HCI Group, Inc. (Form: 10-Q, Received: 08/09/2022 16:13:00)

0001400810http://hcigroup.com/20220630#LongTermDebtAndFinanceLeaseObligationsExcludingLineOfCredit--12-31http://hcigroup.com/20220630#LongTermDebtAndFinanceLeaseObligationsExcludingLineOfCredittwo yearhttp://fasb.org/us-gaap/2021-01-31#PropertyPlantAndEquipmentNetfour yearshttp://fasb.org/us-gaap/2021-01-31#PropertyPlantAndEquipmentNetQ2two Yearsthree yeartwo yearfalsetwo year0001400810us-gaap:EquitySecuritiesMember2021-04-012021-06-300001400810us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001400810us-gaap:RestrictedStockMember2021-03-310001400810hci:SeniorAndJuniorDebtOfPrivateEquityBackedCompaniesMember2021-01-012021-12-310001400810hci:PowerUtilityAndEnergyIndustriesAndInfrastructureMember2022-06-300001400810hci:FourPointFiveFivePercentagePromissoryNoteMember2022-01-012022-06-3000014008102021-12-310001400810us-gaap:CommonStockMember2021-06-300001400810hci:InvestmentExpenseMember2021-04-012021-06-300001400810us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMemberhci:FMKTMember2022-01-012022-06-300001400810us-gaap:IntersegmentEliminationMember2022-04-012022-06-300001400810hci:FMKTMember2021-12-310001400810us-gaap:LimitedPartnerMember2022-06-300001400810hci:AnchorTenantRelationshipMember2022-06-300001400810srt:MinimumMemberhci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2022-01-012022-06-300001400810us-gaap:EquitySecuritiesMember2021-04-012021-06-300001400810us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810hci:LimitedPartnershipInvestmentMember2021-01-012021-06-3000014008102022-04-262022-04-260001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:NortheastRegionMember2022-04-012022-06-300001400810us-gaap:OtherInvestmentsMember2022-04-012022-06-300001400810us-gaap:RevolvingCreditFacilityMember2021-01-012021-06-300001400810hci:ClaimsHandlingServicesMember2021-12-310001400810us-gaap:RetainedEarningsMember2021-04-012021-06-300001400810srt:MinimumMemberhci:OfficeSpaceMember2022-06-300001400810us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810us-gaap:NoncontrollingInterestMember2021-04-012021-06-300001400810us-gaap:OperatingSegmentsMemberhci:RealEstateOperationsMember2022-04-012022-06-300001400810hci:ThreepointsevenfivepercentagecallablepromissorynotememberMemberus-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810hci:InPlaceLeasesMember2022-06-300001400810us-gaap:OtherInvestmentsMember2021-04-012021-06-300001400810us-gaap:OperatingSegmentsMemberhci:HCPCIInsuranceOperationsMember2021-01-012021-06-300001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2021-12-310001400810us-gaap:RevolvingCreditFacilityMember2022-04-012022-06-300001400810us-gaap:FairValueInputsLevel2Memberhci:FourPointTwoFivePercentageConvertibleSeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810srt:MinimumMemberus-gaap:OfficeEquipmentMember2022-06-300001400810us-gaap:AdditionalPaidInCapitalMember2022-06-300001400810hci:ThreePointSevenFivePercentageCallablePromissoryNoteMember2022-01-012022-06-300001400810us-gaap:RestrictedStockMember2022-04-012022-06-300001400810us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810us-gaap:RedeemablePreferredStockMemberus-gaap:FixedMaturitiesMember2022-06-300001400810hci:FourPointFiveFivePercentagePromissoryNotesMember2022-01-012022-06-300001400810us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:SoutheastRegionMember2022-04-012022-06-300001400810us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001400810us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-3100014008102021-02-012021-02-280001400810hci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2022-06-300001400810us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-01-012021-06-300001400810us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001400810us-gaap:OtherInvestmentsMember2021-01-012021-06-300001400810hci:ClaimsHandlingServicesMember2022-01-012022-06-300001400810hci:HomeownersChoicePropertyAndCasualtyInsuranceCompanyIncorporationMember2021-01-012021-06-300001400810hci:CreditAndEquityInvestmentsPrimarilyInPrivateEquityOwnedCompaniesMember2021-01-012021-12-310001400810us-gaap:RetainedEarningsMember2021-12-310001400810us-gaap:FixedMaturitiesMember2021-04-012021-06-300001400810us-gaap:CashAndCashEquivalentsMember2021-04-012021-06-300001400810us-gaap:ParentMember2022-03-310001400810us-gaap:EmployeeStockOptionMember2021-12-310001400810hci:SeniorAndJuniorDebtOfPrivateEquityBackedCompaniesMember2022-06-300001400810hci:FourPointFiveFivePercentagePromissoryNoteMember2021-12-310001400810hci:LimitedPartnershipInvestmentMember2022-04-012022-06-300001400810us-gaap:CommonStockMember2021-12-310001400810us-gaap:OperatingSegmentsMemberhci:TypTapInsuranceCompanyMember2021-01-012021-06-300001400810hci:TypTapInsuranceGroupIncMember2022-04-012022-06-300001400810us-gaap:OperatingSegmentsMemberhci:RealEstateOperationsMember2021-01-012021-06-300001400810us-gaap:RestrictedStockMember2022-06-300001400810us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FixedMaturitiesMember2022-06-300001400810hci:ThreePointSevenFivePercentagePromissoryNoteMember2022-01-012022-06-300001400810us-gaap:CommonStockMemberhci:ShareRepurchasePlanMember2022-04-012022-06-300001400810hci:HomeownersChoicePropertyAndCasualtyInsuranceCompanyIncorporationMember2021-04-012021-06-300001400810us-gaap:FairValueInputsLevel2Memberhci:FourPointTwoFivePercentageConvertibleSeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-3100014008102021-04-012021-06-300001400810hci:InvestmentExpenseMember2022-04-012022-06-300001400810us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-3000014008102022-04-012022-06-3000014008102022-05-310001400810us-gaap:NoncontrollingInterestMember2021-03-310001400810hci:HundredPercentQuotaShareReinsuranceMemberhci:UnitedInsuranceHoldingsCorporationMember2022-06-300001400810us-gaap:FixedMaturitiesMember2022-01-012022-06-300001400810hci:TypTapInsuranceGroupIncMember2021-04-012021-06-300001400810us-gaap:OperatingSegmentsMemberhci:RealEstateOperationsMember2021-04-012021-06-300001400810hci:TypTapInsuranceGroupIncMember2022-01-012022-06-300001400810us-gaap:EmployeeStockOptionMember2022-01-012022-06-300001400810us-gaap:EquitySecuritiesMember2022-01-012022-06-300001400810hci:PolicyRenewalRightsMember2022-01-012022-06-300001400810us-gaap:OperatingSegmentsMemberus-gaap:CorporateAndOtherMember2022-06-300001400810us-gaap:CommonStockMember2020-12-310001400810us-gaap:RestrictedStockMember2021-01-012021-03-310001400810us-gaap:OtherLiabilitiesMember2021-12-310001400810hci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2022-01-012022-06-300001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2022-05-310001400810us-gaap:SubsequentEventMember2022-07-142022-07-140001400810srt:MaximumMemberus-gaap:OfficeEquipmentMember2022-06-300001400810hci:ThreepointsevenfivepercentagecallablepromissorynotememberMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001400810us-gaap:IntersegmentEliminationMember2022-01-012022-06-300001400810us-gaap:FairValueInputsLevel3Memberhci:ThreePointNineZeroPercentagePromissoryNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001400810us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMemberhci:FMKTMember2021-01-012021-06-300001400810us-gaap:OperatingExpenseMemberhci:FMKTMember2022-01-012022-06-300001400810us-gaap:EmployeeStockOptionMember2022-06-300001400810us-gaap:FixedMaturitiesMemberus-gaap:USTreasuryAndGovernmentMember2022-06-300001400810us-gaap:CommonStockMember2021-04-012021-06-300001400810hci:ThreePointNineZeroPercentagePromissoryNotesMember2021-12-310001400810hci:FMKTMember2022-01-012022-06-300001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2022-01-012022-06-300001400810hci:LimitedPartnershipInvestmentMember2021-04-012021-06-300001400810hci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2021-12-310001400810hci:SegmentConcentrationRiskMemberhci:HCPCIInsuranceOperationsMemberus-gaap:AssetsTotalMember2022-01-012022-06-300001400810us-gaap:SalesRevenueNetMemberhci:SegmentConcentrationRiskMemberhci:TypTapInsuranceCompanyMember2022-01-012022-06-300001400810hci:FourPointTwoFivePercentageConvertibleSeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001400810us-gaap:WarrantMember2021-04-012021-06-300001400810us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2022-06-300001400810hci:GainLossIncomeFromUnconsolidatedJointVentureMember2022-04-012022-06-300001400810us-gaap:RestrictedStockMember2022-01-012022-03-310001400810hci:ReinsuranceMember2022-06-300001400810hci:InvestmentExpenseMember2021-01-012021-06-300001400810us-gaap:RetainedEarningsMember2022-04-012022-06-300001400810us-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810hci:ThreePointNineZeroPercentagePromissoryNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001400810us-gaap:ParentMember2021-03-310001400810hci:GainLossIncomeFromUnconsolidatedJointVentureMember2021-04-012021-06-3000014008102022-08-010001400810hci:ShortDurationInsuranceContractsAccidentYearTwoThousandTwentyOneAndPriorMember2022-01-012022-06-300001400810us-gaap:SubsequentEventMember2022-09-162022-09-160001400810us-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001400810hci:PrivateUSLowerMiddleMarketCompaniesMember2022-06-300001400810hci:InvestmentExpenseMember2022-01-012022-06-300001400810hci:FourPointFiveFivePercentagePromissoryNotesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001400810hci:ExchangeTradedDebtMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810us-gaap:FixedMaturitiesMemberhci:ExchangeTradedDebtMember2021-12-310001400810us-gaap:RetainedEarningsMember2020-12-310001400810us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2021-12-310001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:NortheastRegionMember2021-01-012021-06-300001400810hci:FourPointTwoFivePercentageConvertibleSeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810us-gaap:RetainedEarningsMember2021-03-310001400810hci:ThreePointNineZeroPercentagePromissoryNotesMember2022-01-012022-06-300001400810hci:SegmentConcentrationRiskMemberhci:TypTapInsuranceCompanyMemberus-gaap:AssetsTotalMember2022-01-012022-06-300001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2022-06-300001400810hci:RetailSpaceMember2022-01-012022-06-300001400810us-gaap:AdditionalPaidInCapitalMember2021-01-012021-06-300001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:NortheastRegionMember2022-01-012022-06-300001400810us-gaap:CommonStockMember2022-06-300001400810hci:ThreePointNineZeroPercentagePromissoryNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810us-gaap:AdditionalPaidInCapitalMember2022-03-310001400810us-gaap:RevolvingCreditFacilityMember2021-04-012021-06-300001400810us-gaap:NoncontrollingInterestMember2022-04-012022-06-300001400810hci:InPlaceLeasesMember2022-01-012022-06-300001400810hci:PowerUtilityAndEnergyIndustriesAndInfrastructureMember2022-01-012022-06-300001400810hci:CreditAndEquityInvestmentsPrimarilyInPrivateEquityOwnedCompaniesMember2022-01-012022-06-300001400810us-gaap:LimitedPartnerMember2022-01-012022-06-300001400810us-gaap:OperatingSegmentsMemberhci:TypTapInsuranceCompanyMember2021-04-012021-06-300001400810hci:PowerUtilityAndEnergyIndustriesAndInfrastructureMember2021-12-310001400810hci:TypTapInsuranceGroupIncMember2021-01-012021-06-300001400810us-gaap:ParentMember2021-12-310001400810hci:AnchorTenantRelationshipMember2021-12-310001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:SoutheastRegionMember2021-01-012021-12-310001400810us-gaap:CashAndCashEquivalentsMember2021-01-012021-06-300001400810hci:UnitedInsuranceHoldingsCorporationMembersrt:MaximumMemberhci:RenewalRightsAgreementMember2022-01-012022-06-300001400810hci:ClaimsHandlingServicesMember2022-04-012022-06-300001400810hci:PrivateUSLowerMiddleMarketCompaniesMember2021-01-012021-12-310001400810hci:ClaimsHandlingServicesMember2021-04-012021-06-300001400810hci:FMKTMember2022-06-012022-06-300001400810hci:ThreepointsevenfivepercentagecallablepromissorynotememberMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:RenewalRightsAgreementMember2022-01-012022-06-300001400810us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMemberhci:FMKTMember2021-04-012021-06-300001400810us-gaap:OperatingSegmentsMemberhci:TypTapInsuranceCompanyMember2022-01-012022-06-300001400810us-gaap:ReinsuranceRecoverableMemberus-gaap:ReinsurerConcentrationRiskMember2022-06-300001400810srt:MaximumMemberhci:RetailSpaceMember2022-06-300001400810us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001400810hci:MatureRealEstatePrivateEquityFundsAndPortfolioGloballyMember2021-12-310001400810hci:BankLoansPublicAndPrivateCorporateBondsAssetBackedSecuritiesEquityAndDebtRestructuringMember2022-01-012022-06-300001400810us-gaap:RedeemablePreferredStockMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810hci:HundredPercentQuotaShareReinsuranceMemberhci:UnitedInsuranceHoldingsCorporationMember2022-01-012022-06-300001400810us-gaap:LimitedPartnerMember2022-04-012022-06-300001400810hci:ClaimsHandlingServicesMember2022-06-300001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:EightyFivePercentQuotaShareReinsuranceMember2022-06-300001400810hci:SeniorAndJuniorDebtOfPrivateEquityBackedCompaniesMember2021-12-3100014008102021-01-012021-06-300001400810hci:PrivateUSLowerMiddleMarketCompaniesMember2021-12-310001400810hci:FourPointFiveFivePercentagePromissoryNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001400810us-gaap:CarryingReportedAmountFairValueDisclosureMemberhci:ThreePointNineZeroPercentagePromissoryNotesMember2022-06-300001400810us-gaap:OperatingSegmentsMemberhci:HCPCIInsuranceOperationsMember2021-12-310001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMemberus-gaap:DebtInstrumentRedemptionPeriodThreeMember2022-01-012022-06-300001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:NortheastRegionMember2021-04-012021-06-300001400810us-gaap:OperatingSegmentsMemberhci:HCPCIInsuranceOperationsMember2022-06-300001400810us-gaap:ParentMember2022-04-012022-06-300001400810hci:HomeownersChoicePropertyAndCasualtyInsuranceCompanyIncorporationMember2022-04-012022-06-3000014008102021-06-300001400810us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001400810us-gaap:SalesRevenueNetMemberhci:SegmentConcentrationRiskMemberhci:HCPCIInsuranceOperationsMember2022-01-012022-06-300001400810us-gaap:RestrictedStockMember2021-01-012021-06-300001400810hci:FourPointFiveFivePercentagePromissoryNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310001400810us-gaap:SalesRevenueNetMemberhci:SegmentConcentrationRiskMemberhci:HCPCIInsuranceOperationsMember2021-01-012021-06-300001400810us-gaap:FixedMaturitiesMember2022-04-012022-06-300001400810hci:ExchangeTradedDebtMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001400810us-gaap:EquitySecuritiesMember2021-01-012021-06-300001400810hci:ThreePointSevenFivePercentageCallablePromissoryNoteMember2022-06-300001400810hci:ShareRepurchasePlanMember2022-01-012022-06-300001400810us-gaap:RealEstateInvestmentMember2022-04-012022-06-300001400810us-gaap:ParentMember2022-06-300001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001400810us-gaap:EquitySecuritiesMember2022-04-012022-06-300001400810us-gaap:OperatingSegmentsMemberhci:HCPCIInsuranceOperationsMember2022-01-012022-06-300001400810hci:SegmentConcentrationRiskMemberhci:HCPCIInsuranceOperationsMemberus-gaap:AssetsTotalMember2021-01-012021-12-310001400810us-gaap:OperatingSegmentsMemberhci:HCPCIInsuranceOperationsMember2021-04-012021-06-300001400810us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001400810us-gaap:EquitySecuritiesMember2022-04-012022-06-300001400810hci:ThreePointSevenFivePercentageCallablePromissoryNoteMember2021-12-310001400810hci:BoatDocksWetSlipsMembersrt:MinimumMember2022-06-300001400810us-gaap:NoncontrollingInterestMember2022-06-300001400810us-gaap:CarryingReportedAmountFairValueDisclosureMemberhci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2022-06-3000014008102022-05-312022-05-310001400810us-gaap:EmployeeStockOptionMember2022-04-012022-06-3000014008102022-01-012022-03-310001400810hci:InPlaceLeasesMember2021-12-310001400810us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2022-01-012022-06-300001400810us-gaap:CommonStockMemberhci:ShareRepurchasePlanMember2022-01-012022-06-300001400810us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300001400810hci:TypTapInsuranceGroupIncMember2021-12-310001400810hci:ThreepointsevenfivepercentagecallablepromissorynotememberMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810srt:MinimumMemberhci:RetailSpaceMember2022-06-300001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001400810us-gaap:FairValueInputsLevel1Memberhci:ExchangeTradedDebtMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810us-gaap:FairValueInputsLevel1Memberhci:ExchangeTradedDebtMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001400810us-gaap:OfficeEquipmentMember2022-01-012022-06-300001400810us-gaap:NoncontrollingInterestMember2022-01-012022-06-300001400810us-gaap:AdditionalPaidInCapitalMember2022-01-012022-06-300001400810us-gaap:RedeemablePreferredStockMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001400810us-gaap:RestrictedStockMember2022-01-012022-06-300001400810us-gaap:RetainedEarningsMember2022-03-310001400810hci:TypTapInsuranceGroupIncMember2022-06-300001400810us-gaap:OperatingSegmentsMemberhci:RealEstateOperationsMember2021-12-310001400810us-gaap:SalesRevenueNetMemberhci:SegmentConcentrationRiskMemberhci:TypTapInsuranceCompanyMember2021-01-012021-06-300001400810us-gaap:FairValueInputsLevel2Memberhci:FourPointSevenFivePercentageConvertibleSeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810us-gaap:CommonStockMember2021-03-310001400810hci:ThreePointSevenFivePercentagePromissoryNoteMember2022-06-300001400810us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2022-05-012022-05-310001400810us-gaap:RestrictedStockMember2021-12-310001400810us-gaap:RetainedEarningsMember2022-01-012022-06-300001400810us-gaap:NoncontrollingInterestMember2021-12-310001400810us-gaap:NoncontrollingInterestMember2022-03-310001400810us-gaap:FairValueMeasurementsRecurringMember2022-06-300001400810us-gaap:CarryingReportedAmountFairValueDisclosureMemberhci:FourPointTwoFivePercentageConvertibleSeniorNotesMember2021-12-310001400810us-gaap:ParentMember2022-01-012022-06-300001400810us-gaap:RealEstateInvestmentMember2021-01-012021-06-300001400810us-gaap:ParentMember2021-04-012021-06-300001400810us-gaap:OperatingSegmentsMemberhci:TypTapInsuranceCompanyMember2021-12-310001400810hci:ShareRepurchasePlanMember2022-04-012022-06-300001400810us-gaap:SalesRevenueNetMemberhci:SegmentConcentrationRiskMemberhci:TypTapInsuranceCompanyMember2022-04-012022-06-300001400810us-gaap:SubsequentEventMember2022-08-192022-08-190001400810hci:WeatherEventsMember2022-01-012022-06-300001400810hci:FiftyFiveReinsurersMember2021-12-310001400810srt:MaximumMember2022-01-012022-06-300001400810hci:MatureRealEstatePrivateEquityFundsAndPortfolioGloballyMember2021-01-012021-12-310001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:NortheastRegionMember2021-12-310001400810us-gaap:LimitedPartnerMember2021-12-310001400810hci:ReinsuranceMember2022-04-012022-06-300001400810us-gaap:FairValueInputsLevel3Memberhci:ThreePointNineZeroPercentagePromissoryNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810us-gaap:RealEstateInvestmentMember2022-05-012022-05-310001400810hci:FinanceLeaseLiabilitiesMember2022-01-012022-06-300001400810hci:HomeownersChoicePropertyAndCasualtyInsuranceCompanyIncorporationMember2022-01-012022-06-300001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:NonCompeteAgreementMember2021-12-310001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810hci:PowerUtilityAndEnergyIndustriesAndInfrastructureMember2021-01-012021-12-310001400810us-gaap:EquitySecuritiesMember2022-01-012022-06-3000014008102021-01-012021-12-310001400810hci:GainLossIncomeFromUnconsolidatedJointVentureMember2021-01-012021-06-300001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-06-300001400810us-gaap:WarrantMember2021-01-012021-06-300001400810us-gaap:OperatingSegmentsMemberus-gaap:CorporateAndOtherMember2021-12-310001400810us-gaap:EquitySecuritiesMember2021-01-012021-06-300001400810us-gaap:OtherInvestmentsMember2022-01-012022-06-300001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FixedMaturitiesMember2022-06-300001400810us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810us-gaap:RetainedEarningsMember2021-01-012021-06-300001400810us-gaap:LimitedPartnerMember2021-04-012021-06-300001400810us-gaap:OperatingSegmentsMemberus-gaap:CorporateAndOtherMember2021-01-012021-06-300001400810us-gaap:ParentMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-01-012021-06-300001400810us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810hci:GainLossIncomeFromUnconsolidatedJointVentureMember2022-01-012022-06-300001400810hci:LimitedPartnershipInvestmentMember2022-01-012022-06-300001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001400810us-gaap:OperatingSegmentsMemberhci:RealEstateOperationsMember2022-06-300001400810us-gaap:ReinsuranceRecoverableMemberhci:ReinsuranceMemberus-gaap:ReinsurerConcentrationRiskMember2022-01-012022-06-300001400810us-gaap:RetainedEarningsMember2021-06-300001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:SoutheastRegionMember2022-01-012022-06-300001400810us-gaap:OperatingSegmentsMemberhci:HCPCIInsuranceOperationsMember2022-04-012022-06-300001400810hci:MatureRealEstatePrivateEquityFundsAndPortfolioGloballyMember2022-01-012022-06-300001400810us-gaap:OperatingSegmentsMemberus-gaap:CorporateAndOtherMember2021-04-012021-06-300001400810us-gaap:FairValueInputsLevel2Memberus-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001400810us-gaap:SalesRevenueNetMemberhci:SegmentConcentrationRiskMemberhci:HCPCIInsuranceOperationsMember2021-04-012021-06-300001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:NortheastRegionMember2022-06-300001400810us-gaap:OperatingExpenseMemberhci:FMKTMember2022-04-012022-06-300001400810us-gaap:NoncontrollingInterestMember2021-06-300001400810us-gaap:RestrictedStockMember2022-03-310001400810us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001400810us-gaap:OperatingSegmentsMemberhci:RealEstateOperationsMember2022-01-012022-06-300001400810hci:MatureRealEstatePrivateEquityFundsAndPortfolioGloballyMember2022-06-300001400810us-gaap:SalesRevenueNetMemberhci:SegmentConcentrationRiskMemberhci:TypTapInsuranceCompanyMember2021-04-012021-06-300001400810us-gaap:RestrictedStockMember2021-04-012021-06-300001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FixedMaturitiesMember2021-12-310001400810hci:PolicyRenewalRightsMemberhci:UnitedInsuranceHoldingsCorporationMember2021-12-310001400810hci:CreditAndEquityInvestmentsPrimarilyInPrivateEquityOwnedCompaniesMember2021-12-310001400810us-gaap:IntersegmentEliminationMember2021-04-012021-06-300001400810hci:UnitedInsuranceHoldingsCorporationMember2022-04-012022-06-300001400810us-gaap:LimitedPartnerMember2021-01-012021-06-300001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMemberhci:ConvertibleDebtInstrumentConversionPeriodFiveMember2022-06-300001400810hci:BoatDocksWetSlipsMembersrt:MaximumMember2022-06-300001400810hci:OfficeSpaceMember2022-01-012022-06-300001400810us-gaap:FairValueInputsLevel1Memberus-gaap:RedeemablePreferredStockMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001400810us-gaap:RevolvingCreditFacilityMember2022-06-300001400810hci:UnitedInsuranceHoldingsCorporationMember2022-01-012022-06-300001400810us-gaap:OtherLiabilitiesMember2022-06-300001400810us-gaap:RevolvingCreditFacilityMember2022-01-012022-06-300001400810hci:ReinsuranceMember2021-01-012021-06-300001400810us-gaap:FairValueInputsLevel1Memberus-gaap:RedeemablePreferredStockMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300001400810hci:FMKTMember2021-01-012021-06-300001400810hci:FourPointFiveFivePercentagePromissoryNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810hci:FourPointFiveFivePercentagePromissoryNoteMember2022-06-300001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMemberhci:ShareRepurchaseAgreementMember2022-01-012022-06-300001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:EightyFivePercentQuotaShareReinsuranceMember2022-01-012022-06-300001400810us-gaap:CommonStockMember2022-03-3100014008102021-01-012021-03-310001400810hci:ReinsuranceMember2021-12-310001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMember2022-01-012022-06-300001400810hci:SegmentConcentrationRiskMemberhci:TypTapInsuranceCompanyMemberus-gaap:AssetsTotalMember2021-01-012021-12-310001400810hci:CreditAndEquityInvestmentsPrimarilyInPrivateEquityOwnedCompaniesMember2022-06-300001400810us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FixedMaturitiesMember2021-12-310001400810us-gaap:FixedMaturitiesMemberus-gaap:USTreasuryAndGovernmentMember2021-12-310001400810us-gaap:ParentMember2021-06-300001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001400810hci:BoatDocksWetSlipsMember2022-01-012022-06-300001400810us-gaap:SubsequentEventMember2022-07-010001400810us-gaap:RealEstateInvestmentMember2021-04-012021-06-300001400810us-gaap:NoncontrollingInterestMember2021-01-012021-06-300001400810hci:FortyFiveReinsurersMember2022-06-300001400810us-gaap:OperatingSegmentsMemberhci:TypTapInsuranceCompanyMember2022-04-012022-06-300001400810us-gaap:CashAndCashEquivalentsMember2022-04-012022-06-3000014008102022-06-300001400810us-gaap:EmployeeStockOptionMember2021-04-012021-06-300001400810hci:PrivateUSLowerMiddleMarketCompaniesMember2022-01-012022-06-300001400810us-gaap:AdditionalPaidInCapitalMember2021-12-310001400810hci:BankLoansPublicAndPrivateCorporateBondsAssetBackedSecuritiesEquityAndDebtRestructuringMember2022-06-300001400810us-gaap:FixedMaturitiesMemberhci:ExchangeTradedDebtMember2022-06-300001400810us-gaap:CarryingReportedAmountFairValueDisclosureMemberhci:ThreePointNineZeroPercentagePromissoryNotesMember2021-12-310001400810hci:ThreepointsevenfivepercentagecallablepromissorynotememberMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300001400810hci:AnchorTenantRelationshipMember2022-01-012022-06-300001400810hci:SeniorAndJuniorDebtOfPrivateEquityBackedCompaniesMember2022-01-012022-06-300001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:SoutheastRegionMember2022-06-300001400810us-gaap:RedeemablePreferredStockMemberus-gaap:FixedMaturitiesMember2021-12-310001400810us-gaap:FairValueInputsLevel2Memberus-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810hci:ReinsuranceMember2021-04-012021-06-300001400810us-gaap:RealEstateInvestmentMember2022-01-012022-06-300001400810hci:BankLoansPublicAndPrivateCorporateBondsAssetBackedSecuritiesEquityAndDebtRestructuringMember2021-12-310001400810hci:UnitedInsuranceHoldingsCorporationMember2021-12-310001400810hci:UnitedInsuranceHoldingsCorporationMember2022-06-3000014008102022-03-310001400810us-gaap:IntersegmentEliminationMember2021-01-012021-06-3000014008102021-03-310001400810us-gaap:OperatingExpenseMemberhci:FMKTMember2021-01-012021-06-300001400810hci:RenewalRightsAndNonCompeteAgreementMemberhci:UnitedInsuranceHoldingsCorporationMember2022-06-300001400810hci:FourPointFiveFivePercentagePromissoryNotesMember2022-06-300001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001400810hci:WeatherEventsMember2022-04-012022-06-300001400810us-gaap:ParentMember2020-12-310001400810us-gaap:DebtInstrumentRedemptionPeriodOneMemberhci:FourPointSevenFivePercentageConvertibleSeniorNotesMember2022-01-012022-06-300001400810us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMemberhci:FMKTMember2022-04-012022-06-3000014008102021-10-012021-10-3100014008102020-01-012020-12-310001400810us-gaap:RevolvingCreditFacilityMember2022-05-312022-05-310001400810us-gaap:CommonStockMember2022-04-012022-06-300001400810hci:FourPointFiveFivePercentagePromissoryNotesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810hci:PolicyRenewalRightsMemberhci:UnitedInsuranceHoldingsCorporationMember2022-06-300001400810us-gaap:EmployeeStockOptionMember2021-01-012021-06-300001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMemberhci:ShareRepurchaseAgreementMember2022-06-300001400810hci:ThreePointNineZeroPercentagePromissoryNotesMember2022-06-300001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-3000014008102020-12-310001400810us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001400810srt:ConsolidationEliminationsMember2022-06-300001400810hci:FourPointFiveFivePercentagePromissoryNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-01-012021-06-300001400810us-gaap:CommonStockMember2022-01-012022-06-300001400810hci:ThreepointsevenfivepercentagecallablepromissorynotememberMemberus-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001400810us-gaap:OperatingSegmentsMemberhci:TypTapInsuranceCompanyMember2022-06-300001400810us-gaap:OperatingSegmentsMemberus-gaap:CorporateAndOtherMember2022-01-012022-06-300001400810us-gaap:OperatingSegmentsMemberus-gaap:CorporateAndOtherMember2022-04-012022-06-300001400810us-gaap:CommonStockMember2021-01-012021-06-300001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001400810us-gaap:OperatingExpenseMemberhci:FMKTMember2021-04-012021-06-300001400810hci:BankLoansPublicAndPrivateCorporateBondsAssetBackedSecuritiesEquityAndDebtRestructuringMember2021-01-012021-12-310001400810us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001400810hci:ClaimsHandlingServicesMember2021-01-012021-06-300001400810us-gaap:SalesRevenueNetMemberhci:SegmentConcentrationRiskMemberhci:HCPCIInsuranceOperationsMember2022-04-012022-06-300001400810hci:ShortDurationInsuranceContractsAccidentYearTwoThousandTwentyOneAndPriorMember2022-04-012022-06-300001400810srt:MaximumMemberhci:OfficeSpaceMember2022-06-300001400810hci:FMKTMember2022-06-300001400810us-gaap:CashAndCashEquivalentsMember2022-01-012022-06-300001400810us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001400810us-gaap:SubsequentEventMember2022-07-012022-07-010001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-06-300001400810us-gaap:ParentMember2021-01-012021-06-300001400810hci:ReinsuranceMember2022-01-012022-06-300001400810us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-3000014008102022-01-012022-06-300001400810hci:FourPointSevenFivePercentageConvertibleSeniorNotesMemberhci:ConvertibleDebtInstrumentConversionPeriodFiveMember2022-01-012022-06-300001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:NonCompeteAgreementMember2022-06-300001400810us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001400810srt:ConsolidationEliminationsMember2021-12-310001400810us-gaap:RestrictedStockMember2020-12-310001400810us-gaap:FixedMaturitiesMember2021-01-012021-06-300001400810hci:UnitedInsuranceHoldingsCorporationMemberhci:SoutheastRegionMember2021-12-310001400810us-gaap:RestrictedStockMember2021-06-300001400810us-gaap:RetainedEarningsMember2022-06-30utr:acrehci:Segmentxbrli:purehci:Securityhci:Reinsurerxbrli:sharesiso4217:USDxbrli:sharesiso4217:USDhci:TradingDay

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q


☑		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number

001-34126

HCI Group, Inc.

(Exact name of registrant as specified in its charter)


Florida		20-5961396
(State of Incorporation)		(IRS Employer Identification No.)

3802 Coconut Palm Drive
Tampa, FL 33619
(Address, including zip code, of principal executive offices)

(813) 849-9500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Shares, no par value	HCI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐	Accelerated filer ☑	Non-accelerated filer ☐	Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The aggregate number of shares of the registrant’s common stock, no par value, outstanding on August 1, 2022 was 9,044,534.

HCI GROUP, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


		Page

	PART I – FINANCIAL INFORMATION

Item 1	Financial Statements
	Consolidated Balance Sheets:
	June 30, 2022 (unaudited) and December 31, 2021	1-2
	Consolidated Statements of Income:
	Three and six months ended June 30, 2022 and 2021 (unaudited)	3
	Consolidated Statements of Comprehensive Income:
	Three and six months ended June 30, 2022 and 2021 (unaudited)	4
	Consolidated Statements of Equity:
	Three and six months ended June 30, 2022 and 2021 (unaudited)	5-8
	Consolidated Statements of Cash Flows:
	Six months ended June 30, 2022 and 2021 (unaudited)	9-11
	Notes to Consolidated Financial Statements (unaudited)	12-47

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	48-61

Item 3	Quantitative and Qualitative Disclosures About Market Risk	62-63

Item 4	Controls and Procedures	64


	PART II – OTHER INFORMATION

Item 1	Legal Proceedings	65

Item 1A	Risk Factors	65

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	65-66

Item 3	Defaults Upon Senior Securities	66

Item 4	Mine Safety Disclosures	66

Item 5	Other Information	67

Item 6	Exhibits	68-75

Signatures		76

Certifications

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollar amounts in thousands)


	June 30,		December 31,
	2022		2021
	(Unaudited)
Assets
Fixed-maturity securities, available for sale, at fair value (amortized cost: $403,844 and $41,953, respectively and allowance for credit losses: $0 and $0, respectively)	$	398,571	$	42,583
Equity securities, at fair value (cost: $38,065 and $46,276, respectively)		35,719		51,740
Limited partnership investments		26,695		28,133
Investment in unconsolidated joint venture, at equity		858		363
Real estate investments		72,723		73,896
Total investments		534,566		196,715
Cash and cash equivalents		360,488		628,943
Restricted cash		2,600		2,400
Accrued interest and dividends receivable		1,421		353
Income taxes receivable		1,789		4,084
Premiums receivable, net (allowance: $3,935 and $1,750, respectively)		52,302		68,157
Prepaid reinsurance premiums		81,023		26,355
Reinsurance recoverable, net of allowance for credit losses:
Paid losses and loss adjustment expenses (allowance: $0 and $0, respectively)		11,134		11,985
Unpaid losses and loss adjustment expenses (allowance: $62 and $90, respectively)		42,348		64,665
Deferred policy acquisition costs		48,305		57,695
Property and equipment, net		17,244		14,232
Right-of-use assets - operating leases		1,861		2,204
Intangible assets, net		14,358		10,636
Funds withheld for assumed business		82,468		73,716
Other assets		28,796		14,717
Total assets	$	1,280,703	$	1,176,857

(continued)

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets – (Continued)

(Dollar amounts in thousands)


	June 30,			December 31,
	2022			2021
	(Unaudited)
Liabilities and Equity
Losses and loss adjustment expenses	$	238,824		$	237,165
Unearned premiums		370,140			366,744
Advance premiums		25,428			13,771
Reinsurance payable on paid losses and loss adjustment expenses		4,302			4,017
Ceded reinsurance premiums payable		24,641			19,318
Accrued expenses		17,093			15,453
Deferred income taxes, net		6,168			11,739
Revolving credit facility		—			15,000
Long-term debt		211,648			45,504
Lease liabilities - operating leases		1,824			2,203
Other liabilities		48,737			31,485
Total liabilities		948,805			762,399
Commitments and contingencies (Note 20)
Redeemable noncontrolling interest (Note 17)		91,963			89,955
Equity:
Common stock (no par value, 40,000,000 shares authorized, 9,047,972 and 10,131,399 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively)		—			—
Additional paid-in capital		12,887			76,077
Retained income		229,621			246,790
Accumulated other comprehensive (loss) income, net of taxes		(3,760	)		498
Total stockholders’ equity		238,748			323,365
Noncontrolling interests		1,187			1,138
Total equity		239,935			324,503
Total liabilities, redeemable noncontrolling interest and equity	$	1,280,703		$	1,176,857

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

(Dollar amounts in thousands, except per share amounts)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Revenue
Gross premiums earned	$	181,124		$	139,440		$	360,049		$	270,382
Premiums ceded		(56,205	)		(46,436	)		(109,367	)		(89,535	)
Net premiums earned		124,919			93,004			250,682			180,847
Net investment income		3,684			2,635			6,552			7,229
Net realized investment (losses) gains		(6	)		2,607			(320	)		3,720
Net unrealized investment (losses) gains		(4,234	)		1,489			(7,810	)		1,220
Policy fee income		1,052			992			2,109			1,962
Other		511			777			1,753			1,400
Total revenue		125,926			101,504			252,966			196,378
Expenses
Losses and loss adjustment expenses		86,830			55,917			159,534			101,668
Policy acquisition and other underwriting expenses		26,863			23,169			56,271			46,234
General and administrative personnel expenses		15,301			10,546			29,335			20,196
Interest expense		1,515			2,000			2,116			4,079
Other operating expenses		6,977			4,775			13,269			9,002
Total expenses		137,486			96,407			260,525			181,179
(Loss) income before income taxes		(11,560	)		5,097			(7,559	)		15,199
Income tax (benefit) expense		(3,018	)		1,267			(1,808	)		4,524
Net (loss) income		(8,542	)		3,830			(5,751	)		10,675
Net income attributable to redeemable noncontrolling interest (Note 17)		(2,268	)		(2,179	)		(4,516	)		(2,973	)
Net loss attributable to noncontrolling interests		829			266			1,189			363
Net (loss) income after noncontrolling interests	$	(9,981	)	$	1,917		$	(9,078	)	$	8,065
Basic (loss) earnings per share	$	(1.04	)	$	0.25		$	(0.92	)	$	1.02
Diluted (loss) earnings per share	$	(1.04	)	$	0.24		$	(0.92	)	$	0.98

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

(Amounts in thousands)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Net (loss) income	$	(8,542	)	$	3,830		$	(5,751	)	$	10,675
Other comprehensive loss:
Change in unrealized loss on investments:
Net unrealized (losses) gains arising during the period		(2,174	)		99			(6,325	)		(83	)
Call and repayment gains charged to investment income		—			—			—			(2	)
Reclassification adjustment for net realized (gains) losses		(8	)		(576	)		421			(577	)
Net change in unrealized losses		(2,182	)		(477	)		(5,904	)		(662	)
Deferred income taxes on above change		553			117			1,491			162
Total other comprehensive loss, net of income taxes		(1,629	)		(360	)		(4,413	)		(500	)
Comprehensive (loss) income		(10,171	)		3,470			(10,164	)		10,175
Comprehensive loss attributable to noncontrolling interests		883			275			1,344			373
Comprehensive (loss) income after noncontrolling interests	$	(9,288	)	$	3,745		$	(8,820	)	$	10,548

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Equity

For the Three Months Ended June 30, 2022

(Unaudited)

(Dollar amounts in thousands, except per share amount)


	Common Stock					Additional Paid-In			Retained			Accumulated Other Comprehensive Loss,			Total Stockholders’			Noncontrolling			Total
	Shares			Amount		Capital			Income			Net of Tax			Equity			Interests			Equity
Balance at March 31, 2022		10,125,927		$	—	$	79,131		$	243,647		$	(2,185	)	$	320,593		$	1,435		$	322,028
Net loss		—			—		—			(7,885	)		—			(7,885	)		(657	)		(8,542	)
Net income attributable to redeemable noncontrolling interest		—			—		—			(2,096	)		—			(2,096	)		(172	)		(2,268	)
Total other comprehensive loss, net of income taxes		—			—		—			—			(1,575	)		(1,575	)		(54	)		(1,629	)
Issuance of restricted stock		3,000			—		—			—			—			—			—			—
Forfeiture of restricted stock		(700	)		—		—			—			—			—			—			—
Repurchase and retirement of common stock		(1,050,790	)		—		(67,705	)		—			—			(67,705	)		—			(67,705	)
Repurchase and retirement of common stock under share repurchase plan		(29,465	)		—		(1,884	)		—			—			(1,884	)		—			(1,884	)
Dilution from subsidiary stock-based compensation		—			—		—			—			—			—			635			635
Common stock dividends ($0.40 per share)		—			—		—			(4,045	)		—			(4,045	)		—			(4,045	)
Stock-based compensation		—			—		3,345			—			—			3,345			—			3,345
Balance at June 30, 2022		9,047,972		$	—	$	12,887		$	229,621		$	(3,760	)	$	238,748		$	1,187		$	239,935

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Equity – (Continued)

For the Three Months Ended June 30, 2021

(Unaudited)

(Dollar amounts in thousands, except per share amount)


	Common Stock					Additional Paid-In			Retained			Accumulated Other Comprehensive Income,			Total Stockholders’			Noncontrolling			Total
	Shares			Amount		Capital			Income			Net of Tax			Equity			Interests			Equity
Balance at March 31, 2021		8,289,682		$	—	$	—		$	216,086		$	1,405		$	217,491		$	117		$	217,608
Net income (loss)		—			—		—			4,096			—			4,096			(266	)		3,830
Net income attributable to redeemable noncontrolling interest		—			—		—			(2,179	)		—			(2,179	)		—			(2,179	)
Total other comprehensive loss, net of income taxes		—			—		—			—			(351	)		(351	)		(9	)		(360	)
Issuance of restricted stock		3,000			—		—			—			—			—			—			—
Forfeiture of restricted stock		(9,060	)		—		—			—			—			—			—			—
Cancellation of restricted stock		(1,160	)		—		—			—			—			—			—			—
Repurchase and retirement of common stock		(16,822	)		—		(1,288	)		—			—			(1,288	)		—			(1,288	)
Dilution from subsidiary stock-based compensation		—			—		—			—			—			—			1,541			1,541
Common stock dividends ($0.40 per share)		—			—		—			(3,659	)		—			(3,659	)		—			(3,659	)
Stock-based compensation		—			—		2,556			—			—			2,556			—			2,556
Additional paid-in capital shortfall adjustment allocated to retained income		—			—		(1,268	)		1,268			—			—			—			—
Balance at June 30, 2021		8,265,640		$	—	$	—		$	215,612		$	1,054		$	216,666		$	1,383		$	218,049

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Equity – (Continued)

For the Six Months Ended June 30, 2022

(Unaudited)

(Dollar amounts in thousands, except per share amount)


	Common Stock					Additional Paid-In			Retained			Accumulated Other Comprehensive Income (Loss),			Total Stockholders’			Noncontrolling			Total
	Shares			Amount		Capital			Income			Net of Tax			Equity			Interests			Equity
Balance at December 31, 2021		10,131,399		$	—	$	76,077		$	246,790		$	498		$	323,365		$	1,138		$	324,503
Net loss		—			—		—			(4,907	)		—			(4,907	)		(844	)		(5,751	)
Net income attributable to redeemable noncontrolling interest		—			—		—			(4,171	)		—			(4,171	)		(345	)		(4,516	)
Total other comprehensive loss, net of income taxes		—			—		—			—			(4,258	)		(4,258	)		(155	)		(4,413	)
Issuance of restricted stock		7,000			—		—			—			—			—			—			—
Forfeiture of restricted stock		(3,965	)		—		—			—			—			—			—			—
Repurchase and retirement of common stock		(1,056,997	)		—		(68,103	)		—			—			(68,103	)		—			(68,103	)
Repurchase and retirement of common stock under share repurchase plan		(29,465	)		—		(1,884	)		—			—			(1,884	)		—			(1,884	)
Dilution from subsidiary stock-based compensation		—			—		—			—			—			—			1,393			1,393
Common stock dividends ($0.80 per share)		—			—		—			(8,091	)		—			(8,091	)		—			(8,091	)
Stock-based compensation		—			—		6,797			—			—			6,797			—			6,797
Balance at June 30, 2022		9,047,972		$	—	$	12,887		$	229,621		$	(3,760	)	$	238,748		$	1,187		$	239,935

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Equity – (Continued)

For the Six Months Ended June 30, 2021

(Unaudited)

(Dollar amounts in thousands, except per share amount)


	Common Stock					Additional Paid-In			Retained			Accumulated Other Comprehensive Income,			Total Stockholders’			Noncontrolling			Total
	Shares			Amount		Capital			Income			Net of Tax			Equity			Interests			Equity
Balance at December 31, 2020		7,785,617		$	—	$	—		$	199,592		$	1,544		$	201,136		$	—		$	201,136
Net income (loss)		—			—		—			11,038			—			11,038			(363	)		10,675
Net income attributable to redeemable noncontrolling interest		—			—		—			(2,973	)		—			(2,973	)		—			(2,973	)
Cumulative effect of change in accounting principle		—			—		—			(3,018	)		—			(3,018	)		—			(3,018	)
Total other comprehensive loss, net of income taxes		—			—		—			—			(490	)		(490	)		(10	)		(500	)
Issuance of restricted stock		551,086			—		—			—			—			—			—			—
Forfeiture of restricted stock		(11,110	)		—		—			—			—			—			—			—
Cancellation of restricted stock		(142,760	)		—		—			—			—			—			—			—
Repurchase and retirement of common stock		(17,193	)		—		(1,308	)		—			—			(1,308	)		—			(1,308	)
Issuance of common stock		100,000			—		5,410			—			—			5,410			—			5,410
Dilution from subsidiary stock-based compensation		—			—		—			—			—			—			1,756			1,756
Issuance of warrants, net of issuance costs (Note 17)		—			—		8,640			—			—			8,640			—			8,640
Common stock dividends ($0.80 per share)		—			—		—			(6,452	)		—			(6,452	)		—			(6,452	)
Stock-based compensation		—			—		4,683			—			—			4,683			—			4,683
Additional paid-in capital shortfall adjustment allocated to retained income		—			—		(17,425	)		17,425			—			—			—			—
Balance at June 30, 2021		8,265,640		$	—	$	—		$	215,612		$	1,054		$	216,666		$	1,383		$	218,049

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)


	Six Months Ended
	June 30,
	2022			2021
Cash flows from operating activities:
Net (loss) income after noncontrolling interests	$	(9,078	)	$	8,065
Net income attributable to noncontrolling interests		3,327			2,610
Net (loss) income		(5,751	)		10,675
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense		8,579			6,497
Net (accretion of discount) amortization of premiums on investments in fixed-maturity securities		(189	)		144
Depreciation and amortization		3,495			2,928
Deferred income tax benefit		(4,080	)		(3,732	)
Net realized investment losses (gains)		320			(3,720	)
Net unrealized investment losses (gains)		7,810			(1,220	)
Credit loss expense - reinsurance recoverable		(28	)		(28	)
Net (income) loss from unconsolidated joint venture		(495	)		50
Net income from limited partnership interests		(1,799	)		(2,359	)
Distributions received from limited partnership interests		2,046			1,792
Foreign currency remeasurement loss		50			75
Other non-cash items		(405	)		21
Changes in operating assets and liabilities:
Accrued interest and dividends receivable		(1,068	)		258
Income taxes		2,295			7,106
Premiums receivable, net		15,855			(739	)
Prepaid reinsurance premiums		(54,668	)		35,614
Reinsurance recoverable		23,196			23,181
Deferred policy acquisition costs		9,390			(569	)
Funds withheld for assumed business		(8,752	)		(43,395	)
Other assets		(12,707	)		9,773
Losses and loss adjustment expenses		1,659			(8,384	)
Unearned premiums		3,396			40,443
Advance premiums		11,657			9,855
Reinsurance payable on paid losses and loss adjustment expenses		285			7,398
Ceded reinsurance premiums payable		5,323			9,206
Accrued expenses and other liabilities		16,215			(5,223	)
Net cash provided by operating activities		21,629			95,647

(continued)

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows – (Continued)

(Unaudited)

(Amounts in thousands)


	Six Months Ended
	June 30,
	2022			2021
Cash flows from investing activities:
Investments in limited partnership interests		(1,144	)		(700	)
Distributions received from limited partnership interests		2,335			2,653
Purchase of property and equipment		(4,229	)		(1,275	)
Purchase of real estate investments		(111	)		(331	)
Purchase of intangible assets		(3,800	)		—
Purchase of fixed-maturity securities		(377,638	)		(6,338	)
Purchase of equity securities		(16,383	)		(45,040	)
Purchase of short-term and other investments		—			(1,058	)
Proceeds from sales of real estate investments		667			—
Proceeds from sales of fixed-maturity securities		11,494			14,680
Proceeds from calls, repayments and maturities of fixed-maturity securities		4,020			16,677
Proceeds from sales of equity securities		24,427			56,511
Proceeds from sales, redemptions and maturities of short-term and other investments		267			2,026
Net cash (used in) provided by investing activities		(360,095	)		37,805
Cash flows from financing activities:
Cash dividends paid		(8,168	)		(6,605	)
Cash dividends received under share repurchase forward contract		77			153
Net repayment under revolving credit facility		(15,000	)		(23,750	)
Proceeds from issuance of redeemable noncontrolling interest and warrants		—			100,000
Issuance costs - redeemable noncontrolling interest		—			(6,262	)
Cash dividends paid to redeemable noncontrolling interest		(2,508	)		—
Proceeds from issuance of long-term debt		172,500			—
Repayment of long-term debt		(501	)		(480	)
Repurchases of common stock		(68,103	)		(1,308	)
Repurchases of common stock under share repurchase plan		(1,884	)		—
Purchase of noncontrolling interests		(389	)		(58	)
Debt issuance costs		(5,757	)		(152	)
Net cash provided by financing activities		70,267			61,538
Effect of exchange rate changes on cash		(56	)		(45	)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(268,255	)		194,945
Cash, cash equivalents, and restricted cash at beginning of period		631,343			433,741
Cash, cash equivalents, and restricted cash at end of period	$	363,088		$	628,686

(continued)

HCI GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows – (Continued)

(Unaudited)

(Amounts in thousands)


	Six Months Ended
	June 30,
	2022			2021
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	55		$	1,150
Cash paid for interest	$	943		$	3,492
Non-cash investing and financing activities:
Unrealized loss on investments in available-for-sale securities, net of tax	$	(4,413	)	$	(500	)
Receivable from sales of equity securities	$	1,051		$	3,455
Payable on purchases of equity securities	$	1,050		$	32
Warrants issued in Centerbridge transaction	$	—		$	9,217
Acquisition of intangibles:
Common stock issued	$	—		$	5,410
Contingent consideration payable	$	1,069		$	2,419

See accompanying Notes to Consolidated Financial Statements (unaudited).

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 1 -- Nature of Operations

HCI Group, Inc., together with its subsidiaries (“HCI” or the “Company”), is primarily engaged in the property and casualty insurance business through two Florida domiciled insurance companies, Homeowners Choice Property & Casualty Insurance Company, Inc. (“HCPCI”) and TypTap Insurance Company (“TypTap”). Both HCPCI and TypTap are authorized to underwrite various homeowners’ property and casualty insurance products and allied lines business in the state of Florida and in other states. The operations of both insurance subsidiaries are supported by HCI Group, Inc. and certain HCI subsidiaries. The Company emphasizes the use of internally developed technologies to collect and analyze claims and other supplemental data to generate savings and efficiency for the operations of the insurance subsidiaries. In addition, Greenleaf Capital, LLC, the Company’s real estate subsidiary, is primarily engaged in the business of owning and leasing real estate and operating marina facilities.

Assumed Business

Northeast Region

In 2021, the Company began providing quota share reinsurance on all in-force, new and renewal policies issued by United Property & Casualty Insurance Company, an insurance subsidiary of United Insurance Holdings Corporation (“United”), in the states of Connecticut, New Jersey, Massachusetts, and Rhode Island (collectively “Northeast Region”). Through its insurance subsidiaries, the Company began renewing and/or replacing United policies in two states in December 2021, a third state in January 2022, and the fourth state in April 2022.

Southeast Region

In February 2022, HCPCI entered into another reinsurance agreement with United where HCPCI provides 85% quota share reinsurance on all of United’s personal lines insurance business in the states of Georgia, North Carolina, and South Carolina (collectively “Southeast Region”) from December 31, 2021 through May 31, 2022. Under this agreement, HCPCI paid United a catastrophe allowance of 9% of premium and a provisional ceding commission of 25% of premium. That percentage could increase up to 32% depending on the direct loss ratio results from the reinsured business.

The Company also entered into a renewal rights agreement with United in connection with the Southeast Region assumed business. Under the renewal rights agreement, the Company has the right to renew and/or replace United’s insurance policies at the end of their respective policy periods. The ability to replace policies is subject to regulatory approvals in the three states. The policy replacement date was set for June 1, 2022 or such other date as mutually agreed by both parties. In connection with the transaction, United agreed to not compete with the Company for the issuance of personal lines homeowners business in these three states until July 1, 2025. As part of the transaction, United will receive a renewal rights ceding commission of 6%, with a portion of the ceding commission paid up-front, and the aggregate ceding commission amount will not exceed $6,000. See Note 7 -- “Intangible Assets, Net” for additional information.

The Company began renewing United’s policies in South Carolina on June 1, 2022. The policy replacement date for Georgia and North Carolina policies has yet to be determined and the Company, through TypTap, entered into a new quota share reinsurance agreement in June 2022 to provide 100% reinsurance on all of United’s in-force, new and renewal policies in the Southeast Region from June 1, 2022 through May 31, 2023. In exchange, TypTap pays United a ceding commission of 16% of premium.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 2 -- Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements for HCI Group, Inc. and its majority-owned and controlled subsidiaries (collectively, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s financial position as of June 30, 2022 and the results of operations and cash flows for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ending December 31, 2022. The accompanying unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021 included in the Company’s Form 10-K, which was filed with the SEC on March 10, 2022.

In preparing the interim unaudited consolidated financial statements, management was required to make certain judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the financial reporting date and throughout the periods being reported upon. Certain of the estimates result from judgments that can be subjective and complex and consequently actual results may differ from these estimates.

Material estimates that are particularly susceptible to significant change in the near term are related to the Company’s losses and loss adjustment expenses, which include amounts estimated for claims incurred but not yet reported. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make these estimates. In addition, accounting policies specific to reinsurance with retrospective provisions, reinsurance recoverable, deferred income taxes, limited partnership investments, intangible assets acquired from United, and stock-based compensation expense involve significant judgments and estimates material to the Company’s consolidated financial statements.

All significant intercompany balances and transactions have been eliminated.

Long-Term Debt

Long-term debt includes debt instruments and finance lease obligations. A debt instrument is generally classified as a liability and carried at amortized cost, net of any issuance costs. Debt issuance costs are capitalized and amortized to interest expense over the expected life of the debt instrument using the effective interest method. At issuance, a debt instrument with embedded features such as conversion and redemption options is evaluated to determine whether bifurcation and derivative accounting is applicable. Any embedded feature other than the conversion option is evaluated at issuance to determine if it is probable that such embedded feature will be exercised. If the Company concludes that the exercisability of that embedded feature is not probable, the embedded feature is considered to be non-substantive and would not impact the initial measurement and expected life of the debt instrument.

Revenue from Claims Processing Services

Revenue related to claims processing services is included in other revenue in the consolidated statements of income. For the three and six months ended June 30, 2022, revenues from claims processing services were

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

$372 and $1,379, respectively. Revenues from claims processing services were $207 for the three and six months ended June 30, 2021. At June 30, 2022 and December 31, 2021, other assets included $321 and $314, respectively, of amounts receivable attributable to this service.

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation. Ceded reinsurance premiums payable were reclassified out of other liabilities and funds withheld for assumed business were reclassified out of other assets for the six months ended June 30, 2021 within the consolidated statement of cash flows to conform with the current year presentation.

Note 3 -- Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company’s consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.


	June 30,		December 31,
	2022		2021
Cash and cash equivalents	$	360,488	$	628,943
Restricted cash		2,600		2,400
Total	$	363,088	$	631,343

Restricted cash represents funds in the Company’s sole ownership held by certain states in which the Company’s insurance subsidiaries conduct business to meet regulatory requirements and not available for immediate business use. Funds withheld in an account for which the Company is a co-owner but not the named beneficiary are not considered restricted cash.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 4 -- Investments

a) Available-for-Sale Fixed-Maturity Securities

The Company holds investments in fixed-maturity securities that are classified as available-for-sale. At June 30, 2022 and December 31, 2021, the cost or amortized cost, allowance for credit loss, gross unrealized gains and losses, and estimated fair value of the Company’s available-for-sale securities by security type were as follows:


	Cost or Amortized		Allowance for Credit		Gross Unrealized		Gross Unrealized			Estimated Fair
	Cost		Loss		Gain		Loss			Value
As of June 30, 2022
U.S. Treasury and U.S. government agencies	$	372,323	$	—	$	2	$	(4,762	)	$	367,563
Corporate bonds		28,953		—		27		(556	)		28,424
States, municipalities, and political subdivisions		1,761		—		8		(2	)		1,767
Exchange-traded debt		700		—		14		(1	)		713
Redeemable preferred stock		107		—		—		(3	)		104
Total	$	403,844	$	—	$	51	$	(5,324	)	$	398,571
As of December 31, 2021
U.S. Treasury and U.S. government agencies	$	17,046	$	—	$	64	$	(86	)	$	17,024
Corporate bonds		21,913		—		632		(53	)		22,492
States, municipalities, and political subdivisions		1,759		—		49		—			1,808
Exchange-traded debt		767		—		44		—			811
Redeemable preferred stock		468		—		—		(20	)		448
Total	$	41,953	$	—	$	789	$	(159	)	$	42,583

Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. The scheduled contractual maturities of fixed-maturity securities as of June 30, 2022 and December 31, 2021 are as follows:


	June 30, 2022				December 31, 2021
	Cost or		Estimated		Cost or		Estimated
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale
Due in one year or less	$	167,143	$	167,002	$	10,734	$	10,826
Due after one year through five years		232,353		227,637		19,222		19,820
Due after five years through ten years		3,854		3,427		11,503		11,403
Due after ten years		494		505		494		534
	$	403,844	$	398,571	$	41,953	$	42,583

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Sales of Available-for-Sale Fixed-Maturity Securities

Proceeds received, and the gross realized gains and losses from sales of available-for-sale fixed-maturity securities, for the three and six months ended June 30, 2022 and 2021 were as follows:


			Gross Realized		Gross Realized
	Proceeds		Gains		Losses
Three months ended June 30, 2022	$	2,436	$	11	$	(3	)
Three months ended June 30, 2021	$	14,644	$	576	$	—
Six months ended June 30, 2022	$	11,494	$	13	$	(434	)
Six months ended June 30, 2021	$	14,680	$	577	$	—

Gross Unrealized Losses for Available-for-Sale Fixed-Maturity Securities

Securities with gross unrealized loss positions at June 30, 2022 and December 31, 2021, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows:


	Less Than Twelve Months					Twelve Months or Longer					Total
	Gross			Estimated		Gross			Estimated		Gross			Estimated
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
As of June 30, 2022	Loss			Value		Loss			Value		Loss			Value
U.S. Treasury and U.S. government agencies	$	(4,664	)	$	348,459	$	(98	)	$	2,048	$	(4,762	)	$	350,507
Corporate bonds		(556	)		23,828		—			—		(556	)		23,828
States, municipalities, and political subdivisions		(2	)		387		—			—		(2	)		387
Exchange-traded debt		(1	)		23		—			—		(1	)		23
Redeemable preferred stock		(3	)		104		—			—		(3	)		104
Total available-for-sale securities	$	(5,226	)	$	372,801	$	(98	)	$	2,048	$	(5,324	)	$	374,849


	Less Than Twelve Months					Twelve Months or Longer					Total
	Gross			Estimated		Gross			Estimated		Gross			Estimated
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
As of December 31, 2021	Loss			Value		Loss			Value		Loss			Value
U.S. Treasury and U.S. government agencies	$	(73	)	$	9,809	$	(13	)	$	616	$	(86	)	$	10,425
Corporate bonds		(53	)		4,452		—			—		(53	)		4,452
Redeemable preferred stock		(20	)		442		—			—		(20	)		442
Total available-for-sale securities	$	(146	)	$	14,703	$	(13	)	$	616	$	(159	)	$	15,319

At June 30, 2022 and December 31, 2021, there were 68 and 23 securities, respectively, in an unrealized loss position.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Allowance for Credit Losses of Available-for-Sale Fixed-Maturity Securities

The Company regularly reviews its individual investment securities for credit impairment. The Company considers various factors in determining whether a credit loss exists for each individual security, including-

•

the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings;

•

the extent to which the market value of the security has been below its cost or amortized cost;

•

general market conditions and industry or sector specific factors and other qualitative factors;

•

nonpayment by the issuer of its contractually obligated interest and principal payments; and

•

the Company’s intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.

The table below summarizes the activity in the allowance for credit losses of available-for-sale securities for the three and six months ended June 30, 2022 and 2021:



	2022		2021
Balance at January 1	$	—	$	588
Reductions for securities sold		—		(9	)
Balance at March 31	$	—	$	579
Reductions for securities exchanged		—		(579	)
Balance at June 30	$	—	$	—

b) Equity Securities

The Company holds investments in equity securities measured at fair values which are readily determinable. At June 30, 2022 and December 31, 2021, the cost, gross unrealized gains and losses, and estimated fair value of the Company’s equity securities were as follows:


			Gross Unrealized		Gross Unrealized			Estimated Fair
	Cost		Gain		Loss			Value
June 30, 2022	$	38,065	$	2,073	$	(4,419	)	$	35,719
December 31, 2021	$	46,276	$	6,335	$	(871	)	$	51,740

The table below presents the portion of unrealized gains and losses in the Company’s consolidated statements of income related to equity securities still held.


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2022			2021		2022			2021
Net (losses) gains recognized	$	(4,323	)	$	3,069	$	(7,865	)	$	3,536
Exclude: Net realized (losses) gains recognized for securities sold		(89	)		1,580		(55	)		2,316
Net unrealized (losses) gains recognized	$	(4,234	)	$	1,489	$	(7,810	)	$	1,220

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Sales of Equity Securities

Proceeds received, and the gross realized gains and losses from sales of equity securities, for the three and six months ended June 30, 2022 and 2021 were as follows:


			Gross Realized		Gross Realized
	Proceeds		Gains		Losses
Three months ended June 30, 2022	$	6,058	$	433	$	(522	)
Three months ended June 30, 2021	$	22,133	$	1,983	$	(403	)
Six months ended June 30, 2022	$	24,427	$	1,853	$	(1,908	)
Six months ended June 30, 2021	$	56,511	$	3,125	$	(809	)

c) Limited Partnership Investments

The Company has interests in limited partnerships that are not registered or readily tradeable on a securities exchange. These partnerships are private equity funds managed by general partners who make decisions with regard to financial policies and operations. As such, the Company is not the primary beneficiary and does not consolidate these partnerships. The following table provides information related to the Company’s investments in limited partnerships:


	June 30, 2022						December 31, 2021
	Carrying		Unfunded				Carrying		Unfunded
Investment Strategy	Value		Balance		(%) (a)		Value		Balance		(%) (a)
Primarily in senior secured loans and, to a limited extent, in other debt and equity securities of private U.S. lower-middle-market companies. (b)(c)(e)	$	4,613	$	—		15.37	$	6,076	$	2,085		15.37
Value creation through active distressed debt investing primarily in bank loans, public and private corporate bonds, asset-backed securities, and equity securities received in connection with debt restructuring. (b)(d)(e)		3,347		—		1.67		3,423		—		1.69
High returns and long-term capital appreciation through investments in the power, utility and energy industries, and in the infrastructure sector. (b)(f)(g)		5,723		—		0.18		6,270		1,401		0.18
Value-oriented investments in less liquid and mispriced senior and junior debts of private equity-backed companies. (b)(h)(i)		3,940		—		0.56		4,437		—		0.57
Value-oriented investments in mature real estate private equity funds and portfolios globally. (b)(j)		6,417		3,881		1.34		5,977		4,537		1.36
Risk-adjusted returns on credit and equity investments, primarily in private equity-owned companies. (b)(k)		2,655		2,584		0.39		1,950		3,050		0.47
Total	$	26,695	$	6,465			$	28,133	$	11,073

(a)

Represents the Company’s percentage investment in the fund at each balance sheet date.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

(b)

Except under certain circumstances, withdrawals from the funds or any assignments are not permitted. Distributions, except income from late admission of a new limited partner, will be received when underlying investments of the funds are liquidated.

(c)

The term is expected to be the later of ten years or two years following the maturity of the fund’s outstanding leverage. Although the capital commitment period has expired, follow-on investments and pending commitments may require additional fundings.

(d)

The term has been extended for a second additional one-year period to June 30, 2023. Although the capital commitment period has ended, the general partner could still request an additional funding under certain circumstances.

(e)

At the fund manager’s discretion, the term of the fund may be extended for up to two additional one-year periods.

(f)

Expected to have a ten-year term. The capital commitment period has expired but the general partner may request additional funding for follow-on investment.

(g)

With the consent of a supermajority of partners, the term of the fund may be extended for up to three additional one-year periods.

(h)

Expected to have an eight-year term from the commencement date, which can be extended for up to two additional one-year periods with the consent of either the advisory committee or a majority of limited partners.

(i)

The capital commitment period has ended but an additional funding may be requested.

(j)

The term is expected to end November 27, 2027. The term may be extended for up to four additional one-year periods at the general partner’s discretion, and up to two additional one-year periods with the consent of the advisory committee.

(k)

Expected to have an eight-year term after the final admission date. The term may be extended for an additional one-year period at the general partner’s discretion, and up to two additional one-year periods with the consent of either the advisory committee or a majority of limited partners.

The following is the summary of aggregated unaudited financial information of limited partnerships included in the investment strategy table above, which in certain cases is presented on a three-month lag due to the unavailability of information at the Company’s respective balance sheet dates. The financial statements of these limited partnerships are audited annually.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Operating results:
Total income	$	179,117		$	384,629		$	515,945		$	373,681
Total expenses		(23,023	)		(25,208	)		(72,340	)		(80,720	)
Net income	$	156,094		$	359,421		$	443,605		$	292,961


	June 30,		December 31,
	2022		2021
Balance sheet:
Total assets	$	5,899,813	$	5,855,616
Total liabilities	$	408,725	$	564,732

For the three and six months ended June 30, 2022, the Company recognized net investment income of $19 and $1,799, respectively. Included in the net investment income for the three and six months ended June 30, 2022 was an estimated unfavorable change in net asset value of $516. During the three and six months ended June 30, 2022, the Company received total cash distributions of $2,785 and $4,381, respectively, including returns on investment of $1,235 and $2,046, respectively.

For the three and six months ended June 30, 2021, the Company recognized net investment income of $1,572 and $2,359, respectively. During the three and six months ended June 30, 2021, the Company received

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

total cash distributions of $2,421 and $4,445, respectively, including returns on investment of $1,314 and $1,792, respectively.

At June 30, 2022 and December 31, 2021, the Company’s net cumulative contributed capital to the partnerships at each respective balance sheet date totaled $27,180 and $28,371, respectively, and the Company’s maximum exposure to loss aggregated $26,695 and $28,133, respectively.

d) Investment in Unconsolidated Joint Venture

Melbourne FMA, LLC, a wholly owned subsidiary, currently has an equity investment in FMKT Mel JV, a Florida limited liability company treated as a joint venture under U.S. GAAP. At June 30, 2022 and December 31, 2021, the Company’s maximum exposure to loss relating to the variable interest entity was $858 and $363, respectively, representing the carrying value of the investment. In June 2022, the joint venture sold its last outparcel and recognized a gain of $572. There were no cash distributions during the six months ended June 30, 2022 and 2021. At June 30, 2022, there was undistributed income of $488 as opposed to none at December 31, 2021 from this equity method investment. The following tables provide FMJV’s summarized unaudited financial results and the unaudited financial positions:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Operating results:
Total revenues	$	572		$	—		$	572		$	—
Total expenses		(8	)		(28	)		(22	)		(56	)
Net income (loss)	$	564		$	(28	)	$	550		$	(56	)
The Company’s share of net income (loss)*	$	508		$	(25	)	$	495		$	(50	)

* Included in net investment income in the Company’s consolidated statements of income.


	June 30,		December 31,
	2022		2021
Balance sheet:
Property and equipment, net	$	—	$	357
Cash		953		29
Other		18		18
Total assets	$	971	$	404

Other liabilities	$	17	$	—
Members’ capital		954		404
Total liabilities and members’ capital	$	971	$	404
Investment in unconsolidated joint venture, at equity**	$	858	$	363

** Includes the 90% share of FMKT Mel JV’s operating results.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

e) Real Estate Investments

Real estate investments consist of the following as of June 30, 2022 and December 31, 2021:


	June 30,			December 31,
	2022			2021
Land	$	39,425		$	39,720
Land improvements		11,933			11,917
Buildings and building improvements		29,410			29,405
Tenant and leasehold improvements		1,548			1,511
Other		1,318			1,265
Total, at cost		83,634			83,818
Less: accumulated depreciation and amortization		(10,911	)		(9,922	)
Real estate investments	$	72,723		$	73,896

In May 2022, the Company sold one outparcel in Sorrento, Florida for net proceeds of $667. See additional information under f) Net Investment Income (Loss) below. Depreciation and amortization expense related to real estate investments was $483 and $479 for the three months ended June 30, 2022 and 2021, respectively, and $989 and $970 for the six months ended June 30, 2022 and 2021, respectively.

f) Net Investment Income (Loss)

Net investment income (loss), by source, is summarized as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Available-for-sale fixed-maturity securities	$	1,137		$	384		$	1,585		$	825
Equity securities		300			340			587			691
Investment expense		(116	)		(129	)		(250	)		(254	)
Limited partnership investments		19			1,572			1,799			2,359
Real estate investments		1,538			344			1,885			3,341
Net income (loss) from unconsolidated joint venture		508			(25	)		495			(50	)
Cash and cash equivalents		298			149			451			317
Net investment income	$	3,684		$	2,635		$	6,552		$	7,229

For the three and six months ended June 30, 2022, income from real estate investments included a net gain of $376 resulting from the sale of the outparcel described in e) Real Estate Investments and $451 of income from selling the liquor license previously owned by the Company’s restaurant business which was discontinued in 2020. For the six months ended June 30, 2021, income from real estate investments included a net gain of $2,790 resulting from a legal settlement with The Kroger Co. in a lawsuit filed by a real estate subsidiary of the Company to enforce a guaranty of a commercial lease.

g) Other Investments

From time to time, the Company may invest in financial assets other than stocks, mutual funds and bonds. For the three months ended June 30, 2022 and 2021, net realized gains related to other investments were $75 and $452, respectively, and $156 and $827 for the six months ended June 30, 2022 and 2021, respectively.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 5 -- Comprehensive Income (Loss)

Comprehensive income (loss) includes net income and other comprehensive income or loss, which for the Company includes changes in unrealized gains or losses of investments carried at fair value and changes to the credit losses related to these investments. Reclassification adjustments for realized (gains) losses are reflected in net realized investment gains (losses) on the consolidated statements of income. The components of other comprehensive income or loss and the related tax effects allocated to each component were as follows:


	Three Months Ended									Three Months Ended
	June 30, 2022									June 30, 2021
	Before			Income			Net of			Before			Income			Net of
	Tax			Tax Effect			Tax			Tax			Tax Effect			Tax
Net unrealized (losses) gains	$	(2,174	)	$	(551	)	$	(1,623	)	$	99		$	25		$	74
Call and repayment gains charged to investment income		—			—			—			—			(1	)		1
Reclassification adjustment for realized gains		(8	)		(2	)		(6	)		(576	)		(141	)		(435	)
Total other comprehensive loss	$	(2,182	)	$	(553	)	$	(1,629	)	$	(477	)	$	(117	)	$	(360	)


	Six Months Ended									Six Months Ended
	June 30, 2022									June 30, 2021
	Before			Income			Net of			Before			Income			Net of
	Tax			Tax Effect			Tax			Tax			Tax Effect			Tax
Net unrealized losses	$	(6,325	)	$	(1,598	)	$	(4,727	)	$	(83	)	$	(20	)	$	(63	)
Call and repayment gains charged to investment income		—			—			—			(2	)		(1	)		(1	)
Reclassification adjustment for realized losses (gains)		421			107			314			(577	)		(141	)		(436	)
Total other comprehensive loss	$	(5,904	)	$	(1,491	)	$	(4,413	)	$	(662	)	$	(162	)	$	(500	)

Note 6 -- Fair Value Measurements

The Company records and discloses certain financial assets at their estimated fair values. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:


Level 1	–	Unadjusted quoted prices in active markets for identical assets.
Level 2	–	Other inputs that are observable for the asset, either directly or indirectly such as quoted prices for identical assets that are not observable throughout the full term of the asset.
Level 3	–	Inputs that are unobservable.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Valuation Methodology

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of money-market funds and certificates of deposit maturing within 90 days. Their carrying value approximates fair value due to the short maturity and high liquidity of these funds.

Restricted Cash

Restricted cash represents cash held by state authorities and the carrying value approximates fair value.

Fixed-Maturity and Equity Securities

Estimated fair values of the Company’s fixed-maturity and equity securities are determined in accordance with U.S. GAAP, using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally measured using quoted prices in active markets for identical securities or other inputs that are observable either directly or indirectly, such as quoted prices for similar securities. In those instances where observable inputs are not available, fair values are measured using unobservable inputs. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the security and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are significantly affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange.

The estimated fair values for securities that do not trade on a daily basis are determined by management, utilizing prices obtained from an independent pricing service and information provided by brokers, which are level 2 inputs. Management reviews the assumptions and methods utilized by the pricing service and then compares the relevant data and pricing to broker-provided data. The Company gains assurance of the overall reasonableness and consistent application of the assumptions and methodologies, and compliance with accounting standards for fair value determination through ongoing monitoring of the reported fair values.

Revolving Credit Facility

From time to time, the Company has an amount outstanding under a revolving credit facility. The interest rate is variable and is periodically adjusted based on the London Interbank Offered Rate plus a spread. As a result, carrying value, when outstanding, approximates fair value.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Long-Term Debt

The following table summarizes components of the Company’s long-term debt and methods used in estimating their fair values:


	Maturity Date	Valuation Methodology
4.75% Convertible Senior Notes	2042	Quoted price
4.25% Convertible Senior Notes	2037	Quoted price
3.90% Promissory Note	2032	Discounted cash flow method/Level 3 inputs
3.75% Callable Promissory Note	2036	Discounted cash flow method/Level 3 inputs
4.55% Promissory Note	2036	Discounted cash flow method/Level 3 inputs

Assets Measured at Estimated Fair Value on a Recurring Basis

The following tables present information about the Company’s financial assets measured at estimated fair value on a recurring basis. The tables indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of June 30, 2022 and December 31, 2021:


	Fair Value Measurements Using
	(Level 1)		(Level 2)		(Level 3)		Total
As of June 30, 2022
Financial Assets:
Cash and cash equivalents	$	360,488	$	—	$	—	$	360,488
Restricted cash	$	2,600	$	—	$	—	$	2,600
Fixed-maturity securities:
U.S. Treasury and U.S. government agencies	$	366,134	$	1,429	$	—	$	367,563
Corporate bonds		28,424		—		—		28,424
State, municipalities, and political subdivisions		—		1,767		—		1,767
Exchange-traded debt		713		—		—		713
Redeemable preferred stock		104		—		—		104
Total available-for-sale securities	$	395,375	$	3,196	$	—	$	398,571
Equity securities	$	35,719	$	—	$	—	$	35,719


	Fair Value Measurements Using
	(Level 1)		(Level 2)		(Level 3)		Total
As of December 31, 2021
Financial Assets:
Cash and cash equivalents	$	628,943	$	—	$	—	$	628,943
Restricted cash	$	2,400	$	—	$	—	$	2,400
Fixed-maturity securities:
U.S. Treasury and U.S. government agencies	$	15,536	$	1,488	$	—	$	17,024
Corporate bonds		22,492		—		—		22,492
State, municipalities, and political subdivisions		—		1,808		—		1,808
Exchange-traded debt		811		—		—		811
Redeemable preferred stock		448		—		—		448
Total available-for-sale securities	$	39,287	$	3,296	$	—	$	42,583
Equity securities	$	51,740	$	—	$	—	$	51,740

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Liabilities Carried at Other Than Fair Value

The following tables present fair value information for liabilities that are carried on the consolidated balance sheets at amounts other than fair value as of June 30, 2022 and December 31, 2021:


	Carrying		Fair Value Measurements Using						Estimated
	Value		(Level 1)		(Level 2)		(Level 3)		Fair Value
As of June 30, 2022
Financial Liabilities:
Long-term debt:
4.75% Convertible Senior Notes	$	166,596	$	—	$	178,522	$	—	$	178,522
4.25% Convertible Senior Notes		23,916		—		27,143		—		27,143
3.90% Promissory Note		9,117		—		—		8,711		8,711
3.75% Callable Promissory Note		6,973		—		—		6,604		6,604
4.55% Promissory Note		5,025		—		—		4,959		4,959
Total long-term debt	$	211,627	$	—	$	205,665	$	20,274	$	225,939


	Carrying		Fair Value Measurements Using						Estimated
	Value		(Level 1)		(Level 2)		(Level 3)		Fair Value
As of December 31, 2021
Financial Liabilities:
Revolving credit facility	$	15,000	$	—	$	15,000	$	—	$	15,000
Long-term debt:
4.25% Convertible Senior Notes	$	23,885	$	—	$	33,248	$	—	$	33,248
3.90% Promissory Note		9,287		—		—		10,488		10,488
3.75% Callable Promissory Note		7,153		—		—		7,852		7,852
4.55% Promissory Note		5,148		—		—		6,051		6,051
Total long-term debt	$	45,473	$	—	$	33,248	$	24,391	$	57,639

Note 7 -- Intangible Assets, Net

The Company’s intangible assets, net consist of the following:


	June 30,			December 31,
	2022			2021
Anchor tenant relationships (a)	$	1,761		$	1,761
In-place leases		4,215			4,215
Policy renewal rights - United		12,384			7,634
Non-compete agreements - United (b)		314			195
Total, at cost		18,674			13,805
Less: accumulated amortization		(4,316	)		(3,169	)
Intangible assets, net	$	14,358		$	10,636

(a)

An anchor tenant is a tenant that attracted more customers than other tenants.

