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

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report:  August 7, 2019
(Date of earliest event reported)

FEDNAT HOLDING COMPANY
(Exact name of registrant as specified in its charter)

Florida
 
000-25001
 
65-0248866
(State or other jurisdiction of incorporation)
 
(Commission  File Number)
 
(I.R.S. Employer Identification No.)

14050 N.W. 14 th  Street, Suite 180
Sunrise, FL
 
 
 
33323
(Address of principal executive offices)
 
(Zip Code)

Registrant’s telephone number, including area code:  (800) 293-2532

NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock
FNHC
Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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.    ☐
 

 
 
 
 
 
 

Item 1.01.
Entry into a Material Definitive Agreement.

FedNat Holding Company (the “ Company ”) is reporting that it has received regulatory approvals from the Florida Office of Insurance Regulation (the “ Florida OIR ”) and the Louisiana Department of Insurance (the “ LDI ”) to complete the transactions contemplated by the Equity Purchase Agreement dated February 25, 2019 (the “ Purchase Agreement ”) among the Company, 1347 Property Insurance Holdings, Inc., a Delaware corporation (“ PIH ”), Maison Managers, Inc. a Delaware corporation (“ MM ”), Maison Insurance Company, a Louisiana corporation (“ Maison ”), and Claimcor, LLC, a Florida limited liability company (“ CC  and, together with MM and Maison, the “ Maison Companies ”). Under the Purchase Agreement, the Company has agreed to purchase the Maison Companies from PIH (the “ Acquisition ”). Subject to satisfaction of all closing conditions, the Acquisition is expected to close as soon as practicable following November 30, 2019, which is the end of the 2019 hurricane season.

In connection with the approval of the Acquisition by the Florida OIR, the Company entered into a Consent Order dated August 7, 2019 among the Florida OIR, the Company, PIH and Maison (the “ Florida Consent Order ”). The Florida Consent Order contains customary provisions relating to the closing of the Acquisition and the operation of Maison following the closing.

In connection with the approval of the Acquisition by the LDI, the Company entered into a Consent Agreement dated August 9, 2019 among the LDI, the Company and Maison (the “ Louisiana Consent Order ”). The Louisiana Consent Order contains customary provisions relating to the closing of the Acquisition and the operation of Maison following the closing. In addition, the Company agreed to submit to the LDI required biographical information about any new officers or directors during the six-month period following the date of the LDI’s approval of the Acquisition and, if the LDI does not approve such individual, the LDI may rescind its approval of the Acquisition, subject to a 30-day cure period available to the Company. The Company also agreed to provide to the LDI, for two years following the LDI approval date, copies of board and committee minutes on a confidential basis, copies of Form 8-Ks filed to report the voting results of shareholders’ meetings, copies of the Company’s proxy statements and notices of shareholder meetings, and notice of any person known to the Company who has obtained proxies to vote 10% or more of the Company’s outstanding common stock.

The foregoing descriptions of the Florida Consent Order and the Louisiana Consent Agreement are included to provide information regarding their terms. These descriptions do not purport to be complete and are qualified in their entirety by reference to the complete text of the Florida Consent Order, which is filed as  Exhibit 10.1  to this Form 8-K, and the Louisiana Consent Agreement, which is filed as  Exhibit 10.2  to this Form 8-K.

Item 8.01.
Other Events.

Within its 2019-2020 excess of loss reinsurance program, the Company has purchased additional reinsurance protection that reduces the second and third event retention for FedNat Insurance Company and Monarch National Insurance Company, on a combined basis, from $22 million to $10 million per event. The cost of the underlying layer was approximately $3.0 million.

Item 9.01.
Financial Statements and Exhibits.

(d)
Exhibits
Exhibit No.
Description
10.1
 
 
10.2



SIGNATURES

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

 
FEDNAT HOLDING COMPANY
 
 
 
 
 
Date:  August 13, 2019
By:
/s/ Ronald A. Jordan
 
 
Name:
Ronald A. Jordan
 
Title:
Chief Financial Officer
 
 
(Principal Financial Officer)
 
 
 



