HCI Group, Inc S-3ASR, filed Jan 22, 2024
HCI Group, Inc. (HCI)
Table of Contents
As filed with the Securities and Exchange Commission on January 22, 2024
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HCI Group, Inc.
(Exact name of registrant as specified in its charter)
| Florida | 20-5961396 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
3802 Coconut Palm Drive
Tampa, FL 33619
(813) 849-9500
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
F&L Corp.
One Independent Drive, Suite 1300
Jacksonville, Florida 32202
(904) 359-2000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
| Andrew Graham, Esq. General Counsel HCI Group, Inc. 3802 Coconut Palm Drive Tampa, Florida 33619 Telephone No.: (813) 849-9500 |
Curt P. Creely, Esq. Garrett F. Bishop, Esq. Foley & Lardner LLP 100 N. Tampa Street, Suite 2700 Tampa, Florida 33602 Telephone No.: (813) 229-2300 Facsimile No.: (813) 221-4210 |
Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☒
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
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 7(a)(2)(B) of Securities Act. ☐
Table of Contents
EXPLANATORY NOTE
This registration statement contains three prospectuses:
| • | A base prospectus (the “Base Prospectus”) that covers the offering, issuance and sale by us and the selling security holders of common stock, preferred stock, debt securities, warrants, stock purchase contracts and stock purchase units, in each case from time to time in one or more offerings; |
| • | An equity distribution agreement prospectus supplement (the “ATM Prospectus Supplement”) covering the offering, issuance and sale by us of up to a maximum aggregate offering price of $75.0 million of our common stock that may be issued and sold under an equity distribution agreement with each of Truist Securities, Inc. and Citizens JMP Securities, LLC, each as sales agent; and |
| • | A resale prospectus supplement (the “Resale Prospectus Supplement”) relating to (1) the possible issuance of up to 750,000 shares of common stock by us to the holder of our common stock purchase warrants upon the exercise of such warrants; (2) the possible resale by CB Snowbird Holdings, L.P., a Delaware limited partnership (“selling security holder”), of amended and restated common stock purchase warrants issued in a private placement on January 22, 2024; and (3) the possible resale by the selling security holder of up to 750,000 shares of our common stock issuable upon the exercise of such warrants. |
The Base Prospectus immediately follows this explanatory note. The specific terms of any other securities to be offered pursuant to the Base Prospectus will be specified in one or more prospectus supplements to the Base Prospectus. The specific terms of the securities to be issued and sold under the equity distribution agreement is specified in the ATM Prospectus Supplement that immediately follows the Base Prospectus. Information about the selling security holders that may sell a common stock purchase warrant or shares of our common stock registered pursuant to the Resale Prospectus Supplement is included in the Resale Prospectus Supplement that immediately follows the ATM Prospectus Supplement.
1
Table of Contents
PROSPECTUS
HCI Group, Inc.
Common Stock
Preferred Stock
Debt Securities
Warrants
Stock Purchase Contracts
Stock Purchase Units
By this prospectus, we may offer and sell from time to time securities in one or more offerings in amounts, at prices and on terms determined at the time of the offering. We may sell any combination of these securities in one or more offerings. This prospectus provides you with a general description of the securities we may offer.
We may offer and sell the following securities:
| • | common stock; |
| • | preferred stock, which may be convertible into our common stock or other securities; |
| • | senior or subordinated debt securities, which may be convertible into our common stock or preferred stock; |
| • | warrants to purchase common stock, preferred stock or debt securities; and |
| • | stock purchase contracts and stock purchase units. |
In addition, selling security holders to be named in a prospectus supplement may offer and sell from time to time, in one or more offerings, securities in such amounts and on such terms as set forth in such prospectus statement.