(b)

$119 was fully amortized in June 2022 and $195 was fully amortized in June 2021.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

The remaining weighted-average amortization periods for the intangible assets at June 30, 2022 are summarized in the table below:


Anchor tenant relationships		11.9 years
In-place leases		9.8 years
Policy renewal rights - United		3.7 years

In connection with the Southeast Region assumed business as described in Note 1 -- “Nature of Operations” the Company recorded intangible assets of $4,869 representing the renewal rights and non-compete agreement in exchange for consideration consisting of a 6% commission on any replacement premium which includes $3,800 of commission prepaid up-front. The consideration was estimated at $4,869 with a $1,069 contingent liability. At June 30, 2022 and December 31, 2021, contingent liabilities related to renewal rights intangible assets were $3,488 and $2,419, respectively, with the contingent liabilities included in other liabilities on the consolidated balance sheets.

The renewal rights and non-compete intangible assets acquired do not meet the definition of a business as substantially all of the fair value of the intangible assets acquired are concentrated in a group of similar assets. Therefore, the Company accounted for the purchase of the renewal rights and non-compete intangible assets as an asset acquisition.

Note 8 -- Other Assets

The following table summarizes the Company’s other assets:


	June 30,		December 31,
	2022		2021
Benefits receivable related to retrospective reinsurance contracts	$	10,938	$	3,064
Reimbursement receivable under TPA service		1,519		3,525
Prepaid expenses		4,560		2,853
Deposits		2,577		406
Lease acquisition costs, net		570		505
Other		8,632		4,364
Total other assets	$	28,796	$	14,717

Note 9 -- Revolving Credit Facility

In May 2022, the Company repaid the entire credit facility balance of $15,000. For the three months ended June 30, 2022 and 2021, interest expense was $62 and $25, respectively, including $24 and $24 of amortization of issuance costs, respectively. For the six months ended June 30, 2022 and 2021, interest expense was $151 and $129, respectively, including $49 and $49 of amortization of issuance costs, respectively. At June 30, 2022, the Company was in compliance with all required covenants with no borrowings outstanding. The borrowing capacity of the facility is now $65,000.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 10 -- Long-Term Debt

The following table summarizes the Company’s long-term debt:


	June 30,			December 31,
	2022			2021
4.75% Convertible Senior Notes, due June 1, 2042	$	172,500		$	—
4.25% Convertible Senior Notes, due March 1, 2037		23,916			23,916
3.90% Promissory Note, due through April 1, 2032		9,253			9,431
3.75% Callable Promissory Note, due through September 1, 2036		7,060			7,246
4.55% Promissory Note, due through August 1, 2036		5,098			5,225
Finance lease liabilities, due through October 15, 2024		21			31
Total principal amount		217,848			45,849
Less: unamortized issuance costs		(6,200	)		(345	)
Total long-term debt	$	211,648		$	45,504

The following table summarizes future maturities of long-term debt as of June 30, 2022, which takes into consideration the assumption that the 4.75% Convertible Senior Notes and 4.25% Convertible Senior Notes are repurchased at their respective next earliest call dates:


Due in 12 months following June 30,
2022	$	1,026
2023		1,057
2024		1,096
2025		1,140
2026		197,603
Thereafter		15,926
Total	$	217,848

Information with respect to interest expense related to long-term debt is as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Interest Expense:
Contractual interest	$	1,334	$	1,704	$	1,806	$	3,411
Non-cash expense (a)		119		271		159		539
Total	$	1,453	$	1,975	$	1,965	$	3,950

(a)

Includes amortization of debt issuance costs.

4.75% Convertible Senior Notes

In May 2022, the Company issued 4.75% Convertible Senior Notes in a private offering for an aggregate principal amount of $172,500. The net proceeds of the 4.75% Convertible Senior Notes were $166,486 after $6,014 in related issuance and transaction costs. These notes mature June 1, 2042 and the cash interest is payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2022.

The 4.75% Convertible Senior Notes rank equally in right of payment to the Company’s existing and future unsecured and unsubordinated obligations. The 4.75% Convertible Senior Notes do not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

the issuance or repurchase of securities by the Company or any of its subsidiaries. The 4.75% Convertible Senior Notes provide no protection to the note holders in the event of a fundamental change or other corporate transaction involving the Company except those described in the indenture. The 4.75% Convertible Senior Notes do not require a sinking fund to be established for the purpose of redemption. In conjunction with the issuance of the 4.75% Convertible Senior Notes, the Company entered into a share repurchase agreement providing for the repurchase of shares of the Company’s common stock. See Note 18 -- “Equity” under Share Repurchase Agreement for additional information.

Embedded Conversion Feature

The conversion feature of the 4.75% Convertible Senior Notes is subject to conversion rate adjustments upon the occurrence of specified events (including payment of dividends above a specified amount) but will not be adjusted for any accrued and unpaid interest.

The conversion rate of the 4.75% Convertible Senior Notes is currently 12.4166 shares of common stock for each $1 in principal amount, which is the equivalent of approximately $80.54 per share.

The holders of the 4.75% Convertible Senior Notes may convert all or a portion of their convertible senior notes during specified periods prior to the maturity date as follows: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2022, if the last reported sale price of the Company’s common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; (2) during the five business-day period after any ten consecutive trading-day period in which the trading price per $1 principal amount of the 4.75% Convertible Senior Notes is less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; (3) if specified corporate events, including a change in control, occur; (4) if any or all of the 4.75% Convertible Senior Notes are called for redemption, at any time prior to the close of business on the business day prior to the redemption date; or (5) during either the period beginning on, and including, March 1, 2027 and ending at the close of business on the business day immediately preceding June 7, 2027, or the period beginning on, and including, March 1, 2042 and ending at the close of business on the business day immediately preceding the maturity date.

The note holders who elect to convert their convertible senior notes in connection with a fundamental change as described in the indenture will be entitled to a “make-whole” adjustment in the form of an increase in the conversion rate. Upon conversion, the Company has the option to satisfy its conversion obligation by paying or delivering cash, shares of its common stock or a combination of cash and shares of its common stock. As of June 30, 2022, none of the conditions allowing the holders of the 4.75% Convertible Senior Notes to convert had been met.

The Company determined that the 4.75% Convertible Senior Notes’ embedded conversion feature is not a derivative financial instrument and does not require bifurcation.

Embedded Redemption Feature – Fundamental Change

The note holders have the right to require the Company to repurchase for cash all or any portion of the 4.75% Convertible Senior Notes at par prior to the maturity date should any of the fundamental change events described in the indenture occur. The Company concluded that this embedded redemption feature is not a derivative financial instrument, does not require bifurcation, and that it is not probable at issuance that any of the

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

specified fundamental change events will occur. Therefore, this embedded redemption feature is not substantive and will not affect the expected life of the liability.

Embedded Redemption Feature – Put Option of the Note Holder

At the option of the holders of the 4.75% Convertible Senior Notes, the Company is required to repurchase for cash all or any portion of the 4.75% Convertible Senior Notes at par on June 1, 2027, June 1, 2032 or June 1, 2037. The Company concluded that this embedded feature is not a derivative financial instrument and does not require bifurcation. Due to this provision, the Company determined that it is appropriate to amortize the debt issuance costs from the date the debt is issued to the earliest date at which the holders of the 4.75% Convertible Senior Notes can demand payment. Thus, the Company amortizes the issuance costs associated with the 4.75% Convertible Senior Notes over the period from May 23, 2022 to June 1, 2027.

The effective interest rate for the 4.75% Convertible Senior Notes, taking into account both cash and non-cash components, approximates 5.6%. Had a 20-year term been used for the amortization of the issuance costs of the 4.75% Convertible Senior Notes, the annual effective interest rate charged to earnings would have decreased to approximately 5.0%. As of June 30, 2022, the remaining amortization period of the debt issuance costs was expected to be 4.9 years for the 4.75% Convertible Senior Notes.

4.25% Convertible Senior Notes

On March 1, 2022, none of the holders of the 4.25% Convertible Senior Notes exercised the put option, which would have required the Company to repurchase for cash all or any portion of the notes at par. The Company’s recent cash dividends on common stock have exceeded $0.35 per share, resulting in adjustments to the conversion rate of the 4.25% Convertible Senior Notes. Accordingly, as of June 30, 2022, the conversion rate of the Company’s 4.25% Convertible Senior Notes was 16.4976 shares of common stock for each $1 in principal amount, which was the equivalent of approximately $60.61 per share.

The debt issuance costs for the 4.25% Convertible Senior Notes had been fully amortized as of February 2022.

Note 11 -- Reinsurance

Reinsurance obtained from other insurance companies

The Company cedes a portion of its homeowners’ insurance exposure to other entities under catastrophe excess of loss reinsurance contracts and a portion of its flood insurance exposure under one quota share reinsurance agreement. Ceded premiums under most catastrophe excess of loss reinsurance contracts are subject to revision resulting from subsequent adjustments in total insured value. Under the terms of the quota share reinsurance agreement, the Company is entitled to a 30% ceding commission on ceded premiums written and a profit commission equal to 10% of net profit.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

The Company remains liable for claims payments in the event that any reinsurer is unable to meet its obligations under the reinsurance agreements. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. The Company contracts with a number of reinsurers to secure its annual reinsurance coverage, which generally becomes effective June 1st of each year. The Company purchases reinsurance each year taking into consideration probable maximum losses and reinsurance market conditions.

The impact of the reinsurance contracts on premiums written and earned is as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Premiums Written:
Direct	$	187,792		$	143,224		$	359,773		$	253,355
Assumed		(1,640	)		41,754			3,673			57,471
Gross written		186,152			184,978			363,446			310,826
Ceded		(56,205	)		(46,436	)		(109,367	)		(89,535	)
Net premiums written	$	129,947		$	138,542		$	254,079		$	221,291
Premiums Earned:
Direct	$	164,887		$	115,733		$	313,733		$	226,025
Assumed		16,237			23,707			46,316			44,357
Gross earned		181,124			139,440			360,049			270,382
Ceded		(56,205	)		(46,436	)		(109,367	)		(89,535	)
Net premiums earned	$	124,919		$	93,004		$	250,682		$	180,847

During the three and six months ended June 30, 2022, the Company recognized ceded losses of $2,517 and $3,387, respectively, as reductions in losses and loss adjustment expenses. During the three and six months ended June 30, 2021, the Company recognized ceded losses of $487 and $594, respectively, as reductions in losses and loss adjustment expenses. At June 30, 2022 and December 31, 2021, there were 45 and 55 reinsurers, respectively, participating in the Company’s reinsurance program. Total net amounts recoverable and receivable from reinsurers at June 30, 2022 and December 31, 2021 were $53,482 and $76,650, respectively. Approximately 54.9% of the reinsurance recoverable balance at June 30, 2022 was receivable from three reinsurers, one of which was the Florida Hurricane Catastrophe Fund, a tax-exempt state trust fund. Based on all available information considered in the rating-based method, the Company recognized decreases in credit loss expense of $17 and $28 for the three and six months ended June 30, 2022, respectively. For the three and six months ended June 30, 2021, the Company derecognized credit loss expenses of $16 and $28, respectively. Allowances for credit losses related to the reinsurance recoverable balance were $62 and $90 at June 30, 2022 and December 31, 2021, respectively.

One of the existing reinsurance contracts includes retrospective provisions that adjust premiums in the event losses are minimal or zero. Prior to June 1, 2022, there were two reinsurance contracts with retrospective provisions. For the three and six months ended June 30, 2022, the Company recognized reductions in premiums ceded of $6,390 and $7,874, respectively, related to these adjustments in the consolidated statements of income. For the three and six months ended June 30, 2021, the Company recognized reductions in premiums ceded of $3,575 and $8,255, respectively. See Note 20 -- “Commitments and Contingencies” for additional information.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Amounts receivable pursuant to retrospective provisions are reflected in other assets. At June 30, 2022 and December 31, 2021, other assets included $10,938 and $3,064, respectively. Management believes the credit risk associated with the collectability of accrued benefits is minimal as the amount receivable is concentrated with reinsurers with good credit ratings and the Company monitors the creditworthiness of these reinsurers based on available information about each reinsurer’s financial condition.

Reinsurance provided to other insurance companies

For the three and six months ended June 30, 2022, $20,639 and $27,488, respectively, of assumed premiums written related to the Northeast Region’s insurance policies were derecognized, which primarily resulted from the return of the unearned portion of assumed written premiums subsequent to the Company’s renewal and/or replacement of insurance policies in Massachusetts. For the three and six months ended June 30, 2021, assumed premiums written were $41,754 and $57,471, respectively. At June 30, 2022, the Company had a net balance of $1,772 due to United related to the Northeast Region, consisting of payable on paid losses and loss adjustment expenses of $1,522 and premiums payable of $329, offset by ceding commission receivable of $79. At December 31, 2021, the Company had a net balance of $4,486 due to United related to the Northeast Region, consisting of ceding commission payable of $535 and payable on paid losses and loss adjustment expenses of $4,017, offset by premiums receivable of $66.

Effective December 31, 2021, the Company entered into a separate agreement to provide 85% quota share reinsurance on United’s personal lines insurance policies in the states of Georgia, South Carolina and North Carolina through May 31, 2022. Effective June 1, 2022, the Company entered into a new agreement to provide 100% quota share reinsurance on United’s personal lines insurance policies in the Southeast Region. For the three and six months ended June 30, 2022, assumed premiums written related to the Southeast Region’s insurance policies were $18,999 and $31,161, respectively. At June 30, 2022, the Company had a net balance of $9,329 due to United, consisting of premiums payable of $14,027 and payable on paid losses and loss adjustment expenses of $2,780, offset by ceding commission receivable of $4,861 and a catastrophe cost allowance receivable of $2,617. At December 31, 2021, there was an amount receivable from United of $23,325, net of a ceding commission of $8,835 and a catastrophe cost allowance of $3,181.

At June 30, 2022 and December 31, 2021, the balance of funds withheld for assumed business related to the Company’s quota share reinsurance agreements with United was $82,468 and $73,716, respectively.

Note 12 -- Losses and Loss Adjustment Expenses

The liability for losses and loss adjustment expenses (“LAE”) is determined on an individual case basis for all claims reported. The liability also includes amounts for unallocated expenses, anticipated future claim development and losses incurred but not reported.

The Company primarily writes insurance in states which could be exposed to hurricanes or other natural catastrophes. The occurrence of a major catastrophe could have a significant effect on the Company’s quarterly results and cause a temporary disruption of the normal operations of the Company. However, the Company is unable to predict the frequency or severity of any such events that may occur in the near term or thereafter.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Activity in the liability for losses and LAE is summarized as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Net balance, beginning of period*	$	179,837		$	144,630		$	172,410		$	141,065
Incurred, net of reinsurance, related to:
Current period		78,448			51,310			148,524			93,230
Prior period		8,382			4,607			11,010			8,438
Total incurred, net of reinsurance		86,830			55,917			159,534			101,668
Paid, net of reinsurance, related to:
Current period		(37,627	)		(20,006	)		(56,423	)		(27,602	)
Prior period		(32,626	)		(25,640	)		(79,107	)		(60,230	)
Total paid, net of reinsurance		(70,253	)		(45,646	)		(135,530	)		(87,832	)
Net balance, end of period		196,414			154,901			196,414			154,901
Add: reinsurance recoverable before allowance for credit losses		42,410			48,884			42,410			48,884
Gross balance, end of period	$	238,824		$	203,785		$	238,824		$	203,785

* Net balance represents beginning-of-period liability for unpaid losses and LAE less beginning-of-period reinsurance recoverable for unpaid losses and LAE.

The establishment of loss and LAE reserves is an inherently uncertain process and changes in loss and LAE reserve estimates are expected as these estimates are subject to the outcome of future events. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such estimates are adjusted. During the three and six months ended June 30, 2022, the Company recognized losses related to prior periods of $8,382 and $11,010, respectively, primarily to increase the reserve resulting from increased litigation. Loss and LAE expenses for the three and six months ended June 30, 2022 included estimated losses, net of reinsurance, of approximately $10,438 and $23,399, respectively, related to policies assumed from United. In addition, the Company recognized $5,811 and $11,932, respectively, of losses related to weather events in Florida during the three and six months ended June 30, 2022.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 13 -- Segment Information

The Company identifies its operating divisions or segments based on managerial emphasis, organizational structure and revenue source. In the first quarter of 2021, the Company reorganized its operations to focus on specific business segments, resulting in the creation of TTIG with a separate workforce, board of directors and financial reporting structure. Companies under TTIG include TypTap, TypTap Management Company, Exzeo USA, Inc., and Cypress Tech Development Company, Inc., the parent company of an India company, Exzeo Software Private Limited. TTIG and its subsidiaries are considered a new reporting segment known as TypTap Group. The Company has four reportable segments: HCPCI insurance operations, TypTap Group, real estate operations, and corporate and other. Due to their economic characteristics, the Company’s property and casualty insurance division and reinsurance operations, excluding the insurance operations under TypTap Group, are grouped together into one reportable segment under HCPCI insurance operations. The TypTap Group segment includes its property and casualty insurance operations, information technology operations and its management company’s activities. The real estate operations segment includes companies engaged in operating commercial properties the Company owns for investment purposes or for use in its own operations. The corporate and other segment represents the activities of the holding companies and any other companies that do not meet the quantitative and qualitative thresholds for a reportable segment. The determination of segments may change over time due to changes in operational emphasis, revenues, and results of operations. The Company’s chief executive officer, who serves as the Company’s chief operating decision maker, evaluates each division’s financial and operating performance based on revenue and operating income.

For the three months ended June 30, 2022 and 2021, revenues from the HCPCI insurance operations segment before intracompany elimination represented 69.8% and 77.6%, respectively, and revenues from the TypTap Group segment represented 27.9% and 20.3%, respectively, of total revenues of all operating segments. For the six months ended June 30, 2022 and 2021, revenues from the HCPCI insurance operations segment before intracompany elimination represented 69.8% and 77.8%, respectively, and revenues from the TypTap Group segment represented 28.1% and 18.9%, respectively, of total revenues of all operating segments. At June 30, 2022 and December 31, 2021, HCPCI insurance operations’ total assets represented 55.2% and 58.7%, respectively, and TypTap Group’s total assets represented 33.1% and 29.3%, respectively, of the combined assets of all operating segments.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

The following tables present segment information reconciled to the Company’s consolidated statements of income. Intersegment transactions are not eliminated from segment results. However, intracompany transactions are eliminated in segment results below.


	HCPCI
	Insurance			TypTap			Real		Corporate/			Reclassification/
For Three Months Ended June 30, 2022	Operations			Group			Estate (a)		Other (b)			Elimination			Consolidated
Revenue:
Gross premiums earned (c)	$	115,636		$	67,443		$	—	$	—		$	(1,955	)	$	181,124
Premiums ceded		(36,979	)		(20,629	)		—		—			1,403			(56,205	)
Net premiums earned		78,657			46,814			—		—			(552	)		124,919
Net (loss) income from investment portfolio		(1,446	)		283			—		(1,228	)		1,835			(556	)
Policy fee income		628			424			—		—			—			1,052
Other		414			532			2,765		1,472			(4,672	)		511
Total revenue		78,253			48,053			2,765		244			(3,389	)		125,926
Expenses:
Losses and loss adjustment expenses		48,692			38,692			—		—			(554	)		86,830
Amortization of deferred policy acquisition costs		15,904			7,167			—		—			—			23,071
Other policy acquisition expenses		679			3,135			—		—			—			3,814
Stock-based compensation expense		1,187			897			—		2,158			—			4,242
Interest expense		—			211			224		1,291			(211	)		1,515
Depreciation and amortization		153			774			606		302			(600	)		1,235
Personnel and other operating expenses		7,738			8,526			626		1,913			(2,024	)		16,779
Total expenses		74,353			59,402			1,456		5,664			(3,389	)		137,486
Income (loss) before income taxes	$	3,900		$	(11,349	)	$	1,309	$	(5,420	)	$	—		$	(11,560	)
Total revenue from non-affiliates (d)	$	76,276		$	49,009		$	2,427	$	(359	)
Gross premiums written	$	113,139		$	73,013

(a)

Other revenue under real estate primarily consisted of rental income from investment properties.

(b)

Other revenue under corporate and other primarily consisted of revenue from marina business.

(c)

Gross premiums earned under HCPCI Insurance Operations consist of $113,681 from HCPCI and $1,955 from a reinsurance company.

(d)

Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)


	HCPCI
	Insurance			TypTap			Real		Corporate/			Reclassification/
For Three Months Ended June 30, 2021	Operations			Group			Estate (a)		Other (b)			Elimination			Consolidated
Revenue:
Gross premiums earned (c)	$	102,850		$	39,000		$	—	$	—		$	(2,410	)	$	139,440
Premiums ceded		(36,101	)		(12,585	)		—		—			2,250			(46,436	)
Net premiums earned		66,749			26,415			—		—			(160	)		93,004
Net income from investment portfolio		3,550			495			—		2,392			294			6,731
Policy fee income		701			291			—		—			—			992
Other		812			475			2,379		267			(3,156	)		777
Total revenue		71,812			27,676			2,379		2,659			(3,022	)		101,504
Expenses:
Losses and loss adjustment expenses		39,641			16,440			—		—			(164	)		55,917
Amortization of deferred policy acquisition costs		20,540			5,553			—		—			—			26,093
Other policy acquisition expenses		(5,070	)		2,021			—		—			125			(2,924	)
Stock-based compensation expense		937			1,600			—		1,618			—			4,155
Interest expense		—			—			259		1,766			(25	)		2,000
Depreciation and amortization		18			312			574		364			(605	)		663
Personnel and other operating expenses		4,665			6,233			1,317		641			(2,353	)		10,503
Total expenses		60,731			32,159			2,150		4,389			(3,022	)		96,407
Income (loss) before income taxes	$	11,081		$	(4,483	)	$	229	$	(1,730	)	$	—		$	5,097
Total revenue from non-affiliates (d)	$	70,914		$	27,813		$	2,041	$	2,715
Gross premiums written	$	124,222		$	60,725

(a)

Other revenue under real estate primarily consisted of rental income from investment properties.

(b)

Other revenue under corporate and other primarily consisted of revenue from marina business.

(c)

Gross premiums earned under HCPCI Insurance Operations consist of $100,440 from HCPCI and $2,410 from a reinsurance company.

(d)

Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)


	HCPCI
	Insurance			TypTap			Real		Corporate/			Reclassification/
For Six Months Ended June 30, 2022	Operations			Group			Estate (a)		Other (b)			Elimination			Consolidated
Revenue:
Gross premiums earned (c)	$	234,941		$	128,065		$	—	$	—		$	(2,957	)	$	360,049
Premiums ceded		(73,932	)		(37,562	)		—		—			2,127			(109,367	)
Net premiums earned		161,009			90,503			—		—			(830	)		250,682
Net (loss) income from investment portfolio		(2,903	)		267			—		(912	)		1,970			(1,578	)
Policy fee income		1,282			827			—		—			—			2,109
Other		1,661			1,001			5,168		2,308			(8,385	)		1,753
Total revenue		161,049			92,598			5,168		1,396			(7,245	)		252,966
Expenses:
Losses and loss adjustment expenses		92,687			67,680			—		—			(833	)		159,534
Amortization of deferred policy acquisition costs		35,006			16,589			—		—			—			51,595
Other policy acquisition expenses		1,342			3,418			—		—			—			4,760
Stock-based compensation expense		2,331			1,782			—		4,466			—			8,579
Interest expense		—			411			451		1,665			(411	)		2,116
Depreciation and amortization		267			1,335			1,211		474			(1,223	)		2,064
Personnel and other operating expenses		15,056			16,019			1,933		3,647			(4,778	)		31,877
Total expenses		146,689			107,234			3,595		10,252			(7,245	)		260,525
Income (loss) before income taxes	$	14,360		$	(14,636	)	$	1,573	$	(8,856	)	$	—		$	(7,559	)
Total revenue from non-affiliates (d)	$	158,009		$	93,832		$	4,491	$	90
Gross premiums written	$	204,280		$	159,166

(a)

Other revenue under real estate primarily consisted of rental income from investment properties.

(b)

Other revenue under corporate and other primarily consisted of revenue from marina business.

(c)

Gross premiums earned under HCPCI Insurance Operations consist of $231,984 from HCPCI and $2,957 from a reinsurance company.

(d)

Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)


	HCPCI
	Insurance			TypTap			Real		Corporate/			Reclassification/
For Six Months Ended June 30, 2021	Operations			Group			Estate (a)		Other (b)			Elimination			Consolidated
Revenue:
Gross premiums earned (c)	$	207,371		$	67,811		$	—	$	—		$	(4,800	)	$	270,382
Premiums ceded		(72,081	)		(22,094	)		—		—			4,640			(89,535	)
Net premiums earned		135,290			45,717			—		—			(160	)		180,847
Net income from investment portfolio		4,430			831			—		3,887			3,021			12,169
Policy fee income		1,413			549			—		—			—			1,962
Other		1,333			650			7,513		827			(8,923	)		1,400
Total revenue		142,466			47,747			7,513		4,714			(6,062	)		196,378
Expenses:
Losses and loss adjustment expenses		73,080			28,752			—		—			(164	)		101,668
Amortization of deferred policy acquisition costs		33,287			10,190			—		—			—			43,477
Other policy acquisition expenses		(246	)		3,062			—		—			(59	)		2,757
Stock-based compensation expense		1,698			1,967			—		2,832			—			6,497
Interest expense		—			90			741		3,518			(270	)		4,079
Depreciation and amortization		38			600			1,161		540			(1,238	)		1,101
Personnel and other operating expenses		9,723			11,355			2,518		2,335			(4,331	)		21,600
Total expenses		117,580			56,016			4,420		9,225			(6,062	)		181,179
Income (loss) before income taxes	$	24,886		$	(8,269	)	$	3,093	$	(4,511	)	$	—		$	15,199
Total revenue from non-affiliates (d)	$	141,114		$	48,192		$	6,836	$	4,239
Gross premiums written	$	205,210		$	105,615

(a)

Other revenue under real estate primarily consisted of rental income from investment properties.

(b)

Other revenue under corporate and other primarily consisted of revenue from marina business.

(c)

Gross premiums earned under HCPCI Insurance Operations consist of $202,571 from HCPCI and $4,800 from a reinsurance company.

(d)

Represents amounts before reclassification of certain revenue and expenses to conform with an insurance company’s presentation.

The following table presents segment assets reconciled to the Company’s total assets on the consolidated balance sheets:


	June 30,			December 31,
	2022			2021
Segments:
HCPCI Insurance Operations	$	635,564		$	676,509
TypTap Group		431,610			369,600
Real Estate Operations		127,953			127,651
Corporate and Other		176,474			65,349
Consolidation and Elimination		(90,898	)		(62,252	)
Total assets	$	1,280,703		$	1,176,857

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Note 14 -- Leases

The table below summarizes the Company’s right-of-use (“ROU”) assets and corresponding liabilities for operating and finance leases:


	June 30,		December 31,
	2022		2021
Operating leases:
ROU assets	$	1,861	$	2,204
Liabilities	$	1,824	$	2,203
Finance leases:
ROU assets	$	80	$	86
Liabilities	$	21	$	31

The Company’s lease of office space in India for its information technology operations expired in January 2022 and a new lease agreement was entered into effective February 2022 with an initial term of nine years.

The following table summarizes the Company’s operating and finance leases in which the Company is a lessee:


		Renewal	Other Terms and
Class of Assets	Initial Term	Option	Conditions
Operating lease:
Office equipment	1 to 51 months	Yes	(a), (b)
Office space	3 to 9 years	Yes	(b), (c)
Finance lease:
Office equipment	3 to 5 years	Not applicable	(d)

(a)

At the end of the lease term, the Company can purchase the equipment at fair market value.

(b)

There are no variable lease payments.

(c)

Rent escalation provisions exist.

(d)

There is a bargain purchase option.

As of June 30, 2022, maturities of lease liabilities were as follows:


	Leases
	Operating		Finance
Due in 12 months following June 30,
2022	$	1,090	$	16
2023		177		5
2024		98		1
2025		103		—
2026		109		—
Thereafter		434		—
Total lease payments		2,011		22
Less: interest		187		1
Total lease obligations	$	1,824	$	21

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

The following table provides quantitative information with regards to the Company’s operating and finance leases:


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2022			2021		2022		2021
Lease costs:
Finance lease costs:
Amortization – ROU assets*	$	5		$	5	$	10	$	9
Interest expense		—			—		—		1
Operating lease costs*		282			391		656		845
Short-term lease costs*		91			113		201		150
Total lease costs	$	378		$	509	$	867	$	1,005
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows – finance leases						$	—	$	1
Operating cash flows – operating leases						$	648	$	848
Financing cash flows – finance leases						$	10	$	9

	June 30,
	2022
Weighted-average remaining lease term:
Finance leases (in years)		1.5
Operating leases (in years)		4.2
Weighted-average discount rate:
Finance leases (%)		3.4	%
Operating leases (%)		3.9	%

* Included in other operating expenses on the consolidated statements of income.

The following table summarizes the Company’s operating leases in which the Company is a lessor:


		Renewal	Other Terms and
Class of Assets	Initial Term	Option	Conditions
Operating lease:
Office space	1 to 3 years	Yes	(e)
Retail space	3 to 20 years	Yes	(e)
Boat docks/wet slips	1 to 12 months	Yes	(e)

(e)

There are no purchase options.

Note 15 -- Income Taxes

During the three months ended June 30, 2022, the Company recorded approximately $3,018 of income tax benefit, which resulted in an effective tax rate of 26.1%. During the three months ended June 30, 2021, the Company recorded approximately $1,267 of income taxes, which resulted in an effective tax rate of 24.9%. The increase in the effective tax rate as compared with the corresponding period in the prior year was primarily attributable to an increase in non-deductible compensation expense related to restricted stock granted to certain executives and the increased Florida corporate tax rate effective January 1, 2022. During the six months ended June 30, 2022, the Company recorded approximately $1,808 of income tax benefit, which resulted in an effective tax rate of 23.9%. During the six months ended June 30, 2021, the Company recorded approximately $4,524 of income taxes, which resulted in an effective tax rate of 29.8%. The decrease in the effective tax rate in 2022 as

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

compared with the corresponding period in the prior year was primarily attributable to the recognition of tax benefits attributable to restricted stock that vested in February and May 2022. The Company’s estimated annual effective tax rate differs from the statutory federal tax rate due to state and foreign income taxes as well as certain nondeductible and tax-exempt items.

Note 16 -- Earnings Per Share

U.S. GAAP requires the Company to use the two-class method in computing basic earnings (loss) per share since holders of the Company’s restricted stock have the right to share in dividends, if declared, equally with common stockholders. These participating securities affect the computation of both basic and diluted earnings (loss) per share during periods of net income or loss. For a majority-owned subsidiary, its basic and diluted earnings (loss) per share are first computed separately. Then, the Company’s proportionate share in that majority-owned subsidiary’s earnings is added to the computation of both basic and diluted earnings (loss) per share at a consolidated level.

A summary of the numerator and denominator of the basic and diluted earnings per common share is presented below:


	Three Months Ended								Three Months Ended
	June 30, 2022								June 30, 2021
	Loss			Shares (a)		Per Share			Income			Shares (a)		Per Share
	(Numerator)			(Denominator)		Amount			(Numerator)			(Denominator)		Amount
Net (loss) income	$	(8,542	)						$	3,830
Less: Net income attributable to redeemable noncontrolling interest		(2,268	)							(2,179	)
Less: TypTap Group’s net loss attributable to non-HCI common stockholders and TypTap Group’s participating securities		829								429
Net (loss) income attributable to HCI		(9,981	)							2,080
Less: Loss (income) attributable to participating securities		635								(168	)
Basic (Loss) Earnings Per Share:
(Loss) income allocated to common stockholders		(9,346	)		9,022	$	(1.04	)		1,912			7,526	$	0.25
Effect of Dilutive Securities: *
Stock options		—			—					—			175
Warrants		—			—					—			247
Diluted (Loss) Earnings Per Share:
(Loss) income available to common stockholders and assumed conversions	$	(9,346	)		9,022	$	(1.04	)	$	1,912			7,948	$	0.24


(a)	Shares in thousands.
*	For the three months ended June 30, 2022, convertible senior notes, stock options, and warrants were excluded due to anti-dilutive effect. For the three months ended June 30, 2021, convertible senior notes were excluded due to anti-dilutive effect.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)


	Six Months Ended								Six Months Ended
	June 30, 2022								June 30, 2021
	Loss			Shares (a)		Per Share			Income			Shares (a)		Per Share
	(Numerator)			(Denominator)		Amount			(Numerator)			(Denominator)		Amount
Net (loss) income	$	(5,751	)						$	10,675
Less: Net income attributable to redeemable noncontrolling interest		(4,516	)							(2,973	)
Less: TypTap Group’s net loss attributable to non-HCI common stockholders and TypTap Group’s participating securities		1,189								501
Net (loss) income attributable to HCI		(9,078	)							8,203
Less: Loss (income) attributable to participating securities		590								(569	)
Basic (Loss) Earnings Per Share:
(Loss) income allocated to common stockholders		(8,488	)		9,249	$	(0.92	)		7,634			7,500	$	1.02
Effect of Dilutive Securities: *
Stock options		—			—					—			141
Warrants		—			—					—			161
Diluted (Loss) Earnings Per Share:
(Loss) income available to common stockholders and assumed conversions	$	(8,488	)		9,249	$	(0.92	)	$	7,634			7,802	$	0.98


(a)	Shares in thousands.
*	For the six months ended June 30, 2022, convertible senior notes, stock options, and warrants were excluded due to anti-dilutive effect. For the six months ended June 30, 2021, convertible senior notes were excluded due to anti-dilutive effect.

Note 17 -- Redeemable Noncontrolling Interest

The following table summarizes the activity of redeemable noncontrolling interest during the six months ended June 30, 2022 and 2021:


	2022			2021
Balance at January 1	$	89,955		$	—
Initial proceeds from Centerbridge		—			100,000
Increase (decrease):
Proceeds allocated to warrants*		—			(9,217	)
Issuance costs		—			(6,262	)
Issuance costs allocated to warrants*		—			577
Accrued cash dividends		1,342			458
Accretion - increasing dividend rates		906			336
Dividends paid		(2,508	)		—
Balance at March 31	$	89,695		$	85,892
Increase (decrease):
Accrued cash dividends		1,500			1,250
Accretion - increasing dividend rates		768			929
Balance at June 30	$	91,963		$	88,071

*Net decrease related to warrants of $8,640.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

For the three months ended June 30, 2022 and 2021, net income attributable to redeemable noncontrolling interest was $2,268 and $2,179, respectively, consisting of accrued cash dividends of $1,500 and $1,250, respectively, and accretion related to increasing dividend rates of $768 and $929, respectively. For the six months ended June 30, 2022 and 2021, net income attributable to redeemable noncontrolling interest was $4,516 and $2,973, respectively, consisting of accrued cash dividends of $2,842 and $1,708, respectively, and accretion related to increasing dividend rates of $1,674 and $1,265, respectively.

Note 18 -- Equity

Stockholders’ Equity

Common Stock

In March 2022, the Company’s Board of Directors authorized a plan to repurchase up to $20,000 of the Company’s common shares before commissions and fees during 2022. During the three and six months ended June 30, 2022, the Company repurchased and retired a total of 29,465 shares at a weighted average price per share of $63.92 under this authorized repurchase plan. The total cost of shares repurchased, inclusive of fees and commissions, during the three and six months ended June 30, 2022 was $1,884 or $63.95 per share.

On April 26, 2022, the Company’s Board of Directors declared a quarterly dividend of $0.40 per common share. The dividends were paid on June 17, 2022 to stockholders of record on May 17, 2022.

Warrants

At June 30, 2022, there were warrants outstanding and exercisable to purchase 750,000 shares of HCI common stock at an exercise price of $54.40. The warrants expire on February 26, 2025.

Share Repurchase Agreement

In conjunction with the issuance of the 4.75% Convertible Senior Notes as described in Note 10 -- “Long-Term Debt” under 4.75% Convertible Senior Notes, the Company used $66,853 of the net proceeds to repurchase and retire an aggregate of 1,037,600 shares of its common stock at a price of $64.43 per share from institutional investors.

Prepaid Share Repurchase Forward Contract

In March 2022, the Company’s share repurchase forward contract with Societe Generale, entered into in conjunction with the 2017 issuance of the 4.25% Convertible Senior Notes, was physically settled with the delivery from Societe Generale of 191,100 shares of HCI’s common stock to the Company.

Noncontrolling Interests

At June 30, 2022, there were 81,138,380 shares of TTIG’s common stock outstanding, of which 6,138,380 shares were not owned by HCI.

During the three and six months ended June 30, 2022, TTIG repurchased and retired a total of 45,239 and 66,983 shares, respectively, of its common stock surrendered by its employees to satisfy payroll tax liabilities

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

associated with the vesting of restricted shares. The total cost of purchasing noncontrolling interests during the three and six months ended June 30, 2022 was $262 and $389, respectively.

Note 19 -- Stock-Based Compensation

2012 Omnibus Incentive Plan

The Company currently has outstanding stock-based awards granted under the Plan which is currently active and available for future grants. At June 30, 2022, there were 1,108,940 shares available for grant.

Stock Options

Stock options granted and outstanding under the incentive plan vest over a period of four years and are exercisable over the contractual term of ten years.

A summary of the stock option activity for the three and six months ended June 30, 2022 and 2021 is as follows (option amounts not in thousands):


					Weighted
			Weighted		Average
			Average		Remaining	Aggregate
	Number of		Exercise		Contractual	Intrinsic
	Options		Price		Term	Value
Outstanding at January 1, 2022		440,000	$	45.25	6.6 years	$	18,119
Outstanding at March 31, 2022		440,000	$	45.25	6.3 years	$	10,494
Outstanding at June 30, 2022		440,000	$	45.25	6.1 years	$	9,354
Exercisable at June 30, 2022		357,500	$	44.23	5.8 years	$	7,965

Outstanding at January 1, 2021		440,000	$	45.25	7.6 years	$	3,113
Outstanding at March 31, 2021		440,000	$	45.25	7.3 years	$	13,464
Outstanding at June 30, 2021		440,000	$	45.25	7.1 years	$	23,883
Exercisable at June 30, 2021		275,000	$	43.40	6.6 years	$	15,436

There were no options exercised during the three and six months ended June 30, 2022 and 2021. For the three months ended June 30, 2022 and 2021, the Company recognized $161 and $219, respectively, of compensation expense which was included in general and administrative personnel expenses. For the six months ended June 30, 2022 and 2021, the Company recognized $345 and $442, respectively, of compensation expense. Deferred tax benefits related to stock options were $0 and $0 for the three months ended June 30, 2022 and 2021, respectively, and $0 and $1 for the six months ended June 30, 2022 and 2021, respectively. At June 30, 2022 and December 31, 2021, there was $660 and $1,005, respectively, of unrecognized compensation expense related to nonvested stock options. The Company expects to recognize the remaining compensation expense over a weighted-average period of 1.3 years.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Restricted Stock Awards

From time to time, the Company has granted and may grant restricted stock awards to certain executive officers, other employees and nonemployee directors in connection with their service to the Company. The terms of the Company’s outstanding restricted stock grants may include service, performance and market-based conditions. The determination of fair value with respect to the awards containing only service-based conditions is based on the market value of the Company’s common stock on the grant date. For awards with market-based conditions, the fair value is determined using a Monte Carlo simulation method, which calculates many potential outcomes for an award and then establishes fair value based on the most likely outcome.

Information with respect to the activity of unvested restricted stock awards during the three and six months ended June 30, 2022 and 2021 is as follows:


	Number of			Weighted
	Restricted			Average
	Stock			Grant Date
	Awards			Fair Value
Nonvested at January 1, 2022		679,997		$	39.72
Granted		4,000		$	70.58
Vested		(50,667	)	$	50.68
Forfeited		(3,265	)	$	45.85
Nonvested at March 31, 2022		630,065		$	39.00
Granted		3,000		$	67.30
Vested		(51,125	)	$	45.04
Forfeited		(700	)	$	45.61
Nonvested at June 30, 2022		581,240		$	38.61

Nonvested at January 1, 2021		423,787		$	43.79
Granted		548,086		$	36.95
Vested		(41,250	)	$	42.18
Cancelled		(141,600	)	$	43.76
Forfeited		(2,050	)	$	45.67
Nonvested at March 31, 2021		786,973		$	39.11
Granted		3,000		$	76.00
Vested		(68,541	)	$	43.80
Cancelled		(1,160	)	$	45.96
Forfeited		(9,060	)	$	46.44
Nonvested at June 30, 2021		711,212		$	38.71

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

The Company recognized compensation expense related to restricted stock, which is included in general and administrative personnel expenses, of $3,184 and $2,336 for the three months ended June 30, 2022 and 2021, respectively, and $6,452 and $4,241 for the six months ended June 30, 2022 and 2021, respectively. At June 30, 2022 and December 31, 2021, there was approximately $12,845 and $18,995, respectively, of total unrecognized compensation expense related to nonvested restricted stock arrangements. The Company expects to recognize the remaining compensation expense over a weighted-average period of 2.1 years. The following table summarizes information about deferred tax benefits recognized and tax benefits realized related to restricted stock awards and paid dividends, and the fair value of vested restricted stock for the three and six months ended June 30, 2022 and 2021.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Deferred tax benefits recognized	$	639	$	495	$	1,291	$	459
Tax benefits realized for restricted stock and paid dividends	$	902	$	1,357	$	1,304	$	1,412
Fair value of vested restricted stock	$	2,303	$	3,002	$	4,871	$	4,742

In February 2021, the Company cancelled 141,600 shares of restricted stock for employees who transitioned to TypTap Group. In exchange, these employees received replacement restricted stock issued under TTIG’s equity incentive plan.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

Subsidiary Equity Plan

For the three months ended June 30, 2022 and 2021, TypTap Group recognized compensation expense related to its stock-based awards of $897 and $1,599, respectively. For the six months ended June 30, 2022 and 2021, TypTap Group recognized compensation expense related to its stock-based awards of $1,782 and $1,814, respectively. At June 30, 2022 and December 31, 2021, there was $9,558 and $11,230, respectively, of unrecognized compensation expense related to nonvested restricted stock and stock options.

Note 20 -- Commitments and Contingencies

Agreement with Florida Department of Transportation

In May 2022, the Company entered into an agreement to sell 1.5 acres of land in Tampa, Florida for net proceeds of $14,500 to the Florida Department of Transportation (“FDOT”) in connection with an eminent domain proceeding for a planned road improvement project. Upon the sale closing in July 2022, the Company will retain from its investment property an office building on approximately six acres of land. See Note 21 -- “Subsequent Events” for additional information.

Obligations under Multi-Year Reinsurance Contracts

As of June 30, 2022, the Company has a contractual obligation related to one multi-year reinsurance contract. The contract was entered into effective June 1, 2022 and the Company’s previous two multi-year reinsurance contracts were commuted effective May 31, 2022. The contract may be cancelled only with the other party’s consent or when its respective experience account is positive at the end of each contract year. The table below represents the future minimum aggregate premium amounts payable to the reinsurer.


Due in 12 months following June 30,
2022	$	91,350
2023		91,350
Total	$	182,700

Capital Commitments

As described in Note 4 -- “Investments” under Limited Partnership Investments, the Company is contractually committed to capital contributions for limited partnership interests. At June 30, 2022, there was an aggregate unfunded balance of $6,465.

FIGA Assessments

In October 2021, the Florida Office of Insurance Regulation approved a 2022 assessment for the Florida Insurance Guaranty Association (“FIGA”) which is necessary to secure funds for the payment of covered claims of insolvent insurance companies. The 2022 FIGA assessment is levied at 0.70% on collected premiums of all covered lines of business except auto insurance. The surcharge, which is collectible from a policyholder, will be assessed on new and renewal policies with effective dates beginning January 1, 2022 through December 31, 2022.

In March 2022, the Florida Office of Insurance Regulation approved an assessment for FIGA which is necessary to secure funds for the payment of covered claims relating to the liquidation of one insurance company.

HCI GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

(Amounts in thousands, except share and per share amounts, unless otherwise stated)

The FIGA assessment is levied at 1.3% on collected premiums of all covered lines of business except auto insurance. The surcharge, which is collectible from a policyholder, will be assessed on new and renewal policies with effective dates beginning July 1, 2022 through June 30, 2023.

The Company’s insurance subsidiaries, as member insurers, are required to collect and remit the pass-through assessments to FIGA on a quarterly basis. As of June 30, 2022, the FIGA assessments payable by the Company were $954.

Note 21 -- Subsequent Events

On July 1, 2022, the Company closed on its agreement to sell 1.5 acres of land in Tampa, Florida for net proceeds of $14,500 to the FDOT in connection with the eminent domain proceeding for the planned road improvement project. This sale results in a net realized gain of $13,402 recognized in July 2022 which will be reflected in net investment income. Upon the close of the sale, the Company is retaining from its investment property an office building on approximately six acres of land.

On July 14, 2022, the Company’s Board of Directors declared a quarterly dividend of $0.40 per common share. The dividends are payable on September 16, 2022 to stockholders of record on August 19, 2022.

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion under this Item 2 in conjunction with our consolidated financial statements and related notes and information included elsewhere in this quarterly report on Form 10-Q and in our Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 10, 2022. Unless the context requires otherwise, as used in this Form 10-Q, the terms “HCI,” “we,” “us,” “our,” “the Company,” “our company,” and similar references refer to HCI Group, Inc., a Florida corporation incorporated in 2006, and its subsidiaries. All dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are in whole dollars unless specified otherwise.

Forward-Looking Statements

In addition to historical information, this quarterly report contains forward-looking statements as defined under federal securities laws. Such statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. Typically, forward-looking statements can be identified by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions. The important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include but are not limited to the effects of governmental regulation; changes in insurance regulations; the frequency and extent of claims; uncertainties inherent in reserve estimates; catastrophic events; changes in the demand for, pricing of, availability of or collectability of reinsurance; restrictions on our ability to change premium rates; increased rate pressure on premiums; the severity and impact of a pandemic; and other risks and uncertainties detailed herein and from time to time in our SEC reports.

OVERVIEW – General

HCI Group, Inc. is a Florida-based InsurTech company with operations in property and casualty insurance, reinsurance, real estate and information technology. After the reorganization of our business in the first quarter of 2021, we now manage our operations in the following organizational segments, based on managerial emphasis and evaluation of financial and operating performances:

HCPCI Insurance Operations

▪

Property and casualty insurance

▪

Reinsurance and other auxiliary operations

TypTap Group

▪

Property and casualty insurance

▪

Information technology

Real Estate Operations

Other Operations

▪

Holding company operations

For the three months ended June 30, 2022 and 2021, revenues from HCPCI insurance operations before intracompany elimination represented 69.8% and 77.6%, respectively, and revenues from TypTap Group represented 27.9% and 20.3%, respectively, of total revenues of all operating segments. For the six months ended June 30, 2022 and 2021, revenues from HCPCI insurance operations before intracompany elimination represented

69.8% and 77.8%, respectively, and revenues from TypTap Group represented 28.1% and 18.9%, respectively, of total revenues of all operating segments. At June 30, 2022 and December 31, 2021, HCPCI insurance operations’ total assets represented 55.2% and 58.7%, respectively, and TypTap Group’s total assets represented 33.1% and 29.3%, respectively, of the combined assets of all operating segments. See Note 13 -- “Segment Information” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q for additional information.

HCPCI Insurance Operations

Property and Casualty Insurance

HCPCI provides various forms of residential insurance products such as homeowners insurance, fire insurance, flood insurance and wind-only insurance. HCPCI is authorized to write residential property and casualty insurance in the states of Arkansas, California, Connecticut, Florida, Maryland, Massachusetts, New Jersey, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina and Texas. Currently, Florida is HCPCI’s primary market.

In 2021, HCPCI began providing quota share reinsurance on all in-force, new and renewal policies issued by United in the Northeast Region. HCPCI began renewing and/or replacing United policies in two states in December 2021, a third state in January 2022, and the fourth state in April 2022.

Reinsurance and other auxiliary operations

We have a Bermuda domiciled wholly-owned reinsurance subsidiary, Claddaugh Casualty Insurance Company Ltd. We selectively retain risk in Claddaugh, reducing the cost of third-party reinsurance. Claddaugh fully collateralizes its exposure to HCPCI and TypTap by depositing funds into a trust account. Claddaugh may mitigate a portion of its risk through retrocession contracts. Currently, Claddaugh does not provide reinsurance to non-affiliates. Other auxiliary operations also include claim adjusting and processing services.

TypTap Group

Property and Casualty Insurance

TypTap Insurance Group, Inc. (“TTIG”), our majority-owned subsidiary, currently has four subsidiaries: TypTap Insurance Company (“TypTap”), TypTap Management Company, Exzeo USA, Inc., and Cypress Tech Development Company which also owns Exzeo Software Private Limited, a subsidiary domiciled in India. TTIG is primarily engaged in the property and casualty insurance business and is currently using internally developed technology to collect and analyze claims and other supplemental data to generate savings and efficiency for its insurance operations.

TypTap, TTIG’s insurance subsidiary, has been the primary source of our organic growth in gross written premium since 2016. TypTap’s policies in force have increased from 6,721 in January 2018 to 75,421 at June 30, 2022. TypTap has been successful in using internally developed proprietary technology to underwrite, select and write policies efficiently. As of August 2, 2022, TypTap has been approved to offer homeowners coverage in 18

states outside of Florida. TypTap is currently operating in twelve states. In addition to the expansion in TypTap business, we also expect continued growth from the United policies assigned to TypTap through the renewal rights agreements acquired by HCI.

In 2021, TypTap began providing quota share reinsurance on all in-force, new and renewal policies issued by United in the Northeast Region. TypTap began renewing and/or replacing United policies in two states in December 2021, a third state in January 2022, and the fourth state in April 2022.

In June 2022, TypTap entered into a new reinsurance agreement with United where TypTap provides 100% quota share reinsurance on all of United’s personal lines insurance business in the Southeast Region from June 1, 2022 through May 31, 2023. In exchange, TypTap pays United a ceding commission of 16% of premium.

Information Technology

Our information technology operations include a team of experienced software developers with extensive knowledge in developing web-based products and applications for mobile devices. The operations, which are in Tampa, Florida and Noida, India, are focused on developing cloud-based, innovative products and services that support in-house operations as well as our third-party relationships with our agency partners and claim vendors. These products include SAMSTM, HarmonyTM, AtlasViewer® and ClaimColonyTM.

Real Estate Operations

Our real estate operations consist of properties we own and use for our own operations and multiple properties we own and operate for investment purposes. Properties used in operations consist of one Tampa office building and an insurance operations site in Ocala, Florida. Our investment properties include retail shopping centers, one office building, two marinas, and undeveloped land near TTIG’s headquarters in Tampa, Florida.

Other Operations

Holding company operations

Activities of our holding company, HCI Group, Inc., plus other companies that do not meet the quantitative and qualitative thresholds for a reportable segment comprise the operations of this segment.

Recent Events

On July 1, 2022, we closed on our agreement to sell 1.5 acres of land in Tampa, Florida for net proceeds of $14,500,000 to the Florida Department of Transportation in connection with the eminent domain proceeding for the planned road improvement project. This sale results in a net realized gain of $13,402,000.

On July 14, 2022, our Board of Directors declared a quarterly dividend of $0.40 per common share. The dividends are payable on September 16, 2022 to stockholders of record on August 19, 2022.

RESULTS OF OPERATIONS

The following table summarizes our results of operations for the three and six months ended June 30, 2022 and 2021 (dollar amounts in thousands, except per share amounts):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Revenue
Gross premiums earned	$	181,124		$	139,440		$	360,049		$	270,382
Premiums ceded		(56,205	)		(46,436	)		(109,367	)		(89,535	)
Net premiums earned		124,919			93,004			250,682			180,847
Net investment income		3,684			2,635			6,552			7,229
Net realized investment (losses) gains		(6	)		2,607			(320	)		3,720
Net unrealized investment (losses) gains		(4,234	)		1,489			(7,810	)		1,220
Policy fee income		1,052			992			2,109			1,962
Other income		511			777			1,753			1,400
Total revenue		125,926			101,504			252,966			196,378
Expenses
Losses and loss adjustment expenses		86,830			55,917			159,534			101,668
Policy acquisition and other underwriting expenses		26,863			23,169			56,271			46,234
General and administrative personnel expenses		15,301			10,546			29,335			20,196
Interest expense		1,515			2,000			2,116			4,079
Other operating expenses		6,977			4,775			13,269			9,002
Total expenses		137,486			96,407			260,525			181,179
(Loss) income before income taxes		(11,560	)		5,097			(7,559	)		15,199
Income tax (benefit) expense		(3,018	)		1,267			(1,808	)		4,524
Net (loss) income		(8,542	)		3,830			(5,751	)		10,675
Net income attributable to noncontrolling interests		(1,439	)		(1,913	)		(3,327	)		(2,610	)
Net (loss) income after noncontrolling interests	$	(9,981	)	$	1,917		$	(9,078	)	$	8,065
Ratios to Net Premiums Earned:
Loss Ratio		69.51	%		60.12	%		63.64	%		56.22	%
Expense Ratio		40.55	%		43.54	%		40.29	%		43.97	%
Combined Ratio		110.06	%		103.66	%		103.93	%		100.19	%
Ratios to Gross Premiums Earned:
Loss Ratio		47.94	%		40.10	%		44.31	%		37.60	%
Expense Ratio		27.97	%		29.04	%		28.05	%		29.41	%
Combined Ratio		75.91	%		69.14	%		72.36	%		67.01	%
(Loss) Earnings Per Share Data:
Basic	$	(1.04	)	$	0.25		$	(0.92	)	$	1.02
Diluted	$	(1.04	)	$	0.24		$	(0.92	)	$	0.98

Comparison of the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 2021

Our results of operations for the three months ended June 30, 2022 reflect net loss of approximately $8,542,000 or $1.04 loss per share, compared with net income of approximately $3,830,000 or $0.24 diluted earnings per share, for the three months ended June 30, 2021. The quarter-over-quarter decrease was due to a $30,913,000 increase in losses and loss adjustment expenses, a net decrease in income from our investment portfolio (consisting of net investment income and net realized and unrealized gains or losses) of $7,287,000, a $4,755,000 increase in general and administrative personnel expenses, and a $3,694,000 increase in policy acquisition and other underwriting expenses, offset by an increase in net premiums earned of $31,915,000 and a $485,000 decrease in interest expense.

Revenue

Gross Premiums Earned on a consolidated basis for the three months ended June 30, 2022 and 2021 were approximately $181,124,000 and $139,440,000, respectively. HCPCI gross premiums earned were $113,681,000 for the three months ended June 30, 2022 compared to $100,440,000 for the three months ended June 30, 2021. Gross premiums earned from the United insurance policies assumed were $16,237,000 for the three months ended June 30, 2022 compared to $23,707,000 for the three months ended June 30, 2021. TypTap’s gross premiums earned were $67,443,000 versus $39,000,000 for the same comparative period with the increase due to a greater number of policies in force from the organic growth in TypTap’s business and from the business assumed from United beginning June 1, 2021.

Premiums Ceded for the three months ended June 30, 2022 and 2021 were approximately $56,205,000 and $46,436,000, respectively, representing 31.0% and 33.3%, respectively, of gross premiums earned. The $9,769,000 increase was primarily attributable to higher reinsurance costs for the 2022 contract year due to an increased overall reinsurance coverage amount as a result of premium growth and expansion.

Our premiums ceded represent costs of reinsurance to cover losses from catastrophes that exceed the retention levels defined by our catastrophe excess of loss reinsurance contracts or to assume a proportional share of losses as defined in a quota share agreement. The rates we pay for reinsurance are based primarily on policy exposures reflected in gross premiums earned. Reinsurance costs can be decreased by a reduction in premiums ceded attributable to retrospective provisions under multi-year reinsurance contracts. For the three months ended June 30, 2022, premiums ceded included a decrease of $6,390,000 related to retrospective provisions compared with a decrease of $3,575,000 for the three months ended June 30, 2021. See “Economic Impact of Reinsurance Contracts with Retrospective Provisions” under “Critical Accounting Policies and Estimates.”

Net Premiums Written for the three months ended June 30, 2022 and 2021 totaled approximately $129,947,000 and $138,542,000, respectively. Net premiums written represent the premiums charged on policies issued during a fiscal period less any applicable reinsurance costs. The decrease in 2022 resulted from an increase in premiums ceded to reinsurers as described above. We had approximately 220,600 policies in force at June 30, 2022 (excluding policies assumed from United) as compared with approximately 150,000 policies in force at June 30, 2021.

Net Premiums Earned for the three months ended June 30, 2022 and 2021 were approximately $124,919,000 and $93,004,000, respectively, and reflect the gross premiums earned less reinsurance costs as described above.

The following is a reconciliation of our total Net Premiums Written to Net Premiums Earned for the three months ended June 30, 2022 and 2021 (amounts in thousands):


	Three Months Ended
	June 30,
	2022			2021
Net Premiums Written	$	129,947		$	138,542
Increase in Unearned Premiums		(5,028	)		(45,538	)
Net Premiums Earned	$	124,919		$	93,004

Net Investment Income for the three months ended June 30, 2022 and 2021 was approximately $3,684,000 and $2,635,000, respectively. The $1,049,000 increase was primarily attributable to a $1,194,000 increase in income from real estate investments and a $753,000 increase in income from available-for-sale fixed-maturity securities, offset by a $1,553,000 decrease in income from limited partnership investments. See Net Investment Income (Loss) under Note 4 -- “Investments” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

Net Realized Investment Losses for the three months ended June 30, 2022 were approximately $6,000 versus $2,607,000 of net realized investment gains for the three months ended June 30, 2021. The $2,613,000 decrease was primarily attributable to net gains from selling equity securities and other investments during 2021.

Net Unrealized Investment Losses for the three months ended June 30, 2022 were approximately $4,234,000 versus $1,489,000 of net unrealized investment gains for the three months ended June 30, 2021. The net unrealized investment loss for the three months ended June 30, 2022 was primarily attributable to an overall decline in the equity market compared with the three months ended June 30, 2021.

Expenses

Our consolidated Losses and Loss Adjustment Expenses amounted to approximately $86,830,000 and $55,917,000 for the three months ended June 30, 2022 and 2021, respectively. HCPCI losses and loss adjustment expenses were $48,692,000 for the three months ended June 30, 2022 compared to $39,641,000 for the three months ended June 30, 2021. The increase was primarily attributable to a $7,902,000 net increase in losses attributable to the United policies assumed due to an increase in the number of policies assumed from United and $1,074,000 of additional losses reported during the second quarter of 2022 from Tropical Storm Eta. Losses and loss adjustment expenses for TypTap were $38,692,000 versus $16,440,000 for the same comparative period. The increase was attributable to $16,500,000 of losses attributable to the greater number of TypTap policies in force, $2,507,000 of additional losses from policies renewed or assumed from United, and $3,445,000 of prior period loss development. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”

Policy Acquisition and Other Underwriting Expenses for the three months ended June 30, 2022 and 2021 were approximately $26,863,000 and $23,169,000 on a consolidated basis, respectively, and primarily reflect the amortization of deferred acquisition costs such as commissions payable to agents for production and renewal of policies, catastrophe allowance payable to United, and premium taxes. An increase in policy acquisition costs primarily results from premium growth. Policy acquisition expenses for HCPCI insurance operations were $16,583,000 for the three months ended June 30, 2022 compared to $15,470,000 for the three months ended June 30, 2021. The increase was due to amortization of increased costs associated with the increase in the number of policies assumed from United. TypTap Group policy acquisition expenses were $10,302,000 versus $7,574,000 for the same comparative period, with the increase attributable to amortization of increased commission costs related to the growth of TypTap’s policies in force over the past 12 months and the policies assumed from United.

General and Administrative Personnel Expenses for the three months ended June 30, 2022 and 2021 were approximately $15,301,000 and $10,546,000, respectively. Our general and administrative personnel expenses include salaries, wages, payroll taxes, stock-based compensation expenses, and employee benefit costs. Factors such as merit increases, changes in headcount, and periodic restricted stock grants, among others, cause fluctuations in this expense. In addition, our personnel expenses are decreased by the capitalization of payroll costs related to a project to develop software for internal use and the payroll costs associated with the processing and settlement of certain catastrophe claims which are recoverable from reinsurers under reinsurance contracts. The period-over-period increase of $4,755,000 was primarily attributable to an increase in the headcount of temporary and full-time employees and merit increases for non-executive employees effective in late February 2022.

Interest Expense for the three months ended June 30, 2022 and 2021 was approximately $1,515,000 and $2,000,000, respectively. The decrease primarily resulted from conversions of our 4.25% convertible senior notes during the second half of 2021, offset by interest expense related to our 4.75% convertible senior notes issued in May 2022.

Income Tax Benefit for the three months ended June 30, 2022 was approximately $3,018,000 for state, federal, and foreign income taxes resulting in an effective tax rate of 26.1% for 2022. This compared with approximately $1,267,000 of income tax expense for the three months ended June 30, 2021, resulting in an effective tax rate of 24.9% for 2021. The increase in the effective tax rate was primarily attributable to an increase in non-deductible compensation expense related to certain executive compensation and the increased Florida corporate tax rate effective January 1, 2022.

Ratios:

The loss ratio applicable to the three months ended June 30, 2022 (losses and loss adjustment expenses incurred related to net premiums earned) was 69.5% compared with 60.1% for the three months ended June 30, 2021. The increase was primarily due to the increase in losses and loss adjustment expenses as further described above, offset in part by the increase in net premiums earned.

The expense ratio applicable to the three months ended June 30, 2022 (defined as total expenses excluding losses and loss adjustment expenses related to net premiums earned) was 40.6% compared with 43.6% for the three months ended June 30, 2021. The decrease in our expense ratio was primarily attributable to the increase in net premiums earned and the decrease in interest expense, offset in part by the increase in general and administrative personnel expenses.

The combined ratio (total of all expenses in relation to net premiums earned) is the measure of overall underwriting profitability before other income. Our combined ratio for the three months ended June 30, 2022 was 110.1% compared with 103.7% for the three months ended June 30, 2021. The increase in 2022 was attributable to the factors described above.

Due to the impact our reinsurance costs have on net premiums earned from period to period, our management believes the combined ratio measured to gross premiums earned is more relevant in assessing overall performance. The combined ratio to gross premiums earned for the three months ended June 30, 2022 was 75.9% compared with 69.1% for the three months ended June 30, 2021. The increase in 2022 was primarily attributable to the increase in losses and loss adjustment expenses, offset by the increase in gross premiums earned.

Comparison of the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

Our results of operations for the six months ended June 30, 2022 reflect net loss of approximately $5,751,000 or $0.92 loss per share, compared with net income of approximately $10,675,000 or $0.98 diluted earnings per share, for the six months ended June 30, 2021. The period-over-period decrease was primarily due to a $57,866,000 increase in losses and loss adjustment expenses, a net decrease in income from our investment portfolio (consisting of net investment income/loss and net realized and unrealized gains/losses) of $13,747,000, a $10,037,000 increase in policy acquisition and other underwriting expenses, and a $9,139,000 increase in general and administrative personnel expenses, offset by an increase in net premiums earned of $69,835,000 and a $1,963,000 decrease in interest expense.

Revenue

Gross Premiums Earned on a consolidated basis for the six months ended June 30, 2022 and 2021 were approximately $360,049,000 and $270,382,000, respectively. HCPCI gross premiums earned were $231,984,000 for the six months ended June 30, 2022 compared to $202,571,000 for the six months ended June 30, 2021. Gross premiums earned from the United insurance policies assumed were $46,316,000 for the six months ended June 30, 2022 compared to $44,357,000 for the six months ended June 30, 2021. TypTap’s gross premiums earned were $128,065,000 versus $67,811,000 for the same comparative period with the increase due to a greater number of policies in force from the organic growth in TypTap’s business and from the business assumed from United beginning June 1, 2021.

Premiums Ceded for the six months ended June 30, 2022 and 2021 were approximately $109,367,000 and $89,535,000, respectively, representing 30.4% and 33.1%, respectively, of gross premiums earned. The $19,832,000 increase was primarily attributable to higher reinsurance costs for the 2022 contract year due to an increased overall reinsurance coverage amount as a result of premium growth and expansion.

For the six months ended June 30, 2022, premiums ceded included a decrease of $7,874,000 related to retrospective provisions compared with a net reduction of $8,255,000 for the six months ended June 30, 2021. See “Economic Impact of Reinsurance Contracts with Retrospective Provisions” under “Critical Accounting Policies and Estimates.”

Net Premiums Written for the six months ended June 30, 2022 and 2021 totaled approximately $254,079,000 and $221,291,000, respectively. The $32,788,000 increase in 2022 resulted primarily from the factors described earlier.

Net Premiums Earned for the six months ended June 30, 2022 and 2021 were approximately $250,682,000 and $180,847,000, respectively, and reflect the gross premiums earned less reinsurance costs as described above.

The following is a reconciliation of our total Net Premiums Written to Net Premiums Earned for the six months ended June 30, 2022 and 2021 (amounts in thousands):


	Six Months Ended
	June 30,
	2022			2021
Net Premiums Written	$	254,079		$	221,291
Increase in Unearned Premiums		(3,397	)		(40,444	)
Net Premiums Earned	$	250,682		$	180,847

Net Investment Income for the six months ended June 30, 2022 and 2021 was approximately $6,552,000 and $7,229,000, respectively. The $677,000 decrease was primarily attributable to a $1,456,000 decrease in

income from real estate investments and a $560,000 decrease in income from limited partnership investments, offset by a $760,000 increase in income from available-for-sale fixed-maturity securities. See Net Investment Income (Loss) under Note 4 -- “Investments” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

Net Unrealized Investment Losses for the six months ended June 30, 2022 were approximately $7,810,000 versus $1,220,000 of net unrealized investment gains for the six months ended June 30, 2021. The net unrealized investment loss for the six months ended June 30, 2022 was primarily attributable to an overall decline in the equity market compared with the six months ended June 30, 2021.

Expenses

Our consolidated Losses and Loss Adjustment Expenses amounted to approximately $159,534,000 and $101,668,000 for the six months ended June 30, 2022 and 2021, respectively. HCPCI losses and loss adjustment expenses were $92,687,000 for the six months ended June 30, 2022 compared to $73,080,000 for the six months ended June 30, 2021. The increase was primarily attributable to $3,000,000 of losses associated with growth in HCPCI’s Florida portfolio, a $13,972,000 net increase in losses attributable to the United policies assumed due to an increase in the number of policies assumed from United and $1,241,000 of additional losses reported during the first half of 2022 from Tropical Storm Eta. Losses and loss adjustment expenses for TypTap were $67,680,000 versus $28,752,000 for the same comparative period. The increase was attributable to $29,750,000 of losses attributable to the greater number of TypTap policies in force, $4,951,000 of additional losses from policies assumed or renewed from United, and $3,990,000 of prior period losses. See “Reserves for Losses and Loss Adjustment Expenses” under “Critical Accounting Policies and Estimates.”

Policy Acquisition and Other Underwriting Expenses for the six months ended June 30, 2022 and 2021 were approximately $56,271,000 and $46,234,000 on a consolidated basis, respectively. Policy acquisition expenses for HCPCI insurance operations were $36,348,000 for the six months ended June 30, 2022 compared to $33,041,000 for the six months ended June 30, 2021. The increase was due to amortization of increased costs associated with the increase in the number of policies assumed from United. TypTap Group policy acquisition expenses were $20,007,000 versus $13,252,000 for the same comparative period, with the increase attributable to amortization of increased commission costs related to the growth of TypTap’s policies in force over the past 12 months and the policies assumed from United.

General and Administrative Personnel Expenses for the six months ended June 30, 2022 and 2021 were approximately $29,335,000 and $20,196,000, respectively. The period-over-period increase of $9,139,000 was primarily attributable to an increase in the headcount of temporary and full-time employees, merit increases for non-executive employees effective in late February 2022, and higher stock-based compensation expense.

Interest Expense for the six months ended June 30, 2022 and 2021 was approximately $2,116,000 and $4,079,000, respectively. The decrease primarily resulted from conversions of our 4.25% convertible senior notes during the second half of 2021, offset by interest expense related to our 4.75% convertible senior notes issued in May 2022.

Income Tax Benefit for the six months ended June 30, 2022 was approximately $1,808,000 for state, federal, and foreign income taxes resulting in an effective tax rate of 23.9% for 2022. This compared with approximately $4,524,000 of income tax expense for the six months ended June 30, 2021, resulting in an effective tax rate of 29.8% for 2021. The decrease in the effective tax rate was primarily attributable to the recognition of tax benefits attributable to restricted stock that vested in February and May 2022.

Ratios:

The loss ratio applicable to the six months ended June 30, 2022 (losses and loss adjustment expenses incurred related to net premiums earned) was 63.6% compared with 56.2% for the six months ended June 30, 2021. The increase was primarily due to the increase in losses and loss adjustment expenses as further described above, offset in part by the increase in net premiums earned.

The expense ratio applicable to the six months ended June 30, 2022 was 40.3% compared with 44.0% for the six months ended June 30, 2021. The decrease in our expense ratio was primarily attributable to the increase in net premiums earned and the decrease in interest expense, offset in part by the increase in policy acquisition, underwriting and personnel expenses.

The combined ratio is the measure of overall underwriting profitability before other income. Our combined ratio for the six months ended June 30, 2022 was 103.9% compared with 100.2% for the six months ended June 30, 2021. The increase in 2022 was attributable to the factors described above.

Due to the impact our reinsurance costs have on net premiums earned from period to period, our management believes the combined ratio measured to gross premiums earned is more relevant in assessing overall performance. The combined ratio to gross premiums earned for the six months ended June 30, 2022 was 72.4% compared with 67.0% for the six months ended June 30, 2021. The increase in 2022 was primarily attributable to the increase in losses and loss adjustment expenses, offset by the increase in gross premiums earned.

Seasonality of Our Business

Our insurance business is seasonal as hurricanes and tropical storms affecting Florida, our primary market, and other southeastern states typically occur during the period from June 1st through November 30th of each year. Winter storms in the northeast usually occur during the period between December 1st and March 31st of each year. Also, with our reinsurance treaty year typically effective June 1st of each year, any variation in the cost of our reinsurance, whether due to changes in reinsurance rates, coverage levels or changes in the total insured value of our policy base, will occur and be reflected in our financial results beginning June 1st of each year.

LIQUIDITY AND CAPITAL RESOURCES

Throughout our history, our liquidity requirements have been met through issuances of our common and preferred stock, debt offerings and funds from operations. We expect our future liquidity requirements will be met by funds from operations, primarily the cash received by our insurance subsidiaries from premiums written and investment income. We may consider raising additional capital through debt and equity offerings to support our growth and future investment opportunities.

Our insurance subsidiaries require liquidity and adequate capital to meet ongoing obligations to policyholders and claimants and to fund operating expenses. In addition, we attempt to maintain adequate levels of liquidity and surplus to manage any differences between the duration of our liabilities and invested assets. In the insurance industry, cash collected for premiums from policies written is invested, interest and dividends are earned thereon, and losses and loss adjustment expenses are paid out over a period of years. This period of time varies by the circumstances surrounding each claim. With the exception of litigated claims, substantially all of our losses and loss adjustment expenses are fully settled and paid within 100 days of the claim receipt date. Additional cash outflow occurs through payments of underwriting costs such as commissions, taxes, payroll, and general overhead expenses.

We believe that we maintain sufficient liquidity to pay claims and expenses, as well as to satisfy commitments in the event of unforeseen events such as reinsurer insolvencies, inadequate premium rates, or reserve deficiencies. We maintain a comprehensive reinsurance program at levels management considers adequate to diversify risk and safeguard our financial position.

In the future, we anticipate our primary use of funds will be to pay claims, reinsurance premiums, interest, and dividends and to fund operating expenses and real estate acquisitions.

Revolving Credit Facility, Convertible Senior Notes, Promissory Notes, and Finance Leases

The following table summarizes the principal and interest payment obligations of our indebtedness at June 30, 2022:


	Maturity Date	Payment Due Date
4.75% Convertible Senior Notes*	June 2042	June 1 and December 1**
4.25% Convertible Senior Notes	March 2037	March 1 and September 1
3.75% Callable Promissory Note	Through September 2036	1st day of each month
4.55% Promissory Note	Through August 2036	1st day of each month
3.90% Promissory Note	Through April 2032	1st day of each month
Finance leases	Through October 2024	Various
Revolving credit facility	Through December 2023	January 1, April 1, July 1, October 1


*	At the option of the noteholders, we may be required to repurchase for cash all or any portion of the notes on June 1, 2027, June 1, 2032 or June 1, 2037.
**	The cash interest is payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2022.

See Note 10 -- “Long-Term Debt” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q.

Share Repurchase Plan

In March 2022, the Board approved a plan to repurchase up to $20,000,000 of common shares during 2022 under which we may purchase shares of common stock in open market purchases, block transactions and privately negotiated transactions in accordance with applicable federal securities laws. At June 30, 2022, there was approximately $18,117,000 available under the plan. See Note 18 -- “Equity” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q for more information.

Limited Partnership Investments

Our limited partnership investments consist of six private equity funds managed by their general partners. Two of these funds have unexpired capital commitments which are callable at the discretion of the fund’s general partner for funding new investments or expenses of the fund. Although capital commitments for four of the remaining funds have expired, the general partners may request additional funds under certain circumstances. At June 30, 2022, there was an aggregate unfunded capital balance of $6,465,000. See Limited Partnership Investments under Note 4 -- “Investments” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q for additional information.

Real Estate Investment

Real estate has long been a significant component of our overall investment portfolio. It diversifies our portfolio and helps offset the volatility of other higher-risk investments. Thus, we may consider increasing our real estate investment portfolio should an opportunity arise.

We currently have a 90% equity interest in FMKT Mel JV, LLC, a Florida limited liability company for which we are not the primary beneficiary. In June 2022, FMKT Mel JV sold its last outparcel and recognized a net gain of $572,000. We anticipate that the liquidation of FMKT Mel JV and the distribution of its earnings will take place during the third quarter of 2022.