OFFICE OF INSURANCE REGULATION DAVID ALTMAIER COMMISSIONER IN THE MATTER OF: CASE NO.: 246427-19-CO Application for the Direct Acquisition of MAISON INSURANCE COMPANY by FEDNAT HOLDING COMPANY / CONSENT ORDER THIS CAUSE came on for consideration upon the filing by FEDNAT HOLDING COMPANY (“APPLICANT”) with the FLORIDA OFFICE OF INSURANCE REGULATION (“OFFICE”) of an application for the approval of the direct acquisition of 100% of the issued and outstanding voting securities of MAISON INSURANCE COMPANY (“MAISON”), pursuant to Section 628.461, Florida Statutes (“Application”). Following a complete review of the entire record, and upon consideration thereof, and being otherwise fully advised in the premises, the OFFICE hereby finds as follows: 1. The OFFICE has jurisdiction over the subject matter and the parties herein. 2. APPLICANT has applied for and, subject to the present and continuing satisfaction of the requirements, terms, and conditions established herein, has satisfactorily met all conditions precedent to the granting of approval by the OFFICE of the proposed acquisition of 100% of the issued and outstanding shares of MAISON’s stock. Page 1 of 13

 
3. APPLICANT is a Florida holding company that is publicly traded on the National Association of Securities Dealers Automated Quotations system (“Nasdaq”) under the symbol “FNHC”, with no 10% or greater shareholders. 4. MAISON is a Louisiana-domiciled and licensed property and casualty insurer that is authorized to transact property and casualty insurance in Florida through a subsisting Certificate of Authority issued by the OFFICE. MAISON has agreed to be treated as commercially domiciled in Florida and, as such, is subject to filings required by Section 628.461, Florida Statutes. 5. MAISON is owned 100% by 1347 PROPERTY INSURANCE HOLDINGS, INC. (“1347 PROPERTY”), a Delaware holding company that is publicly traded on Nasdaq under the symbol “PIH”. 1347 PROPERTY is beneficially owned 45% by Fundamental Global Investors, LLC, a North Carolina limited liability company; 20% by Kingsway Financial Services, Inc., a Delaware corporation; and 10% by Gordon G. Pratt; with no other 10% or greater shareholders. 6. The Application represents that on or about February 25, 2019, APPLICANT and MAISON entered into an “Equity Purchase Agreement” (“Equity Agreement”) whereby APPLICANT agreed to purchase all issued and outstanding shares of MAISON’s stock for a total cash consideration of $25,500,000 United States Dollars (“USD”) and a stock consideration as determined in the Equity Agreement. 7. APPLICANT and 1347 PROPERTY have submitted, as Exhibit C to the Equity Agreement referenced in paragraph 6 above, a draft “Standstill Agreement” that APPLICANT and 1347 PROPERTY have agreed to execute after the closing of the transaction described in paragraph 6 above. Within 10 days after the closing of the transaction, APPLICANT and 1347 PROPERTY agree to submit an executed copy of the Standstill Agreement to the OFFICE. Page 2 of 13

 
8. If, as a result of the transaction contemplated in this Consent Order, 1347 PROPERTY acquires 10% or more of APPLICANT, 1347 PROPERTY acknowledges that it must comply with the requirements of Section 628.461, Florida Statutes. 9. APPLICANT has made material representations that, except as disclosed in the Application, none of its officers or directors, and none of the post-acquisition officers and directors of MAISON, have been found guilty of, or have pleaded guilty or nolo contendere to, a felony or misdemeanor, other than a minor traffic violation, without regard to whether a judgment or conviction was entered by the court. 10. APPLICANT has further represented that it has submitted complete background information on all the individuals referenced in paragraph 9 above. If said information has not been provided to the OFFICE, or if the sources utilized by the OFFICE in its investigation process reveal that the representations made in paragraph 9 above are inaccurate, any such individual shall be removed as officer or director of said company within 30 days of receipt of notification from the OFFICE and replaced with a person or persons acceptable to the OFFICE. 11. If, upon receipt of notification from the OFFICE pursuant to paragraph 10 above, APPLICANT does not timely take the required corrective action, APPLICANT agrees that such failure to act would constitute an immediate serious danger to the public and the OFFICE may immediately suspend, revoke, or take other administrative action as it deems appropriate upon the Certificate of Authority of MAISON without further proceedings, pursuant to Sections 120.569(2)(n) and 120.60(6), Florida Statutes. 12. APPLICANT represents that, except as disclosed in the Application, there are no present plans or proposals to make any substantive changes to MAISON, including liquidating it, selling any of its assets (except for transactions such as investment portfolio transactions in the Page 3 of 13

