of the reports. The SBA may also review the results of current and prior Contract Year
exposure and loss examinations to determine the reasonableness of the reported losses. Except as noted in paragraph 4. above, Companies meeting these tests for reasonableness will be scheduled for reimbursement. Companies not meeting these tests for
reasonableness will be handled on a case-by-case basis and will be contacted to provide specific information regarding their individual book of business. The discovery of errors in a Company’s reported exposure under the Data Call may require a
resubmission of the current Contract Year Data Call which, as the Data Call impacts the Company’s Premium, Retention, and coverage for the Contract Year, will be required before the Company’s request for reimbursement or an advance will be
fully processed by the Administrator. 

  

					
		 	15	  	FHCF-2015K
		 		  	Rule 19-8.010 F.A.C.

	 	(c)	Loss Reimbursement Calculations 

  

	 	1.	In general, the Company’s paid Ultimate Net Losses must exceed its full FHCF Retention for a specific Covered Event before any reimbursement is payable from the FHCF for that Covered Event. As described in Article
V(28)(b), Retention adjustments will be made on or after January 1 of the Contract Year. No interest is payable on additional payments to the Company due to this type of Retention adjustment. Each Company sustaining reimbursable losses will
receive the amount of reimbursement due under the Contract up to the amount of the Company’s payout. If more than one Covered Event occurs in any one Contract Year, any reimbursements due from the FHCF shall take into account the Company’s
Retention for each Covered Event. However, the Company’s reimbursements from the FHCF for all Covered Events occurring during the Contract Year shall not exceed, in aggregate, the Projected Payout Multiple or Payout Multiple, as applicable,
times the individual Company’s Reimbursement Premium for the Contract Year. 

  

	 	2.	In determining reimbursements under this Contract, the SBA shall reimburse each of the Companies, including entities created pursuant to Section 627.351(6), Florida Statutes, for the amount (if any) of
reimbursement due under the individual Company’s Contract, but not to exceed for all Loss Occurrences, an amount equal to the Projected Payout Multiple or the Payout Multiple, as applicable, times the individual Company’s Reimbursement
Premium for the Contract Year. 

  

	 	3.	Reserve established. When a Covered Event occurs in a subsequent Contract Year when reimbursable losses are still being paid for a Covered Event in a previous Contract Year, the SBA will establish a reserve for the
outstanding reimbursable losses for the previous Contract Year, based on the length of time the losses have been outstanding, the amount of losses already paid, the percentage of incurred losses still unpaid, and any other factors specific to the
loss development of the Covered Events involved. 

  

	 	(d)	Commutation 

  

	 	1.	Not less than 36 months or more than 60 months after the end of the Contract Year, the Company shall file a final Proof of Loss Report(s), with the exception of Companies having no reportable losses as described in
paragraph (3)(d)1.a. below. Otherwise, the final Proof of Loss Report(s) is required as specified in paragraph (3)(d)1.b. below. The Company and SBA may mutually agree to initiate commutation after 36 months and prior to 60 months after the end of
the Contract Year. The commutation negotiations shall begin at the later of 60 months after the end of the Contract Year or upon completion of the FHCF loss examination for the Company and the resolution of all outstanding examination issues.

  

	 	a.	If the Company’s most recently submitted Proof of Loss Report(s) indicate that it has no losses resulting from a Loss Occurrence(s) during the Contract Year, the SBA shall after 36 months request that the Company
execute a final commutation agreement. The final commutation agreement shall constitute a complete and final release of all obligations of the SBA with respect to all claims and losses. If the Company chooses not to execute a final commutation
agreement, the SBA shall be released from all obligations 60 months following the end of the Contract Year if no Proof of Loss Report(s) indicating reimbursable losses have been filed and the commutation shall be deemed concluded. However during
this time, if the Company determines that it does have losses to report for FHCF reimbursement, the Company must submit an updated Proof of Loss Report(s) prior to the end of 60 months after the Contract Year and the Company shall be required to
follow the commutation provisions and time frames otherwise specified in this section. 

  

					
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		 		  	Rule 19-8.010 F.A.C.

	 	b.	If the Company has submitted a Proof of Loss Report(s) indicating that it does have losses resulting from a Loss Occurrence(s) during the Contract Year, the SBA may require the Company to submit within 30 days an
updated, current Proof of Loss Report(s) for each Loss Occurrence during the Contract Year. The Proof of Loss Report(s) must include all paid losses as well as all outstanding losses and incurred but not reported losses, which are not finally
settled and which may be reimbursable losses under this Contract, and must be accompanied by supporting documentation (at a minimum an adjuster’s summary report or equivalent details) and a copy of a written opinion on the present value of the
outstanding losses and incurred but not reported losses by the Company’s certifying actuary. Failure of the Company to provide an updated current Proof of Loss Report(s), supporting documentation, and an opinion by the date requested by the SBA
may result in referral to the Office of Insurance Regulation for a violation of the Contract. Increases in reported paid, outstanding, or incurred but not reported losses on original or corrected Proof of Loss Report filings received later than 60
months after the end of the Contract Year shall not be eligible for reimbursement or commutation. 