Each time securities are sold using this prospectus, we will provide a supplement to this prospectus and possibly other offering materials containing specific information about the offering and the terms of the securities being sold, including the offering price and the net proceeds we and any selling security holders expect to receive from the sale of such securities. Unless otherwise set forth in the applicable prospectus supplement, we will not receive any proceeds from the sale of securities by any selling security holder. The supplement or other offering materials may also add, update or change information contained or incorporated by reference in this prospectus. You should read this prospectus, any prospectus supplement, any other offering materials and the information incorporated by reference carefully before you invest.
We or the selling security holders may offer and sell these securities to or through underwriters, dealers or agents, or directly to investors, on a continued or a delayed basis. The supplements to this prospectus will provide the specific terms of the plan of distribution and, if we or any selling security holders use any agents, underwriters or dealers to sell our securities, the names of such agents, underwriters or dealers and a description of their compensation.
Our common stock is listed on the New York Stock Exchange under the symbol “HCI.” On January 18, 2024, the last reported sale price of our common stock on the New York Stock Exchange was $89.44 per share.
Investment in our securities involves risks, including those described in the section titled “Risk Factors” on page 6 of this prospectus. Please read carefully and consider these risk factors, as well as those included in the reports we file under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), such as our most recent Annual Report on Form 10-K, and those included in any applicable prospectus supplement and/or other offering material we file with the Securities and Exchange Commission (the “SEC”).
Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is January 22, 2024.
Table of Contents
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 6 | ||||
| 7 | ||||
| 8 | ||||
| 18 | ||||
| 22 | ||||
| DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS |
24 | |||
| 25 | ||||
| 26 | ||||
| 29 | ||||
| 29 | ||||
| 29 |
Table of Contents
Unless the context otherwise requires, references in this prospectus to “we,” “us,” “our,” “our company,” “the Company,” or “HCI” refer to HCI Group, Inc. and its subsidiaries.
This prospectus is part of a registration statement that we filed with the SEC utilizing an “automatic shelf” registration process as a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”). Under this automatic shelf registration process, we or any selling security holder may, from time to time, offer and sell the securities or combinations of the securities described in this prospectus in one or more offerings. This prospectus provides you with a general description of those securities. As permitted by the rules and regulations of the SEC, this prospectus does not contain all of the information set forth in the registration statement. For additional information regarding us and the offered securities, please refer to the registration statement of which this prospectus forms a part. Each time we or any selling security holders offer securities using this prospectus, we will provide a prospectus supplement and/or other offering material that will contain specific information about the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings. The rules of the SEC allow us to incorporate by reference information into this prospectus. “Incorporate by reference” means that we can disclose important information to you by referring you to another document filed separately with the SEC. This information incorporated by reference is considered to be a part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. Any prospectus supplement and/or other offering material may also add, update or change information contained or incorporated by reference in this prospectus. You should read this prospectus, any prospectus supplement (and any applicable free writing prospectuses) and any other offering material together with the additional information described under the heading “Where You Can Find More Information.”
You should rely only on the information contained or incorporated by reference in this prospectus, in any prospectus supplement and in any other offering material. Neither we, nor the selling security holders, have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it.
This prospectus and the accompanying prospectus supplement do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the securities described in the accompanying prospectus supplement or an offer to sell or the solicitation of an offer to buy such securities in any circumstances in which such offer or solicitation is unlawful. You should assume that the information appearing in this prospectus, any prospectus supplement, the documents incorporated by reference and any related free writing prospectus is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed materially since those dates.