 
ordinary course of business), merging or consolidating it with any person or persons, or making any other major change in its business operations. 13. APPLICANT acknowledges and represents that if the transactions contemplated in the Application are consummated, MAISON will be an affiliated person of FedNat Insurance Company and Monarch National Insurance Company, pursuant to Section 624.10(2)(e), Florida Statutes. 14. APPLICANT, MAISON, and 1347 PROPERTY shall ensure that any agreement MAISON is party to or governed by, with respect to any and all pro rata and excess of loss reinsurance coverage, shall provide for terms and pricing to be procured at open market terms. APPLICANT, MAISON, or 1347 PROPERTY shall conduct sufficient due diligence, through a broker or otherwise, and shall solicit legitimate written quotes from potential third-party reinsurers through a firm order prior to entering into a quota share or excess of loss agreement. 15. MAISON shall not enter into any reinsurance or brokerage agreement, whether or not affiliated, that requires approval from the reinsurer or broker regarding any potential sale of MAISON. 16. Until such time as MAISON is no longer subject to the commercially domiciled conditions stipulated in Consent Order No.: 203693-17-CO, and pursuant to Sections 628.461(3)(f)-(g), Florida Statutes, APPLICANT shall file or cause to be filed with the OFFICE the Enterprise Risk Report required by Section 628.801(2), Florida Statutes, and any and all additional information necessary to evaluate the enterprise risk of MAISON. 17. Until such time as MAISON is no longer subject to the commercially domiciled conditions stipulated in Consent Order No.: 203693-17-CO, and pursuant to Section 624.10(3), Florida Statutes, APPLICANT is a controlling entity and, as such, shall comply with Section Page 4 of 13

 
628.461(12)(b), Florida Statutes, should APPLICANT choose to divest its controlling interest in MAISON. 18. All parties to this Consent Order agree that this Consent Order regarding the acquisition of MAISON shall be deemed null and void if the transaction contemplated in the Application does not close within 180 days of execution of this Consent Order. 19. Within 10 business days after the transactions contemplated in the Application are completed, APPLICANT shall submit, or cause to be submitted, to the OFFICE all documents evidencing completion of said transactions. Further, APPLICANT or MAISON shall notify the OFFICE within 3 days of determining that the transaction will not occur. 20. Any material changes to the information submitted in the Application filing shall be reported to the OFFICE for its review prior to the closing. APPLICANT and MAISON acknowledge that if the OFFICE determines that any of these reported changes would have a material negative impact to the financial condition or operation of APPLICANT or MAISON, the OFFICE may rescind its approval as granted in this Consent Order by written notice to APPLICANT. 21. The Application represents that APPLICANT, 1347 PROPERTY, and MAISON requested approval of the transactions contemplated in this Application from MAISON’s domiciliary regulator, the Louisiana Department of Insurance, which issued its approval by order dated August 7, 2019. 22. APPLICANT, 1347 PROPERTY, and MAISON acknowledge that any repayment of surplus notes issued by MAISON are subject to approval by the Louisiana Department of Insurance and shall not be construed as being approved by issuance of this Consent Order. Page 5 of 13

 
23. Any prior orders, consent orders, or corrective action plans that MAISON has entered into with the OFFICE prior to the execution of this Consent Order shall apply and remain in full force and effect for MAISON, except where provisions of such orders, consent orders, or corrective action plans have expired; have been superseded by subsequent orders, consent orders, or corrective action plans; or are inconsistent with this Consent Order. 24. MAISON shall, no later than 15 days after the month in which all transactions contemplated in the Application are completed, file an update to its Holding Company Registration Statement, as required by Section 628.801, Florida Statutes, and Rule 69O-143.046, Florida Administrative Code. 25. APPLICANT, 1347 PROPERTY, and MAISON affirm that all explanations, representations, statements, and documents provided to the OFFICE in connection with this Application, including all attachments and supplements thereto, are true and correct and fully describe all transactions, agreements, ownership structures, understandings, and control with regard to the acquisition and future operations of MAISON. APPLICANT, 1347 PROPERTY, and MAISON further agree and affirm that said explanations, representations, statements, and documents, including all attachments and supplements thereto, are material to the issuance of this Consent Order and have been relied upon by the OFFICE in its determination to enter into this Consent Order. 26. APPLICANT or MAISON shall report to the OFFICE, Property & Casualty Financial Oversight, any time that one or more of them is named as a party defendant in a class action lawsuit within 15 days after the class is certified. APPLICANT or MAISON shall include a copy of the complaint at the time the class action lawsuit is reported to the OFFICE. Page 6 of 13