  

	 	2.	Determining the present value of outstanding claims and losses. 

  

	 	a.	If the Company exceeds or expects to exceed its Retention, the Company and the SBA or their respective representatives shall attempt, by mutual agreement, to agree upon the present value of all outstanding claims and
losses, both reported and incurred but not reported, resulting from Loss Occurrences during the Contract Year. Payment by the SBA of its portion of any amount or amounts so mutually agreed and certified by the Company’s certifying actuary shall
constitute a complete and final release of the SBA in respect of all claims and losses, both reported and unreported, under this Contract. 

  

	 	b.	If agreement on present value cannot be reached within 90 days of the FHCF’s receipt of the final Proof of Loss Report(s) and supporting documentation, the Company and the SBA may mutually appoint an actuary,
adjuster, or appraiser to investigate and determine such claims or losses. If both parties then agree, the SBA shall pay its portion of the amount so determined to be the present value of such claims or losses. 

 

	 	c.	If the parties fail to agree, then any difference shall be settled by a panel of three actuaries, as provided in this paragraph. 

  

	 	i.	One actuary shall be chosen by each party, and the third actuary shall be chosen by those two actuaries. If either party does not appoint an actuary within 30 days, the other party may appoint two actuaries. If the two
actuaries fail to agree on the selection of an independent third actuary within 30 days of their appointment, each of them shall name two, of whom the other shall decline one and the decision shall be made by drawing lots. 

 

	 	ii.	All of the actuaries shall be regularly engaged in the valuation of property claims and losses and shall be members of the Casualty Actuarial Society and of the American Academy of Actuaries. 

 

	 	iii.	None of the actuaries shall be under the control of either party to this Contract. 

  

	 	iv.	Each party shall submit its case to the panel in writing on the 30th day after the appointment of the third actuary. Following the submission of the case to the
panel, the parties are prohibited from providing any further information or other communication except at the request of the panel. Such responses to requests from the panel must be in writing and simultaneously provided to the other party and all
members of the panel, except that the panel may require the response to be provided in a meeting or teleconference attended by both parties and all members of the panel. 

  

					
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		 		  	Rule 19-8.010 F.A.C.

	 	v.	The decision in writing of any two actuaries, when filed with the parties hereto, shall be final and binding on both parties. 

  

	 	d.	The reasonable and customary expense of the actuaries and of the commutation (as a result of b. and c. above) shall be equally divided between the two parties. Said commutation shall take place in Tallahassee, Florida,
unless some other place is mutually agreed upon by the Company and the SBA. 

  

	(4)	Advances 

  

	 	(a)	The SBA may make advances for loss reimbursements as defined herein, at market interest rates, to the Company in accordance with Section 215.555(4)(e), Florida Statutes. An advance is an early reimbursement which
allows the Company to continue to pay claims in a timely manner. Advances will be made based on the Company’s paid and reported outstanding losses for Covered Policies (excluding all incurred but not reported [IBNR] losses) as reported on a
Proof of Loss Report, and shall include Loss Adjustment Expense Reimbursement as calculated by the FHCF. In order to be eligible for an advance, the Company must submit its exposure data for the Contract Year as required under paragraph (1) of
this Article. Except as noted below, advances, if approved, will be made as soon as practicable after the SBA receives a written request, signed by two officers of the Company, for an advance of a specific amount and any other information required
for the specific type of advance under subparagraphs (c) and (e) below. All reimbursements due to a Company shall be offset against any amount of outstanding advances plus the interest due thereon. 

 

	 	(b)	For advances or excess advances, which are advances that are in excess of the amount to which the Company is entitled, the market interest rate shall be the prime rate as published in the Wall Street Journal on the
first business day of the Contract Year. This rate will be adjusted annually on the first business day of each subsequent Contract Year, regardless of whether the Company executes subsequent Contracts. In addition to the prime rate, an additional 5%
interest charge will apply on excess advances. All interest charged will commence on the date the SBA issues a check for an advance and will cease on the date upon which the FHCF has received the Company’s Proof of Loss Report(s) for the
Covered Event(s) for which the Company qualifies for reimbursement(s). If such reimbursement(s) are less than the amount of outstanding advance(s) issued to the Company, interest will continue to accrue on the outstanding balance of the advance(s)
until subsequent Proof of Loss Reports qualify the Company for reimbursement under any Covered Event equal to or exceeding the amount of any outstanding advance(s). Interest shall be billed on a periodic basis. If it is determined that the Company
received funds in excess of those to which it was entitled, the interest as to those sums will not cease on the date of the receipt of the Proof of Loss Report but will continue until the Company reimburses the FHCF for the overpayment.

