Form 10-Q Heritage Insurance Holdi For: Mar 31

 

Executed Copy

Exhibit 10.20

Heritage Insurance Holdings, Inc.

A DELAWARE CORPORATION

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into

as of January 1, 2015 by and between HERITAGE INSURANCE HOLDINGS, INC., and any of its parent or subsidiary companies (collectively , the "Company") , and Sharon Binnun (the

"Executive").

 

 

RECITALS

 

 

 

 

 

 

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, the parties hereby agree as follows:

 

Section I. Term

and the Executive shall continue to serve the Company and its Subsidiaries , on the terms and conditions set forth herein , from January 1, 2015 until the termination of this agreement (the "Employment Term").

 

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2.Duties of Executive. The Executive shall perform the duties of an Executive commensurate with such position, shall diligently perform all services as may be reasonably designated by the Board and shall exercise such power and authority as is necessary and customary to the performance of such duties and services. The Executive shall devote its services on a fulltime basis to the business and affairs of the Company and the Subsidiaries.

 

Section IL Compensation

 

1.Salary. During the Employment Term, the Executive shall receive a bi-monthly salary of $12,500.00, subject to normal withholdings and matchings.

 

2.Additional Cash Compensation. During the Employment Term, Executive shall be eligible to receive an additional annual amount up to $60,000 or such greater amount, as approved by the Board of Directors in their sole discretion.

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.) .Automobile Allowance. Executive shall receive an automobile allowance of

$900/month or such greater amount as approved by the Board of Directors during the Employment Term.

 

4.Expense Reimbursement. During the Employment Term, the Company , upon the submission of supporting documentation by the Executive, and in accordance with Company policies for its executive es, shall reimburse the Executive for all expenses actually paid or incurred by the Executive in the course of and pursuant to the business of the Company and the Subsidiaries , expenses for travel and entertainment and other benefits provided to other executives of the Company and the Subsidiaries including stock options and similar benefits set by the Board from time to time.

 

5.Working Facilities. During the Employment Term, the Company shall furnish the Executive with an office, and such other facilities and services suitable to her position and adequate for the performance of her duties hereunder.

 

6.Vacation. During the Employment Term, Executive shall be entitled to reasonable paid vacations during each year of the Term, the time and duration thereof to be determined by mutual agreement between Executive and the Company, but not less than that period authorized for other employees of the Company.

 

Section III. Termination

 

1. Termination. Notwithstanding anything contained in this Agreement to the contrary, Executive is an at will employee and may be terminated for any reason as determined by the Company in its sole discretion.

 

Section IV. Restrictive Covenants

 

 

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"confidential" or "private"), in any form or medium, that is disclosed to, or developed or learned by, the Executive, and that relates to the operation of the Company in any way including , but not limited to, business plan, underwriting , products, services, research, or development of or by the Company or its Subsidiaries , suppliers, distributors, customers , investors , partner, and/or other business associates, and that has not become publicly known. Confidential Information includes, but is not limited to, the following:

 

a.Internal business information (including but not limited to information relating to strategy, staffing, financial data, training, marketing , promotional and sales plans and practices, costs, bidding activities and strategies, rate and pricing structures, and accounting and business methods);

 

b.Identities of: negotiations with, individual requirements of, specific contractual arrangements with, and information about, the Company's or its Subsidiaries' suppliers, distributors , customers , investors, partners and/or other business associates, their contact information, and their confidential information;

 

c.Compilations of data and analyses, underwriting process and parameters, material processes, technical data, specific prograi11 information, trade or industrial practices, computer programs, formulae, systems, research, records, rep01is, manuals , documentation , customer and supplier lists , data and databases relating thereto, and technology and methodology regarding specific projects; and

 

cl. Intellectual Property not generally available to the public, or published by the Company or its Subsidiaries. "Intellectual Property," or "IP," shall mean (1) inventions or devices, whether patentable or not; (2) original works of authorship produced by or on behalf of the Company or its Subsidiaries; (3) trade secrets; (4) know-how; (5) customer lists and confidential information; and (6) any other intangible prope1iy protectable under federal, state or foreign law. Other examples of Intellectual Property include, but are not limited to, patent applications , patents, copyrighted works, technical data, computer software, knowledge of suppliers or business partnership, documentation, processes, and methods and results of research.

 

 

a.The Executive acknowledges and agrees with the representations of the Company that Confidential Information and IP is proprietary and valuable to the Company, and that any disclosure or unauthorized use thereof may cause irreparable harm and loss to the Company. It is further acknowledged by the Executive that if the general public or competitors (now existing or to be created in the future) learn of these ongoing discussions and negotiations with potential investors as a result of the Executive's failure to comply hereunder, irreparable harm and substantial financial loss may occur to the Company's, the insurance entity or other Subsidiary's viability and future revenues. The Executive acknowledges and agrees that the knowledge and experience the Executive shall acquire by virtue of employment by the Company during the Employment Term is of a special, unique and extraordinary character

 

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and that such position allows the Executive access to Confidential Information and Intellectual Property.