 
27. MAISON shall maintain an information security program for the security and protection of confidential and proprietary information under its control that complies with all applicable laws and regulations regarding information security. MAISON agrees that it shall continually monitor and enhance its information security programs in order to mitigate data security breaches. MAISON further agrees that it shall notify the OFFICE within 5 business days of identifying a data breach. 28. Executive Order 13224 prohibits any transactions by U.S. persons involving the blocked assets and interests of terrorists and terrorist support organizations. APPLICANT and MAISON shall maintain and adhere to procedures necessary to detect and prevent prohibited transactions with those individuals and entities, which have been identified at the Treasury Department’s Office of Foreign Assets Control website, http://www.treas.gov/ofac. 29. Within 60 days of the execution of this Consent Order, APPLICANT shall submit, or cause to be submitted, to the OFFICE a certification evidencing compliance with all the requirements of this Consent Order. Any exceptions shall be so noted and contained in the certification. Exceptions noted in the certification shall also include a timeline defining when the outstanding requirements of the Consent Order will be completed. Said certification shall be submitted to the OFFICE via electronic mail and directed to the attention of the Assistant General Counsel representing the OFFICE in this matter and as named in this Consent Order. 30. Any deadlines, reporting requirements, other provisions, or requirements set forth in this Consent Order may be altered or terminated by written approval of the OFFICE. Such written approval by the OFFICE is subject to statutory or administrative regulation limitations. 31. APPLICANT, 1347 PROPERTY, and MAISON expressly waive a hearing in this matter, the making of findings of fact and conclusions of law by the OFFICE, and all further and Page 7 of 13

 
other proceedings herein to which they may be entitled by law or rules of the OFFICE. APPLICANT, 1347 PROPERTY, and MAISON also hereby knowingly and voluntarily waive all rights to challenge or to contest this Consent Order in any forum available to them, now or in the future, including the right to any administrative proceeding, state or federal court action, or any appeal. 32. APPLICANT, 1347 PROPERTY, and MAISON affirm that all requirements set forth herein are material to the issuance of this Consent Order. 33. APPLICANT, 1347 PROPERTY, and MAISON agree that, upon execution of this Consent Order, failure to adhere to one or more of the terms and conditions contained herein may result, without further proceedings, in the OFFICE suspending, revoking, or taking other administrative action as it deems appropriate upon the Certificate of Authority of MAISON in this state in accordance with Sections 120.569(2)(n) and 120.60(6), Florida Statutes. 34. Each party to this action shall bear its own costs and fees. 35. The parties agree that this Consent Order shall be deemed to be executed when the OFFICE has signed and docketed a copy of this Consent Order bearing the signatures of the authorized representatives of APPLICANT, 1347 PROPERTY, and MAISON, notwithstanding the fact that the copy may have been transmitted to the OFFICE electronically. Further, APPLICANT, 1347 PROPERTY, and MAISON agree that the signatures of their authorized representatives as affixed to this Consent Order shall be under the seal of a Notary Public. Page 8 of 13

 
WHEREFORE, subject to the terms and conditions set forth above, the Application for the direct acquisition of 100% of the issued and outstanding voting securities of MAISON INSURANCE COMPANY by FEDNAT HOLDING COMPANY, pursuant to Section 628.461, Florida Statutes, is APPROVED. FURTHER, all terms and conditions contained herein are hereby ORDERED. DONE and ORDERED this 7th day of August, 2019. /s/ David Altmaier David Altmaier, Commissioner Office of Insurance Regulation Page 9 of 13

 
By execution hereof, FEDNAT HOLDING COMPANY consents to entry of this Consent Order, agrees without reservation to all of the above terms and conditions, and shall be bound by all provisions herein. The undersigned represents that he or she has the authority to bind FEDNAT HOLDING COMPANY to the terms and conditions of this Consent Order. FEDNAT HOLDING COMPANY By: /s/ Michael Braun Print Name: Michael Braun Title: CEO [Corporate Seal] Date: 8/7/19 STATE OF FLORIDA COUNTY OF BROWARD The foregoing instrument was acknowledged before me this 7th day of August, 2019 by Michael Braun as CEO (name of person) (type of authority, e.g. officer, trustee, attorney in fact) for FedNat Holding Company (Company Name) /s/ James Gordon Jennings III (Signature of the Notary) James Gordon Jennings III (Print, Type or Stamp Commissioned Name of Notary) Personally Known  OR Produced Identification Type of Identification Produced My Commission Expires 12/16/2021 Page 10 of 13