Sources and Uses of Cash

Cash Flows for the Six Months Ended June 30, 2022

Net cash provided by operating activities for the six months ended June 30, 2022 was approximately $21,629,000, which consisted primarily of cash received from net premiums written, reinsurance recoveries (of approximately $26,584,000) less cash disbursed for operating expenses, losses and loss adjustment expenses and interest payments. Net cash used in investing activities of $360,095,000 was primarily due to the purchases of fixed-maturity and equity securities of $394,021,000, the purchases of property and equipment of $4,229,000, and the purchase of intangible assets from United of $3,800,000, offset by the proceeds from sales of fixed-maturity and equity securities of $35,921,000, the proceeds from calls, repayments and maturities of fixed-maturity securities of $4,020,000, and distributions received from limited partnership investments of $2,335,000. Net cash provided by financing activities totaled $70,267,000, which was primarily due to the proceeds from issuance of 4.75% Convertible Senior Notes of $172,500,000, offset by $69,987,000 of share repurchases, net repayment of our revolving credit facility of $15,000,000, $8,091,000 of net cash dividend payments, debt issuance costs paid of $5,757,000, cash dividends paid to redeemable noncontrolling interest of $2,508,000, and repayments of long-term debt of $501,000.

Cash Flows for the Six Months Ended June 30, 2021

Net cash provided by operating activities for the six months ended June 30, 2021 was approximately $95,647,000, which consisted primarily of cash received from net premiums written, reinsurance recoveries (of approximately $23,775,000) less cash disbursed for operating expenses, losses and loss adjustment expenses and interest payments. Net cash provided by investing activities of $37,805,000 was primarily due to the proceeds from sales of fixed-maturity and equity securities of $71,191,000, the proceeds from calls, repayments and maturities of fixed-maturity securities of $16,677,000, and distributions received from limited partnership investments of $2,653,000, offset by the purchases of fixed-maturity and equity securities of $51,378,000, and the purchases of property and equipment of $1,275,000. Net cash provided by financing activities totaled $61,538,000, which consisted of net proceeds of $93,738,000 from Centerbridge for investment in TTIG, offset by $6,452,000 of net cash dividend payments, net repayment of our revolving credit facility of $23,750,000, and $1,308,000 used in share repurchases.

Investments

The main objective of our investment policy is to maximize our after-tax investment income with a reasonable level of risk given the current financial market. Our excess cash is invested primarily in money market accounts, certificates of deposit, and fixed-maturity and equity securities.

At June 30, 2022, we had $434,290,000 of fixed-maturity and equity investments, which are carried at fair value. Changes in the general interest rate environment affect the returns available on new fixed-maturity investments. While a rising interest rate environment enhances the returns available on new investments, it reduces the market value of existing fixed-maturity investments and thus the availability of gains on disposition. A decline in interest rates reduces the returns available on new fixed-maturity investments but increases the market value of existing fixed-maturity investments, creating the opportunity for realized investment gains on disposition.

In the future, we may alter our investment policy as to investments in federal, state and municipal obligations, preferred and common equity securities and real estate mortgages, as permitted by applicable law, including insurance regulations.

OFF-BALANCE SHEET ARRANGEMENTS

As of June 30, 2022, we had unexpired capital commitments for limited partnerships in which we hold interests. Such commitments are not recognized in the financial statements but are required to be disclosed in the notes to the financial statements. See Note 20 -- “Commitments and Contingencies” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q for additional information.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these consolidated financial statements requires us to make estimates and judgments to develop amounts reflected and disclosed in our financial statements. Material estimates that are particularly susceptible to significant change in the near term are related to our losses and loss adjustment expenses, which include amounts estimated for claims incurred but not yet reported. We base our estimates on various assumptions and actuarial data we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates.

We believe our accounting policies specific to losses and loss adjustment expenses, reinsurance recoverable, reinsurance with retrospective provisions, deferred income taxes, stock-based compensation expense, limited partnership investments, acquired intangible assets, warrants, and redeemable noncontrolling interest involve our most significant judgments and estimates material to our consolidated financial statements.

Reserves for Losses and Loss Adjustment Expenses

Our liability for losses and loss adjustment expense (“Reserves”) is specific to property insurance, which is our insurance subsidiaries’ only line of business. The Reserves include both case reserves on reported claims and our reserves for incurred but not reported (“IBNR”) losses. At each period end date, the balance of our Reserves is based on our best estimate of the ultimate cost of each claim for those known cases and the IBNR loss reserves are estimated based primarily on our historical experience. Changes in the estimated liability are charged or credited to operations as the losses and loss adjustment expenses are adjusted.

The IBNR represents our estimate of the ultimate cost of all claims that have occurred but have not been reported to us, and in some cases may not yet be known to the insured, and future development of reported claims. Estimating the IBNR component of our Reserves involves considerable judgment on the part of management. At June 30, 2022, $177,320,000 of the total $238,824,000 we have reserved for losses and loss adjustment expenses is attributable to our estimate of IBNR. The remaining $61,504,000 relates to known cases which have been reported but not yet fully settled in which case we have established a reserve based on currently available information and our best estimate of the cost to settle each claim. At June 30, 2022, $42,941,000 of the $61,504,000 in reserves for known cases relates to claims incurred during prior years.

Our Reserves increased from $237,165,000 at December 31, 2021 to $238,824,000 at June 30, 2022. The $1,659,000 increase is comprised of $92,101,000 in reserves established for the 2022 loss year, offset by reductions in our Reserves of $21,777,000 specific to Hurricane Irma, Hurricane Michael, Hurricane Sally and Tropical Storm Eta, and reductions in our non-catastrophe Reserves of $49,711,000 for 2021 and $18,954,000 for 2020 and prior loss years. The Reserves established for 2022 claims is primarily driven by an allowance for those claims that have been incurred but not reported to the company as of June 30, 2022. The decrease of $68,665,000 specific to our 2021 and prior loss-year reserves is due to settlement of claims related to those loss years.

Based on all information known to us, we consider our Reserves at June 30, 2022 to be adequate to cover our claims for losses that have occurred as of that date including losses yet to be reported to us. However, these estimates are continually reviewed by management as they are subject to significant variability and may be impacted by trends in claim severity and frequency or unusual exposures that have not yet been identified. As part of the process, we review historical data and consider various factors, including known and anticipated

regulatory and legal developments, changes in social attitudes, inflation and economic conditions. As experience develops and other data becomes available, these estimates are revised, as required, resulting in increases or decreases to the existing unpaid losses and loss adjustment expenses. Adjustments are reflected in the results of operations in the period in which they are made, and the liabilities may deviate substantially from prior estimates.

Economic Impact of Reinsurance Contracts with Retrospective Provisions

From time to time, our reinsurance contracts may include retrospective provisions that adjust premiums in the event losses are minimal or zero. In accordance with accounting principles generally accepted in the United States of America, we will recognize an asset in the period in which the absence of loss experience obligates the reinsurer to pay cash or other consideration under the contract. In the event that a loss arises, we will derecognize such asset in the period in which a loss arises. Such adjustments to the asset, which accrue throughout the contract term, will negatively impact our operating results when a catastrophic loss event occurs during the contract term.

For the three months ended June 30, 2022 and 2021, we accrued benefits of $6,390,000 and $3,575,000, respectively. For the six months ended June 30, 2022 and 2021, we accrued benefits of $7,874,000 and $8,255,000, respectively. The accrual of benefits was recognized as a reduction in ceded premiums.

As of June 30, 2022, we had $10,938,000 of accrued benefits, the amount that would be charged to earnings in the event we experience a catastrophic loss that exceeds the coverage limit provided under such agreement.

We believe the credit risk associated with the collectability of accrued benefits is minimal based on available information about each reinsurer’s financial position and each reinsurer’s demonstrated ability to comply with contract terms.

The above and other accounting estimates and their related risks that we consider to be our critical accounting estimates are more fully described in our Annual Report on Form 10-K, which we filed with the SEC on March 10, 2022. For the six months ended June 30, 2022, there have been no other material changes with respect to any of our critical accounting policies.

RECENT ACCOUNTING PRONOUNCEMENTS

There have been no recent accounting pronouncements or changes in recent accounting pronouncements during the six months ended June 30, 2022, as compared to those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, that are of significance, or potential significance, to the Company.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our investment portfolios at June 30, 2022 included fixed-maturity and equity securities, the purposes of which are not for speculation. Our main objective is to maximize after-tax investment income and maintain sufficient liquidity to meet our obligations while minimizing market risk, which is the potential economic loss from adverse fluctuations in securities prices. We consider many factors including credit ratings, investment concentrations, regulatory requirements, anticipated fluctuation of interest rates, durations and market conditions in developing investment strategies. Our investment securities are managed primarily by outside investment advisors and are overseen by the investment committee appointed by our Board of Directors. From time to time, our investment committee may decide to invest in low risk assets such as U.S. government bonds.

Our investment portfolios are exposed to interest rate risk, credit risk and equity price risk. Fiscal and economic uncertainties caused by any government action or inaction may exacerbate these risks and potentially have adverse impacts on the value of our investment portfolios.

We classify our fixed-maturity securities as available-for-sale and report any unrealized gains or losses, net of deferred income taxes, as a component of other comprehensive income within our stockholders’ equity. As such, any material temporary changes in their fair value can adversely impact the carrying value of our stockholders’ equity. In addition, we recognize any unrealized gains or losses related to our equity securities in our statement of income. As a result, our results of operations can be materially affected by the volatility in the equity market.

Interest Rate Risk

Our fixed-maturity securities are sensitive to potential losses resulting from unfavorable changes in interest rates. We manage the risk by analyzing anticipated movement in interest rates and considering our future capital needs.

The following table illustrates the impact of hypothetical changes in interest rates to the fair value of our fixed-maturity securities at June 30, 2022 (amounts in thousands):


Hypothetical Change in Interest Rates	Estimated Fair Value		Change in Estimated Fair Value			Percentage Increase (Decrease) in Estimated Fair Value
300 basis point increase	$	380,227	$	(18,344	)		-4.60	%
200 basis point increase		386,341		(12,230	)		-3.07	%
100 basis point increase		392,455		(6,116	)		-1.53	%
100 basis point decrease		404,685		6,114			1.53	%
200 basis point decrease		410,758		12,187			3.06	%
300 basis point decrease		416,417		17,846			4.48	%

Credit Risk

Credit risk can expose us to potential losses arising principally from adverse changes in the financial condition of the issuers of our fixed-maturity securities. We mitigate the risk by investing in fixed-maturity securities that are generally investment grade, by diversifying our investment portfolio to avoid concentrations in any single issuer or business sector, and by continually monitoring each individual security for declines in credit quality. While we emphasize credit quality in our investment selection process, significant downturns in the markets or general economy may impact the credit quality of our portfolio.

The following table presents the composition of our fixed-maturity securities, by rating, at June 30, 2022 (amounts in thousands):


			% of Total				% of Total
	Amortized		Amortized		Estimated		Estimated
Comparable Rating	Cost		Cost		Fair Value		Fair Value
AAA	$	93,368		23	$	93,273		23
AA+, AA, AA-		281,539		70		276,805		69
A+, A, A-		12,791		3		12,569		3
BBB+, BBB, BBB-		14,335		3		14,115		4
CCC+, CC and Not rated		1,811		1		1,809		1
Total	$	403,844		100	$	398,571		100

Equity Price Risk

Our equity investment portfolio at June 30, 2022 included common stocks, perpetual preferred stocks, mutual funds and exchange-traded funds. We may incur losses due to adverse changes in equity security prices. We manage the risk primarily through industry and issuer diversification and asset mix.

The following table illustrates the composition of our equity securities at June 30, 2022 (amounts in thousands):


			% of Total
	Estimated		Estimated
	Fair Value		Fair Value
Stocks by sector:
Consumer	$	7,360		21
Financial		5,747		16
Technology		1,903		5
Other (1)		2,570		7
		17,580		49
Mutual funds and exchange-traded funds by type:
Debt		15,087		42
Equity		3,052		9
Total	$	35,719		100

(1)

Represents an aggregate of less than 5% sectors.

Foreign Currency Exchange Risk

At June 30, 2022, we did not have any material exposure to foreign currency related risk.

ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial and accounting officer), we have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, and, based on this evaluation, our chief executive officer and our chief financial officer have concluded that these disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, implementation of possible controls and procedures depends on management’s judgment in evaluating their benefits relative to costs.

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

The Company is a party to claims and legal actions arising routinely in the ordinary course of our business. Although we cannot predict with certainty the ultimate resolution of the claims and lawsuits asserted against us, we do not believe that any currently pending legal proceedings to which we are a party will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

ITEM 1A – RISK FACTORS

There have been no material changes in the risk factors previously disclosed in the section entitled “Risk Factors” in our Form 10-K, which was filed with the SEC on March 10, 2022.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)

Sales of Unregistered Securities and Use of Proceeds

All information related to sales of unregistered securities have been reported in Current Report on Form 8-K filings.

(b)

Repurchases of Securities

The table below summarizes the number of common shares repurchased under the share repurchase agreement and the 2022 repurchase plan approved by our Board of Directors, and also the number of common shares surrendered by employees to satisfy payroll tax liabilities associated with the vesting of restricted shares (dollar amounts in thousands, except share and per share amounts):


	Total Number of Shares		Average Price Paid		Total Number of Shares Purchased as Part of Publicly Announced Plans		Maximum Dollar Value of Shares That May Yet Be Purchased Under The Plans
For the Month Ended	Purchased		Per Share		or Programs (a)		or Programs (b)
April 30, 2022		6,264	$	64.89		6,264	$	19,594
May 31, 2022 (c)		1,060,074	$	64.43		9,284	$	18,996
June 30, 2022		13,917	$	63.18		13,917	$	18,117
		1,080,255	$	64.42		29,465

(a)

In March 2022, our Board of Directors authorized a plan announced March 14, 2022 to repurchase up to $20,000 of the Company’s common shares before commissions and fees during 2022.

(b)

Represents the balances before commissions and fees at the end of each month. See Note 18 -- “Equity” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q for additional information.

(c)

During May 2022, 1,037,600 shares of common stock were repurchased from institutional investors (see Note 18 -- “Equity” to our unaudited consolidated financial statements under Item 1 of this Quarterly Report on Form 10-Q for additional information).

Working Capital Restrictions and Other Limitations on Payment of Dividends

We are not subject to working capital restrictions or other limitations on the payment of dividends. Our insurance subsidiaries, however, are subject to restrictions on the dividends they may pay. Those restrictions could impact HCI’s ability to pay future dividends.

Under Florida law, a domestic insurer may not pay any dividend or distribute cash or other property to its stockholder except out of that part of its available and accumulated capital and surplus funds which is derived from realized net operating profits on its business and net realized capital gains. Additionally, a Florida domestic insurer may not make dividend payments or distributions to its stockholder without prior approval of the Florida Office of Insurance Regulation if the dividend or distribution would exceed the larger of (1) the lesser of (a) 10.0% of its capital surplus or (b) net income, not including realized capital gains, plus a two year carry forward, (2) 10.0% of capital surplus with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains or (3) the lesser of (a) 10.0% of capital surplus or (b) net investment income plus a three year carry forward with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains.

Alternatively, a Florida domestic insurer may pay a dividend or distribution without the prior written approval of the Florida Office of Insurance Regulation (1) if the dividend is equal to or less than the greater of (a) 10.0% of the insurer’s capital surplus as regards policyholders derived from realized net operating profits on its business and net realized capital gains or (b) the insurer’s entire net operating profits and realized net capital gains derived during the immediately preceding calendar year, (2) the insurer will have policy holder capital surplus equal to or exceeding 115.0% of the minimum required statutory capital surplus after the dividend or distribution, (3) the insurer files a notice of the dividend or distribution with the Florida Office of Insurance Regulation at least ten business days prior to the dividend payment or distribution and (4) the notice includes a certification by an officer of the insurer attesting that, after the payment of the dividend or distribution, the insurer will have at least 115% of required statutory capital surplus as to policyholders. Except as provided above, a Florida domiciled insurer may only pay a dividend or make a distribution (1) subject to prior approval by the Florida Office of Insurance Regulation or (2) 30 days after the Florida Office of Insurance Regulation has received notice of such dividend or distribution and has not disapproved it within such time.

During the six months ended June 30, 2022, our insurance subsidiaries paid dividends of $12,000,000 to HCI.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 – MINE SAFETY DISCLOSURES

None.

ITEM 5 – OTHER INFORMATION

None.

ITEM 6 – EXHIBITS

The following documents are filed as part of this report:


EXHIBIT
NUMBER		DESCRIPTION

3.1		Articles of Incorporation, with amendments. Incorporated by reference to the correspondingly numbered exhibit to our Form 10-Q filed August 7, 2013.

3.1.1		Articles of Amendment to Articles of Incorporation designating the rights, preferences and limitations of Series B Junior Participating Preferred Stock. Incorporated by reference to Exhibit 3.1 to our Form 8-K filed October 18, 2013.

3.1.2		Articles of Amendment to Articles of Incorporation cancelling the rights, preferences and limitations of Series B Junior Participating Preferred Stock. Incorporated by reference to Exhibit 3.1 to our Form 8-K filed May 15, 2020.

3.2		Bylaws, with amendments. Incorporated by reference to the correspondingly numbered exhibit to our Form 8-K filed September 13, 2019.

4.1		Form of common stock certificate. Incorporated by reference to the correspondingly numbered exhibit to our Form 10-Q filed November 7, 2013.

4.2		Common Stock Purchase Warrant, dated February 26, 2021, issued by HCI Group, Inc. to CB Snowbird Holdings, L.P. Incorporated by reference to Exhibit 4.1 of our Form 8-K filed March 1, 2021.

4.3		Indenture, dated May 23, 2022, by and between HCI Group, Inc. and The Bank of New York Mellon Trust Company, N.A.

4.6		Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 12, 2021.

4.9		See Exhibits 3.1, 3.1.1, 3.1.2 and 3.2 of this report for provisions of the Articles of Incorporation, as amended, and our Bylaws, as amended, defining certain rights of security holders.

4.10		Indenture, dated March 3, 2017, between HCI Group, Inc. and The Bank of New York Mellon Trust Company, N.A. Incorporated by reference to Exhibit 4.1 of our Form 8-K filed March 3, 2017.

4.11		Form of Global 4.25% Convertible Senior Note due 2037 (included in Exhibit 4.1). Incorporated by reference to Exhibit 4.1 of our Form 8-K filed March 3, 2017.

10.1		Preferred Stock Purchase Agreement, dated February 26, 2021, among TypTap Insurance Group, Inc., HCI Group, Inc., and CB Snowbird Holdings, L.P. Incorporated by reference to the corresponding numbered exhibit to our Form 8-K filed March 1, 2021.

10.2		Amended and Restated Articles of Incorporation of TypTap Insurance Group, Inc. filed February 26, 2021. Incorporated by reference to the corresponding numbered exhibit to our Form 8-K filed March 1, 2021.

10.3		Shareholders Agreement, dated February 26, 2021, among TypTap Insurance Group, Inc., CB Snowbird Holdings, L.P., HCI Group, Inc., and the other shareholders party thereto. Incorporated by reference to the corresponding numbered exhibit to our Form 8-K filed March 1, 2021.


10.4		Parent Guaranty Agreement, dated February 26, 2021, between HCI Group, Inc. and CB Snowbird Holdings, L.P. Incorporated by reference to the corresponding numbered exhibit to our Form 8-K filed March 1, 2021.

10.5**		HCI Group, Inc. 2012 Omnibus Incentive Plan as revised April 26, 2022. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed May 6, 2022.

10.6**		HCI Group, Inc. (formerly known as Homeowners Choice, Inc.) 2007 Stock Option and Incentive Plan. Incorporated by reference to the correspondingly numbered exhibit to our Form 10-Q filed August 29, 2008.

10.7**		Executive Employment Agreement dated November 23, 2016 between Mark Harmsworth and HCI Group, Inc. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 3, 2017.

10.31		Property Catastrophe First Excess of Loss Reinsurance Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.32		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.33		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.34		Joinder, Second Amendment to Credit Agreement and Modification of Other Loan Documents. Incorporated by reference to the corresponding numbered exhibit to our Form 8-K filed January 28, 2021.

10.40		Reinstatement Premium Protection Reinsurance Contract (For First Excess Cat) effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.41		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.42		Property Catastrophe First Excess of Loss Reinsurance Contract effective June 1, 2021 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.


10.43		Reinstatement Premium Protection Reinsurance Contract (For First Excess Cat) effective June 1, 2021 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.44		7th Layer Non-Florida Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.45		Flood Property Catastrophe Excess of Loss Reinsurance Contract effective July 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.48**		TypTap Insurance Group, Inc. 2021 Equity Incentive Plan. Incorporated by reference to Exhibit 10.5 of our Form 8-K filed March 1, 2021.

10.49**		Form of Restricted Stock Award Agreement of TypTap Insurance Group, Inc. Incorporated by reference to Exhibit 10.6 of our Form 8-K filed March 1, 2021.

10.50		Exchange Agreement, dated August 26, 2021, by and between HCI Group, Inc. and Citadel Equity Fund Ltd. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed November 9, 2021.

10.51**		Stock Option Agreement between Paresh Patel and TypTap Insurance Group, Inc. dated October 1, 2021. Incorporated by reference to Exhibit 99.1 to our Form 8-K filed October 7, 2021.

10.52**		TypTap Insurance Group, Inc. 2021 Omnibus Incentive Plan. Incorporated by reference to Exhibit 99.2 of our Form 8-K filed October 7, 2021.

10.53		Purchase Agreement, dated May 18, 2022, by and among HCI Group, Inc., JMP Securities LLC and Truist Securities, Inc., as representatives of the several purchasers named therein. Incorporated by reference to Exhibit 10.1 of our Form 8-K filed May 23, 2022.

10.57		Form of executive restricted stock award contract. Incorporated by reference to Exhibit 10.57 to our Form 10-Q filed May 1, 2014.

10.58		Purchase Agreement, dated February 28, 2017, by and between HCI Group, Inc. and JMP Securities LLC and SunTrust Robinson Humphrey, Inc., as representatives of the several initial purchasers named therein. Incorporated by reference to Exhibit 10.1 of our Form 8-K filed February 28, 2017.

10.59		Prepaid Forward Contract, dated February 28, 2017 and effective as of March 3, 2017, between HCI Group, Inc. and Societe Generale. Incorporated by reference to Exhibit 10.1 of our Form 8-K filed March 3, 2017.

10.60		Credit Agreement, Promissory Note, Security and Pledge Agreement, dated December 5, 2018, between HCI Group, Inc. and Fifth Third Bank. Incorporated by reference to Exhibits 99.1, 99.2, and 99.3 of our Form 8-K filed December 6, 2018.

10.88**		Nonqualified Stock Option Agreement between Paresh Patel and HCI Group, Inc. dated January 7, 2017. Incorporated by reference to Exhibit 99.2 to our Form 8-K filed January 11, 2017.


10.99**		Restricted Stock Award Contract between Paresh Patel and HCI Group, Inc. dated January 7, 2017. Incorporated by reference to Exhibit 99.1 to our Form 8-K filed January 11, 2017.

10.101**		Restricted Stock Award Contract between Paresh Patel and HCI Group, Inc. dated February 8, 2018. Incorporated by reference to Exhibit 99.1 to our Form 8-K filed February 14, 2018.

10.102**		Nonqualified Stock Option Agreement between Paresh Patel and HCI Group, Inc. dated February 8, 2018. Incorporated by reference to Exhibit 99.2 to our Form 8-K filed February 14, 2018.

10.103**		Restricted Stock Award Contract between Paresh Patel and HCI Group, Inc. dated January 15, 2019. Incorporated by reference to Exhibit 99.1 to our Form 8-K filed January 22, 2019.

10.104**		Nonqualified Stock Option Agreement between Paresh Patel and HCI Group, Inc. dated January 15, 2019. Incorporated by reference to Exhibit 99.2 to our Form 8-K filed January 22, 2019.

10.105**		Restricted Stock Award Contract between Paresh Patel and HCI Group, Inc. dated January 16, 2020. Incorporated by reference to Exhibit 99.1 to our Form 8-K filed January 23, 2020.

10.106**		Nonqualified Stock Option Agreement between Paresh Patel and HCI Group, Inc. dated January 16, 2020. Incorporated by reference to Exhibit 99.2 to our Form 8-K filed January 23, 2020.

10.107		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2021 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.108		Non-Florida Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.109		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2021 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.110		Non-Florida Reinstatement Premium Protection Reinsurance Contract effective June 1, 2021, issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.111		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2021, issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.112		Top Layer Flood/Wind Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.


10.113		Property Catastrophe First Excess of Loss Reinsurance Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.114		Reinstatement Premium Protection Reinsurance Contract (For First Excess Cat) effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.115		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.116		Property Catastrophe First Excess of Loss Reinsurance Contract effective June 1, 2021 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.117		Reinstatement Premium Protection Reinsurance Contract (For First Excess Cat) effective June 1, 2021 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.118		Non-Florida Property Catastrophe $6MXS$4M Excess of Loss Reinsurance Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.119		Non-Florida Reinstatement Premium Protection Reinsurance Contract (For $6MXS$4M Excess Cat) effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.120		Reimbursement Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by the State Board of Administration of the State of Florida. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.121		Reimbursement Contract effective June 1, 2021 issued to TypTap Insurance Company by the State Board of Administration of the State of Florida. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.122		Multi-Year Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.


10.123		Multi-Year Non-Florida Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2021 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Incorporated by reference to the corresponding numbered exhibit to our Form 10-Q filed August 6, 2021.

10.124		Property Quota Share Reinsurance Contract effective December 31, 2020 issued to United Property and Casualty Insurance Company by Homeowners Choice Property & Casualty Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.125		Renewal Rights Agreement effective January 18, 2021 by and among United Property and Casualty Insurance Company, Inc., United Insurance Holdings Corp., United Insurance Management, L.C. and Homeowners Choice Property & Casualty Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.126		Property Quota Share Reinsurance Contract effective June 1, 2021 issued to United Property and Casualty Insurance Company by Homeowners Choice Property & Casualty Insurance Company and TypTap Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.127		Renewal Rights Agreement effective December 30, 2021 by and among United Property and Casualty Insurance Company, Inc., United Insurance Holdings Corp., United Insurance Management, L.C. and Homeowners Choice Property & Casualty Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.128		Property Quota Share Reinsurance Contract effective December 31, 2021 issued to United Property and Casualty Insurance Company, by Homeowners Choice Property & Casualty Insurance Company. Incorporated by reference to the corresponding numbered exhibit to our Form 10-K filed March 10, 2022.

10.129		Property Quota Share Reinsurance Contract effective June 1, 2022 issued to United Property and Casualty Insurance Company by TypTap Insurance Company.

10.131		Multi-Year Working Layer Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.132		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.133		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.134		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.135		Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).


10.136		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2022 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.137		Reinstatement Premium Protection Reinsurance Contract effective June 1, 2022 issued to TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.138		Non-Florida Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.139		Non-Florida Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.140		Sixth Layer Non-Florida Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.141		Non-Florida Reinstatement Premium Protection Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.142		Non-Florida Reinstatement Premium Protection Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.143		Flood Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.144		Property Catastrophe Shared Multi-Region Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.145		Top Layer Flood/Wind Property Catastrophe Excess of Loss Reinsurance Contract effective June 1, 2022 issued to Homeowners Choice Property & Casualty Insurance Company, Inc. and TypTap Insurance Company by subscribing reinsurers. Portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv).

10.146		Reimbursement Contract effective June 1, 2022 between TypTap Insurance Company and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund.

10.147		Reimbursement Contract effective June 1, 2022 between Homeowners Choice Property & Casualty Insurance Company, Inc. and the State Board of Administration of the State of Florida which administers the Florida Hurricane Catastrophe Fund.



31.1		Certification of the Chief Executive Officer

31.2		Certification of the Chief Financial Officer

32.1		Written Statement of the Chief Executive Officer Pursuant to 18 U.S.C.ss.1350

32.2		Written Statement of the Chief Financial Officer Pursuant to 18 U.S.C.ss.1350

101.INS		Inline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL documents.

101.SCH		Inline XBRL Taxonomy Extension Schema.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase.

101.DEF		Inline XBRL Definition Linkbase.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

** Management contract or compensatory plan.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, who has signed this report on behalf of the Company.


	HCI GROUP, INC.

August 9, 2022	By:	/s/ Paresh Patel
		Paresh Patel
		Chief Executive Officer
		(Principal Executive Officer)

August 9, 2022	By:	/s/ James Mark Harmsworth
		James Mark Harmsworth
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

A signed original of this document has been provided to HCI Group, Inc. and will be retained by HCI Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 4.3

HCI GROUP, INC.
(Issuer)

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee

INDENTURE

Dated as of May 23, 2022

4.75% Convertible Senior Notes due 2042

TABLE OF CONTENTS

Page


Article 1 Definitions
Section 1.01. Definitions	1
Section 1.02. References to Interest	14
Article 2 Issue, Description, Execution, Registration and Exchange of Notes
Section 2.01. Designation and Amount	14
Section 2.02. Form of Notes	14
Section 2.03. Date and Denomination of Notes; Payments of Interest and Defaulted Amounts	15
Section 2.04. Execution, Authentication and Delivery of Notes	16
Section 2.05. Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary	17
Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes	23
Section 2.07. Temporary Notes	25
Section 2.08. Cancellation of Notes Paid, Converted, Etc	25
Section 2.09. CUSIP Numbers	25
Section 2.10. Additional Notes; Repurchases	26
Article 3 Satisfaction and Discharge
Section 3.01. Satisfaction and Discharge	26
Article 4 Particular Covenants of the Company
Section 4.01. Payment of Principal and Interest	27
Section 4.02. Maintenance of Office or Agency	27
Section 4.03. Appointments to Fill Vacancies in Trustee’s Office	28
Section 4.04. Provisions as to Paying Agent	28
Section 4.05. Existence	29
Section 4.06. Rule 144A Information Requirement and Annual Reports	29
Section 4.07. Stay, Extension and Usury Laws	31
Section 4.08. Compliance Certificate; Statements as to Defaults	32
Section 4.09. Foreign Account Tax Compliance Act (FATCA)	32


Article 5 Lists of Holders and Reports by the Company and the Trustee
Section 5.01. Lists of Holders	32
Section 5.02. Preservation and Disclosure of Lists	33
Article 6 Defaults and Remedies
Section 6.01. Events of Default	33
Section 6.02. Acceleration; Rescission and Annulment	34
Section 6.03. Additional Interest in Lieu of Reporting Default	35
Section 6.04. Payments of Notes on Default; Suit Therefor	36
Section 6.05. Application of Monies Collected by Trustee	38
Section 6.06. Proceedings by Holders	38
Section 6.07. Proceedings by Trustee	39
Section 6.08. Remedies Cumulative and Continuing	40
Section 6.09. Direction of Proceedings and Waiver of Defaults by Majority of Holders	40
Section 6.10. Notice of Defaults	40
Section 6.11. Undertaking to Pay Costs	41
Article 7 Concerning the Trustee
Section 7.01. Duties and Responsibilities of Trustee	41
Section 7.02. Reliance on Documents, Opinions, Etc	43
Section 7.03. No Responsibility for Recitals, Etc	44
Section 7.04. Trustee, Paying Agents, Conversion Agents, Bid Solicitation Agent or Note Registrar May Own Notes	45
Section 7.05. Monies and Shares of Common Stock to Be Held in Trust	45
Section 7.06. Compensation and Expenses of Trustee	45
Section 7.07. Eligibility of Trustee	46
Section 7.08. Resignation or Removal of Trustee	46
Section 7.09. Acceptance by Successor Trustee	47
Section 7.10. Succession by Merger, Etc	48
Section 7.11. Trustee’s Application for Instructions from the Company	49
Article 8 Concerning the Holders
Section 8.01. Action by Holders	49
Section 8.02. Proof of Execution by Holders	49
Section 8.03. Who Are Deemed Absolute Owners	49
Section 8.04. Company-Owned Notes Disregarded	50
Section 8.05. Revocation of Consents; Future Holders Bound	50


Article 9 Holders’ Meetings
Section 9.01. Purpose of Meetings	51
Section 9.02. Call of Meetings by Trustee	51
Section 9.03. Call of Meetings by Company or Holders	51
Section 9.04. Qualifications for Voting	52
Section 9.05. Regulations	52
Section 9.06. Voting	52
Section 9.07. No Delay of Rights by Meeting	53
Article 10 Supplemental Indentures
Section 10.01. Supplemental Indentures Without Consent of Holders	53
Section 10.02. Supplemental Indentures with Consent of Holders	54
Section 10.03. Effect of Supplemental Indentures	56
Section 10.04. Notation on Notes	56
Section 10.05. Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee	56
Article 11 Consolidation, Merger, Sale, Conveyance and Lease
Section 11.01. Company May Consolidate, Etc. on Certain Terms	56
Section 11.02. Successor Corporation to Be Substituted	57
Section 11.03. Evidence to Be Given to Trustee	58
Article 12 No Personal Liability of Directors, Officers, Employees or Stockholders
Section 12.01. Indenture and Notes Solely Corporate Obligations	58
Article 13 Conversion of Notes
Section 13.01. Conversion Privilege	58
Section 13.02. Conversion Procedure; Settlement Upon Conversion	61
Section 13.03. Increased Conversion Rate Applicable to Certain Notes Surrendered in Connection with Make-Whole Fundamental Changes or Notices of Redemption	66
Section 13.04. Adjustment of Conversion Rate	68
Section 13.05. Adjustments of Prices	77
Section 13.06. Shares to Be Fully Paid	77
Section 13.07. Effect of Recapitalizations, Reclassifications and Changes of the Common Stock	77
Section 13.08. Certain Covenants	80
Section 13.09. Responsibility of Trustee	80


Section 13.10. Stockholder Rights Plans	81
Section 13.11. Limit of Issuance of Common Stock Upon Conversion	81
Section 13.12. Withholding Taxes for Adjustments in Conversation Rate	81
Article 14 Repurchase of Notes at Option of Holders
Section 14.01. Repurchase at Option of Holders Upon a Fundamental Change	81
Section 14.02. Repurchase at Option of Holders upon Specified Dates	84
Section 14.03. Withdrawal of Repurchase Notice	86
Section 14.04. Deposit of Repurchase Price	87
Section 14.05. Covenant to Comply with Applicable Laws Upon Repurchase of Notes	87
Article 15 Optional Redemption
Section 15.01. Right to Redeem; Notices to Trustee	88
Section 15.02. Selection of Notes to be Redeemed	88
Section 15.03. Redemption Notice	89
Section 15.04. Deposit of Redemption Price	89
Section 15.05. Effect of Redemption Notice	90
Section 15.06. Notes Redeemed in Part	90
Article 16 Miscellaneous Provisions
Section 16.01. Provisions Binding on Company’s and Trustee’s Successors	90
Section 16.02. Official Acts by Successor Corporation	90
Section 16.03. Addresses for Notices, Etc	91
Section 16.04. Governing Law; Jury Trial Waiver	92
Section 16.05. Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Trustee	93
Section 16.06. Legal Holidays	93
Section 16.07. No Security Interest Created	93
Section 16.08. Benefits of Indenture	93
Section 16.09. Table of Contents, Headings, Etc	94
Section 16.10. Authenticating Agent	94
Section 16.11. Execution in Counterparts	95
Section 16.12. Severability	95
Section 16.13. Force Majeure	95
Section 16.14. Calculations	96
Section 16.15. USA PATRIOT Act	96
Section 16.16. No Adverse Interpretation of Other Agreements	96

EXHIBITS

Exhibit A Form of Note

INDENTURE, dated as of May 23, 2022, between HCI GROUP, INC., a Florida corporation, as issuer (the “Company,” as more fully set forth in ‎Section 1.01) and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, as trustee (the “Trustee,” as more fully set forth in ‎Section 1.01).

W I T N E S S E T H:

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of the Company’s 4.75% Convertible Senior Notes due 2042 (the “Notes”), initially in an aggregate principal amount not to exceed $150,000,000 (as increased by an amount equal to the aggregate principal amount of any additional Notes purchased by the Initial Purchasers pursuant to the exercise of their option to purchase additional Notes as set forth in the Purchase Agreement), and the Company has duly authorized the execution and delivery of this Indenture.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

That in order to declare the terms and conditions upon which the Notes are, and are to be, authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Notes by the Holders thereof, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective Holders from time to time of the Notes (except as otherwise provided below), as follows:

Article 1
Definitions

Section 1.01. Definitions. The terms defined in this ‎Section 1.01 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this ‎Section 1.01. The words “herein,” “hereof,” “hereunder,” and words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article include the plural as well as the singular.

“Additional Interest” means all amounts, if any, payable pursuant to ‎Section 4.06(d), ‎Section 4.06(e) and ‎Section 6.03, as applicable.

“Additional Shares” shall have the meaning specified in ‎Section 13.03.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control,” when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Applicable Law” shall have the meaning specified in ‎Section 13.03.

“Averaging Period” shall have the meaning specified in ‎Section 13.04(e).

“Bid Solicitation Agent” means the Company or the Person appointed by the Company to solicit bids for the Trading Price of the Notes in accordance with ‎Section 13.01(b)(i). The Company shall initially act as the Bid Solicitation Agent.

“Board of Directors” means the board of directors of the Company or a committee of such board duly authorized to act for it hereunder.

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors, and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“Business Day” means, with respect to any Note, any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is or banking institutions in New York, New York are authorized or required by law or executive order to close or be closed.

“Capital Stock” means, for any entity, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that entity.

“Cash Settlement” shall have the meaning specified in ‎Section 13.02(a).

“close of business” means 5:00 p.m. (New York City time).

“Combination Settlement” shall have the meaning specified in ‎Section 13.02(a).

“Commission” means the U.S. Securities and Exchange Commission.

“Common Conversion Period” shall have the meaning specified in the definition of Observation Period in this ‎Section 1.01.

“Common Equity” of any Person means Capital Stock of such Person that is generally entitled (a) to vote in the election of directors of such Person or (b) if such Person is not a corporation, to vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management or policies of such Person.

“Common Stock” means the common stock of the Company, no par value per share, at the date of this Indenture.

“Company” shall have the meaning specified in the first paragraph of this Indenture, and subject to the provisions of ‎Article 11, shall include its successors and assigns.

“Company Notice” shall have the meaning specified in ‎Section 14.02(c).

“Company Order” means a written order of the Company, signed by (a) the Company’s Chief Executive Officer, Chief Financial Officer, President, Executive or Senior Vice President, or any Vice President (whether or not designated by a number or numbers or word or words added before or after the title “Vice President”) and (b) any such other Officer designated by any Officer set forth in clause (a) of this definition or the Company’s Treasurer or any Assistant Treasurer or Secretary or any Assistant Secretary, and delivered to the Trustee.

“Conversion Agent” shall have the meaning specified in ‎Section 4.02.

“Conversion Date” shall have the meaning specified in ‎Section 13.02(c).

“Conversion Obligation” shall have the meaning specified in ‎Section 13.01(a).

“Conversion Price” means as of any date, $1,000 divided by the Conversion Rate as of such date.

“Conversion Rate” shall have the meaning specified in ‎Section 13.01(a).

“Corporate Trust Office” means the designated office of the Trustee at which at any time its corporate trust business shall be administered, which office at the date hereof is located at The Bank of New York Mellon Trust Company, N.A. 4655 Salisbury Road, Suite 300 Jacksonville, FL 32256 Attention: Corporate Trust Administration, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the designated corporate trust office of any successor trustee (or such other address as such successor trustee may designate from time to time by notice to the Holders and the Company).

“Custodian” means the Trustee, as custodian for DTC, with respect to the Global Notes, or any successor entity thereto.

“Daily Conversion Value” means, for each of the 40 consecutive Trading Days during the Observation Period, 2.5% of the product of (a) the Conversion Rate on such Trading Day and (b) the Daily VWAP on such Trading Day.

“Daily Measurement Value” means, the Specified Dollar Amount divided by 40.

“Daily Settlement Amount” for each of the 40 consecutive Trading Days during the Observation Period, shall consist of:

(a) cash equal to the lesser of (i) the Daily Measurement Value and (ii) the Daily Conversion Value; and

(b) to the extent the Daily Conversion Value on such Trading Day exceeds the Daily Measurement Value, a number of shares of Common Stock equal to (1) the

difference between the Daily Conversion Value and the Daily Measurement Value, divided by (2) the Daily VWAP for such Trading Day.

“Daily VWAP” means, for each of the 40 consecutive Trading Days during the applicable Observation Period, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “HCI<equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the market value of one share of the Common Stock on such Trading Day determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by the Company). The “Daily VWAP” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.

“Default” means any event that is, or after notice or passage of time, or both, would be, an Event of Default.

“Defaulted Amounts” means any amounts on any Note (including, without limitation, the Repurchase Price, the Redemption Price, principal and interest) that are payable but are not punctually paid or duly provided for.

“Depositary” means, with respect to each Global Note, the Person specified in ‎Section 2.05(c) as the Depositary with respect to such Notes, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, “Depositary” shall mean or include such successor.

“Distributed Property” shall have the meaning specified in ‎Section 13.04(c).

“DTC” means The Depository Trust Company.

“Effective Date” shall have the meaning specified in ‎Section 13.03(c); provided that, solely for purposes of ‎Section 13.04, “Effective Date” means the first date on which shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, reflecting the relevant share split or share combination, as applicable.

“Event of Default” shall have the meaning specified in ‎Section 6.01.

“Ex-Dividend Date” means the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Company or, if applicable, from the seller of Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Form of Assignment and Transfer” means the “Form of Assignment and Transfer” in substantially the form attached as Attachment 3 to the Form of Note attached hereto as Exhibit A.

“Form of Notice of Conversion” means the “Form of Notice of Conversion” in substantially the form attached as Attachment 1 to the form of Note attached hereto as Exhibit A.

“Form of Repurchase Notice” means the “Form of Repurchase Notice” in substantially the form attached as Attachment 2 to the form of Note attached hereto as Exhibit A.

“Fundamental Change” shall be deemed to have occurred at the time after the Notes are originally issued if any of the following occurs:

(a) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than the Company, its Subsidiaries and the employee benefit plans of the Company and its Subsidiaries, files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Common Stock representing more than 50% of the voting power of the Common Stock;

(b) the consummation of (A) any recapitalization, reclassification or change of the Common Stock (other than changes in par value or from no par value or resulting from a subdivision or combination) as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of the Company pursuant to which the Common Stock will be converted into cash, securities or other property, other than a merger of the Company solely for the purpose of changing the Company’s jurisdiction of incorporation, that results in a reclassification, conversion or exchange of outstanding shares of the Common Stock solely into shares of common stock of the surviving entity; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its Subsidiaries, taken as a whole, to any Person other than one or more of the Company’s Subsidiaries, other than any disposition by the Company of all or any part of its interest in TypTap Insurance Group, Inc. or any of TypTap Insurance Group, Inc.’s Subsidiaries; provided, however, that neither (i) a transaction described in clause (B) in which the holders of all classes of the Company’s Common Equity immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of Common Equity representing more than 50% of the total voting power of the continuing or surviving corporation or transferee or the parent thereof immediately after such transaction in substantially the same proportions as such ownership immediately prior to such transaction (this proviso, the “Majority Ownership Exception”) nor (ii) any merger primarily for the purpose of changing the Company’s jurisdiction of organization to another state within the United States of America or the District of Columbia that results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of common stock of the surviving corporation shall be a Fundamental Change pursuant to this clause (b);

(d) the Common Stock (or other common stock or ordinary shares underlying the Notes) ceases to be listed or quoted on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors);

provided, however, that a transaction or transactions described in clauses (a) or (b) above shall not constitute a Fundamental Change if at least 90% of the consideration received or to be received by the holders of the Common Stock, excluding cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights, in connection with such transaction or transactions consists of shares of common stock or ordinary shares that are listed or quoted on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions, and, as a result thereof, the Notes become convertible into such consideration, excluding cash payments for fractional shares pursuant to ‎Section 13.02. If any transaction in which the Common Stock is replaced by the securities of another entity occurs, following completion of any related Make-Whole Fundamental Change Period (or, in the case of a transaction that would have been a Fundamental Change or a Make-Whole Fundamental Change but for the proviso immediately following clause (d) of this definition, following the Effective Date of such transaction), references to the “Company” in this definition shall instead be references to such other entity.

“Fundamental Change Company Notice” shall have the meaning specified in ‎Section 14.01(c).

“Fundamental Change Repurchase Date” shall have the meaning specified in ‎Section 14.01(a).

“Fundamental Change Repurchase Price” shall have the meaning specified in ‎Section 14.01(a).

“Global Note” shall have the meaning specified in ‎Section 2.05(b).

“Holder,” as applied to any Note, or other similar terms (but excluding the term “beneficial holder,” “beneficial owner” or “owner of a beneficial interest” or terms of similar import), means any Person in whose name a particular Note is registered on the Note Register.

“Indenture” means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented.

“Initial Dividend Threshold” shall have the meaning specified in ‎Section 13.04(d).

“Initial Purchasers” means JMP Securities LLC and Truist Securities, Inc.

“Interest Payment Date” means each June 1 and December 1 of each year, beginning on December 1, 2022.

“Last Reported Sale Price” of the Common Stock on any date means the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is traded. If the Common Stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the “Last Reported Sale Price” shall be the last quoted bid price for the Common Stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If the Common Stock is not so quoted, the “Last Reported Sale Price” shall be the average of the mid-point of the last bid and ask prices for the Common Stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Company for this purpose.

“Majority Ownership Exception” shall have the meaning specified in the definition of Fundamental Change in this ‎Section 1.01.

“Make-Whole Fundamental Change” means any transaction or event that constitutes a Fundamental Change (as defined above and determined after giving effect to any exceptions to or exclusions from such definition, but without regard to the Majority Ownership Exception).

“Make-Whole Fundamental Change Period” means, for any Make-Whole Fundamental Change, the period from, and including, the Effective Date of such Make-Whole Fundamental Change up to, and including, the Business Day immediately prior to the related Fundamental Change Repurchase Date (or, in the case of a Make-Whole Fundamental Change that would have been a Fundamental Change but for the Majority Ownership Exception, the 35th Trading Day immediately following the Effective Date of such Make-Whole Fundamental Change).

“Market Disruption Event” means:

(i) for purposes of determining whether the Notes will be convertible pursuant to ‎Section 13.01(b), the occurrence or existence during the one-half hour period ending on the scheduled close of trading on the principal U.S. national or regional securities exchange on which the Common Stock is listed for trading of any material suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the stock exchange or otherwise) in the Common Stock or in any options contracts or futures contracts relating to the Common Stock; and

(ii) for purposes of determining any Observation Period only, (x) a failure by the primary U.S. national or regional securities exchange or market on which the Common Stock is listed or admitted for trading to open for trading during its regular

trading session or (y) the occurrence or existence prior to 1:00 p.m., New York City time, on any Scheduled Trading Day for the Common Stock for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Common Stock or in any options, contracts or futures contracts relating to the Common Stock.

“Maturity Conversion Period” shall have the meaning specified in the definition of Observation Period in this ‎Section 1.01.

“Maturity Date” means June 1, 2042.

“Measurement Period” shall have the meaning specified in ‎Section 13.01(b)(i).

“Merger Common Stock” shall have the meaning specified in ‎Section 13.07(e).

“Merger Event” shall have the meaning specified in ‎Section 13.07(a).

“Note” or “Notes” shall have the meaning specified in the first paragraph of the recitals of this Indenture.

“Note Register” shall have the meaning specified in ‎Section 2.05(a).

“Note Registrar” shall have the meaning specified in ‎Section 2.05(a).

“Notice of Conversion” shall have the meaning specified in ‎Section 13.02(b).

“Observation Period,” with respect to any Note surrendered for conversion means: (i) if the relevant Conversion Date occurs other than during the Common Conversion Period, the Maturity Conversion Period or a Redemption Period, the 40 consecutive Trading Day period beginning on, and including, the second Trading Day after the related Conversion Date; (ii) subject to clause (iv), if the relevant Conversion Date occurs during the period beginning on, and including, March 1, 2027 and ending at the close of business on the Business Day immediately preceding June 7, 2027 (the “Common Conversion Period”), the 40 consecutive Trading Days beginning on, and including, the 41st Scheduled Trading Day immediately preceding June 7, 2027; (iii) subject to clause (iv), if the relevant Conversion Date occurs during the period beginning on, and including, March 1, 2042 and ending at the close of business on the Business Day immediately preceding the Maturity Date (the “Maturity Conversion Period”), the 40 consecutive Trading Days beginning on, and including, the 41st Scheduled Trading Day immediately preceding the Maturity Date; and (iv) if the relevant Conversion Date occurs during the period beginning on, and including, the date on which the Company issues a Redemption Notice with respect to the Notes and ending at the close of business on the Business Day immediately preceding the related Redemption Date (each, a “Redemption Period”), the 40 consecutive Trading Days beginning on, and including, the 41st Scheduled Trading Day immediately preceding the relevant Redemption Date.

“Offering Memorandum” means (a) with respect to the Original Notes, the Original Offering Memorandum and (b) with respect to any additional Notes issued pursuant to ‎Section 2.10, the offering memorandum, prospectus or similar offering document relating to the offering and sale of such additional Notes.

“Officer” means, with respect to the Company, the Chief Executive Officer, the Chief Financial Officer, the President, the Treasurer, any Assistant Treasurer, the Secretary, any Assistant Secretary, any Executive or Senior Vice President or any Vice President (whether or not designated by a number or numbers or word or words added before or after the title “Vice President”).

“Officer’s Certificate,” when used with respect to the Company, means a certificate that is delivered to the Trustee and that is signed by an Officer of the Company. Each such certificate shall include the statements provided for in ‎Section 16.05 if and to the extent required by the provisions of such Section. The Officer giving an Officer’s Certificate pursuant to ‎Section 4.08 shall be the principal executive, financial or accounting officer of the Company.

“open of business” means 9:00 a.m. (New York City time).

“Opinion of Counsel” means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company that is delivered to the Trustee, which opinion may contain customary exceptions and qualifications as to the matters set forth therein. Each such opinion shall include the statements provided for in ‎Section 16.05 if and to the extent required by the provisions of such ‎Section 16.05.

“Optional Redemption” means redemption by the Company of the Notes pursuant to ‎Article 15.

“Optional Repurchase Company Notice” shall have the meaning specified in ‎Section 14.02(c).

“Optional Repurchase Date” shall have the meaning specified in ‎Section 14.02(a).

“Optional Repurchase Price” shall have the meaning specified in ‎Section 14.02(a).

“Original Notes” means the up to $150,000,000 aggregate principal amount of Notes, covered by the Original Offering Memorandum.

“Original Offering Memorandum” means the preliminary offering memorandum dated May 18, 2022, as supplemented by the pricing term sheet dated May 18, 2022, relating to the offering and sale of the Notes.

“outstanding,” when used with reference to Notes, shall, subject to the provisions of ‎Section 8.04, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except:

(a) Notes theretofore canceled by the Trustee or accepted by the Trustee for cancellation;

(b) Notes, or portions thereof, that have become due and payable and in respect of which monies in the necessary amount shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent);

(c) Notes that have been paid pursuant to ‎Section 2.06 or Notes in lieu of which, or in substitution for which, other Notes shall have been authenticated and delivered pursuant to the terms of ‎Section 2.06 unless proof satisfactory to the Trustee is presented that any such Notes are held by protected purchasers in due course;

(d) Notes converted pursuant to ‎Article 13 and required to be cancelled pursuant to ‎Section 2.08;

(e) Notes redeemed pursuant to ‎Article 15; and

(f) Notes repurchased pursuant to the penultimate sentence of ‎Section 2.10 and surrendered to the Trustee for cancellation.

“Paying Agent” shall have the meaning specified in ‎Section 4.02.

“Person” means an individual, a corporation, a limited liability company, an association, a partnership, a joint venture, a joint stock company, a trust, an unincorporated organization or a government or an agency or a political subdivision thereof.

“Physical Notes” means permanent certificated Notes in registered form issued in denominations of $1,000 principal amount and multiples thereof.

“Physical Settlement” shall have the meaning specified in ‎Section 13.02(a).

“Predecessor Note” of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under ‎Section 2.06 in lieu of or in exchange for a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note that it replaces.

“Purchase Agreement” means that certain Purchase Agreement dated as of May 18, 2022 among the Company and the Representatives of the Initial Purchasers.

“Record Date” means, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock (or other applicable security) have the right to receive any cash, securities or other property or in which the Common Stock (or such other security) is exchanged for or converted into any combination of

cash, securities or other property, the date fixed for determination of holders of the Common Stock (or such other security) entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors, by statute, by contract or otherwise).

“Redemption Date” shall have the meaning specified in ‎Section 15.01(b).

“Redemption Notice” shall have the meaning specified in ‎Section 15.03(a).

“Redemption Period” shall have the meaning specified in the definition of Observation Period in this ‎Section 1.01.

“Redemption Price” shall have the meaning specified in ‎Section 15.01(b).

“Reference Property” shall have the meaning specified in ‎Section 13.07(a).

“Regular Record Date,” with respect to any Interest Payment Date, means the May 15 or November 15 (whether or not such day is a Business Day) immediately preceding the applicable June 1 or December 1 Interest Payment Date, respectively.

“Repurchase Date” shall have the meaning specified in ‎Section 14.03(a).

“Repurchase Notice” shall have the meaning specified in ‎Section 14.01(b)(i).

“Repurchase Price” shall have the meaning specified in ‎Section 14.04(a).

“Resale Restriction Termination Date,” (i) with respect to the Notes, shall have the meaning specified in the legend set forth in ‎Section 2.05(c), and (ii) with respect to the Common Stock issued upon conversion of the Notes, shall have the meaning specified in the legend set forth in ‎Section 2.05(d).

“Responsible Officer” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, any assistant vice president, any trust officer or assistant trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

“Restricted Securities” shall have the meaning specified in ‎Section 2.05(c).

“Rule 144” means Rule 144 as promulgated under the Securities Act.

“Rule 144A” means Rule 144A as promulgated under the Securities Act.

“Scheduled Trading Day” means a day that is scheduled to be a Trading Day on the principal U.S. national or regional securities exchange or market on which the

Common Stock is listed or admitted for trading. If the Common Stock is not so listed or admitted for trading, “Scheduled Trading Day” means a Business Day.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Settlement Amount” has the meaning specified in ‎Section 13.02(a)(ii).

“Settlement Method” means, with respect to any conversion of Notes, Physical Settlement, Cash Settlement or Combination Settlement, as elected (or deemed to have been elected) by the Company.

“Settlement Notice” has the meaning specified in ‎Section 13.02(a)(i).

“Shelf Registration Statement” means a registration statement of the Company filed with the Commission on either (i) Form S-3 (or any successor form or other appropriate form under the Securities Act) or (ii) if the Company is not permitted to file a registration statement on Form S-3, an evergreen registration statement on Form S-1 (or any successor form or other appropriate form under the Securities Act), in each case for an offering to be made on a continuous or delayed basis pursuant to Rule 415 under the Securities Act covering Notes and any Common Stock issuable upon conversion thereof.

“Significant Subsidiary” means a Subsidiary of the Company that meets the definition of “significant subsidiary” in Article 1, Rule 1-02(w) of Regulation S-X under the Exchange Act.

“Specified Dollar Amount” means the maximum cash amount per $1,000 principal amount of Notes being converted to be received upon conversion as specified in the Settlement Notice.

“Spin-Off” shall have the meaning specified in ‎Section 13.04(c).

“Stock Price” shall have the meaning specified in ‎Section 13.03(c).

“Subsidiary” means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.

“Successor Company” shall have the meaning specified in ‎Section 11.01(a).

“Trading Day” means a day on which (i) trading in the Common Stock (or other security for which a closing sale price must be determined) generally occurs on The New York Stock Exchange or, if the Common Stock is not then listed on The New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which

the Common Stock (or such other security) is then listed or, if the Common Stock (or such other security) is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock (or such other security) is then listed or admitted for trading, (ii) there is no Market Disruption Event and (iii) a Last Reported Sale Price for the Common Stock (or closing sale price for such other security) is available on such securities exchange or market; provided that if the Common Stock (or such other security) is not so listed or traded, “Trading Day” means a Business Day; and provided, further, that for purposes of determining amounts due upon any conversion for which Cash Settlement or Combination Settlement is applicable only, “Trading Day” means a day on which (x) there is no Market Disruption Event and (y) trading in the Common Stock generally occurs on The New York Stock Exchange or, if the Common Stock is not then listed on The New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then listed or admitted for trading, except that if the Common Stock is not so listed or admitted for trading, “Trading Day” means a Business Day.

“Trading Price” of the Notes on any date of determination means the average of the secondary market bid quotations obtained by the Bid Solicitation Agent for $5,000,000 principal amount of Notes at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers the Company selects for this purpose; provided that if three such bids cannot reasonably be obtained by the Bid Solicitation Agent but two such bids are obtained, then the average of such two bids shall be used, and if only one such bid can reasonably be obtained by the Bid Solicitation Agent, that one bid shall be used. If the Bid Solicitation Agent cannot reasonably obtain at least one bid for $5,000,000 principal amount of Notes from a nationally recognized securities dealer on any determination date, then the Trading Price per $1,000 principal amount of Notes on such determination date shall be deemed to be less than 98% of the product of the Last Reported Sale Price of the Common Stock and the applicable Conversion Rate.

“transfer” shall have the meaning specified in ‎Section 2.05(c).

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended, as it was in force at the date of execution of this Indenture; provided, however, that in the event the Trust Indenture Act of 1939 is amended after the date hereof, the term “Trust Indenture Act” shall mean, to the extent required by such amendment, the Trust Indenture Act of 1939, as so amended.

“Trustee” means the Person named as the “Trustee” in the first paragraph of this Indenture until a successor trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, “Trustee” shall mean or include each Person who is then a Trustee hereunder.

“unit of Reference Property” shall have the meaning specified in ‎Section 13.07(a).

“Valuation Period” shall have the meaning specified in ‎Section 13.04(c).

Section 1.02. References to Interest. Unless the context otherwise requires, any reference to interest on, or in respect of, any Note in this Indenture shall be deemed to include Additional Interest if, in such context, Additional Interest is, was or would be payable pursuant to any of ‎Section 4.06(d), ‎Section 4.06(e) and ‎Section 6.03. Unless the context otherwise requires, any express mention of Additional Interest in any provision hereof shall not be construed as excluding Additional Interest in those provisions hereof where such express mention is not made.

Article 2
Issue, Description, Execution, Registration and Exchange of Notes

Section 2.01. Designation and Amount. The Notes shall be designated as the “4.75% Convertible Senior Notes due 2042.” The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is initially limited to $150,000,000 (as increased by an amount equal to the aggregate principal amount of any additional Notes purchased by the Initial Purchasers pursuant to the exercise of their option to purchase additional Notes as set forth in the Purchase Agreement), subject to ‎Section 2.10 and except for Notes authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of other Notes pursuant to ‎Section 2.05, ‎Section 2.06, ‎Section 2.07, ‎Section 10.04, ‎Section 11.02, ‎Section 13.02, ‎Section 14.04 and ‎Section 15.06(b).

Section 2.02. Form of Notes. The Notes and the Trustee’s certificate of authentication to be borne by such Notes shall be substantially in the respective forms set forth in Exhibit A, the terms and provisions of which shall constitute, and are hereby expressly incorporated in and made a part of this Indenture. To the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.

Any Global Note may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Indenture as may be required by the Custodian or the Depositary, or as may be required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange or automated quotation system upon which the Notes may be listed or traded or designated for issuance or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Notes are subject.

Any of the Notes may have such letters, numbers or other marks of identification and such notations, legends or endorsements as the Officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the Notes

may be listed or designated for issuance, or to conform to usage or to indicate any special limitations or restrictions to which any particular Notes are subject.

Each Global Note shall represent such principal amount of the outstanding Notes as shall be specified therein and shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be increased or reduced to reflect repurchases, redemptions, cancellations, conversions, transfers or exchanges permitted hereby. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in such manner and upon written instructions given by the Holder of such Notes in accordance with this Indenture. Payment of principal (including the Repurchase Price and Redemption Price, if applicable) of, and accrued and unpaid interest on, a Global Note shall be made to the Holder of such Note on the date of payment, unless a record date or other means of determining Holders eligible to receive payment is provided for herein.

Section 2.03. Date and Denomination of Notes; Payments of Interest and Defaulted Amounts.

(a) The Notes shall be issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof. Each Note shall be dated the date of its authentication and shall bear interest from the date specified on the face of the form of Note attached as Exhibit A hereto. Accrued interest on the Notes shall be computed on the basis of a 360-day year composed of twelve 30-day months and, for partial months, on the basis of actual days elapsed over a 30-day month.

(b) The Person in whose name any Note (or its Predecessor Note) is registered on the Note Register at the close of business on any Regular Record Date with respect to any Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date. Interest shall be payable at the office or agency of the Company maintained by the Company for such purposes, which shall initially be the Corporate Trust Office, or any other office in the continental United States of America so designated by the Trustee. The Company shall pay, or cause the Paying Agent to pay, interest on any Physical Notes to Holders holding Physical Notes having an aggregate principal amount of $5,000,000 or less, by check mailed to the Holders of these Notes at their address as it appears in the Note Register and to Holders holding Physical Notes having an aggregate principal amount of more than $5,000,000, either by check mailed to such Holders or, upon application by such a Holder to the Note Registrar not later than the relevant Regular Record Date, by wire transfer in immediately available funds to that Holder’s account within the United States, which application shall remain in effect until the Holder notifies, in writing, the Note Registrar to the contrary or on any Global Note by wire transfer of immediately available funds to the account of the Depositary or its nominee.

(c) Any Defaulted Amounts shall forthwith cease to be payable to the Holder on the relevant payment date but shall accrue interest per annum at the rate borne by the Notes, subject to the enforceability thereof under applicable law, from, and including, such relevant payment date to, but excluding, the date on which such Defaulted Amounts together with such interest thereon shall be paid by the Company, at its election in each case, as provided in clause ‎(i) or ‎(ii) below:

(i) The Company may elect to make payment of any Defaulted Amounts to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on a special record date for the payment of such Defaulted Amounts, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of the Defaulted Amounts proposed to be paid on each Note and the date of the proposed payment (which shall be not less than 25 days after the receipt by the Trustee of such notice, unless the Trustee shall consent in writing to an earlier date), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount to be paid in respect of such Defaulted Amounts or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Amounts as in this clause provided. Thereupon the Company shall fix a special record date for the payment of such Defaulted Amounts which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment, and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Company shall promptly notify the Trustee in writing of such special record date and the Trustee, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Amounts and the special record date therefor to be delivered to each Holder not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Amounts and the special record date therefor having been so delivered, such Defaulted Amounts shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such special record date and shall no longer be payable pursuant to the following clause ‎(ii) of this ‎Section 2.03(c).

(ii) The Company may make payment of any Defaulted Amounts in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Notes may be listed or designated for issuance, and upon such notice as may be required by such exchange or automated quotation system, if, after written notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

Section 2.04. Execution, Authentication and Delivery of Notes. The Notes shall be signed in the name and on behalf of the Company by the manual, facsimile or electronic signature of its Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary or any of its Executive or Senior Vice Presidents.

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes, and the Trustee in accordance with such Company Order shall authenticate and deliver such Notes, without any further action by the Company hereunder.

Only such Notes as shall bear thereon a certificate of authentication substantially in the form set forth on the form of Note attached as Exhibit A hereto, executed manually, by facsimile or electronically by an authorized signatory of the Trustee (or an authenticating agent appointed by the Trustee as provided by ‎Section 16.10), shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee (or such an authenticating agent) upon any Note executed by the Company shall be conclusive evidence that the Note so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture.

In case any Officer of the Company who shall have signed any of the Notes shall cease to be such Officer before the Notes so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Notes nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Notes had not ceased to be such Officer of the Company; and any Note may be signed on behalf of the Company by such Persons as, at the actual date of the execution of such Note, shall be the Officers of the Company, although at the date of the execution of this Indenture any such person was not such an Officer.

Section 2.05. Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary.

(a) The Company shall cause to be kept at the Corporate Trust Office a register (the register maintained in such office or in any other office or agency of the Company designated pursuant to ‎Section 4.02, the “Note Register”) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. Such register shall be in written form or in any form capable of being converted into written form within a reasonable period of time. The Trustee is hereby initially appointed the “Note Registrar” for the purpose of registering Notes and transfers of Notes as herein provided. The Company may appoint one or more co-Note Registrars in accordance with ‎Section 4.02.

Upon surrender for registration of transfer of any Note to the Note Registrar or any co-Note Registrar, and satisfaction of the requirements for such transfer set forth in this ‎Section 2.05, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture.

Notes may be exchanged for other Notes of any authorized denominations and of a like aggregate principal amount, upon surrender of the Notes to be exchanged at any

such office or agency maintained by the Company pursuant to ‎Section 4.02. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes that the Holder making the exchange is entitled to receive, bearing registration numbers not contemporaneously outstanding.

All Notes presented or surrendered for registration of transfer or for exchange, repurchase, redemption or conversion shall (if so required by the Company, the Trustee, the Note Registrar or any co-Note Registrar) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee and duly executed, by the Holder thereof or its attorney-in-fact duly authorized in writing.

No service charge shall be imposed by the Company, the Trustee, the Note Registrar, any co-Note Registrar or any Paying Agent for any exchange or registration of transfer of Notes, but the Company or the Trustee may require a Holder to pay a sum sufficient to cover any documentary, stamp or similar issue or transfer tax or other similar governmental charge required by law or permitted pursuant to ‎Section 13.02(d) or ‎Section 13.02(e).

None of the Company, the Trustee, the Note Registrar or any co-Note Registrar shall be required to exchange or register a transfer of any Notes surrendered for conversion or, if a portion of any Note is surrendered for conversion, such portion thereof surrendered for conversion, any Notes, or a portion of any Note, surrendered for repurchase (and not withdrawn) in accordance with ‎Article 14 or selected for redemption pursuant to ‎Article 15.

All Notes issued upon any registration of transfer or exchange of Notes in accordance with this Indenture shall be the valid and binding obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture as the Notes surrendered upon such registration of transfer or exchange.

(b) So long as the Notes are eligible for book-entry settlement with the Depositary, unless otherwise required by law, subject to the seventh paragraph from the end of ‎Section 2.05(c) all Notes shall be represented by one or more Notes in global form (each, a “Global Note”) registered in the name of the Depositary or a nominee of the Depositary. The transfer and exchange of beneficial interests in a Global Note that does not involve the issuance of a Physical Note shall be effected through the Depositary (but not the Trustee or the Custodian) in accordance with this Indenture (including the restrictions on transfer set forth herein) and the procedures of the Depositary therefor.

(c) Every Note that bears or is required under this ‎Section 2.05(c) to bear the legend set forth in this ‎Section 2.05(c) (together with any Common Stock issued upon conversion of the Notes and required to bear the legend set forth in ‎Section 2.05(d), collectively, the “Restricted Securities”) shall be subject to the restrictions on transfer set forth in this ‎Section 2.05(c) (including those contained in the legend set forth below), unless such restrictions on transfer shall be eliminated or otherwise waived by written consent of the Company with written notice to the Trustee as provided below. The

Holder of each such Restricted Security, by such Holder’s acceptance thereof, agrees to be bound by all such restrictions on transfer. As used in this ‎Section 2.05(c) and ‎Section 2.05(d), the term “transfer” encompasses any sale, pledge, transfer or other disposition whatsoever of any Restricted Security.

Until the Resale Restriction Termination Date, any certificate evidencing a Note (and all securities issued in exchange therefor or substitution thereof, other than Common Stock, if any, issued upon conversion thereof which shall bear the legend set forth in ‎Section 2.05(d), if applicable) shall bear a legend in substantially the following form (unless such Notes have been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer, or sold pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act, or unless otherwise agreed by the Company in writing, with notice thereof to the Trustee):

THE SALE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, PRIOR TO THE RESALE RESTRICTION TERMINATION DATE (AS DEFINED BELOW), THIS NOTE AND ANY SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE (AND ANY BENEFICIAL INTEREST HEREIN OR THEREIN) MAY NOT BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED, EXCEPT:

(A) TO HCI GROUP, INC. (THE “COMPANY”) OR ANY OF ITS SUBSIDIARIES;

(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT;

(C) TO A PERSON THAT YOU REASONABLY BELIEVE TO BE A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT; OR

(D) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (INCLUDING, IF AVAILABLE, THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT).

THE “RESALE RESTRICTION TERMINATION DATE” MEANS THE DATE: THAT IS AT LEAST ONE YEAR AFTER THE LAST ORIGINAL ISSUANCE DATE OF THE NOTES (INCLUDING ISSUANCE OF ADDITIONAL NOTES PURSUANT TO THE EXERCISE OF THE INITIAL PURCHASERS’ OPTION TO PURCHASE ADDITIONAL NOTES); AND ON WHICH THE COMPANY HAS INSTRUCTED THE TRUSTEE THAT THIS LEGEND WILL NO LONGER APPLY IN ACCORDANCE WITH THE PROCEDURES DESCRIBED IN THE INDENTURE.

PRIOR TO ANY TRANSFER PURSUANT TO THE FOREGOING CLAUSE ‎(D), THE COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE

THE DELIVERY OF SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE AND RELY UPON TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

DURING THE PERIOD ENDING ONE YEAR AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF THE NOTES, NO “AFFILIATE” (AS DEFINED IN RULE 144) WILL BE PERMITTED TO RESELL ANY OF THE NOTES THAT CONSTITUTE “RESTRICTED SECURITIES” UNDER RULE 144 THAT HAVE BEEN REACQUIRED BY ANY OF THEM.

No transfer of any Note prior to the Resale Restriction Termination Date will be registered by the Note Registrar unless the applicable box on the Form of Assignment and Transfer has been checked.

Any Note (or security issued in exchange or substitution therefor) as to which such restrictions on transfer shall have expired in accordance with their terms may, upon surrender of such Note for exchange to the Note Registrar in accordance with the provisions of this ‎Section 2.05, be exchanged for a new Note or Notes, of like tenor and aggregate principal amount, which shall not bear the restrictive legend required by this ‎Section 2.05(c) and shall not be assigned a restricted CUSIP number. The Company shall be entitled to instruct the Custodian in writing to so surrender any Global Note as to which such restrictions on transfer shall have expired in accordance with their terms for exchange, and, upon such instruction, the Custodian shall so surrender such Global Note for exchange; and any new Global Note so exchanged therefor shall not bear the restrictive legend specified in this ‎Section 2.05(c) and shall not be assigned a restricted CUSIP number. The Company shall promptly notify the Trustee in writing upon the occurrence of the Resale Restriction Termination Date. The Company shall promptly notify the Trustee and the Holders in writing after a registration statement, if any, with respect to the Notes or any Common Stock issued upon conversion of the Notes has been declared effective under the Securities Act.

Notwithstanding any other provisions of this Indenture (other than the provisions set forth in this ‎Section 2.05(c), a Global Note may not be transferred as a whole or in part except (i) by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary and (ii) for transfers of portions of a Global Note in certificated form made upon request of a member of, or a participant in, the Depositary (for itself or on behalf of a beneficial owner) by written notice given to the Trustee by or on behalf of the Depositary in accordance with customary procedures of the Depositary and in compliance with this ‎Section 2.05(c).

The Depositary shall be a clearing agency registered under the Exchange Act. The Company initially appoints DTC to act as Depositary with respect to each Global Note. Initially, each Global Note shall be issued to the Depositary, registered in the name

of Cede & Co., as the nominee of the Depositary, and deposited with the Trustee as custodian for Cede & Co.

If (i) the Depositary notifies the Company at any time that the Depositary is unwilling or unable to continue as depositary for the Global Notes and a successor depositary is not appointed within 90 days of such notice, (ii) the Depositary ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days of the Company becoming aware of such cessation, (iii) an Event of Default with respect to the Notes has occurred and is continuing and a beneficial owner of any Note requests that its beneficial interest therein be issued as a Physical Note or (iv) the Company and a beneficial owner of any Note so agree, the Company shall execute, and the Trustee, upon receipt of an Officer’s Certificate and a Company Order for the authentication and delivery of Notes, shall authenticate and deliver (x) in the case of clause (iii) or (iv), a Physical Note to such beneficial owner in a principal amount equal to the principal amount of such Note corresponding to such beneficial owner’s beneficial interest and (y) in the case of clause (i) or (ii), Physical Notes to each beneficial owner of the related Global Notes (or a portion thereof) in an aggregate principal amount equal to the aggregate principal amount of such Global Notes in exchange for such Global Notes, and upon delivery of the Global Notes to the Trustee such Global Notes shall be canceled.

Physical Notes issued in exchange for all or a part of the Global Note pursuant to this ‎Section 2.05(c) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. Upon execution and authentication, the Trustee shall deliver such Physical Notes to the Persons in whose names such Physical Notes are so registered.

At such time as all interests in a Global Note have been converted, canceled, repurchased, redeemed or transferred, such Global Note shall be, upon receipt thereof, canceled by the Trustee in accordance with its customary procedures. At any time prior to such cancellation, if any interest in a Global Note is exchanged for Physical Notes, converted, canceled, repurchased, redeemed or transferred to a transferee who receives Physical Notes therefor or any Physical Note is exchanged or transferred for part of such Global Note, the principal amount of such Global Note shall, in accordance with the Trustee’s customary procedures, be appropriately reduced or increased, as the case may be, and an endorsement shall be made on the Schedule of Exchanges of such Global Note, by the Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction or increase.

The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary participants or beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when

expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

Neither the Trustee nor any agent of the Trustee shall have any responsibility or liability for any actions taken or not taken by the Depositary.

Neither the Company, the Trustee nor any agent of the Company or the Trustee shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Note or maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

The Trustee shall have the right to decline to authenticate and deliver any Notes under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith shall determine that such action would expose the Trustee to personal liability to existing Holders.

(d) Until the Resale Restriction Termination Date, any stock certificate representing Common Stock issued upon conversion of such Note shall bear a legend in substantially the following form (unless such Common Stock has been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer, or pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act, or such Common Stock has been issued upon conversion of Notes that have been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer, or pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act, or unless otherwise agreed by the Company with written notice thereof to the Trustee and any transfer agent for the Common Stock):

THE SALE OF THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, PRIOR TO THE RESALE RESTRICTION TERMINATION DATE (AS DEFINED BELOW), THIS SECURITY (AND ANY BENEFICIAL INTEREST HEREIN) MAY NOT BE OFFERED, RESOLD, OR OTHERWISE TRANSFERRED, EXCEPT:

(A) TO HCI GROUP, INC. (THE “COMPANY”) OR ANY OF ITS SUBSIDIARIES;

(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT;

(C) TO A PERSON THAT YOU REASONABLY BELIEVE TO BE A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT; OR

(D) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (INCLUDING, IF AVAILABLE, THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT).

THE “RESALE RESTRICTION TERMINATION DATE” MEANS THE DATE: THAT IS AT LEAST ONE YEAR AFTER THE LAST ORIGINAL ISSUANCE DATE OF THE COMPANY’S 4.75% CONVERTIBLE SENIOR NOTES DUE 2042 (INCLUDING THE LAST DATE OF ISSUANCE OF ADDITIONAL NOTES PURSUANT TO THE EXERCISE OF THE INITIAL PURCHASERS’ OPTION TO PURCHASE ADDITIONAL NOTES); AND ON WHICH THE COMPANY HAS INSTRUCTED THE TRANSFER AGENT THAT THIS LEGEND WILL NO LONGER APPLY, IN ACCORDANCE WITH THE PROCEDURES DESCRIBED IN THE INDENTURE FOR THE NOTES.

PRIOR TO ANY TRANSFER PURSUANT TO THE FOREGOING CLAUSE ‎(D), THE COMPANY AND THE TRANSFER AGENT RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE AND RELY UPON TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

DURING THE PERIOD ENDING ONE YEAR AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF THE NOTES, NO “AFFILIATE” (AS DEFINED IN RULE 144) WILL BE PERMITTED TO RESELL ANY SHARES OF COMMON STOCK ISSUED UPON CONVERSION OF THE NOTES THAT CONSTITUTE “RESTRICTED SECURITIES” UNDER RULE 144 THAT HAVE BEEN REACQUIRED BY ANY OF THEM.

Any such Common Stock as to which such restrictions on transfer shall have expired in accordance with their terms may, upon surrender of the certificates representing such shares of Common Stock for exchange in accordance with the procedures of the transfer agent for the Common Stock, be exchanged for a new certificate or certificates for a like aggregate number of shares of Common Stock, which shall not bear the restrictive legend required by this ‎Section 2.05(d).