 

b.The Executive acknowledges and agrees that (a) the nature and periods of restrictions imposed by the covenants contained in this Agreement are fair, reasonable and necessary to protect and preserve for the Company and its Subsidiaries their viability and future revenues;

(b)the Company or its Subsidiaries would sustain great and irreparable loss and damage if the Executive were to breach any of such covenants set forth herein; and (c) the covenants herein set forth are made as an inducement to and have been relied upon by the Company in entering into this Agreement. The Executive acknowledges and agrees this Agreement is binding on the Executive's heirs , executors, successors, administrators, representatives and agents.

 

c.The Executive agrees to receive and to treat Confidential Information and the knowledge on a confidential and restricted basis and to undertake the following additional obligation with respect thereto:

 

 

ii.Not to disclose Confidential Information. except to the extent the Executive

is required to disclose or use such Confidential Information in the performance of the Executive's assigned duties for the Company or its Subsidiaries, to any person without the prior express written consent of the Board of Directors of the Company;

 

 

iv.To promptly disclose and assign any right, title and interest to the Company

all IP authored, made, conceived or actually reduced to practice, alone or jointly with others, (a) while performing duties for the Company or its Subsidiaries, or

(b) during the Initial Term or Employment Term of this Agreement , or ( c) which results or is suggested by any work done for or at the request of the Company or its Subsidiaries, or (cl) which was aided by the use of trade secret information, whether or not during working hours and regardless of location ;

 

 

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Section V. Miscellaneous

 

 

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whatsoever, and cannot be reformed, such illegal, invalid or unenforceable provision shall be deemed severed here from and shall not affect the validity, legality or enforceability of the remainder of this Agreement.

 

 

 

 

the benefit of and shall be binding upon the parties hereto, their personal representatives, successors, heirs and assigns. The obligations of Company and the Subsidiaries to Executive are joint and several. All provisions of this Agreement are specifically enforceable by the Subsidiaries in addition to Company. Each of the Subsidiaries shall be considered a third party beneficiary under the provisions of this Agreement.

 

 

 

 

 

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against whom enforcement of any such amendment, supplement or modification is sought.

 

 

 

 

 

 

seeking equitable remedies shall be submitted to arbitration in Pinellas County, Florida

pursuant to the rules of the American Arbitration Association .

 

 

 

 

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Agreed to by:

 

Heritage Insurance Holdings, Inc.

 

By:/s/BRUCE LUCAS

Bruce Lucas, CEO

 

By: /s/SHARON BINNON

Sharon Binnun, Executive Vice President

 

 

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Exhibit 10.21

Zephyr Insurance Company, Inc.

A HAWAII CORPORATION

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of April 2, 2018 by and between ZEPHR INSURANCE COMPANY, INC., Hawaii corporation, and any of its parent or subsidiary companies (collectively, the “Company”), and TIM JOHNS (the, “Executive”).

 

RECITALS

AGREEMENT

NOW, THEREFORE. in consideration of the premises and mutual covenants set forth herein, the parties hereby agree as follows:

Section I. Term and Duties

 

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Section IL Compensation and Benefits

Section III. Termination.

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Section IV. Restrictive Covenants

 

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Section V. Miscellaneous

 

 

 

 

 

 

 

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Agreed to by:

Heritage Insurance Holdings, Inc.

 

By: /s/ BRUCE T LUCAS

Bruce, Lucas, CEO

By: /s/ TIMOTHY E JOHNS

Tim Johns

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit A - Definitions

"Accrued Obligations,, means all accrued but unpaid base salary through the end of the term of employment; any unpaid or unreimbursed expenses incurred in accordance with Company policy; any benefits provided under the Company's employee benefit plans upon a termination of employment, in accordance with the terms therein, including rights to equity in the Company pursuant to any plan or grant; any unpaid bonus in respect to any completed fiscal year that has ended on or prior to the end of the term of employment; and rights to indemnification by virtue of the Executive's position as an officer or director of the Company or its subsidiaries and the benefits under any directors' and officers' liability insurance policy maintained by the Company, in accordance with its terms thereof.

"Cause" means a conviction of the Executive, or a plea of nolo contendere, to a felony; or willful misconduct or gross negligence by the Executive conduct by the Executive causing material economic harm to the Company; or a failure by the Executive to carry out the reasonable and lawful directions of the Board of Directors or the Executive's supervisor; or fraud, embezzlement, theft or dishonesty by the Executive against the Company or any Affiliate of the Company, or a violation by the Executive of a policy or procedure of the Company or any Affiliate; or a breach by the Executive of the Agreement.