  

	 	(c)	If the Company has an outstanding advance balance as of December 31 of this or any other Contract Year, the Company is required to have an actuary certify outstanding and incurred but not reported losses as
reported on the applicable December Proof of Loss Report. 

  

	 	(d)	The specific type of advances enumerated in Section 215.555, Florida Statutes, follow. 

  

	 	1.	Advances to Companies to prevent insolvency, as defined under Article XIV. 

  

	 	a.	Section 215.555(4)(e)1., Florida Statutes, provides that the SBA shall advance to the Company amounts necessary to maintain the solvency of the Company, up to 50 percent of the SBA’s estimate of the
reimbursement due to the Company. 

  

	 	b.	In addition to the requirements outlined in subparagraph (4)(a) above, the requirements for an advance to a Company to prevent insolvency are that the Company demonstrates it is likely to qualify for reimbursement
and that the immediate receipt of moneys from the SBA is likely to prevent the Company from becoming insolvent, and the Company provides the following information: 

  

					
		 	18	  	FHCF-2015K
		 		  	Rule 19-8.010 F.A.C.

	 	i.	Current assets; 

  

	 	ii.	Current liabilities other than liabilities due to the Covered Event; 

  

	 	iii.	Current surplus as to policyholders; 

  

	 	iv.	Estimate of other expected liabilities not due to the Covered Event; and 

  

	 	v.	Amount of reinsurance available to pay claims for the Covered Event under other reinsurance treaties. 

  

	 	c.	The SBA’s final decision regarding an application for an advance to prevent insolvency shall be based on whether or not, considering the totality of the circumstances, including the SBA’s obligations to
provide reimbursement for all Covered Events occurring during the Contract Year, granting an advance is essential to allowing the entity to continue to pay additional claims for a Covered Event in a timely manner. 

 

	 	2.	Advances to entities created pursuant to Section 627.351(6), Florida Statutes. 

  

	 	a.	Section 215.555(4)(e)2., Florida Statutes, provides that the SBA may advance to an entity created pursuant to Section 627.351(6), Florida Statutes, up to 90% of the lesser of the SBA’s estimate of the
reimbursement due or the entity’s share of the actual aggregate Reimbursement Premium for that Contract Year, multiplied by the current available liquid assets of the FHCF. 

 

	 	b.	In addition to the requirements outlined in subparagraph (4)(a) above, the requirements for an advance to entities created pursuant to Section 627.351(6), Florida Statutes, are that the entity must demonstrate
to the SBA that the advance is essential to allow the entity to pay claims for a Covered Event. 

  

	 	3.	Advances to limited apportionment companies. 

 Section 215.555(4)(e)3., Florida Statutes,
provides that the SBA may advance the amount of estimated reimbursement payable to limited apportionment companies. 
  

	 	(e)	In determining whether or not to grant an advance and the amount of an advance, the SBA: 

  

	 	1.	Shall determine whether its assets available for the payment of obligations are sufficient and sufficiently liquid to fulfill its obligations to other Companies prior to granting an advance; 

 

	 	2.	Shall review and consider all the information submitted by such Companies; 

  

	 	3.	Shall review such Companies’ compliance with all requirements of Section 215.555, Florida Statutes; 

  

	 	4.	Shall consult with all relevant regulatory agencies to seek all relevant information; 

  

	 	5.	Shall review the damage caused by the Covered Event and when that Covered Event occurred; 

  

	 	6.	Shall consider whether the Company has substantially exhausted amounts previously advanced; 

  

	 	7.	Shall consider any other factors deemed relevant; and 

  

	 	8.	Shall require commercial self-insurance funds established under section 624.462, Florida Statutes, to submit a copy of written estimates of expenses in support of the amount of advance requested. 

 

	 	(f)	Any amount advanced by the SBA shall be used by the Company only to pay claims of its policyholders for the Covered Event or Covered Events which have precipitated the immediate need to continue to pay additional claims
as they become due. 

  

					
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		 		  	Rule 19-8.010 F.A.C.

	(5)	Delinquent Payments 

 Failure to submit a payment when due is a violation of the terms of
this Contract and Section 215.555, Florida Statutes. Interest on late payments shall be due as set forth in Article VIII(2) and Article IX(2). 
  