(e) The Company shall not, and shall not permit any of its controlled “affiliates” (as defined in Rule 144) to, resell any of the Notes or any shares of Common Stock issued upon conversion of any Note that constitute “restricted securities” under Rule 144 that have been reacquired by any of them, unless such Note or shares of Common Stock are registered under the Securities Act or resold pursuant to an exemption from the registration requirements of the Securities Act in a transaction that results in such Note no longer being “restricted securities” under Rule 144.

Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes. In case any Note shall become mutilated or be destroyed, lost or stolen, the Company in its discretion may execute, and upon its written request in a Company Order, the Trustee or an authenticating agent appointed by the Trustee shall authenticate and deliver a new Note, bearing a registration number not contemporaneously outstanding, in exchange and substitution for the mutilated Note, or in lieu of and in substitution for the Note so destroyed, lost or stolen. In every case the applicant for a substituted Note shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless from any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company, to the Trustee and, if applicable, to such authenticating agent evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.

The Trustee or such authenticating agent may authenticate any such substituted Note and deliver the same upon the receipt of such security or indemnity as the Trustee, the Company and, if applicable, such authenticating agent may require. No service charge shall be imposed by the Company, the Trustee, the Note Registrar or any co-Note Registrar for any exchange or registration of transfer of any substitute Note, but, upon the issuance of any substitute Note, the Company or the Trustee may require the payment by the Holder of a sum sufficient to cover any tax, assessment or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith. In case any Note that has matured or is about to mature or has been surrendered for required repurchase or redemption or is about to be converted in accordance with ‎Article 13 shall become mutilated or be destroyed, lost or stolen, the Company may, in its sole discretion, instead of issuing a substitute Note, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof except in the case of a mutilated Note), as the case may be, if the applicant for such payment or conversion shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, evidence satisfactory to the Company, the Trustee and, if applicable, any Paying Agent or Conversion Agent of the destruction, loss or theft of such Note and of the ownership thereof.

Every substitute Note issued pursuant to the provisions of this ‎Section 2.06 by virtue of the fact that any Note is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be found at any time, and shall be entitled to all the benefits of (but shall be subject to all the limitations set forth in) this Indenture equally and proportionately with any and all other Notes duly issued hereunder. To the extent permitted by law, all Notes shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment or conversion or repurchase of mutilated, destroyed, lost or stolen Notes and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment or conversion of negotiable instruments or other securities without their surrender.

Section 2.07. Temporary Notes. Pending the preparation of Physical Notes, the Company may execute and the Trustee or an authenticating agent appointed by the Trustee shall, upon written request of the Company in a Company Order, authenticate and deliver temporary Notes (printed or lithographed). Temporary Notes shall be issuable in any authorized denomination, and substantially in the form of the Physical Notes but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Company. Every such temporary Note shall be executed by the Company and authenticated by the Trustee or such authenticating agent upon the same conditions and in substantially the same manner, and with the same effect, as the Physical Notes. Without unreasonable delay, the Company shall execute and deliver to the Trustee or such authenticating agent Physical Notes (other than any Global Note) and thereupon any or all temporary Notes (other than any Global Note) may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to ‎Section 4.02 and the Trustee or such authenticating agent shall authenticate and deliver in exchange for such temporary Notes an equal aggregate principal amount of Physical Notes. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Physical Notes authenticated and delivered hereunder.

Section 2.08. Cancellation of Notes Paid, Converted, Etc. The Company shall cause all Notes surrendered for the purpose of payment, repurchase (including as described in Section 2.10 and except for repurchases pursuant to cash-settled swaps or other cash-settled derivatives), redemption, registration of transfer or exchange or conversion, if surrendered to any Person other than the Trustee (including the Company or the Company’s agents, Subsidiaries or Affiliates), to be delivered to the Trustee for cancellation. All Notes delivered to the Trustee for cancellation shall be canceled promptly by it, and no Notes shall be authenticated in exchange thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall dispose of canceled Notes in accordance with its customary procedures and, after such disposition, shall deliver a certificate of such disposition to the Company upon the written request of the Company. If the Company shall acquire any of the Notes, such acquisition shall not operate as a redemption, repurchase or satisfaction of the indebtedness represented by such Notes unless and until the same are delivered to the Trustee for cancellation.

Section 2.09. CUSIP Numbers. The Company in issuing the Notes may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in all notices issued to Holders as a convenience to such Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or on such notice and that reliance may be placed only on the other identification numbers printed on the Notes, and any purpose for which such notice is given shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee in writing of any change in the “CUSIP” numbers.

Section 2.10. Additional Notes; Repurchases. The Company may, without the consent of, or notice to, the Holders and notwithstanding ‎Section 2.01, reopen this Indenture and issue additional Notes hereunder with the same terms as the Notes initially issued hereunder (other than differences in issue date, issue price and, if applicable, interest accrued prior to the issue date of such additional Notes and the initial interest payment date) in an unlimited aggregate principal amount; provided that if any such additional Notes are not fungible with the Notes initially issued hereunder for U.S. federal income tax purposes, such additional Notes shall have a separate CUSIP number. Prior to the issuance of any such additional Notes, the Company shall deliver to the Trustee a Company Order, an Officer’s Certificate and an Opinion of Counsel, such Officer’s Certificate and Opinion of Counsel to cover such matters required by ‎Section 16.05, and such Opinion of Counsel to include a customary legal opinion as to the enforceability under New York law of such additional Notes, which opinion may contain customary exceptions and qualifications. In addition, the Company may, to the extent permitted by law, and directly or indirectly (regardless of whether such Notes are surrendered to the Company), repurchase Notes in the open market or otherwise, whether by the Company or its Subsidiaries or through a private or public tender or exchange offer or through counterparties to private agreements, including by cash-settled swaps or other derivatives. The Company shall cause any Notes so repurchased (other than Notes repurchased pursuant to cash-settled swaps or other cash-settled derivatives) to be surrendered to the Trustee for cancellation in accordance with ‎Section 2.08.

Article 3
Satisfaction and Discharge

Section 3.01. Satisfaction and Discharge. This Indenture shall, upon request of the Company contained in an Officer’s Certificate cease to be of further effect, and the Trustee, at the expense and written request of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when all Notes theretofore authenticated and delivered (other than Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in ‎Section 2.06 and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in ‎Section 4.04(d) have been delivered to the Trustee for cancellation; or the Company has deposited with the Trustee or delivered to Holders, as applicable, after the Notes have become due and payable, whether at the Maturity Date, any Redemption Date, any Repurchase Date, upon conversion or otherwise, cash, shares of Common Stock or a combination thereof (at the Company’s election), if any (solely to satisfy the Company’s Conversion Obligation, if applicable), sufficient to pay all of the outstanding Notes and all other sums due and payable under this Indenture by the Company; and the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under ‎Section 7.06 shall survive.

Article 4
Particular Covenants of the Company

Section 4.01. Payment of Principal and Interest. The Company covenants and agrees that it will cause to be paid the principal (including the Repurchase Price and Redemption Price, if applicable) of, and accrued and unpaid interest on, each of the Notes at the places, at the respective times and in the manner provided herein and in the Notes.

Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by the United States of America from principal or interest (including any Additional Interest) payments hereunder.

Section 4.02. Maintenance of Office or Agency. An office will be maintained on behalf of the Company in New York, New York, or any other office located in the continental United States of America so designated by the Company, where the Notes may be surrendered for registration of transfer or exchange or for presentation for payment, repurchase or redemption (“Paying Agent”) or for conversion (“Conversion Agent”) and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office or the office or agency of the Trustee in New York, New York, or any other office located in the continental United States of America so designated by the Trustee as a place where Notes may be presented for payment or for registration of transfer.

The Company may also from time to time designate as co-Note Registrars one or more other offices or agencies located in the United States of America where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office in New York, New York, or any other office located in the continental United States of America so designated by the Company as a place for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The terms “Paying Agent” and “Conversion Agent” include any such additional or other offices or agencies, as applicable.

The Company hereby initially designates the Trustee as the Paying Agent, Note Registrar, Custodian and Conversion Agent and the Corporate Trust Office and the office of the Trustee in New York, New York, or any other office located in the continental United States of America so designated by the Trustee, each shall be considered as one such office or agency of the Company for each of the aforesaid purposes.

Section 4.03. Appointments to Fill Vacancies in Trustee’s Office. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in ‎Section 7.08, a Trustee, so that there shall at all times be a Trustee hereunder.

Section 4.04. Provisions as to Paying Agent.

(a) If the Company shall appoint a Paying Agent other than the Trustee, the Company will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this ‎Section 4.04:

(i) that it will hold all sums held by it as such agent for the payment of the principal (including the Repurchase Price and Redemption Price, if applicable) of, and accrued and unpaid interest on, the Notes in trust for the benefit of the Holders of the Notes;

(ii) that it will give the Trustee prompt written notice of any failure by the Company to make any payment of the principal (including the Repurchase Price and Redemption Price, if applicable) of, and accrued and unpaid interest on, the Notes when the same shall be due and payable; and

(iii) that at any time during the continuance of an Event of Default, upon request of the Trustee, it will forthwith pay to the Trustee all sums so held in trust.

The Company shall, on or before each due date of the principal (including the Repurchase Price and Redemption Price, if applicable) of, or accrued and unpaid interest on, the Notes, deposit with the Paying Agent a sum sufficient to pay such principal (including the Repurchase Price and Redemption Price, if applicable) or accrued and unpaid interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee in writing of any failure to take such action; provided that if such deposit is made on the due date, such deposit must be received by the Paying Agent by 10:00 a.m., New York City time, on such date.

(b) If the Company shall act as its own Paying Agent, it will, on or before each due date of the principal (including the Repurchase Price and Redemption Price, if applicable) of, and accrued and unpaid interest on, the Notes, set aside, segregate and hold in trust for the benefit of the Holders of the Notes a sum sufficient to pay such principal (including the Repurchase Price and Redemption Price, if applicable) and accrued and unpaid interest so becoming due and will promptly notify the Trustee in writing of any failure to take such action and of any failure by the Company to make any payment of the principal (including the Repurchase Price and Redemption Price, if applicable) of, or accrued and unpaid interest on, the Notes when the same shall become due and payable.

(c) Anything in this ‎Section 4.04 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of

this Indenture, or for any other reason, pay, cause to be paid or deliver to the Holders or the Trustee, as applicable, all sums or amounts held in trust by the Company or any Paying Agent hereunder as required by this ‎Section 4.04, such sums or amounts, if paid or delivered to the Trustee, to be held by the Trustee upon the trusts herein contained and upon such payment or delivery by the Company or any Paying Agent to the Holders or the Trustee, as applicable, the Company or such Paying Agent shall be released from all further liability but only with respect to such sums or amounts.

(d) Any money and shares of Common Stock deposited with the Trustee or any Paying Agent or Conversion Agent, or then held by the Company, in trust for the payment of the principal (including the Repurchase Price and Redemption Price, if applicable) of, and accrued and unpaid interest on and the consideration due upon conversion of, any Note and remaining unclaimed for two years after such principal (including the Repurchase Price and Redemption Price, if applicable), interest or consideration due upon conversion has become due and payable shall be paid to the Company on request of the Company contained in an Officer’s Certificate, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money and shares of Common Stock, and all liability of the Company as trustee thereof, shall thereupon cease.

Section 4.05. Existence. Subject to ‎Article 11, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence.

Section 4.06. Rule 144A Information Requirement and Annual Reports.

(a) At any time the Company is not subject to Sections 13 or 15(d) of the Exchange Act, the Company shall, so long as any of the Notes (or any shares of Common Stock issuable upon conversion thereof), at such time, constitute “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, upon written request, provide to the Trustee, any Holder, beneficial owner or prospective purchaser of such Notes or shares of Common Stock, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act to facilitate the resale of such Notes or shares of Common Stock pursuant to Rule 144A under the Securities Act.

(b) The Company shall file with the Trustee within 15 days after the same are required to be filed with the Commission (taking into account any applicable grace periods provided thereunder), copies of any documents or reports that the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act (excluding any such information, documents or reports, or portions thereof, subject to confidential treatment and any correspondence with the Commission). Any such document or report that the Company files with the Commission via the Commission’s EDGAR system shall be deemed to be filed with the Trustee for purposes of this ‎Section 4.06(b) at the time such documents are filed via the EDGAR system, it being understood

that the Trustee shall not be responsible for determining whether such filings have been made.

(c) Delivery of the reports and documents described in subsection ‎(b) above to the Trustee is for informational purposes only, and the Trustee’s receipt of such shall not constitute actual or constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to conclusively rely on an Officer’s Certificate).

(d) If, at any time during the six-month period beginning on, and including, the date that is six months after the last date of original issuance of the Notes offered pursuant to the applicable Offering Memorandum, the Company fails to timely file any document or report that it is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act, as applicable (after giving effect to all applicable grace periods thereunder and other than reports on Form 8-K), or such Notes are not otherwise freely tradable pursuant to Rule 144 by Holders other than the Company’s Affiliates or holders that were the Company’s Affiliates within the preceding three months (as a result of restrictions pursuant to U.S. securities law or the terms of this Indenture or such Notes), the Company shall pay Additional Interest on such Notes. Such Additional Interest shall accrue on such Notes at the rate of 0.50% per annum of the principal amount of such Notes outstanding for each day during such period for which the Company’s failure to file has occurred and is continuing or the Notes are not otherwise freely tradable pursuant to Rule 144 by Holders other than the Company’s Affiliates or holders that were the Company’s Affiliates within the preceding three months (without restrictions pursuant to U.S. securities law or the terms of this Indenture or such Notes). As used in this ‎Section 4.06(d), documents or reports that the Company is required to “file” with the Commission pursuant to Section 13 or 15(d) of the Exchange Act do not include documents or reports that the Company furnishes to the Commission pursuant to Section 13 or 15(d) of the Exchange Act.

(e) If, and for so long as, the restrictive legend on the Notes offered pursuant to the applicable Offering Memorandum specified in ‎Section 2.05(c) has not been removed (or deemed removed pursuant to this Indenture), such Notes are assigned a restricted CUSIP number or such Notes are not otherwise freely tradable pursuant to Rule 144 by Holders other than the Company’s Affiliates or holders that were the Company’s Affiliates within the preceding three months (without restrictions pursuant to U.S. securities law or the terms of this Indenture or the Notes) beginning on the 380th day after the last date of original issuance of such Notes, the Company shall pay Additional Interest on such Notes at a rate equal to 0.50% per annum of the principal amount of such Notes outstanding until the restrictive legend on such Notes has been removed in accordance with ‎Section 2.05(c), such Notes are assigned an unrestricted CUSIP number and such Notes are freely tradable pursuant to Rule 144 by Holders other than the Company’s Affiliates or holders that were the Company’s Affiliates within the preceding three months (without restrictions pursuant to U.S. securities law or the terms of this Indenture or such Notes).

(f) Notwithstanding the foregoing, no Additional Interest will accrue or be payable under ‎Section 4.06(e): for any date on which the following four conditions are satisfied: the Company has filed a Shelf Registration Statement for the resale of the Notes and any shares of Common Stock issuable upon conversion of such Notes, such Shelf Registration Statement is effective and usable by Holders identified therein as selling security Holders for the resale of such Notes and any shares of Common Stock issued upon conversion of such Notes, the Holders may sell such Notes and any shares of Common Stock issuable upon conversion of such Notes held by them under such Shelf Registration Statement on terms customary for the resale of convertible or exchangeable securities offered in reliance on Rule 144A, and such Notes and/or shares of Common Stock sold pursuant to such Shelf Registration Statement become freely tradable as a result of such sale; or after the Company has complied with the conditions set forth in clause ‎(i) above for a period of two years.

(g) Additional Interest will be payable in arrears on each Interest Payment Date following accrual in the same manner and to the same Persons as regular interest on the Notes.

(h) The Additional Interest that is payable in accordance with ‎Section 4.06(d) or ‎Section 4.06(e) shall be in addition to, and not in lieu of, any Additional Interest that may be payable as a result of the Company’s election pursuant to ‎Section 6.03. Notwithstanding the foregoing, in no event shall Additional Interest accrue under the terms of this Indenture (aggregating any Additional Interest payable pursuant to ‎Section 4.06(d) or ‎Section 4.06(e) with any Additional Interest payable pursuant to ‎Section 6.03) at a rate per year in excess of 0.50%, regardless of the number of events or circumstances giving rise to the requirement to pay such Additional Interest.

(i) If Additional Interest is payable by the Company pursuant to ‎Section 4.06(d) or ‎Section 4.06(e), the Company shall deliver to the Trustee an Officer’s Certificate to that effect stating the amount of such Additional Interest that is payable and the date on which such Additional Interest is payable. Unless and until a Responsible Officer of the Trustee receives at the Corporate Trust Office such a certificate, the Trustee may assume without inquiry that no such Additional Interest is payable. If the Company has paid Additional Interest directly to the Persons entitled to it, the Company shall deliver to the Trustee an Officer’s Certificate setting forth the particulars of such payment.

(j) For the avoidance of doubt, in the event additional Notes are issued under this Indenture pursuant to ‎Section 2.10, for purposes of determining whether Additional Interest shall be payable pursuant to ‎Section 4.06(d) or ‎Section 4.06(e) with respect to any Notes issued under this Indenture, all Notes that do not have the same CUSIP number or were not offered by the same Offering Memorandum shall be considered separately.

Section 4.07. Stay, Extension and Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law that would prohibit or forgive the Company from paying all or any

portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Indenture; and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

Section 4.08. Compliance Certificate; Statements as to Defaults. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending on December 31, 2022) an Officer’s Certificate stating whether or not the signers thereof have knowledge of any failure by the Company to comply with all conditions and covenants then required to be performed under this Indenture and, if so, specifying each such failure and the nature thereof.

In addition, the Company shall deliver to the Trustee, within 30 days after the occurrence of any Event of Default or Default, an Officer’s Certificate setting forth the details of such Event of Default or Default, its status and the action that the Company is taking or proposing to take in respect thereof.

Section 4.09. Foreign Account Tax Compliance Act (FATCA). In order to comply with applicable tax laws, rules and regulations (inclusive of directives, guidelines and interpretations promulgated by competent authorities) in effect from time to time (“Applicable Law”) to which a foreign financial institution, issuer, trustee, paying agent, holder or other institution is or has agreed to be subject to related to the Indenture, the Company agrees to provide to the Trustee sufficient information about holders or other applicable parties and/or transactions (including any modification to the terms of such transactions) so the Trustee can determine whether it has tax related obligations under Applicable Law, that the Trustee shall be entitled to make any withholding or deduction from payments under the Indenture to the extent necessary to comply with Applicable Law for which the Trustee shall not have any liability, and to hold harmless the Trustee for any losses it may suffer due to the actions it takes to comply with such Applicable Law. The terms of this section shall survive the termination of this Indenture.

Article 5
Lists of Holders and Reports by the Company and the Trustee

Section 5.01. Lists of Holders. For so long as there are any Physical Notes, the Company covenants and agrees that it will furnish or cause to be furnished to the Trustee, semi-annually, not more than 15 days after each May 15 and November 15 in each year beginning with November 15, 2022, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request (or such lesser time as the Trustee may reasonably request in order to enable it to timely provide any notice to be provided by it hereunder), a list in such form as the Trustee may reasonably require of the names and addresses of the Holders as of a date not more than 15 days (or such other date as the Trustee may reasonably request in order to so provide

any such notices) prior to the time such information is furnished, except that no such list need be furnished so long as the Trustee is acting as Note Registrar.

Section 5.02. Preservation and Disclosure of Lists. The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders contained in the most recent list furnished to it as provided in ‎Section 5.01 or maintained by the Trustee in its capacity as Note Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in ‎Section 5.01 upon receipt of a new list so furnished.

Article 6
Defaults and Remedies

Section 6.01. Events of Default. The following events shall be “Events of Default” with respect to the Notes:

(a) default, by the Company, in any payment of interest on any Note when due and payable, and the default continues for a period of 30 days;

(b) default, by the Company, in the payment of principal (including the Repurchase Price or Redemption Price, if applicable) of any Note when due and payable on the Maturity Date, upon any required repurchase, redemption, upon declaration of acceleration or otherwise;

(c) failure by the Company to comply with its obligation to convert the Notes in accordance with this Indenture upon exercise of a Holder’s conversion right, and such failure continues for a period of three Business Days;

(d) failure by the Company to issue a Company Notice in accordance with ‎Section 14.01(c) or ‎14.02(c), respectively, or notice of a specified corporate event in accordance with ‎Section 13.01(b)(ii) or ‎Section 13.01(b)(iii), in each case when due;

(e) failure by the Company to comply with its obligations under ‎Article 11;

(f) failure by the Company for 60 days after written notice of default from the Trustee or to the Company and the Trustee from the Holders of at least 25% in principal amount of the Notes then outstanding to comply with any of its other agreements contained in the Notes or this Indenture;

(g) default by the Company or any Significant Subsidiary of the Company in the payment when due, after the expiration of any applicable grace period, of principal of, or premium, if any, or interest on, any indebtedness for money borrowed in the aggregate principal amount then outstanding of $10,000,000 or more, or resulting in the acceleration of the Company’s or the Company’s Subsidiaries’ indebtedness for money borrowed having an aggregate principal amount of $10,000,000 or more so that it becomes due and payable before the date on which it would otherwise have become due and payable, if such default is not cured or waived, or such acceleration is not rescinded,

as the case may be, within 30 days after written notice to the Company from the Trustee or to the Company and the Trustee from the Holders of at least 25% in principal amount of Notes then outstanding in accordance with this Indenture;

(h) a final judgment for the payment of $10,000,000 or more (excluding any amounts covered by insurance) rendered against the Company or any Significant Subsidiary of the Company, which judgment is not discharged or stayed within 60 days after the date on which the right to appeal thereof has expired if no such appeal has commenced, or the date on which all rights to appeal have been extinguished;

(i) the Company or any Significant Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Company or any such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any such Significant Subsidiary or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due; or

(j) an involuntary case or other proceeding shall be commenced against the Company or any Significant Subsidiary seeking liquidation, reorganization or other relief with respect to the Company or such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or such Significant Subsidiary or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 consecutive days.

Section 6.02. Acceleration; Rescission and Annulment. In case one or more Events of Default shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), then, and in each and every such case (other than an Event of Default specified in ‎Section 6.01(i) or ‎Section 6.01(j) with respect to the Company), unless the principal of all of the Notes shall have already become due and payable, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding determined in accordance with ‎Section 8.04, by notice in writing to the Company (and to the Trustee if given by Holders), may declare 100% of the principal of, and accrued and unpaid interest, if any, on, all the Notes to be due and payable immediately, and upon any such declaration the same shall become and shall automatically be immediately due and payable, anything contained in this Indenture or in the Notes to the contrary notwithstanding. If an Event of Default specified in ‎Section 6.01(i) or ‎Section 6.01(j) with respect to the Company occurs and is continuing, 100% of the principal of, and accrued and unpaid interest, if any, on, all Notes shall become and shall automatically be immediately due and payable.

The immediately preceding paragraph, however, is subject to the conditions that if, at any time after the principal of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay installments of accrued and unpaid interest upon all Notes and the principal of any and all Notes that shall have become due otherwise than by acceleration (with interest on overdue installments of accrued and unpaid interest to the extent that payment of such interest is enforceable under applicable law, and on such principal at the rate borne by the Notes) and amounts due to the Trustee pursuant to ‎Section 7.06, and if rescission would not conflict with any judgment or decree of a court of competent jurisdiction and any and all existing Events of Default under this Indenture, other than the nonpayment of the principal of and accrued and unpaid interest, if any, on Notes that shall have become due solely by such acceleration, shall have been cured or waived pursuant to ‎Section 6.09, then and in every such case (except as provided in the immediately succeeding sentence) the Holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Company and to the Trustee, may waive all Defaults or Events of Default with respect to the Notes and rescind and annul such declaration and its consequences and such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent Default or Event of Default, or shall impair any right consequent thereon. Notwithstanding anything to the contrary herein, no such waiver or rescission and annulment shall extend to or shall affect any Default or Event of Default resulting from the nonpayment of the principal of, or accrued and unpaid interest on, any Notes or a failure to pay or deliver, as the case may be, the consideration due upon conversion of the Notes.

Section 6.03. Additional Interest in Lieu of Reporting Default. Notwithstanding anything in this Indenture or in the Notes to the contrary, to the extent the Company elects, the sole remedy for an Event of Default relating to the Company’s failure to comply with its obligations as set forth in ‎Section 4.06(b) shall after the occurrence of such an Event of Default consist exclusively of the right to receive Additional Interest on the Notes at a rate equal to 0.25% per annum of the principal amount of the Notes outstanding for each day during the 90-day period beginning on, and including, the occurrence of such an Event of Default during which such Event of Default is continuing, and at a rate equal to 0.50% per annum of the principal amount of the Notes outstanding for each day from the 91st day until the 180th day during which such Event of Default is continuing (or, if earlier, the date on which such Event of Default is cured or waived as provided for in this Indenture). Additional Interest payable pursuant to this ‎Section 6.03 shall be in addition to, not in lieu of, any Additional Interest payable pursuant to ‎Section 4.06(d) or ‎Section 4.06(e), subject to the second immediately succeeding paragraph. If the Company so elects, such Additional Interest shall be payable in the same manner, to the same Persons and on the same dates as regular interest on the Notes. On the 181st day after such Event of Default (if the Event of Default relating to the Company’s failure to comply with its obligations as set forth in ‎Section 4.06(b) is not cured or waived prior to such 181st day), the Notes will be subject to acceleration as provided in ‎Section 6.02. The provisions of this paragraph will not affect

the rights of Holders of Notes in the event of the occurrence of any Event of Default other than the Company’s failure to comply with its obligations as set forth in ‎‎‎Section 4.06(b). In the event the Company does not elect to pay Additional Interest following an Event of Default in accordance with this ‎Section 6.03, or the Company elects to pay such Additional Interest but the Company does not pay such Additional Interest when due, the Notes shall be immediately subject to acceleration as provided in ‎Section 6.02.

In order to elect to pay Additional Interest as the sole remedy during the first 180 days after the occurrence of any Event of Default described in the immediately preceding paragraph, the Company must notify in writing all Holders of the Notes, the Trustee and the Paying Agent of such election prior to the beginning of such 180-day period. Upon the failure to timely give such notice, the Notes shall be immediately subject to acceleration as provided in ‎Section 6.02.

In no event shall Additional Interest accrue under the terms of this Indenture (aggregating any Additional Interest payable pursuant to this ‎Section 6.03 with any Additional Interest payable pursuant to ‎Section 4.06(d) or ‎Section 4.06(e) at a rate per year in excess of 0.50%, regardless of the number of events or circumstances giving rise to the requirement to pay such Additional Interest.

The Trustee shall not at any time be under any duty or responsibility to any Holder to determine Additional Interest (including if such interest is due and payable), or with respect to the nature, extent or calculation of the amount of Additional Interest owed, or with respect to the method employed in such calculation of Additional Interest (as to which the Trustee is entitled to conclusively rely on an Officer’s Certificate delivered to it pursuant to Section 4.06(i).

Section 6.04. Payments of Notes on Default; Suit Therefor. If an Event of Default described in clause ‎(a) or ‎(b) of ‎Section 6.01 shall have occurred, the Company shall, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of the Notes, the whole amount then due and payable on the Notes for principal and interest, if any, with interest on any overdue principal and interest, if any, at the rate borne by the Notes at such time, and, in addition thereto, such further amount as shall be sufficient to cover any amounts due to the Trustee under ‎Section 7.06. If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated.

In the event there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Notes under Title 11 of the United States Code, or any other applicable law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Company or such other obligor, the property of the Company or such other obligor, or in the event of any other judicial

proceedings relative to the Company or such other obligor upon the Notes, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this ‎Section 6.04, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal and accrued and unpaid interest, if any, in respect of the Notes, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents and to take such other actions as it may deem necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceedings relative to the Company or any other obligor on the Notes, its or their creditors, or its or their property, and to collect and receive any monies or other property payable or deliverable on any such claims, and to distribute the same after the deduction of any amounts due to the Trustee under ‎Section 7.06; and any receiver, assignee or trustee in bankruptcy or reorganization, liquidator, custodian or similar official is hereby authorized by each of the Holders to make such payments to the Trustee, as administrative expenses, and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for reasonable compensation, expenses, advances and disbursements, including agents and counsel fees, and including any other amounts due to the Trustee under ‎Section 7.06, incurred by it up to the date of such distribution. To the extent that such payment of reasonable compensation, expenses, advances and disbursements out of the estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, monies, securities and other property that the Holders of the Notes may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting such Holder or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Trustee without the possession of any of the Notes, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes.

In any proceedings brought by the Trustee (and in any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to represent all the Holders of the Notes, and it shall not be necessary to make any Holders of the Notes parties to any such proceedings.

In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of any waiver pursuant to ‎Section 6.09 or any rescission and annulment pursuant to ‎Section 6.02 or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the Holders, and the Trustee shall, subject to any determination in such proceeding, be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the Holders, and the Trustee shall continue as though no such proceeding had been instituted.

Section 6.05. Application of Monies Collected by Trustee. Any monies collected by the Trustee pursuant to this ‎Article 6 with respect to the Notes shall be applied in the following order, at the date or dates fixed by the Trustee for the distribution of such monies, upon presentation of the several Notes, and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid:

First, to the payment of all amounts due the Trustee under ‎Section 7.06;

Second, in case the principal of the outstanding Notes shall not have become due and be unpaid, to the payment of interest on, and any cash due upon conversion of, the Notes in default in the order of the due date of the payments of such interest and cash due upon conversion, as the case may be, with interest (to the extent that such interest has been collected by the Trustee) upon such overdue payments at the rate borne by the Notes at such time, such payments to be made ratably to the Persons entitled thereto;

Third, in case the principal of the outstanding Notes shall have become due, by declaration or otherwise, and be unpaid to the payment of the whole amount (including, if applicable, the payment of the Repurchase Price or Redemption Price and any cash due upon conversion) then owing and unpaid upon the Notes for principal and interest, if any, with interest on the overdue principal and, to the extent that such interest has been collected by the Trustee, upon overdue installments of interest at the rate borne by the Notes at such time, and in case such monies shall be insufficient to pay in full the whole amounts so due and unpaid upon the Notes, then to the payment of such principal (including, if applicable, the Repurchase Price or Redemption Price and the cash due upon conversion) and interest without preference or priority of principal over interest, or of interest over principal or of any installment of interest over any other installment of interest, or of any Note over any other Note, ratably to the aggregate of such principal (including, if applicable, the Repurchase Price or Redemption Price and any cash due upon conversion) and accrued and unpaid interest; and

Fourth, to the payment of the remainder, if any, to the Company.

Section 6.06. Proceedings by Holders. Except to enforce the right to receive payment of principal (including, if applicable, the Repurchase Price or Redemption Price) or interest when due, or the right to receive payment or delivery of the consideration due upon conversion, no Holder of any Note shall have any right by virtue of or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture, or for the appointment of a receiver,

trustee, liquidator, custodian or other similar official, or for any other remedy hereunder, unless:

(a) such Holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof, as herein provided;

(b) Holders of at least 25% in aggregate principal amount of the Notes then outstanding shall have made written request upon the Trustee to pursue such remedy hereunder;

(c) such Holders shall have offered to the Trustee such security or indemnity satisfactory to it against any loss, liability or expense to be incurred therein or thereby;

(d) the Trustee for 60 days after its receipt of the request and offer of security or indemnity, had not complied with such request; and

(e) no direction that, in the opinion of the Trustee, is inconsistent with such written request shall have been given to the Trustee by the Holders of a majority of the aggregate principal amount of the Notes then outstanding within such 60-day period pursuant to ‎Section 6.09, it being understood and intended, and being expressly covenanted by the taker and Holder of every Note with every other taker and Holder and the Trustee that no one or more Holders shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders (except as otherwise provided herein) (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders). For the protection and enforcement of this ‎Section 6.06, each and every Holder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

Notwithstanding any other provision of this Indenture and any provision of any Note, the right of any Holder to receive payment or delivery, as the case may be, of (x) the principal (including the Redemption Price, the Repurchase Price on any Repurchase Date and the Fundamental Change Repurchase Price if applicable) of, (y) accrued and unpaid interest, if any, on, and (z) the consideration due upon conversion of, such Note, on or after the respective due dates expressed or provided for in such Note or in this Indenture, or to institute suit for the enforcement of any such payment or delivery, as the case may be, on or after such respective dates against the Company shall not be impaired or affected without the consent of such Holder.

Section 6.07. Proceedings by Trustee. In case of an Event of Default the Trustee may in its discretion (subject to the provisions of ‎Section 7.01) proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as are necessary to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the

specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

Section 6.08. Remedies Cumulative and Continuing. Except as provided in the last paragraph of ‎Section 2.06, all powers and remedies given by this ‎Article 6 to the Trustee or to the Holders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Trustee or the Holders of the Notes, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of any Holder of any of the Notes to exercise any right or power accruing upon any Default or Event of Default shall impair any such right or power, or shall be construed to be a waiver of any such Default or Event of Default or any acquiescence therein; and, subject to the provisions of ‎Section 6.06, every power and remedy given by this ‎Article 6 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders.

Section 6.09. Direction of Proceedings and Waiver of Defaults by Majority of Holders. The Holders of a majority of the aggregate principal amount of the Notes at the time outstanding determined in accordance with ‎Section 8.04 shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to Notes; provided, however, that such direction shall not be in conflict with any rule of law or with this Indenture, and the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. The Trustee may refuse to follow any direction that it determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. The Holders of a majority in aggregate principal amount of the Notes at the time outstanding determined in accordance with ‎Section 8.04 may on behalf of the Holders of all of the Notes waive any past Default or Event of Default hereunder and its consequences except a default in the payment of accrued and unpaid interest, if any, on, or the principal (including any Repurchase Price or Redemption Price) of, the Notes when due that has not been cured pursuant to the provisions of ‎Section 6.01, a failure by the Company to pay or deliver, as the case may be, the consideration due upon conversion of the Notes or a default in respect of a covenant or provision hereof which under ‎Article 10 cannot be modified or amended without the consent of each Holder of an outstanding Note affected. Upon any such waiver the Company, the Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Whenever any Default or Event of Default hereunder shall have been waived as permitted by this ‎Section 6.09, said Default or Event of Default shall for all purposes of the Notes and this Indenture be deemed to have been cured and to be not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

Section 6.10. Notice of Defaults. The Trustee shall, within 90 days after a Responsible Officer of the Trustee receives written notice of the occurrence and continuance of a Default in accordance with ‎Section 7.02(m), deliver to all Holders notice of all such Defaults, unless such Defaults shall have been cured or waived before the giving of such notice; provided that, except in the case of a Default in the payment of the principal of (including the Repurchase Price or Redemption Price, if applicable), or accrued and unpaid interest on, any of the Notes or a Default in the payment or delivery of the consideration due upon conversion, the Trustee shall be protected in withholding such notice if and so long as it in good faith determines that the withholding of such notice is in the interests of the Holders.

Section 6.11. Undertaking to Pay Costs. All parties to this Indenture agree, and each Holder of any Note by its acceptance thereof shall be deemed to have agreed, that any court may, in its discretion, require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this ‎Section 6.11 (to the extent permitted by law) shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Notes at the time outstanding determined in accordance with ‎Section 8.04, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or accrued and unpaid interest, if any, on any Note (including, but not limited to, the Repurchase Price or Redemption Price with respect to the Notes being repurchased or redeemed, as applicable, as provided in this Indenture) on or after the due date expressed or provided for in such Note or to any suit for the enforcement of the right to convert any Note in accordance with the provisions of ‎Article 13.

Article 7
Concerning the Trustee

Section 7.01. Duties and Responsibilities of Trustee. The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of all Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred that has not been cured or waived the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs; provided that if an Event of Default occurs and is continuing and is known to the Trustee pursuant to ‎Section 7.02(m), the Trustee will be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to the Trustee against the losses, expenses and liabilities that might be incurred by it in compliance with such request or direction.

No provision of this Indenture shall be construed to relieve the Trustee from liability for its own grossly negligent action, its own grossly negligent failure to act, its own willful misconduct or its own bad faith, except that:

(a) prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default that may have occurred:

(i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions that by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of any mathematical calculations or other facts stated therein);

(b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee, unless it shall be proved that the Trustee was grossly negligent in ascertaining the pertinent facts;

(c) the Trustee shall not be responsible or liable for any action it takes, suffers or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture;

(d) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority of the aggregate principal amount of the Notes at the time outstanding determined as provided in ‎Section 8.04 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture;

(e) whether or not therein provided, every provision of this Indenture relating to the conduct or affecting the liability of, or affording protection to, the Trustee shall be subject to the provisions of this Section;

(f) the Trustee shall not be liable in respect of any payment (as to the correctness of amount, entitlement to receive or any other matters relating to payment) or notice effected by the Company or any Paying Agent or any records maintained by any co-Note Registrar with respect to the Notes;

(g) if any party fails to deliver a notice relating to an event the fact of which, pursuant to this Indenture, requires notice to be sent to the Trustee, the Trustee may conclusively rely on its failure to receive such notice as reason to act as if no such event occurred, unless a Responsible Officer of the Trustee had actual knowledge of such event;

(h) in the absence of written agreement between the Company and the Trustee, all cash received by the Trustee shall be placed in a non-interest bearing trust account; and

(i) in the event that the Trustee is also acting as Custodian, Note Registrar, Paying Agent, Conversion Agent, Bid Solicitation Agent or transfer agent hereunder, the rights and protections afforded to the Trustee pursuant to this ‎Article 7, including, without limitation, the right to be indemnified, shall also be afforded to such Custodian, Note Registrar, Paying Agent, Conversion Agent, Bid Solicitation Agent or transfer agent.

None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers.

Section 7.02. Reliance on Documents, Opinions, Etc. Except as otherwise provided in ‎Section 7.01:

(a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, note, coupon or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties;

(b) before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel;

(c) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officer’s Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a Board Resolution;

(d) the Trustee may consult with counsel of its selection and require an Opinion of Counsel and any advice of such counsel or Opinion of Counsel shall be full and complete authorization and protection or reliance on in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

(e) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice,

request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the expense of the Company and shall incur no liability of any kind by reason of such inquiry or investigation;

(f) the Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder;

(g) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder;

(h) the Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture (i.e., an incumbency certificate);

(i) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, custodians, nominees or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent, custodian, nominee or attorney appointed by it with due care hereunder;

(j) the permissive rights of the Trustee enumerated herein shall not be construed as duties; and

(k) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

(l) In no event shall the Trustee be responsible or liable for any special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, lost profits), even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(m) The Trustee shall not be charged with knowledge of any Default or Event of Default with respect to the Notes, unless either following an Event of Default under clause (a) or (b) of Section 6.01, a Responsible Officer shall have actual knowledge of such Event of Default or written notice of such Default or Event of Default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.

(n) The responsibility of the Trustee related to corporate actions for securities it holds is limited to forwarding any notices it timely receives to a designated party and acting at the direction of such designated party.

Section 7.03. No Responsibility for Recitals, Etc. The recitals contained herein and in the Notes (except in the Trustee’s certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any Notes or the proceeds of any Notes authenticated and delivered by the Trustee in conformity with the provisions of this Indenture.

Section 7.04. Trustee, Paying Agents, Conversion Agents, Bid Solicitation Agent or Note Registrar May Own Notes. The Trustee, any Paying Agent (if other than the Company), any Conversion Agent, Bid Solicitation Agent (if other than the Company) or Note Registrar, in its individual or any other capacity, may become the owner or pledgee of Notes with the same rights it would have if it were not the Trustee, Paying Agent, Conversion Agent, Bid Solicitation Agent or Note Registrar.

Section 7.05. Monies and Shares of Common Stock to Be Held in Trust. All monies and any shares of Common Stock received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received. Money and any shares of Common Stock held by the Trustee in trust hereunder need not be segregated from other funds or property except to the extent required by law. The Trustee shall be under no liability for interest on any money or shares of any Common Stock received by it hereunder except as may be agreed from time to time in writing by the Company and the Trustee.

Section 7.06. Compensation and Expenses of Trustee. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation for all services rendered by it hereunder in any capacity (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) as mutually agreed to in writing between the Trustee and the Company, and the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances reasonably incurred or made by the Trustee in accordance with any of the provisions of this Indenture in any capacity thereunder (including the reasonable compensation and the expenses and disbursements of its agents and counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as shall have been caused by its gross negligence, willful misconduct or bad faith. The Company also covenants to indemnify the Trustee or any predecessor Trustee in any capacity under this Indenture and any other document or transaction entered into in connection herewith and their agents and any authenticating agent for, and to hold them harmless against, any loss, claim (whether asserted by the Company, any Holder or any other Person), damage, liability or expense incurred without gross negligence, willful misconduct or bad faith on the part of the Trustee, its officers, directors, agents or employees, or such agent or authenticating agent, as the case may be,

and arising out of or in connection with the acceptance or administration of this trust or in any other capacity hereunder, including the costs and expenses of defending themselves against any claim of liability in the premises. The Trustee shall notify the Company promptly after a Responsible Officer of the Trustee becomes aware of any claim for which it may seek indemnity, provided that failure to provide such notice shall not impair the Company’s obligation to provide indemnity under this ‎Section 7.06. The obligations of the Company under this ‎Section 7.06 to compensate or indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall be secured by a senior claim to which the Notes are hereby made subordinate on all money or property held or collected by the Trustee, except, subject to the effect of ‎Section 6.05, funds held in trust herewith for the benefit of the Holders of particular Notes. The Trustee’s right to receive payment of any amounts due under this ‎Section 7.06 shall not be subordinate to any other liability or indebtedness of the Company. The obligations of the Company under this ‎Section 7.06 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The indemnification provided in this ‎Section 7.06 shall extend to the officers, directors, agents and employees of the Trustee.

Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee and its agents and any authenticating agent incur expenses or render services after an Event of Default specified in ‎Section 6.01(i) or ‎Section 6.01(j) occurs, the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any bankruptcy, insolvency or similar laws.

Section 7.07. Eligibility of Trustee. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

Section 7.08. Resignation or Removal of Trustee.

(a) The Trustee may at any time resign by giving written notice of such resignation to the Company and by delivering notice thereof to the Holders. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the delivery of such notice of resignation to the Holders, the resigning Trustee may, at the expense of the Company, petition any court

of competent jurisdiction for the appointment of a successor trustee, or any Holder who has been a bona fide holder of a Note or Notes for at least six months may, subject to the provisions of ‎Section 6.11, on behalf of himself or herself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.

(b) In case at any time any of the following shall occur:

(i) the Trustee shall cease to be eligible in accordance with the provisions of ‎Section 7.07 and shall fail to resign after written request therefor by the Company or by any such bona fide Holder, or

(ii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in either case, the Company may by a Board Resolution remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of ‎Section 6.11, any Holder who has been a bona fide holder of a Note or Notes for at least six months may, on behalf of himself or herself and all others similarly situated, at the expense of the Company, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the delivery of such notice of removal to the Holders, the Trustee being removed may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor trustee with respect to the Notes.

(c) The Holders of a majority in aggregate principal amount of the Notes at the time outstanding, as determined in accordance with ‎Section 8.04, may at any time remove the Trustee and nominate a successor trustee by so notifying the Trustee and the Company in writing not less than 30 days prior to the effective date of such removal. If within ten days after notice to the Company of such nomination the Company objects thereto, the Trustee so removed or any Holder, upon the terms and conditions and otherwise as in ‎Section 7.08 provided, may petition any court of competent jurisdiction for an appointment of a successor trustee.

(d) Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this ‎Section 7.08 shall become effective upon acceptance of appointment by the successor trustee as provided in ‎Section 7.09.

Section 7.09. Acceptance by Successor Trustee. Any successor trustee appointed as provided in ‎Section 7.08 shall execute, acknowledge and deliver to the Company and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as Trustee herein; but, nevertheless, on the written request of the Company or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of ‎Section 7.06, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a senior claim to which the Notes are hereby made subordinate on all money or property held or collected by such trustee as such, except for funds held in trust for the benefit of Holders of particular Notes, to secure any amounts then due it pursuant to the provisions of ‎Section 7.06.

No successor trustee shall accept appointment as provided in this ‎Section 7.09 unless at the time of such acceptance such successor trustee shall be eligible under the provisions of ‎Section 7.07.

Upon acceptance of appointment by a successor trustee as provided in this ‎Section 7.09, each of the Company and the successor trustee, at the written direction and at the expense of the Company shall deliver or cause to be delivered notice of the succession of such trustee hereunder to the Holders. If the Company fails to deliver such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be delivered at the expense of the Company.

The Trustee shall have no responsibility or liability for the action or inaction of a successor trustee.

Section 7.10. Succession by Merger, Etc. Any corporation or other entity into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation or other entity succeeding to all or substantially all of the corporate trust business of the Trustee (including the administration of this Indenture), shall be the successor to the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided that in the case of any corporation or other entity succeeding to all or substantially all of the corporate trust business of the Trustee such corporation or other entity shall be eligible under the provisions of ‎Section 7.07.

In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee or authenticating agent appointed by such predecessor trustee, and

deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee or an authenticating agent appointed by such successor trustee may authenticate such Notes either in the name of any predecessor trustee hereunder or in the name of the successor trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor trustee or to authenticate Notes in the name of any predecessor trustee shall apply only to its successor or successors by merger, conversion or consolidation.

Section 7.11. Trustee’s Application for Instructions from the Company. Any application by the Trustee for written instructions from the Company (other than with regard to any action proposed to be taken or omitted to be taken by the Trustee that affects the rights of the Holders of the Notes under this Indenture) may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer that the Company has indicated to the Trustee should receive such application actually receives such application, unless any such officer shall have consented in writing to any earlier date), unless, prior to taking any such action (or the effective date in the case of any omission), the Trustee shall have received written instructions in accordance with this Indenture in response to such application specifying the action to be taken or omitted.

Article 8
Concerning the Holders

Section 8.01. Action by Holders. Whenever in this Indenture it is provided that the Holders of a specified percentage of the aggregate principal amount of the Notes may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action, the Holders of such specified percentage have joined therein may be evidenced by any instrument or any number of instruments of similar tenor executed by Holders in person or by agent or proxy appointed in writing, or the record of the Holders voting in favor thereof at any meeting of Holders duly called and held in accordance with the provisions of ‎Article 9, or a combination of such instrument or instruments and any such record of such a meeting of Holders. Whenever the Company or the Trustee solicits the taking of any action by the Holders of the Notes, the Company or the Trustee may, but shall not be required to, fix in advance of such solicitation, a date as the record date for determining Holders entitled to take such action. The record date if one is selected shall be not more than fifteen days prior to the date of commencement of solicitation of such action.

Section 8.02. Proof of Execution by Holders. Subject to the provisions of ‎Section 7.01, ‎Section 7.02 and ‎Section 9.05, proof of the execution of any instrument by

a Holder or its agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Notes shall be proved by the Note Register or by a certificate of the Note Registrar. The record of any Holders’ meeting shall be proved in the manner provided in ‎Section 9.06.

Section 8.03. Who Are Deemed Absolute Owners. The Company, the Trustee, any authenticating agent, any Paying Agent, any Conversion Agent and any Note Registrar may deem the Person in whose name a Note shall be registered upon the Note Register to be, and may treat it as, the absolute owner of such Note (whether or not such Note shall be overdue and notwithstanding any notation of ownership or other writing thereon made by any Person other than the Company or any Note Registrar) for the purpose of receiving payment of or on account of the principal of and (subject to ‎Section 2.03) accrued and unpaid interest on such Note, for conversion of such Note and for all other purposes under this Indenture; and neither the Company nor the Trustee nor any Paying Agent nor any Conversion Agent nor any Note Registrar shall be affected by any notice to the contrary. The sole registered holder of a Global Note shall be the Depositary or its nominee. All such payments or deliveries so made to any Holder for the time being, or upon its order, shall be valid, and, to the extent of the sums or shares of Common Stock so paid or delivered, effectual to satisfy and discharge the liability for monies payable or shares deliverable upon any such Note. Notwithstanding anything to the contrary in this Indenture or the Notes following an Event of Default, any owner of a beneficial interest in a Global Note may directly enforce against the Company, without the consent, solicitation, proxy, authorization or any other action of the Depositary or any other Person, such owner’s right to exchange such beneficial interest for a Note in certificated form in accordance with the provisions of this Indenture.

Section 8.04. Company-Owned Notes Disregarded. In determining whether the Holders of the requisite aggregate principal amount of Notes have concurred in any direction, consent, waiver or other action under this Indenture, Notes that are owned by the Company, by any Subsidiary thereof or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any Subsidiary thereof shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided that for the purposes of determining whether the Trustee shall be protected in conclusively relying on any such direction, consent, waiver or other action only Notes that a Responsible Officer actually knows are so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as outstanding for the purposes of this ‎Section 8.04 if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to so act with respect to such Notes and that the pledgee is not the Company, a Subsidiary thereof or a Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or a Subsidiary thereof. In the case of a dispute as to such right, any decision or indecision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. The Company shall furnish to the Trustee promptly an Officer’s Certificate listing and identifying all Notes, if any, known by the Company to be owned or held by or for the account of any of the above described Persons; and, subject to ‎Section 7.01, the Trustee shall be entitled to accept such

Officer’s Certificate as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are outstanding for the purpose of any such determination.

Section 8.05. Revocation of Consents; Future Holders Bound. At any time prior to (but not after) the evidencing to the Trustee, as provided in ‎Section 8.01, of the taking of any action by the Holders of the percentage of the aggregate principal amount of the Notes specified in this Indenture in connection with such action, any Holder of a Note that is shown by the evidence to be included in the Holders of Notes which have consented to such action may, by filing written notice with the Trustee at its Corporate Trust Office and upon proof of holding as provided in ‎Section 8.02, revoke such action so far as concerns such Note. Except as aforesaid, any such action taken by the Holder of any Note shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Note and of any Notes issued in exchange or substitution therefor or upon registration of transfer thereof, irrespective of whether any notation in regard thereto is made upon such Note or any Note issued in exchange or substitution therefor or upon registration of transfer thereof.

Article 9
Holders’ Meetings

Section 9.01. Purpose of Meetings. A meeting of Holders may be called at any time and from time to time pursuant to the provisions of this ‎Article 9 for any of the following purposes:

(a) to give any notice to the Company or to the Trustee or to give any directions to the Trustee permitted under this Indenture, or to consent to the waiving of any Default or Event of Default hereunder (in each case, as permitted under this Indenture) and its consequences, or to take any other action authorized to be taken by Holders pursuant to any of the provisions of ‎Article 6;

(b) to remove the Trustee and nominate a successor trustee pursuant to the provisions of ‎Article 7;

(c) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of ‎Section 10.02; or

(d) to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Notes under any other provision of this Indenture or under applicable law.

Section 9.02. Call of Meetings by Trustee. The Trustee may at any time call a meeting of Holders to take any action specified in ‎Section 9.01, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the Holders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting and the establishment of any record date pursuant to ‎Section 8.01, shall be delivered to Holders of such Notes. Such notice shall also be

delivered to the Company. Such notices shall be sent not less than 20 nor more than 90 days prior to the date fixed for the meeting.

Any meeting of Holders shall be valid without notice if the Holders of all Notes then outstanding are present in person or by proxy or if notice is waived before or after the meeting by the Holders of all Notes then outstanding, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice.

Section 9.03. Call of Meetings by Company or Holders. In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% of the aggregate principal amount of the Notes then outstanding, shall have requested the Trustee to call a meeting of Holders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have sent the notice of such meeting within 20 days after receipt of such request, then the Company or such Holders may determine the time and the place for such meeting and may call such meeting to take any action authorized in ‎Section 9.01, by delivering notice thereof as provided in ‎Section 9.02.

Section 9.04. Qualifications for Voting. To be entitled to vote at any meeting of Holders a Person shall be a Holder of one or more Notes on the record date pertaining to such meeting or be a Person appointed by an instrument in writing as proxy by a Holder of one or more Notes on the record date pertaining to such meeting. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.

Section 9.05. Regulations. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders, in regard to proof of the holding of Notes and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit.

The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders as provided in ‎Section 9.03, in which case the Company or the Holders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Holders of a majority in aggregate principal amount of the Notes represented at the meeting and entitled to vote at the meeting.

Subject to the provisions of ‎Section 8.04, at any meeting of Holders each Holder or proxyholder shall be entitled to one vote for each $1,000 principal amount of Notes held or represented by him or her; provided, however, that no vote shall be cast or counted at any meeting in respect of any Note challenged as not outstanding and ruled by

the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Notes held by it or instruments in writing as aforesaid duly designating it as the proxy to vote on behalf of other Holders. Any meeting of Holders duly called pursuant to the provisions of ‎Section 9.02 or ‎Section 9.03 may be adjourned from time to time by the Holders of a majority of the aggregate principal amount of Notes represented at the meeting, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.

Section 9.06. Voting. The vote upon any resolution submitted to any meeting of Holders shall be by written ballot on which shall be subscribed the signatures of the Holders or of their representatives by proxy and the outstanding aggregate principal amount of the Notes held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was sent as provided in ‎Section 9.02. The record shall show the aggregate principal amount of the Notes voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting.

Any record so signed and verified shall be conclusive evidence of the matters therein stated.

Section 9.07. No Delay of Rights by Meeting. Nothing contained in this ‎Article 9 shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Holders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders under any of the provisions of this Indenture or of the Notes. Nothing contained in this ‎Article 9 shall be deemed or construed to limit any Holder’s actions pursuant to the applicable procedures of the Depositary so long as the Notes are issued in global form.

Article 10
Supplemental Indentures

Section 10.01. Supplemental Indentures Without Consent of Holders. The Company, when authorized by the resolutions of the Board of Directors and the Trustee, at the Company’s expense, may from time to time and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes:

(a) to cure any ambiguity, mistake, omission, defect or inconsistency in this Indenture or the Notes in a manner that does not adversely affect the Holders of the Notes in any material respect as evidenced by an Officer’s Certificate;

(b) to provide for the assumption by a Successor Company of the obligations of the Company under this Indenture pursuant to ‎Article 11;

(d) to secure the Notes;

(e) to add to the covenants or events of default for the benefit of the Holders, make changes that would provide additional rights to the Holders, or surrender any right or power conferred upon the Company or any guarantor;

(f) to make any change that does not adversely affect the rights of any Holder;

(g) to increase the Conversion Rate as provided in this Indenture;

(h) to irrevocably elect a Settlement Method or a Specified Dollar Amount, as permitted by this Indenture; provided, however, that no such election shall affect any Settlement Method theretofore elected (or deemed to be elected) with respect to any Note pursuant to the provisions of ‎Section 13.02;

(i) to conform this Indenture to the requirements of the Trust Indenture Act as then in effect;

(j) to provide for the acceptance of appointment by a successor trustee pursuant to ‎Section 7.09 or to facilitate the administration of the trusts by more than one trustee;

(k) to conform the provisions of this Indenture, or the Notes, to the “Description of Notes” in the Original Offering Memorandum, to the extent such provision in the “Description of Notes” was intended to be a verbatim recitation of a provision of this Indenture, as evidenced by an Officer’s Certificate; or

(l) in connection with any transaction described in ‎Section 13.07, to provide that the Notes are convertible into Reference Property, subject to the provisions of ‎Section 13.02, and make certain related changes to the terms of the Notes to the extent expressly required by this Indenture.

Upon the written request of the Company, the Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to, but may in its discretion, enter into any supplemental

indenture that affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this ‎Section 10.01 may be executed by the Company and the Trustee without the consent of the Holders of any of the Notes at the time outstanding, notwithstanding any of the provisions of ‎Section 10.02.

Section 10.02. Supplemental Indentures with Consent of Holders. With the consent (evidenced as provided in ‎Article 8) of the Holders of at least a majority of the aggregate principal amount of Notes then outstanding (determined in accordance with ‎Article 8 and including, without limitation, consents obtained in connection with a repurchase of, or tender or exchange offer for, Notes), the Company, when authorized by the resolutions of the Board of Directors and the Trustee, at the Company’s expense, may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or any supplemental indenture or of modifying in any manner the rights of the Holders; provided, however, that, without the consent of each Holder of an outstanding Note affected, no such supplemental indenture shall:

(a) reduce the amount of Notes whose Holders must consent to an amendment;

(b) reduce the rate of or extend the stated time for payment of interest (other than Additional Interest) on any Note;

(d) make any change that adversely affects the conversion rights of any Notes;

(e) reduce the Redemption Price or Repurchase Price of any Note or amend or modify in any manner adverse to the Holders the Company’s obligation to make such payments, whether through an amendment or waiver of provisions in the covenants, definitions or otherwise;

(f) make any Note payable in money other than that stated in the Note;

(g) change the ranking of the Notes;

(h) impair the right of any Holder to receive payment of principal of (including the Redemption Price, the Repurchase Price on any Repurchase Date and the Fundamental Change Repurchase Price, if applicable) and interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Note; or

(i) make any change in the provisions of this ‎Article 10 that require each Holder’s consent or in the waiver provisions in ‎Section 6.02 or ‎Section 6.09.

Upon the written request of the Company, and upon the filing with the Trustee of evidence of the consent of Holders as aforesaid and subject to ‎Section 10.05, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

Holders do not need, under this ‎Section 10.02, to approve the particular form of any proposed supplemental indenture. It shall be sufficient if such Holders approve the substance thereof. After any such supplemental indenture under this ‎Section 10.02 becomes effective, the Company shall deliver to the Holders a notice briefly describing such supplemental indenture. However, the failure to give such notice to all the Holders, or any defect in the notice, will not impair or affect the validity of the supplemental indenture.

Section 10.03. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture pursuant to the provisions of this ‎Article 10, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitation of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

Section 10.04. Notation on Notes. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this ‎Article 10 may, at the Company’s expense, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company or the Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may, at the Company’s expense, be prepared and executed by the Company, authenticated by the Trustee (or an authenticating agent duly appointed by the Trustee pursuant to ‎Section 16.10) and delivered in exchange for the Notes then outstanding, upon surrender of such Notes then outstanding.

Section 10.05. Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee. In addition to the documents required by ‎Section 16.05, the Trustee shall receive and shall be fully protected in conclusively relying upon an Officer’s Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this ‎Article 10 and is permitted or authorized by this Indenture, such Opinion of Counsel to include a customary legal opinion as to the enforceability under New York law of such

supplemental indenture, which opinion may contain customary exceptions and qualifications.

Article 11
Consolidation, Merger, Sale, Conveyance and Lease

Section 11.01. Company May Consolidate, Etc. on Certain Terms. Subject to the provisions of ‎Section 11.02, the Company shall not consolidate with, merge with or into, or sell, convey, transfer or lease all or substantially all of its properties and assets to, another Person, as the case may be, unless:

(a) the Company is the surviving entity or the resulting, surviving or transferee Person (the “Successor Company”), if not the Company, shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and the Successor Company (if not the Company) shall expressly assume by an indenture supplemental hereto in form satisfactory to the Trustee all of the obligations of the Company under the Notes and this Indenture;

(b) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing under this Indenture; and

(c) the Company has delivered to the Trustee the Officer’s Certificate and Opinion of Counsel pursuant to ‎Section 11.03.

For purposes of this ‎Section 11.01, the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of one or more Subsidiaries of the Company to another Person, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of the Company to another Person.

Notwithstanding anything to the contrary in this Indenture, any disposition by the Company of all or any part of its interest in TypTap Insurance Group, Inc., or any of TypTap Insurance Group, Inc.’s Subsidiaries, shall not constitute a sale, conveyance, transfer or lease of all or substantially all of the Company’s property or assets within the meaning of this ‎Article 11.

Section 11.02. Successor Corporation to Be Substituted. In case of any such consolidation, merger, sale, conveyance, transfer or lease and upon the assumption by the Successor Company, as the case may be, of the due and punctual payment of the principal of and accrued and unpaid interest on all of the Notes, the due and punctual delivery or payment, as the case may be, of any consideration due upon conversion of the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Company, such Successor Company (if not the Company, as the case may be) shall succeed to, and may exercise every right and power

of, the Company, as the case may be, under this Indenture, and the Company, as the case may be, will be discharged from the obligations of the Company under the Notes and this Indenture, as applicable, except in the case of any such lease.

Such Successor Company thereupon may cause to be signed, and may issue either in its own name or in the name of the Company any or all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such Successor Company instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Notes that previously shall have been signed and delivered by the Officers of the Company to the Trustee for authentication, and any Notes that such Successor Company thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of the execution hereof. In the event of any such consolidation, merger, sale, conveyance or transfer (but not in the case of a lease), upon compliance with this ‎Article 11 the Person named as the “Company” in the first paragraph of this Indenture (or any successor that shall thereafter have become such in the manner prescribed in this ‎Article 11) may be dissolved, wound up and liquidated at any time thereafter and, except in the case of a lease, such Person shall be released from its liabilities as obligor and maker of the Notes and from its obligations under this Indenture and the Notes.

In case of any such consolidation, merger, sale, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may be appropriate.

Section 11.03. Evidence to Be Given to Trustee. No consolidation, merger, sale, conveyance, transfer or lease pursuant to this ‎Article 11 shall be effective unless the Trustee shall receive an Officer’s Certificate and an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or lease and any such assumption and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, complies with the provisions of this ‎Article 11.

Article 12
No Personal Liability of Directors, Officers, Employees or Stockholders

Section 12.01. Indenture and Notes Solely Corporate Obligations. None of the Company’s past, present or future directors, officers, employees or stockholders, as such, will have any liability for any of the obligations under the Notes or this Indenture or for any claim based on, or in respect or by reason of, such obligations or their creation. By accepting a Note, each Holder waives and releases all such liability. This waiver and release is part of the consideration for the issue of the Notes.

Article 13
Conversion of Notes

Section 13.01. Conversion Privilege.

(a) Subject to and upon compliance with the provisions of this ‎Article 13, each Holder of a Note shall have the right, at such Holder’s option, to convert all or any portion (if the portion to be converted is $1,000 principal amount or an integral multiple thereof) of such Note subject to satisfaction of the conditions described in ‎Section 13.01(b), at any time prior to the close of business on the Business Day immediately preceding the Maturity Date, under the circumstances and during the periods set forth in ‎Section 13.01(b), and irrespective of the conditions described in ‎Section 13.01(b), at any time during (x) the period beginning on and including March 1, 2027 and ending at the close of business on the Business Day immediately preceding June 7, 2027 or (y) the period beginning on, and including, March 1, 2042 and ending at the close of business on the Business Day immediately preceding the Maturity Date, in each case, at an initial conversion rate of 12.4166 shares of Common Stock (subject to adjustment as provided in ‎Section 13.04, the “Conversion Rate”) per $1,000 principal amount of Notes (subject to the settlement provisions of ‎Section 13.02, the “Conversion Obligation”).

(b) (i) A Holder may surrender the Notes for conversion during the five Business-Day period immediately after any ten consecutive Trading-Day period (the “Measurement Period”) in which the Trading Price per $1,000 principal amount of Notes, as determined following a request by a Holder of Notes in accordance with this subsection ‎(b)‎(i), for each Trading Day of the Measurement Period was less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate on each such Trading Day. The Trading Prices shall be determined by the Bid Solicitation Agent pursuant to this subsection ‎(b)‎(i) and the definition of Trading Price set forth in this Indenture. The Company shall provide written notice to the Bid Solicitation Agent (if other than the Company) of the three independent nationally recognized securities dealers selected by the Company pursuant to the definition of Trading Price, along with appropriate contact information for each. The Bid Solicitation Agent (if other than the Company) shall have no obligation to determine the Trading Price per $1,000 principal amount of Notes unless the Company has requested such determination, and the Company shall have no obligation to make such request (or, if the Company is acting as Bid Solicitation Agent, the Company shall have no obligation to determine the Trading Price per $1,000 principal amount of Notes) unless a Holder (or Holders) of at least $5,000,000 aggregate principal amount of Notes provides the Company with reasonable evidence that the Trading Price per $1,000 principal amount of Notes would be less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate, at which time the Company shall instruct the Bid Solicitation Agent (if other than the Company) to determine, or if the Company is acting as Bid Solicitation Agent, the Company shall determine, the Trading Price per $1,000 principal amount of Notes beginning on the next Trading Day and on each successive Trading Day until the Trading Price per $1,000 principal amount of Notes is greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate. If the Company is not acting as Bid

Solicitation Agent, and the Company does not instruct the Bid Solicitation Agent to determine the Trading Price per $1,000 principal amount of Notes when obligated as provided in the preceding sentence, or if the Company instructs the Bid Solicitation Agent to obtain bids and the Bid Solicitation Agent fails to make such determination, or the Company is acting as Bid Solicitation Agent and the Company fails to make such determination when obligated as provided in the preceding sentence, then, in either case, the Trading Price per $1,000 principal amount of Notes shall be deemed to be less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate on each Trading Day of such failure. If the Trading Price condition set forth above has been met, the Company shall so notify the Holders, the Trustee and the Conversion Agent (if other than the Trustee) in writing. If, at any time after the Trading Price condition set forth above has been met, the Trading Price per $1,000 principal amount of Notes is greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock and the applicable Conversion Rate, the Company shall so notify the Holders of the Notes, the Trustee and the Conversion Agent (if other than the Trustee) in writing.

(ii) If the Company elects to:

(A) issue to all or substantially all holders of its Common Stock any rights, options or warrants entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase shares of its Common Stock at a price per share that is less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading-Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance; or

(B) distribute to all or substantially all holders of its Common Stock the Company’s assets, debt securities or rights to purchase securities of the Company, which distribution has a per share value, as reasonably determined by the Board of Directors, exceeding 10% of the Last Reported Sale Price of the Common Stock on the Trading Day preceding the date of announcement for such distribution,

then, in either case, the Company shall notify all Holders of the Notes, the Trustee and the Conversion Agent (if other than the Trustee) at least 45 Scheduled Trading Days prior to the Ex-Dividend Date for such issuance or distribution. Once the Company has given such notice, the Notes may be surrendered for conversion at any time until the earlier of the close of business on the Business Day immediately preceding the Ex-Dividend Date for such issuance or distribution and the Company’s announcement that such issuance or distribution will not take place, even if the Notes are not otherwise convertible at such time. For purposes of this ‎Section 13.01(b)(ii)(A) and ‎Section 13.04(b), in determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of the Common Stock at less than such average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading-Day period ending on, and including, the Trading Day immediately preceding the date of announcement for such issuance, and

in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.

(iii) If a transaction or event that (x) constitutes a Fundamental Change occurs, (y) constitutes a Make-Whole Fundamental Change occurs or (z) if the Company is a party to a consolidation, merger, binding share exchange, or transfer or lease of all or substantially all of the Company’s assets, pursuant to which the Common Stock would be converted into cash, securities or other assets not set forth in (x) and (y) above, regardless of whether a Holder has the right to require the Company to repurchase the Notes pursuant to ‎Section 14.01, then the Notes may be surrendered for conversion at any time from or after the effective date of the transaction or event until the earlier of 35 Trading Days after the actual effective date of such transaction or event (or, if later, the date on which the Company provides notice of such transaction or event) or, if such transaction or event also constitutes a Fundamental Change, until the related Fundamental Change Repurchase Date, and the close of business on the Business Day immediately preceding the Maturity Date. The Company shall notify Holders, the Trustee and the Conversion Agent (if other than the Trustee) in writing as promptly as practicable following the date the Company publicly announces such transaction or event and in no event later than the actual effective date of such transaction or event.

(iv) Holders may surrender Notes for conversion during any calendar quarter commencing after the calendar quarter ending on June 30, 2022 (and only during such calendar quarter), if the Last Reported Sale Price of the Common Stock for at least 20 Trading Days (whether or not consecutive) during the period of 30 consecutive Trading Days ending on the last Trading Day of the immediately preceding calendar quarter is greater than 130% of the Conversion Price on each applicable Trading Day. Neither the Trustee nor the Conversion Agent shall have any duty to monitor such sale price. The Company shall notify Holders, the Trustee and the Conversion Agent (if other than the Trustee) in writing as promptly as practicable following the end of any such calendar quarter if the conditions to such conversion have been satisfied.

(v) If the Company calls any or all of the Notes for redemption pursuant to ‎Article 15, then Holders may surrender their Notes for conversion at any time prior to the close of business on the Business Day immediately preceding the Redemption Date, even if the Notes are not otherwise convertible at such time. After that time, the right to convert on account of the relevant Redemption Notice shall expire, unless the Company defaults in the payment of the Redemption Price, in which case a Holder of Notes may convert its Notes until the Redemption Price has been paid or duly provided for.

Section 13.02. Conversion Procedure; Settlement Upon Conversion.

(a) Except as provided in ‎Section 13.03(b) and ‎Section 13.07(a), upon conversion of any Note, the Company shall pay or deliver, as the case may be, cash (“Cash Settlement”), shares of Common Stock, together with cash, if applicable, in lieu of delivering any fractional share of Common Stock in accordance with subsection ‎(j) of this ‎Section 13.02 (“Physical Settlement”) or a combination of cash and shares of Common Stock, together with cash, if applicable, in lieu of delivering any fractional share of Common Stock in accordance with subsection ‎(j) of this ‎Section 13.02 (“Combination Settlement”), at the Company’s election, as the case may be, as described below.

(i) All conversions occurring during the Common Conversion Period, during the Maturity Conversion Period or during a Redemption Period, as the case may be, shall be settled using the same Settlement Method. Except for any conversions occurring during the Common Conversion Period, the Maturity Conversion Period or a Redemption Period, the Company shall use the same Settlement Method for all conversions occurring on the same Conversion Date, but the Company shall not have any obligation to use the same Settlement Method with respect to conversions that occur on different Conversion Dates. If the Company elects a Settlement Method, the Company shall notify in writing Holders converting through the Trustee of the Settlement Method it has selected (the “Settlement Notice”) no later than the close of business on the Trading Day immediately following the related Conversion Date (or, in the case of any conversions for which the relevant Conversion Date occurs (x) during a Redemption Period, in the relevant Redemption Notice, (y) during the Common Conversion Period, no later than March 1, 2027, or (z) during the Maturity Conversion Period, no later than March 1, 2042). If the Company does not so elect a Settlement Method prior to the deadline set forth in the immediately preceding sentence, the Company shall no longer have the right to elect Cash Settlement or Combination Settlement and the Company shall be deemed to have elected Physical Settlement in respect to its Conversion Obligation. If the Company elects Combination Settlement, but does not timely notify converting holders of the Specified Dollar Amount per $1,000 principal amount of Notes, such Specified Dollar Amount will be deemed to be $1,000.

At any time on or prior to March 1, 2042, the Company may irrevocably elect to satisfy the Conversion Obligation with respect to any Notes to be converted after the date of such election through any Settlement Method the Company is permitted to elect (including Combination Settlement with a Specified Dollar Amount of $1,000 per $1,000 principal amount of Notes or with an ability to continue to set the Specified Dollar Amount per $1,000 principal amount of Notes at or above a specific amount set forth in the election notice). If the Company irrevocably elects to fix the Settlement Method to Combination Settlement with an ability to continue to set the Specified Dollar Amount per $1,000 principal amount of Notes at or above a specific amount, the Company shall, after the date of such election, inform the Holders converting their Notes, the Trustee and the Conversion Agent of such Specified Dollar Amount no later than the relevant deadline for election of a Settlement Method, or, if the Company does not timely notify the Holders, such Specified Dollar Amount shall be the specific amount set forth in the

election notice or, if no specific amount was set forth in the election notice, such Specified Dollar Amount shall be $1,000 per $1,000 principal amount of Notes. Notwithstanding the foregoing, no such irrevocable election shall affect any Settlement Method theretofore elected (or deemed to be elected) with respect to any Note pursuant to the provisions described above. The Company may make such an election at its sole discretion without the consent of the Holders. Upon making such an election, the Company shall concurrently (A) post such information on its website or otherwise publicly disclose such information and (B) provide written notice to the Trustee and the Conversion Agent (if other than the Trustee) and to the Holders. For the avoidance of doubt, such an irrevocable election, if made by the Company, will be effective without the need to amend this Indenture or the Notes, including pursuant to ‎Section 10.01(h). However, the Company may nonetheless choose to execute such an amendment at its option.

(ii) The cash, shares of Common Stock or combination of cash and shares of Common Stock in respect of any conversion of Notes (the “Settlement Amount”) shall be computed as follows:

(A) If the Company elects (or is deemed to have elected) Physical Settlement, the Company shall deliver to converting Holders in respect of each $1,000 principal amount of Notes being converted a number of shares of Common Stock equal to the Conversion Rate, together with cash, if applicable, in lieu of delivering any fractional share of Common Stock in accordance with subsection ‎(j) of this ‎Section 13.02;

(B) If the Company elects Cash Settlement, the Company shall pay to converting Holders in respect of each $1,000 principal amount of Notes being converted cash in an amount equal to the sum of the Daily Conversion Values for each of the 40 consecutive Trading Days in the relevant Observation Period; and

(C) If the Company elects Combination Settlement, the Company shall pay or deliver, as the case may be, to converting Holders in respect of each $1,000 principal amount of Notes being converted a Settlement Amount equal to the sum of the Daily Settlement Amounts for each of the 40 consecutive Trading Days in the relevant Observation Period, together with cash, if applicable, in lieu of delivering any fractional share of Common Stock in accordance with subsection ‎(j) of this ‎Section 13.02.

(iii) The Daily Settlement Amounts (if applicable) and the Daily Conversion Values (if applicable) shall be determined by the Company promptly following the last day of the applicable Observation Period. Promptly after such determination of the Daily Settlement Amounts or the Daily Conversion Values, as the case may be, and the amount of cash payable in lieu of any fractional share, the Company shall notify the Trustee and the Conversion Agent (if other than the Trustee) in writing of the Daily Settlement Amounts or the Daily Conversion

Values, as the case may be, and the amount of cash payable in lieu of fractional shares of Common Stock. The Trustee and the Conversion Agent (if other than the Trustee) shall have no responsibility for any such determination.

(b) Subject to ‎Section 13.02(e), before any Holder of a Note shall be entitled to convert a Note as set forth above, such Holder shall in the case of a Global Note, comply with the procedures of the Depositary in effect at that time and, if required, pay funds equal to interest payable on the next Interest Payment Date to which such Holder is not entitled as set forth in ‎Section 13.02(h) and, if required, pay all transfer and similar taxes, if any as provided in Sections ‎13.02(d) or ‎(e), and in the case of a Physical Note complete, manually sign and deliver an irrevocable notice to the Conversion Agent as set forth in the Form of Notice of Conversion (or a facsimile thereof) (a “Notice of Conversion”) at the office of the Conversion Agent and state in writing therein the principal amount of Notes to be converted and the name or names (with addresses) in which such Holder wishes the certificate or certificates for any shares of Common Stock to be delivered upon settlement of the Conversion Obligation to be registered, surrender such Notes, duly endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer documents), at the office of the Conversion Agent, if required, furnish appropriate endorsements and transfer documents, if required, pay all transfer or similar taxes and if required, pay funds equal to interest payable on the next Interest Payment Date to which such Holder is not entitled as set forth in ‎Section 13.02(h). The Trustee (and, if different, the Conversion Agent) shall notify the Company of any conversion pursuant to this ‎Article 13 on the Conversion Date for such conversion. No Notice of Conversion with respect to any Notes may be delivered by a Holder thereof if such Holder has also delivered a Repurchase Notice to the Company in respect of such Notes and not validly withdrawn such Repurchase Notice in accordance with ‎Section 14.03. Nothing herein shall preclude any withholding of tax required by law.

If more than one Note shall be surrendered for conversion at one time by the same Holder, the Conversion Obligation with respect to such Notes shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted thereby) so surrendered.

(c) A Note shall be deemed to have been converted immediately prior to the close of business on the date (the “Conversion Date”) that the Holder has complied with the requirements set forth in subsection ‎(b) above. Except as set forth in ‎Section 13.03(b) and ‎Section 13.07(a), the Company shall pay or deliver, as the case may be, the consideration due in respect of the Conversion Obligation on the second Business Day immediately following the relevant Conversion Date, if the Company elects Physical Settlement, or on the second Business Day immediately following the last Trading Day of the Observation Period, in the case of any other Settlement Method. If any shares of Common Stock are due to converting Holders, the Company shall issue or cause to be issued, and deliver to the Conversion Agent or to such Holder, or such Holder’s nominee or nominees, a book-entry transfer through the Depositary for the full number of shares of Common Stock to which such Holder shall be entitled in satisfaction of the Company’s Conversion Obligation.