 

"COBRA,, means the Consolidated Omnibus Budget Reconciliation Act of 198S, as amended from time to time.

 

"Good Reason" means any action by the Company that results in a material diminution in the Executive's position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive.

"Person" means an individual, a partnership, a limited liability company, a corporation (whether or not for profit), an association, a joint stock company, a trust, a joint venture, an unincorporated organization, investment fun any other business entity and a governmental entity or any department, agency or political subdivision thereof.

"ZAC' means Zephyr Acquisition Company, a Hawaii corporation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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(Exhibit B)

 

ZEPHYR INSURANCE COMPANY

SUMMARY OF EMPLOYEE BENEFITS

 

Health Plans: Zephyr offers a choice between Kaiser Permanente and two HMSA plans (HMSA Preferred Provider and HMSA Health Plan Hawaii). We pay 100% of the Insurance premiums for our employees and subsidize for dependents.

 

Dental Plans: Zephyr offers HDS (Hawaii Dental Service) coverage In conjunction with both Kaiser and HMSA medical plans.

 

Complementary Health Care Services: Zephyr offers coverage for Chiropractic Services, Acupuncture, and Massage Therapy and pays 100% of the premium cost.

 

Basic Life, AD&D, LTD and STD Insurance: Basic Life, AD&D, Long Term Disability and Short Term Disability Insurance premiums are 100% paid by the Company. All regular full time employees working at least 20 hours per week will receive Basic Life/AD&D Insurance with the benefit amount equal to 1.5 times your annual salary. Employees must meet eligibility requirements prior to enrollment.

 

Additional Life: Employees are offered the option to purchase Additional Life Insurance for you and your Spouse/Child.

 

Supplemental Insurance: A variety of supplemental Insurance products are offered to employees through AFLAC Including coverage for Accident, Cancer, Life, Personal Sickness, and Hospital Intensive Care. These premiums are all 100% employee-paid and are deducted via automatic payroll deduction. The fact that most are pre-tax Items does make these options more affordable.

 

Flexible Spending Plan: Employees may enroll Into this plan that allows you to direct a part of your pay, on a pretax basis, Into a special account that can be used throughout the year to reimburse yourself for certain our-of-pocket health care and dependent care expenses.

 

Employee Assistance Program (EAP): This web based service can be accessed by all employees and their family. This on-line EAP offers resources and Information for Issues such as Mental Health and Well-Being, Personal and Professional Issues, Relationships, Substance Abuse, Family Life, Dally Stress, and Self Improvement.

 

401k Plan: Employees may participate In the 401k plan upon completing 6 months of employment zephyr's matching contribution to employee's 401k plan will be 100% (dollar for dollar) of the first 6% of compensation employees defer to their Plan.

 

Incentive Compensation Program (ICP): At the discretion of the Board of Directors and based on the planned operating results of the company and each individual employee's performance, an ICP may be awarded to employees of Zephyr Insurance Company.

 

Paid Time Off (PTO): Employees who are beyond their Initial year of employment and are employed by the Company as of December 31of the previous year will be eligible for PTO in the current year according to the following schedule:

 

 

Holidays: All employees will be given the day off with pay for the nine (9) standard holidays observed by the Company. In addition to one (1) floating holiday per year.

Exhibit 10.22

Heritage Insurance Holdings, Inc.
Restricted Stock Award Agreement

This Restricted Stock Award Agreement (the “Agreement”) is entered into as of [________], 202[_] (the “Award Date”) between Heritage Insurance Holdings, Inc. (the “Company”) and [____________] (the “Participant”). Any term capitalized but not defined in the Agreement shall have the meaning set forth in the Heritage Insurance Holdings, Inc. Omnibus Incentive Plan, as may be amended from time to time (the “Plan”).

The Plan provides that the Administrator may grant restricted stock to employees, directors, and independent contractors of the Company or its Affiliates. In the Administrator’s exercise of discretion under the Plan, the Administrator has determined that the Participant should receive a restricted stock award under the Plan and, accordingly, the Company and the Participant hereby agree as follows:

1.Grant.

(a)Time-Based Shares.  Participant is hereby issued [_______] shares of Stock that are initially unvested and that will be eligible to vest in accordance with Section 4(a) of the Agreement (the “Time-Based Shares”).

(b)Performance-Based Shares.  Participant is hereby issued [_______] shares of Stock that are initially unvested and that will be eligible to vest in accordance with Section 4(b) of the Agreement (the “Performance-Based Shares”; together with the Time-Based Shares, the “Award Shares”).

2.Stock Certificates. The Company may, but shall not be required to, issue certificates for the Award Shares in the Participant’s name, in which event the Company (or its designee) shall hold the certificates until the Award Shares either are forfeited or become vested.  