1
Table of Contents
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement and/or any other offering material, and the information incorporated by reference in this prospectus, any prospectus supplement and/or any other offering material, contain forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical fact, included or incorporated by reference in this prospectus, any prospectus supplement and/or any other offering material, including, without limitation, estimates, projections, outlook, guidance, statements relating to our business plans, strategy, objectives, expected operating results and future financial position, and the assumptions upon which those statements are based, are forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. These forward-looking statements are based solely on our current beliefs and are not guarantees of future performance. Therefore, these forward-looking statements are subject to inherent risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including but not limited to:
| • | the future availability of insurance policy assumptions and acquisitions; |
| • | the effect of governmental regulation on the insurance industry and other industries in which we operate; |
| • | any failure of our information technology systems or cybersecurity breach; |
| • | the frequency and extent of insurance claims; |
| • | uncertainties inherent in our reserve estimates; |
| • | the occurrence of catastrophic events, particularly in the State of Florida; |
| • | our ability to sell insurance products through independent agents; |
| • | restrictions on our ability to change premium rates; |
| • | increased rate pressure on premiums due to competition and market conditions; |
| • | changes in the demand for, pricing of, availability of or collectability of reinsurance; |
| • | the success and economic viability of the anchor tenants for our real estate investments; and |
| • | other risks and uncertainties that we identify under “Risk Factors” on page 5 of this prospectus, in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, in any prospectus supplement, in any other offering material, and in any other documents that we file from time to time with the SEC that are incorporated by reference into this prospectus, any prospectus supplement and/or any other offering material. |
Any forward-looking statement made by us in this prospectus is based only on information currently available to us and speaks only as of the date on which it is made. We assume no obligation, and disclaim any duty, to update or revise publicly any forward-looking statements, whether written or oral, and whether as a result of new information, future events or otherwise, except to the extent required by law.
2
Table of Contents
Our Business
HCI Group, Inc. is a Florida-based company that, through its subsidiaries, is engaged in various business activities, including property and casualty insurance, information technology services, insurance management, real estate, and reinsurance.
Our largest subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc. (“Homeowners Choice”), provides property and casualty insurance primarily to residential property owners and tenants in Florida. Homeowners Choice began operations by participating in a “take-out program” through which we assumed insurance policies issued by Citizens Property Insurance Corporation (“Citizens”), a Florida state-supported insurer. The take-out program is a legislatively mandated program designed to reduce the State’s risk exposure by encouraging private companies to assume policies from Citizens. Opportunities to acquire large numbers of policies from Citizens meeting our strict underwriting criteria diminished in recent years. However, recently, circumstances within the Florida homeowners insurance industry have changed and we plan to selectively pursue additional assumption transactions with Citizens. On September 1, 2023, we received approval from the Florida Office of Insurance Regulation to assume up to 75,000 policies from Citizens.
TypTap Insurance Group, Inc. (“TTIG”), our majority-owned InsurTech subsidiary, provides homeowners insurance and produces insurance-related technologies. It 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. TypTap is primarily engaged in the property and casualty insurance business, focusing on homeowners multi-peril policies. TypTap utilizes technology developed by Exzeo to receive, analyze, approve and process policy applications and issue resulting policies automatically.
Our general operating and growth strategies are to continually optimize our existing book of insurance business, organically expand our insurance business, manage our costs and expenses, diversify our business operations, develop and deploy new technologies to streamline operational processes, and maintain a strong balance sheet so we can quickly pursue accretive opportunities when they arise. Our growth strategies also include assumption of business from other insurance companies.
We have a Bermuda domiciled wholly owned reinsurance subsidiary, Claddaugh Casualty Insurance Company Ltd. (“Claddaugh”), which provides reinsurance to Homeowners Choice and TypTap. We selectively retain risk in Claddaugh. Claddaugh fully collateralizes its exposure to Homeowners Choice 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.
Homeowners Choice and TypTap have provided reinsurance to a non-affiliated insurance company in connection with the transition of business from that insurance company to Homeowners Choice and TypTap pending regulatory approvals. Our real estate operations consist of multiple properties we own and operate for investment purposes and also properties we own and use for our own operations. Our portfolio of investment properties includes three waterfront properties consisting of a total of 26.1 acres and a five-acre submerged land lease. One waterfront property contains a building structure that we currently lease to the operator of Crabby’s on the Pass restaurant and a marina. Another houses retail space and a marina with high and dry storage. We acquired the restaurant and marina operations in connection with our purchase of two waterfront properties and we continue to operate two marinas to enhance the property values. The remaining waterfront property consists of nine acres of vacant land. Additional investment properties include an Aldi-anchored retail center in Clearwater, Florida, a second grocery-anchored retail center that is currently under development in Haines City, Florida, a Thornton’s filling station with inline retail in Riverview, Florida, and an office building totaling approximately 180,000 square feet in the Westshore area of Tampa.