	(6)	Inadequate Data Submissions 

 If exposure data or other information required to be
reported by the Company under the terms of this Contract is not received by the FHCF in the format specified by the FHCF or is inadequate to the extent that the FHCF requires resubmission of data, the Company will be required to pay the FHCF a
resubmission fee of $1,000 for resubmissions that are not a result of an examination by the SBA. If a resubmission is necessary as a result of an examination report issued by the SBA, the first resubmission fee will be $2,000. If the Company’s
examination-required resubmission is inadequate and the SBA requires an additional resubmission(s), the resubmission fee for each subsequent resubmission shall be $2,000. A resubmission of exposure data may delay the processing of the Company’s
request for reimbursement or an advance. 
  

	(7)	Delinquent Submissions 

 Failure to submit an exposure submission, resubmission, loss
report, or commutation documentation when due is a violation of the terms of this Contract and Section 215.555, Florida Statutes. 
  

	(8)	Confidential Information/Trade Secret Information 

 Pursuant to the provisions of
Section 215.557, Florida Statutes, the reports of insured values under Covered Policies by ZIP Code submitted to the SBA pursuant to Section 215.555, Florida Statutes, are confidential and exempt from the provisions of
Section 119.07(1), Florida Statutes, and Section 24(a), Art. I of the State Constitution. If other information submitted by the Company to the FHCF could reasonably be ruled a “trade secret” as defined in Section 812.081,
Florida Statutes, such information must be clearly marked “Trade Secret Information.” 
 ARTICLE XI - TAXES 

In consideration of the terms under which this Contract is issued, the Company agrees to make no deduction in respect of the Premium herein when making premium
tax returns to the appropriate authorities. Should any taxes be levied on the Company in respect of the Premium herein, the Company agrees to make no claim upon the SBA for reimbursement in respect of such taxes. 

ARTICLE XII - ERRORS AND OMISSIONS 
 Any inadvertent
delay, omission, or error on the part of the SBA shall not be held to relieve the Company from any liability which would attach to it hereunder if such delay, omission, or error had not been made. 

ARTICLE XIII - INSPECTION OF RECORDS 
 The Company shall
allow the SBA to inspect, examine, and verify, at reasonable times, all records of the Company relating to the Covered Policies under this Contract, including Company files concerning claims, losses, or legal proceedings regarding subrogation or
claims recoveries which involve this Contract, including premium, loss records and reports involving exposure data or losses under Covered Policies. This right by the SBA to inspect, examine, and verify shall survive the completion and closure of an
exposure examination or loss examination file and the termination of the Contract. The Company shall have no right to re-open an exposure or loss reimbursement examination once closed and the findings have been accepted by the Company; any
re-opening shall be at the sole discretion of the SBA. If the State Board of Administration Finance Corporation (formerly known as the FHCF Finance Corporation) has issued revenue bonds and relied upon the exposure and loss data submitted and
certified by the Company as accurate to determine the amount of bonding needed, the SBA may choose not to require, or accept, a resubmission if the resubmission will result in additional reimbursements to the

  

					
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		 		  	Rule 19-8.010 F.A.C.

 
Company. The SBA may require any discovered errors, inadvertent omissions, and typographical errors associated with the data reporting of insured values, discovered prior to the closing of the
file and acceptance of the examination findings by the Company, to be corrected to reflect the proper values. The Company shall retain its records in accordance with the requirements for records retention regarding exposure reports and claims
reports outlined herein, and in any administrative rules adopted pursuant to Section 215.555, Florida Statutes. Companies writing covered collateral protection policies, as defined in definition (10)(d) of Article V, must be able to
provide documentation that the policy covers personal residences, protects both the borrower’s and lender’s interest, and that the coverage is in an amount at least equal to the coverage for the dwelling in place under the lapsed
homeowner’s policy. 
  

	(1)	Purpose of FHCF Examination 

 The purpose of the examinations conducted by the SBA is to
evaluate the accuracy of the FHCF exposure or loss data reported by the Company. However, due to the limited nature of the examination, it cannot be relied upon as an assurance that a company’s data is reported accurately or in its entirety.
The company should not rely on the FHCF to identify every type of reporting error in its data. In addition, the reporting requirements are subject to change each Contract Year so it is the Company’s responsibility to be familiar with the
applicable Contract Year requirements and to incorporate any changes into its data for that Contract Year. It is also the Company’s responsibility to ensure that its data is reported accurately and to comply with Florida Statutes and any
applicable rules when reporting exposure data. The examination report is not intended to provide a legal determination of the Company’s compliance. 
  