3.Rights as Stockholder. On and after the Award Date, and except to the extent provided in Section 9, the Participant may exercise full voting rights with respect to the Award Shares and the Participant will be entitled to receive dividends on Award Shares if dividends are payable on Stock to stockholders of record after the Award Date; provided, that any such dividends shall not be paid currently but shall be accrued and paid within thirty (30) days of such time as all applicable restrictions on the corresponding Award Shares lapse. If the Participant forfeits any rights he may have to the Award Shares in accordance with Section 4 of the Agreement, the Participant shall, on the day of forfeiture, cease to have any rights as a stockholder with respect to the forfeited Award Shares or any interest therein, including rights to any dividends on such stock.  Neither unvested Award Shares, nor the right to vote such shares and receive dividends thereon, may be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered; provided, however, that the Participant may grant to another person a revocable proxy to vote unvested Award Shares at a Company stockholder meeting.  

4.Vesting; Effect of Termination of Employment.

(a)Vesting Generally – Time-Based Shares.  The Time-Based Shares shall vest in three equal installments on [_______], [_______] and [_______], provided the Participant remains continuously employed by the Company or its Affiliates from the Award Date until the corresponding vesting date.

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(b)Vesting Generally – Performance-Based Shares.  The Performance-Based Shares shall be eligible to vest on the “Certification Date” (as defined below), subject to and in accordance with the attached Schedule A, provided the Participant remains continuously employed by the Company or its Affiliates at all times from the Award Date until the Certification Date.  Any Performance-Based Shares outstanding on the Certification Date but which do not vest in accordance with Schedule A shall automatically be forfeited by the Participant and revert to the Company on the Certification Date without any payment therefor.  For purposes of the Agreement, “Certification Date” means the date on which the Committee determines the extent to which the performance criterion set forth on Schedule A has been achieved, which date shall be no later than [_______].

(c)Termination of Employment Generally.  Except as expressly set forth in Section 4(d) and 4(e) below, if the Participant’s continuous employment with the Company and its Affiliates terminates for any reason prior to the vesting of any Award Shares, such unvested Award Shares shall automatically be forfeited by the Participant and revert to the Company as of the Participant’s last day of employment without any payment therefor.

(d)Termination without Cause or resignation for Good Reason.  If the Participant’s continuous employment with the Company and its Affiliates is terminated by the Company or its Affiliates without Cause or the Participant voluntarily terminates his employment with the Company or its Affiliates for Good Reason prior to [_______], the remaining unvested Time-Based Shares shall fully vest upon the Participant’s last day of employment, the Target Performance Shares (as defined in Schedule A) shall vest upon the Participant’s last day of employment and the remaining amount of the unvested Performance-Based Shares shall automatically be forfeited by the Participant and revert to the Company as of the Participant’s last day of employment without any payment therefor. In the event that such termination without Cause or resignation for Good Reason occurs on or after [_______] but before the Certification Date, the Performance-Based Shares shall be eligible to vest on the Participant’s last day of employment based on the Committee’s good faith estimate, made on or before the Participant’s last day of employment, of the extent to which the performance criterion set forth on Schedule A was achieved.

(e)Termination upon death or Disability.  If the Participant’s continuous employment with the Company and its Affiliates is terminated by reason of the Participant’s death or Disability:

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(f)Termination for Cause or Inimical Conduct.  Section 14(e) of the Plan is hereby incorporated by reference as if fully set forth herein and shall control in the event of conflict with any other provision of the Agreement.

5.Terms and Conditions of Distribution. The Company shall distribute certificates (if applicable) for Award Shares as soon as practicable after they become vested. If the Participant dies before the Company has distributed all vested Award Shares, the Company shall distribute certificates (if applicable) for the vested Award Shares to the beneficiary or beneficiaries the Participant designated, in the proportions the Participant specified. If the Participant failed to designate a beneficiary or beneficiaries, the Company shall distribute certificates (if applicable) for the vested Award Shares to the Participant’s estate. The Company shall distribute certificates (if applicable) for the vested Award Shares no later than six months after the Participant’s death.  

Notwithstanding the foregoing, the Company shall not distribute the certificates for the Award Shares until the Participant has paid to the Company or an Affiliate the amount required to be withheld for federal, state or local taxes. The Participant may direct the Company to withhold a portion of the Award Shares for federal, state and local income taxes, in which case the amount withheld shall not exceed the maximum statutory tax rates in the Participant’s applicable jurisdictions.

6.Legend on Stock Certificates. The Company may require that certificates for Award Shares distributed to the Participant pursuant to the Agreement bear any legend that counsel to the Company believes is necessary or desirable to facilitate compliance with applicable securities laws.