(d) In case any Note shall be surrendered for partial conversion, the Company shall execute and the Trustee shall authenticate and deliver to or upon the written order of the Holder of the Note so surrendered a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Note, without payment of any service charge by the converting Holder but with payment of a sum sufficient to cover any transfer tax or similar governmental charge required by law or that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such conversion being different from the name of the Holder of the old Notes surrendered for such conversion.

(e) If a Holder submits a Note for conversion, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of any shares of Common Stock upon conversion, unless the tax is due because the Holder requests such shares to be issued in a name other than the Holder’s name, in which case the Holder shall pay that tax. The Conversion Agent may refuse to deliver the certificates representing the shares of Common Stock being issued in a name other than the Holder’s name until the Trustee receives a sum sufficient to pay any tax that is due by such Holder in accordance with the immediately preceding sentence.

(f) Except as provided in ‎Section 13.04, no adjustment shall be made for dividends on any shares issued upon the conversion of any Note as provided in this ‎Article 13.

(g) Upon the conversion of an interest in a Global Note, the Trustee, or the Custodian at the direction of the Trustee, shall make a notation on such Global Note as to the reduction in the principal amount represented thereby. The Company shall notify the Trustee in writing of any conversion of Notes effected through any Conversion Agent other than the Trustee.

(h) Upon conversion, a Holder shall not receive any separate cash payment for accrued and unpaid interest, if any, except as set forth below. The Company’s settlement of the Conversion Obligation shall be deemed to satisfy in full its obligation to pay the principal amount of the Note and accrued and unpaid interest, if any, to, but excluding, the relevant Conversion Date. As a result, accrued and unpaid interest, if any, to, but excluding, such Conversion Date shall be deemed to be paid in full rather than cancelled, extinguished or forfeited. Upon a conversion of Notes into a combination of cash and shares of the Company’s Common Stock, accrued and unpaid interest will be deemed to be paid first out of the cash paid upon such conversion. Notwithstanding the foregoing, if Notes are converted after the close of business on a Regular Record Date, Holders of such Notes as of the close of business on such Regular Record Date will receive the full amount of interest payable on such Notes on the corresponding Interest Payment Date notwithstanding the conversion. Notes surrendered for conversion during the period from the close of business on any Regular Record Date to the open of business on the immediately following Interest Payment Date must be accompanied by funds equal to the amount of interest payable on the Notes so converted; provided that no such payment shall be required for conversions following the Regular Record Date immediately preceding the Maturity Date; if the Company has specified a Repurchase

Date or Redemption Date that is after a Regular Record Date and on or prior to the Business Day immediately following the corresponding Interest Payment Date; for conversions following the Regular Record Date immediately preceding June 1, 2027; or to the extent of any Defaulted Amounts, if any Defaulted Amounts exist at the time of conversion with respect to such Note. Therefore, for the avoidance of doubt, all Holders of Notes on the Regular Record Date immediately preceding June 1, 2027, the Maturity Date, a Repurchase Date or a Redemption Date described in the preceding sentence will receive the full interest payment due on June 1, 2027, the Maturity Date or other applicable Interest Payment Date, as applicable, regardless of whether their Notes have been converted following such Regular Record Date.

(i) The Person in whose name any shares of Common Stock delivered upon conversion is registered shall be treated as a stockholder of record as of the close of business on the relevant Conversion Date (if the Company elects (or is deemed to have elected) to satisfy the related Conversion Obligation by Physical Settlement) or the last Trading Day of the relevant Observation Period (if the Company elects to satisfy the related Conversion Obligation by Combination Settlement), as the case may be, subject to Sections ‎13.04(c) and ‎13.04(e). Upon a conversion of Notes, such Person shall no longer be a Holder of such Notes surrendered for conversion.

(j) The Company shall not issue any fractional share of Common Stock upon conversion of the Notes and shall instead pay cash in lieu of any fractional share of Common Stock issuable upon conversion based on, in the case of Combination Settlement, the Daily VWAP on the Last Trading Day of the applicable Observation Period, or, in the case of Physical Settlement, based on the daily VWAP on the relevant Conversion Date. For each Note surrendered for conversion, if the Company has elected Combination Settlement, the full number of shares that shall be issued upon conversion thereof shall be computed on the basis of the aggregate Daily Settlement Amounts for the applicable Observation Period, and any fractional shares remaining after such computation shall be paid in cash.

Section 13.03. Increased Conversion Rate Applicable to Certain Notes Surrendered in Connection with Make-Whole Fundamental Changes or Notices of Redemption.

(a) If (i) the Effective Date of a Make-Whole Fundamental Change occurs prior to June 7, 2027 or (ii) the Company gives a Redemption Notice with respect to any or all of the Notes for which the relevant Redemption Date occurs prior to June 7, 2027 and, in each case, a Holder elects to convert its Notes in connection with such Make-Whole Fundamental Change or Redemption Notice, as the case may be, the Company shall, under the circumstances described below, increase the Conversion Rate for the Notes so surrendered for conversion by a number of additional shares of Common Stock (the “Additional Shares”), as described below. A conversion of Notes shall be deemed for these purposes to be “in connection with” such Make-Whole Fundamental Change if the applicable Conversion Date occurs during the Make-Whole Fundamental Change Period. A conversion of Notes shall be deemed for these purposes to be “in connection with” a Redemption Notice for which the Redemption Date occurs prior to June 7, 2027

if the relevant Notice of Conversion is received by the Conversion Agent from, and including, the date of the Redemption Notice until the close of business on the Business Day immediately preceding the Redemption Date.

(b) Upon surrender of Notes for conversion in connection with a Make-Whole Fundamental Change that occurs prior to June 7, 2027 pursuant to ‎Section 13.01(b)(iii) or Redemption Notice for which the Redemption Date occurs prior to June 7, 2027, the Company shall, at its option, satisfy the related Conversion Obligation by Physical Settlement, Cash Settlement or Combination Settlement in accordance with ‎Section 13.02 based on the Conversion Rate as increased to reflect the Additional Shares pursuant to the table below; provided, however, that if, at the effective time of a Make-Whole Fundamental Change described in clause (b) of the definition of Fundamental Change, the Reference Property following such Make-Whole Fundamental Change is composed entirely of cash, for any conversion of Notes following the Effective Date of such Make-Whole Fundamental Change, the Conversion Obligation shall be calculated based solely on the Stock Price for the transaction and shall be deemed to be an amount of cash per $1,000 principal amount of converted Notes equal to the Conversion Rate (including any adjustment for Additional Shares), multiplied by such Stock Price. In such event, the Conversion Obligation will be determined and shall be paid to Holders in cash on the second Business Day following the Conversion Date. The Company shall notify the Trustee, the Conversion Agent (if other than the Trustee) and Holders of Notes of the Effective Date of any Make-Whole Fundamental Change no later than five Business Days after such Effective Date.

(c) The number of Additional Shares, if any, by which the Conversion Rate shall be increased shall be determined by reference to the table below, based on the date on which the Make-Whole Fundamental Change occurs or becomes effective or the date of the applicable Redemption Notice, as the case may be (in each case, the “Effective Date”), and the price (the “Stock Price”) paid (or deemed to be paid) per share of the Common Stock in the Make-Whole Fundamental Change or with respect to the Optional Redemption, as the case may be. If the holders of the Common Stock receive in exchange for their Common Stock only cash in a Make-Whole Fundamental Change described in clause (b) of the definition of Fundamental Change, the Stock Price shall be the cash amount paid per share. Otherwise, the Stock Price shall be the average of the Last Reported Sale Prices of the Common Stock over the ten Trading-Day period ending on, and including, the Trading Day immediately preceding the Effective Date of the Make-Whole Fundamental Change or the date of the Redemption Notice, as the case may be. The Board of Directors shall make appropriate adjustments to the Stock Price, in its good faith determination, to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date of the event occurs, during such ten consecutive Trading-Day period.

(d) The Stock Prices set forth in the column headings of the table below shall be adjusted as of any date on which the Conversion Rate of the Notes is otherwise adjusted. The adjusted Stock Prices shall equal the Stock Prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the

Conversion Rate immediately prior to such adjustment giving rise to the Stock Price adjustment and the denominator of which is the Conversion Rate as so adjusted. The number of Additional Shares set forth in the table below shall be adjusted in the same manner and at the same time as the Conversion Rate as set forth in ‎Section 13.04.

(e) The following table sets forth the number of Additional Shares by which the Conversion Rate shall be increased per $1,000 principal amount of Notes pursuant to this ‎Section 13.03 for each Stock Price and Effective Date set forth below:


	Stock Price
Effective Date	$64.43	$72.50	$80.54	$95.00	$104.70	$125.00	$150.00	$175.00	$200.00	$250.00	$400.00	$525.00
May 23, 2022	3.1041	2.2661	1.7174	1.1402	0.9154	0.6381	0.4534	0.3382	0.2569	0.1486	0.0166	0.0000
June 1, 2023	3.1041	2.1211	1.5533	0.9833	0.7746	0.5325	0.3793	0.2848	0.2176	0.1270	0.0137	0.0000
June 1, 2024	3.1041	1.9959	1.3875	0.8138	0.6225	0.4199	0.3010	0.2282	0.1759	0.1044	0.0113	0.0000
June 1, 2025	3.1041	1.8237	1.1617	0.5968	0.4367	0.2902	0.2109	0.1617	0.1258	0.0759	0.0081	0.0000
June 1, 2026	3.1041	1.5931	0.8372	0.3187	0.2188	0.1482	0.1107	0.0858	0.0673	0.0414	0.0042	0.0000
June 7, 2027	3.1041	1.3766	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000

(f) The exact Stock Prices and Effective Dates may not be set forth in the table above, in which case:

(i) if the Stock Price is between two Stock Prices in the table above or the Effective Date is between two Effective Dates in the table above, the number of Additional Shares shall be determined by a straight-line interpolation between the number of Additional Shares set forth for the higher and lower Stock Prices and the earlier and later Effective Dates, as applicable, based on a 365-day or 366-day year, as applicable;

(ii) if the Stock Price is greater than $525.00 per share (subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table above pursuant to subsection ‎(d) above), no Additional Shares shall be added to the Conversion Rate; and

(iii) if the Stock Price is less than $64.43 per share (subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table above pursuant to subsection ‎(d) above), no Additional Shares shall be added to the Conversion Rate.

Notwithstanding the foregoing, in no event shall the Conversion Rate per $1,000 principal amount of Notes exceed 15.5207 shares of Common Stock, subject to adjustment in the same manner as the Conversion Rate pursuant to ‎Section 13.04.

(g) Nothing in this ‎Section 13.03 shall prevent an adjustment to the Conversion Rate pursuant to ‎Section 13.04 in respect of a Make-Whole Fundamental Change.

Section 13.04. Adjustment of Conversion Rate. The Conversion Rate shall be adjusted from time to time by the Company if any of the following events occurs, except that the Company shall not make any adjustments to the Conversion Rate if Holders of the Notes participate (other than in the case of (x) a share split or share combination or (y) a tender or exchange offer), at the same time and upon the same terms as holders of the Common Stock and solely as a result of holding the Notes, in any of the transactions described in this ‎Section 13.04, without having to convert their Notes, as if they held a number of shares of Common Stock equal to the Conversion Rate, multiplied by the principal amount (expressed in thousands) of Notes held by such Holder.

(a) If the Company exclusively issues shares of Common Stock as a dividend or distribution on shares of its Common Stock, or if the Company effects a share split or share combination, the Conversion Rate shall be adjusted based on the following formula:

CR' = CR0 × (OS'/OS0)

where,

CR0 = the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date of such dividend or distribution, or immediately prior to the open of business on the Effective Date of such share split or share combination, as applicable;

CR' = the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date or Effective Date, as applicable;

OS0 = the number of shares of Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date or Effective Date, as applicable, before giving effect to such dividend, distribution, share split or share combination; and

OS' = the number of shares of Common Stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination.

Any adjustment made under this ‎Section 13.04(a) shall become effective immediately after the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately after the open of business on the Effective Date for such share split or share combination, as applicable. If any dividend or distribution of the type described in this ‎Section 13.04(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

(b) If the Company issues to all or substantially all holders of its Common Stock any rights, options or warrants entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase shares of the Common Stock at a price per share that is less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading-Day period

ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, the Conversion Rate shall be increased based on the following formula:

CR' = CR0 × ((OS0 + X) / (OS0 + Y))

where,

CR0 = the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such issuance;

CR' = the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date;

OS0 = the number of shares of Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date;

X = the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and

Y = the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants, divided by the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading-Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants.

Any increase made under this ‎Section 13.04(b) shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the open of business on the Ex-Dividend Date for such issuance. To the extent that such rights, options or warrants are not exercised prior to their expiration or shares of the Common Stock are not delivered after the exercise of such rights, options or warrants, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights, options or warrants are not so issued, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such Ex-Dividend Date for such issuance had not occurred.

For purposes of this ‎Section 13.04(b) and ‎Section 13.01(b)(ii)(A), in determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of the Common Stock at less than such average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading-Day period ending on, and including, the Trading Day immediately preceding the date of announcement for such issuance, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.

(c) If the Company distributes shares of its Capital Stock, evidences of its indebtedness, other assets or property or rights, options or warrants to acquire its Capital Stock or other securities, to all or substantially all holders of the Common Stock, excluding dividends, distributions or issuances as to which an adjustment was effected pursuant to ‎Section 13.04(a) or ‎Section 13.04(b), dividends or distributions paid exclusively in cash, as to which the provisions of ‎Section 13.04(d) shall apply, distributions of Reference Property in a transaction described in ‎Section 13.07; and Spin-Offs as to which the provisions set forth below in this ‎Section 13.04(c) shall apply (any of such shares of Capital Stock, evidences of indebtedness, other assets or property or rights, options or warrants to acquire Capital Stock or other securities of the Company, the “Distributed Property”), then the Conversion Rate shall be increased based on the following formula:

CR' = CR0 × (SP0 / (SP0 – FMV))

where,

CR0 = the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;

CR' = the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date;

SP0 = the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading-Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and

FMV = the fair market value (as determined by the Board of Directors) of the Distributed Property distributed with respect to each outstanding share of the Common Stock on the Ex-Dividend Date for such distribution.

Any increase made under the portion of this ‎Section 13.04(c) above shall become effective immediately after the open of business on the Ex-Dividend Date for such distribution.

Notwithstanding the foregoing, if “FMV” (as defined above) is equal to or greater than “SP0” (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, in respect of each $1,000 principal amount thereof, at the same time and upon the same terms as holders of the Common Stock receive the Distributed Property, the amount and kind of Distributed Property such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate in effect on the Ex-Dividend Date for the distribution. If the Board of Directors determines the “FMV” (as defined above) of any distribution for purposes of this ‎Section 13.04(c) by reference to the actual or when-issued trading market for any securities, it shall in doing so consider the prices in such market over the same period used in computing the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading-Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such

distribution. If the Company issues rights, options or warrants that are only exercisable upon the occurrence of certain triggering events, then the Company will not adjust the Conversion Rate pursuant to the foregoing in this ‎Section 13.04(c) until the earliest of these triggering events occurs; provided that the rights, options or warrants trade together with the Common Stock and will be issued in respect of future issuances of the shares of the Common Stock.

With respect to an adjustment pursuant to this ‎Section 13.04(c) where there has been a payment of a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company, that are, or, when issued, will be, listed or admitted for trading on a U.S. national securities exchange (a “Spin-Off”), the Conversion Rate shall be increased based on the following formula:

CR' = CR0 × ((FMV0 + MP0) / MP0)

where,

CR0 = the Conversion Rate in effect immediately prior to the end of the Valuation Period;

CR' = the Conversion Rate in effect immediately after the end of the Valuation Period;

FMV0 = the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of the Common Stock applicable to one share of the Common Stock (determined by reference to the definition of Last Reported Sale Price as set forth in ‎Section 1.01 as if references therein to Common Stock were to such Capital Stock or similar equity interest) over the first 10 consecutive Trading-Day period after, and including, the Ex-Dividend Date of the Spin-Off (the “Valuation Period”); and

MP0 = the average of the Last Reported Sale Prices of the Common Stock over the Valuation Period.

The increase to the Conversion Rate under the preceding paragraph shall occur at the close of business on the last Trading Day of the Valuation Period; provided that (x) in respect of any conversion of Notes for which Physical Settlement is applicable , if the relevant Conversion Date occurs during the Valuation Period, the reference to “10” in the preceding paragraph shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date for such Spin-Off to, and including, such Conversion Date in determining the Conversion Rate and (y) in respect of any conversion of Notes for which Cash Settlement or Combination Settlement is applicable, for any Trading Day that falls within the relevant Observation Period for such conversion and within the Valuation Period, the reference to “10” in the preceding paragraph shall be deemed replaced with such lesser number of Trading Days as have

elapsed from, and including, the Ex-Dividend Date for such Spin-Off to, and including, such Trading Day in determining the Conversion Rate as of such Trading Day.

If any distribution of the type described in this ‎Section 13.04(c) is declared but not so made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to make such distribution, to the Conversion Rate that would then be in effect if such distribution had not been declared.

(d) If any cash dividend or distribution is made to all or substantially all holders of the Common Stock other than a regular, quarterly cash dividend that does not exceed $0.40 per share (the “Initial Dividend Threshold”), the Conversion Rate shall be adjusted based on the following formula:

CR' = CR0 × ((SP0 - T) / (SP0 - C))

where,

CR0 = the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution;

CR' = the Conversion Rate in effect immediately after the open of business on the Ex-Dividend Date for such dividend or distribution;

SP0 = the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution;

T = the Initial Dividend Threshold; provided that if the dividend or distribution is not a regular quarterly cash dividend, the Initial Dividend Threshold shall be deemed to be zero; and

C = the amount in cash per share the Company distributes to all or substantially all holders of the Common Stock.

The Initial Dividend Threshold shall be subject to adjustment in a manner inversely proportional to adjustments to the Conversion Rate; provided that no adjustment shall be made to the Initial Dividend Threshold for any adjustment to the Conversion Rate pursuant to this ‎Section 13.04(d).

Any increase pursuant to this ‎Section 13.04(d) shall become effective immediately after the open of business on the Ex-Dividend Date for such dividend or distribution. If such dividend or distribution is not so paid, the Conversion Rate shall be decreased, effective as of the date the Board of Directors determines not to make or pay such dividend or distribution, to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

Notwithstanding the foregoing, if “C” (as defined above) is equal to or greater than “SP0” (as defined above), in lieu of the foregoing increase, each Holder of a Note

shall receive, in respect of each $1,000 principal amount of Notes, at the same time and upon the same terms as holders of shares of the Common Stock, the amount of cash that such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate on the Ex-Dividend Date for such cash dividend or distribution.

(e) If the Company makes or any of its Subsidiaries makes a payment to holders of the Common Stock in respect of a tender or exchange offer, other than an odd-lot offer, for the Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of the Common Stock exceeds the average of the Last Reported Sale Price of the Common Stock over the 10 consecutive Trading Days commencing on, and including, the Trading Day immediately following the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, the Conversion Rate shall be increased based on the following formula:

CR' = CR0 × ((AC + (SP' × OS')) / (OS0 × SP'))

CR0 = the Conversion Rate in effect immediately prior to the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;

CR' = the Conversion Rate in effect immediately after the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;

AC = the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for shares of Common Stock purchased in such tender or exchange offer;

OS0 = the number of shares of Common Stock outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer);

OS' = the number of shares of Common Stock outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer); and

SP' = the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period (the “Averaging Period”) commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires.

The increase to the Conversion Rate under this ‎Section 13.04(e) shall occur at the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires; provided that (x) in respect of any conversion of Notes for which Physical Settlement is applicable,

if the relevant Conversion Date occurs during the 10 Trading Days immediately following, and including, the Trading Day next succeeding the expiration date of any tender or exchange offer, references to “10” or “10th” in the preceding paragraph shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Trading Day next succeeding the expiration date of such tender or exchange offer to, and including, such Conversion Date in determining the Conversion Rate and (y) in respect of any conversion of Notes for which Cash Settlement or Combination Settlement is applicable, for any Trading Day that falls within the relevant Observation Period for such conversion and within the 10 Trading Days immediately following, and including, the Trading Day next succeeding the expiration date of any tender or exchange offer, references to “10” or “10th” in the preceding paragraph shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Trading Day next succeeding the expiration date of such tender or exchange offer to, and including, such Trading Day in determining the Conversion Rate as of such Trading Day.

(f) Notwithstanding this ‎Section 13.04 or any other provision of this Indenture or the Notes, if a Conversion Rate adjustment becomes effective on any Ex-Dividend Date, and a Holder that has converted its Notes on or after such Ex-Dividend Date and on or prior to the related Record Date would be treated as the record holder of the shares of Common Stock as of the related Conversion Date as described under ‎Section 13.02(i) based on an adjusted Conversion Rate for such Ex-Dividend Date, then, notwithstanding the Conversion Rate adjustment provisions in this ‎Section 13.04, the Conversion Rate adjustment relating to such Ex-Dividend Date shall not be made for such converting Holder. Instead, such Holder shall be treated as if such Holder were the record owner of the shares of Common Stock on an unadjusted basis and participate in the related dividend, distribution or other event giving rise to such adjustment.

(g) Except as stated herein, the Company shall not adjust the Conversion Rate for the issuance of shares of the Common Stock or any securities convertible into or exchangeable for shares of the Common Stock or the right to purchase shares of the Common Stock or such convertible or exchangeable securities (including as consideration for a merger, purchase or similar transaction).

(h) In addition to those adjustments required by clauses ‎(a), ‎(b), ‎(c), ‎(d) and ‎(e) of this ‎Section 13.04, and to the extent permitted by applicable law and subject to the applicable rules of The New York Stock Exchange, the Company from time to time may increase the Conversion Rate by any amount for a period of at least 20 Business Days if the Board of Directors determines that such increase would be in the Company’s best interest. In addition, to the extent permitted by applicable law and subject to the applicable rules of The New York Stock Exchange, the Company may (but is not required to) increase the Conversion Rate to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock in connection with a dividend or distribution of shares (or rights to acquire shares) or similar event. Whenever the Conversion Rate is increased pursuant to either of the preceding two sentences, the Company shall deliver to the Holder of each Note a notice of the increase at least 15 days

prior to the date the increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate and the period during which it will be in effect.

(i) Notwithstanding anything to the contrary in this ‎Article 13, the Conversion Rate shall not be adjusted:

(i) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Common Stock under any plan;

(ii) upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of the Company’s Subsidiaries;

(iii) upon the repurchase of any shares of Common Stock pursuant to an open-market share repurchase program or other buy-back transaction that is not a tender offer or exchange offer of the nature described under ‎Section 13.04(e);

(iv) for a third-party tender offer (other than a tender offer by any Subsidiary of the Company as described under ‎Section 13.04(e);

(v) upon the issuance of any shares of the Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (ii) of this subsection and outstanding as of the date the Notes were first issued;

(vi) solely for a change in the par value of the Common Stock; or

(vii) for accrued and unpaid interest, if any.

The Company shall not be required to make an adjustment pursuant to clauses ‎(a), ‎(b), ‎(c), ‎(d) or ‎(e) of this ‎Section 13.04 unless such adjustment would result in a change of at least 1% of the then effective Conversion Rate. However, the Company shall carry forward any adjustment that the Company would otherwise have to make and take that adjustment into account in any subsequent adjustment. Notwithstanding the foregoing, all such carried-forward adjustments shall be made with respect to the Notes in connection with any subsequent adjustment to the Conversion Rate of at least 1% of the Conversion Rate (when such carried-forward adjustments are taken into account), on the occurrence of any Fundamental Change or Make-Whole Fundamental Change, on any Conversion Date (in the case of Physical Settlement) or on each Trading Day of any Observation Period (in the case of Cash Settlement or Combination Settlement) and on the date the Company sends a Redemption Notice for all or any Notes. All calculations and other determinations under this ‎Article 13 shall be made by the Company and shall be made to the nearest one-ten thousandth (1/10,000) of a share.

(j) Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly file with the Trustee (and the Conversion Agent if not the Trustee) an Officer’s Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Unless and until a Responsible Officer of the Trustee shall have received such Officer’s Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume without inquiry that the last Conversion Rate of which it has knowledge is still in effect. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on which each adjustment becomes effective and shall deliver such notice of such adjustment of the Conversion Rate to each Holder. Failure to deliver such notice shall not affect the legality or validity of any such adjustment.

(k) For purposes of this ‎Section 13.04, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company so long as the Company does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company, but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.

Section 13.05. Adjustments of Prices. Whenever any provision of this Indenture requires the Company to calculate the Last Reported Sale Prices, the Daily VWAPs, the Daily Conversion Values, the Daily Settlement Amounts over a span of multiple days (including an Observation Period and the period for determining the Stock Price for purposes of a Make-Whole Fundamental Change or Redemption Notice), the Company shall make appropriate adjustments to each to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date, Effective Date or expiration date, as the case may be, of the event occurs, at any time during the period when such Last Reported Sale Prices, Daily VWAPs, Daily Conversion Values or Daily Settlement Amounts are to be calculated.

Section 13.06. Shares to Be Fully Paid. The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common Stock to provide for conversion of the Notes from time to time as such Notes are presented for conversion (assuming that at the time of computation of such number of shares, all such Notes would be converted by a single Holder) and that Physical Settlement is applicable.

Section 13.07. Effect of Recapitalizations, Reclassifications and Changes of the Common Stock. (a) In the case of:

(i) any recapitalization, reclassification or change of the Common Stock (other than changes in par value or from no par value or resulting from a subdivision or combination),

(ii) any consolidation, merger or combination involving the Company,

(iii) any sale, lease or other transfer to a third party of the consolidated assets of the Company and the Company’s Subsidiaries substantially as an entirety or

(iv) any statutory share exchange,

in each case, as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a “Merger Event”), then, at and after the effective time of such Merger Event, the right to convert each $1,000 principal amount of Notes shall be changed into a right to convert such principal amount of Notes into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of Common Stock equal to the Conversion Rate immediately prior to such Merger Event would have owned or been entitled to receive (the “Reference Property,” with each “unit of Reference Property” meaning the kind and amount of Reference Property that a holder of one share of Common Stock is entitled to receive) upon such Merger Event and, prior to or at the effective time of such Merger Event, the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture permitted under ‎Section 10.01(l) providing for such change in the right to convert each $1,000 principal amount of Notes; provided, however, that at and after the effective time of the Merger Event the Conversion Obligation shall be calculated and settled in accordance with ‎Section 13.02 such that any amount otherwise payable in cash upon conversion of the Notes as set forth under ‎Section 13.02 shall continue to be payable in cash, the Company shall continue to have the right to elect to determine the form of consideration to be paid or delivered, as the case may be, upon conversion of the Notes, as set forth under ‎Section 13.02, any shares of Common Stock, that the Company would have been required to deliver upon conversion of the Notes in accordance with ‎Section 13.02 shall instead be deliverable in the amount and type of Reference Property that a holder of that number of shares of Common Stock would have received in such Merger Event and the Daily VWAP shall be calculated based on the value of a unit of Reference Property.

If the Merger Event causes the Common Stock to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), then the Reference Property into which the Notes will be convertible shall be deemed to be the weighted average of the types and amounts of consideration actually received by the holders of the Common Stock, and the unit of Reference Property for purposes of the immediately preceding paragraph shall refer to the consideration referred to in clause ‎(1) attributable to one share of Common Stock. If the holders of the Common Stock receive only cash in such Merger Event, then for all conversions that occur after the effective date of such Merger Event (x) the consideration due upon conversion of each $ 1,000 principal amount of Notes shall be solely cash in an amount equal to the Conversion Rate in effect on the Conversion Date (as may be increased by any Additional Shares pursuant to ‎Section 13.03), multiplied by

the price paid per share of Common Stock in such Merger Event and (y) the Company shall satisfy the Conversion Obligation by paying cash to converting Holders on the second Business Day immediately following the Conversion Date. The Company shall notify Holders, the Trustee and the Conversion Agent (if other than the Trustee) in writing of such weighted average as soon as practicable after such determination is made.

Such supplemental indenture described in the second immediately preceding paragraph shall provide for anti-dilution and other adjustments that shall be as nearly equivalent as is possible to the adjustments provided for in this ‎Article 13. If, in the case of any Merger Event, the Reference Property includes shares of stock, securities or other property or assets (including cash or any combination thereof) of a Person other than the successor or purchasing corporation, as the case may be, in such Merger Event, then such supplemental indenture shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holders of the Notes as the Board of Directors shall reasonably consider necessary by reason of the foregoing, including the provisions providing for the purchase rights set forth in ‎Article 14.

(b) In the event the Company shall execute a supplemental indenture pursuant to subsection ‎(a) of this ‎Section 13.07, the Company shall promptly file with the Trustee an Officer’s Certificate briefly stating the reasons therefor, the kind or amount of cash, securities or property or asset that will comprise a unit of Reference Property after any such Merger Event, any adjustment to be made with respect thereto and that all conditions precedent have been complied with, and shall promptly deliver notice thereof to all Holders. The Company shall cause notice of the execution of such supplemental indenture to be delivered to each Holder, within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture.

(c) The Company shall not become a party to any Merger Event unless its terms are consistent with this ‎Section 13.07. None of the foregoing provisions shall affect the right of a holder of Notes to convert its Notes into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, as set forth in ‎Section 13.01 and ‎Section 13.02 prior to the effective date of such Merger Event.

(d) The above provisions of this Section shall similarly apply to successive Merger Events.

(e) In connection with any Merger Event, the Initial Dividend Threshold shall be subject to adjustment as described in clause (i), clause (ii) or clause (iii) below, as the case may be.

(i) In the case of a Merger Event in which the Reference Property (determined, as appropriate, pursuant to subsection (a) above and excluding any dissenters’ appraisal rights) is composed entirely of shares of common stock (the “Merger Common Stock”), the Initial Dividend Threshold at and after the effective time of such Merger Event will be equal to (x) the Initial Dividend Threshold immediately prior to the effective time of such Merger Event, divided

by (y) the number of shares of Merger Common Stock that a holder of one share of Common Stock would receive in such Merger Event (such quotient rounded down to the nearest cent).

(ii) In the case of a Merger Event in which the Reference Property (determined, as appropriate, pursuant to subsection (a) above and excluding any dissenters’ appraisal rights) is composed in part of shares of Merger Common Stock, the Initial Dividend Threshold at and after the effective time of such Merger Event will be equal to (x) the Initial Dividend Threshold immediately prior to the effective time of such Merger Event, multiplied by (y) the Merger Valuation Percentage for such Merger Event (such product rounded down to the nearest cent).

(iii) For the avoidance of doubt, in the case of a Merger Event in which the Reference Property (determined, as appropriate, pursuant to subsection (a) above and excluding any dissenters’ appraisal rights) is composed entirely of consideration other than shares of common stock, the Initial Dividend Threshold at and after the effective time of such Merger Event will be equal to zero.

Section 13.08. Certain Covenants. (a) The Company covenants that any shares of Common Stock issued upon conversion of Notes will be validly issued, fully paid and non-assessable by the Company and free from all taxes, liens and charges with respect to the issue thereof.

(b) The Company further covenants that if at any time the Common Stock shall be listed on any national securities exchange or automated quotation system, the Company will use commercially reasonable efforts to list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, any Common Stock issuable upon conversion of the Notes.

Section 13.09. Responsibility of Trustee. The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine the Conversion Rate (or any adjustment thereto) or whether any facts exist that may require any adjustment (including any increase) of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities, property or cash that may at any time be issued or delivered upon the conversion of any Note; and the Trustee and any other Conversion Agent make no representations with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Note for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article. Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any

provisions contained in any supplemental indenture entered into pursuant to ‎Section 13.07 relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Holders upon the conversion of their Notes after any event referred to in such ‎Section 13.07 or to any adjustment to be made with respect thereto, but, subject to the provisions of ‎Section 7.01, may accept (without any independent investigation) as conclusive evidence of the correctness of any such provisions, and shall be protected in conclusively relying upon, the Officer’s Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto. Neither the Trustee nor the Conversion Agent shall be responsible for determining whether any event contemplated by ‎Section 13.01(b) has occurred that makes the Notes eligible for conversion or no longer eligible therefor until the Company has delivered to the Trustee and the Conversion Agent the notices referred to in ‎Section 13.01(b) with respect to the commencement or termination of such conversion rights, on which notices the Trustee and the Conversion Agent may conclusively rely, and the Company agrees to deliver such notices to the Trustee and the Conversion Agent immediately after the occurrence of any such event or at such other times as shall be provided for in ‎Section 13.01(b). The Conversion Agent (if other than the Company or an Affiliate of the Company) shall have the same protection under this ‎Section 13.09 as the Trustee.

Section 13.10. Stockholder Rights Plans. To the extent that the Company has a shareholder rights plan in effect upon conversion of the Notes, each share of Common Stock, if any, issued upon such conversion shall be entitled to receive the appropriate number of rights, if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any such stockholder rights plan, as the same may be amended from time to time. If at the time of conversion, however, the rights have separated from the shares of Common Stock in accordance with the provisions of the applicable stockholder rights plan so that the Holders would not be entitled to receive any rights in respect of Common Stock, if any, issuable upon conversion of the Notes, the Conversion Rate shall be adjusted at the time of separation as if the Company distributed to all or substantially all holders of the Common Stock Distributed Property as provided in ‎Section 13.04(c), subject to readjustment in the event of the expiration, termination or redemption of such rights.

Section 13.11. Limit of Issuance of Common Stock Upon Conversion. The Company will not take any voluntary action that would result in an adjustment to the Conversion Rate pursuant to Sections ‎13.04(b), ‎13.04(c), ‎13.04(d) or ‎13.04(e) without complying, if applicable, with the stockholder approval rules of The New York Stock Exchange, or any similar rule of any stock exchange on which the Common Stock is listed at the relevant time. In accordance with such listing standards, this restriction will apply at any time when the Notes are outstanding, regardless of whether the Company then has a class of securities listed on The New York Stock Exchange.

Section 13.12. Withholding Taxes for Adjustments in Conversation Rate. If the Company pays withholding taxes on behalf of a Holder or beneficial owner as a result of

an adjustment to the Conversion Rate, the Company may, at its option, set off such payments against payments of cash and shares of Common Stock on the Notes.

Article 14
Repurchase of Notes at Option of Holders

Section 14.01. Repurchase at Option of Holders Upon a Fundamental Change. (a) If a Fundamental Change occurs at any time, each Holder shall have the right, at such Holder’s option, to require the Company to repurchase for cash all of such Holder’s Notes, or any portion thereof that is equal to $1,000 or an integral multiple of $1,000, on the date (the “Fundamental Change Repurchase Date”) specified by the Company that is not less than 20 Business Days or more than 30 Business Days following the date of the Fundamental Change Company Notice (but subject to extension to comply with applicable law) at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon, including any Additional Interest, to, but excluding, the Fundamental Change Repurchase Date (the “Fundamental Change Repurchase Price”), unless the Fundamental Change Repurchase Date falls after a Regular Record Date but on or prior to the Interest Payment Date to which such Regular Record Date relates, in which case the Company shall instead pay the full amount of accrued and unpaid interest, including any Additional Interest, to Holders of record as of such Regular Record Date, and the Fundamental Change Repurchase Price shall be equal to 100% of the principal amount of Notes to be repurchased pursuant to this ‎Section 14.01.

(b) Repurchases of Notes under this ‎Section 14.01 shall be made, at the option of the Holder thereof, upon:

(i) delivery to the Paying Agent by a Holder of a duly completed notice as set forth in the Form of Repurchase Notice (the “Repurchase Notice”), if the Notes are Physical Notes, or in compliance with the Depositary’s procedures for surrendering interests in Global Notes, if the Notes are Global Notes, in each case on or before the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date; and

(ii) delivery of the Notes, if the Notes are Physical Notes, to the Paying Agent at any time after delivery of the Repurchase Notice but on or before the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date (together with all necessary endorsements for transfer) at the Corporate Trust Office of the Paying Agent, or book-entry transfer of the Notes, if the Notes are Global Notes, in compliance with the procedures of the Depositary, in each case such delivery being a condition to receipt by the Holder of the Fundamental Change Repurchase Price therefor.

The Repurchase Notice in respect of any Notes to be repurchased shall state:

(iii) in the case of Physical Notes, the certificate numbers of the Notes to be delivered for repurchase;

(iv) the portion of the principal amount of Notes to be repurchased, which must be $1,000 or an integral multiple thereof; and

(v) that the Notes are to be repurchased by the Company pursuant to the applicable provisions of the Notes and this Indenture; provided, however, that if the Notes are Global Notes, the Repurchase Notice must comply with appropriate Depositary procedures.

Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Repurchase Notice contemplated by this ‎Section 14.01 shall have the right to withdraw, in whole or in part, such Repurchase Notice at any time prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with ‎Section 14.02.

The Paying Agent shall promptly notify the Company of the receipt by it of any Repurchase Notice or written notice of withdrawal thereof.

(c) On or before the 20th calendar day after the occurrence of a Fundamental Change, the Company shall provide to all Holders of Notes and the Trustee and the Paying Agent (in the case of a Paying Agent other than the Trustee) a written notice (the “Fundamental Change Company Notice”) of the occurrence of the Fundamental Change and of the repurchase right at the option of the Holders arising as a result thereof. Each Fundamental Change Company Notice shall specify:

(i) the events causing the Fundamental Change;

(ii) the date of the Fundamental Change;

(iii) the last date on which a Holder may exercise the repurchase right pursuant to this ‎Section 14.01;

(iv) the Fundamental Change Repurchase Price;

(v) the Fundamental Change Repurchase Date;

(vi) the name and address of the Paying Agent and the Conversion Agent, if applicable;

(vii) if applicable, the Conversion Rate and any adjustments to the Conversion Rate;

(viii) if applicable, that the Notes with respect to which a Repurchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the Repurchase Notice in accordance with the terms of this Indenture;

(ix) the procedures that Holders must follow to require the Company to repurchase their Notes.

No failure of the Company to give the foregoing notices and no defect therein shall limit the Holders’ repurchase rights or affect the validity of the proceedings for the repurchase of the Notes pursuant to this ‎Section 14.01.

At the Company’s written request and upon 15 days prior notice, the Trustee shall give such notice in the Company’s name and at the Company’s expense; provided, however, that, in all cases, the text of such Fundamental Change Company Notice shall be prepared by the Company.

(d) Notwithstanding the foregoing, no Notes may be repurchased by the Company on any date at the option of the Holders upon a Fundamental Change if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to such date (except in the case of an acceleration resulting from a Default by the Company in the payment of the Fundamental Change Repurchase Price with respect to such Notes). The Paying Agent will promptly return to the respective Holders thereof any Physical Notes held by it during the acceleration of the Notes (except in the case of an acceleration resulting from a Default by the Company in the payment of the Fundamental Change Repurchase Price with respect to such Notes), or any instructions for book-entry transfer of the Notes in compliance with the procedures of the Depositary shall be deemed to have been cancelled, and, upon such return or cancellation, as the case may be, the Repurchase Notice with respect thereto shall be deemed to have been withdrawn.

(e) Notwithstanding the foregoing, the Company will not be required to repurchase any Notes from Holders pursuant to this ‎Section 14.01 if a third party purchases such Notes on the Fundamental Change Repurchase Date in the manner and otherwise in compliance with the requirements set forth in this ‎Section 14.01.

Section 14.02. Repurchase at Option of Holders upon Specified Dates. (a) On June 1, 2027, June 1, 2032 and June 1, 2037 (each, an “Optional Repurchase Date”), each Holder shall have the right, at such Holder’s option, to require the Company to repurchase for cash all of such Holder’s Notes, or any portion thereof that is equal to $1,000 or an integral multiple of $1,000, at a repurchase price equal to 100% of the principal amount to be repurchased, plus accrued and unpaid interest, including Additional Interest, if any, thereon to, but excluding, the Optional Repurchase Date (the “Optional Repurchase Price”), unless the Optional Repurchase Date falls after a Regular Record Date but on or prior to the Interest Payment Date to which such Regular Record Date relates, in which case the Company shall instead pay the full amount of accrued and unpaid interest to Holders of record as of such Regular Record Date, and the Optional Repurchase Price shall be equal to 100% of the principal amount of Notes to be repurchased pursuant to this ‎Section 14.02.

(b) Repurchases of Notes under this ‎Section 14.02 shall be made, at the option of the Holder thereof, upon:

(i) delivery to the Paying Agent by a Holder of a duly completed Repurchase Notice, if the Notes are Physical Notes, or in compliance with the

Depositary’s procedures for surrendering interests in Global Notes, if the Notes are Global Notes, in each case at any time from the open of business on the date that is 20 Business Days prior to the applicable Optional Repurchase Date to the close of business on the Business Day immediately preceding the Optional Repurchase Date; and

(ii) delivery of the Notes, if the Notes are Physical Notes, to the Paying Agent at any time after delivery of the Repurchase Notice but on or before the close of business on the Business Day immediately preceding the Optional Repurchase Date (together with all necessary endorsements for transfer) at the Corporate Trust Office of the Paying Agent, or book-entry transfer of the Notes, if the Notes are Global Notes, in compliance with the procedures of the Depositary, in each case such delivery being a condition to receipt by the Holder of the Optional Repurchase Price therefor.

The Repurchase Notice in respect of any Notes to be repurchased shall state:

(iii) in the case of Physical Notes, the certificate numbers of the Notes to be delivered for repurchase;

(iv) the portion of the principal amount of Notes to be repurchased, which must be $1,000 or an integral multiple thereof; and

(v) that the Notes are to be repurchased by the Company pursuant to the applicable provisions of the Notes and this Indenture;

provided, however, that if the Notes are Global Notes, the Repurchase Notice must comply with appropriate Depositary procedures.

Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Repurchase Notice contemplated by this ‎Section 14.02 shall have the right to withdraw, in whole or in part, such Repurchase Notice at any time prior to the close of business on the Business Day immediately preceding the Optional Repurchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with ‎Section 14.03.

The Paying Agent shall promptly notify the Company of the receipt by it of any Repurchase Notice or written notice of withdrawal thereof.

(c) On or before the 20th Business Day prior to the applicable Optional Repurchase Date, the Company shall provide to all Holders of Notes and the Trustee and the Paying Agent (in the case of a Paying Agent other than the Trustee) a written notice (the “Optional Repurchase Company Notice” and, together with the “Fundamental Change Company Notice,” each a “Company Notice”) of such Optional Repurchase Date and of the repurchase right at the option of the Holders arising as a result thereof. Each Optional Repurchase Company Notice shall specify:

(i) the Optional Repurchase Date;

(ii) the last date on which a Holder may exercise the repurchase right pursuant to this ‎Section 14.02;

(iii) the Optional Repurchase Price;

(iv) the name and address of the Paying Agent and the Conversion Agent, if applicable;

(v) if applicable, the Conversion Rate and any adjustments to the Conversion Rate;

(vi) if applicable, that the Notes with respect to which the Repurchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the Repurchase Notice in accordance with the terms of this Indenture; and

(vii) the procedures that Holders must follow to require the Company to repurchase their Notes.

At the Company’s written request and upon 15 days prior notice, the Trustee shall give such notice in the Company’s name and at the Company’s expense; provided, however, that, in all cases, the text of such Optional Repurchase Company Notice shall be prepared by the Company.

(d) Notwithstanding the foregoing, no Notes may be repurchased by the Company on any Optional Repurchase Date if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to such date (except in the case of an acceleration resulting from a Default by the Company in the payment of the Optional Repurchase Price with respect to such Notes). The Paying Agent will promptly return to the respective Holders thereof any Physical Notes held by it during the acceleration of the Notes (except in the case of an acceleration resulting from a Default by the Company in the payment of the Optional Repurchase Price with respect to such Notes), or any instructions for book-entry transfer of the Notes in compliance with the procedures of the Depositary shall be deemed to have been cancelled, and, upon such return or cancellation, as the case may be, the Repurchase Notice with respect thereto shall be deemed to have been withdrawn.

Section 14.03. Withdrawal of Repurchase Notice. A Repurchase Notice may be withdrawn (in whole or in part) by means of a written notice of withdrawal delivered to the Paying Agent in accordance with this ‎Section 14.03 at any time prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date or the Optional Repurchase Date, as applicable (each of the foregoing, a “Repurchase Date”), specifying:

(i) the principal amount of the Notes with respect to which such notice of withdrawal is being submitted,

(ii) if Physical Notes have been issued, the certificate number of the Note in respect of which such notice of withdrawal is being submitted, and

(iii) the principal amount, if any, of such Note that remains subject to the original Repurchase Notice, which portion must be in principal amounts of $1,000 or an integral multiple of $1,000;

provided, however, that if the Notes are Global Notes, the notice must comply with appropriate procedures of the Depositary.

Section 14.04. Deposit of Repurchase Price. (a) The Company will deposit with the Trustee (or other Paying Agent appointed by the Company, or if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in ‎Section 4.04) on or prior to 10:00 a.m., New York City time, on the applicable Repurchase Date, an amount of money sufficient to repurchase all of the Notes to be repurchased at the appropriate Fundamental Change Repurchase Price or Optional Repurchase Price, as applicable (each of the foregoing, a “Repurchase Price”). Subject to receipt of funds and/or Notes by the Trustee (or other Paying Agent appointed by the Company), payment for Notes surrendered for repurchase (and not withdrawn prior to the close of business on the Business Day immediately preceding the applicable Repurchase Date) will be made on the later of the applicable Repurchase Date with respect to such Note (provided the Holder has satisfied the conditions in ‎Section 14.01 or ‎Section 14.02, as applicable) and the time of book-entry transfer or the delivery of such Note to the Trustee (or other Paying Agent appointed by the Company) by the Holder thereof in the manner required by ‎Section 14.01 or ‎Section 14.02, as applicable, by mailing checks for the amount payable to the Holders of such Notes entitled thereto as they shall appear in the Note Register; provided, however, that payments to the Depositary shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee. The Trustee shall, promptly after such payment and upon written demand by the Company, return to the Company any funds in excess of the applicable Repurchase Price. Nothing herein shall preclude any withholding tax required by law.

(b) If by 10:00 a.m. New York City time, on the applicable Repurchase Date, the Trustee (or other Paying Agent appointed by the Company) holds money sufficient to pay the applicable Repurchase Price of all the Notes or portions thereof that are to be repurchased on the applicable Repurchase Date, then such Notes will cease to be outstanding, interest will cease to accrue on such Notes (whether or not book-entry transfer of the Notes has been made or the Notes have been delivered to the Trustee or Paying Agent) and all other rights of the Holders of such Notes will terminate (other than the right to receive the applicable Repurchase Price).

(c) Upon surrender of a Note that is to be repurchased in part pursuant to ‎Section 14.01 or ‎Section 14.02, the Company shall execute and the Trustee shall

authenticate and deliver to the Holder a new Note in an authorized denomination equal in principal amount to the unrepurchased portion of the Note surrendered.

Section 14.05. Covenant to Comply with Applicable Laws Upon Repurchase of Notes. In connection with any repurchase offer pursuant to a Repurchase Notice, the Company will, if required:

(a) comply with the provisions of the Exchange Act that may then be applicable;

(b) file any required schedule under the Exchange Act; and

(c) otherwise comply with all federal and state securities laws in connection with any offer by the Company to repurchase the Notes;

in each case, so as to permit the rights and obligations under this ‎Article 14 to be exercised in the time and in the manner specified in this ‎Article 14.

Article 15
Optional Redemption

Section 15.01. Right to Redeem; Notices to Trustee. No sinking fund is provided for the Notes. (a) The Notes are not redeemable by the Company prior to June 5, 2025. On or after June 5, 2025, the Notes may be redeemed, in whole or in part, for cash, at the option of the Company, if the Last Reported Sale Price of the Common Stock has been at least 130% of the Conversion Price then in effect for at least 20 Trading Days (whether or not consecutive) during any 30 consecutive Trading Day period (including the last Trading Day of such period) ending on, and including, the Trading Day immediately preceding the date on which the Company provides the relevant Redemption Notice. On or after June 7, 2027 and prior to the Maturity Date, the Company may redeem for cash all or part of the Notes, regardless of the foregoing sale price condition.

(b) The redemption price at which the Notes are redeemable (the “Redemption Price”) shall be equal to the sum of 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, including Additional Interest, if any, to, but excluding, the date specified by the Company for redemption (the “Redemption Date”); provided, however, that if the Redemption Date is after a Regular Record Date and on or prior to the Interest Payment Date to which it relates, then the accrued and unpaid interest, if any, to, but excluding, the Redemption Date, shall be paid on such Interest Payment Date to the Holders of record of such Notes on the applicable Regular Record Date instead of the holders surrendering such Notes for redemption on the Redemption Date, and the Redemption Price will be equal to 100% of the principal amount of the Notes to be redeemed. The Redemption Date must be a Business Day.

Section 15.02. Selection of Notes to be Redeemed. (a) If the Company elects to redeem fewer than all of the Notes, the Notes to be redeemed will be selected according to DTC’s applicable procedures, in the case of the Notes represented by a Global Note,

or, in the case of Physical Notes, the Trustee shall select the Notes to be redeemed (in principal amounts of $1,000 or multiples thereof) by lot, on a pro rata basis or by another method the trustee considers to be fair and appropriate unless an alternative method of selection is otherwise required by law or applicable stock exchange or depositary requirements. The Trustee shall make the selection within seven days from its receipt of the notice from the Company delivered pursuant to ‎Section 15.03 from outstanding Notes not previously called for redemption.

(b) Notes and portions of the Notes that the Trustee selects shall be in principal amounts of $1,000 or integral multiples thereof). Provisions of this Indenture that apply to Notes called for redemption in whole also apply to Notes called for redemption in part. The Trustee shall notify the Company promptly of the Notes or portions of Notes to be redeemed.

(c) Notes which have been converted during a selection of Notes to be redeemed may be treated by the Trustee as outstanding for the purpose of such selection.

(d) No Notes may be redeemed if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to the Redemption Date (except in the case of an acceleration resulting from a Default by the Company in the payment of the Redemption Price with respect to such Notes).

Section 15.03. Redemption Notice. (a) Redemptions of Notes under this ‎Article 15 shall be made, at the option of the Company, upon delivery to the Trustee, Paying Agent and each Holder of Notes of a duly completed notice of redemption (the “Redemption Notice”) not less than 45 Scheduled Trading Days nor more than 60 Scheduled Trading Days before the Redemption Date. The Redemption Notice shall specify the Notes to be redeemed and shall state:

(i) the Redemption Date;

(ii) the Redemption Price;

(iii) the applicable Conversion Rate and any adjustments thereto;

(iv) the name and address of the Paying Agent and Conversion Agent;

(v) that Holders may convert their Notes at any time prior to the close of business on the Business Day immediately preceding the Redemption Date unless the Company defaults in the payment of the Redemption Price, in which case Holders of Notes may convert their Notes until the Redemption Price has been paid or duly provided for; and

(vi) that the Notes are to be redeemed by the Company pursuant to the applicable provisions of the Notes and this Indenture.

(b) If the Notes to be redeemed are Physical Notes, delivery of such Notes must be made to the Paying Agent at any time after delivery of the Redemption Notice but on or before the close of business on the Business Day immediately preceding the Redemption Date (together with all necessary endorsements for transfer) at the Corporate Trust Office of the Paying Agent, or Global Notes, in compliance with the procedures of the Depositary, in each case such delivery being a condition to receipt by the Holder of the Redemption Price.

Section 15.04. Deposit of Redemption Price. The Company will deposit with the Trustee (or other Paying Agent appointed by the Company, or if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in ‎Section 4.04) on or prior to 10:00 a.m., New York City time, on the Redemption Date an amount of money sufficient to redeem all of the Notes to be redeemed at the appropriate Redemption Price. Subject to receipt of funds and/or Notes by the Trustee (or other Paying Agent appointed by the Company), payment of the Redemption Price will be made on the later of the Redemption Date with respect to such Note and the time of book-entry transfer or the delivery of such Note to the Trustee (or other Paying Agent appointed by the Company) by the Holder thereof in the manner required by ‎Section 15.03(b) by mailing checks for the amount payable to the Holders of such Notes entitled thereto as they shall appear in the Note Register; provided, however, that payments to the Depositary shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee. The Trustee shall, promptly after such payment and upon written demand by the Company, return to the Company any funds in excess of the Redemption Price. Nothing herein shall preclude any withholding tax required by law.

Section 15.05. Effect of Redemption Notice. If by 10:00 a.m. New York City time, on the Redemption Date, the Trustee (or other Paying Agent appointed by the Company) holds money sufficient to pay the Redemption Price of all the Notes or portions thereof that are to be redeemed on such Redemption Date, then such Notes will cease to be outstanding, interest will cease to accrue on such Notes (whether or not book-entry transfer of the Notes has been made or the Notes have been delivered to the Trustee or Paying Agent) and all other rights of the Holders of such Notes will terminate (other than the right to receive the Redemption Price).

Section 15.06. Notes Redeemed in Part. (a) If any Note selected by the Trustee for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Note so selected, the converted portion of such Note shall be deemed to be the portion selected for redemption.

(b) Upon surrender of a Note that is to be redeemed in part pursuant to ‎Section 15.01, the Company shall execute and the Trustee shall authenticate and deliver to the Holder a new Note in an authorized denomination equal in principal amount to the unredeemed portion of the Note surrendered.

(c) In the case of any certificated Notes, in the event of any redemption in part, the Company shall not be required to issue, register the transfer of, or exchange, any Notes during a period beginning at the open of business 15 days before any selection

for redemption of Notes and ending at the close of business on the earliest date on which the relevant Redemption Notice is deemed to have been given to all Holders of notes to be redeemed or register the transfer of, or exchange, any Notes so selected for redemption, in whole or in part, except the unredeemed portion of any Notes being redeemed in part.

Article 16
Miscellaneous Provisions

Section 16.01. Provisions Binding on Company’s and Trustee’s Successors. All the covenants, stipulations, promises and agreements of the Company and the Trustee contained in this Indenture shall bind their successors and assigns whether so expressed or not.

Section 16.02. Official Acts by Successor Corporation. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or Officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation or other entity that shall at the time be the lawful sole successor of the Company.

Section 16.03. Addresses for Notices, Etc. Any notice or demand that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders on the Company shall be deemed to have been sufficiently given or made, for all purposes if given or served by being mailed by first class mail (registered or certified, return receipt requested), postage prepaid until another address is filed by the Company with the Trustee) to HCI Group, Inc., 5300 West Cypress Street, Suite 100, Tampa, Florida 33607, Attention: General Counsel. Any notice, direction, request or demand hereunder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or served by being mailed by first class mail (registered or certified, return receipt requested), postage prepaid, to the Corporate Trust Office and sent electronically in PDF format to barbara.zsombori@bnymellon.com.

The Trustee, by notice to the Company, may designate additional or different addresses for subsequent notices or communications.

Any notice or communication sent to a Holder shall be mailed to it by first class mail (registered or certified, return receipt requested) or by e-mail or overnight air courier guaranteeing next day delivery, at its address as it appears on the Note Register and shall be sufficiently given to it if so delivered within the time prescribed; provided that notices given to Holders holding Notes in book-entry form may be given through the facilities of the Depository.

Failure to deliver a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is delivered in the manner provided above, it is duly given, whether or not the addressee receives it.

In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to Holders by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”), given pursuant to this Indenture and related documents and delivered using Electronic Means; provided, however, that the Company shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Company whenever a person is to be added or deleted from the listing. If the Company elects to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Company understands and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Company shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Company and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Company. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from its reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The Company agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Company; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures. "Electronic Means" shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder.

Section 16.04. Governing Law; Jury Trial Waiver. THIS INDENTURE, THE NOTES, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS INDENTURE OR THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF OTHER THAN SECTIONS 5-1401 AND NOTEREF _Ref92829409 \r \h \*

MERGEFORMAT 5-1402 OF THE GENERAL OBLIGATIONS LAW). EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED BY THIS INDENTURE OR THE NOTES.

The Company irrevocably consents and agrees, for the benefit of the Holders from time to time of the Notes and the Trustee, and the Trustee irrevocably consents and agrees, that any legal action, suit or proceeding against it with respect to obligations, liabilities or any other matter arising out of or in connection with this Indenture or the Notes may be brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and, until amounts due and to become due in respect of the Notes have been paid, hereby irrevocably consents and submits to the non-exclusive jurisdiction of each such court in personam, generally and unconditionally with respect to any action, suit or proceeding for itself in respect of its properties, assets and revenues.

Each of the Company and the Trustee irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Indenture or the Notes brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 16.05. Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Trustee. Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture other than an Opinion of Counsel with respect to an action to be taken on the date hereof in connection with the initial issuance of the Notes, the Company shall furnish to the Trustee an Officer’s Certificate and an Opinion of Counsel stating that all conditions precedent provided for in this Indenture to such action have been complied with or satisfied. Such Opinion of Counsel shall be in form and substance reasonably satisfactory to the Trustee.

Each Officer’s Certificate provided for, by or on behalf of the Company in this Indenture, and Opinion of Counsel delivered to the Trustee with respect to compliance with this Indenture (other than the Officer’s Certificates provided for in ‎Section 4.08) shall include a statement that the Person making such certificate or opinion has read such covenant or condition; a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with

or satisfied; and a statement as to whether or not, in the opinion of such Person, such covenant or condition has been complied with or satisfied.

Section 16.06. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Repurchase Date, Conversion Date or Maturity Date is not a Business Day, then any action to be taken on such date need not be taken on such date, but may be taken on the next succeeding Business Day with the same force and effect as if taken on such date, and no interest shall accrue in respect of the delay.

Section 16.07. No Security Interest Created. Nothing in this Indenture or in the Notes, expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction.

Section 16.08. Benefits of Indenture. Nothing in this Indenture or in the Notes, expressed or implied, shall give to any Person, other than the parties hereto, any Paying Agent, any Conversion Agent, any authenticating agent, any Note Registrar and their successors hereunder or the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.

Section 16.09. Table of Contents, Headings, Etc. The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

Section 16.10. Authenticating Agent. The Trustee may appoint an authenticating agent that shall be authorized to act on its behalf and subject to its direction in the authentication and delivery of Notes in connection with the original issuance thereof and transfers and exchanges of Notes hereunder, including under ‎Section 2.04, ‎Section 2.05, ‎Section 2.06, ‎Section 2.07, ‎Section 10.04, ‎Section 13.02(d) and ‎Section 14.04 as fully to all intents and purposes as though the authenticating agent had been expressly authorized by this Indenture and those Sections to authenticate and deliver Notes. For all purposes of this Indenture, the authentication and delivery of Notes by the authenticating agent shall be deemed to be authentication and delivery of such Notes “by the Trustee” and a certificate of authentication executed on behalf of the Trustee by an authenticating agent shall be deemed to satisfy any requirement hereunder or in the Notes for the Trustee’s certificate of authentication. Such authenticating agent shall at all times be a Person eligible to serve as trustee hereunder pursuant to ‎Section 7.07.

Any corporation or other entity into which any authenticating agent may be merged or converted or with which it may be consolidated, or any corporation or other entity resulting from any merger, consolidation or conversion to which any authenticating agent shall be a party, or any corporation or other entity succeeding to all or substantially all the corporate trust business of any authenticating agent, shall be the successor of the authenticating agent hereunder, if such successor corporation or other entity is otherwise eligible under this Section, without the execution or filing of any paper or any further act

on the part of the parties hereto or the authenticating agent or such successor corporation or other entity.

Any authenticating agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any authenticating agent by giving written notice of termination to such authenticating agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any authenticating agent shall cease to be eligible under this Section, the Trustee may appoint a successor authenticating agent (which may be the Trustee), shall give written notice of such appointment to the Company and shall deliver notice of such appointment to all Holders.

The Company agrees to pay to the authenticating agent from time to time such compensation for its services as agreed in writing although the Company may terminate the authenticating agent (if other than the Trustee), if it determines such authenticating agent’s fees to be unreasonable.

The provisions of ‎Section 7.02, ‎Section 7.03, ‎Section 7.04, ‎Section 8.03 and this ‎Section 16.10 shall be applicable to any authenticating agent.

If an authenticating agent is appointed pursuant to this Section, the Notes may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:



as Authenticating Agent, certifies that this is one of the Notes described in the within-named Indenture.

By:
	Authorized Signatory

Section 16.11. Execution in Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The words “execution,” “signed,” “signature,” and words of like import in this Indenture or in any other certificate, agreement or document related to this Indenture shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf”, “tif” or “jpg”) and other electronic signatures

100

(including, without limitation, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 16.12. Severability. In the event any provision of this Indenture or in the Notes shall be invalid, illegal or unenforceable, then (to the extent permitted by law) the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired.

Section 16.13. Force Majeure. In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, epidemics, pandemics and similar outbreaks of infectious disease, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

Section 16.14. Calculations. Except as otherwise provided herein, the Company shall be responsible for making all calculations called for under this Indenture and the Notes. These calculations include, but are not limited to, determinations of the Last Reported Sale Prices of the Common Stock, the Daily VWAPs, the Trading Price of the Notes, the Daily Settlement Amounts, the Daily Conversion Values, accrued interest payable on the Notes, any Make-Whole Fundamental Change, the Conversion Rate of the Notes, the Conversion Price of the Notes and the Redemption Price. The Company shall make all these calculations in good faith and, absent manifest error, the Company’s calculations shall be final and binding on the Trustee, the Conversion Agent, the Paying Agent and the Holders. The Company shall provide a schedule of its calculations to each of the Trustee, the Paying Agent and the Conversion Agent, and each of the Trustee, the Paying Agent and Conversion Agent is entitled to rely conclusively upon the accuracy of the Company’s calculations without independent verification. The Trustee will forward the Company’s calculations to any Holder upon the written request of that Holder at the sole cost and expense of the Company.

101

Section 16.15. USA PATRIOT Act. The parties hereto acknowledge that in order to comply with the laws, rules, regulations and executive orders in effect from time to time applicable to banking institutions, including, without limitation, those relating to the funding of terrorist activities and money laundering, including Section 326 of the USA PATRIOT Act, the Trustee, like all financial institutions, is required to obtain, verify, record and update information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy its requirements under applicable law.

Section 16.16. No Adverse Interpretation of Other Agreements. Other than the Notes and any supplemental indenture hereto, this Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or any of its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

Section 16.17. (a) The Company covenants and represents that neither it nor any of its affiliates, subsidiaries, directors or officers are the target or subject of any sanctions enforced by the U.S. Government (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC)), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively “Sanctions”).

(b) The Company covenants and represents that neither it nor any of its affiliates, subsidiaries, directors or officers will use any payments made pursuant to this Indenture (i) to fund or facilitate any activities of or business with any person who, at the time of such funding or facilitation, is the subject or target of Sanctions, (ii) to fund or facilitate any activities of or business with any country or territory that is the target or subject of Sanctions, or (iii) in any other manner that will result in a violation of Sanctions by any party hereto.

102

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first written above.


HCI GROUP, INC.
By:	/s/ James Mark Harmsworth
	Name: James Mark Harmsworth
	Title: Chief Financial Officer

103


THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
By:	/s/ April Bradley
	Name: April Bradley
	Title: Vice President

104

Exhibit A

[FORM OF FACE OF NOTE]

[INCLUDE FOLLOWING LEGEND IF A GLOBAL NOTE]

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

[INCLUDE FOLLOWING LEGEND IF A RESTRICTED SECURITY]

[THE SALE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, PRIOR TO THE RESALE RESTRICTION TERMINATION DATE (AS DEFINED BELOW), THIS NOTE AND ANY SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE (AND ANY BENEFICIAL INTEREST HEREIN OR THEREIN) MAY NOT BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED, EXCEPT:

(A) TO HCI GROUP, INC. (THE “COMPANY”) OR ANY OF ITS SUBSIDIARIES;

(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT;

(C) TO A PERSON THAT YOU REASONABLY BELIEVE TO BE A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT; OR

(D) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (INCLUDING, IF AVAILABLE, THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT).

105

THE “RESALE RESTRICTION TERMINATION DATE” MEANS THE DATE: (1) THAT IS AT LEAST ONE YEAR AFTER THE LAST ORIGINAL ISSUANCE DATE OF THE COMPANY’S 4.75% CONVERTIBLE SENIOR NOTES DUE 2042; AND (2) ON WHICH THE COMPANY HAS INSTRUCTED THE TRUSTEE THAT THIS LEGEND WILL NO LONGER APPLY IN ACCORDANCE WITH THE PROCEDURES DESCRIBED IN THE INDENTURE FOR THE NOTES.

PRIOR TO ANY TRANSFER PURSUANT TO THE FOREGOING CLAUSE (D), THE COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE AND RELY UPON TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

_______________________

1 This legend (other than the first paragraph hereof) shall be deemed removed from the face of this Security without further action of the Company, the Trustee, or the Holders of this Security at such time as the Company instructs the Trustee to remove such legend pursuant to Section 2.05(c) of the Indenture.

106

HCI Group, Inc.

4.75% Convertible Senior Note due 2042

No.___________ [Initially] 2 $__________

CUSIP No. [____]

HCI GROUP, INC., a corporation duly organized and validly existing under the laws of the State of Florida (the “Company,” which term includes any successor corporation or other entity under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to [CEDE & CO.] 3 [________] 4, or registered assigns, the principal sum [as set forth in the “Schedule of Exchanges of Notes” attached hereto]5 [of $[________]]6, which amount, taken together with the principal amounts of all other outstanding Notes, shall not, unless permitted by the Indenture, exceed $150,000,000 in aggregate at any time (or $172,500,000 if the Initial Purchasers exercise their option to purchase additional Notes in full as set forth in the Purchase Agreement), in accordance with the rules and procedures of the Depositary, on June 1, 2042 (the “Maturity Date”), and interest thereon as set forth below.

This Note shall accrue interest at the rate of 4.75% per year from May 23, 2022, or from the most recent date for which interest has been paid or provided for to, but excluding, the next scheduled Interest Payment Date until the Maturity Date. Accrued interest on this Note shall be computed on the basis of a 360-day year composed of twelve 30-day months and, for partial months, on the basis of actual days elapsed over a 30-day month. Interest is payable semi-annually in arrears on each June 1 and December 1, commencing on December 1, 2022, to Holders of record at the close of business on the preceding May 15 and November 15 (whether or not such day is a Business Day), respectively. Additional Interest will be payable as set forth in ‎Section 4.06(d), ‎Section 4.06(e) and ‎Section 6.03 of the within-mentioned Indenture, and any reference to interest on, or in respect of, any Note therein shall be deemed to include Additional Interest if, in such context, Additional Interest is, was or would be payable pursuant to any of such ‎Section 4.06(d), ‎Section 4.06(e) or ‎Section 6.03 and any express mention of the payment of Additional Interest in any provision therein shall not be construed as excluding Additional Interest in those provisions thereof where such express mention is not made.

Any Defaulted Amounts shall accrue interest per annum at the rate borne by the Notes, subject to the enforceability thereof under applicable law, from, and including, the relevant payment date to, but excluding, the date on which such Defaulted Amounts shall have been paid by the Company, at its election, in accordance with ‎Section 2.03(c) of the Indenture.

_______________________

2 Include if a Global Note.

3 Include for a Global Note.

4 Include for a Physical Note.

5 Include for a Global Note.

6 Include for a Physical Note.

107

The Company shall pay the principal of and interest on this Note, if and so long as such Note is a Global Note, in immediately available funds in lawful money of the United States at the time to the Depositary or its nominee, as the case may be, as the registered Holder of such Note. As provided in and subject to the provisions of the Indenture, the Company shall pay the principal of any Notes (other than Notes that are Global Notes) at the office or agency designated by the Company for that purpose. The Company has initially designated the Trustee as its Paying Agent and Note Registrar in respect of the Notes and the Trustee’s office in New York, New York (or in the continental United States of America) as a place where Notes may be presented for payment or for registration of transfer and exchange.

Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Note the right to convert this Note into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, on the terms and subject to the limitations set forth in the Indenture. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

This Indenture, the Notes, and any claim, controversy or dispute arising under or related to this Indenture or the Notes, shall be governed by, and construed in accordance with, the laws of the State of New York (without regard to the conflicts of laws provisions thereof other than Sections 5-1401 and 5-1402 of the General Obligations Law).

In the case of any conflict between this Note and the Indenture, the provisions of the Indenture shall control and govern.

This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed manually, by facsimile or electronically by the Trustee or a duly authorized authenticating agent under the Indenture.

108


HCI GROUP, INC.
By:
	Name:
	Title:

109

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee, certifies that this is one of the Notes described in the within-named Indenture.



By:
	Authorized Signatory
	Dated:

110

[FORM OF REVERSE OF NOTE]

HCI Group, Inc.
4.75% Convertible Senior Note due 2042

This Note is one of a duly authorized issue of Notes of the Company, designated as its 4.75% Convertible Senior Notes due 2042 (the “Notes”), initially limited to the aggregate principal amount of $ $150,000,000 (as increased by an amount equal to the aggregate principal amount of any additional Notes purchased by the Initial Purchasers pursuant to the exercise of their option to purchase additional Notes as set forth in the Purchase Agreement), all issued or to be issued under and pursuant to an Indenture dated as of May 23, 2022 (the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A. (the “Trustee”), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Notes. Additional Notes may be issued in an unlimited aggregate principal amount, subject to certain conditions specified in the Indenture. Capitalized terms used in this Note and not defined in this Note shall have the respective meanings set forth in the Indenture.

In the event certain Events of Default (other than an Event of Default specified in ‎Section 6.01(i) or ‎Section 6.01(j) of the Indenture with respect to the Company) shall have occurred and be continuing, the principal of, and interest on, all Notes may be declared, by either the Trustee or Holders of at least 25% in aggregate principal amount of the Notes then outstanding, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions and certain exceptions set forth in the Indenture. If an Event of Default specified in ‎Section 6.01(i) or ‎Section 6.01(j) of the Indenture with respect to the Company occurs and is continuing, 100% of the principal of, and accrued and unpaid interest, if any, on, all Notes shall become and shall automatically be immediately due and payable.

Subject to the terms and conditions of the Indenture, the Company will make all payments and deliveries in respect of the Repurchase Price on the applicable Repurchase Date, in respect of the Redemption Price on the Redemption Date, and the principal amount on the Maturity Date, as the case may be, to the Holder who surrenders a Note to a Paying Agent to collect such payments in respect of the Note. The Company will pay all cash amounts due with respect to the Notes in money of the United States that at the time of payment is legal tender for payment of public and private debts.

The Indenture contains provisions permitting the Company and the Trustee in certain circumstances, without the consent of the Holders of the Notes, and in certain other circumstances, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures modifying the terms of the Indenture and the Notes as described therein. It is also provided in the Indenture that, subject to certain exceptions, the Holders of a majority in aggregate principal amount of

111

the Notes at the time outstanding may on behalf of the Holders of all of the Notes waive any past Default or Event of Default under the Indenture and its consequences.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay or deliver, as the case may be, the principal (including the Redemption Price, the Repurchase Price on any Repurchase Date and the Fundamental Change Repurchase Price, if applicable) of, accrued and unpaid interest on, and the consideration due upon conversion of, this Note at the place, at the respective times, at the rate and in the lawful money herein prescribed.

The Notes are issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof. At the office or agency of the Company referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture, the transfer of the Notes may be registered and Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations, without payment of any service charge but, if required by the Company or Trustee, with payment of a sum sufficient to cover any transfer or similar tax that may be imposed in connection with any such transfer.

Upon the occurrence of a Fundamental Change or any Optional Repurchase Date, the Holder has the right, at such Holder’s option, to require the Company to repurchase for cash all of such Holder’s Notes or any portion thereof (in principal amounts of $1,000 or integral multiples thereof) on the Repurchase Date at a price equal to the Repurchase Price.

The Company has the right to redeem all any portion of the Notes, at the Company’s option, (i) on or after June 5, 2025 if the last reported sale price of the Common Stock has been at least 130% of the Conversion Price then in effect for at least 20 Trading Days (whether or not consecutive) during any 30 consecutive Trading Day period (including the last Trading Day of such period) ending on, and including, the Trading Day immediately preceding the date on which the Company provides the Redemption Notice and (ii) on or after June 7, 2027, regardless of the foregoing sale price condition, in each case for cash in an amount equal to the Redemption Price.

Subject to the provisions of the Indenture, the Holder hereof has the right, at its option, during certain periods and upon the occurrence of certain conditions specified in the Indenture, prior to the close of business on the Business Day immediately preceding the Maturity Date, to convert any Notes or portion thereof that is $1,000 or an integral multiple thereof, into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, at the Conversion Rate specified in the Indenture, as adjusted from time to time as provided in the Indenture.

Terms used in this Note and defined in the Indenture are used herein as therein defined.

112

ABBREVIATIONS

The following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM = as tenants in common

UNIF GIFT MIN ACT = Uniform Gifts to Minors Act

CUST = Custodian

TEN ENT = as tenants by the entireties

JT TEN = joint tenants with right of survivorship and not as tenants in common

Additional abbreviations may also be used though not in the above list.

113

Schedule A7

SCHEDULE OF EXCHANGES OF NOTES

HCI Group, Inc.
4.75% Convertible Senior Notes due 2042

The initial principal amount of this Global Note is [] DOLLARS ($[]). The following increases or decreases in this Global Note have been made:


Date of increase or decrease	Amount of decrease in principal amount of this Global Note	Amount of increase in principal amount of this Global Note	Principal amount of this Global Note following such decrease or increase	Signature of authorized signatory of Trustee or Custodian

________________________

7 Include if a Global Note.

114

ATTACHMENT 1

[FORM OF NOTICE OF CONVERSION]

To: HCI Group, Inc.

To: The Bank of New York Mellon Trust Company, N.A.

4655 Salisbury Road, Suite 300

Jacksonville, FL 32256

Attention: Corporate Trust Administration

The undersigned registered owner of this Note hereby exercises the option to convert this Note, or the portion hereof (that is $1,000 principal amount or an integral multiple thereof) below designated, into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, in accordance with the terms of the Indenture referred to in this Note, and directs that any cash payable and any shares of Common Stock issuable and deliverable upon such conversion, together with any cash for any fractional share, and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. If any shares of Common Stock or any portion of this Note not converted are to be issued in the name of a Person other than the undersigned, the undersigned will pay all documentary, stamp or similar issue or transfer taxes, if any in accordance with ‎Section 13.02(d) and ‎Section 13.02(e) of the Indenture. Any amount required to be paid to the undersigned on account of interest accompanies this Note.



Dated:
			Signature(s)


Signature Guarantee

Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or Notes are to be delivered, other than to and in the name of the registered holder.

115


Fill in for registration of shares if to be issued, and Notes if to be delivered, other than to and in the name of the registered holder:
(Name)


(Street Address)


(City, State and Zip Code) Please print name and address
		Principal amount to be converted (if less than all): $____,000 NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
		Social Security or Other Taxpayer Identification Number

116

ATTACHMENT 2

[FORM OF REPURCHASE NOTICE]

To: HCI Group, Inc.

To: The Bank of New York Mellon Trust Company, N.A.

4655 Salisbury Road, Suite 300

Jacksonville, FL 32256

Attention: Corporate Trust Administration

The undersigned registered owner of this Note hereby acknowledges receipt of a notice from HCI Group, Inc. (the “Company”) as to the occurrence of a Fundamental Change or Optional Repurchase Date with respect to the Company and specifying the applicable Repurchase Date and requests and instructs the Company to pay to the registered holder hereof:

☐ in accordance with Section 14.01 of the Indenture; or

☐ in accordance with Section 14.02 of the Indenture;

referred to in this Note (1) the entire principal amount of this Note, or the portion thereof (that is $1,000 principal amount or an integral multiple thereof) below designated, and (2) if such Repurchase Date does not fall during the period after a Regular Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest, if any, thereon to, but excluding, such Repurchase Date.

In the case of Physical Notes, the certificate numbers of the Notes to be repurchased are as set forth below:


Dated:
			Signature(s)


			Social Security or Other Taxpayer Identification Number

			Principal amount to be repurchased by the Company (if less than all): $___,000

			NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.

117

ATTACHMENT 3

[FORM OF ASSIGNMENT AND TRANSFER]

The Bank of New York Mellon Trust Company, N.A.