	(2)	Examination Requirements for Exposure Verification 

 The Company shall retain complete
and accurate records, in policy level detail, of all exposure data submitted to the SBA in any Contract Year until the SBA has completed its examination of the Company’s exposure submissions. The Company shall also retain complete and accurate
records of any completed exposure examination for any Contract Year in which the Company incurred losses until the completion of the loss reimbursement examination and commutation for that Contract Year. The records to be retained are outlined in
the Data Call adopted for the Contract Year under Rule 19- 8.029, F.A.C. A complete list of records to be retained for the exposure examination is set forth in Form FHCF-EAP1, adopted for the Contract Year under Rule 19-8.030, F.A.C. 

 

	(3)	Examination Requirements for Loss Reports 

 The Company shall retain complete and
accurate records of all reported losses and/or advances submitted to the SBA until the SBA has completed its examination of the Company’s reimbursable losses and commutation for the Contract Year (if applicable) has been concluded. The records
to be retained are set forth as part of the Proof of Loss Report, Form FHCF-L1B, adopted for the Contract Year under Rule 19-8.029, F.A.C., and Form FHCF-LAP1, adopted for the Contract Year under Rule 19-8.030, F.A.C. 

 

	(4)	Examination Procedures 

  

	 	(a)	The FHCF will send an examination notice to the Company providing the commencement date of the examination, the site of the examination, any accommodation requirements of the examiner, and the reports and data which
must be assembled by the Company and forwarded to the FHCF upon request. The Company shall be prepared to choose one location in which to be examined, unless otherwise specified by the SBA. 

 

	 	(b)	 The reports and data are required to be forwarded to the FHCF as set forth in an examination notice letter. The information is then forwarded to the
examiner. If the FHCF receives accurate and complete records as requested, the examiner will contact the Company to inform the Company as to what policies or other documentation will be required once the examiner is on site. Any records not required
to be provided to the examiner in advance shall be made available at the time the examiner arrives on site. Any records to support reported losses which 

  

					
		 	21	  	FHCF-2015K
		 		  	Rule 19-8.010 F.A.C.

	 	
are provided after the examiner has left the work-site will, at the SBA’s discretion, result in an additional examination of exposure and/or loss records or an extension or expansion of the
examination already in progress. All costs associated with such additional examination or with the extension or expansion of the original examination shall be borne by the Company. 

 

	 	(c)	At the conclusion of the examiner’s work and the management review of the examiner’s report, findings, recommendations, and work papers, the FHCF will forward an examination report to the Company and require a
response from the Company by a date certain as to the examination findings and recommendations. 

  

	 	(d)	If the Company accepts the examination findings and recommendations, and there is no recommendation for additional information, the examination report will be finalized and the exam file closed. 

 

	 	(e)	If the Company disputes the examiner’s findings, the areas in dispute will be resolved by a meeting or a conference call between the Company and FHCF management. 

 

	 	(f)    1.	If the recommendation of the examiner is to resubmit the Company’s exposure data for the Contract Year in question, then the FHCF will send the Company a letter outlining the process for resubmission and including
a deadline to resubmit. Once the resubmission is received, the FHCF’s Administrator calculates a revised Reimbursement Premium for the Contract Year which has been examined. The SBA shall then review the resubmission with respect to the
examiner’s findings, and accept the resubmission or contact the Company with any questions regarding the resubmission. Once the SBA has accepted the resubmission as a sufficient response to the examiner’s findings, the exam is closed.

  

	 	2.	If the recommendation of the examiner is to give the Company the option to either resubmit the exposure data or to pay the estimated Premium difference, then the FHCF will send the Company a letter outlining the process
for resubmission or for paying the estimated Premium difference and including a deadline for the resubmission or the payment to be received by the FHCF’s Administrator. If the Company chooses to resubmit, the same procedures outlined in Article
XIII(3)(f)1. apply. 

  

	 	(g)	If the recommendation of the examiner is to update the Company’s Proof of Loss Report(s) for the Contract Year under review, the FHCF will send the Company a letter outlining the process for submitting the Proof of
Loss Report(s) and including a deadline to file. Once the Proof of Loss Report(s) is received by the FHCF Administrator, the FHCF’s Administrator will calculate a revised reimbursement. The SBA shall then review the submitted Proof of Loss
Report(s) with respect to the examiner’s findings, and accept the Proof of Loss Report(s) as filed or contact the Company with any questions. Once the SBA has accepted the corrected Proof of Loss Report(s) as a sufficient response to the
examiner’s findings, the exam is closed. 