7.Delivery of Certificates. Notwithstanding the provisions of Sections 4 and 5 of the Agreement, the Company is not required to issue or deliver any certificates for Award Shares before completing the steps necessary to comply with applicable federal and state securities laws (including any registration requirements) and applicable stock exchange rules and practices. The Company shall use commercially reasonable efforts to cause compliance with those laws, rules and practices.

The Company shall not make any distribution of certificates before the first date the Award Shares may be distributed to the Participant without penalty or forfeiture under federal or state laws or regulations governing short swing trading of securities. In determining whether a distribution would result in such a penalty or forfeiture, the Administrator may rely upon information reasonably available to them or upon representations of the Participant’s legal or personal representative.

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8.No Right to Employment. Nothing in the Plan or the Agreement shall be construed as creating any right in the Participant to continued employment or service, or as altering or amending the existing terms and conditions of the Participant’s employment or service (other than with respect to the Award Shares).

9.Nontransferability. No interest of the Participant or any beneficiary in or under the Agreement shall be assignable or transferable by voluntary or involuntary act or by operation of law, other than in accordance with Section 5 of the Agreement or by the laws of descent and distribution, or pursuant to a domestic relations order (as defined in section 414(p)) of the Code).  Distribution of Award Shares shall be made only to the Participant; or, if the Administrator has been provided with evidence acceptable to it that the Participant is legally incompetent, the Participant’s guardian or legal representative; or, if the Participant is deceased, to the beneficiaries that the Participant has designated in the manner required by the Administrator or, in the absence of a designated beneficiary, to the Participant’s estate. The Administrator may, in its discretion, require a Participant’s guardian or legal representative to supply it with evidence the Administrator deems necessary to establish the authority of the guardian or legal representative to act on behalf of the Participant. Any effort to assign or transfer the rights under the Agreement in contravention of the Agreement or the Plan shall be wholly ineffective, and shall be grounds for termination by the Administrator of all rights of the Participant and his beneficiary in and under the Agreement.

10.Administration. The Administrator administers the Plan. The Participant’s rights under the Agreement are expressly subject to the terms and conditions of the Plan, including required stockholder approval thereof, and to any guidelines the Administrator adopts from time to time. The Participant hereby acknowledges receipt of a copy of the Plan.

11.Submission to Jurisdiction; WAIVER OF JURY TRIAL.

(a)Each party hereto hereby irrevocably and unconditionally (i) consents to submit to the exclusive jurisdiction of the state or federal courts residing in the state of Florida, county of Pinellas (the “Chosen Courts”) for any dispute, claim or controversy arising out of or relating to the Agreement or the negotiation, validity or performance of the Agreement or the transactions contemplated hereby (“Proceeding”), (ii) waives any objection to the laying of venue of any such Proceeding in the Chosen Courts and (iii) agrees not to plead or claim in any Chosen Court that such Proceeding brought therein has been brought in any inconvenient forum.  Each party hereto hereby agrees not to commence any such Proceeding other than before a Chosen Court.  Each party hereto agrees that a final, non-appealable judgment in any Proceeding so brought shall be conclusive and may be enforced by suit on the judgment in any court of competent jurisdiction, or in any other manner provided by law.  Each party hereto agrees that service of summons and complaint or any other process that might be served in any Proceeding hereunder may be made on such party by sending or delivering a copy of the process to such party to be served at the address of such party and in the manner provided for the giving of notices in Section 18 of the Agreement.  Nothing in this Section 11(a), however, shall affect the right of any party hereto to serve legal process in any other manner permitted by applicable law.  

(b)EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES (AND SHALL CAUSE ITS AFFILIATES TO IRREVOCABLY WAIVE) ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY

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LEGAL PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT OR BY THE TRANSACTIONS CONTEMPLATED HEREBY OR THE NEGOTIATION, VALIDITY OR PERFORMANCE HEREOF.  EACH PARTY HERETO (i) CERTIFIES THAT NO OTHER PARTY HERETO OR ANY OF SUCH OTHER PARTY’S REPRESENTATIVES HAS REPRESENTED, EXPRESSLY OR OTHERWISE THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT SUCH PARTY AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11(b).

12.Choice of Law.  The Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to any choice of law or conflict of laws rules, provisions or principles (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

13.Sole Agreement. The Award Shares are in all respects subject to the provisions set forth in the Plan to the same extent and with the same effect as if set forth fully herein. In the event that the terms of the Agreement conflict with the terms of the Plan, the Plan shall control. The Agreement is the entire agreement between the parties to it relating to the subject matter hereof, and any and all prior oral and written representations relating to the subject matter hereof are merged in the Agreement. The Agreement may be amended only by written agreement between the Participant and the Company.

14.Counterparts. The parties may execute the Agreement in one or more counterparts, all of which together shall constitute but one Agreement.