3
Table of Contents
Our real estate used in operations consists of an office building located in the Sabal Palms Industrial Park in Tampa, Florida with gross area of 67,289 square feet, an office building located in the Westshore area of Tampa, Florida with gross area of 72,249 square feet, and an office building with gross area of approximately 16,000 square feet in Ocala, Florida. The Ocala location, in addition to day-to-day operational use, serves as our alternative site in the event we experience any significant disruption at our Tampa offices.
Our information technology operations include a team of experienced software developers with extensive knowledge in designing and creating web-based applications. The operations, which are located 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. Products created thus far have been solely for use by the Company’s insurance-related subsidiaries.
Recent Developments
Citizens Assumptions
Effective November 21, 2023, our subsidiary, Homeowners Choice assumed approximately 53,750 policies from Citizens. The assumption of the policies, which amount to approximately $196 million of in-force premium, is based upon an approval in September 2023 by the Florida Office of Insurance Regulation. Additionally, our subsidiary, TypTap, assumed approximately 6,700 policies from Citizens in December 2023 and assumed approximately 9,500 policies from Citizens in January 2024.
Condo Owners Reciprocal Exchange
On November 30, 2023, the Company received regulatory approval from the Florida Office of Insurance Regulation to form Condo Owners Reciprocal Exchange (“CORE”), a an HCI sponsored reciprocal insurer, which will focus on writing commercial residential policies for condominium owners in Florida. A reciprocal insurer is an unincorporated aggregation of at least 25 policyholders operating through an attorney in fact to provide insurance among themselves. A reciprocal insurer is essentially owned by its policyholders, but its operations such as underwriting, claims and management services are provided by an attorney-in-fact for a predetermined management fee.
Redemption of 4.25% Convertible Senior Notes due 2037
On January 10, 2024, the Company announced that it had notified the holders of its outstanding 4.25% Convertible Senior Notes due 2037 (the “Notes”) of its election to redeem the remaining $24 million principal balance of the Notes. As a result of such notice, the Notes became immediately convertible into shares of our common stock. The current conversion rate, which is subject to adjustment, is 16.5893 shares of common stock per $1,000 principal amount of Notes. The redemption date of the Notes is March 15, 2024.
Redemption of Preferred Stock of TypTap Insurance Group, Inc.
On January 22, 2024, we entered into a redemption agreement (“Redemption Agreement”) with CB Snowbird Holdings, L.P., a Delaware limited partnership (“Centerbridge”) whereby we redeemed all of Centerbridge’s preferred shares in TTIG for approximately $103 million (the “Redemption”). As a result of the Redemption, Centerbridge no longer has any equity interest in TTIG. The Redemption Agreement contained representations and warranties and mutual releases customary for this type of transaction. Pursuant to the Redemption Agreement, the parties agreed that each of the Parent Guaranty Agreement, dated February 26, 2021, by us in favor of Centerbridge and the TTIG Shareholders Agreement, dated February 26, 2021, are terminated effective immediately.
In connection with the Redemption, we entered into an amended and restated common stock purchase warrant with Centerbridge, dated January 22, 2024, allowing for the issuance of 750,000 shares of our common stock at
4
Table of Contents
an exercise price of $54.40 per share (the “Warrant”). The Warrant contains substantially similar terms and conditions as the common stock purchase warrant, dated February 26, 2021, with Centerbridge (the “Original Warrant”), except that shares of our common stock underlying the Warrant expire as follows: 300,000 shares expire February 26, 2025; 150,000 shares expire December 31, 2026; 150,000 shares expire December 31, 2027; and the remaining 150,000 shares expire December 31, 2028. As with the Original Warrant, the Warrant may be exercised with cash or on a “cashless” basis, at the option of Centerbridge and is subject to customary adjustments in its exercise price and/or number of shares for which the Warrant is exercisable as a result of future stock splits, stock dividends, reverse stock splits, and the like with respect to our common stock, and also upon certain dividends, distributions of stock purchase rights, and fundamental transactions by us.