 
By execution hereof, 1347 PROPERTY INSURANCE HOLDINGS, INC., consents to entry of this Consent Order, agrees without reservation to all of the above terms and conditions, and shall be bound by all provisions herein. The undersigned represents that he or she has the authority to bind 1347 PROPERTY INSURANCE HOLDINGS, INC., to the terms and conditions of this Consent Order. 1347 PROPERTY INSURANCE HOLDINGS, INC. By: /s/ John S. Hill Print Name: John S. Hill Title: VP, CFO and Secretary [Corporate Seal] Date: August 7, 2019 STATE OF FLORIDA COUNTY OF HILLSBOROUGH The foregoing instrument was acknowledged before me this 7th day of August, 2019 by John S. Hill as CFO (name of person) (type of authority, e.g. officer, trustee, attorney in fact) for 1347 Property Ins. Holding (Company Name) /s/ Carla D. Barber (Signature of the Notary) Carla D. Barber (Print, Type or Stamp Commissioned Name of Notary) Personally Known  OR Produced Identification Type of Identification Produced My Commission Expires May 16, 2023 Page 11 of 13

 
By execution hereof, MAISON INSURANCE COMPANY consents to entry of this Consent Order, agrees without reservation to all of the above terms and conditions, and shall be bound by all provisions herein. The undersigned represents that he or she has the authority to bind MAISON INSURANCE COMPANY to the terms and conditions of this Consent Order. MAISON INSURANCE COMPANY By: /s/ Douglas N. Raucy Print Name: Douglas N. Raucy Title: President [Corporate Seal] Date: 8/7/19 STATE OF FLORIDA COUNTY OF HILLSBOROUGH The foregoing instrument was acknowledged before me this 7th day of August, 2019 by Douglas N. Raucy as CEO and President (name of person) (type of authority, e.g. officer, trustee, attorney in fact) for Maison Insurance (Company Name) /s/ Carla D. Barber (Signature of the Notary) Carla D. Barber (Print, Type or Stamp Commissioned Name of Notary) Personally Known  OR Produced Identification Type of Identification Produced My Commission Expires May 16, 2023 Page 12 of 13

 
COPIES FURNISHED TO: DOUGLAS RAUCY, PRESIDENT RYAN SHAFFER, FINANCIAL Maison Insurance Company SPECIALIST 1511 N. Westshore Boulevard Property & Casualty Financial Oversight – Tampa, Florida 33607 Company Admissions Telephone: (813) 579-6210 Florida Office of Insurance Regulation Email: draucy@maisonins.com 200 East Gaines Street Tallahassee, Florida 32399 MICHAEL H. BRAUN, PRESIDENT FedNat Holding Company MICHAEL KLINER, ASSISTANT 14050 NW 14 Street, Suite 180 GENERAL COUNSEL Sunrise, Florida 33323 Florida Office of Insurance Regulation Telephone: (954) 308-1322 200 East Gaines Street Email: mbraun@fednat.com Tallahassee, Florida 32399 Telephone: (850) 413-4108 SANDY FAY, ATTORNEY Email: michael.kliner@floir.com Colodny Fass, P.L.L.C. 1401 NW 136th Avenue, Suite 200 Sunrise, Florida 33323 Telephone: (954) 492-4010 Email: sfay@colodnyfass.com ALISON STERETT, FINANCIAL ADMINISTRATOR Property & Casualty Financial Oversight - Company Admissions Florida Office of Insurance Regulation 200 East Gaines Street Tallahassee, Florida 32399 COREY HUBBARD, FINANCIAL EXAMINER/ANALYST SUPERVISOR Property & Casualty Financial Oversight - Company Admissions Florida Office of Insurance Regulation 200 East Gaines Street Tallahassee, Florida 32399 Page 13 of 13