15.Delivery by Facsimile or E-Mail.  The Agreement, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or electronic transmission in portable document format (“.pdf”), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of either party hereto or to any such agreement or instrument, the other party hereto or thereto shall re-execute original forms thereof and deliver them to the other party.  No party hereto shall raise the use of a facsimile machine or electronic transmission in .pdf format to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic transmission in .pdf format as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

16.Tax Consequences.  The Participant has reviewed with his own tax advisors the federal, state, local and foreign tax consequences of the acquisition, ownership and sale of the Award Shares and the transactions contemplated by the Agreement. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (and not the Company) shall be responsible for any tax liability that may arise as a result of the transactions contemplated by the Agreement.  Without limiting the generality of the foregoing, the Participant may, within thirty (30) days of the transfer of the Award Shares to the Participant, make an election under Section 83 of the Internal Revenue Code of 1986, as amended, with respect to any or all of the Award Shares and, if he makes such an election, he shall promptly deliver to the Company a copy of such election.  

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17.Waiver. Except as expressly provided herein, neither the Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing the Agreement and signed by the Company and Participant. Either party’s failure to enforce any provision of the Agreement shall not in any way be construed as a waiver of any such provision, nor prevent that party from thereafter enforcing any other provision of the Agreement. The rights granted both parties hereunder are cumulative and shall not constitute a waiver of either party’s right to assert any other legal remedy available to him or it.

18.Notices. All notices required or permitted hereunder will be in writing and will be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not during normal business hours of the recipient, then on the next business day; (iii) five calendar days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications under the Agreement to the Company shall be sent to the Company’s headquarters, attention: Vice President of Compliance, and all communications under the Agreement to the Participant will be sent to his then current address on file in the Company’s payroll records, or to such other address as either such party may designate by 10 days’ advance written notice to the other party hereto.

19.Successors. The rights and obligations created under the Agreement shall, subject to the transfer restrictions contained herein and in the Plan, be binding on the Participant and his heirs and legal representatives and shall be binding on the successors and assigns of the Company.

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In Witness Whereof, the Company and the Participant have duly executed the Agreement as of the day and year first above written.

COMPANY:

 

Heritage Insurance Holdings, Inc.

 

Name:
Title:

 

 

PARTICIPANT:

 

Name:

Title:

 

 

 

 

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Schedule A

Performance-Based Shares

Performance Period:  January 1, 202[_] through December 31, 202[_]

Performance Criteria:  [_______]

Target Number of Performance-Based Shares:  [_______]of the total number of Performance-Based Shares (the “Target Performance Shares”)

Performance Goals and Vesting Formula:

Note: pro rata amounts are calculated between threshold and target and target and max.  If performance is less than threshold performance, all of the Performance-Based Shares shall terminate on the last day of the Performance Period without any payment in respect thereof.

 

Page 8 of 8

Executed Copy
Exhibit 10.23

FOURTH AMENDMENT TO CREDIT AGREEMENT

This FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of March 24, 2021 (the “Fourth Amendment Effective Date”), is entered into by and among HERITAGE INSURANCE HOLDINGS, INC., a Delaware corporation (the “Borrower”), the Guarantors, the Lenders party hereto, and Regions Bank, in its capacity as Administrative Agent (the “Administrative Agent”).

R E C I T A L S

WHEREAS, the Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, and Regions Bank, as Administrative Agent and Collateral Agent, are parties to that certain Credit Agreement, dated as of December 14, 2018 (as amended by that certain First Amendment to Credit Agreement, dated as of May 17, 2019, as further amended by that certain Second Amendment to Credit Agreement, dated as of April 27, 2020, as further amended by that certain Third Amendment to Credit Agreement, dated as of June 1, 2020, and as further amended, restated, amended and restated, supplemented, increased, extended, refinanced, renewed, replaced, and/or otherwise modified in writing from time to time, the “Credit Agreement”); and

WHEREAS, the Credit Parties have requested that the Credit Agreement be amended as provided in Section 3 below, and the Lenders (by act of the Required Lenders) have agreed to consent to such amendments set forth herein, subject to the terms and conditions of this Amendment;

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

A G R E E M E N T

1.Introductory Paragraph and Recitals; Definitions. The above introductory paragraph and recitals (including any terms defined therein) of this Amendment are incorporated herein by reference as if fully set forth in the body of this Amendment. Capitalized terms used herein but not otherwise defined herein shall have the meanings provided for such terms in the Credit Agreement (as amended by this Amendment).

2.Amendments to the Credit Agreement. Pursuant to Section 11.4 of the Credit Agreement, the Credit Agreement is hereby amended in the following respects:

(a)Section 1.1 (Definitions) of the Credit Agreement is amended by inserting the following new definitions in the appropriate alphabetical order:

“Fourth Amendment Effective Date” shall mean March 24, 2021.