Also in connection with the Redemption, we entered into a registration rights agreement, dated January 22, 2024, with Centerbridge (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, we agreed, by January 31, 2024, to register the resale of the Warrant and the shares underlying the Warrant upon exercise by Centerbridge. In addition to the initial registration, we granted Centerbridge certain demand and piggyback registration rights. Additionally, Centerbridge agreed that, without our prior written consent, neither it nor its affiliates will transfer the Warrant, any shares underlying the Warrant in excess of 300,000 shares in a single transaction (other than a brokers’ transaction) or shares underlying the Warrant directly to a holder who is or, to their knowledge, after such transfer would be required to file an original or amended statement on Schedule 13D. The Registration Rights Agreement is set to terminate upon the earliest to occur of (1) the time in which Rule 144(b)(1) under the Securities Act is available for the resale of the shares underlying the Warrant; (2) no holder under the Registration Rights Agreement holds registerable securities (as defined therein); and (3) June 30, 2029; provided, however, that so long as Centerbridge holds the Warrant, the right to registration under the Registration Rights Agreement with respect to any other registrable securities will not terminate. The piggyback registration rights under the Registration Rights Agreement expire upon the earlier of June 26, 2025 and the term of the Registration Rights Agreement.
Company Information
Our principal executive offices are located at 3802 Coconut Palm Drive, Tampa, Florida 33619, and our telephone number is (813) 849-9500. Our website address is https:.//hcigroup.com. Information contained on our website is not incorporated by reference into this prospectus, and such information should not be considered to be part of this prospectus.
5
Table of Contents
Investing in our securities involves significant risks. Before making an investment decision, you should carefully consider the risks and other information we include or incorporate by reference in this prospectus and any prospectus supplement. In particular, you should consider the risk factors under the heading “Risk Factors” included in our most recent Annual Report on Form 10-K, as may be revised or supplemented by our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, each of which are on file with the SEC and are incorporated herein by reference, and which may be amended, supplemented or superseded from time to time by other reports we file with the SEC in the future. The risks and uncertainties we have described are not the only ones facing our company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also affect our business operations. Additional risk factors may be included in a prospectus supplement relating to a particular offering of securities.
6
Table of Contents
Unless otherwise indicated in the applicable prospectus supplement, we anticipate that the net proceeds from the sale of the securities that we may offer under this prospectus and any applicable prospectus supplement, free writing prospectus or possibly other offering materials containing specific information about the offering will be used for general corporate purposes. We will have significant discretion in the use of any net proceeds. We may invest the proceeds temporarily until we use them for their stated purpose. If we decide to use the net proceeds from a particular offering of securities for a specific purpose, we will describe that purpose in the applicable prospectus supplement, free writing prospectus or other offering material.
We will not receive any proceeds from the sale of securities by the selling security holders.
7
Table of Contents
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the debt securities sets forth general terms that may apply to the debt securities and provisions of the indentures that will govern the debt securities, and is not complete. We will describe the particular terms of any debt securities in the prospectus supplement relating to those debt securities.
The debt securities will be either our senior debt securities or our subordinated debt securities. Senior debt securities will be issued under an indenture between us and a U.S. banking institution named as trustee in a prospectus supplement, a form of which is incorporated by reference as an exhibit to the registration statement of which this prospectus is a part. The indenture relating to the senior debt securities, as amended or otherwise supplemented by any supplemental indentures, is referred to in this prospectus as the senior indenture. Subordinated debt securities will be issued under an indenture between us and a U.S. banking institution named as trustee in a prospectus supplement, a form of which is incorporated by reference as an exhibit to the registration statement of which this prospectus is a part. The indenture relating to the subordinated debt securities, as amended or otherwise supplemented by any supplemental indentures, is referred to in this prospectus as the subordinated indenture. The senior indenture and the subordinated indenture are sometimes referred to in this prospectus collectively as the indentures, and each individually, as an indenture.