4655 Salisbury Road, Suite 300

Jacksonville, FL 32256

Attention: Corporate Trust Administration

For value received hereby __________ sell(s), assign(s) and transfer(s) unto __________ (Please insert social security or Taxpayer Identification Number of assignee) the within Note, and hereby irrevocably constitutes and appoints __________ attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises.

In connection with any transfer of the within Note occurring prior to the Resale Restriction Termination Date, as defined in the Indenture governing such Note, the undersigned confirms that such Note is being transferred:

 to HCI Group, Inc. or a subsidiary thereof; or

 Pursuant to a registration statement that has become or been declared effective under the Securities Act of 1933, as amended; or

 Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or

 Under any other available exemption from the registration requirements of the Securities Act of 1933, as amended (including, if available, the exemption provided by Rule 144 under the Securities Act of 1933, as amended.


Dated:
			Signature(s)


Signature Guarantee

Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15.

118

NOTICE: The signature on the assignment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.

119

EXHIBIT 10.129

Property Quota Share Reinsurance Contract

issued to

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

Effective: June 1, 2022

1 of NUMPAGES 23


PROPERTY QUOTA SHARE REINSURANCE CONTRACT TABLE OF CONTENTS
Article		Page

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


Exhibit A	Trust Agreement	21

Effective: June 1, 2022

2 of NUMPAGES 23


Exhibit B	Third Party Claims Administration Agreement	•

Effective: June 1, 2022

3 of NUMPAGES 23

PROPERTY QUOTA SHARE REINSURANCE CONTRACT

issued to

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St Petersburg, Florida

(the “Company”)

THE SUBSCRIBING REINSURER(S) IDENTIFIED IN THE
INTERESTS AND LIABILITIES AGREEMENT(S) ATTACHED TO
AND FORMING PART OF THIS CONTRACT

(the “Reinsurer”)

ARTICLE 1

Business Covered

This Contract is to indemnify the Company in respect of the liability that may accrue to the Company as a result of loss or losses under Policies classified by the Company as Southeast Property, in force at the inception of this Contract, or written or renewed during the term of this Contract by or on behalf of the Company, subject to the terms and conditions herein contained.

ARTICLE 2

Retention and Limit

A. The Company shall cede, and the Reinsurer shall accept as reinsurance, a 100% share of all business covered hereunder. The Reinsurer shall pay to the Company the Reinsurer’s quota share of losses under the Policies and of Loss Adjustment Expense associated therewith. The Reinsurer shall also pay to the Company the Reinsurer’s quota share of Extra Contractual Obligations and Loss in Excess of Policy Limits covered under this Contract.

B. Other Reinsurance. The Reinsurer shall be permitted to make reinsurance claims pertaining to this Contract against HCI Group’s Non-Florida Reinsurance Tower. “HCI Group’s Non-Florida Reinsurance Tower” shall mean all property reinsurance contracts that provide reinsurance coverage to Homeowners Choice Property & Casualty Insurance Company, Inc., and TypTap Insurance Company’s property business in all territories except for the State of Florida. HCI Group’s Non-Florida Reinsurance Tower shall remain in place during the term of this Contract and contains the following coverage:

Effective: June 1, 2022

4 of NUMPAGES 23

100% of $515,000,000 excess of $10,000,000 each occurrence, and $1,030,000,000 in the aggregate.

HCI Group’s Non-Florida Reinsurance Tower shall be filed with and reviewed by Demotech, Inc.

ARTICLE 3

Term

A. This Contract shall take effect at 12:01 a.m. Eastern Time, June 1, 2022, and shall remain in effect until 12:01 a.m. Eastern Time June 1, 2023, in respect of losses occurring during the term of this Contract.

B. At expiration of this Contract, the Reinsurer shall return to the Company the ceded unearned portion of the Subject Written Premium, net of provisional ceding commission, as of the date of expiration, on business in force at that time and date. The Reinsurer shall have no liability for losses occurring after expiration.

C. However, at expiration of this Contract, by mutual agreement, the contract may be extended such that Reinsurer shall remain liable for all Policies covered by this Contract that are in force at expiration, until the termination, expiration or renewal of such Policies, whichever occurs first.

D. In the event this Contract expires on a run-off basis, the Reinsurer’s liability hereunder shall continue if the Company is required by statute or regulation to continue coverage for a Policy, until the earliest date on which the Company may cancel the Policy.

ARTICLE 4

Special Termination

A. The Company may terminate a Reinsurer’s percentage share in this Contract at any time by giving written notice to the Reinsurer in the event of any of the following circumstances:

1. The Reinsurer ceases underwriting operations.

2. A state insurance department or other legal authority orders the Reinsurer to cease writing business, or the Reinsurer is placed under regulatory supervision.

3. The Reinsurer has become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary), or there have been instituted against it proceedings for the appointment of a receiver, liquidator, rehabilitator, conservator, trustee in

Effective: June 1, 2022

5 of NUMPAGES 23

bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations.

4. The Reinsurer has merged with or has become acquired or controlled by any company, corporation, or individual(s) not controlling the Reinsurer’s operations at the inception of this Contract.

B. Termination shall be effected on a run-off or cut-off basis as set forth in the Term Article, at the sole discretion of the Company. The reinsurance premium due the Reinsurer hereunder shall be pro rated based on the period of the Reinsurer’s participation hereon, and the Reinsurer shall immediately return any unearned reinsurance premium received.

C. Additionally, in the event of any of the circumstances listed in paragraph A of this Article, the Company shall have the option to commute the Reinsurer’s liability for losses on Policies covered by this Contract. In the event the Company and the Reinsurer cannot agree on the commutation amount, they shall appoint an actuary and/or appraiser to assess such amount and shall share equally any expense of the actuary and/or appraiser. If the Company and the Reinsurer cannot agree on an actuary and/or appraiser, the Company and the Reinsurer each shall nominate three individuals, of whom the other shall decline two, and the final appointment shall be made by drawing lots. Payment by the Reinsurer of the amount of liability ascertained shall constitute a complete and final release of both parties in respect of liability arising from the Reinsurer’s participation under this Contract.

D. The Company’s option to require commutation under paragraph C above shall survive the termination or expiration of this Contract.

ARTICLE 5

Territory

The territorial limits of this Contract shall be identical with those of the Company’s Policies issued in Georgia, North Carolina and South Carolina.

ARTICLE 6

Exclusions

A. This Contract shall not apply to and specifically excludes:

1. Liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any Insolvency Fund. “Insolvency Fund” includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, howsoever denominated, established or governed, that provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee, or other obligation of an insurer,

Effective: June 1, 2022

6 of NUMPAGES 23

or its successors or assigns, that has been declared by any competent authority to be insolvent, or that is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part.

2. Any premium and liability arising from Policies in respect of coverage classified as (“Excluded Coverage”):

a. Flood (including National Flood Insurance Program and private coverage);

b. Identity Theft;

c. Equipment Breakdown

ARTICLE 7

Special Acceptance

ARTICLE 8

Premium

The Company shall cede to the Reinsurer its exact proportion of the unearned portion of the Subject Written Premium for business in force at the inception of this Contract, and the Subject Written Premium of the Company for Policies written or renewed after said inception.

ARTICLE 9

Ceding Commission

The Reinsurer shall allow the Company a 16.0% commission on all Subject Written Premiums ceded to the Reinsurer hereunder. The Company shall allow the Reinsurer return commission on return premiums at the same rate as such rate may be adjusted under this Article.

ARTICLE 10

TRUST ACCOUNT

The Reinsurer agrees to establish a Trust Account in accordance with the Trust Agreement entered into by the Company and the Reinsurer, a copy of which is attached hereto as Exhibit A.

Effective: June 1, 2022

7 of NUMPAGES 23

Collateral and Collateral Release. As promptly as possible after the effective date of this Contract the Reinsurer shall provide collateral to be deposited into the Trust Account equal to the Reinsurer’s pro-rata share of $10,000,000 based upon the proportion of the total quota share to which the Reinsurer subscribes.

Within 30 days following expiration of this Contract and 30 days following each quarter thereafter (each such date, a “Calculation Date”), the Company shall report the following:

Losses and loss adjustment expenses paid by the Company, but not recovered from the Reinsurer net of any ceded paid losses and loss adjustment expenses recoverable by the Reinsurer under the Property Catastrophe Reinsurance Contract as of the applicable Calculation Date; plus

Reserves for losses and loss adjustment expense reported and outstanding net of any ceded reserves for reported losses and loss adjustment expenses recoverable by the Reinsurer under the Property Catastrophe Reinsurance Contract as of the applicable Calculation Date; plus

Reserves for losses and loss adjustment expenses incurred by not reported (IBNR) net of any ceded IBNR recoverable by the Reinsurer under the Property Catastrophe Reinsurance Contract as of the applicable Calculation Date; plus

The unearned portion of the Subject Written Premium, if any, less the ceding commission thereon.

As respects all calculations, the amount calculated in accordance with the above shall be used to determine the amount of collateral required to be retained in the Trust Account applicable to this Contract. In the event the collateral in the Trust Account is in excess of the amount calculated above as of any Calculation Date, the Company shall release to the Reinsurer such amount in excess thereof as promptly as possible. In the event the collateral in the Trust Account is less than the amount calculated above as of any Calculation Date, the Reinsurer shall provide collateral to be deposited into the Trust Account equal to such shortfall amount as promptly as possible.

ARTICLE 11

Reports and Remittances

A. As promptly as possible after the effective date of this Contract, the Company shall remit to the Trust Account, established in accordance with the Trust Account Article, the Reinsurer’s share of the unearned portion of the Subject Written Premium, less provisional commission thereon applicable to subject business in force at the effective time and date of this Contract.

Effective: June 1, 2022

8 of NUMPAGES 23

B. All Subject Written Premium of the Company for Policies written or renewed after the inception of this Contract, less ceding commission, shall be deposited into the Trust Account. Within 15 calendar days following the end of each month, the Company shall furnish the Reinsurer with a report summarizing:

1. Premium, as defined in Article 8 of this Contract during the month

2. the ceding commission as provided for in Article 9 of this Contract

3. loss and Loss Adjustment Expenses accrued under the Third Party Claims Administration Agreement during the month

4. ceded subrogation, salvage, or other recoveries during the month,

Item (3) shall be paid to Griston from the Trust Account. The positive balance of (1) less (2) plus (4) shall be due the Reinsurer. Any balance shown to be due the Company shall be withdrawn from the Trust Account. If the balance in the Trust Account is less than the amount due the Company, net of any ceded paid losses and loss adjustment expenses uncollected but recoverable by the Reinsurer under the Property Catastrophe Reinsurance Contract, then the Reinsurer shall pay the Company the balance shown to be due the company net of any ceded paid losses and loss adjustment expenses uncollected but recoverable by the Reinsurer under the Property Catastrophe Reinsurance Contract.

C. In addition, the Company shall furnish the Reinsurer with a monthly statement showing the unearned premium reserves, and the reserves for outstanding losses including Loss Adjustment Expense. The Company shall also provide the Reinsurer with such other information as may be required by the Reinsurer for completion of its financial statements.

ARTICLE 12

Definitions

A. “Southeast Property” means residential property and liability business written in the states of Georgia, North Carolina, and South Carolina.

B. “Loss Adjustment Expense” means costs and expenses incurred by the Company in connection with the investigation, appraisal, adjustment, settlement, litigation, defense or appeal of a specific claim or loss, or alleged loss, including but not limited to:

1. court costs;

2. costs of supersedeas and appeal bonds;

3. monitoring counsel expenses;

Effective: June 1, 2022

9 of NUMPAGES 23

4. legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, including but not limited to declaratory judgment actions, arbitration and mediation actions;

5. post-judgment interest;

6. pre-judgment interest, unless included as part of an award or judgment;

7. a pro rata share of salaries and expenses of Company field employees, calculated in accordance with the time occupied in adjusting such loss, and expenses of other Company employees who have been temporarily diverted from their normal and customary duties and assigned to the field adjustment of losses covered by this Contract; and

8. subrogation, salvage and recovery expenses.

“Loss Adjustment Expense” does not include salaries and expenses of the Company’s employees, except as provided in subparagraph (7) above, and office and other overhead expenses.

C. “Subject Written Premium” means gross written premium of the Company for the classes of business reinsured hereunder, less cancellations and return premiums, and less installment fees, MGA fees, inspection fees, Policy fees, Policy taxes or any other taxes, EMPAT fees, and pass through assessments or any recoupments of assessments.

D. “Subject Earned Premium” means the gross earned premium, less cancellations and return premiums, and less the earned portion of installment fees, MGA fees, inspection fees, Policy fees, Policy taxes or any other taxes, EMPAT fees, and pass through assessments or any recoupments of assessments.

E. “Policy” means any binder, policy, or contract of insurance issued, accepted or held covered provisionally or otherwise, by or on behalf of the Company in respect of Southeast Property.

F. “Third Party Claims Administration Agreement” means the agreement entered into between the Company and Griston Claim Management, Inc. (“Griston”), a copy of which is attached hereto as Exhibit B.

ARTICLE 13

Extra Contractual Obligations/Excess of Policy Limits

A. This Contract shall cover Extra Contractual Obligations, as provided in the Retention and Limit Article. “Extra Contractual Obligations” shall be defined as those liabilities not covered under any other provision of this Contract and that arise from the handling of any

Effective: June 1, 2022

10 of NUMPAGES 23

claim on business covered hereunder, such liabilities arising because of, but not limited to, the following: failure by the Company to settle within the Policy limit, or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of any action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such action.

B. This Contract shall cover Loss in Excess of Policy Limits, as provided in the Retention and Limit Article. “Loss in Excess of Policy Limits” shall be defined as Loss in excess of the Policy limit, having been incurred because of, but not limited to, failure by the Company to settle within the Policy limit or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of any action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such action.

C. An Extra Contractual Obligation and/or Loss in Excess of Policy Limits shall be deemed to have occurred on the same date as the loss covered under the Company’s Policy, and shall constitute part of the original loss.

D. For the purposes of the Loss in Excess of Policy Limits coverage hereunder, the word "Loss" shall mean any amounts for which the Company would have been contractually liable to pay had it not been for the limit of the original Policy.

E. Loss Adjustment Expense in respect of Extra Contractual Obligations and/or Loss in Excess of Policy Limits shall be covered hereunder in the same manner as other Loss Adjustment Expense.

F. However, this Article shall not apply where the loss has been incurred due to final legal adjudication of fraud of a member of the Board of Directors or a corporate officer of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder.

G. In no event shall coverage be provided to the extent not permitted under law.

ARTICLE 14

Net Retained Liability

A. This Contract applies only to that portion of any loss that the Company retains net for its own account (prior to deduction of any reinsurance that inures solely to the benefit of the Company).

B. The amount of the Reinsurer’s liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurer(s), whether specific or general, any amounts that may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise.

Effective: June 1, 2022

11 of NUMPAGES 23

ARTICLE 15

Original Conditions

All reinsurance under this Contract shall be subject to the same rates, terms, conditions, waivers and interpretations, and to the same modifications and alterations as the respective Policies of the Company. However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract.

ARTICLE 16

No Third Party Rights

This Contract is solely between the Company and the Reinsurer, and in no instance shall any insured, claimant or other third party have any rights under this Contract except as may be expressly provided otherwise herein.

ARTICLE 17

Loss Settlements

A. The Company, per the terms of the Third Party Claims Administration Agreement, has granted Griston Claim Management, Inc. (“Griston”) authority to adjust, settle or compromise all claims and losses, subject to the Company’s approval.

B. As respects losses subject to this Contract, all loss settlements made by the Company, whether under strict Policy terms or by way of compromise, and any Extra Contractual Obligations and/or Loss in Excess of Policy Limits, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay or allow, as the case may be, its share of each such settlement in accordance with this Contract.

ARTICLE 18

Salvage and Subrogation

A. Salvages and all recoveries (including amounts due from all reinsurances that inure to the benefit of this Contract, whether recovered or not), shall be first deducted from any loss to the extent received prior to loss settlement hereunder to arrive at the amount of liability attaching hereunder.

B. All salvages, recoveries or payments recovered or received subsequent to loss settlement hereunder shall be applied as if recovered or received prior to the aforesaid settlement, and all necessary adjustments shall be made by the parties hereto.

Effective: June 1, 2022

12 of NUMPAGES 23

ARTICLE 19

Currency

A. Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United States Dollars, and all payments hereunder shall be in United States Dollars.

B. For purposes of this Contract, where the Company receives premiums or pays losses in currencies other than United States Dollars, such premiums or losses shall be converted into United States Dollars at the actual rates of exchange at which these premiums or losses are entered in the Company’s books.

ARTICLE 20

Security

A. This Article applies only to the extent a Reinsurer does not qualify for credit with any insurance regulatory authority having jurisdiction over the Company’s reserves

B. The Company agrees, in respect of its Policies or bonds falling within the scope of this Contract, that when it files with its insurance regulatory authority, or sets up on its books liabilities as required by law, it shall forward to the Reinsurer a statement showing the proportion of such liabilities applicable to the Reinsurer. The “Reinsurer’s Obligations” shall be defined as follows:

1. the Reinsurer’s share of the unearned portion of the Subject Written Premium;

2. known outstanding losses that have been reported to the Reinsurer and Loss Adjustment Expense relating thereto;

3. losses and Loss Adjustment Expense paid by the Company but not recovered from the Reinsurer;

4. losses incurred but not reported and Loss Adjustment Expense relating thereto;

5. all other amounts for which the Company cannot take credit on its financial statements unless funding is provided by the Reinsurer.

C. The Reinsurer’s Obligations shall be funded by funds withheld, cash advances, Trust Agreement or a Letter of Credit (LOC). The Company shall have the option of determining the method of funding provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Company’s reserves.

Effective: June 1, 2022

13 of NUMPAGES 23

the Company of a clean, irrevocable and unconditional LOC issued by a bank and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company’s reserves in an amount equal to the Reinsurer’s Obligations. Such LOC shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days (or such other time period as may be required by insurance regulatory authorities), prior to any expiration date the issuing bank shall notify the Company by certified or registered mail that the issuing bank elects not to consider the LOC extended for any additional period.

E. The Reinsurer and the Company agree that any funding provided by the Reinsurer pursuant to the provisions of this Contract may be drawn upon at any time, notwithstanding any other provision of this Contract, and be utilized by the Company or any successor, by operation of law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Company, for the following purposes, unless otherwise provided for in a separate Trust Agreement:

1. to reimburse the Company for the Reinsurer’s Obligations, the payment of which is due under the terms of this Contract and that has not been otherwise paid;

2. to make refund of any sum that is in excess of the actual amount required to pay the Reinsurer’s Obligations under this Contract (or in excess of 102% of the Reinsurer’s Obligations, if funding is provided by a Trust Agreement);

3. to fund an account with the Company for the Reinsurer’s Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company’s other assets, and interest thereon not in excess of the prime rate shall accrue to the benefit of the Reinsurer. Any taxes payable on accrued interest shall be paid out of the assets in the account that are in excess of the Reinsurer’s Obligations (or in excess of 102% of the Reinsurer’s Obligations, if funding is provided by a Trust Agreement). If the assets are inadequate to pay taxes, any taxes due shall be paid or reimbursed by the Reinsurer;

4. to pay the Reinsurer’s share of any other amounts the Company claims are due under this Contract.

F. If the amount drawn by the Company is in excess of the actual amount required for E(1) or E(3), or in the case of E(4), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer.

G. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company.

Effective: June 1, 2022

14 of NUMPAGES 23

H. At annual intervals, or more frequently at the discretion of the Company, but never more frequently than monthly, the Company shall prepare a specific statement of the Reinsurer’s Obligations for the sole purpose of amending the LOC or other method of funding, in the following manner:

1. If the statement shows that the Reinsurer’s Obligations exceed the balance of the LOC as of the statement date, the Reinsurer shall, within 30 days after receipt of the statement, secure delivery to the Company of an amendment to the LOC increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference.

2. If, however, the statement shows that the Reinsurer’s Obligations are less than the balance of the LOC (or that 102% of the Reinsurer’s Obligations are less than the trust account balance if funding is provided by a Trust Agreement), as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the LOC reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess.

I. Should the Company or the Reinsurer be in breach of its obligations under this Article, or any Trust Agreement entered into to collateralize the Reinsurer’s Obligations hereunder, notwithstanding anything to the contrary elsewhere in this Contract, including but not limited to the Arbitration Article, the Company or the Reinsurer may seek immediate relief in respect of said breach from any court sitting in Pinellas County, Florida having competent jurisdiction of the parties hereto or the state and federal courts having jurisdiction for disputes from Pinellas County, as determined by the Company, and the parties consent to jurisdiction of such court. The Company and the Reinsurer agree that in addition to obeying the order of such court, each will bear its own costs, including reasonable attorneys’ fees and court costs, incurred in seeking the relief sought from such breach. In the alternative, the Company or the Reinsurer may elect to demand arbitration of such dispute pursuant to the provisions of the Arbitration Article hereunder.

ARTICLE 21

Taxes

A. In consideration of the terms under which this Contract is issued, the Company undertakes not to claim any deduction of the premium hereon when making Canadian tax returns.

B. 1. The Reinsurer has agreed to allow, for the purpose of paying the Federal Excise Tax, the applicable percentage of the premium payable hereon (as imposed under the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.

Effective: June 1, 2022

15 of NUMPAGES 23

2. In the event of any return of such premium becoming due hereunder, the Reinsurer shall deduct the applicable percentage of such premium from the amount of the return, and the Company or its agent should take steps to recover the Tax from the U.S. Government.

ARTICLE 22

Access to Records

The Reinsurer or its duly authorized representatives shall have the right to visit the offices of the Company to inspect, examine, audit, and verify any of the policy, accounting or claim files (“Records”) relating to the Policies reinsured under this Contract during regular business hours after giving five working days’ prior notice; provided, that the Company shall be permitted to exclude from such inspection, examination or audit information that is not primarily related to the Policies to the extent any such information related to the Policies cannot be segregated or separated, without material cost or effort, from information that the Company believes in good faith is not permitted to be disclosed or transferred to the Reinsurer or its affiliates pursuant to applicable law or that would otherwise reveal sensitive competitive information concerning the business of the Company and its affiliates (other than the Policies). This right shall be exercisable during the term of this Contract or after the expiration of this Contract.

ARTICLE 23

Confidentiality

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract ("Confidential Information") are proprietary and confidential to the Company. Confidential Information shall not include documents, information or data that the Reinsurer can show:

1. are publicly known or have become publicly known through no unauthorized act of the Reinsurer;

2. have been rightfully received from a third person without obligation of confidentiality; or

3. were known by the Reinsurer prior to the placement of this Contract without an obligation of confidentiality.

B. Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential Information to any third parties, including any affiliated companies, except:

1. when required by retrocessionaires as respects business ceded to this Contract;

Effective: June 1, 2022

16 of NUMPAGES 23

2. when required by regulators performing an audit of the Reinsurer’s records and/or financial condition; or

3. when required by external auditors performing an audit of the Reinsurer’s records in the normal course of business.

Further, the Reinsurer agrees not to use any Confidential Information for any purpose not related to the performance of its obligations or enforcement of its rights under this Contract.

C. Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer agrees to provide the Company with written notice of same at least 10 days prior to such release or disclosure and to use its best efforts to assist the Company in maintaining the confidentiality provided for in this Article.

D. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

ARTICLE 24

Indemnification and Errors and Omissions

A. The Reinsurer is reinsuring, subject to the terms and conditions of this Contract, the obligations of the Company under any Policy. The Company shall be the sole judge as to:

1. what shall constitute a claim or loss covered under any Policy;

2. the Company’s liability thereunder;

3. the amount or amounts that it shall be proper for the Company to pay thereunder.

B. The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and liability(ies) of the Company under any Policy.

C. Any inadvertent error, omission or delay in complying with the terms and conditions of this Contract shall not be held to relieve either party hereto from any liability that would attach to it hereunder if such error, omission or delay had not been made, provided such error, omission or delay is rectified immediately upon discovery.

ARTICLE 25

Insolvency

A. If more than one reinsured company is referenced within the definition of “Company” in the Preamble to this Contract, this Article shall apply severally to each such company. Further, this Article and the laws of the domiciliary state shall apply in the event of the insolvency of any company covered hereunder. In the event of a conflict between any provision of this

Effective: June 1, 2022

17 of NUMPAGES 23

Article and the laws of the domiciliary state of any company covered hereunder, that domiciliary state’s laws shall prevail.

B. In the event of the insolvency of the Company, this reinsurance (or the portion of any risk or obligation assumed by the Reinsurer, if required by applicable law) shall be payable directly to the Company, or to its liquidator, receiver, conservator or statutory successor, either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed and allowed in the liquidation proceeding, whichever may be required by applicable statute, without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the Policy or bond reinsured, which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

C. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this reinsurance Contract as though such expense had been incurred by the Company.

ARTICLE 26

Arbitration

A. Except as may be elected by the Company pursuant to paragraph I of the Security Article of this Contract, any dispute arising out of the interpretation, performance or breach of this Contract, including the formation or validity thereof, shall be submitted for decision to a panel of three arbitrators. Notice requesting arbitration shall be in writing and sent certified or registered mail, return receipt requested.

B. One arbitrator shall be chosen by each party and the two arbitrators shall then choose an impartial third arbitrator who shall preside at the hearing. If either party fails to appoint its arbitrator within 30 days after being requested to do so by the other party, the latter, after 10 days’ prior notice by certified or registered mail of its intention to do so, may appoint the second arbitrator.

Effective: June 1, 2022

18 of NUMPAGES 23

C. If the two arbitrators do not agree on a third arbitrator within 60 days of their appointment, the third arbitrator shall be chosen in accordance with the procedures for selecting the third arbitrator in force on the date the arbitration is demanded, established by the AIDA Reinsurance and Insurance Arbitration Society – U.S. (ARIAS). The arbitrators shall be persons knowledgeable about insurance and reinsurance who have no personal or financial interest in the result of the arbitration. If a member of the panel dies, becomes disabled or is otherwise unwilling or unable to serve, a substitute shall be selected in the same manner as the departing member was chosen and the arbitration shall continue.

D. Within 30 days after all arbitrators have been appointed, the panel shall meet and determine timely periods for briefs, discovery procedures and schedules of hearings. The arbitration hearing and any pre-hearing conferences shall be held in St. Petersburg, Florida, on the date(s) fixed by the arbitrators, provided that the arbitrators may call for pre-hearing conferences by means of teleconference or videoconference as they may deem appropriate.

E. The panel shall be relieved of all judicial formality and shall not be bound by the strict rules of procedure and evidence. Notwithstanding anything to the contrary in this Contract, the arbitrators may at their discretion, consider underwriting and placement information provided by the Company to the Reinsurer, as well as any correspondence exchanged by the parties that is related to this Contract. The arbitration shall take place in St Petersburg, Florida, or at such other place as the parties shall agree. The decision of any two arbitrators shall be in writing and shall be final and binding. The panel is empowered to grant interim relief as it may deem appropriate.

F. The panel shall interpret this Contract as an honorable engagement rather than as merely a legal obligation and shall make its decision considering the custom and practice of the applicable insurance and reinsurance business as promptly as possible after the hearings. Judgment upon an award may be entered in any court having jurisdiction thereof.

G. Each party shall bear the expense of its own arbitrator and shall jointly and equally bear with the other party the cost of the third arbitrator. The remaining costs of the arbitration shall be allocated by the panel. The panel may, at its discretion, award such further costs and expenses as it considers appropriate, including but not limited to attorneys’ fees, to the extent permitted by law.

ARTICLE 27

Governing Law

This Contract shall be governed as to performance, administration and interpretation by the laws of the State of Florida, exclusive of conflict of law rules. However, with respect to credit for reinsurance, the rules of all applicable states shall apply.

Effective: June 1, 2022

19 of NUMPAGES 23

ARTICLE 28

Entire Agreement

This Contract sets forth all of the duties and obligations between the Company and the Reinsurer and supersedes any and all prior or contemporaneous written agreements with respect to matters referred to in this Contract. This Contract may not be modified or changed except by an amendment to this Contract in writing signed by both parties. However, this Article shall not be construed as limiting the admissibility of evidence regarding the formation, interpretation, purpose or intent of this Contract.

ARTICLE 29

Non-Waiver

The failure of the Company or the Reinsurer to insist on compliance with this Contract or to exercise any right or remedy hereunder shall not constitute a waiver of any rights contained in this Contract nor prevent either party from thereafter demanding full and complete compliance nor prevent either party from exercising such remedy in the future.

ARTICLE 30

Mode of Execution

A. This Contract may be executed by:

1. an original written ink signature of paper documents;

2. an exchange of electronic copies showing the original written ink signature of paper documents;

3. electronic signature technology employing computer software and a digital signature or digitizer pen pad to capture a person’s handwritten signature in such a manner that the signature is unique to the person signing, is under the sole control of the person signing, is capable of verification to authenticate the signature and is linked to the document signed in such a manner that if the data is changed, such signature is invalidated.

B. The use of any one or a combination of these methods of execution shall constitute a legally binding and valid signing of this Contract. This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Effective: June 1, 2022

20 of NUMPAGES 23

IN WITNESS WHEREOF, the Company has caused this Contract to be executed by its duly authorized representative.

This ____________ day of June, 2022.

United Property & Casualty Insurance Company

By: __________________________________________

Name: _______________________________________

Title: ________________________________________

Effective: June 1, 2022

21 of NUMPAGES 23

EXHIBIT A

TRUST AGREEMENT

Effective: June 1, 2022

22 of NUMPAGES 23

EXHIBIT B

Third Party Claims Administration Agreement

Effective: June 1, 2022

23 of NUMPAGES 23

EXHIBIT 10.131. Certain identified information has been excluded from this exhibit because it is immaterial and would be competitively harmful if publicly disclosed. Information that has been omitted is indicated with brackets.

WORKING LAYER CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT

EFFECTIVE: JUNE 1, 2022

ISSUED TO

HOMEOWNERS CHOICE PROPERTY & CASUALTY INSURANCE COMPANY
TAMPA, FLORIDA

Including any and/or all companies that are or may hereafter become affiliated therewith

Page 1

WORKING LAYER CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT

TABLE OF CONTENTS

ARTICLE 1

BUSINESS COVERED 1

ARTICLE 2

TERM 1

ARTICLE 3

SPECIAL TERMINATION 2

ARTICLE 4

TERRITORY 3

ARTICLE 5

EXCLUSIONS 3

ARTICLE 6

RETENTION AND LIMIT 5

ARTICLE 7

REINSURANCE PREMIUM 6

ARTICLE 8

EXPOSURE CAP 7

ARTICLE 9

EXPERIENCE ACCOUNT 7

ARTICLE 10

COMMUTATION AND PROFIT COMMISSION 7

ARTICLE 11

REPORTS 8

ARTICLE 12

DEFINITIONS 9

ARTICLE 13

LOSS OCCURRENCE DEFINITION 11

ARTICLE 14

ACCESS TO RECORDS 14

ARTICLE 15

ARBITRATION 14

ARTICLE 16

CONFIDENTIATILITY 15

ARTICLE 17

CURRENCY 16

ARTICLE 18

ENTIRE AGREEMENT 16

ARTICLE 19

ERRORS AND OMISSIONS 17

ARTICLE 20

FEDERAL EXCISE TAX 17

ARTICLE 21

Page 2

GOVERNING LAW 17

ARTICLE 22

INSOLVENCY 17

ARTICLE 23

LATE PAYMENTS 18

ARTICLE 24

LIABILITY OF THE REINSURER 19

ARTICLE 25

LOSS NOTICES AND SETTLEMENTS 20

ARTICLE 26

NO ASSIGNMENT 20

ARTICLE 27

NON-WAIVER 20

ARTICLE 28

NOTICES AND AGREEMENT EXECUTION 21

ARTICLE 29

OFFSET 21

ARTICLE 30

OTHER REINSURANCE 21

ARTICLE 31

SALVAGE AND SUBROGATION 22

ARTICLE 32

SERVICE OF SUIT 22

ARTICLE 33

SEVERABILITY 23

ARTICLE 34

TAXES 23

ARTICLE 35

THIRD PARTY RIGHTS 23

ARTICLE 36

COMMUNICATIONS 23

ATTACHMENTS

Nuclear Incident Exclusion Clause - Physical Damage – Reinsurance U.S.A. Sanction Limitation And Exclusion Clause

Page 3

WORKING LAYER CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT (hereinafter called the “Contract”)

EFFECTIVE: JUNE 1, 2022
issued to

HOMEOWNERS CHOICE PROPERTY & CASUALTY INSURANCE COMPANY

Tampa, Florida

Including any and/or all companies that are or may hereafter become affiliated therewith (collectively the “Reinsured”)

THE SUBSCRIBING REINSURER(S) SPECIFIED IN THE INTERESTS AND LIABLITIES AGREEMENT

ATTACHED TO THIS CONTRACT

(hereinafter called, with other participants, the “Reinsurer”)

ARTICLE 1

BUSINESS COVERED

This Contract is to indemnify the Reinsured in respect of its net excess liability as a result of any loss or losses which may occur during the Term of this Contract under any policies, contracts and binders of insurance or reinsurance (hereinafter called “Policy” or "Policies") not covered by the Reinsured's flood contract, in force at the effective date hereof or issued or renewed on or after that date, covering direct and assumed business classified by the Reinsured as the property perils of Homeowners, Condominium Owners, Renters, Business Owner Policy and Dwelling, subject to the terms, conditions and limitations hereinafter set forth.

ARTICLE 2

TERM

A. This Contract shall take effect at 12:01 a.m., Standard Time, June 1, 2022, and, unless terminated prior to that time and date as provided in the Special Termination Article, or as provided in paragraph C below, shall remain in effect until 12:01 a.m., Standard Time, June 1, 2025, applying to Loss Occurrences commencing during the term of this Contract. For purposes of this Contract, “Standard Time” shall mean the time as described in the original Policy.

B. The Term shall be divided into three Contract Years as follows:

“Contract Year 1” incepting at 12:01 a.m., Standard Time, June 1, 2022, and shall remain in effect until 12:01 a.m., Standard Time, June 1, 2023.

Page 4

“Contract Year 2” incepting at 12:01 a.m., Standard Time, June 1, 2023, and shall remain in effect until 12:01 a.m., Standard Time, June 1, 2024.

“Contract Year 3” incepting at 12:01 a.m., Standard Time, June 1, 2024, and shall remain in effect until 12:01 a.m., Standard Time, June 1, 2025.

In the event this Contract is terminated or commuted, the final Contract Year shall be from the beginning of the then current Contract Year through the effective date of termination or commutation.

C. Provided the Experience Account Balance is positive, the Reinsured shall have the option to commute this Contract with 60 days prior notice to the inception of Contract Year 2 or Contract Year 3. Should this option be elected by the Reinsured, the provisions of the Commutation and Profit Commission Article shall apply.

ARTICLE 3

SPECIAL TERMINATION

1. The Reinsured may terminate this Contract at the end of any Contract Year by giving written notice to the Reinsurer at least 30 days prior to the end of such Contract Year, in the event any of the following circumstances occur:

The Florida Office of Insurance Regulation or other legal authority has ordered the Reinsurer to cease writing business; or

The Reinsurer's A.M. Best's rating has been assigned or downgraded below A-and/or its Standard & Poor's rating has been assigned or downgraded below BBB+; or

The Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement or similar proceedings (whether voluntary or involuntary), or proceedings have been instituted against the Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations.

2. The Reinsurer may immediately terminate this Contract by giving 10 days written notice to the Reinsured in the event the Reinsured fails to remit any premium installment payment due in accordance with the provisions of the Premium Article. Should the Reinsured remit payment during this notice period, the Reinsurer shall lose the right to terminate.

Page 5

3. The Reinsurer may terminate this Contract at the end of any Contract Year by giving written notice to the Reinsured in the event any of the following circumstances occur:

The Reinsured has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement or similar proceedings (whether voluntary or involuntary), or proceedings have been instituted against the Reinsured for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or

A change of control and/or sale of the Reinsured.

ARTICLE 4

TERRITORY

The liability of the Reinsurer shall be limited to losses under Policies covering property located within the territorial limits of the State of Florida; but this limitation shall not apply to moveable property if the Reinsured's Policies provide coverage when said moveable property is outside the aforementioned territorial limits.

ARTICLE 5

EXCLUSIONS

1. This Contract does not apply to and specifically excludes the following:

All excess of loss reinsurance assumed by the Reinsured.

Reinsurance assumed by the Reinsured under obligatory reinsurance agreements, except intercompany reinsurance between the Reinsured and its affiliates and agency reinsurance where the policies involved are to be re-underwritten in accordance with the underwriting standards of the Reinsured and reissued as policies of the Reinsured at the next anniversary or expiration date.

Financial guarantee and insolvency.

Insurance policies classified by the Reinsured as Accident and Health, Fidelity and Surety, Boiler and Machinery, Workers' Compensation, and Credit business.

Flood and/or earthquake when written as such for standalone policies where flood and/or earthquake is the only named peril.

Page 6

Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Physical Damage -Reinsurance U.S.A." attached to and forming part of this Contract.

Loss or damage caused by or resulting from war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation by order of any government or public authority, but this exclusion shall not apply to loss or damage covered under a standard policy with a standard War Exclusion Clause.

Loss or liability from any Pool, Association or Syndicate and any assessment or similar demand for payment related to the Florida Hurricane Catastrophe Fund or Citizens Property Insurance Corporation.

All liability of the Reinsured 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, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Reinsured 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.

Loss and/or damage and/or costs and/or expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke. Nevertheless, this exclusion does not preclude payment of the cost of removing debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25% of the Reinsured's property loss under the applicable original policy.

Loss, damage, cost or expense arising out of an act of terrorism involving the use of
any biological, chemical, nuclear or radioactive agent, material, device or weapon.

All liability arising out of mold, spores and/or fungus, but this exclusion shall not apply to those losses which follow as a direct result of a loss caused by a peril otherwise covered hereunder.

This Contract excludes from both the retention and limit hereof (and reinsurer will not reimburse reinsured in respect of) coverage in respect of any claim, loss, expense or liability of any kind whatsoever arising from, relating to or to the extent contributed to, by any bacterial, viral, microbial or biological infection causing, anticipated to cause or having been caused by, any mass infection, epidemic or pandemic event(s) or loss(es), including

Page 7

but not limited to the COVID-19 virus. This absolute exclusion shall apply regardless of whether any reinsured policy(ies) or contract(s) provide(s) coverage in respect of such an exposure, or is construed, ordered or regulated to provide coverage in respect of such an exposure.

Notwithstanding any provision to the contrary within this Contract or any endorsement thereto, it is understood and agreed as follows:

This Contract excludes any and all liability for any losses arising out of, caused by, occasioned by or resulting from loss of, alteration of, unauthorized access to, unauthorized use of, or damage to, or a reduction in the functionality, availability or operation of, or a failure in the security of a computer system, hardware, program, software, data, information repository, microchip, integrated circuit or similar device in computer equipment or non-computer equipment (hereinafter, “Information Technology”);

ii.

provided, however, any loss (that would otherwise be covered hereunder in the absence of this exclusion) directly resulting from one or more Non-Cyber Perils will not be excluded by Paragraph (i).

iii.

“Non-Cyber Perils” means avalanche, fire, water damage, sprinkler leakage, landslide, landslip, looting, mudslide, lightning, explosion, aircraft or vehicle impact, falling objects, windstorm, hail, tornado, cyclone, hurricane, earthquake, volcano, tsunami, flood, rain, storm surge, liquefaction, volcanic eruption, solar flares, winter storm, freeze or weight of snow, riot, strike, collapse or earth movement.

2. The Reinsured may submit to the Reinsurer, for special acceptance hereunder, business not covered by this Contract. If said business is accepted by the Reinsurer, it will be subject to the terms of this Contract, except as such terms are modified by such acceptance. Any special acceptance business covered under the reinsurance agreement being replaced by this Contract will be automatically covered hereunder. Further, in the event a Reinsurer becomes a party to this Contract subsequent to the special acceptance of any business not normally covered hereunder, the Reinsurer shall automatically accept the same as being a part of this Contract.

Page 8

ARTICLE 6

RETENTION AND LIMIT

Layer 1 Section A: The Reinsurer shall be liable in respect of each Loss Occurrence for the Ultimate Net Loss over and above the initial Ultimate Net Loss of [ ] each Loss Occurrence, subject to a limit of liability to the Reinsurer of [ ] each Loss Occurrence. In no event shall the Reinsurer’s liability hereunder exceed [ ] for all Loss Occurrences commencing during each Contract Year for Section A Layer 1.

Layer 1 Section B: In the event that the coverage afforded under Section A is exhausted during any Contract Year due to a prior Loss Occurrence, the Reinsurer shall be liable in respect of each Loss Occurrence for the Ultimate Net Loss over and above the initial Ultimate Net Loss of [ ] each Loss Occurrence, subject to a limit of liability to the Reinsurer of [ ] each Loss Occurrence. In no event shall the Reinsurer’s liability hereunder exceed [ ] for all Loss Occurrences subject to this Section B commencing during the Term of this Contract.

The Reinsurer’s aggregate liability shall not exceed [ ] for all Loss Occurrences commencing during each Contract Year for Layer 1.

In no event shall the Reinsurer’s aggregate liability hereunder exceed [ ] for all Loss Occurrences commencing during the Term of this Contract for Layer 1.

Layer 2 Section A: The Reinsurer shall be liable in respect of each Loss Occurrence for the Ultimate Net Loss over and above the initial Ultimate Net Loss of [ ] each Loss Occurrence, subject to a limit of liability to the Reinsurer of [ ] each Loss Occurrence. In no event shall the Reinsurer’s liability hereunder exceed [ ] for all Loss Occurrences commencing during each Contract Year for Section A Layer 2.

Layer 2 Section B: In the event that the coverage afforded under Section A is exhausted during any Contract Year by a prior Loss Occurrence, the Reinsurer shall be liable in respect of each Loss Occurrence for the Ultimate Net Loss over and above the initial Ultimate Net Loss of [ ] each Loss Occurrence, subject to a limit of liability to the Reinsurer of [ ] each Loss Occurrence. In no event shall the Reinsurer’s liability hereunder exceed [ ] for all Loss Occurrences subject to this Section B commencing during the Term of this Contract.

The Reinsurer’s aggregate liability shall not exceed [ ] for all Loss Occurrences commencing during each Contract Year for Layer 2.

In no event shall the Reinsurer’s aggregate liability hereunder exceed [ ] for all Loss Occurrences commencing during the Term of this Contract for Layer 2.

The Reinsurer’s maximum aggregate liability hereunder for all Loss Occurrences during the Term of this Contract for both Layers 1 and 2 shall be limited to [ ].

Page 9

Notwithstanding the provisions above, no Loss Occurrence shall be covered hereunder unless it involves two or more risks subject to this Contract. The Reinsured shall be the sole judge of what constitutes one risk for purposes of this Contract.

ARTICLE 7

REINSURANCE PREMIUM

For each Contract Year covered hereunder, the Reinsured shall pay the Reinsurer the Annual Deposit Premium for the Contract Year at inception of such Contract Year, which shall be fully earned at inception. “Annual Deposit Premium” shall be [ ] and is payable on June 1 of each Contract Year. The Annual Deposit Premium is inclusive of the Reinsurer’s Annual Margin. With respect to Contract Year 1, premium shall be due and payable in full on later of June 15, 2022 or within 3 days of the execution of this Contract.

“Reinsurer’s Annual Margin” shall be [ ] for each Contract Year. The Reinsurer’s Annual Margin shall be non-refundable and fully earned at inception of each Contract Year.

In the event the Reinsured provides notice of commutation in accordance with the Term Article, any future Annual Deposit Premium and Reinsurer’s Annual Margin payments shall not be due. In the event the Reinsured rescinds its notice of commutation 60 days prior to the end of that Contract Year, any Annual Deposit Premium and Reinsurer’s Annual Margin that would have been due if not for the commutation notice shall be due and payable in accordance with paragraphs 1 and 2 above, and all future Annual Deposit Premiums and Reinsurer’s Annual Margins will be due when they would have been due if not for the commutation notice. The recission of the notice of commutation shall not be effective unless the Annual Deposit Premium for the next Contract Year is paid in in full.

ARTICLE 8

EXPOSURE CAP

For each Contract Year covered hereunder, the Total Insured Value subject to the terms, conditions and limitations of this Contract shall be no more than [ ] in total (the Overall Exposure Cap) and no more than [ ] for the southern Florida counties of Dade, Broward, Monroe, Palm Beach, Hendry, Lee & Collier (the “Southern Exposure Cap” and collectively with the Overall Exposure Cap, the “Exposure Cap”).

Page 10

In the event the Reinsured’s Total Insured Value is greater than either the Overall Exposure Cap or the Southern Exposure Cap during the Contract Year, the Reinsured will exclude its most recent Policies from coverage under this Contract until the Reinsured’s Total Insured Value equals or is less than the applicable Exposure Cap. If the Total Insured Value ever exceeds either Exposure Cap, then the Reinsured shall immediately notify the Reinsurer and, within 10 days, provide the Reinsurer with a bordereau of all Policies, which shall specify which Policies are excluded and which Policies are included hereunder as a result of the applicable Exposure Cap. Thereafter, the Reinsured shall update such bordereau on a monthly basis until such time as the Total Insured Value for all Policies falls below the applicable Exposure Cap.

“Total Insured Value” means the Reinsured’s aggregate sum of limits on all of the Company’s Policies with wind exposure for business covered hereunder regardless of geographic location.

Within 30 days after the end of each Contract Quarter, the Reinsured shall provide the Reinsurer with an exposure report inclusive of in-force Total Insured Value for the overall portfolio and by county.

ARTICLE 9

EXPERIENCE ACCOUNT

The Reinsurer shall establish a notional Experience Account for the benefit of the Reinsured equal to the following:

Cumulative Annual Deposit Premium; less

Reinsurer’s Annual Margin for each Contract Year; less

Cumulative net losses paid under this Contract; less

Outstanding reserves as of the date of termination for unpaid Ultimate Net Loss ceded to this Contract.

If the balance of the Experience Account is positive, the Reinsurer shall pay the Reinsured an amount equal to [ ] of the balance upon termination of this Contract if the Reinsured elects to commute pursuant to Article 10 Commutation and Profit Commission.

Page 11

ARTICLE 10

COMMUTATION AND PROFIT COMMISSION

Commutation of this Contract in its entirety may be elected by the Reinsured, at its sole option, as of May 31, 2023, provided the Experience Account Balance (as defined in Article 11 Reports) is positive. If the Reinsured elects commutation, the Reinsured shall receive a Profit Commission equal to [ ] of the Experience Account Balance, which shall serve as the commutation amount. At May 31, 2023, the Reinsured may commute this Contract and may enter into negotiations with the Reinsurer for another three-year term contract, effective June 1, 2023, at terms and conditions to be mutually agreed between the Reinsured and the Reinsurer.

If this Contract is not commuted at May 31, 2023, then, at the end of each subsequent Contract Year thereafter, if the Experience Account Balance is zero or positive, the Reinsured may commute this Contract, at its sole option, and receive a Profit Commission equal to [ ] of the Experience Account Balance as of the effective date of commutation.

Payment by the Reinsurer of the commutation amount determined in accordance with this Article shall constitute a complete and final release of both parties in respect of liability arising from this Contract, without the need for execution and delivery of any further documentation.

ARTICLE 11

REPORTS

Within 45 days after the end of each Contract Quarter (the “Settlement Date”), the Reinsured shall report to the Reinsurer the Reinsured’s estimate of Ultimate Net Loss under this Contract. The loss report shall include:

Paid Ultimate Net Loss for the Contract Quarter and on a cumulative basis from the effective date of this Contract through the end of that Contract Quarter.

The Reinsured’s most recent calculation of outstanding Ultimate Net Loss for each Loss Occurrence, as of the end of that Contract Quarter.

The amount of ceded Ultimate Net Loss paid during the previous Contract Quarter and the amount of such paid Ultimate Net Loss due to be reimbursed by the Reinsurer on the Settlement Date immediately following such Contract Quarter.

2. Within 45 days after the end of each Contract Quarter, the Reinsured shall also furnish to the Reinsurer a statement of the Experience Account Balance as of the end of such Contract Quarter, such statements subject to the review and approval of the Reinsurer. The Experience Account Balance shall be calculated as

Page 12

of inception and as of each Settlement Date for the immediately preceding Contract Quarter as follows:

1. The Experience Account Balance at the inception of this Contract shall equal:

The Annual Deposit Premium due the Reinsurer on the effective date of this Contract; less

the Reinsurer’s Annual Margin for Contract Year 1.

2. On each subsequent Settlement Date, the Experience Account Balance shall equal:

the Experience Account Balance as of the immediately preceding Settlement Date (or at inception, as respects the first Settlement Date); plus

the Annual Deposit Premium due during the Contract Year; less

the Reinsurer’s Annual Margin due during the Contract Quarter, if any; less

the Ultimate Net Loss paid for the Contract Quarter.

3. The Reinsured shall also periodically update and furnish to the Reinsurer such other reports, experience account statements, aggregates or information as may be reasonably required by the Reinsurer and reasonably available to the Reinsured.

ARTICLE 12

DEFINITIONS

ULTIMATE NET LOSS

The term "Ultimate Net Loss" as used herein shall be defined as the sum or sums (including Loss in Excess of Policy Limits, Extra Contractual Obligations and Loss Adjustment Expense, as hereinafter defined) paid or payable by the Reinsured in settlement of claims and in satisfaction of judgments rendered on account of such claims after deduction of all salvage, all recoveries, and all claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Contract are not recoverable until the Reinsured's Ultimate Net Loss has been ascertained. Ultimate Net Loss shall be calculated net of any inuring reinsurance, whether collectible or not.

LOSS IN EXCESS OF POLICY LIMITS AND EXTRA CONTRACTUAL OBLIGATIONS

The terms "Loss in Excess of Policy Limits" and "Extra Contractual Obligations" as used herein shall be defined as follows:

"Loss in Excess of Policy Limits" shall mean 100% of any amount paid or payable by the Reinsured in excess of its Policy limits, but otherwise

Page 13

within the terms of its Policy, such loss in excess of the Reinsured's Policy limits having been incurred because of, but not limited to, failure by the Reinsured to settle within the Policy limits or by reason of the Reinsured's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action.

"Extra Contractual Obligations" shall mean 100% of any punitive, exemplary, compensatory or consequential damages paid or payable by the Reinsured, not covered by any other provision of this Contract and which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Reinsured to settle within the Policy limits or by reason of the Reinsured's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. An Extra Contractual Obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the Policy.

Notwithstanding anything stated herein, this Contract shall not apply to any Loss in Excess of Policy Limits or any Extra Contractual Obligation incurred by the Reinsured as a result of any fraudulent and/or criminal act by any officer or director of the Reinsured acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder.

Further, any Loss in Excess of Policy Limits and/or Extra Contractual Obligations that are made in connection with this Contract shall not exceed 25% of the contractual loss under

all Policies involved in the Loss Occurrence as respects each excess layer hereunder.

LOSS ADJUSTMENT EXPENSE

The term "Loss Adjustment Expense" as used herein shall be defined as expenses assignable to the investigation, appraisal, adjustment, settlement, litigation, defense, and/or appeal of claims, regardless of how such expenses are classified for statutory reporting purposes. Loss Adjustment Expense shall include, but not be limited to, interest on judgments, expenses of outside adjusters, expenses and a pro rata share of salaries of the Reinsured's field employees and expenses of other employees of the Reinsured who have been temporarily diverted from their normal and customary duties and assigned to the adjustment of losses covered by this Contract, expenses of the Reinsured's officials incurred in connection with losses covered by this Contract, and Declaratory Judgment Expenses or other legal expenses and costs incurred in

Page 14

connection with coverage questions and legal actions connected thereto. Loss Adjustment Expense shall not include normal office expenses or salaries of the Reinsured's employees or officials.

DECLARATORY JUDGMENT EXPENSE

The term "Declaratory Judgment Expense" as used herein shall be defined as the Reinsured's own costs and legal expense incurred in direct connection with declaratory judgment actions brought to determine the Reinsured's defense and/or indemnification obligations that are assignable to specific claims arising out of Policies reinsured by this Contract, regardless of whether the declaratory judgment action is successful or unsuccessful. Any Declaratory Judgment Expense shall be deemed to have been fully incurred by the Reinsured on the same date as the original loss (if any) giving rise to the action.

CONTRACT YEAR

“Contract Year” as used herein shall be defined as the period from 12:00:01 a.m., Eastern Time, June 1, 2022, through 11:59:59 p.m., Eastern Time, May 31, 2023, and each subsequent 12-month period thereafter that this Contract continues in force. However, if this Contract is terminated or commuted, the final Contract Year shall be from the beginning of the then current Contract Year to the effective time and date of termination or commutation.

TERM OF THIS CONTRACT

"Term of this Contract" as used herein shall be defined as the period from 12:00:01 a.m., Eastern Time, June 1, 2022, through 11:59:59 p.m., Eastern Time, May 31, 2025. However, if this Contract is terminated, Term of this Contract as used herein shall mean the period from 12:00:01 a.m., Eastern Time, June 1, 2021 to the effective time and date of termination.

CONTRACT QUARTER

“Contract Quarter” means each of the three-month period commencing June 1, September 1, December 1 and March 1 during the Term of this Contract or thereafter. In the event this Contract is terminated, the final “Contract Quarter” shall be from the beginning of the then current “Contract Quarter” through the effective date of termination or commutation.

SETTLEMENT DATES

“Settlement Dates” shall be the first business day on or after 45 days following the end of each Contract Quarter or within 10 business days after the Reinsurer has received the Reinsured reports under the Reports Article, whichever is later.

ARTICLE 13

Page 15

LOSS OCCURRENCE DEFINITION

LOSS OCCURRENCE

1. “LOSS OCCURRENCE” MEANS THE SUM OF ALL INDIVIDUAL LOSSES DIRECTLY OCCASIONED BY ANY ONE DISASTER, ACCIDENT OR LOSS OR SERIES OF DISASTERS, ACCIDENTS OR LOSSES ARISING OUT OF ONE EVENT. HOWEVER, THE DURATION AND EXTENT OF ANY ONE “LOSS OCCURRENCE” SHALL BE LIMITED TO ALL INDIVIDUAL LOSSES SUSTAINED BY THE COMPANY OCCURRING DURING ANY PERIOD OF 168 CONSECUTIVE HOURS ARISING OUT OF AND DIRECTLY OCCASIONED BY THE SAME EVENT EXCEPT THAT THE TERM “LOSS OCCURRENCE” SHALL BE FURTHER DEFINED AS FOLLOWS:

AS REGARDS ANY “NAMED STORM,” ALL INDIVIDUAL LOSSES SUSTAINED BY THE COMPANY ARISING OUT OF AND DIRECTLY OCCASIONED BY SUCH “NAMED STORM,” WITHOUT REGARD TO THE LIMITATIONS OF DURATION AND EXTENT SET FORTH ABOVE. “NAMED STORM” MEANS ANY STORM OR STORM SYSTEM DECLARED BY THE US NATIONAL HURRICANE CENTER, US CENTRAL PACIFIC HURRICANE CENTER, US WEATHER PREDICTION CENTER, OR THEIR SUCCESSOR ORGANIZATIONS, ALL BEING DIVISIONS OF THE US NATIONAL WEATHER SERVICE TO BE A TROPICAL STORM OR HURRICANE, AND ANY SUCCESSORS THEREOF. A STORM OR STORM SYSTEM THAT MERGES WITH A “NAMED STORM” SHALL BE CONSIDERED PART OF THAT “NAMED STORM.” A “NAMED STORM” SHALL BE DEEMED TO BEGIN AT THE EFFECTIVE TIME AND DATE OF THE FIRST WATCH, WARNING OR OTHER OFFICIAL ADVISORY APPLICABLE TO SUCH TROPICAL STORM OR HURRICANE ISSUED BY THE ABOVE REFERENCED GOVERNMENTAL METEOROLOGICAL AGENCIES. A “NAMED STORM” SHALL BE DEEMED TO END 72 HOURS AFTER THE CANCELLATION OF THE LAST WATCH, WARNING OR OTHER OFFICIAL ADVISORY APPLICABLE TO SUCH TROPICAL STORM, HURRICANE OR SUCCESSOR, ISSUED BY THE ABOVE REFERENCED GOVERNMENTAL METEOROLOGICAL AGENCIES IRRESPECTIVE OF THE DURATION OF THE TIMING OR SPACING BETWEEN SUCH WATCHES, WARNINGS OR OTHER OFFICIAL ADVISORIES. IF TWO OR MORE STORMS ARE ASSIGNED DIFFERENT NAMES BY THE ABOVE REFERENCED GOVERNMENTAL METEOROLOGICAL AGENCIES, EACH OF THOSE STORMS SHALL CONSTITUTE A SEPARATE EVENT FOR PURPOSES OF THIS DEFINITION.

AS REGARDS WINDSTORM, HAIL, TORNADO, CYCLONE, INCLUDING ENSUING COLLAPSE AND WATER DAMAGE OTHER THAN “NAMED STORM,” ALL INDIVIDUAL LOSSES SUSTAINED BY THE COMPANY

Page 16

OCCURRING DURING ANY PERIOD OF 96 CONSECUTIVE HOURS ARISING OUT OF AND DIRECTLY OCCASIONED BY THE SAME EVENT.

C. AS REGARDS RIOT, RIOT ATTENDING A STRIKE, CIVIL COMMOTION, VANDALISM AND MALICIOUS MISCHIEF, ALL INDIVIDUAL LOSSES SUSTAINED BY THE COMPANY OCCURRING DURING ANY PERIOD OF 96 CONSECUTIVE HOURS ARISING OUT OF AND DIRECTLY OCCASIONED BY THE SAME EVENT. THE MAXIMUM DURATION OF 96 CONSECUTIVE HOURS MAY BE EXTENDED IN RESPECT OF INDIVIDUAL LOSSES THAT OCCUR BEYOND SUCH 96 CONSECUTIVE HOURS DURING THE CONTINUED OCCUPATION OF AN ASSURED’S PREMISES BY STRIKERS, PROVIDED SUCH OCCUPATION COMMENCED DURING THE AFORESAID PERIOD.

D. AS REGARDS EARTHQUAKE AND FIRE FOLLOWING DIRECTLY OCCASIONED BY THE EARTHQUAKE, THOSE EARTHQUAKE LOSSES AND INDIVIDUAL FIRE LOSSES THAT COMMENCE DURING THE PERIOD OF 168 CONSECUTIVE HOURS MAY BE INCLUDED IN THE COMPANY’S “LOSS OCCURRENCE”.

E. AS REGARDS ANY RELATED WEATHER CONDITIONS INVOLVING SNOW, SLEET, FREEZING RAIN, FREEZE, ICE, WINTER WEATHER, AND WIND LOSSES RELATED TO SUCH CONDITIONS, ALL INDIVIDUAL LOSSES SUSTAINED BY THE COMPANY, THAT OCCUR DURING ANY PERIOD OF 168 CONSECUTIVE HOURS ARISING OUT OF AND DIRECTLY OCCASIONED BY THE SAME EVENT.

F. AS REGARDS FIRESTORMS, BRUSH FIRES AND OTHER FIRES OR SERIES OF FIRES, IRRESPECTIVE OF ORIGIN (EXCEPT FOR FIRES COVERED IN SUBPARAGRAPHS (C) AND (D) ABOVE) WHICH SPREAD THROUGH TREES, GRASSLAND OR OTHER VEGETATION, ALL INDIVIDUAL LOSSES SUSTAINED BY THE COMPANY OCCURRING DURING ANY PERIOD OF

Page 17

168 CONSECUTIVE HOURS WITHIN A 150-MILE RADIUS OF ANY FIXED POINT SELECTED BY THE COMPANY MAY BE INCLUDED IN THE COMPANY’S “LOSS OCCURRENCE.” HOWEVER, AN INDIVIDUAL LOSS SUBJECT TO THIS SUBPARAGRAPH CANNOT BE INCLUDED IN MORE THAN ONE “LOSS OCCURRENCE”.

2. EXCEPT AS PROVIDED IN SUBPARAGRAPH (1)(A) ABOVE:

A. THE COMPANY MAY CHOOSE THE DATE AND TIME WHEN ANY SUCH PERIOD OF CONSECUTIVE HOURS COMMENCES PROVIDED THAT IT IS NOT EARLIER THAN THE DATE AND TIME OF THE OCCURRENCE OF THE FIRST RECORDED INDIVIDUAL LOSS SUSTAINED BY THE COMPANY ARISING OUT OF THAT DISASTER, ACCIDENT OR LOSS.

B. ONLY ONE PERIOD OF CONSECUTIVE HOURS SHALL APPLY WITH RESPECT TO ONE EVENT, EXCEPT THAT, AS RESPECTS THOSE “LOSS OCCURRENCES” REFERRED TO IN SUBPARAGRAPH (1)(C) ABOVE, IF THE DISASTER, ACCIDENT OR LOSS OCCASIONED BY THE EVENT IS OF GREATER DURATION THAN 96 CONSECUTIVE HOURS, THEN THE COMPANY MAY DIVIDE THAT DISASTER, ACCIDENT OR LOSS INTO TWO OR MORE “LOSS OCCURRENCES” PROVIDED NO TWO PERIODS OVERLAP AND NO INDIVIDUAL LOSS IS INCLUDED IN MORE THAN ONE SUCH PERIOD AND PROVIDED THAT NO PERIOD COMMENCES EARLIER THAN THE DATE AND TIME OF THE OCCURRENCE OF THE FIRST RECORDED INDIVIDUAL LOSS SUSTAINED BY THE COMPANY ARISING OUT OF THAT DISASTER, ACCIDENT OR LOSS.

3. LOSSES ARISING FROM A COMBINATION OF TWO OR MORE PERILS AS A RESULT OF THE SAME EVENT SHALL BE CONSIDERED AS HAVING ARISEN FROM ONE “LOSS OCCURRENCE.” FURTHERMORE, ALL LOSSES ARISING FROM AN EVENT INVOLVING A COMBINATION OF LOSSES DESCRIBED IN SUBPARAGRAPHS (1)(A) AND (1)(B) MAY BE CONSIDERED AS HAVING ARISEN FROM ONE “LOSS OCCURRENCE.” NOTWITHSTANDING THE FOREGOING, THE HOURLY LIMITATIONS AS STATED ABOVE SHALL NOT BE EXCEEDED AS RESPECTS THE APPLICABLE PERILS, AND, EXCEPT AS RESPECTS THOSE “LOSS OCCURRENCES” INVOLVING A “NAMED STORM” REFERRED TO IN SUBPARAGRAPH (1)(A) ABOVE, NO SINGLE “LOSS OCCURRENCE” SHALL ENCOMPASS A TIME PERIOD GREATER THAN 168 CONSECUTIVE HOURS.

Page 18

ARTICLE 14

ACCESS TO RECORDS

The Reinsurer or its designated representatives shall have access to the books and records of the Reinsured on matters relating to this reinsurance at all reasonable times, and at the location where such books and records are maintained in the ordinary course of business, for the purpose of obtaining and making copies of information concerning this Contract or the subject matter thereof. Notification of a request for inspection of records shall be sent to the Reinsured by the Reinsurer in written form. The Reinsurer’s right of audit and inspection shall continue as long as either party has a claim against the other arising out of this Contract.

ARTICLE 15

ARBITRATION

1. As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Reinsured, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Underwriters at Lloyd’s. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, the two Arbiters shall request the American Arbitration Association to appoint the Umpire. If the American Arbitration Association fails to appoint the Umpire within 30 days after it has been requested to do so, either party may request a justice of a court of general jurisdiction of the state in which the arbitration is to be held to appoint the Umpire.

Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

Page 19

If more than one reinsurer is involved in the same dispute, all such reinsurers shall, at the option of the Reinsured, constitute and act as one party for purposes of this Article and communications shall be made by the Reinsured to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Contract from several to joint.

Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with
the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract. Notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the State of Florida.

ARTICLE 16

CONFIDENTIALITY

1. The Reinsurer hereby acknowledges that the terms and conditions of this Contract, any materials provided in the course of audit or inspection and any documents, information and data provided to it by the Reinsured, whether directly or through an authorized agent, in connection with the placement and execution of this Contract (hereinafter referred to as "Confidential Information") are proprietary and confidential to the Reinsured. Confidential Information shall not include documents, information or data that the Reinsurer can show:

a. Are publicly available or have become publicly available through no unauthorized act of the Reinsurer;

Have been rightfully received from a third person without obligation of confidentiality; or

Were known by the Reinsurer prior to the placement of this Contract without an obligation of confidentiality.

2. Absent the written consent of the Reinsured, the Reinsurer shall not disclose any Confidential Information to any third parties, including any affiliated companies (except to the extent necessary to enable affiliated companies or third parties engaged by the Reinsurer to perform services related to this Contract on behalf of the Reinsurer), except:

When required by retrocessionaires subject to the business ceded to this Contract;

Page 20

When required by regulators performing an audit of the Reinsurer’s records and/or financial condition;

When required by external auditors performing an audit of the Reinsurer's records in the normal course of business;

When required by attorneys in connection with an actual or potential dispute hereunder; or

When required for the Reinsurer's internal operations directly related to carrying out the terms and conditions of this Contract.

Further, the Reinsurer agrees not to use any Confidential Information for any purpose not related to the performance of its obligations or enforcement of its rights under this Contract.

3. With regard to any personally identifiable information of the insured under the Reinsured's Policy to which the Reinsurer or its representatives may have access, the Reinsurer shall agree to be bound by the insurance privacy laws of the state in which the Policy is issued and any applicable U.S. federal law and shall keep such information secure in accordance with U.S. insurance industry standards or that of the Reinsurer's country of domicile, whichever standards are higher.

4. Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer agrees to provide the Reinsured with written notice of same at least 10 days prior to such release or disclosure and to use its best efforts to assist the Reinsured in maintaining the confidentiality provided for in this Article.

5. The provisions of this Article shall extend to the officers, directors, shareholders and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

Page 21

ARTICLE 17

CURRENCY

Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract shall be in United States Dollars.

Amounts paid or received by the Reinsured in any other currency shall be converted to United States Dollars at the rate of exchange at the date such transaction is entered on the books of the Reinsured.

ARTICLE 18

ENTIRE AGREEMENT

This Contract and any related trust agreement, Letter of Credit and/or special acceptance, shall constitute the entire agreement between the parties hereto with respect to the business being reinsured hereunder, and there are no understandings between the parties hereto other than as expressed in this Contract. Any change or modification to this Contract shall be null and void unless made by written amendment to this Contract and signed by a duly authorized officer of each of the parties hereto.

ARTICLE 19

ERROR AND OMISSIONS

Inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery.

ARTICLE 20

FEDERAL EXCISE TAX

The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to the Federal Excise Tax.

In the event of any return of premium becoming due hereunder, the Reinsurer will deduct the applicable percentage from the return premium payable hereon and the Reinsured or its agent should take steps to recover the tax from the United States Government.

Page 22

ARTICLE 21

GOVERNING LAW

This Contract shall be governed by and construed in accordance with the laws of the State of Florida.

ARTICLE 22

INSOLVENCY

If more than one reinsured company is included within the definition of “Reinsured” hereunder, this Article shall apply individually to each such company.

In the event of the insolvency of one or more of the Reinsured’s companies, this reinsurance shall be payable directly to the Reinsured or to its liquidator, receiver, conservator or statutory successor, with reasonable provision for verification, on the basis of the liability of the Reinsured or on the basis of claims files and allowed in the liquidation proceeding, whichever may be required by applicable statute, without diminution because of the insolvency of the Reinsured or because the liquidator, receiver, conservator or statutory successor of the Reinsured has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Reinsured shall give written notice to the Reinsurer of the pendency of a claim against the Reinsured indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the Reinsured or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the court, against the Reinsured as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Reinsured solely as a result of the defense undertaken by the Reinsurer.

Where two or more Reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the Reinsured.

It is further understood and agreed that, in the event of the insolvency of one or more of the Reinsured’s companies, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Reinsured or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee or other party as more specifically limited by any statute or regulation applicable

Page 23

hereto, of such reinsurance in the event of the insolvency of the Reinsured or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such Policy obligations of the Reinsured as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the Reinsured to such payees. However, the exceptions provided in (1) and (2) above shall apply only to the extent that applicable statutes or regulations specifically permit such exceptions.

ARTICLE 23

LATE PAYMENTS

The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract.

In the event any premium, loss or other payment due either party is not received by the payment due date, the party to whom payment is due may require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on the amount past due calculated for each such payment on the last business day of each month as follows:

The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

0.016%; times

The amount past due, including accrued interest.

It is agreed that interest shall accumulate until payment of the original amount due plus interest penalties have been received by the party to whom payment is due.

3. If the interest rate provided under this Article exceeds the maximum interest rate allowed

by any applicable law or is held unenforceable by an arbitrator or a court of competent jurisdiction, such interest rate shall be modified to the highest rate permitted by the applicable law, and all remaining provisions of this Article and Contract shall remain in full force and effect without being impaired or invalidated in any way.

4. The establishment of the due date shall, for purposes of this Article, be determined as follows:

As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal of the initial billing for each such payment.

Page 24

Any claim or loss payment due the Reinsured hereunder shall be deemed due 30 days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 30 days, interest will accrue on the payment amount overdue in accordance with paragraphs (2) and (3) above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs (a) and (b) of this paragraph, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days following transmittal of written notification that the provisions of this Article have been invoked.

5. Nothing herein shall be construed as limiting or prohibiting a Reinsurer from contesting the

validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract. If the debtor party prevails in an arbitration or other proceeding, then any interest penalties due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest penalty on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

Interest penalties arising out of the application of this Article that are $1,000 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period.

ARTICLE 24

LIABILITY OF THE REINSURER

The liability of the Reinsurer shall follow that of the Reinsured in every case and be subject in all respects to all the general and specific stipulations, clauses, waivers, interpretations and modifications of the Reinsured’s Policies and any endorsements thereon. However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract.

Page 25

Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract.

ARTICLE 25

LOSS NOTICES AND SETTLEMENTS

Whenever losses sustained by the Reinsured appear likely to result in a claim hereunder, the Reinsured shall notify the Reinsurer, and the Reinsurer shall have the right to participate in the adjustment of such losses at its own expense.

All loss settlements made by the Reinsured, provided they are within the terms of this Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable upon receipt of reasonable evidence of the amount paid (or scheduled to be paid within 14 days) by the Reinsured.

ARTICLE 26

NO ASSIGNMENT

Neither party shall assign its rights or obligations hereunder to any other entity, whether or not an affiliate, without the express written consent of the other party, and any purported assignment in violation of this provision shall be deemed to not have occurred for the purposes of this Contract.

ARTICLE 27

NON-WAIVER

The failure of the Reinsured or the Reinsurer to insist on compliance with this Contract or to exercise any right or remedy hereunder shall not constitute a waiver of any rights or remedies contained herein nor prevent either party from thereafter demanding full and complete compliance nor prevent either party from exercising such rights or remedies with respect to similar situations in the future.

ARTICLE 28

NOTICES AND AGREEMENT EXECUTION

Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile. With the exception of notices of termination, first class mail is also acceptable.

Page 26

The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto:

Paper documents with an original ink signature;

Facsimile or electronic copies of paper documents showing an original ink signature; and/or

Electronic records with an electronic signature made via an electronic agent. For the purposes of this Contract, the terms “electronic record”, “electronic signature” and “electronic agent” shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

3. This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

ARTICLE 29

OFFSET

The Reinsured or the Reinsurer may offset any balance, whether on account of premium, return of unearned premium, commission, claims or losses, Adjustment Expense, salvage, or otherwise, due from one party to the other under this Agreement or under any other agreement heretofore or hereafter entered into between the Reinsured and the Reinsurer. If the Reinsured (including all affiliates, whether or not covered by this Agreement) is comprised of more than one entity, all such entities will be considered the Reinsured for purposes of offset. In the event of any form of regulatory supervision or receivership of either the Reinsured or the Reinsurer, offset shall be permitted in accordance with the terms of this Article and as otherwise permitted by applicable law.

ARTICLE 30

OTHER REINSURANCE

Except for coverage from the Florida Hurricane Catastrophe Fund (FHCF), the Reinsured shall be permitted to carry other reinsurance, recoveries under which shall inure solely to the benefit of the Reinsured and be entirely disregarded in applying all of the provisions of this Contract. Any and all coverage purchased by the Reinsured from the FHCF (or any successor thereto) shall inure to the benefit of this reinsurance, whether or not collectible, and recoveries under the FHCF shall be deemed in place when calculating Ultimate Net Loss under this reinsurance.

ARTICLE 31

SALVAGE AND SUBROGATION

Page 27

The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or recovery made by the Reinsured, less the actual cost, excluding salaries of officials and employees of the Reinsured and sums paid to attorneys as retainer, of obtaining such reimbursement or making such recovery) on account of claims and settlements involving reinsurance hereunder. Salvage thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Reinsured for its primary loss. The Reinsured hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights if, in the Reinsured’s opinion, it is economically reasonable to do so.

ARTICLE 32

SERVICE OF SUIT

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities.)

This Article will not be read to conflict with or override the obligations of the parties to arbitrate their disputes as provided for in the Arbitration Article. This Article is intended as an aid to compelling arbitration or enforcing such arbitration or arbitral award, not as an alternative to the Arbitration Article for resolving disputes arising out of this Contract.

In the event the Reinsurer fails to pay any amount claimed to be due hereunder or fails to otherwise perform its obligations hereunder, the Reinsurer, at the request of the Reinsured, will submit to the jurisdiction of a court of competent jurisdiction within the United States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer’s rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. The Reinsurer, once the appropriate court is accepted by the Reinsurer or is determined by removal, transfer or otherwise, as provided for above, will comply with all requirements necessary to give said court jurisdiction and, in any suit instituted against any of the Reinsurers upon this Contract, will abide by the final decision of such court or of any Appellate Court in the event of an appeal.

Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the Office of the General Counsel, Berkshire Hathaway Insurance Group, 100 First Stamford Place, Suite 200, Stamford CT 06902, upon whom service of process

Page 28

may be served by any lawful process in any action, suit or proceeding instituted by or on behalf of the Reinsured or any beneficiary hereunder arising out of this Contract.

ARTICLE 33

SEVERABILITY

If any provision of this Contract shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction.

ARTICLE 34

TAXES

In consideration of the terms under which this Contract is issued, the Reinsured will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America of the District of Columbia.

Page 29

ARTICLE 35

THIRD PARTY RIGHTS

This Contract is solely between the Reinsured and the Reinsurer, and in no instance shall any other party have any rights under this Contract except as expressly provided otherwise in the Insolvency Article.

ARTICLE 36

COMMUNICATIONS

All communication (including but not limited to notices, reports and statements) relating to this Contract and all payments (including but not limited to premium, return premium, commissions, taxes, losses, Loss Adjustment Expense, salvages and loss settlements) under this Contract shall be made directly between the Reinsured and the Reinsurer.

NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE – REINSURANCE U.S.A.

1. This Reinsurance does not cover any loss or liability accruing to the Reinsured, directly or indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks.

2. Without in any way restricting the operation of paragraph (1) of this clause, this Reinsurance does not cover any loss or liability accruing to the Reinsured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:

Nuclear reactor power plants including all auxiliary property on the site, or

II.

Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and “critical facilities” as such, or

Page 30

III.

Installations for fabricating complete fuel elements or for processing substantial quantities of “special nuclear material”, and for reprocessing, salvaging, chemically separating, storing or disposing of “spent” nuclear fuel or waste materials, or

IV.

Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reinsured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate

(a)

where Reinsured does not have knowledge of such nuclear reactor power plant or nuclear installation, or

(b)

where said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused. However, on and after 1st January 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof.

ARP-HCI-02-CAT-WRK-22 ARP 35B

DOC: June 10, 2022

Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reinsured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.

It is understood and agreed that this clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reinsured to be the primary hazard.

The term “special nuclear material” shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.

Reinsured to be sole judge of what constitutes:

(a)

substantial quantities, and

Page 31

(b)

the extent of installation, plant or site.