“Specified Managing Agency Services Agreement” shall mean that certain Managing Agency Contract, dated as of January 1, 2019, by and between Heritage Property & Casualty Insurance Company, as the company, and Heritage MGA, LLC, as the manager (as amended, restated, amended and restated, supplemented, extended, renewed, replaced, and/or otherwise modified in writing from time to time pursuant to the Specified Managing Agency Services Agreement Amendment or otherwise in accordance with the terms of this Agreement and the other Loan Documents).

Fourth Amendment to Credit Agreement (Heritage Insurance Holdings, Inc.)

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“Specified Managing Agency Services Agreement Amendment” shall mean that certain letter agreement, dated as of the Fourth Amendment Effective Date, by and between Heritage Property & Casualty Insurance Company, as the company, and Heritage MGA, LLC, as the manager, relating to the Specified Managing Agency Services Agreement (as provided to the Administrative Agent (or its designee) in fully executed form on or prior to the Fourth Amendment Effective Date).

(b)The definition of “Consolidated EBITDA” in Section 1.1 (Definitions) of the Credit Agreement is amended by (i) deleting the text “and” as it occurs immediately prior to the beginning of clause (a)(vii) of such definition, (ii) renumbering clause (a)(vii) of such definition as a new clause (a)(viii) of such definition, and (iii) inserting a new clause (a)(vii) of such definition in the appropriate alphabetical and sub-numerical order to read as follows:

(vii) unpaid managing general agency fees, expenses and other amounts that would have been due and owing by Heritage Property & Casualty Insurance Company to Heritage MGA, LLC pursuant to the Specified Managing Agency Services Agreement with respect to the twelve (12) consecutive calendar month period ended December 31, 2020, but for a waiver provided by Heritage MGA, LLC pursuant to and in accordance with the terms of the Specified Managing Agency Services Agreement Amendment, to the extent that the Specified Managing Agency Services Agreement Amendment is expressly permitted under clause (A) of the proviso to the last sentence of Section 8.16, and

(c)The proviso to the last sentence of Section 8.16 (Amendments to Organizational Agreements / Material Agreements) of the Credit Agreement is amended and restated in its entirety to read as follows:

; provided, however, that the Credit Parties and their Subsidiaries shall be permitted (A) to amend or waive any provision of the Specified Managing Agency Services Agreement pursuant to the Specified Managing Agency Services Agreement Amendment in order to reduce the managing general agency fees, expenses and/or other amounts that would otherwise be due and payable under the Specified Managing Agency Services Agreement from Heritage Property & Casualty Insurance Company to Heritage MGA, LLC solely with respect to the twelve (12) consecutive calendar month period ended December 31, 2020, and (B) to amend, terminate or waive any provision of a Material Contract to the extent expressly required to do so under Applicable Law or in writing by any Insurance Regulatory Authority, in each case of this clause (B), with prompt written notice of such amendment, termination or waiver to be provided to the Administrative Agent.

3.Effectiveness; Conditions Precedent. This Amendment shall become effective as of the Fourth Amendment Effective Date upon receipt by the Administrative Agent of counterparts of this Amendment, duly executed by each of the Credit Parties, Lenders constituting the Required Lenders, the Administrative Agent and the Collateral Agent.

4.Representations and Warranties. The Borrower (on behalf of itself and the other Credit Parties) hereby represents and warrants to the Administrative Agent and the Lenders as follows:

(a)the Borrower and each other Credit Party has taken all necessary action to authorize the execution and delivery of, and performance under, this Amendment;

(b)this Amendment has been duly executed and delivered by the Borrower and each other Credit Party and constitutes each such Credit Party’s legal, valid and binding obligations, enforceable in accordance with its terms, except as such enforceability may be subject to: (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar Laws affecting creditors’ rights

2

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generally; and/or (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity);

(c)no consent, approval, authorization or order of, or filing, registration or qualification with, any court or Governmental Authority or third-party is required in connection with the execution or delivery of, or performance under, this Amendment by the Borrower or any other Credit Party;

(d)both immediately before and immediately after giving effect to this Amendment, the representations and warranties contained in the Credit Agreement or any other Credit Document are true and correct in all material respects, except to the extent that such representations and warranties specifically refer to an earlier date, in which case, they are true and correct in all material respects as of such earlier date; and

(e)immediately after giving effect to this Amendment, no Default or Event of Default exists.