The following summaries of the material provisions of the indentures and the debt securities do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the indentures, including the definitions of specified terms used in the indentures, and the debt securities.
General Terms
Neither indenture limits the amount of debt securities that we may issue. Each indenture provides that debt securities may be issued up to the principal amount authorized by us from time to time. The senior debt securities will be unsecured and will have the same rank as all of our other unsecured and unsubordinated debt. The subordinated debt securities will be unsecured and will be subordinated to all senior indebtedness as set forth below. None of our subsidiaries will have any obligations with respect to the debt securities. Therefore, our rights and the rights of our creditors, including holders of senior debt securities and subordinated debt securities, to participate in the assets of any subsidiary will be subject to the prior claims of the creditors of our subsidiaries.
We may issue the debt securities in one or more separate series of senior debt securities and/or subordinated debt securities. The prospectus supplement relating to the particular series of debt securities being offered will specify the particular amounts, prices and terms of those debt securities. These terms may include:
| • | the title of the debt securities and the series in which the debt securities will be included; |
| • | the authorized denominations and aggregate principal amount of the debt securities; |
| • | the date or dates on which the principal and premium, if any, are payable; |
| • | the rate or rates per annum at which the debt securities will bear interest, if there is any interest, or the method or methods of calculating interest and the date from which interest will accrue; |
| • | the place or places where the principal of and any premium and interest on the debt securities will be payable; |
| • | the dates on which the interest will be payable and the corresponding record dates; |
| • | the period or periods within which, the price or prices at which, and the terms and conditions on which, the debt securities may be redeemed, in whole or in part, at our option; |
| • | any obligation to redeem, repay or purchase debt securities pursuant to any sinking fund or analogous provisions or at the option of a holder; |
| • | the portion of the principal amount of the debt securities payable upon declaration of the acceleration of the maturity of the debt securities; |
8
Table of Contents
| • | the person to whom any interest on any debt security will be payable if other than the person in whose name the debt security is registered on the applicable record date; |
| • | any events of default, covenants or warranties applicable to the debt securities; |
| • | if applicable, provisions related to the issuance of debt securities in book-entry form; |
| • | the currency, currencies or composite currency of denomination of the debt securities; |
| • | the currency, currencies or composite currencies in which payments on the debt securities will be payable and whether the holder may elect payment to be made in a different currency; |
| • | whether and under what conditions we will pay additional amounts to holders of the debt securities; |
| • | the terms and conditions of any conversion or exchange provisions in respect of the debt securities; |
| • | the terms pursuant to which our obligation under the indenture may be terminated through the deposit of money or government obligations; |
| • | whether the debt securities will be subordinated in right of payment to senior indebtedness and the terms of any such subordination; and |
| • | any other specific terms of the debt securities not inconsistent with the applicable indenture. |
Unless otherwise specified in the applicable prospectus supplement, the debt securities will not be listed on any securities exchange.
Unless the applicable prospectus supplement specifies otherwise, we will issue the debt securities in fully registered form without coupons. If we issue debt securities of any series in bearer form, the applicable prospectus supplement will describe the special restrictions and considerations, including special offering restrictions and special federal income tax considerations, applicable to those debt securities and to payment on and transfer and exchange of those debt securities.
U.S. Federal Income Tax Considerations
We may issue the debt securities as original issue discount securities, bearing no interest or bearing interest at a rate, which, at the time of issuance, is below market rates, to be sold at a substantial discount below their principal amount. We will describe some special U.S. federal income tax and other considerations applicable to any debt securities that are issued as original issue discount securities in the applicable prospectus supplement. We encourage you to consult with your own competent tax and financial advisors on these important matters.