  

	 	(h)	The examiner’s list of errors is made available in the examination report sent to the Company. Given that the examination was based on a sample of the Company’s policies or claims rather than the whole
universe of the Company’s Covered Policies or reported claims, the error list is not intended to provide a complete list of errors but is intended to indicate what information needs to be reviewed and corrected throughout the Company’s
book of Covered Policy business or claims information to ensure more complete and accurate reporting to the FHCF. 

  

	(4)	Costs of the Examinations 

 The costs of the examinations shall be borne by the SBA.
However, in order to remove any incentive for a Company to delay preparations for an examination, the SBA shall be reimbursed by the Company for any examination expenses incurred in addition to the usual and customary costs, which additional
expenses were incurred as a result of the Company’s failure, despite proper notice, to be prepared for the examination or as a result of a Company’s failure to provide requested information. All requested information must be complete and
accurate. 

  

					
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		 		  	Rule 19-8.010 F.A.C.

 ARTICLE XIV - INSOLVENCY OF THE COMPANY 

Company shall notify the FHCF immediately upon becoming insolvent. Except as otherwise provided below, no covered loss reimbursements will be made until the
FHCF has completed and closed its examination of the insolvent Company’s losses, unless an agreement is entered into by the court appointed receiver specifying that all data and computer systems required for FHCF exposure and loss examinations
will be maintained until completion of the Company’s exposure and loss examinations. Except as otherwise provided below, in order to account for potential erroneous reporting, the SBA shall hold back 25% of requested loss reimbursements until
the exposure and loss examinations for the Company are completed. Only those losses supported by the examination will be reimbursed. Pursuant to Section 215.555(4)(g), Florida Statutes, the FHCF is required to pay the “net amount of all
reimbursement moneys” due an insolvent insurer to the Florida Insurance Guaranty Association (FIGA) for the benefit of Florida policyholders. For the purpose of this Contract, a Company is insolvent when an order of liquidation with a finding
of insolvency has been entered by a court of competent jurisdiction. In light of the need for an immediate infusion of funds to enable policyholders of insolvent companies to be paid for their claims, the SBA may enter into agreements with FIGA
allowing exposure and loss examinations to take place immediately without the usual notice and response time limitations and allowing the FHCF to make loss reimbursements (net of any amounts payable to the SBA from the Company or FIGA) to FIGA
before the examinations are completed and before the response time expires for claims filing by reinsurers and financial institutions, which have a priority interest in those funds pursuant to Section 215.555(4)(g), Florida Statutes. Such
agreements must ensure the availability of the necessary records and adequate security must be provided so that if the FHCF determines that it overpaid FIGA on behalf of the Company, or if claims are filed by reinsurers or financial institutions
having a priority interest in these funds, that the funds will be repaid to the FHCF by FIGA within a reasonable time. 
 ARTICLE XV - TERMINATION

 The FHCF and the obligations of both parties under this Contract can be terminated only as may be provided by law or applicable rules. 

ARTICLE XVI - VIOLATIONS 
 Pursuant to the provisions of
Section 215.555(10), Florida Statutes, any violation of the terms of this Contract by the Company constitutes a violation of the Insurance Code of the State of Florida. Pursuant to the provisions of Section 215.555(11), Florida Statutes,
the SBA is authorized to take any action necessary to enforce any administrative rules adopted pursuant to Section 215.555, Florida Statutes, and the provisions and requirements of this Contract. 

ARTICLE XVII - APPLICABLE LAW 
 This Contract shall be
governed by and construed according to the laws of the State of Florida in respect of any matter relating to or arising out of this Contract. 
 ARTICLE
XVIII - REIMBURSEMENT CONTRACT ELECTIONS 
  

	(1)	Reimbursement Percentage 

 For purposes of determining reimbursement (if any) due the
Company under this Contract and in accordance with the Statute, the Company has the option to elect a 45% or 75% or 90% reimbursement percentage under this Contract. If the Company is a member of an NAIC group, all members must elect the same
reimbursement percentage, and the individual executing this Contract on behalf of the Company, by placing his or her initials in the box under (a) below, affirms that the Company has elected the same reimbursement percentage as all members of
its NAIC group. If the 

  

					
		 	23	  	FHCF-2015K
		 		  	Rule 19-8.010 F.A.C.

 
Company is an entity created pursuant to Section 627.351, Florida Statutes, the Company must elect the 90% reimbursement percentage. The Company shall not be permitted to change its
reimbursement percentage during the Contract Year. The Company shall be permitted to change its reimbursement percentage at the beginning of a new Contract Year, but may not reduce its reimbursement percentage if a Covered Event required the
issuance of revenue bonds, until the bonds are no longer outstanding. 
 IMPORTANT NOTE: The State Board of Administration Finance
Corporation issued revenue bonds as a result of its liabilities for Covered Events under the Contract Year effective June 1, 2005. As those bonds are no longer outstanding, the Company may select a Reimbursement Percentage that is less than its
selection under the prior Contract Year effective June 1, 2014. 
 The Reimbursement Percentage elected by the Company for the
prior Contract Year effective June 1, 2014 was as follows: Homeowners Choice Property and Casualty Insurance Company - 90% 
  