5.Reaffirmation. The Borrower (on behalf of itself and the other Credit Parties): (a) (i) acknowledges and consents to all of the terms and conditions of this Amendment, (ii) affirms all of its obligations under the Credit Documents (as amended by this Amendment), and (iii) agrees that this Amendment, and all documents, agreements and instruments executed in connection with this Amendment, do not operate to reduce or discharge such Credit Party’s obligations under the Credit Documents (except to the extent such obligations are expressly modified pursuant to this Amendment); and (b) (i) affirms that each of the Liens granted in, or pursuant to, the Credit Documents is valid and subsisting, and (ii) agrees that this Amendment, and all documents, agreements and instruments executed in connection with this Amendment, do not, in any manner, impair, or otherwise adversely affect, any of the Liens granted in, or pursuant to, the Credit Documents.

6.Miscellaneous.

(a)Credit Document. This Amendment shall be deemed to be, and is, a Credit Document, and all references to a “Credit Document” in the Credit Agreement and the other Credit Documents (including, without limitation, all such references in the representations and warranties in the Credit Agreement and the other Credit Documents) shall be deemed to include this Amendment.

(b)No Other Changes. Except as expressly modified hereby, all of the terms and provisions of the Credit Documents shall remain unchanged and in full force and effect.

(c)Counterparts; Delivery. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by telecopy or other electronic imaging means (including in “.pdf” form) shall be effective as delivery of a manually executed counterpart of this Amendment.

(d)Fees and Expenses. The Borrower agrees to pay all reasonable out-of-pocket fees and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including, without limitation, the reasonable fees and expenses of Moore & Van Allen PLLC, as counsel to the Administrative Agent.

(e)Governing Law. THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF, OR RELATING TO THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK.

[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written, intending to create an instrument under seal.

a Delaware corporation

Name:Kirk Lusk

Title:Chief Financial Officer

a Florida limited liability company

FIRST ACCESS INSURANCE GROUP, LLC,

a Florida limited liability company

HERITAGE INSURANCE CLAIMS, LLC,

a Florida limited liability company

HERITAGE MGA, LLC,

a Florida limited liability company

NBIC FINANCIAL HOLDINGS, INC.,

a Delaware corporation

NBIC HOLDINGS, INC.,

a Delaware corporation

NBIC SERVICE COMPANY, INC.,

a Rhode Island corporation

SKYE LANE PROPERTIES, LLC,

a Florida limited liability company

ZEPHYR ACQUISITION COMPANY,

a Delaware corporation

Name:Kirk Lusk

Title:Chief Financial Officer

HI Holdings, INc.,

a Hawaii corporation

Name:Ernesto Garateix

Title:Chief Operating Officer

[Signature Pages Continue]

Signature Page to Fourth Amendment to Credit Agreement (Heritage Insurance Holdings, Inc.)

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ADMINISTRATIVE AGENT

as Administrative Agent and Collateral Agent

Name:Travis Lovell

Title:Director

[Signature Pages Continue]

Signature Page to Fourth Amendment to Credit Agreement (Heritage Insurance Holdings, Inc.)

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Name:Travis Lovell

Title:Director

[Signature Pages Continue]

Signature Page to Fourth Amendment to Credit Agreement (Heritage Insurance Holdings, Inc.)

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bmo harris bank n.a.,

as a Lender

Name:Collin Wagner

Title:Vice President

[Signature Pages Continue]

Signature Page to Fourth Amendment to Credit Agreement (Heritage Insurance Holdings, Inc.)

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hancock whitney bank,

as a Lender

Name:Allen L. Harvell, Jr.

Title:SVP

[Signature Pages Continue]

Signature Page to Fourth Amendment to Credit Agreement (Heritage Insurance Holdings, Inc.)

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CIBC BANK USA,

as a Lender

Name:Austin G. Love

Title:Managing Director

[Signature Pages Continue]

Signature Page to Fourth Amendment to Credit Agreement (Heritage Insurance Holdings, Inc.)

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woodforest national bank,

as a Lender

Name:Thomas Angley

Title:Senior Vice President

[Signature Pages End]

Signature Page to Fourth Amendment to Credit Agreement (Heritage Insurance Holdings, Inc.)

 

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT

I, Ernesto Garateix, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Heritage Insurance Holdings, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the end of the period covered by this report; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting  which are reasonably likely to  adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 7, 2021

 

 

 

 

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT

I, Kirk Lusk, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Heritage Insurance Holdings, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the end of the period covered by this report; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting  which are reasonably likely to  adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 7, 2021

 

 

 

Exhibit 32.1

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES–OXLEY ACT OF 2002

In connection the Quarterly Report on Form 10Q of Heritage Insurance Holdings, Inc. (the “Company”) for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Report”), I, Ernesto Garateix, the Chief Executive Officer of the Company. hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

Date: May 7, 2021

 

 

Exhibit 32.2

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES–OXLEY ACT OF 2002

In connection the Quarterly Report on Form 10Q of Heritage Insurance Holdings, Inc. (the “Company”) for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Report”), I, Kirk Lusk, the Chief Financial Officer of the Company. hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

Date: May 7, 2021

 

 

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