 
Consent Agreement The Louisiana Department of Insurance (hereinafter “LDI”), FedNat Holding Company (hereinafter “FedNat”) and Maison Insurance Company (hereinafter “Maison”) enter into the following stipulation of facts and agreement to wit: FedNat has made application to the LDI to acquire control (as defined in La. R.S. 22:691.2) of Maison. The LDI shall agree to approve the acquisition of control of Maison by FedNat conditioned upon the following agreements and understandings: 1) For a period of six months from the date of the Ruling of the Commissioner of Insurance of Louisiana (hereinafter “Commissioner”) approving the acquisition, FedNat shall notify the LDI of any new officers or directors of FedNat and shall submit to the LDI the biographical information for those individuals as if they had served as directors of FedNat at the time of the filing of this application to acquire control of Maison. This filing shall include completed biographical affidavits, third party verification reports prepared by a vendor on the list of such vendors approved by the National Association of Insurance Commissioners (“NAIC”) and submission of fingerprints in compliance with the LDI instructions. 2) FedNat agrees that the Commissioner may rescind approval of this acquisition should he, based on review of the required biographical information, find that grounds exist pursuant to La. R.S. 22:691.4 to have denied the application. Page 1 of 5

 
3) The Commissioner agrees that prior to rescinding approval of this acquisition pursuant to the conditions above he shall provide thirty (30) days written notice to FedNat and provide FedNat with an opportunity to remedy the grounds for rescission. 4) FedNat agrees that for a period of two years from the date of the Commissioner’s Ruling approving the acquisition, FedNat shall provide copies of the minutes of the meetings of the Board of Directors and any committees, sub-committees and advisory boards or committees to the LDI within five days of the adoption/approval of those minutes. The Commissioner agrees that FedNat shall be entitled to file all such materials pursuant to La. R.S. 44:3.2, La. R.S. 691.8, La. R.S. 691.10, and/or any other applicable exemption from the Louisiana Public Records Law, and that all materials so filed shall have the protections thereof. The Commissioner shall provide FedNat with written notice in the event the Commissioner makes a determination that such documents do not constitute proprietary or trade secret information so that FedNat may seek appropriate relief to prevent public disclosure. 5) FedNat agrees that for a period of two years from the date of the Commissioner’s Ruling approving the acquisition, the company shall provide final or draft copies of the minutes from FedNat’s shareholder meetings to the LDI within thirty days of the meeting. Submission of a copy of the Form 8-K filing submitted by FedNat to the Securities and Exchange Commission concerning the voting results of FedNat’s shareholder meetings, within five Page 2 of 5

 
business days of the Form 8-K being filed, shall satisfy the requirements of this paragraph. 6) FedNat agrees that for a period of two years from the date of the Commissioner’s Ruling approving the acquisition, FedNat shall provide notice to the LDI of any person who has obtained proxies authorizing them to vote shares of FedNat of ten percent or more within 5 days of FedNat receiving written notice of such a fact. This notice shall include the identity of the person who has obtained such proxies. This paragraph shall not apply to proxies solicited by or on behalf of FedNat or its Board of Directors. 7) FedNat agrees that for a period of two years from the date of the Commissioner’s Ruling approving the acquisition, FedNat shall provide to the LDI copies of all Proxy Statements and Notices of Shareholder Meetings as filed with the Securities and Exchange Commission. 8) FedNat and Maison agree that Maison shall maintain a minimum capital and surplus of five million ($5,000,000). 9) FedNat and Maison agree that Maison shall not pay any dividends or similar distributions without prior approval of the LDI. 10) FedNat and Maison agree that the companies shall request prior approval from the LDI before initiating any change to the Maison Business Plan(s) including but not limited to: a. Changes in Maison’s reinsurance program; Page 3 of 5

 
b. Changes in Maison’s managing general agent; c. Changes in Maison’s policy servicing/administration system; d. Changes in Maison’s claims administration; e. Changes in Maison’s Actuary or CPA; f. Changes in the geographical territory in which Maison writes business; g. Changes in the types of products offered by Maison; h. Changes in Maison’s product distribution system; i. Changes in the policy limits offered by Maison. This paragraph shall not apply to any changes FedNat disclosed in its application to acquire control of Maison. Further FedNat may, at any time, request that LDI remove any or all of the provisions contained in this paragraph. Page 4 of 5

 
The individuals signing below hereby represent and warrant that they are duly authorized to execute and deliver this Agreement on behalf of the respective parties. /s/ Michael Braun Signature of FedNat Representative Michael Braun Printed Name of the FedNat Representative CEO & President Title of FedNat Representative 8/2/19 Date /s/ Douglas N. Raucy Signature of Maison Representative Douglas N. Raucy Printed Name of the Maison Representative President Title of Maison Representative 8/2/19 Date /s/ Barry E. Ward Signature of LDI Representative Barry E. Ward Printed Name of LDI Representative Deputy Commissioner – Licensing Title of Department Representative 8/9/19 Date Page 5 of 5