Note: Without in any way restricting the operation of paragraph (1) hereof, it is understood and agreed that

(a)

all Policies issued by the Reinsured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

(b)

with respect to any risk located in Canada Policies issued by the Reinsured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

ARP-HCI-02-CAT-WRK-22 ARP 35B DOC: June 10, 2022

SANCTION LIMITATION AND EXCLUSION CLAUSE

No reinsurer shall be deemed to provide cover and no reinsurer shall be liable to pay any claim or provide any benefit hereunder to the extent that the provision of such cover, payment of such claim or provision of such benefit would expose that reinsurer to any sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulation of the European Union, United Kingdom or United States of America.

ARP-HCI-02-CAT-WRK-22 ARP 950

DOC: June 10, 2022

Signed in _____________________, on this ____ day of _____________, 2022

NATIONAL LIABILITY AND FIRE INSURANCE COMPANY

By: ____________________________________________

TITLE: ___________________________________________

Page 32

Signed in _____________________, on this ____ day of _____________, 2022

HOMEOWNERS CHOICE PROPERTY & CASUALTY INSURANCE COMPANY, INC.

TAMPA, FLORIDA

By: ____________________________________________

TITLE: ___________________________________________

ARP-HCI-02-CAT-WRK-22 ARP 950

DOC: June 10, 2022

Page 33

EXHIBIT 10.132. Certain identified information has been excluded from this exhibit because it is immaterial and would be competitively harmful if publicly disclosed. Information that has been omitted is indicated with brackets.

Property Catastrophe Excess of Loss Reinsurance Contract

issued to

Homeowners Choice Property & Casualty Insurance Company, Inc.

Tampa, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

Effective: June 1, 2022 DOC: June 15, 2022

1 of NUMPAGES 4


PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT TABLE OF CONTENTS
Article		Page

	Preamble	4
1	Business Covered	4
2	Retention and Limit	4
3	Florida Hurricane Catastrophe Fund	5
4	Term	6
5	Special Termination	6
6	Territory	8
7	Exclusions	8
8	Special Acceptance	10
9	Premium	10
10	Reinstatement	11
11	Definitions	11
12	Extra Contractual Obligations/Excess of Policy Limits	15
13	Net Retained Liability	16
14	Other Reinsurance	16
15	Original Conditions	16
16	No Third Party Rights	16
17	Notice of Loss and Loss Settlements	16
18	Late Payments	17
19	Offset	18
20	Currency	18
21	Unauthorized Reinsurance	18
22	Taxes	21
23	Access to Records	21
24	Confidentiality	22
25	Indemnification and Errors and Omissions	23
26	Insolvency	24
27	Run-Off Reinsurer	25
28	Arbitration	26
29	Expedited Arbitration	27
30	Service of Suit	27
31	Governing Law	28
32	Entire Agreement	29
33	Non-Waiver	29
34	Sanction Limitation and Exclusion Clause (LMA 3100)	29
35	Intermediary	29
36	Mode of Execution	30
	Company Signing Block	31

Effective: June 1, 2022 DOC: June 15, 2022

2 of NUMPAGES 4


PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT TABLE OF CONTENTS
Attachments		Page

	Pools, Associations & Syndicates Exclusions Clause	32
	Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance - U.S.A.	35
	Terrorism Exclusion	37
	Limited Communicable Disease Exclusion No. 2 (Property Treaty Reinsurance)	38
	Cyber Loss Limited Exclusion Clause (Property Treaty Reinsurance)	39
	Trust Agreement Requirements Clause	40

Effective: June 1, 2022 DOC: June 15, 2022

3 of NUMPAGES 4

Property Catastrophe Excess of Loss Reinsurance Contract

(the “Contract”)

issued to

Homeowners Choice Property & Casualty
Insurance Company, Inc.

Tampa, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

THE SUBSCRIBING REINSURER(S) IDENTIFIED IN THE
INTERESTS AND LIABILITIES AGREEMENT(S) ATTACHED TO
AND FORMING PART OF THIS CONTRACT

(the “Reinsurer”)

ARTICLE 1

BUSINESS COVERED

This Contract is to indemnify the Company in respect of its net excess liability as a result of any

loss or losses which may occur during the term of this Contract under any Policies in force at the effective date hereof or issued or renewed on or after that date, covering direct and assumed business classified by the Company as the property perils of Business Owners, Homeowners, Condominium Owners, Renters and Dwelling, subject to the terms and conditions herein contained.

ARTICLE 2

Retention and Limit

A. For each Layer of reinsurance provided hereunder, the Reinsurer shall be liable in respect of each Loss Occurrence for the Ultimate Net Loss over and above the initial Ultimate Net Loss retention as set forth in the schedule below for the Loss Occurrence, subject to a limit of liability to the Reinsurer for each such Loss Occurrence, and subject further to a limit of liability for all Loss Occurrences commencing during the term of this Contract, as set forth below:

Effective: June 1, 2022 DOC: June 15, 2022

4 of NUMPAGES 4


RETENTION AND LIMIT SCHEDULE
Layer	Company’s Retention	Reinsurer’s Limit of Liability
	Ultimate Net Loss in respect of each Loss Occurrence	Ultimate Net Loss in respect of each Loss Occurrence	Ultimate Net Loss in respect of all Loss Occurrences during the term of this Contract
Third Layer	[ ]	[ ]	[ ]
Fourth Layer	[ ]	[ ]	[ ]
Fifth Layer	[ ]	[ ]	[ ]

B. No Loss Occurrence shall be covered hereunder unless it involves two or more risks subject to this Contract. The Company shall be the sole judge of what constitutes one risk for purposes of this Contract.

ARTICLE 3

FLORIDA HURRICANE CATASTROPHE FUND

A. As respects Loss Occurrences subject to this Contract, any loss reimbursement recoverable by the Company under the Florida Hurricane Catastrophe Fund (FHCF), shall be deducted in determining Ultimate Net Loss under this Contract, subject to the following:

1. The full reimbursement amount due from the FHCF, based on statutory limits of coverage as of June 1, shall be deemed recovered by the Company, whether or not actually received from the FHCF and whether or not reduced because of the FHCF’s inability to pay.

2. For purposes of allocating recoveries from the FHCF with respect to each Loss Occurrence, only amounts recoverable by applying the pay-out and retention multiples for the FHCF prior to any reduction in retention due to multiple Loss Occurrences in the same annual period shall be included in calculating the deduction from Ultimate Net Loss.

3. If the Company’s aggregate limit of FHCF reimbursement coverage is exhausted from Loss Occurrences commencing during the term of this Contract, and the FHCF does not designate the portion of said limit allocable to each Loss Occurrence, the total FHCF reimbursement received shall be allocated to the each individual Loss Occurrence in the proportion that the Company’s losses in that Loss Occurrence bear to the Company’s total losses arising out of all Loss Occurrences to which the reimbursement applies.

Effective: June 1, 2022 DOC: June 15, 2022

5 of NUMPAGES 4

4. For purposes of loss recoveries under this Contract prior to the final determination of the Company’s retention and limit under the FHCF, FHCF coverage shall be calculated using the Company’s “Projected Payout Multiple” under the FHCF. Upon determination of the Company’s retention and limit under the FHCF, losses will be adjusted, recognizing any adjustment to the “Projected Payout Multiple” caused by a change in the Aggregate Mandatory FHCF Premium but disregarding any change due to a decrease in the statutory limit.

B. Any FHCF reimbursement premiums paid by the Company for FHCF layers that inure to the benefit of this Contract shall be deemed to be premiums paid for inuring reinsurance.

C. The Company has opted for a 90% coverage selection from the FHCF.

ARTICLE 4

Term

This Contract shall take effect at 12:01 a.m., Standard Time, June 1, 2022, and unless terminated prior to that time and date as provided in the Special Termination Article, shall remain in effect until 12:01 a.m., Standard Time, June 1, 2023, applying to Loss Occurrences commencing during the term of this Contract. For purposes of this Contract, “Standard Time” shall mean the time as described in the original Policy.

ARTICLE 5

SPECIAL TERMINATION

A. The Company may terminate a Subscribing Reinsurer’s percentage share in this Contract at any time by giving written notice to the Subscribing Reinsurer in the event of any of the following circumstances:

1. The Subscribing Reinsurer ceases underwriting operations.

2. A state insurance department or other legal authority orders the Subscribing Reinsurer to cease writing business, or the Subscribing Reinsurer is placed under regulatory supervision.

3. The Subscribing Reinsurer has become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary), or there have been instituted against it proceedings for the appointment of a receiver, liquidator, rehabilitator, conservator, trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations.

Effective: June 1, 2022 DOC: June 15, 2022

6 of NUMPAGES 4

the amount thereof at any date during the prior 12-month period (including the period prior to the inception of this Contract).

5. The Subscribing Reinsurer has become, or has announced its intention to become, merged with or acquired or controlled by any company, corporation, or individual(s) not controlling the Subscribing Reinsurer’s operations at the inception of this Contract.

6. The Subscribing Reinsurer has retroceded its entire liability under this Contract without the Company’s prior written consent, except for retrocessions to members of the Subscribing Reinsurer’s holding company group.

7. The Subscribing Reinsurer has been assigned an A.M. Best’s rating of less than “A-” and/or an S&P rating of less than “BBB+.” However, as respects Underwriting Members of Lloyd’s, London, a Lloyd’s Market Rating of less than “A-” by A.M. Best and/or less than “BBB+” by S&P shall apply.

8. The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid.

9. The Subscribing Reinsurer has in any other way assigned its interests or delegated its obligations under this Contract to an unaffiliated entity.

10. The Subscribing Reinsurer has failed to post or maintain required collateral to secure its obligations as required under this Contract, and has not cured such deficiency within 30 days following written notice thereof from the Company.

Notwithstanding the foregoing, agreement by a Lloyd’s syndicate to follow claim settlements procedures under Lloyd’s Claims Scheme (Combined) shall not constitute a transfer of its claims-paying authority, for purposes of subparagraphs (8) and (9) of this paragraph.

B. Termination shall be effected on a cut-off basis and the Subscribing Reinsurer shall have no liability for Loss Occurrences commencing after the date of termination. The reinsurance premium due the Subscribing Reinsurer hereunder (including any minimum reinsurance premium) shall be prorated based on the period of the Subscribing Reinsurer’s participation hereon, and the Subscribing Reinsurer shall immediately return any excess reinsurance premium received. Reinstatement premium, if any, shall be calculated based on the Subscribing Reinsurer’s reinsurance premium earned during the period of the Subscribing Reinsurer’s participation hereon.

Effective: June 1, 2022 DOC: June 15, 2022

7 of NUMPAGES 4

of whom the other shall decline two, and the final appointment shall be made by drawing lots. Payment by the Subscribing Reinsurer of the amount of liability ascertained shall constitute a complete and final release of both parties in respect of liability arising from the Subscribing Reinsurer’s participation under this Contract.

D. The Company’s option to require commutation under paragraph C above shall survive the termination or expiration of this Contract.

ARTICLE 6

Territory

This Contract shall apply to Policies issued in the State of Florida.

ARTICLE 7

Exclusions

A. This Contract shall not apply to and specifically excludes:

1. Policies covered by the Company’s Flood Tower.

2. Flood when written as such.

3. Earthquake for standalone Policies where earthquake is the only named peril.

4. Hail damage to an insured’s growing or standing crops.

5. Reinsurance assumed by the Company under obligatory reinsurance agreements, except intercompany reinsurance between the Company and its affiliates and reinsurance where the Policies involved are to be re-underwritten in accordance with the underwriting standards of the Company and reissued as Policies of the Company in due course.

6. Pools, Associations & Syndicates, per the attached exclusion.

7. Liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any Insolvency Fund. “Insolvency Fund” includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, howsoever denominated, established or governed, that provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee, or other obligation of an insurer, or its successors or assigns, that has been declared by any competent authority to be insolvent, or that is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part.

8. Loss or damage occasioned by war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, martial law, or confiscation by

Effective: June 1, 2022 DOC: June 15, 2022

8 of NUMPAGES 4

order of any government or public authority, but not excluding loss or damage that would be covered under a standard form of Policy containing a standard war exclusion clause.

9. Losses excluded by the attached Nuclear Incident Exclusion Clause – Physical Damage – Reinsurance – U.S.A.

10. Terrorism as defined in the attached Terrorism Exclusion.

11. Mold unless directly resulting from an otherwise covered peril.

12. Loss and/or damage and/or costs and/or expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke. Nevertheless, this exclusion does not preclude payment of the cost of removing debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25.0% of the Company’s property loss under the applicable original Policy.

13. Financial guarantee and insolvency.

14. Loss or damage to overhead transmission and distribution lines, including supporting structures, of electrical companies, telephone companies, and cable companies. This exclusion shall not apply, however, to transmission and distribution lines and their supporting structures located on the property of any original insured or within 1,000 feet thereof.

15. Losses excluded by the attached Limited Communicable Disease Exclusion No. 2 (Property Treaty Reinsurance).

16. Loss Excluded by the attached Cyber Loss Limited Exclusion Clause (Property Treaty Reinsurance).

17. Policies written by TypTap Insurance Company.

B. With the exception of subparagraphs A(7), A(8), A(9), A(10), A(13), A(15) and A(16) above, should any judicial, regulatory or legislative entity having legal jurisdiction invalidate any exclusion on the Company's Policy, any amount of loss for which the Company is liable because of such invalidation will not be excluded hereunder.

C. With the exception of subparagraphs A(7), A(8), A(9), A(10), A(13), A(15) and A(16) above, if the Company inadvertently issues a Policy falling within the scope of one or more of the exclusions, such Policy shall be covered hereunder, provided that the Company issues, or causes to be issued, the required notice of cancellation within 30 days after a member of the executive or managerial staff at the Company’s home office having underwriting authority in the class of business involved becomes aware that the Policy applies to excluded classes, unless the Company is prevented from canceling said Policy within such period by applicable statute or regulation, in which case such Policy shall be covered hereunder until the earliest date on which the Company may cancel.

Effective: June 1, 2022 DOC: June 15, 2022

9 of NUMPAGES 4

ARTICLE 8

SPECIAL ACCEPTANCE

Business that is not within the scope of this Contract may be submitted to the Reinsurer for special acceptance hereunder, and such business, if accepted by the Reinsurer shall be covered hereunder, subject to the terms and conditions of this Contract, except as modified by the special acceptance. The Reinsurer shall be deemed to have accepted a risk, if it has not responded within five business days after receiving the underwriting information on such risk. Any renewal of a special acceptance agreed to for a predecessor contract to this Contract, shall automatically be covered hereunder.

ARTICLE 9

Premium

The Company shall pay the Reinsurer a Deposit Premium in accordance with the schedule set forth below. The reinsurance premium to be paid to the Reinsurer for the reinsurance provided under each Layer shall be calculated at the Final Adjusted Premium Rates set out below multiplied by the Company’s final Total Insured Value, subject to the applicable Minimum Premium stated below:


PREMIUM SCHEDULE
Layer	Final Adjusted Premium Rate	Deposit Premium	Minimum Premium
Third Layer	[ ]	[ ]	[ ]
Fourth Layer	[ ]	[ ]	[ ]
Fifth Layer	[ ]	[ ]	[ ]

B. The Deposit Premiums set forth in paragraph A above shall be payable to the Reinsurer by the Company in installments as follows:


DEPOSIT INSTALLMENT SCHEDULE
Layer	June 1, 2022	September 1, 2022	January 1, 2023	April 1, 2023
Third Layer	[ ]	[ ]	[ ]	[ ]
Fourth Layer	[ ]	[ ]	[ ]	[ ]
Fifth Layer	[ ]	[ ]	[ ]	[ ]

Effective: June 1, 2022 DOC: June 15, 2022

10 of NUMPAGES 4

return premium due. Should the amount so calculated exceed [ ] of the Deposit Premium paid in accordance with paragraph A above, the Company shall immediately pay the Reinsurer the difference in excess of [ ] of the Deposit Premium. Should the amount so calculated be less than [ ] of the Deposit Premium paid in accordance with paragraph A of this Article, the Reinsurer shall immediately pay the Company the difference below [ ] of the Deposit Premium, subject to the Minimum Premium as set forth above.

D. “Total Insured Value” means the Company’s aggregate wind exposures on September 30, 2022 for business covered hereunder.

E. The estimated Total Insured Value is [ ].

F. The Company shall furnish the Reinsurer with such reasonably available information as may be reasonably required by the Reinsurer for completion of the Reinsurer’s financial statements.

ARTICLE 10

Reinstatement

A. Loss payments under any Layer of this Contract shall reduce the limit of coverage afforded by the amounts paid, but the limit of coverage shall be reinstated from the time of the occurrence of the loss, and for each amount so reinstated, the Company agrees to pay, simultaneously with the Reinsurer’s loss payment, an additional premium calculated at pro rata of the Reinsurer’s premium for the applicable layer(s) for the term of this Contract, being pro rata only as to the fraction of the Reinsurer’s limit of liability hereunder (i.e., the fraction of the Reinsurer’s limit of liability for each Loss Occurrence as set forth for the Layer in the Retention and Limit Article) so reinstated. Nevertheless, the Reinsurer’s liability under the applicable layer(s) shall not exceed such limit(s) in respect of any one Loss Occurrence, nor the applicable limit(s) in respect of all Loss Occurrences commencing during the term of this Contract, as set forth in the Retention and Limit Article.

B. If at the time of a loss settlement hereon the reinsurance premium, as calculated in accordance with the Premium Article, is unknown, the above calculation of reinstatement premium shall be based upon the Deposit Premium, subject to adjustment when the reinsurance premium is finally established.

ARTICLE 11

Definitions

A. 1. “Ultimate Net Loss” means the actual loss paid by the Company or which the Company becomes liable to pay, such loss to include Loss Adjustment Expense, 100% of any Extra Contractual Obligation and 100% of any Loss in Excess of Policy Limits as defined in the Extra Contractual Obligations/Excess of Policy Limits Article. In no event, however, shall more than 25% of “Ultimate Net Loss” for any one Loss

Effective: June 1, 2022 DOC: June 15, 2022

11 of NUMPAGES 4

Occurrence be comprised of Extra Contractual Obligations and Loss in Excess of Policy Limits.

2. Salvages and all recoveries (including amounts due from all reinsurances that inure to the benefit of this Contract, whether recovered or not), shall be first deducted from such loss to arrive at the amount of liability attaching hereunder.

3. All salvages, recoveries or payments recovered or received subsequent to loss settlement hereunder shall be applied as if recovered or received prior to the aforesaid settlement, and all necessary adjustments shall be made by the parties hereto.

4. The Company shall be deemed to be “liable to pay” a loss when a judgment has been rendered that the Company does not plan to appeal, and/or the Company has obtained a release, and/or the Company has accepted a proof of loss, and/or the Company has made a commitment to pay, and/or the Company has scheduled the payment of a loss.

5. Nothing in this clause shall be construed to mean that losses are not recoverable hereunder until the Company’s “Ultimate Net Loss” has been ascertained.

1. court costs;

2. costs of supersedeas and appeal bonds;

3. monitoring counsel expenses;

4. legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, including but not limited to declaratory judgment actions;

5. post-judgment interest;

6. pre-judgment interest, unless included as part of an award or judgment;

8. subrogation, salvage and recovery expenses.

“Loss Adjustment Expense” does not include salaries and expenses of the Company’s employees, except as provided in subparagraph (7) above, and office and other overhead expenses.

Effective: June 1, 2022 DOC: June 15, 2022

12 of NUMPAGES 4

C. 1. “Loss Occurrence” means the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event. However, the duration and extent of any one “Loss Occurrence” shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event except that the term “Loss Occurrence” shall be further defined as follows:

a. As regards any “Named Storm,” all individual losses sustained by the Company arising out of and directly occasioned by such “Named Storm,” without regard to the limitations of duration and extent set forth above. “Named Storm” means any storm or storm system declared by the US National Hurricane Center, US Central Pacific Hurricane Center, US Weather Prediction Center, or their successor organizations, all being divisions of the US National Weather Service to be a tropical storm or hurricane, and any successors thereof. A storm or storm system that merges with a “Named Storm” shall be considered part of that “Named Storm,” once it has merged. A “Named Storm” shall be deemed to begin at the effective time and date of the first watch, warning or other official advisory applicable to such tropical storm or hurricane issued by the above referenced governmental meteorological agencies. A “Named Storm” shall be deemed to end 72 hours after the cancellation of the last watch, warning or other official advisory applicable to such tropical storm, hurricane or successor, issued by the above referenced governmental meteorological agencies irrespective of the duration of the timing or spacing between such watches, warnings or other official advisories. If two or more storms are assigned different names by the above referenced governmental meteorological agencies, each of those storms shall constitute a separate event for purposes of this definition.

b. As regards windstorm, hail, tornado, cyclone, including ensuing collapse and water damage other than “Named Storm,” all individual losses sustained by the Company occurring during any period of 96 consecutive hours arising out of and directly occasioned by the same event.

c. As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company occurring during any period of 96 consecutive hours arising out of and directly occasioned by the same event. The maximum duration of 96 consecutive hours may be extended in respect of individual losses that occur beyond such 96 consecutive hours during the continued occupation of an assured’s premises by strikers, provided such occupation commenced during the aforesaid period.

d. As regards earthquake and fire following directly occasioned by the earthquake, those earthquake losses and individual fire losses that commence during the period of 168 consecutive hours may be included in the Company’s “Loss Occurrence.”

Effective: June 1, 2022 DOC: June 15, 2022

13 of NUMPAGES 4

e. As regards any related weather conditions involving snow, sleet, freezing rain, freeze, ice, winter weather, and wind losses related to such conditions, all individual losses sustained by the Company, that occur during any period of 168 consecutive hours arising out of and directly occasioned by the same event.

f. As regards firestorms, brush fires and other fires or series of fires, irrespective of origin (except for fires covered in subparagraphs (c) and (d) above) which spread through trees, grassland or other vegetation, all individual losses sustained by the Company occurring during any period of 168 consecutive hours within a 150-mile radius of any fixed point selected by the Company may be included in the Company’s “Loss Occurrence.” However, an individual loss subject to this subparagraph cannot be included in more than one “Loss Occurrence.”

2. Except as provided in subparagraph (1)(a) above:

a. The Company may choose the date and time when any such period of consecutive hours commences provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss.

b. Only one period of consecutive hours shall apply with respect to one event, except that, as respects those “Loss Occurrences” referred to in subparagraph (1)(c) above, if the disaster, accident or loss occasioned by the event is of greater duration than 96 consecutive hours, then the Company may divide that disaster, accident or loss into two or more “Loss Occurrences” provided no two periods overlap and no individual loss is included in more than one such period and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss.

3. Losses arising from a combination of two or more perils as a result of the same event shall be considered as having arisen from one “Loss Occurrence.” Furthermore, all losses arising from an event involving a combination of losses described in subparagraphs (1)(a) and (1)(b) may be considered as having arisen from one “Loss Occurrence.” Notwithstanding the foregoing, the hourly limitations as stated above shall not be exceeded as respects the applicable perils, and, except as respects those “Loss Occurrences” involving a “Named Storm” referred to in subparagraph (1)(a) above, no single “Loss Occurrence” shall encompass a time period greater than 168 consecutive hours.

D. “Policy” means any binder, policy, or contract of insurance or reinsurance issued, accepted or held covered provisionally or otherwise, by or on behalf of the Company.

Effective: June 1, 2022 DOC: June 15, 2022

14 of NUMPAGES 4

ARTICLE 12

EXTRA CONTRACTUAL OBLIGATIONS/EXCESS OF POLICY LIMITS

A. This Contract shall cover Extra Contractual Obligations, as provided in the definition of Ultimate Net Loss. “Extra Contractual Obligations” shall be defined as those liabilities not covered under any other provision of this Contract and that arise from the handling of any claim on business covered hereunder, such liabilities arising because of, but not limited to, the following: failure by the Company to settle within the Policy limit, or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of any action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such action.

B. This Contract shall cover Loss in Excess of Policy Limits, as provided in the definition of Ultimate Net Loss. “Loss in Excess of Policy Limits” shall be defined as Loss in excess of the Policy limit, having been incurred because of, but not limited to, failure by the Company to settle within the Policy limit or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of any action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such action.

D. For the purposes of the Loss in Excess of Policy Limits coverage hereunder, the word “Loss” shall mean any amounts for which the Company would have been contractually liable to pay had it not been for the limit of the original Policy.

E. Loss Adjustment Expense in respect of Extra Contractual Obligations and/or Loss in Excess of Policy Limits shall be covered hereunder in the same manner as other Loss Adjustment Expense.

G. In no event shall coverage be provided to the extent not permitted under law.

Effective: June 1, 2022 DOC: June 15, 2022

15 of NUMPAGES 4

ARTICLE 13

NET RETAINED LIABILITY

A. This Contract applies only to that portion of any loss that the Company retains net for its own account (prior to deduction of any reinsurance that inures solely to the benefit of the Company).

ARTICLE 14

OTHER REINSURANCE

The Company shall be permitted to carry in force other reinsurance, recoveries under which shall inure to the benefit of this Contract.

ARTICLE 15

Original Conditions

All reinsurance under this Contract shall be subject to the same terms, conditions, waivers and interpretations, and to the same modifications and alterations as the respective Policies of the Company. However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract.

ARTICLE 16

NO THIRD PARTY RIGHTS

ARTICLE 17

Notice of Loss and Loss Settlements

A. The Company shall advise the Reinsurer promptly if paid and estimated Ultimate Net Loss is in excess of 75% of the Company’s retention, or if, in the opinion of the Company, such Ultimate Net Loss may result in a claim hereunder. Thereafter, the Company shall advise the Reinsurer, at least monthly, of all subsequent developments thereto that may materially affect the position of the Reinsurer.

Effective: June 1, 2022 DOC: June 15, 2022

16 of NUMPAGES 4

B. The Company alone and at its full discretion shall adjust, settle or compromise all claims and losses.

C. As respects losses subject to this Contract, all loss settlements made by the Company, whether under strict Policy terms or by way of compromise, and any Extra Contractual Obligations and/or Loss in Excess of Policy Limits, shall be binding upon the Reinsurer. The Reinsurer agrees to pay or allow, as the case may be, its share of each such settlement immediately upon receipt of reasonable evidence of the amount paid by the Company or that the Company estimates it will pay within the next 14 days. Within 30 days after receipt of the Reinsurer’s payment, the Company shall report to the Reinsurer the Reinsurer’s payment, minus the Reinsurer’s share of losses subject to this Contract that the Company has paid, or become liable to pay, as of the date of the report. Any positive difference shall be remitted to the Reinsurer with the Company’s report.

ARTICLE 18

LATE PAYMENTS

A. In the event any payment due either party is not received by the Intermediary by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on the amount past due calculated for each such payment on the last business day of each month as follows:

1. The number of full days that have expired since the overdue date or the last monthly calculation, whichever the lesser; times

2. 1/365th of the sum of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made, plus 1%; times

3. The amount past due, including accrued interest.

Interest shall accumulate until payment of the original amount due plus interest penalties have been received by the Intermediary.

B. The due date shall, for purposes of this Article, be determined as follows:

1. Payments from the Reinsurer to the Company shall be due on the date on which the demand for payment (including delivery of bordereaux or quarterly or monthly reports) is received by the Reinsurer, and shall be overdue 30 days thereafter.

Effective: June 1, 2022 DOC: June 15, 2022

17 of NUMPAGES 4

the claim giving rise to such reinstatement premium, and payment shall be overdue 30 days thereafter. In the event a due date is not specifically stated for a given payment, the overdue date shall be 30 days following the date of billing.

C. If the information contained in the Company’s demand for payment is insufficient or not in accordance with the conditions of this Contract, then within 30 days the Reinsurer shall request from the Company all additional information necessary to validate its claim and the payment due date as defined in paragraph B shall be deemed to be the date upon which the Reinsurer received the requested additional information. This paragraph is only for the purpose of establishing when a payment is overdue, and shall not alter the provisions of the Notice of Loss and Loss Settlements Article or other pertinent contractual stipulations.

D. In the event arbitration is necessary to settle a dispute, the panel shall have the authority to make a determination awarding interest to the prevailing party. Interest, if any, awarded by the panel shall supersede the interest amounts outlined herein.

E. Any interest owed pursuant to this Article may be waived by the party to which it is owed. Waiver of such interest, however, shall not affect the waiving party’s rights to other interest amounts due as a result of this Article.

ARTICLE 19

OFFSET

Each party hereto shall have, and may exercise at any time and from time to time, the right to offset any and all balances due from a party to the other arising under this Contract. In the event of the insolvency of a party hereto, offsets shall only be allowed in accordance with the provisions of any applicable law governing offset entitlement.

ARTICLE 20

Currency

A. Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United States Dollars, and all payments hereunder shall be in United States Dollars.

ARTICLE 21

Unauthorized Reinsurance

A. This Article applies:

Effective: June 1, 2022 DOC: June 15, 2022

18 of NUMPAGES 4

1. only to the extent a Subscribing Reinsurer does not qualify for credit with any insurance regulatory authority having jurisdiction over the Company’s reserves, or

2. to a Subscribing Reinsurer qualified as a reciprocal jurisdiction reinsurer with any such insurance regulatory authority in the event such Subscribing Reinsurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration or arbitral award obtained by the Company or any legal successor, in which case such Subscribing Reinsurer shall fund 100% of its share of the Reinsurer’s Obligations as hereinafter provided.

1. unearned premium (if applicable);

2. known outstanding losses that have been reported to the Reinsurer and Loss Adjustment Expense relating thereto;

3. losses and Loss Adjustment Expense paid by the Company but not recovered from the Reinsurer;

4. losses incurred but not reported and Loss Adjustment Expense relating thereto;

5. all other amounts for which the Company cannot take credit on its financial statements unless funding is provided by the Reinsurer.

C. The Reinsurer’s Obligations shall be funded by funds withheld, cash advances, Trust Agreement or a Letter of Credit (LOC). The Reinsurer shall have the option of determining the method of funding provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Company’s reserves.

D. When funding by Trust Agreement, the Reinsurer shall ensure that the Trust Agreement complies with the provisions of the “Trust Agreement Requirements Clause” attached hereto. When funding by a LOC, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable and unconditional LOC issued by a bank and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company’s reserves in an amount equal to the Reinsurer’s Obligations. Such LOC shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days (or such other time period as may be required by insurance regulatory authorities), prior to any expiration date the issuing bank shall notify the Company by certified or registered mail that the issuing bank elects not to consider the LOC extended for any additional period.

Effective: June 1, 2022 DOC: June 15, 2022

19 of NUMPAGES 4

1. to reimburse the Company for the Reinsurer’s Obligations, the payment of which is due under the terms of this Contract and that has not been otherwise paid;

4. to pay the Reinsurer’s share of any other amounts the Company claims are due under this Contract.

F. If the amount drawn by the Company is in excess of the actual amount required for subparagraph E(1) or E(3), or in the case of subparagraph E(4), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer.

H. At annual intervals, or more frequently at the discretion of the Company, but never more frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer’s Obligations for the sole purpose of amending the LOC or other method of funding, in the following manner:

1. If the statement shows that the Reinsurer’s Obligations exceed the balance of the LOC, as of the statement date, the Reinsurer shall, within 30 days after receipt of the statement, secure delivery to the Company of an amendment to the LOC increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference.

Effective: June 1, 2022 DOC: June 15, 2022

20 of NUMPAGES 4

ARTICLE 22

TAXES

A. In consideration of the terms under which this Contract is issued, the Company undertakes not to claim any deduction of the premium hereon when making Canadian tax returns or when making tax returns, other than Income or Profits Tax returns, to any state or territory of the United States of America or to the District of Columbia.

B. 1. Each Subscribing Reinsurer has agreed to allow, for the purpose of paying the Federal Excise Tax, the applicable percentage of the premium payable hereon (as imposed under the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.

2. In the event of any return of premium becoming due hereunder, the Subscribing Reinsurer shall deduct the applicable percentage of the premium from the amount of the return, and the Company or its agent should take steps to recover the Tax from the U.S. Government.

ARTICLE 23

ACCESS TO RECORDS

A. The Reinsurer or its duly authorized representatives shall have the right to visit the offices of the Company to inspect, examine, audit, and verify any of the policy, accounting or claim files (“Records”) relating to business reinsured under this Contract during regular business hours after giving five working days’ prior notice. This right shall be exercisable during the term of this Contract or after the expiration of this Contract. Notwithstanding the above, the Reinsurer shall not have any right of access to the Records of the Company if it is not current in all undisputed payments due the Company.

Effective: June 1, 2022 DOC: June 15, 2022

21 of NUMPAGES 4

the Company’s defense might be jeopardized by release of such Privileged Documents. In the event that the Company seeks to defer release of such Privileged Documents, it shall, in consultation with the Reinsurer, take other steps as reasonably necessary to provide the Reinsurer with the information it reasonably requires to indemnify the Company without causing a loss of such privileges or protections. The Reinsurer shall not have access to Privileged Documents relating to any dispute between the Company and the Reinsurer.

C. For purposes of this Article:

1. “Privileged Documents” means any documents that are Attorney-Client Privilege Documents and/or Work Product Privilege Documents.

2. “Attorney-Client Privilege Documents” means communications of a confidential nature between (a) the Company, or anyone retained by or at the direction of the Company, or its in‑house or outside legal counsel, or anyone in the control of such legal counsel, and (b) any in-house or outside legal counsel, if such communications relate to legal advice being sought by the Company and/or contain legal advice being provided to the Company.

3. “Work Product Privilege Documents” means communications, written materials and tangible things prepared by or for in-house or outside counsel, or prepared by or for the Company, in anticipation of or in connection with litigation, arbitration, or other dispute resolution proceedings.

ARTICLE 24

CONFIDENTIALITY

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract (“Confidential Information”) are proprietary and confidential to the Company. Confidential Information shall not include documents, information or data that the Reinsurer can show:

1. are publicly known or have become publicly known through no unauthorized act of the Reinsurer;

2. have been rightfully received from a third person without obligation of confidentiality; or

3. were known by the Reinsurer prior to the placement of this Contract without an obligation of confidentiality.

B. Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential Information to any third parties, including any affiliated companies (except to the extent necessary to enable affiliated companies or third parties engaged by the Reinsurer to perform services related to this Contract on behalf of the Reinsurer), except:

Effective: June 1, 2022 DOC: June 15, 2022

22 of NUMPAGES 4

1. when required by retrocessionaires as respects business ceded to this Contract;

2. when required by regulators performing an audit of the Reinsurer’s records and/or financial condition; or

3. when required by external auditors performing an audit of the Reinsurer’s records in the normal course of business.

Further, the Reinsurer agrees not to use any Confidential Information for any purpose not related to the performance of its obligations or enforcement of its rights under this Contract.

D. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

ARTICLE 25

Indemnification and Errors and Omissions

A. The Reinsurer is reinsuring, subject to the terms and conditions of this Contract, the obligations of the Company under any Policy. The Company shall be the sole judge as to:

1. what shall constitute a claim or loss covered under any Policy;

2. the Company’s liability thereunder; and

3. the amount or amounts that it shall be proper for the Company to pay thereunder.

B. The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and liability(ies) of the Company under any Policy.

D. Nothing in this Article shall be construed to override any of the other terms and conditions of this Contract.

Effective: June 1, 2022 DOC: June 15, 2022

23 of NUMPAGES 4

ARTICLE 26

Insolvency

D. As to all reinsurance made, ceded, renewed or otherwise becoming effective under this Contract, the reinsurance shall be payable as set forth above by the Reinsurer to the Company or to its liquidator, receiver, conservator or statutory successor, (except as provided by Section 4118(a)(1)(A) of the New York Insurance Law, provided the conditions of 1114(c) of such law have been met, if New York law applies) or except (1) where the Contract specifically provides another payee in the event of the insolvency of the Company, or (2) where the Reinsurer, with the consent of the direct insured or insureds, has assumed such Policy obligations of the Company as direct obligations of the Reinsurer to the payees under such Policies and in substitution for the obligations of the Company to such payees. Then, and in that event only, the Company, with the prior approval of the certificate of assumption

Effective: June 1, 2022 DOC: June 15, 2022

24 of NUMPAGES 4

on New York risks by the Superintendent of Financial Services of the State of New York, or with the prior approval of such other regulatory authority as may be applicable, is entirely released from its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.

ARTICLE 27

RUN-OFF REINSURER

A. “Run-off Reinsurer” means any Subscribing Reinsurer that:

1. has been ordered by a state insurance department or other legal authority to cease writing business, or has been placed under regulatory supervision or in rehabilitation; or

2. has ceased reinsurance underwriting operations; or

3. has transferred its claims-paying authority to an unaffiliated entity; or

4. engages in a process of Scheme of Arrangement or similar procedure related to this Contract, including but not limited to an insurance business transfer scheme pursuant to Part VII of the Financial Services and Markets Act 2000 (U.K.), as may be amended from time to time; or

5. in any other way has assigned its interests or delegated its obligations under this Contract to an unaffiliated entity.

B. Notwithstanding any other provision of this Contract, in the event that a Subscribing Reinsurer becomes a Run-off Reinsurer at any time, the Company may elect, by giving written notice to the Run-off Reinsurer at any time thereafter, that all or any of the following shall apply to the Run-off Reinsurer’s participation hereunder:

1. Should the Run-off Reinsurer fail to pay amounts due hereunder, the interest penalty specified in the Late Payments Article shall be increased by 0.5% for each 30 days that a payment is past due, subject to a maximum increase of 7.0%.

2. The Run-off Reinsurer’s liability for losses for Policies covered by this Contract shall be commuted. In the event the Company and the Run-off Reinsurer cannot agree on the commutation amount of the Run-off Reinsurer’s liability under such Policies, they shall appoint an actuary and/or appraiser to assess such liability and shall share equally any expense of the actuary and/or appraiser. If the Company and the Run-off Reinsurer cannot agree on an actuary and/or appraiser, the Company and the Run-off Reinsurer each shall nominate three individuals, of whom the other shall decline two, and the final appointment shall be made by drawing lots. Payment by the Run-off Reinsurer of the

Effective: June 1, 2022 DOC: June 15, 2022

25 of NUMPAGES 4

amount of liability ascertained shall constitute a complete and final release of both parties under this Contract.

3. The Run-off Reinsurer shall have no right of access to the Records of the Company if the Run-off Reinsurer has denied payment of any claim hereunder or there is a pending arbitration between the Company and the Run-off Reinsurer regarding any claim hereunder. A reservation of rights shall be considered a denial of a claim. Notwithstanding the above, the Run-off Reinsurer shall continue to have access to Records of the Company for any claim for which it has raised a query within 30 days of its receipt of a billing, but any inspection of Records must be completed within 90 days of receipt of billing or access will be deemed waived.

4. The provisions of the Arbitration Article shall not apply.

C. The Company’s waiver of any rights provided in this Article is not a waiver of that right or other rights at a later date.

ARTICLE 28

Arbitration

A. Any dispute arising out of the interpretation, performance or breach of this Contract, including the formation or validity thereof, shall be submitted for decision to a panel of three arbitrators. Notice requesting arbitration shall be in writing and sent certified or registered mail, return receipt requested.

D. Within 30 days after all arbitrators have been appointed, the panel shall meet and determine timely periods for briefs, discovery procedures and schedules of hearings.

Effective: June 1, 2022 DOC: June 15, 2022

26 of NUMPAGES 4

provided by the Company to the Reinsurer, as well as any correspondence exchanged by the parties that is related to this Contract. The arbitration shall take place in Tampa, Florida, or at such other place as the parties shall agree. The decision of any two arbitrators shall be in writing and shall be final and binding. The panel is empowered to grant interim relief as it may deem appropriate.

ARTICLE 29

Expedited Arbitration

A. Notwithstanding the provisions of the Arbitration Article, in the event an amount in dispute hereunder $1,000,000 or less, the parties will submit to an expedited arbitration process with the use of a single arbitrator. The arbitrator will be chosen in accordance with the procedures for selecting an arbitrator in force on the date the arbitration is demanded, established by the AIDA Reinsurance and Insurance Arbitration Society - U.S. (ARIAS).

B. Each party’s case will be submitted to the arbitrator within 100 calendar days of the date of determination of the arbitrator. Discovery will be limited to exchanging only those documents directly relating to the issue in dispute, subject to a limit of two discovery depositions from each party, unless otherwise authorized by the arbitrator upon a showing of good cause.

C. Within 120 calendar days of the date of determination of the arbitrator, the hearing will be completed and a written award will be issued by the arbitrator. As the parties agree that time is of the essence, the sole arbitrator does not have the authority to lengthen the schedule, absent agreement of both parties. The arbitrator will have all the powers conferred on the arbitration panel as provided in the Arbitration Article, and said Article will apply to all matters not specifically addressed above.

ARTICLE 30

SERVICE OF SUIT

A. This Article applies only to those Subscribing Reinsurers not domiciled in the United States of America, and/or not authorized in any state, territory and/or district of the United States of America where authorization is required by insurance regulatory authorities.

Effective: June 1, 2022 DOC: June 15, 2022

27 of NUMPAGES 4

B. This Article shall not be read to conflict with or override the obligations of the parties to arbitrate their disputes as provided for in the Arbitration Article. This Article is intended as an aid to compelling arbitration or enforcing such arbitration or arbitral award, not as an alternative to the Arbitration Article for resolving disputes arising out of this Contract.

C. In the event of the failure of the Reinsurer to perform its obligations hereunder, the Reinsurer, at the request of the Company, shall submit to the jurisdiction of a court of competent jurisdiction within the United States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer’s rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. The Reinsurer, once the appropriate court is selected, whether such court is the one originally chosen by the Company and accepted by the Reinsurer or is determined by removal, transfer, or otherwise, as provided for above, shall comply with all requirements necessary to give said court jurisdiction and, in any suit instituted against the Reinsurer upon this Contract, shall abide by the final decision of such court or of any appellate court in the event of an appeal.

D. Service of process in such suit may be made upon:

1. as respects Underwriting Members of Lloyd’s, London: Lloyd’s America, Inc., Attention: Legal Department, 280 Park Avenue, East Tower, 25th Floor, New York, New York 10017;

2. as respects any other Subscribing Reinsurer: Messrs. Mendes and Mount, 750 Seventh Avenue, New York, New York 10019-6829, or another party specifically designated in the Subscribing Reinsurer’s Interests and Liabilities Agreement attached hereto.

The above-named are authorized and directed to accept service of process on behalf of the Reinsurer in any such suit.

E. Further, pursuant to any statute of any state, territory or district of the United States that makes provision therefor, the Reinsurer hereby designates the Superintendent, Commissioner or Director of Insurance, or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract, and hereby designates the above-named as the person to whom the said officer is authorized to mail such process or a true copy thereof.

ARTICLE 31

GOVERNING LAW

Effective: June 1, 2022 DOC: June 15, 2022

28 of NUMPAGES 4

ARTICLE 32

ENTIRE AGREEMENT

ARTICLE 33

NON-WAIVER

ARTICLE 34

Sanction Limitation and Exclusion Clause (LMA 3100)

No (re)insurer shall be deemed to provide cover and no (re)insurer shall be liable to pay any claim or provide any benefit hereunder to the extent that the provision of such cover, payment of such claim or provision of such benefit would expose that (re)insurer to any sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America.

ARTICLE 35

Intermediary

Guy Carpenter & Company, LLC, is hereby recognized as the Intermediary negotiating this Contract for all business hereunder. All communications (including notices, statements, premiums, return premiums, commissions, taxes, losses, Loss Adjustment Expenses, salvages, and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through the Intermediary. Payments by the Company to the Intermediary shall be deemed payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed payment to the Company only to the extent that such payments are actually received by the Company.

Effective: June 1, 2022 DOC: June 15, 2022

29 of NUMPAGES 4

ARTICLE 36

MODE OF EXECUTION

A. This Contract may be executed by:

1. an original written ink signature of paper documents;

2. an exchange of facsimile copies showing the original written ink signature of paper documents;

Effective: June 1, 2022 DOC: June 15, 2022

30 of NUMPAGES 4

IN WITNESS WHEREOF, the Company has caused this Contract to be executed by its duly authorized representative(s), who also confirms the Company’s review of and agreement to be bound by the terms and conditions of the Interests and Liabilities Agreements attached to and forming part of this Contract, this _____ day of __________, in the year of 2022.

Homeowners Choice Property & Casualty
Insurance Company, INC.

Signature: Title:

Print Name:

PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT

Effective: June 1, 2022 DOC: June 15, 2022

31 of NUMPAGES 4

POOLS, ASSOCIATIONS & SYNDICATES EXCLUSIONS CLAUSE

Section A:

This Contract excludes:

a. All business derived directly or indirectly from any Pool, Association or Syndicate which maintains its own reinsurance facilities.

b. Any Pool or Scheme (whether voluntary or mandatory) formed after March 1, 1968 for the purpose of insuring property, whether on a country-wide basis or in respect of designated areas. This exclusion shall not apply to so-called Automobile Insurance Plans or other Pools formed to provide coverage for Automobile Physical Damage.

Section B:

1. This Contract excludes business written by the Company for the same perils, which is known at the time to be insured by, or in excess of underlying amounts placed in, any Pool, Association or Syndicate, whether by way of insurance or reinsurance, formed for the purpose of writing any of the following:

Oil, Gas or Petro-Chemical Plants

Oil or Gas Drilling Rigs and/or

Aviation Risks

2. The exclusion under paragraph 1 of this Section B does not apply:

a. Where the Total Insured Value over all interests of the risk in question is less than $250,000,000.

b. To interests traditionally underwritten as Inland Marine and/or Stock and/or Contents written on a Blanket basis.

c. To Contingent Business Interruption, except when the Company is aware that the key location is known at the time to be insured in any Pool, Association or Syndicate named above, other than as provided for under subparagraph (a).

Section C:

1. Nevertheless the Reinsurer specifically agrees that liability accruing to the Company from its participation in Residual Market Mechanisms, including but not limited to the following, for all perils otherwise protected hereunder shall not be excluded herefrom:

a. So-called “Beach and Windstorm Plans” and so-called “Coastal Pools”;

b. All “FAIR Plan” and “Rural Risk Plan” business;

Effective: June 1, 2022 DOC: June 15, 2022

32 of NUMPAGES 4

c. Louisiana Citizens Property Insurance Corporation;

d. California Earthquake Authority (“CEA”) or any similar entity.

Notwithstanding the above, assessments related to the Florida Hurricane Catastrophe Fund and Citizens Property Insurance Corporation (Florida) shall be excluded hereunder.

2. However, this reinsurance does not include any increase in such liability resulting from:

a. The inability of any other participant in such Residual Market Mechanisms to meet its liability;

b. Any claim against a Residual Market Mechanism or any participant therein, including the Company, whether by way of subrogation or otherwise, brought by or on behalf of any insolvency fund (as defined in the Exclusions Article);

c. Any assessment or surcharge levied on the policyholder and therefore not a liability of the Company;

d. The Company’s initial capital contribution to the CEA;

e. Any assessments, other than interim and regular assessments, from a Residual Market Mechanism included in subparagraph 1(c) above;

f. Any expenditure to purchase or retire bonds.

3. The Company may include in Ultimate Net Loss for any Loss Occurrence covered hereunder only the liability attributable to that Loss Occurrence. If the relevant entity does not specify what portion of an assessment is attributable to each Loss Occurrence, the Company may include in Ultimate Net Loss in respect of each Loss Occurrence a percentage of the Company’s assessments from the relevant entity related to the calendar year in which the Loss Occurrence commenced, regardless of when assessed, such percentage to be determined by dividing the relevant entity’s losses arising from the Loss Occurrence by its total losses for the calendar year.

4. The Company will deduct from Ultimate Net Loss amounts received as recoupment of any assessment that has been included in the Ultimate Net Loss, provided the recoupment is directly allocable to the assessment (“itemized recoupment”). The Company shall use commercially reasonable efforts to recoup such assessment. Any amount received as an itemized recoupment of any assessment (whether under this Contract or any predecessor contract), and therefore deductible from Ultimate Net Loss, shall not be included in the subject premium of this Contract.

Effective: June 1, 2022 DOC: June 15, 2022

33 of NUMPAGES 4

However, if a state levies assessments but does not allow itemized recoupment from policyholders, instead allowing the Company to file an overall increased rate, any such premium increased thereby shall not be deemed to be a recoupment that is deductible from Ultimate Net Loss. Any recoupment received as part of a general premium rate increase, not specifically itemized, shall be included as part of the subject premium of this Contract or a successor contract, as applicable.

NOTES: Wherever used herein the terms:

“Company” shall be understood to mean “Company”, “Reinsured”, “Reassured” or whatever other term is used in the attached reinsurance document to designate the reinsured company or companies.

“Contract” shall be understood to mean “Agreement,” “Contract,” “Policy” or whatever other term is used to designate the attached reinsurance document.

“Reinsurer” shall be understood to mean “Reinsurer,” “Reinsurers,” “Underwriters” or whatever other term is used in the attached reinsurance document to designate the reinsurer or reinsurers.

Effective: June 1, 2022 DOC: June 15, 2022

34 of NUMPAGES 4

Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance - U.S.A.

1. This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks.

2. Without in any way restricting the operation of paragraph (1) of this clause, this Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:

I. Nuclear reactor power plants including all auxiliary property on the site, or

II. Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and “critical facilities” as such, or

III. Installations for fabricating complete fuel elements or for processing substantial quantities of “special nuclear material”, and for reprocessing, salvaging, chemically separating, storing or disposing of “spent” nuclear fuel or waste materials, or

IV. Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate

(a) where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or

(b) where said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused. However on and after 1st January 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof.

4. Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.

5. It is understood and agreed that this clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard.

Effective: June 1, 2022 DOC: June 15, 2022

35 of NUMPAGES 4

6. The term “special nuclear material” shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.

7. Reassured to be sole judge of what constitutes:

(a) substantial quantities, and

(b) the extent of installation, plant or site.

Note: Without in any way restricting the operation of paragraph (1) hereof, it is understood and agreed that

(a) all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

(b) with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

12/12/57

NMA 1119

NOTES: Wherever used herein the terms:

“Reassured” shall be understood to mean “Company”, “Reinsured”, “Reassured” or whatever other term is used in the attached reinsurance document to designate the reinsured company or companies.

“Agreement” shall be understood to mean “Agreement”, “Contract”, “Policy” or whatever other term is used to designate the attached reinsurance document.

“Reinsurers” shall be understood to mean “Reinsurers”, “Underwriters” or whatever other term is used in the attached reinsurance document to designate the reinsurer or reinsurers.

Effective: June 1, 2022 DOC: June 15, 2022

36 of NUMPAGES 4

TERRORISM EXCLUSION

A. Notwithstanding any provision to the contrary within this Contract or any endorsement thereto, it is agreed that this Contract excludes loss, damage, cost, or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any Act of Terrorism, as defined herein, regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

B. An “Act of Terrorism” includes any act, or preparation in respect of action, or threat of action designed to influence the government de jure or de facto of any nation or any political division thereof, or in pursuit of political, religious, ideological, or similar purposes to intimidate the public or a section of the public of any nation by any person or group(s) of persons whether acting alone or on behalf of or in connection with any organization(s) or government(s) de jure or de facto, and which:

a. involves violence against one or more persons; or

b. involves damage to property; or

c. endangers life other than that of the person committing the action; or

d. creates a risk to health or safety of the public or a section of the public; or

e. is designed to interfere with or to disrupt an electronic system.

C. This Contract also excludes loss, damage, cost, or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any action in controlling, preventing, suppressing, retaliating against, or responding to any Act of Terrorism.

D. Notwithstanding the above and subject otherwise to the terms, conditions, and limitations of this Contract, in respect only of personal lines, this Contract shall pay actual loss or damage (but not related cost or expense) caused by any Act of Terrorism, provided such act is not directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with biological, chemical, radiological or nuclear pollution or contamination.

Effective: June 1, 2022 DOC: June 15, 2022

37 of NUMPAGES 4

limited Communicable Disease Exclusion No. 2 (Property treaty Reinsurance)

1. Notwithstanding any provision to the contrary within this reinsurance agreement, this reinsurance agreement excludes any loss, damage, liability, claim, cost or expense of whatsoever nature, directly or indirectly caused by, contributed to by, resulting from, arising out of, or in connection with a Communicable Disease or the fear or threat (whether actual or perceived) of a Communicable Disease regardless of any other cause or event contributing concurrently or in any other sequence thereto.

2. Subject to the other terms, conditions and exclusions contained in this reinsurance agreement, this reinsurance agreement will cover physical damage to property insured under the original policies and any Time Element Loss directly resulting therefrom where such physical damage is directly caused by or arising from any of the following perils: fire, lightning, explosion, aircraft or vehicle impact, falling objects, windstorm, rainstorm, hail, tornado, cyclone, typhoon, hurricane, earthquake, seaquake, seismic and/or volcanic disturbance/eruption, tsunami, flood, freeze, ice storm, weight of snow or ice, avalanche, meteor/asteroid impact, landslip, landslide, mudslide, bush fire, forest fire, riot, riot attending a strike, civil commotion, vandalism and malicious mischief.

Definitions

3. Communicable Disease means any disease which can be transmitted by means of any substance or agent from any organism to another organism where:

3.1. the substance or agent includes, but is not limited to, a virus, bacterium, parasite or other organism or any variation thereof, whether deemed living or not, and

3.2. the method of transmission, whether direct or indirect, includes but is not limited to, airborne transmission, bodily fluid transmission, transmission from or to any surface or object, solid, liquid or gas or between organisms, and

3.3. the disease, substance or agent can cause or threaten damage to human health or human welfare or can cause or threaten damage to, deterioration of, loss of value of, marketability of or loss of use of property.

4. Time Element Loss means business interruption, contingent business interruption or any other consequential losses.

LMA5503

15 May 2020

Effective: June 1, 2022 DOC: June 15, 2022

38 of NUMPAGES 4

CYBER LOSS LIMITED EXCLUSION CLAUSE (PROPERTY TREATY REINSURANCE)

1. Notwithstanding any provision to the contrary within this reinsurance agreement or any endorsement thereto, this reinsurance agreement excludes all loss, damage, liability, cost or expense of whatsoever nature directly or indirectly caused by, contributed to by, resulting from, arising out of or in connection with:

1.2. any loss of, alteration of, or damage to or a reduction in the functionality, availability or operation of a Computer System, unless subject to the provisions of paragraph 2;

1.3. any loss of use, reduction in functionality, repair, replacement, restoration or reproduction of any Data, including any amount pertaining to the value of such Data.

fire, lightning, explosion, aircraft or vehicle impact, falling objects, windstorm, hail, tornado, cyclone, hurricane, earthquake, volcano, tsunami, flood, freeze or weight of snow

Definitions

3. Computer System means any computer, hardware, software, communications system, electronic device (including, but not limited to, smart phone, laptop, tablet, wearable device), server, cloud or microcontroller including any similar system or any configuration of the aforementioned and including any associated input, output, data storage device, networking equipment or back up facility.

4. Data means information, facts, concepts, code or any other information of any kind that is recorded or transmitted in a form to be used, accessed, processed, transmitted or stored by a Computer System.

5. Time Element Loss means business interruption, contingent business interruption or any other consequential losses.

LMA5410

06 March 2020

Effective: June 1, 2022 DOC: June 15, 2022

39 of NUMPAGES 4

TRUST AGREEMENT REQUIREMENTS CLAUSE

A. Except as provided in paragraph B of this Clause, if the Reinsurer satisfies its funding obligations under the Unauthorized Reinsurance Article by providing a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement:

1. Requires the Reinsurer to establish a trust account for the benefit of the Company, and specifies what the Trust Agreement is to cover;

2. Stipulates that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash (United States legal tender), and certificates of deposit (issued by a United States bank and payable in United States legal tender), or any combination of the two, provided that the investments are issued by an institution that is not the parent, subsidiary or affiliate of either the Reinsurer or the Company;

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the Company, or the trustee upon the direction of the Company, may whenever necessary negotiate these assets without consent or signature from the Reinsurer or any other entity;

4. Requires that all settlements of account between the Company and the Reinsurer be made in cash or its equivalent; and

5. Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the Company or the Reinsurer.

B. If a ceding insurer is domiciled in California and the Reinsurer satisfies its funding obligations under the Unauthorized Reinsurance Article by providing a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement:

1. Provides that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in United States dollars, certificates of deposit issued by a United States financial institution as defined in California Insurance Code Section 922.7(a) and payable in United States dollars, and investments permitted by the California Insurance Code, or any combination of the above.

2. Provides that investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust shall not exceed 5% of total investments.

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all

Effective: June 1, 2022 DOC: June 15, 2022

40 of NUMPAGES 4

shares, obligations or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may, whenever necessary, negotiate these assets without consent or signature from the Reinsurer or any other entity.

4. Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the ceding insurer or the Reinsurer.

C. If there are multiple ceding insurers that collectively comprise the Company, “regulatory authorities” as referenced in subparagraph A(2) above, shall mean the individual ceding insurer’s domestic regulator.

Effective: June 1, 2022 DOC: June 15, 2022

41 of NUMPAGES 4

EXHIBIT 10.133. Certain identified information has been excluded from this exhibit because it is immaterial and would be competitively harmful if publicly disclosed. Information that has been omitted is indicated with brackets.

Reinstatement Premium Protection Reinsurance Contract

issued to

Homeowners Choice Property & Casualty Insurance Company, Inc.

Tampa, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

Effective: June 1, 2022 DOC: June 15, 2022

1 of NUMPAGES 4


REINSTATEMENT PREMIUM PROTECTION REINSURANCE CONTRACT TABLE OF CONTENTS
Article		Page

	Preamble	3
1	Business Covered	3
2	Coverage	3
3	Term	4
4	Special Termination	4
5	Territory	5
6	Exclusions	5
7	Premium	5
8	Definitions	6
9	Original Conditions	7
10	No Third Party Rights	7
11	Notice of Loss and Loss Settlements	7
12	Late Payments	8
13	Offset	9
14	Currency	9
15	Unauthorized Reinsurance	9
16	Taxes	12
17	Access to Records	12
18	Confidentiality	13
19	Errors and Omissions	14
20	Insolvency	14
21	Run-Off Reinsurer	15
22	Arbitration	16
23	Expedited Arbitration	17
24	Service of Suit	18
25	Governing Law	19
26	Entire Agreement	19
27	Non-Waiver	19
28	Sanction Limitation and Exclusion Clause (LMA 3100)	19
29	Intermediary	19
30	Mode of Execution	20
	Company Signing Block	21

Attachments
	Trust Agreement Requirements Clause	22

Effective: June 1, 2022 DOC: June 15, 2022

2 of NUMPAGES 4

Reinstatement Premium Protection Reinsurance Contract

(the “Contract”)

issued to

Homeowners Choice Property & Casualty Insurance Company, Inc.

Tampa, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

THE SUBSCRIBING REINSURER(S) IDENTIFIED
IN THE INTERESTS AND LIABILITIES AGREEMENT(S)
ATTACHED TO AND FORMING PART OF THIS CONTRACT

(the “Reinsurer”)

article 1

Business Covered

This Contract is to indemnify the Company in respect of the liability that may accrue to the Company as a result of Reinstatement Premium the Company may become liable to pay under the reinstatement provisions of the Property Catastrophe Excess of Loss Reinsurance Contract, effective at 12:01 a.m., Standard Time, June 1, 2022 and expiring 12:01 a.m., Standard Time, June 1, 2023, Document Number: U8GR0001 (the “Original Contract”), subject to the terms and conditions herein contained. The Original Contract covers losses under Policies covering direct and assumed business classified by the Company as the property perils of Business Owners, Homeowners, Condominium Owners, Renters and Dwelling, in force at the inception of this Contract, or issued or renewed during the term of this Contract. A copy of the Original Contract is attached to and forms part of this Contract.

article 2

coverage

The Reinsurer shall be liable to pay the Reinstatement Premium obligations under the Original Contract.

Effective: June 1, 2022 DOC: June 15, 2022

3 of NUMPAGES 4

article 3

Term

ARTICLE 4

SPECIAL TERMINATION

1. The Subscribing Reinsurer ceases underwriting operations.

2. A state insurance department or other legal authority orders the Subscribing Reinsurer to cease writing business, or the Subscribing Reinsurer is placed under regulatory supervision.

4. The Subscribing Reinsurer’s policyholders’ surplus (or the equivalent under the Subscribing Reinsurer’s accounting system) as reported in such financial statements of the Subscribing Reinsurer as designated by the Company, has been reduced by 20% of the amount thereof at any date during the prior 12-month period (including the period prior to the inception of this Contract).

7. The Subscribing Reinsurer has been assigned an A.M. Best’s rating of less than “A-” and/or an S&P rating of less than “BBB+.” However, as respects Underwriting

Effective: June 1, 2022 DOC: June 15, 2022

4 of NUMPAGES 4

Members of Lloyd’s, London, a Lloyd’s Market Rating of less than “A-” by A.M. Best and/or less than “BBB+” by S&P shall apply.

9. The Subscribing Reinsurer has in any other way assigned its interests or delegated its obligations under this Contract to an unaffiliated entity.

B. The Subscribing Reinsurer shall have no liability for Reinstatement Premium arising from Loss Occurrences commencing after termination. The premium due the Subscribing Reinsurer hereunder (including any minimum premium) shall be prorated based on the period of the Subscribing Reinsurer’s participation hereon, and the Subscribing Reinsurer shall immediately return any excess premium received.

article 5

Territory

The territorial limits of this Contract shall be identical with those of the Original Contract.

article 6

exclusions

This Contract shall follow the exclusions set forth in the Original Contract.

ARTICLE 7

Premium

A. The premium for this Contract shall be based on the Layers of the Original Contract. The Company shall pay the Reinsurer a deposit premium in accordance with the schedule set forth below. The adjusted premium to be paid to the Reinsurer for the reinsurance provided under each Layer shall be calculated as the Rate on Line set out below multiplied by the Final Premium for that Layer:

Effective: June 1, 2022 DOC: June 15, 2022

5 of NUMPAGES 4


PREMIUM SCHEDULE
Layer	Rate on Line	Deposit Premium
Third Layer	[ ]	[ ]
Fourth Layer	[ ]	[ ]
Fifth Layer	[ ]	[ ]

B. The deposit premiums set forth in paragraph A above shall be payable to the Reinsurer by the Company in installments as follows:


DEPOSIT INSTALLMENT SCHEDULE
Layer	June 1, 2022	September 1, 2022	January 1, 2023	April 1, 2023
Third Layer	[ ]	[ ]	[ ]	[ ]
Fourth Layer	[ ]	[ ]	[ ]	[ ]
Fifth Layer	[ ]	[ ]	[ ]	[ ]

C. By April 1, 2023, the Company shall calculate and report the Final Premium in accordance with paragraph A above. If the Final Premium for a Layer is less than the deposit premium payable hereunder (including the fourth deposit premium installment), the fourth quarterly deposit premium installment shall be waived, and any amount in excess of the sum of the previously paid three deposit premium installments shall be remitted to the Reinsurer with the Company’s report. If the Final Premium is less than the sum of the previously paid three deposit premium installments, the Reinsurer shall remit the difference to the Company. Notwithstanding the foregoing, if the Final Premium for a Layer is greater than the deposit premium payable hereunder (including the fourth deposit premium installment), the Company shall remit to the Reinsurer the difference between the Final Premium and the full deposit premium within 45 days after the expiration of this Contract.

D. The Company shall furnish the Reinsurer with such reasonably available information as may be reasonably required by the Reinsurer for completion of the Reinsurer’s financial statements.

article 8

definitions

Effective: June 1, 2022 DOC: June 15, 2022

6 of NUMPAGES 4

recoverable hereunder until the Company’s final Reinstatement Premium has been ascertained. All recoveries received subsequent to reimbursement hereunder shall be applied as if received prior to the aforesaid settlement, and all necessary adjustments shall be made by the parties hereto.

B. “Loss Occurrence” shall follow the definition set forth in the Original Contract.

C. “Final Premium” means the total reinsurance premium except for Reinstatement Premium.

D. “Policy” means any binder, policy, or contract of insurance or reinsurance issued, accepted or held covered provisionally or otherwise, by or on behalf of the Company.

ARTICLE 9

ORIGINAL CONDITIONS

All reinsurance under this Contract shall be subject to the same terms, conditions, waivers and interpretations, and to the same modifications and alterations as the Original Contract. However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract.

article 10

No Third Party Rights

article 11

NOTICE OF LOSS AND LOSS settlements

A. The Company shall advise the Reinsurer promptly of all losses that, in the opinion of the Company, may result in a claim hereunder and of all subsequent developments thereto that may materially affect the position of the Reinsurer.

B. The Company alone and at its full discretion shall adjust, settle or compromise all claims and losses.

C. As respects losses subject to the Original Contract, all loss settlements made by the Company, whether under strict Policy terms or by way of compromise, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay or allow, as the case may be, its share of each such settlement immediately upon receipt of reasonable evidence of the amount paid by the Company or that the Company estimates it will pay within the next 14 days. Within 30 days after receipt of the Reinsurer’s payment, the Company shall report to the Reinsurer the positive difference, if any, of the Reinsurer’s payment, minus the Reinsurer’s share of losses

Effective: June 1, 2022 DOC: June 15, 2022

7 of NUMPAGES 4

subject to this Contract that the Company has paid, or becomes liable to pay, as of the date of the report. Any such positive difference shall be remitted to the Reinsurer with the Company’s report.

ARTICLE 12

LATE PAYMENTS

1. The number of full days that have expired since the overdue date or the last monthly calculation, whichever the lesser; times

2. 1/365th of the sum of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made, plus 1%; times

3. The amount past due, including accrued interest.

Interest shall accumulate until payment of the original amount due plus interest penalties have been received by the Intermediary.

B. The due date shall, for purposes of this Article, be determined as follows:

2. Payments from the Company to the Reinsurer shall be due on the dates specified within this Contract. Payments shall be overdue 30 days thereafter except for the first installment of premium, if applicable, which shall be overdue 60 days from inception or 30 days from final line-signing, whichever the later. Reinstatement Premium, if applicable, shall have as a due date the date when the Company receives payment for the claim giving rise to such Reinstatement Premium, and payment shall be overdue 30 days thereafter. In the event a due date is not specifically stated for a given payment, the overdue date shall be 30 days following the date of billing.

Effective: June 1, 2022 DOC: June 15, 2022

8 of NUMPAGES 4

purpose of establishing when a payment is overdue, and shall not alter the provisions of the Notice of Loss and Loss Settlements Article or other pertinent contractual stipulations.

ARTICLE 13

OFFSET

ARTICLE 14

Currency

A. Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United States Dollars, and all payments hereunder shall be in United States Dollars.

B. For purposes of this Contract, where the Company receives or pays amounts in currencies other than United States Dollars, such amounts shall be converted into United States Dollars at the actual rates of exchange at which these amounts are entered in the Company’s books.

ARTICLE 15

UNAUTHORIZED REINSURANCE

A. This Article applies:

1. only to the extent a Subscribing Reinsurer does not qualify for credit with any insurance regulatory authority having jurisdiction over the Company’s reserves, or

Effective: June 1, 2022 DOC: June 15, 2022

9 of NUMPAGES 4

1. unearned premium (if applicable);

2. known outstanding losses that have been reported to the Reinsurer and Loss Adjustment Expense relating thereto;

3. losses and Loss Adjustment Expense paid by the Company but not recovered from the Reinsurer;

4. losses incurred but not reported and Loss Adjustment Expense relating thereto;

5. all other amounts for which the Company cannot take credit on its financial statements unless funding is provided by the Reinsurer.

1. to reimburse the Company for the Reinsurer’s Obligations, the payment of which is due under the terms of this Contract and that has not been otherwise paid;

Effective: June 1, 2022 DOC: June 15, 2022

10 of NUMPAGES 4

4. to pay the Reinsurer’s share of any other amounts the Company claims are due under this Contract.

Effective: June 1, 2022 DOC: June 15, 2022

11 of NUMPAGES 4

ARTICLE 16

Taxes

ARTICLE 17

access to records

B. Notwithstanding the above, the Company reserves the right to withhold from the Reinsurer any Privileged Documents. However, the Company shall permit and not object to the Reinsurer’s access to Privileged Documents in connection with the underlying claim reinsured hereunder following final settlement or final adjudication of the case or cases involving such claim, with prejudice against all claimants and all parties to such adjudications; the Company may defer release of such Privileged Documents if there are subrogation, contribution, or other third party actions with respect to that claim or case, and the Company’s defense might be jeopardized by release of such Privileged Documents. In the event that the Company seeks to defer release of such Privileged Documents, it shall, in consultation with the Reinsurer, take other steps as reasonably necessary to provide the Reinsurer with the information it reasonably requires to indemnify the Company without causing a loss of such privileges or protections. The Reinsurer shall not have access to Privileged Documents relating to any dispute between the Company and the Reinsurer.

C. For purposes of this Article:

Effective: June 1, 2022 DOC: June 15, 2022

12 of NUMPAGES 4

1. “Privileged Documents” means any documents that are Attorney-Client Privilege Documents and/or Work Product Privilege Documents.

ARTICLE 18

confidentiality

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract (“Confidential Information”) are proprietary and confidential to the Company. Confidential Information shall not include documents, information or data that the Reinsurer can show:

1. are publicly known or have become publicly known through no unauthorized act of the Reinsurer;

2. have been rightfully received from a third person without obligation of confidentiality; or

3. were known by the Reinsurer prior to the placement of this Contract without an obligation of confidentiality.

1. when required by retrocessionaires as respects business ceded to this Contract;

2. when required by regulators performing an audit of the Reinsurer’s records and/or financial condition; or

3. when required by external auditors performing an audit of the Reinsurer’s records in the normal course of business.

Effective: June 1, 2022 DOC: June 15, 2022

13 of NUMPAGES 4

Further, the Reinsurer agrees not to use any Confidential Information for any purpose not related to the performance of its obligations or enforcement of its rights under this Contract.

D. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

ARTICLE 19

Errors and Omissions

Any inadvertent error, omission or delay in complying with the terms and conditions of this Contract shall not be held to relieve either party hereto from any liability that would attach to it hereunder if such error, omission or delay had not been made, provided such error, omission or delay is rectified immediately upon discovery.

ARTICLE 20

insolvency

A. If more than one company is referenced within the definition of “Company” in the Preamble to this Contract, this Article shall apply severally to each such company. Further, this Article and the laws of the domiciliary state shall apply in the event of the insolvency of any company covered hereunder. In the event of a conflict between any provision of this Article and the laws of the domiciliary state of any company covered hereunder, that domiciliary state’s laws shall prevail.

B. In the event of the insolvency of the Company, this coverage (or the portion of any risk or obligation assumed by the Reinsurer, if required by applicable law) shall be payable directly to the Company, or to its liquidator, receiver, conservator or statutory successor, either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed and allowed in the liquidation proceeding, whichever may be required by applicable statute, without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the Policy or bond reinsured, which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses that it may

Effective: June 1, 2022 DOC: June 15, 2022

14 of NUMPAGES 4

deem available to the Company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

ARTICLE 21

RUN-OFF REINSURER

A. “Run-off Reinsurer” means any Subscribing Reinsurer that:

1. has been ordered by a state insurance department or other legal authority to cease writing business, or has been placed under regulatory supervision or in rehabilitation; or

2. has ceased reinsurance underwriting operations; or

3. has transferred its claims-paying authority to an unaffiliated entity; or

5. in any other way has assigned its interests or delegated its obligations under this Contract to an unaffiliated entity.

2. The Run-off Reinsurer’s liability for losses for Policies covered by this Contract shall be commuted. In the event the Company and the Run-off Reinsurer cannot agree on

Effective: June 1, 2022 DOC: June 15, 2022

15 of NUMPAGES 4

the commutation amount of the Run-off Reinsurer’s liability under such Policies, they shall appoint an actuary and/or appraiser to assess such liability and shall share equally any expense of the actuary and/or appraiser. If the Company and the Run-off Reinsurer cannot agree on an actuary and/or appraiser, the Company and the Run-off Reinsurer each shall nominate three individuals, of whom the other shall decline two, and the final appointment shall be made by drawing lots. Payment by the Run-off Reinsurer of the amount of liability ascertained shall constitute a complete and final release of both parties under this Contract.

4. The provisions of the Arbitration Article shall not apply.

C. The Company’s waiver of any rights provided in this Article is not a waiver of that right or other rights at a later date.

ARTICLE 22

arbitration

Effective: June 1, 2022 DOC: June 15, 2022

16 of NUMPAGES 4

D. Within 30 days after all arbitrators have been appointed, the panel shall meet and determine timely periods for briefs, discovery procedures and schedules of hearings.

E. The panel shall be relieved of all judicial formality and shall not be bound by the strict rules of procedure and evidence. Notwithstanding anything to the contrary in this Contract, the arbitrators may at their discretion, consider underwriting and placement information provided by the Company to the Reinsurer, as well as any correspondence exchanged by the parties that is related to this Contract. The arbitration shall take place in Tampa, Florida, or at such other place as the parties shall agree. The decision of any two arbitrators shall be in writing and shall be final and binding. The panel is empowered to grant interim relief as it may deem appropriate.

ARTICLE 23

Expedited Arbitration

Effective: June 1, 2022 DOC: June 15, 2022

17 of NUMPAGES 4

ARTICLE 24

service of suit

D. Service of process in such suit may be made upon:

1. as respects Underwriting Members of Lloyd’s, London: Lloyd’s America, Inc., Attention: Legal Department, 280 Park Avenue, East Tower, 25th Floor, New York, New York 10017;

The above-named are authorized and directed to accept service of process on behalf of the Reinsurer in any such suit.

Effective: June 1, 2022 DOC: June 15, 2022

18 of NUMPAGES 4

ARTICLE 25

GOVERNING LAW

ARTICLE 26

Entire Agreement

ARTICLE 27

NON-WAIVER

ARTICLE 28

Sanction Limitation and Exclusion Clause (LMA 3100)

ARTICLE 29

Intermediary

Effective: June 1, 2022 DOC: June 15, 2022

19 of NUMPAGES 4

Intermediary. Payments by the Company to the Intermediary shall be deemed payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed payment to the Company only to the extent that such payments are actually received by the Company.

ARTICLE 30

mode of execution

A. This Contract may be executed by:

1. an original written ink signature of paper documents;

2. an exchange of facsimile copies showing the original written ink signature of paper documents;

Effective: June 1, 2022 DOC: June 15, 2022

20 of NUMPAGES 4

On this _____ day of __________, in the year of 2022.

Homeowners Choice Property & Casualty Insurance Company, INC.

Signature: Title:

Print Name:

Reinstatement Premium Protection Reinsurance Contract

Effective: June 1, 2022 DOC: June 15, 2022

21 of NUMPAGES 4

TRUST AGREEMENT REQUIREMENTS CLAUSE

1. Requires the Reinsurer to establish a trust account for the benefit of the Company, and specifies what the Trust Agreement is to cover;

4. Requires that all settlements of account between the Company and the Reinsurer be made in cash or its equivalent; and

5. Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the Company or the Reinsurer.

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all

Effective: June 1, 2022 DOC: June 15, 2022

22 of NUMPAGES 4

4. Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the ceding insurer or the Reinsurer.

Effective: June 1, 2022 DOC: June 15, 2022

23 of NUMPAGES 4

EXHIBIT 10.134. Certain identified information has been excluded from this exhibit because it is immaterial and would be competitively harmful if publicly disclosed. Information that has been omitted is indicated with brackets.