	 	(a)	NAIC Group Affirmation: Initial the following box if the Company is part of an NAIC Group: 

  

					
		 	

	  	

  

	 	(b)	Reimbursement Percentage Election: The Company hereby elects the following Reimbursement Percentage for the Contract Year from 12:00:01 a.m., Eastern Time, June 1, 2015, to 12:00 a.m., Eastern Time,
May 31, 2016, (the individual executing this Contract on behalf of the Company shall place his or her initials in the box to the left of the percentage elected for the Company): 

 

													
		  	 	  	45%         OR	  	 	  	75%             OR	 	

	  	90%

  

	(2)	Reporting Exposure for a Single Structure, with a Mix of Commercial Habitational and Commercial Non-Habitational Exposure, Written on a Commercial Policy 

This section is applicable to all Companies which either have exposure for single structures with a mix of commercial habitational and
commercial non-habitational exposure written under a Commercial Policy, or have the authority to write such policies. If the Company does not have the authority to write this type of exposure, this section does not apply; initial the
following N/A box, which completes this section of ARTICLE XVIII. 
  

					
		 	

	  	

 NOT 

APPLICABLE 
 If the Company
does write, or has the authority to write, this type of exposure, please read and complete the remainder of this section. For the purpose of determining the predominant use of mixed-use single structures under this Contract, the FHCF
considers predominant use to be greater than 50% of the total insured value of the structure as justified by the company on the basis of number of floors, square footage, or other reasonable methodology presented to the Administrator

  

					
		 	24	  	FHCF-2015K
		 		  	Rule 19-8.010 F.A.C.

 
(e.g., a classification plan explaining how predominance is determined, and likely to include commercial residential and commercial non-residential or business class codes) for approval prior to
the Data Call submission and the reporting of Ultimate Net Loss under this Contract. Exposure shall be reported under the Company’s Data Call, and Ultimate Net Loss reported on the Proof of Loss Report, in accordance with the following: 

 

	 	(a)	Predominant Use is Dwelling or Habitational Occupancies 

 If a single structure is
used for both habitational and non-habitational purposes and the predominant use is dwelling or habitational occupancies, the entire exposure for the structure should be reported to the FHCF under the Data Call, and the FHCF will reimburse losses
for the entire structure. 
  

	 	(b)	Predominant Use is Non-Dwelling or Non-Habitational Occupancies 

 If a single
structure is used for both habitational and non-habitational purposes and the predominant use is non-dwelling or non-habitational occupancies, the habitational portion of that structure should be identified and reported to the FHCF under the Data
Call. 
 However, in recognition of the unusual nature of commercial structures with incidental habitational exposure and the hardship some
companies may face in having to carve out such incidental habitational exposure, as well as the losses to such structures, the FHCF will accommodate these companies by allowing them to exclude the entire exposure for the single structure from their
Data Call submission, providing the following two conditions are met: 
  

	 	1.	The decision to not carve out and report the incidental habitational exposure shall apply to all such structures insured by the Company; and 

 

	 	2.	If the incidental habitational exposure is not reported to the FHCF, the Company agrees it shall not report losses to the structure and the FHCF shall not reimburse any losses to the structure. 

Initial the CARVING box below if the Company is able to carve out and report its incidental habitational exposure, OR, if this
requirement presents a hardship, the Company must communicate its decision to not carve out and to not report the incidental exposure by having the individual executing this Contract on behalf of the Company placing his or her initials in the NOT
CARVING box below. If the Company does not currently write such policies, but has the authority to write such policies after the start date of this Contract, the decision to carve or not carve out the incidental habitational exposure must be
indicated below. 
  

									
		 		 	
		 	 	  	OR    	 	

	  	
		 	CARVING	  		 	NOT CARVING	  	

 By initialing the CARVING or NOT CARVING box above, the Company is making an irrevocable decision for
the corresponding Contract Year Data Call submission, and any subsequent resubmissions, and for the reporting of Ultimate Net Loss. 

Important Note: Since this election will impact your Data Call submission, please share this decision with the individual(s) responsible
for compiling your Data Call submission and loss report submissions. 