Property Catastrophe Excess of Loss Reinsurance Contract

issued to

TypTap Insurance Company

Ocala, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

Effective: June 1, 2022 DOC: June 16, 2022

1 of NUMPAGES 4


PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT TABLE OF CONTENTS
Article		Page

	Preamble	4
1	Business Covered	4
2	Retention and Limit	4
3	Florida Hurricane Catastrophe Fund	5
4	Term	6
5	Special Termination	6
6	Territory	8
7	Exclusions	8
8	Special Acceptance	10
9	Premium	10
10	Reinstatement	11
11	Definitions	12
12	Extra Contractual Obligations/Excess of Policy Limits	15
13	Net Retained Liability	16
14	Other Reinsurance	16
15	Original Conditions	16
16	No Third Party Rights	16
17	Notice of Loss and Loss Settlements	17
18	Late Payments	17
19	Offset	18
20	Currency	18
21	Unauthorized Reinsurance	19
22	Taxes	21
23	Access to Records	21
24	Confidentiality	22
25	Indemnification and Errors and Omissions	23
26	Insolvency	24
27	Run-Off Reinsurer	25
28	Arbitration	26
29	Expedited Arbitration	27
30	Service of Suit	28
31	Governing Law	29
32	Entire Agreement	29
33	Non-Waiver	29
34	Sanction Limitation and Exclusion Clause (LMA 3100)	29
35	Intermediary	29
36	Mode of Execution	30
	Company Signing Block	31

Effective: June 1, 2022 DOC: June 16, 2022

2 of NUMPAGES 4


PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT TABLE OF CONTENTS
Attachments		Page

	Pools, Associations & Syndicates Exclusions Clause	32
	Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance - U.S.A.	35
	Terrorism Exclusion	37
	Limited Communicable Disease Exclusion No. 2 (Property Treaty Reinsurance)	38
	Cyber Loss Limited Exclusion Clause (Property Treaty Reinsurance)	39
	Trust Agreement Requirements Clause	40

Effective: June 1, 2022 DOC: June 16, 2022

3 of NUMPAGES 4

Property Catastrophe Excess of Loss Reinsurance Contract

(the “Contract”)

issued to

Typtap insurance company

Ocala, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

THE SUBSCRIBING REINSURER(S) IDENTIFIED IN THE
INTERESTS AND LIABILITIES AGREEMENT(S) ATTACHED TO
AND FORMING PART OF THIS CONTRACT

(the “Reinsurer”)

ARTICLE 1

BUSINESS COVERED

This Contract is to indemnify the Company in respect of its net excess liability as a result of any

loss or losses which may occur during the term of this Contract under any Policies in force at the effective date hereof or issued or renewed on or after that date, covering direct and assumed business classified by the Company as the property perils of Homeowners, Condominium Owners, Renters and Dwelling, subject to the terms and conditions herein contained.

ARTICLE 2

Retention and Limit

Effective: June 1, 2022 DOC: June 16, 2022

4 of NUMPAGES 4


RETENTION AND LIMIT SCHEDULE
Layer	Company’s Retention	Reinsurer’s Limit of Liability
	Ultimate Net Loss in respect of each Loss Occurrence	Ultimate Net Loss in respect of each Loss Occurrence	Ultimate Net Loss in respect of all Loss Occurrences during the term of this Contract
First Layer	[ ]	[ ]	[ ]
Second Layer	[ ]	[ ]	[ ]
Third Layer	[ ]	[ ]	[ ]
Fourth Layer	[ ]	[ ]	[ ]
Fifth Layer	[ ]	[ ]	[ ]

ARTICLE 3

FLORIDA HURRICANE CATASTROPHE FUND

Effective: June 1, 2022 DOC: June 16, 2022

5 of NUMPAGES 4

B. Any FHCF reimbursement premiums paid by the Company for FHCF layers that inure to the benefit of this Contract shall be deemed to be premiums paid for inuring reinsurance.

C. The Company has opted for a 90% coverage selection from the FHCF.

ARTICLE 4

Term

ARTICLE 5

SPECIAL TERMINATION

1. The Subscribing Reinsurer ceases underwriting operations.

2. A state insurance department or other legal authority orders the Subscribing Reinsurer to cease writing business, or the Subscribing Reinsurer is placed under regulatory supervision.

Effective: June 1, 2022 DOC: June 16, 2022

6 of NUMPAGES 4

the amount thereof at any date during the prior 12-month period (including the period prior to the inception of this Contract).

9. The Subscribing Reinsurer has in any other way assigned its interests or delegated its obligations under this Contract to an unaffiliated entity.

Effective: June 1, 2022 DOC: June 16, 2022

7 of NUMPAGES 4

D. The Company’s option to require commutation under paragraph C above shall survive the termination or expiration of this Contract.

ARTICLE 6

Territory

This Contract shall apply to Policies issued in the State of Florida.

ARTICLE 7

Exclusions

A. This Contract shall not apply to and specifically excludes:

1. Policies covered by the Company’s Flood Tower.

2. Flood when written as such.

3. Earthquake for standalone Policies where earthquake is the only named peril.

4. Hail damage to an insured’s growing or standing crops.

6. Pools, Associations & Syndicates, per the attached exclusion.

8. Loss or damage occasioned by war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, martial law, or confiscation by

Effective: June 1, 2022 DOC: June 16, 2022

8 of NUMPAGES 4

order of any government or public authority, but not excluding loss or damage that would be covered under a standard form of Policy containing a standard war exclusion clause.

9. Losses excluded by the attached Nuclear Incident Exclusion Clause – Physical Damage – Reinsurance – U.S.A.

10. Terrorism as defined in the attached Terrorism Exclusion.

11. Mold unless directly resulting from an otherwise covered peril.

13. Financial guarantee and insolvency.

15. Losses excluded by the attached Limited Communicable Disease Exclusion No. 2 (Property Treaty Reinsurance).

16. Loss Excluded by the attached Cyber Loss Limited Exclusion Clause (Property Treaty Reinsurance).

17. Policies written by Homeowners Choice Property & Casualty Insurance Company, Inc.

B. With the exception of subparagraphs A(7) through A(10), A(13), A(15) and A(16) above, should any judicial, regulatory or legislative entity having legal jurisdiction invalidate any exclusion on the Company's Policy, any amount of loss for which the Company is liable because of such invalidation will not be excluded hereunder.

C. With the exception of subparagraphs A(7) through A(10), A(13), A(15) and A(16) above, if the Company inadvertently issues a Policy falling within the scope of one or more of the exclusions, such Policy shall be covered hereunder, provided that the Company issues, or causes to be issued, the required notice of cancellation within 30 days after a member of the executive or managerial staff at the Company’s home office having underwriting authority in the class of business involved becomes aware that the Policy applies to excluded classes, unless the Company is prevented from canceling said Policy within such period by applicable statute or regulation, in which case such Policy shall be covered hereunder until the earliest date on which the Company may cancel.

Effective: June 1, 2022 DOC: June 16, 2022

9 of NUMPAGES 4

ARTICLE 8

SPECIAL ACCEPTANCE

ARTICLE 9

Premium

A. As respects the First Layer, the Company shall pay the Reinsurer a premium of [ ] for the term of this Contract.

B. The premium in paragraph A above shall be payable to the Reinsurer by the Company in four equal installments of [ ] on June 1, 2022, September 1, 2022, January 1, 2023 and April 1, 2023.

C. As respects the Second through Fifth Layers, the Company shall pay the Reinsurer a Deposit Premium in accordance with the schedule set forth below. The reinsurance premium to be paid to the Reinsurer for the reinsurance provided under each Layer shall be calculated at the Final Adjusted Premium Rates set out below multiplied by the Company’s final Total Insured Value, subject to the applicable Minimum Premium stated below:


PREMIUM SCHEDULE
Layer	Final Adjusted Premium Rate	Deposit Premium	Minimum Premium
Second Layer	[ ]	[ ]	[ ]
Third Layer	[ ]	[ ]	[ ]
Fourth Layer	[ ]	[ ]	[ ]
Fifth Layer	[ ]	[ ]	[ ]

Effective: June 1, 2022 DOC: June 16, 2022

10 of NUMPAGES 4

D. The Deposit Premiums set forth in paragraph C above shall be payable to the Reinsurer by the Company in installments as follows:


DEPOSIT INSTALLMENT SCHEDULE
Layer	June 1, 2022	September 1, 2022	January 1, 2023		April 1, 2023
Second Layer	[ ]	[ ]	[ ]	[ ]
Third Layer	[ ]	[ ]	[ ]	[ ]
Fourth Layer	[ ]	[ ]	[ ]	[ ]
Fifth Layer	[ ]	[ ]	[ ]	[ ]

E. Within 45 days following the expiration of this Contract, the Company shall provide the Reinsurer with a report showing the Company’s final Total Insured Value. This final Total Insured Value shall be multiplied by the Final Adjusted Premium Rate for each Layer as stated in paragraph C above. Should this amount be greater than or equal to [ ] and less than or equal to [ ] of the Deposit Premium as set forth above, there shall be no additional or return premium due. Should the amount so calculated exceed [ ] of the Deposit Premium paid in accordance with paragraph C above, the Company shall immediately pay the Reinsurer the difference in excess of [ ] of the Deposit Premium. Should the amount so calculated be less than [ ] of the Deposit Premium paid in accordance with paragraph C of this Article, the Reinsurer shall immediately pay the Company the difference below [ ] of the Deposit Premium, subject to the Minimum Premium as set forth above.

F. “Total Insured Value” means the Company’s aggregate wind exposures on September 30, 2022 for business covered hereunder.

G. The estimated Total Insured Value is [ ].

H. The Company shall furnish the Reinsurer with such reasonably available information as may be reasonably required by the Reinsurer for completion of the Reinsurer’s financial statements.

ARTICLE 10

Reinstatement

Effective: June 1, 2022 DOC: June 16, 2022

11 of NUMPAGES 4

applicable layer(s) shall not exceed such limit(s) in respect of any one Loss Occurrence, nor the applicable limit(s) in respect of all Loss Occurrences commencing during the term of this Contract, as set forth in the Retention and Limit Article.

ARTICLE 11

Definitions

5. Nothing in this clause shall be construed to mean that losses are not recoverable hereunder until the Company’s “Ultimate Net Loss” has been ascertained.

1. court costs;

2. costs of supersedeas and appeal bonds;

3. monitoring counsel expenses;

Effective: June 1, 2022 DOC: June 16, 2022

12 of NUMPAGES 4

4. legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, including but not limited to declaratory judgment actions;

5. post-judgment interest;

6. pre-judgment interest, unless included as part of an award or judgment;

8. subrogation, salvage and recovery expenses.

“Loss Adjustment Expense” does not include salaries and expenses of the Company’s employees, except as provided in subparagraph (7) above, and office and other overhead expenses.

Effective: June 1, 2022 DOC: June 16, 2022

13 of NUMPAGES 4

2. Except as provided in subparagraph (1)(a) above:

Effective: June 1, 2022 DOC: June 16, 2022

14 of NUMPAGES 4

D. “Policy” means any binder, policy, or contract of insurance or reinsurance issued, accepted or held covered provisionally or otherwise, by or on behalf of the Company.

ARTICLE 12

EXTRA CONTRACTUAL OBLIGATIONS/EXCESS OF POLICY LIMITS

E. Loss Adjustment Expense in respect of Extra Contractual Obligations and/or Loss in Excess of Policy Limits shall be covered hereunder in the same manner as other Loss Adjustment Expense.

Effective: June 1, 2022 DOC: June 16, 2022

15 of NUMPAGES 4

G. In no event shall coverage be provided to the extent not permitted under law.

ARTICLE 13

NET RETAINED LIABILITY

A. This Contract applies only to that portion of any loss that the Company retains net for its own account (prior to deduction of any reinsurance that inures solely to the benefit of the Company).

ARTICLE 14

OTHER REINSURANCE

The Company shall be permitted to carry in force other reinsurance, recoveries under which shall inure to the benefit of this Contract.

ARTICLE 15

Original Conditions

ARTICLE 16

NO THIRD PARTY RIGHTS

Effective: June 1, 2022 DOC: June 16, 2022

16 of NUMPAGES 4

ARTICLE 17

Notice of Loss and Loss Settlements

B. The Company alone and at its full discretion shall adjust, settle or compromise all claims and losses.

ARTICLE 18

LATE PAYMENTS

1. The number of full days that have expired since the overdue date or the last monthly calculation, whichever the lesser; times

2. 1/365th of the sum of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made, plus 1%; times

3. The amount past due, including accrued interest.

Interest shall accumulate until payment of the original amount due plus interest penalties have been received by the Intermediary.

B. The due date shall, for purposes of this Article, be determined as follows:

Effective: June 1, 2022 DOC: June 16, 2022

17 of NUMPAGES 4

2. Payments from the Company to the Reinsurer shall be due on the dates specified within this Contract. Payments shall be overdue 30 days thereafter except for the first installment of premium, if applicable, which shall be overdue 60 days from inception or 30 days from final line-signing, whichever the later. Reinstatement premium, if applicable, shall have as a due date the date when the Company receives payment for the claim giving rise to such reinstatement premium, and payment shall be overdue 30 days thereafter. In the event a due date is not specifically stated for a given payment, the overdue date shall be 30 days following the date of billing.

ARTICLE 19

OFFSET

ARTICLE 20

Currency

A. Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United States Dollars, and all payments hereunder shall be in United States Dollars.

B. For purposes of this Contract, where the Company receives premiums or pays losses in currencies other than United States Dollars, such premiums or losses shall be converted into

Effective: June 1, 2022 DOC: June 16, 2022

18 of NUMPAGES 4

United States Dollars at the actual rates of exchange at which these premiums or losses are entered in the Company’s books.

ARTICLE 21

Unauthorized Reinsurance

A. This Article applies:

1. only to the extent a Subscribing Reinsurer does not qualify for credit with any insurance regulatory authority having jurisdiction over the Company’s reserves, or

1. unearned premium (if applicable);

2. known outstanding losses that have been reported to the Reinsurer and Loss Adjustment Expense relating thereto;

3. losses and Loss Adjustment Expense paid by the Company but not recovered from the Reinsurer;

4. losses incurred but not reported and Loss Adjustment Expense relating thereto;

5. all other amounts for which the Company cannot take credit on its financial statements unless funding is provided by the Reinsurer.

Effective: June 1, 2022 DOC: June 16, 2022

19 of NUMPAGES 4

Company’s reserves in an amount equal to the Reinsurer’s Obligations. Such LOC shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days (or such other time period as may be required by insurance regulatory authorities), prior to any expiration date the issuing bank shall notify the Company by certified or registered mail that the issuing bank elects not to consider the LOC extended for any additional period.

1. to reimburse the Company for the Reinsurer’s Obligations, the payment of which is due under the terms of this Contract and that has not been otherwise paid;

4. to pay the Reinsurer’s share of any other amounts the Company claims are due under this Contract.

Effective: June 1, 2022 DOC: June 16, 2022

20 of NUMPAGES 4

ARTICLE 22

TAXES

ARTICLE 23

ACCESS TO RECORDS

Effective: June 1, 2022 DOC: June 16, 2022

21 of NUMPAGES 4

C. For purposes of this Article:

1. “Privileged Documents” means any documents that are Attorney-Client Privilege Documents and/or Work Product Privilege Documents.

ARTICLE 24

CONFIDENTIALITY

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract (“Confidential Information”) are proprietary and confidential to the Company. Confidential Information shall not include documents, information or data that the Reinsurer can show:

1. are publicly known or have become publicly known through no unauthorized act of the Reinsurer;

2. have been rightfully received from a third person without obligation of confidentiality; or

Effective: June 1, 2022 DOC: June 16, 2022

22 of NUMPAGES 4

3. were known by the Reinsurer prior to the placement of this Contract without an obligation of confidentiality.

1. when required by retrocessionaires as respects business ceded to this Contract;

2. when required by regulators performing an audit of the Reinsurer’s records and/or financial condition; or

3. when required by external auditors performing an audit of the Reinsurer’s records in the normal course of business.

Further, the Reinsurer agrees not to use any Confidential Information for any purpose not related to the performance of its obligations or enforcement of its rights under this Contract.

D. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

ARTICLE 25

Indemnification and Errors and Omissions

A. The Reinsurer is reinsuring, subject to the terms and conditions of this Contract, the obligations of the Company under any Policy. The Company shall be the sole judge as to:

1. what shall constitute a claim or loss covered under any Policy;

2. the Company’s liability thereunder; and

3. the amount or amounts that it shall be proper for the Company to pay thereunder.

B. The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and liability(ies) of the Company under any Policy.

Effective: June 1, 2022 DOC: June 16, 2022

23 of NUMPAGES 4

D. Nothing in this Article shall be construed to override any of the other terms and conditions of this Contract.

ARTICLE 26

Insolvency

Effective: June 1, 2022 DOC: June 16, 2022

24 of NUMPAGES 4

Policy obligations of the Company as direct obligations of the Reinsurer to the payees under such Policies and in substitution for the obligations of the Company to such payees. Then, and in that event only, the Company, with the prior approval of the certificate of assumption on New York risks by the Superintendent of Financial Services of the State of New York, or with the prior approval of such other regulatory authority as may be applicable, is entirely released from its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.

ARTICLE 27

RUN-OFF REINSURER

A. “Run-off Reinsurer” means any Subscribing Reinsurer that:

1. has been ordered by a state insurance department or other legal authority to cease writing business, or has been placed under regulatory supervision or in rehabilitation; or

2. has ceased reinsurance underwriting operations; or

3. has transferred its claims-paying authority to an unaffiliated entity; or

5. in any other way has assigned its interests or delegated its obligations under this Contract to an unaffiliated entity.

Effective: June 1, 2022 DOC: June 16, 2022

25 of NUMPAGES 4

cannot agree on an actuary and/or appraiser, the Company and the Run-off Reinsurer each shall nominate three individuals, of whom the other shall decline two, and the final appointment shall be made by drawing lots. Payment by the Run-off Reinsurer of the amount of liability ascertained shall constitute a complete and final release of both parties under this Contract.

4. The provisions of the Arbitration Article shall not apply.

C. The Company’s waiver of any rights provided in this Article is not a waiver of that right or other rights at a later date.

ARTICLE 28

Arbitration

D. Within 30 days after all arbitrators have been appointed, the panel shall meet and determine timely periods for briefs, discovery procedures and schedules of hearings.

Effective: June 1, 2022 DOC: June 16, 2022

26 of NUMPAGES 4

E. The panel shall be relieved of all judicial formality and shall not be bound by the strict rules of procedure and evidence. Notwithstanding anything to the contrary in this Contract, the arbitrators may at their discretion, consider underwriting and placement information provided by the Company to the Reinsurer, as well as any correspondence exchanged by the parties that is related to this Contract. The arbitration shall take place in Tampa, Florida, or at such other place as the parties shall agree. The decision of any two arbitrators shall be in writing and shall be final and binding. The panel is empowered to grant interim relief as it may deem appropriate.

ARTICLE 29

Expedited Arbitration

Effective: June 1, 2022 DOC: June 16, 2022

27 of NUMPAGES 4

ARTICLE 30

SERVICE OF SUIT

D. Service of process in such suit may be made upon:

1. as respects Underwriting Members of Lloyd’s, London: Lloyd’s America, Inc., Attention: Legal Department, 280 Park Avenue, East Tower, 25th Floor, New York, New York 10017;

The above-named are authorized and directed to accept service of process on behalf of the Reinsurer in any such suit.

Effective: June 1, 2022 DOC: June 16, 2022

28 of NUMPAGES 4

ARTICLE 31

GOVERNING LAW

ARTICLE 32

ENTIRE AGREEMENT

ARTICLE 33

NON-WAIVER

ARTICLE 34

Sanction Limitation and Exclusion Clause (LMA 3100)

ARTICLE 35

Intermediary

Effective: June 1, 2022 DOC: June 16, 2022

29 of NUMPAGES 4

ARTICLE 36

MODE OF EXECUTION

A. This Contract may be executed by:

1. an original written ink signature of paper documents;

2. an exchange of facsimile copies showing the original written ink signature of paper documents;

Effective: June 1, 2022 DOC: June 16, 2022

30 of NUMPAGES 4

On this _____ day of __________, in the year of 2022.

Typtap insurance company

Signature: Title:

Print Name:

And on this _____ day of __________, in the year of 2022.

PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT

Effective: June 1, 2022 DOC: June 16, 2022

31 of NUMPAGES 4

POOLS, ASSOCIATIONS & SYNDICATES EXCLUSIONS CLAUSE

Section A:

This Contract excludes:

a. All business derived directly or indirectly from any Pool, Association or Syndicate which maintains its own reinsurance facilities.

Section B:

Oil, Gas or Petro-Chemical Plants

Oil or Gas Drilling Rigs and/or

Aviation Risks

2. The exclusion under paragraph 1 of this Section B does not apply:

a. Where the Total Insured Value over all interests of the risk in question is less than $250,000,000.

b. To interests traditionally underwritten as Inland Marine and/or Stock and/or Contents written on a Blanket basis.

Section C:

a. So-called “Beach and Windstorm Plans” and so-called “Coastal Pools”;

b. All “FAIR Plan” and “Rural Risk Plan” business;

Effective: June 1, 2022 DOC: June 16, 2022

32 of NUMPAGES 4

c. Louisiana Citizens Property Insurance Corporation;

d. California Earthquake Authority (“CEA”) or any similar entity.

Notwithstanding the above, assessments related to the Florida Hurricane Catastrophe Fund and Citizens Property Insurance Corporation (Florida) shall be excluded hereunder.

2. However, this reinsurance does not include any increase in such liability resulting from:

a. The inability of any other participant in such Residual Market Mechanisms to meet its liability;

c. Any assessment or surcharge levied on the policyholder and therefore not a liability of the Company;

d. The Company’s initial capital contribution to the CEA;

e. Any assessments, other than interim and regular assessments, from a Residual Market Mechanism included in subparagraph 1(c) above;

f. Any expenditure to purchase or retire bonds.

Effective: June 1, 2022 DOC: June 16, 2022

33 of NUMPAGES 4

NOTES: Wherever used herein the terms:

“Contract” shall be understood to mean “Agreement,” “Contract,” “Policy” or whatever other term is used to designate the attached reinsurance document.

Effective: June 1, 2022 DOC: June 16, 2022

34 of NUMPAGES 4

Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance - U.S.A.

I. Nuclear reactor power plants including all auxiliary property on the site, or

II. Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and “critical facilities” as such, or

IV. Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate

(a) where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or

Effective: June 1, 2022 DOC: June 16, 2022

35 of NUMPAGES 4

6. The term “special nuclear material” shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.

7. Reassured to be sole judge of what constitutes:

(a) substantial quantities, and

(b) the extent of installation, plant or site.

Note: Without in any way restricting the operation of paragraph (1) hereof, it is understood and agreed that

12/12/57

NMA 1119

NOTES: Wherever used herein the terms:

“Agreement” shall be understood to mean “Agreement”, “Contract”, “Policy” or whatever other term is used to designate the attached reinsurance document.

“Reinsurers” shall be understood to mean “Reinsurers”, “Underwriters” or whatever other term is used in the attached reinsurance document to designate the reinsurer or reinsurers.

Effective: June 1, 2022 DOC: June 16, 2022

36 of NUMPAGES 4

TERRORISM EXCLUSION

a. involves violence against one or more persons; or

b. involves damage to property; or

c. endangers life other than that of the person committing the action; or

d. creates a risk to health or safety of the public or a section of the public; or

e. is designed to interfere with or to disrupt an electronic system.

Effective: June 1, 2022 DOC: June 16, 2022

37 of NUMPAGES 4

LIMITED Communicable Disease Exclusion no. 2 (Property Treaty Reinsurance)

Definitions

3. Communicable Disease means any disease which can be transmitted by means of any substance or agent from any organism to another organism where:

3.1. the substance or agent includes, but is not limited to, a virus, bacterium, parasite or other organism or any variation thereof, whether deemed living or not, and

4. Time Element Loss means business interruption, contingent business interruption or any other consequential losses.

LMA5503

15 May 2020

Effective: June 1, 2022 DOC: June 16, 2022

38 of NUMPAGES 4

CYBER LOSS LIMITED EXCLUSION CLAUSE (PROPERTY TREATY REINSURANCE)

1.2. any loss of, alteration of, or damage to or a reduction in the functionality, availability or operation of a Computer System, unless subject to the provisions of paragraph 2;

1.3. any loss of use, reduction in functionality, repair, replacement, restoration or reproduction of any Data, including any amount pertaining to the value of such Data.

fire, lightning, explosion, aircraft or vehicle impact, falling objects, windstorm, hail, tornado, cyclone, hurricane, earthquake, volcano, tsunami, flood, freeze or weight of snow

Definitions

5. Time Element Loss means business interruption, contingent business interruption or any other consequential losses.

LMA5410

06 March 2020

Effective: June 1, 2022 DOC: June 16, 2022

39 of NUMPAGES 4

TRUST AGREEMENT REQUIREMENTS CLAUSE

1. Requires the Reinsurer to establish a trust account for the benefit of the Company, and specifies what the Trust Agreement is to cover;

4. Requires that all settlements of account between the Company and the Reinsurer be made in cash or its equivalent; and

5. Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the Company or the Reinsurer.

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all

Effective: June 1, 2022 DOC: June 16, 2022

40 of NUMPAGES 4

4. Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the ceding insurer or the Reinsurer.

Effective: June 1, 2022 DOC: June 16, 2022

41 of NUMPAGES 4

EXHIBIT 10.135. Certain identified information has been excluded from this exhibit because it is immaterial and would be competitively harmful if publicly disclosed. Information that has been omitted is indicated with brackets.

Property Catastrophe Excess of Loss Reinsurance Contract

issued to

Typtap insurance company

Ocala, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

Effective: June 1, 2022 DOC: July 11, 2022

1 of NUMPAGES 3


PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT TABLE OF CONTENTS
Article		Page

	Preamble	4
1	Business Covered	4
2	Retention and Limit	4
3	Florida Hurricane Catastrophe Fund	5
4	Term	5
5	Special Termination	6
6	Territory	7
7	Exclusions	7
8	Special Acceptance	9
9	Premium	9
10	Reinstatement	10
11	Definitions	10
12	Extra Contractual Obligations/Excess of Policy Limits	13
13	Net Retained Liability	14
14	Other Reinsurance	14
15	Original Conditions	14
16	No Third Party Rights	15
17	Notice of Loss and Loss Settlements	15
18	Late Payments	15
19	Offset	16
20	Currency	17
21	Obligations and Collateral Release	17
22	Limited Recourse	19
23	Taxes	20
24	Access to Records	20
25	Confidentiality	21
26	Indemnification and Errors and Omissions	22
27	Insolvency	23
28	Run-Off Reinsurer	24
29	Arbitration	25
30	Expedited Arbitration	26
31	Service of Suit	27
32	Governing Law	28
33	Entire Agreement	28
34	Non-Waiver	28
35	Sanction Limitation and Exclusion Clause (Lma 3100)	28
36	Mode of Execution	29
	Company Signing Block	30

Effective: June 1, 2022 DOC: July 11, 2022

2 of NUMPAGES 3



PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT TABLE OF CONTENTS
Attachments		Page

	Pools, Associations & Syndicates Exclusions Clause	31
	Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance - U.S.A.	34
	Terrorism Exclusion	36
	Limited Communicable Disease Exclusion No. 2 (Property Treaty Reinsurance)	37
	Cyber Loss Limited Exclusion Clause (Property Treaty Reinsurance)	38
	Trust Agreement Requirements Clause	39

Effective: June 1, 2022 DOC: July 11, 2022

3 of NUMPAGES 3

Property Catastrophe Excess of Loss Reinsurance Contract

(the “Contract”)

issued to

Typtap insurance company

Ocala, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

THE SUBSCRIBING REINSURER(S) IDENTIFIED IN THE
INTERESTS AND LIABILITIES AGREEMENT(S) ATTACHED TO
AND FORMING PART OF THIS CONTRACT

(the “Reinsurer”)

ARTICLE 1

BUSINESS COVERED

This Contract is to indemnify the Company in respect of its net excess liability as a result of any

loss or losses which may occur during the term of this Contract under any Policies in force at the effective date hereof or issued or renewed on or after that date, covering direct and assumed business classified by the Company as the property perils of Homeowners, Condominium Owners, Renters and Dwelling, subject to the terms and conditions herein contained.

ARTICLE 2

Retention and Limit

A. The Reinsurer shall be liable in respect of each Loss Occurrence for the Ultimate Net Loss over and above the initial Ultimate Net Loss of [ ] each Loss Occurrence, subject to a limit of liability to the Reinsurer of [ ] each Loss Occurrence, and subject further to a limit of liability of [ ] for all Loss Occurrences commencing during the term of this Contract.

Effective: June 1, 2022 DOC: July 11, 2022

4 of NUMPAGES 3

ARTICLE 3

FLORIDA HURRICANE CATASTROPHE FUND

B. Any FHCF reimbursement premiums paid by the Company for FHCF layers that inure to the benefit of this Contract shall be deemed to be premiums paid for inuring reinsurance.

C. The Company has opted for a 90% coverage selection from the FHCF.

ARTICLE 4

Term

This Contract shall take effect at 12:01 a.m., Standard Time, June 1, 2022, and unless terminated prior to that time and date as provided in the Special Termination Article, shall remain in effect

Effective: June 1, 2022 DOC: July 11, 2022

5 of NUMPAGES 3

until 12:01 a.m., Standard Time, June 1, 2023, applying to Loss Occurrences commencing during the term of this Contract. For purposes of this Contract, “Standard Time” shall mean the time as described in the original Policy.

ARTICLE 5

SPECIAL TERMINATION

1. The Subscribing Reinsurer ceases underwriting operations.

2. A state insurance department or other legal authority orders the Subscribing Reinsurer to cease writing business, or the Subscribing Reinsurer is placed under regulatory supervision.

4. The Subscribing Reinsurer has become, or has announced its intention to become, merged with or acquired or controlled by any company, corporation, or individual(s) not controlling the Subscribing Reinsurer’s operations at the inception of this Contract.

5. The Subscribing Reinsurer has retroceded its entire liability under this Contract without the Company’s prior written consent, except for retrocessions to members of the Subscribing Reinsurer’s holding company group.

6. The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid.

7. The Subscribing Reinsurer has in any other way assigned its interests or delegated its obligations under this Contract to an unaffiliated entity.

8. The Subscribing Reinsurer has failed to post or maintain required collateral to secure its obligations as required under this Contract, and has not cured such deficiency within 30 days following written notice thereof from the Company.

Effective: June 1, 2022 DOC: July 11, 2022

6 of NUMPAGES 3

C. Additionally, in the event of any of the circumstances listed in paragraph A of this Article, the Company shall have the option to commute the Subscribing Reinsurer’s liability for losses on Policies covered by this Contract. In the event the Company and the Subscribing Reinsurer cannot agree on the commutation amount, they shall appoint an actuary and/or appraiser to assess such amount and shall share equally any expense of the actuary and/or appraiser. If the Company and the Subscribing Reinsurer cannot agree on an actuary and/or appraiser, the Company and the Subscribing Reinsurer each shall nominate three individuals, of whom the other shall decline two, and the final appointment shall be made by drawing lots. Payment by the Subscribing Reinsurer of the amount of liability ascertained shall constitute a complete and final release of both parties in respect of liability arising from the Subscribing Reinsurer’s participation under this Contract.

D. The Company’s option to require commutation under paragraph C above shall survive the termination or expiration of this Contract.

ARTICLE 6

Territory

This Contract shall apply to Policies issued in the State of Florida.

ARTICLE 7

Exclusions

A. This Contract shall not apply to and specifically excludes:

1. Policies covered by the Company’s Flood Tower.

2. Flood when written as such.

3. Earthquake for standalone Policies where earthquake is the only named peril.

4. Hail damage to an insured’s growing or standing crops.

5. Reinsurance assumed by the Company under obligatory reinsurance agreements, except intercompany reinsurance between the Company and its affiliates and

Effective: June 1, 2022 DOC: July 11, 2022

7 of NUMPAGES 3

reinsurance where the Policies involved are to be re-underwritten in accordance with the underwriting standards of the Company and reissued as Policies of the Company in due course.

6. Pools, Associations & Syndicates, per the attached exclusion.

8. Loss or damage occasioned by war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, martial law, or confiscation by order of any government or public authority, but not excluding loss or damage that would be covered under a standard form of Policy containing a standard war exclusion clause.

9. Losses excluded by the attached Nuclear Incident Exclusion Clause – Physical Damage – Reinsurance – U.S.A.

10. Terrorism as defined in the attached Terrorism Exclusion.

11. Mold unless directly resulting from an otherwise covered peril.

13. Financial guarantee and insolvency.

15. Losses excluded by the attached Limited Communicable Disease Exclusion No. 2 (Property Treaty Reinsurance).

Effective: June 1, 2022 DOC: July 11, 2022

8 of NUMPAGES 3

16. Loss Excluded by the attached Cyber Loss Limited Exclusion Clause (Property Treaty Reinsurance).

17. Policies written by Homeowners Choice Property & Casualty Insurance Company, Inc.

ARTICLE 8

SPECIAL ACCEPTANCE

ARTICLE 9

Premium

A. The Company shall pay the Reinsurer a premium of [ ] for the term of this Contract, payable to the Reinsurer by the Company on June 1, 2022.

B. The Company shall furnish the Reinsurer with such reasonably available information as may be reasonably required by the Reinsurer for completion of the Reinsurer’s financial statements.

Effective: June 1, 2022 DOC: July 11, 2022

9 of NUMPAGES 3

ARTICLE 10

Reinstatement

Loss payments under this Contract shall reduce the limit of coverage afforded by the amounts paid, but the limit of coverage shall be reinstated from the time of the occurrence of the loss, and for each amount so reinstated, the Company agrees to pay, simultaneously with the Reinsurer’s loss payment, an additional premium calculated at pro rata of the Reinsurer’s premium for the term of this Contract, being pro rata only as to the fraction of the Reinsurer’s limit of liability hereunder (i.e., the fraction of [ ]) so reinstated. Nevertheless, the Reinsurer’s liability shall not exceed such limit(s) in respect of any one Loss Occurrence, nor the applicable limit(s) in respect of all Loss Occurrences commencing during the term of this Contract, as set forth in the Retention and Limit Article.

ARTICLE 11

Definitions

5. Nothing in this clause shall be construed to mean that losses are not recoverable hereunder until the Company’s “Ultimate Net Loss” has been ascertained.

Effective: June 1, 2022 DOC: July 11, 2022

10 of NUMPAGES 3

1. court costs;

2. costs of supersedeas and appeal bonds;

3. monitoring counsel expenses;

4. legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, including but not limited to declaratory judgment actions;

5. post-judgment interest;

6. pre-judgment interest, unless included as part of an award or judgment;

8. subrogation, salvage and recovery expenses.

“Loss Adjustment Expense” does not include salaries and expenses of the Company’s employees, except as provided in subparagraph (7) above, and office and other overhead expenses.

Effective: June 1, 2022 DOC: July 11, 2022

11 of NUMPAGES 3

above referenced governmental meteorological agencies irrespective of the duration of the timing or spacing between such watches, warnings or other official advisories. If two or more storms are assigned different names by the above referenced governmental meteorological agencies, each of those storms shall constitute a separate event for purposes of this definition.

2. Except as provided in subparagraph (1)(a) above:

b. Only one period of consecutive hours shall apply with respect to one event, except that, as respects those “Loss Occurrences” referred to in subparagraph (1)(c)

Effective: June 1, 2022 DOC: July 11, 2022

12 of NUMPAGES 3

above, if the disaster, accident or loss occasioned by the event is of greater duration than 96 consecutive hours, then the Company may divide that disaster, accident or loss into two or more “Loss Occurrences” provided no two periods overlap and no individual loss is included in more than one such period and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss.

D. “Policy” means any binder, policy, or contract of insurance or reinsurance issued, accepted or held covered provisionally or otherwise, by or on behalf of the Company.

ARTICLE 12

EXTRA CONTRACTUAL OBLIGATIONS/EXCESS OF POLICY LIMITS

Effective: June 1, 2022 DOC: July 11, 2022

13 of NUMPAGES 3

E. Loss Adjustment Expense in respect of Extra Contractual Obligations and/or Loss in Excess of Policy Limits shall be covered hereunder in the same manner as other Loss Adjustment Expense.

G. In no event shall coverage be provided to the extent not permitted under law.

ARTICLE 13

NET RETAINED LIABILITY

A. This Contract applies only to that portion of any loss that the Company retains net for its own account (prior to deduction of any reinsurance that inures solely to the benefit of the Company).

ARTICLE 14

OTHER REINSURANCE

The Company shall be permitted to carry in force other reinsurance, recoveries under which shall inure to the benefit of this Contract.

ARTICLE 15

Original Conditions

Effective: June 1, 2022 DOC: July 11, 2022

14 of NUMPAGES 3

ARTICLE 16

NO THIRD PARTY RIGHTS

ARTICLE 17

Notice of Loss and Loss Settlements

B. The Company alone and at its full discretion shall adjust, settle or compromise all claims and losses.

ARTICLE 18

LATE PAYMENTS

A. In the event any payment due either party is not received by the payment due date, the party to whom payment is due may, by written notification, require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on the amount past due calculated for each such payment on the last business day of each month as follows:

1. The number of full days that have expired since the overdue date or the last monthly calculation, whichever the lesser; times

Effective: June 1, 2022 DOC: July 11, 2022

15 of NUMPAGES 3

2. 1/365th of the sum of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made, plus 1%; times

3. The amount past due, including accrued interest.

B. The due date shall, for purposes of this Article, be determined as follows:

2. Payments from the Company to the Reinsurer shall be due on the dates specified within this Contract. Payments shall be overdue 30 days thereafter except for the first installment of premium, if applicable, which shall be overdue 60 days from inception or 30 days from final line-signing, whichever the later. Reinstatement premium, if applicable, shall have as a due date the date when the Company receives payment for the claim giving rise to such reinstatement premium, and payment shall be overdue 30 days thereafter. In the event a due date is not specifically stated for a given payment, the overdue date shall be 30 days following the date of billing.

ARTICLE 19

OFFSET

Effective: June 1, 2022 DOC: July 11, 2022

16 of NUMPAGES 3

ARTICLE 20

Currency

A. Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United States Dollars, and all payments hereunder shall be in United States Dollars.

ARTICLE 21

OBLIGATIONS AND COLLATERAL RELEASE

A. The Reinsurer will establish a trust fund (“Trust Fund”) for its Obligations (as defined herein) hereunder, pursuant to that certain Trust Agreement by and between the Reinsurer, the Company, and Truist Bank (the “Trust Agreement”). The Trust Fund shall be funded pursuant to the provisions hereof. Collateral deposited in the Trust Fund may be withdrawn on the terms set forth herein and in the Trust Agreement. The Trust Agreement shall be at all times in compliance with the relevant provisions of the Insurance Code of the Company’s state of domicile and the administrative regulations adopted by that state’s insurance department, in order for the Company to receive, full statutory financial statement credit for reinsurance provided under this Contract. Collateral deposited in the Trust Fund may be withdrawn at any time, notwithstanding the other provisions of this Contract, and utilized and applied by the Company or any successor, by operation of law, of the Company, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Reinsurer, for the following purposes:

1. to reimburse the Company for the Reinsurer’s Obligations, the payment of which is due under the terms of this Contract and that has not been otherwise paid;

2. to make refund of any sum that is in excess of 102% of the amount required to pay the Reinsurer’s Obligations under this Contract;

3. to fund an account with the Company for the Reinsurer’s Obligations. Such cash deposit shall be held in an interest-bearing account separate from the Company’s other assets, and interest thereon not in excess of the prime rate shall accrue to the benefit of the Reinsurer;

4. to pay the Reinsurer’s share of any other amounts the Company claims are due under this Contract.

Effective: June 1, 2022 DOC: July 11, 2022

17 of NUMPAGES 3

B. The term “Obligations” shall mean during the term of the Contract, 100% of the limit of the Reinsurer’s liability hereunder less any unpaid minimum premium (net of brokerage and Federal Excise Tax as applicable) and aggregate amounts previously paid by the Reinsurer in respect of claims under this Contract. Upon expiration of the Contract, the term “Obligations” shall mean the amount as determined in accordance with paragraph D below.

C. If, at expiration of this Contract, the Company, in its commercially reasonable judgment, believes that no claims will impact this Contract, the Company will so notify the Reinsurer and shall fully and finally release from the Trust Fund all collateral contained therein.

D. If, at the expiration of this Contract, the Company, in its commercially reasonable judgment, believes that the Company may have a claim hereunder, the Company shall estimate the amount of reinstatement premium due under this Contract based on the reinstatement premium payable under the contract identified in the Business Covered article (the Underlying Contract”) as follows, unless otherwise mutually agreed:

1. The Company shall determine the sum of the following for the Underlying Contract, as of this Contract expiration date:

a. losses and loss adjustment expense paid by the Company;

b. reserves for losses reported and outstanding; and

c. reserves for losses incurred but not reported;

2. The Company shall then calculate the estimated reinstatement premium due on the Underlying Contract and such amount shall constitute the Reinsurer’s Obligations

3. The amount of the estimated reinstatement premium due on the Underlying Contract, measured as of the applicable determination date (as specified in paragraph E below), shall be multiplied by a factor, based upon the number of months, which have elapsed on such determination date since expiration of this Contract, as follows:

a. From 0 to 12 months from expiration of this Contract, 150%, else;

b. From 13 to 24 months from expiration of this Contract, 125%, else;

c. From 25 to 36 months from expiration of this Contract, 110%; and

d. From 37 to 67 months from expiration of this Contract, 100%.

As of 67 months after expiration of this Contract (the “Reporting Period”), the amount determined in subparagraphs 1, 2 and 3 above for such date shall be considered the definitive Final Limit for each such Loss Occurrence for which the Company and the Reinsurer agree to commute this Contract with final settlement on that basis.

Effective: June 1, 2022 DOC: July 11, 2022

18 of NUMPAGES 3

E. The procedure for determining the amount of collateral required to fund the Reinsurer’s Obligations as set forth in paragraph D above, shall be followed each and every time, if in the opinion of the Company, there are materially new estimates regarding its losses, and each quarter-end, until all the Reinsurer’s Obligations have been extinguished or the Reporting Period is over, whichever is earlier. The information to be used for the determinations of the Reinsurer’s Obligations shall be as reflected on the Company’s official books and records.

F. The Company agrees to release from the Trust Fund all collateral in excess of 102% of the amount required to pay the Reinsurer’s Obligations for its share of actual and possible claims, as determined in accordance with paragraph A, above within 10 Business Days of the date of such determination. “Business Day” shall be defined as a day (other than a Saturday or a Sunday) on which banks are open for commercial business in Bermuda and in New York, New York, U.S.A.

G. Notwithstanding the foregoing, if the Reinsurer is licensed as a segregated account company, the Company agrees and acknowledges that there shall only be recourse to the Segregated Trust Account assets, and in the event of the exhaustion of the Segregated Trust Account assets there shall be no recourse by any party for any claims, payments, other expenses or fees whatsoever, howsoever arising pursuant to this Contract, to the assets which are allocated to any other segregated account of the Reinsurer or to the general account of the Reinsurer.

H. At the end of the Reporting Period, this Contract will be commuted based on the Reinsurer’s Obligations at that point. The Company agrees to terminate the Trust Account, and all remaining collateral will be released to the Company and/or the Reinsurer, as applicable, and both parties shall be released from any further obligations under this Contract.

ARTICLE 22

Limited Recourse

A. The liability of the Reinsurer for the performance and discharge of all of its obligations, however they may arise, in relation to this Contract (together “Obligations” for purposes of this Article), shall be limited to and payable solely from the proceeds of realization of the assets of the Trust Fund established in accordance with this Contract, and accordingly there shall be no recourse to any other assets of the Reinsurer whether or not allocated to any other separate account or the general account of the Reinsurer. In the event that the proceeds of realization of the assets of the Trust Fund are insufficient to meet all Obligations, any Obligations remaining after the application of such proceeds shall be extinguished, and the Company undertakes in such circumstances to take no further action against the Reinsurer in respect of any such Obligations. In particular, neither the Company nor any party acting on its behalf shall petition or take any steps for the winding up or receivership of the Reinsurer.

B. Notwithstanding any matter referred to herein, the Company understands and accepts that the Reinsurer acts on behalf of one or more separate accounts of Claddaugh Casualty

Effective: June 1, 2022 DOC: July 11, 2022

19 of NUMPAGES 3

Insurance Company Ltd. and that all corporate matters relating to the creation of the Reinsurer, capacity of the Reinsurer, operation and liquidation of the Reinsurer and any matters relating to the Reinsurer thereof shall be governed by, and construed in accordance with, the laws of Bermuda. The Company has had the opportunity to take advice and to obtain all such additional information that it considers necessary to evaluate the terms, conditions and risks of entering into this Contract with the Reinsurer.

ARTICLE 23

TAXES

ARTICLE 24

ACCESS TO RECORDS

Effective: June 1, 2022 DOC: July 11, 2022

20 of NUMPAGES 3

C. For purposes of this Article:

1. “Privileged Documents” means any documents that are Attorney-Client Privilege Documents and/or Work Product Privilege Documents.

ARTICLE 25

CONFIDENTIALITY

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract (“Confidential Information”) are proprietary and confidential to the Company. Confidential Information shall not include documents, information or data that the Reinsurer can show:

1. are publicly known or have become publicly known through no unauthorized act of the Reinsurer;

2. have been rightfully received from a third person without obligation of confidentiality; or

3. were known by the Reinsurer prior to the placement of this Contract without an obligation of confidentiality.

B. Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential Information to any third parties, including any affiliated companies (except to the extent

Effective: June 1, 2022 DOC: July 11, 2022

21 of NUMPAGES 3

necessary to enable affiliated companies or third parties engaged by the Reinsurer to perform services related to this Contract on behalf of the Reinsurer), except:

1. when required by retrocessionaires as respects business ceded to this Contract;

2. when required by regulators performing an audit of the Reinsurer’s records and/or financial condition; or

3. when required by external auditors performing an audit of the Reinsurer’s records in the normal course of business.

Further, the Reinsurer agrees not to use any Confidential Information for any purpose not related to the performance of its obligations or enforcement of its rights under this Contract.

D. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

ARTICLE 26

Indemnification and Errors and Omissions

A. The Reinsurer is reinsuring, subject to the terms and conditions of this Contract, the obligations of the Company under any Policy. The Company shall be the sole judge as to:

1. what shall constitute a claim or loss covered under any Policy;

2. the Company’s liability thereunder; and

3. the amount or amounts that it shall be proper for the Company to pay thereunder.

B. The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and liability(ies) of the Company under any Policy.

D. Nothing in this Article shall be construed to override any of the other terms and conditions of this Contract.

Effective: June 1, 2022 DOC: July 11, 2022

22 of NUMPAGES 3

ARTICLE 27

Insolvency

Effective: June 1, 2022 DOC: July 11, 2022

23 of NUMPAGES 3

and in that event only, the Company, with the prior approval of the certificate of assumption on New York risks by the Superintendent of Financial Services of the State of New York, or with the prior approval of such other regulatory authority as may be applicable, is entirely released from its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.

ARTICLE 28

RUN-OFF REINSURER

A. “Run-off Reinsurer” means any Subscribing Reinsurer that:

1. has been ordered by a state insurance department or other legal authority to cease writing business, or has been placed under regulatory supervision or in rehabilitation; or

2. has ceased reinsurance underwriting operations; or

3. has transferred its claims-paying authority to an unaffiliated entity; or

5. in any other way has assigned its interests or delegated its obligations under this Contract to an unaffiliated entity.

Effective: June 1, 2022 DOC: July 11, 2022

24 of NUMPAGES 3

4. The provisions of the Arbitration Article shall not apply.

C. The Company’s waiver of any rights provided in this Article is not a waiver of that right or other rights at a later date.

ARTICLE 29

Arbitration

D. Within 30 days after all arbitrators have been appointed, the panel shall meet and determine timely periods for briefs, discovery procedures and schedules of hearings.

Effective: June 1, 2022 DOC: July 11, 2022

25 of NUMPAGES 3

E. The panel shall be relieved of all judicial formality and shall not be bound by the strict rules of procedure and evidence. Notwithstanding anything to the contrary in this Contract, the arbitrators may at their discretion, consider underwriting and placement information provided by the Company to the Reinsurer, as well as any correspondence exchanged by the parties that is related to this Contract. The arbitration shall take place in Tampa, Florida, or at such other place as the parties shall agree. The decision of any two arbitrators shall be in writing and shall be final and binding. The panel is empowered to grant interim relief as it may deem appropriate.

ARTICLE 30

Expedited Arbitration

Effective: June 1, 2022 DOC: July 11, 2022

26 of NUMPAGES 3

ARTICLE 31

SERVICE OF SUIT

D. Service of process in such suit may be made upon:

1. as respects Underwriting Members of Lloyd’s, London: Lloyd’s America, Inc., Attention: Legal Department, 280 Park Avenue, East Tower, 25th Floor, New York, New York 10017;

The above-named are authorized and directed to accept service of process on behalf of the Reinsurer in any such suit.

Effective: June 1, 2022 DOC: July 11, 2022

27 of NUMPAGES 3

designates the above-named as the person to whom the said officer is authorized to mail such process or a true copy thereof.

ARTICLE 32

GOVERNING LAW

This Contract shall be governed as to performance, administration and interpretation by the laws of the State of Florida, subject to the Limited Recourse and Bermuda regulations clauses as set out in the Limited Recourse Article, exclusive of conflict of law rules. However, with respect to credit for reinsurance, the rules of all applicable states shall apply.

ARTICLE 33

ENTIRE AGREEMENT

ARTICLE 34

NON-WAIVER

ARTICLE 35

Sanction Limitation and Exclusion Clause (LMA 3100)

Effective: June 1, 2022 DOC: July 11, 2022

28 of NUMPAGES 3

ARTICLE 36

MODE OF EXECUTION

A. This Contract may be executed by:

1. an original written ink signature of paper documents;

2. an exchange of facsimile copies showing the original written ink signature of paper documents;

Effective: June 1, 2022 DOC: July 11, 2022

29 of NUMPAGES 3

On this _____ day of __________, in the year of 2022.

Typtap insurance company

Signature: Title:

Print Name:

And on this _____ day of __________, in the year of 2022.

PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT

Effective: June 1, 2022 DOC: July 11, 2022

30 of NUMPAGES 3

POOLS, ASSOCIATIONS & SYNDICATES EXCLUSIONS CLAUSE

Section A:

This Contract excludes:

a. All business derived directly or indirectly from any Pool, Association or Syndicate which maintains its own reinsurance facilities.

Section B:

Oil, Gas or Petro-Chemical Plants

Oil or Gas Drilling Rigs and/or

Aviation Risks

2. The exclusion under paragraph 1 of this Section B does not apply:

a. Where the Total Insured Value over all interests of the risk in question is less than $250,000,000.

b. To interests traditionally underwritten as Inland Marine and/or Stock and/or Contents written on a Blanket basis.

Section C:

a. So-called “Beach and Windstorm Plans” and so-called “Coastal Pools”;

Effective: June 1, 2022 DOC: July 11, 2022

31 of NUMPAGES 3

b. All “FAIR Plan” and “Rural Risk Plan” business;

c. Louisiana Citizens Property Insurance Corporation;

d. California Earthquake Authority (“CEA”) or any similar entity.

Notwithstanding the above, assessments related to the Florida Hurricane Catastrophe Fund and Citizens Property Insurance Corporation (Florida) shall be excluded hereunder.

2. However, this reinsurance does not include any increase in such liability resulting from:

a. The inability of any other participant in such Residual Market Mechanisms to meet its liability;

c. Any assessment or surcharge levied on the policyholder and therefore not a liability of the Company;

d. The Company’s initial capital contribution to the CEA;

e. Any assessments, other than interim and regular assessments, from a Residual Market Mechanism included in subparagraph 1(c) above;

f. Any expenditure to purchase or retire bonds.

Effective: June 1, 2022 DOC: July 11, 2022

32 of NUMPAGES 3

NOTES: Wherever used herein the terms:

“Contract” shall be understood to mean “Agreement,” “Contract,” “Policy” or whatever other term is used to designate the attached reinsurance document.

Effective: June 1, 2022 DOC: July 11, 2022

33 of NUMPAGES 3

Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance - U.S.A.

I. Nuclear reactor power plants including all auxiliary property on the site, or

II. Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and “critical facilities” as such, or

IV. Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate

(a) where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or

Effective: June 1, 2022 DOC: July 11, 2022

34 of NUMPAGES 3

6. The term “special nuclear material” shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.

7. Reassured to be sole judge of what constitutes:

(a) substantial quantities, and

(b) the extent of installation, plant or site.

Note: Without in any way restricting the operation of paragraph (1) hereof, it is understood and agreed that

12/12/57

NMA 1119

NOTES: Wherever used herein the terms:

“Agreement” shall be understood to mean “Agreement”, “Contract”, “Policy” or whatever other term is used to designate the attached reinsurance document.

“Reinsurers” shall be understood to mean “Reinsurers”, “Underwriters” or whatever other term is used in the attached reinsurance document to designate the reinsurer or reinsurers.

Effective: June 1, 2022 DOC: July 11, 2022

35 of NUMPAGES 3

TERRORISM EXCLUSION

a. involves violence against one or more persons; or

b. involves damage to property; or

c. endangers life other than that of the person committing the action; or

d. creates a risk to health or safety of the public or a section of the public; or

e. is designed to interfere with or to disrupt an electronic system.

Effective: June 1, 2022 DOC: July 11, 2022

36 of NUMPAGES 3

LIMITED Communicable Disease Exclusion no. 2 (Property Treaty Reinsurance)

Definitions

3. Communicable Disease means any disease which can be transmitted by means of any substance or agent from any organism to another organism where:

3.1. the substance or agent includes, but is not limited to, a virus, bacterium, parasite or other organism or any variation thereof, whether deemed living or not, and

4. Time Element Loss means business interruption, contingent business interruption or any other consequential losses.

LMA5503

15 May 2020

Effective: June 1, 2022 DOC: July 11, 2022

37 of NUMPAGES 3

CYBER LOSS LIMITED EXCLUSION CLAUSE (PROPERTY TREATY REINSURANCE)

1.2. any loss of, alteration of, or damage to or a reduction in the functionality, availability or operation of a Computer System, unless subject to the provisions of paragraph 2;

1.3. any loss of use, reduction in functionality, repair, replacement, restoration or reproduction of any Data, including any amount pertaining to the value of such Data.

fire, lightning, explosion, aircraft or vehicle impact, falling objects, windstorm, hail, tornado, cyclone, hurricane, earthquake, volcano, tsunami, flood, freeze or weight of snow

Definitions

5. Time Element Loss means business interruption, contingent business interruption or any other consequential losses.

LMA5410

06 March 2020

Effective: June 1, 2022 DOC: July 11, 2022

38 of NUMPAGES 3

TRUST AGREEMENT REQUIREMENTS CLAUSE

1. Requires the Reinsurer to establish a trust account for the benefit of the Company, and specifies what the Trust Agreement is to cover;

4. Requires that all settlements of account between the Company and the Reinsurer be made in cash or its equivalent; and

5. Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the Company or the Reinsurer.

Effective: June 1, 2022 DOC: July 11, 2022

39 of NUMPAGES 3

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may, whenever necessary, negotiate these assets without consent or signature from the Reinsurer or any other entity.

4. Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the ceding insurer or the Reinsurer.

Effective: June 1, 2022 DOC: July 11, 2022

40 of NUMPAGES 3

EXHIBIT 10.136. Certain identified information has been excluded from this exhibit because it is immaterial and would be competitively harmful if publicly disclosed. Information that has been omitted is indicated with brackets.

Reinstatement Premium Protection Reinsurance Contract

issued to

TypTap Insurance Company

Ocala, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

Effective: June 1, 2022 DOC: June 16, 2022

1 of NUMPAGES 3


REINSTATEMENT PREMIUM PROTECTION REINSURANCE CONTRACT TABLE OF CONTENTS
Article		Page

	Preamble	3
1	Business Covered	3
2	Coverage	3
3	Term	4
4	Special Termination	4
5	Territory	5
6	Exclusions	5
7	Premium	5
8	Definitions	7
9	Original Conditions	7
10	No Third Party Rights	7
11	Notice of Loss and Loss Settlements	7
12	Late Payments	8
13	Offset	9
14	Currency	9
15	Unauthorized Reinsurance	9
16	Taxes	12
17	Access to Records	12
18	Confidentiality	13
19	Errors and Omissions	14
20	Insolvency	14
21	Run-Off Reinsurer	15
22	Arbitration	16
23	Expedited Arbitration	17
24	Service of Suit	18
25	Governing Law	19
26	Entire Agreement	19
27	Non-Waiver	19
28	Sanction Limitation and Exclusion Clause (LMA 3100)	19
29	Intermediary	20
30	Mode of Execution	20
	Company Signing Block	21

Attachments
	Trust Agreement Requirements Clause	22

Effective: June 1, 2022 DOC: June 16, 2022

2 of NUMPAGES 3

Reinstatement Premium Protection Reinsurance Contract

(the “Contract”)

issued to

Typtap insurance company

Ocala, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

THE SUBSCRIBING REINSURER(S) IDENTIFIED
IN THE INTERESTS AND LIABILITIES AGREEMENT(S)
ATTACHED TO AND FORMING PART OF THIS CONTRACT

(the “Reinsurer”)

article 1

Business Covered

This Contract is to indemnify the Company in respect of the liability that may accrue to the Company as a result of Reinstatement Premium the Company may become liable to pay under the reinstatement provisions of the Property Catastrophe Excess of Loss Reinsurance Contract, effective at 12:01 a.m., Standard Time, June 1, 2022 and expiring 12:01 a.m., Standard Time, June 1, 2023, Document Number: UBWP0001 (the “Original Contract”), subject to the terms and conditions herein contained. The Original Contract covers losses under Policies covering direct and assumed business classified by the Company as the property perils of Homeowners, Condominium Owners, Renters and Dwelling, in force at the inception of this Contract, or issued or renewed during the term of this Contract. A copy of the Original Contract is attached to and forms part of this Contract.

article 2

coverage

The Reinsurer shall be liable to pay the Reinstatement Premium obligations under the Original Contract.

Effective: June 1, 2022 DOC: June 16, 2022

3 of NUMPAGES 3

article 3

Term

ARTICLE 4

SPECIAL TERMINATION

1. The Subscribing Reinsurer ceases underwriting operations.

2. A state insurance department or other legal authority orders the Subscribing Reinsurer to cease writing business, or the Subscribing Reinsurer is placed under regulatory supervision.

7. The Subscribing Reinsurer has been assigned an A.M. Best’s rating of less than “A-” and/or an S&P rating of less than “BBB+.” However, as respects Underwriting

Effective: June 1, 2022 DOC: June 16, 2022

4 of NUMPAGES 3

Members of Lloyd’s, London, a Lloyd’s Market Rating of less than “A-” by A.M. Best and/or less than “BBB+” by S&P shall apply.

9. The Subscribing Reinsurer has in any other way assigned its interests or delegated its obligations under this Contract to an unaffiliated entity.

article 5

Territory

The territorial limits of this Contract shall be identical with those of the Original Contract.

article 6

exclusions

This Contract shall follow the exclusions set forth in the Original Contract.

ARTICLE 7

Premium

A. As respects the First Layer, the Company shall pay the Reinsurer a premium of [ ] for the term of this Contract.

B. The premium in paragraph A above shall be payable to the Reinsurer by the Company in four equal installments of [ ] on June 1, 2022, September 1, 2022, January 1, 2023 and April 1, 2023.

Effective: June 1, 2022 DOC: June 16, 2022

5 of NUMPAGES 3

C. As respects the Second through Fifth Layers, the premiums shall be based on the Layers of the Original Contract, and the Company shall pay the Reinsurer a deposit premium in accordance with the schedule set forth below. The adjusted premium to be paid to the Reinsurer for the reinsurance provided under each Layer shall be calculated as the Rate on Line set out below multiplied by the Final Premium for that Layer:


PREMIUM SCHEDULE
Layer	Rate on Line	Deposit Premium
Second Layer	[ ]	[ ]
Third Layer	[ ]	[ ]
Fourth Layer	[ ]	[ ]
Fifth Layer	[ ]	[ ]

D. The deposit premiums set forth in paragraph C above shall be payable to the Reinsurer by the Company in installments as follows:


DEPOSIT INSTALLMENT SCHEDULE
Layer	June 1, 2022	September 1, 2022	January 1, 2023	April 1, 2023
Second Layer	[ ]	[ ]	[ ]	[ ]
Third Layer	[ ]	[ ]	[ ]	[ ]
Fourth Layer	[ ]	[ ]	[ ]	[ ]
Fifth Layer	[ ]	[ ]	[ ]	[ ]

E. By April 1, 2023, the Company shall calculate and report the Final Premium in accordance with paragraph C above. If the Final Premium for a Layer is less than the deposit premium payable hereunder (including the fourth deposit premium installment), the fourth quarterly deposit premium installment shall be waived, and any amount in excess of the sum of the previously paid three deposit premium installments shall be remitted to the Reinsurer with the Company’s report. If the Final Premium is less than the sum of the previously paid three deposit premium installments, the Reinsurer shall remit the difference to the Company. Notwithstanding the foregoing, if the Final Premium for a Layer is greater than the deposit premium payable hereunder (including the fourth deposit premium installment), the Company shall remit to the Reinsurer the difference between the Final Premium and the full deposit premium within 45 days after the expiration of this Contract.

F. The Company shall furnish the Reinsurer with such reasonably available information as may be reasonably required by the Reinsurer for completion of the Reinsurer’s financial statements.

Effective: June 1, 2022 DOC: June 16, 2022

6 of NUMPAGES 3

article 8

definitions

A. “Reinstatement Premium” means premium paid by the Company for each Layer under the provisions of the Reinstatement Article of the Original Contract. Reinstatement Premium shall be calculated at pro rata of the original reinsurance premium, being pro rata only for the amount being reinstated. If, at the time of a loss settlement under the Original Contract, the reinsurance premium thereunder is not yet known, Reinstatement Premium shall be based upon the deposit premium, subject to adjustment when said reinsurance premium is finally established. Nothing in this clause shall be construed to mean that amounts are not recoverable hereunder until the Company’s final Reinstatement Premium has been ascertained. All recoveries received subsequent to reimbursement hereunder shall be applied as if received prior to the aforesaid settlement, and all necessary adjustments shall be made by the parties hereto.

B. “Loss Occurrence” shall follow the definition set forth in the Original Contract.

C. “Final Premium” means the total reinsurance premium except for Reinstatement Premium.

D. “Policy” means any binder, policy, or contract of insurance or reinsurance issued, accepted or held covered provisionally or otherwise, by or on behalf of the Company.

ARTICLE 9

ORIGINAL CONDITIONS

article 10

No Third Party Rights

article 11

NOTICE OF LOSS AND LOSS settlements

Effective: June 1, 2022 DOC: June 16, 2022

7 of NUMPAGES 3

B. The Company alone and at its full discretion shall adjust, settle or compromise all claims and losses.

ARTICLE 12

LATE PAYMENTS

1. The number of full days that have expired since the overdue date or the last monthly calculation, whichever the lesser; times

2. 1/365th of the sum of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made, plus 1%; times

3. The amount past due, including accrued interest.

Interest shall accumulate until payment of the original amount due plus interest penalties have been received by the Intermediary.

B. The due date shall, for purposes of this Article, be determined as follows:

Effective: June 1, 2022 DOC: June 16, 2022

8 of NUMPAGES 3

the claim giving rise to such Reinstatement Premium, and payment shall be overdue 30 days thereafter. In the event a due date is not specifically stated for a given payment, the overdue date shall be 30 days following the date of billing.

ARTICLE 13

OFFSET

ARTICLE 14

Currency

A. Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United States Dollars, and all payments hereunder shall be in United States Dollars.

ARTICLE 15

UNAUTHORIZED REINSURANCE

A. This Article applies:

Effective: June 1, 2022 DOC: June 16, 2022

9 of NUMPAGES 3

1. only to the extent a Subscribing Reinsurer does not qualify for credit with any insurance regulatory authority having jurisdiction over the Company’s reserves, or

1. unearned premium (if applicable);

2. known outstanding losses that have been reported to the Reinsurer and Loss Adjustment Expense relating thereto;

3. losses and Loss Adjustment Expense paid by the Company but not recovered from the Reinsurer;

4. losses incurred but not reported and Loss Adjustment Expense relating thereto;

5. all other amounts for which the Company cannot take credit on its financial statements unless funding is provided by the Reinsurer.

Effective: June 1, 2022 DOC: June 16, 2022

10 of NUMPAGES 3

1. to reimburse the Company for the Reinsurer’s Obligations, the payment of which is due under the terms of this Contract and that has not been otherwise paid;

4. to pay the Reinsurer’s share of any other amounts the Company claims are due under this Contract.

Effective: June 1, 2022 DOC: June 16, 2022

11 of NUMPAGES 3

ARTICLE 16

Taxes

ARTICLE 17

access to records

Effective: June 1, 2022 DOC: June 16, 2022

12 of NUMPAGES 3

C. For purposes of this Article:

1. “Privileged Documents” means any documents that are Attorney-Client Privilege Documents and/or Work Product Privilege Documents.

ARTICLE 18

confidentiality

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract (“Confidential Information”) are proprietary and confidential to the Company. Confidential Information shall not include documents, information or data that the Reinsurer can show:

1. are publicly known or have become publicly known through no unauthorized act of the Reinsurer;

2. have been rightfully received from a third person without obligation of confidentiality; or

3. were known by the Reinsurer prior to the placement of this Contract without an obligation of confidentiality.

Effective: June 1, 2022 DOC: June 16, 2022

13 of NUMPAGES 3

1. when required by retrocessionaires as respects business ceded to this Contract;

2. when required by regulators performing an audit of the Reinsurer’s records and/or financial condition; or

3. when required by external auditors performing an audit of the Reinsurer’s records in the normal course of business.

Further, the Reinsurer agrees not to use any Confidential Information for any purpose not related to the performance of its obligations or enforcement of its rights under this Contract.

D. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

ARTICLE 19

Errors and Omissions

ARTICLE 20

insolvency

Effective: June 1, 2022 DOC: June 16, 2022

14 of NUMPAGES 3

claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the Policy or bond reinsured, which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

ARTICLE 21

RUN-OFF REINSURER

A. “Run-off Reinsurer” means any Subscribing Reinsurer that:

1. has been ordered by a state insurance department or other legal authority to cease writing business, or has been placed under regulatory supervision or in rehabilitation; or

2. has ceased reinsurance underwriting operations; or

3. has transferred its claims-paying authority to an unaffiliated entity; or

5. in any other way has assigned its interests or delegated its obligations under this Contract to an unaffiliated entity.

B. Notwithstanding any other provision of this Contract, in the event that a Subscribing Reinsurer becomes a Run-off Reinsurer at any time, the Company may elect, by giving

Effective: June 1, 2022 DOC: June 16, 2022

15 of NUMPAGES 3

written notice to the Run-off Reinsurer at any time thereafter, that all or any of the following shall apply to the Run-off Reinsurer’s participation hereunder:

4. The provisions of the Arbitration Article shall not apply.

C. The Company’s waiver of any rights provided in this Article is not a waiver of that right or other rights at a later date.

ARTICLE 22

arbitration

Effective: June 1, 2022 DOC: June 16, 2022

16 of NUMPAGES 3

D. Within 30 days after all arbitrators have been appointed, the panel shall meet and determine timely periods for briefs, discovery procedures and schedules of hearings.

E. The panel shall be relieved of all judicial formality and shall not be bound by the strict rules of procedure and evidence. Notwithstanding anything to the contrary in this Contract, the arbitrators may at their discretion, consider underwriting and placement information provided by the Company to the Reinsurer, as well as any correspondence exchanged by the parties that is related to this Contract. The arbitration shall take place in Tampa, Florida, or at such other place as the parties shall agree. The decision of any two arbitrators shall be in writing and shall be final and binding. The panel is empowered to grant interim relief as it may deem appropriate.

ARTICLE 23

Expedited Arbitration

Effective: June 1, 2022 DOC: June 16, 2022

17 of NUMPAGES 3

ARTICLE 24

service of suit

D. Service of process in such suit may be made upon:

1. as respects Underwriting Members of Lloyd’s, London: Lloyd’s America, Inc., Attention: Legal Department, 280 Park Avenue, East Tower, 25th Floor, New York, New York 10017;

The above-named are authorized and directed to accept service of process on behalf of the Reinsurer in any such suit.

Effective: June 1, 2022 DOC: June 16, 2022

18 of NUMPAGES 3

ARTICLE 25

GOVERNING LAW

ARTICLE 26

Entire Agreement

ARTICLE 27

NON-WAIVER

ARTICLE 28

Sanction Limitation and Exclusion Clause (LMA 3100)

Effective: June 1, 2022 DOC: June 16, 2022

19 of NUMPAGES 3

ARTICLE 29

Intermediary

ARTICLE 30

mode of execution

A. This Contract may be executed by:

1. an original written ink signature of paper documents;

2. an exchange of facsimile copies showing the original written ink signature of paper documents;

Effective: June 1, 2022 DOC: June 16, 2022

20 of NUMPAGES 3

On this _____ day of __________, in the year of 2022.

Typtap insurance company

Signature: Title:

Print Name:

Reinstatement Premium Protection Reinsurance Contract

Effective: June 1, 2022 DOC: June 16, 2022

21 of NUMPAGES 3

TRUST AGREEMENT REQUIREMENTS CLAUSE

1. Requires the Reinsurer to establish a trust account for the benefit of the Company, and specifies what the Trust Agreement is to cover;

4. Requires that all settlements of account between the Company and the Reinsurer be made in cash or its equivalent; and

5. Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the Company or the Reinsurer.

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all

Effective: June 1, 2022 DOC: June 16, 2022

22 of NUMPAGES 3

4. Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the ceding insurer or the Reinsurer.

Effective: June 1, 2022 DOC: June 16, 2022

23 of NUMPAGES 3

EXHIBIT 10.137. Certain identified information has been excluded from this exhibit because it is immaterial and would be competitively harmful if publicly disclosed. Information that has been omitted is indicated with brackets.

Reinstatement Premium Protection Reinsurance Contract

issued to

Typtap insurance company

Ocala, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

Effective: June 1, 2022 DOC: July 11, 2022

1 of NUMPAGES 4


REINSTATEMENT PREMIUM PROTECTION REINSURANCE CONTRACT TABLE OF CONTENTS
Article		Page

	Preamble	3
1	Business Covered	3
2	Coverage	3
3	Term	4
4	Special Termination	4
5	Territory	5
6	Exclusions	5
7	Premium	5
8	Definitions	6
9	Original Conditions	6
10	No Third Party Rights	6
11	Notice of Loss and Loss Settlements	7
12	Late Payments	7
13	Offset	8
14	Currency	8
15	Obligations and Collateral Release	9
16	Limited Recourse	11
17	Taxes	11
18	Access to Records	12
19	Confidentiality	13
20	Errors and Omissions	14
21	Insolvency	14
22	Run-Off Reinsurer	15
23	Arbitration	16
24	Expedited Arbitration	17
25	Service of Suit	17
26	Governing Law	18
27	Entire Agreement	19
28	Non-Waiver	19
29	Sanction Limitation and Exclusion Clause (Lma 3100)	19
30	Mode of Execution	19
	Company Signing Block	21

Attachments
	Trust Agreement Requirements Clause	22

Effective: June 1, 2022 DOC: July 11, 2022

2 of NUMPAGES 4

Reinstatement Premium Protection Reinsurance Contract

(the “Contract”)

issued to

Typtap insurance company

Ocala, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

THE SUBSCRIBING REINSURER(S) IDENTIFIED
IN THE INTERESTS AND LIABILITIES AGREEMENT(S)
ATTACHED TO AND FORMING PART OF THIS CONTRACT

(the “Reinsurer”)

article 1

Business Covered

This Contract is to indemnify the Company in respect of the liability that may accrue to the Company as a result of Reinstatement Premium the Company may become liable to pay under the reinstatement provisions of the Property Catastrophe Excess of Loss Reinsurance Contract, effective at 12:01 a.m., Standard Time, June 1, 2022 and expiring 12:01 a.m., Standard Time, June 1, 2023, Document Number: UBWP0001 and UBPW0001C (collectively, the “Original Contract”), subject to the terms and conditions herein contained. The Original Contract covers losses under Policies covering direct and assumed business classified by the Company as the property perils of Homeowners, Condominium Owners, Renters and Dwelling, in force at the inception of this Contract, or issued or renewed during the term of this Contract. A copy of the Original Contract is attached to and forms part of this Contract.

article 2

coverage

The Reinsurer shall be liable to pay the Reinstatement Premium obligations under the Original Contract.

Effective: June 1, 2022 DOC: July 11, 2022

3 of NUMPAGES 4

article 3

Term

ARTICLE 4

SPECIAL TERMINATION

1. The Subscribing Reinsurer ceases underwriting operations.

2. A state insurance department or other legal authority orders the Subscribing Reinsurer to cease writing business, or the Subscribing Reinsurer is placed under regulatory supervision.

7. The Subscribing Reinsurer has in any other way assigned its interests or delegated its obligations under this Contract to an unaffiliated entity.

Effective: June 1, 2022 DOC: July 11, 2022

4 of NUMPAGES 4

article 5

Territory

The territorial limits of this Contract shall be identical with those of the Original Contract.

article 6

exclusions

This Contract shall follow the exclusions set forth in the Original Contract.

ARTICLE 7

Premium

First Layer (UBWP0001)

A. As respects the First Layer of the Original Contract with Document Number UBWP0001, the Company shall pay the Reinsurer a premium of [ ] for the term of this Contract, payable on June 1, 2022.

Second Layer (UBWP0001)

B. As respects the Second Layer of the Original Contract with Document Number UBWP0001, the Company shall pay the Reinsurer a premium of [ ] for the term of this Contract, payable on June 1, 2022.

Second Layer (UBWP0001C)

Effective: June 1, 2022 DOC: July 11, 2022

5 of NUMPAGES 4

C. As respects the Original Contract with Document Number UBWP0001C, the Company shall pay the Reinsurer a premium of [ ] for the term of this Contract, payable on June 1, 2022.

D. The Company shall furnish the Reinsurer with such reasonably available information as may be reasonably required by the Reinsurer for completion of the Reinsurer’s financial statements.

article 8

definitions

B. “Loss Occurrence” shall follow the definition set forth in the Original Contract.

C. “Final Premium” means the total reinsurance premium except for Reinstatement Premium.

D. “Policy” means any binder, policy, or contract of insurance or reinsurance issued, accepted or held covered provisionally or otherwise, by or on behalf of the Company.

ARTICLE 9

ORIGINAL CONDITIONS

article 10

No Third Party Rights

Effective: June 1, 2022 DOC: July 11, 2022

6 of NUMPAGES 4

article 11

NOTICE OF LOSS AND LOSS settlements

B. The Company alone and at its full discretion shall adjust, settle or compromise all claims and losses.

ARTICLE 12

LATE PAYMENTS

1. The number of full days that have expired since the overdue date or the last monthly calculation, whichever the lesser; times

2. 1/365th of the sum of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made, plus 1%; times

3. The amount past due, including accrued interest.

B. The due date shall, for purposes of this Article, be determined as follows:

Effective: June 1, 2022 DOC: July 11, 2022

7 of NUMPAGES 4

ARTICLE 13

OFFSET

ARTICLE 14

Currency

A. Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United States Dollars, and all payments hereunder shall be in United States Dollars.

Effective: June 1, 2022 DOC: July 11, 2022

8 of NUMPAGES 4

ARTICLE 15

OBLIGATIONS AND COLLATERAL RELEASE

1. to reimburse the Company for the Reinsurer’s Obligations, the payment of which is due under the terms of this Contract and that has not been otherwise paid;

2. to make refund of any sum that is in excess of 102% of the amount required to pay the Reinsurer’s Obligations under this Contract;

4. to pay the Reinsurer’s share of any other amounts the Company claims are due under this Contract.

Effective: June 1, 2022 DOC: July 11, 2022

9 of NUMPAGES 4

premium payable under the contract identified in the Business Covered article (the Underlying Contract”) as follows, unless otherwise mutually agreed:

1. The Company shall determine the sum of the following for the Underlying Contract, as of this Contract expiration date:

a. losses and loss adjustment expense paid by the Company;

b. reserves for losses reported and outstanding; and

c. reserves for losses incurred but not reported;

2. The Company shall then calculate the estimated reinstatement premium due on the Underlying Contract and such amount shall constitute the Reinsurer’s Obligations

a. From 0 to 12 months from expiration of this Contract, 150%, else;

b. From 13 to 24 months from expiration of this Contract, 125%, else;

c. From 25 to 36 months from expiration of this Contract, 110%; and

d. From 37 to 67 months from expiration of this Contract, 100%.

Effective: June 1, 2022 DOC: July 11, 2022

10 of NUMPAGES 4

ARTICLE 16

Limited Recourse

B. Notwithstanding any matter referred to herein, the Company understands and accepts that the Reinsurer acts on behalf of one or more separate accounts of Claddaugh Casualty Insurance Company Ltd. and that all corporate matters relating to the creation of the Reinsurer, capacity of the Reinsurer, operation and liquidation of the Reinsurer and any matters relating to the Reinsurer thereof shall be governed by, and construed in accordance with, the laws of Bermuda. The Company has had the opportunity to take advice and to obtain all such additional information that it considers necessary to evaluate the terms, conditions and risks of entering into this Contract with the Reinsurer.