  

					
		 	25	  	FHCF-2015K
		 		  	Rule 19-8.010 F.A.C.

	(3)	Additional Living Expense (ALE) Written as Time Element Coverage 

 If your Company writes
Covered Policies that provide ALE coverage on a time element basis (i.e., coverage is based on a specific period of time as opposed to a stated dollar limit), you must initial the ‘Yes – Time Element ALE’ box below. If your Company
does not write time element ALE coverage, initial ‘No – Time Element ALE’ box below. 
  

									
		 	

	  	OR    	  	 	  	
		 	Yes – Time	  		  	No – Time	  	
		 	Element ALE	  		  	Element ALE	  	

  

					
		 	26	  	FHCF-2015K
		 		  	Rule 19-8.010 F.A.C.

 ARTICLE XIX – SIGNATURES 

Approved by: 
  

							
	 Florida Hurricane Catastrophe Fund

By: State Board of Administration of the State of Florida
	  		  	
				
	By:	 	

	  		  	6/24/15
		 	Ashbel C. Williams	  		  	Date
		 	Executive Director & CIO	  		  	
			
	Approved as to legality:	  		  	
				
	By:	 	

	  		  	6/24/15
		 	CRAIG A. MEYER	  		  	Date
		 	 ASSISTANT GENERAL COUNSEL
  
	  		  	
		 	Homeowners Choice Property and Casualty Insurance Company	  	
			
		 	 

	  	
		 	 Typed/Printed Name and Title

				
	By:	 	

	  		  	2/25/2015
		 	Signature	  		  	Date

  

					
		 	27	  	FHCF-2015K
		 		  	Rule 19-8.010 F.A.C.

					
	

	 	 STATE BOARD OF ADMINISTRATION OF FLORIDA

 
 1801 HERMITAGE BOULEVARD

TALLAHASSEE, FLORIDA 32308

(850) 488-4406
  

POST OFFICE BOX 13300

32317-3300
	 	 RICK SCOTT

GOVERNOR
 CHAIR

 
 JEFF ATWATER

CHIEF FINANCIAL OFFICER
  

PAM BONDI
 ATTORNEY
GENERAL
  
 ASH WILLIAMS

EXECUTIVE DIRECTOR & CIO

 AMENDMENT NO. 1 

to 
 REIMBURSEMENT
CONTRACT 
 Effective: June 1, 2015 

(Contract) 
 between 

HOMEOWNERS CHOICE PROPERTY AND CASUALTY INSURANCE COMPANY 

(Company) 
 NAIC # 12944

 and 
 THE STATE BOARD
OF ADMINISTRATION OF THE STATE OF FLORIDA (SBA) 
 WHICH ADMINISTERS THE FLORIDA HURRICANE CATASTROPHE FUND (FHCF) 

WHEREAS, the above-referenced Reimbursement Contract for Contract Year 2015-2016, as adopted under Rule 19-8.010, F.A.C., contains a scrivener’s error in
the definition of “Retention Multiple,” 
 NOW, THEREFORE, the parties to the above-referenced Reimbursement Contract agree to the following
amendment, which takes effect June 1, 2015: 
 Paragraph (a) of Subsection (29) of ARTICLE V – DEFINITIONS is amended to read:

  

	(29)	Retention Multiple 

  

	 	(a)	The Retention Multiple is applied to the Company’s Reimbursement Premium to determine the Company’s Retention. The Retention Multiple for the 2015/2016 Contract Year shall be equal to $4.5 billion, adjusted
based upon the reported exposure for the 2013/2014 Contract Year to reflect the percentage growth in exposure to the FHCF since 2004, divided by the estimated total industry Reimbursement Premium at the 90% reimbursement percentage level for the
Contract Year as determined by the SBA. 

  
 

 
  

  

					
		 	28	  	FHCF-2015K-2
		 		  	Rule 19-8.010, F.A.C.

							
	 Approved by:
  

Florida Hurricane Catastrophe Fund
 By: State Board of
Administration of the State of Florida
	  		  	
				
	By:	 	

	  		  	6/24/15
		 	Ashbel C. Williams	  		  	Date
		 	Executive Director & CIO	  		  	
			
	Approved as to legality:	  		  	
				
	By:	 	

	  		  	6/24/15
		 	CRAIG A. MEYER	  		  	Date
		 	ASSISTANT GENERAL COUNSEL	  		  	
		 	 	  		  	
		 	Homeowners Choice Property and Casualty Insurance Company	  	
			
		 	 

	  	
		 	 Typed/Printed Name and Title

				
	By:	 	

	  		  	5/18/2015
		 	Signature	  		  	Date

  

					
		 	29	  	FHCF-2015K-2
		 		  	Rule 19-8.010, F.A.C.

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