Payment, Registration, Transfer and Exchange
Subject to any applicable laws or regulations, we will make payments on the debt securities at a designated office or agency, unless the applicable prospectus supplement otherwise sets forth. At our option, however, we may also make interest payments on the debt securities in registered form:
| • | by checks mailed to the persons entitled to interest payments at their registered addresses; or |
| • | by wire transfer to an account maintained by the person entitled to interest payments as specified in the security register. |
Unless the applicable prospectus supplement otherwise indicates, we will pay any installment of interest on debt securities in registered form to the person in whose name the debt security is registered at the close of business on the regular record date for that installment of interest. If a holder wishes to receive a payment by wire transfer, the holder should provide the paying agent with written wire transfer instructions at least 15 days prior to the payment date.
9
Table of Contents
Unless the applicable prospectus supplement otherwise sets forth, debt securities issued in registered form will be transferable or exchangeable at the agency we may designate from time to time. Debt securities may be transferred or exchanged without service charge, other than any tax or other governmental charge imposed in connection with the transfer or exchange.
Consolidation, Merger or Sale by the Company
Each indenture generally permits a consolidation or merger between us and another U.S. corporation. It also permits the sale or transfer by us of all or substantially all of our property and assets and the purchase by us of all or substantially all of the property and assets of another corporation. These transactions are permitted if:
| • | the resulting or acquiring corporation, if other than us, assumes all of our responsibilities and liabilities under the indenture, including the payment of all amounts due on the debt securities and performance of the covenants in the indenture; and |
| • | immediately after the transaction, no event of default exists. |
Even though each indenture contains the provisions described above, we are not required by either indenture to comply with those provisions if we sell all of our property and assets to another U.S. corporation if, immediately after the sale, that corporation is one of our wholly-owned subsidiaries.
If we consolidate or merge with or into any other corporation or sell all or substantially all of our assets according to the terms and conditions of each indenture, the resulting or acquiring corporation will be substituted for us in the indentures with the same effect as if it had been an original party to the indentures. As a result, the successor corporation may exercise our rights and powers under each indenture, in our name or in its own name and we will be released from all our liabilities and obligations under each indenture and under the debt securities.
Events of Default, Notice and Certain Rights on Default
Unless otherwise stated in the applicable prospectus supplement, an “event of default,” when used with respect to any series of debt securities, means any of the following:
| • | failure to pay interest on any debt security of that series for 30 days after the payment is due; |
| • | failure to pay the principal of or any premium on any debt security of that series when due; |
| • | failure to deposit any sinking fund payment on debt securities of that series when due; |
| • | failure to perform any other covenant in the applicable indenture that applies to debt securities of that series for 90 days after we have received written notice of the failure to perform in the manner specified in the indenture; |
| • | certain events in bankruptcy, insolvency or reorganization; or |
| • | any other event of default that may be specified for the debt securities of that series when that series is created. |
If an event of default for any series of debt securities occurs and continues, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt securities of the series may declare the entire principal of all the debt securities of that series to be due and payable immediately. If a declaration occurs, the holders of a majority of the aggregate principal amount of the outstanding debt securities of that series can, subject to certain conditions, rescind the declaration.
The prospectus supplement relating to each series of debt securities which are original issue discount securities will describe the particular provisions that relate to the acceleration of maturity of a portion of the principal amount of that series when an event of default occurs and continues.
10
Table of Contents
An event of default for a particular series of debt securities does not necessarily constitute an event of default for any other series of debt securities issued under either indenture.
Each indenture requires us to file an officers’ certificate with the trustee each year that states that certain defaults do not exist under the terms of the indenture. The trustee will transmit by mail to the holders of debt securities of a series notice of any default.
Other than its duties in the case of a default, a trustee is not obligated to exercise any of its rights or powers under an indenture at the request, order or direction of any holders, unless the holders offer the trustee indemnification satisfactory to the trustee. If indemnification satisfactory to the trustee is provided, then, subject to certain other rights of the trustee, the holders of a majority in principal amount of the outstanding debt securities of any series may, with respect to the debt securities of that series, direct 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. |
The holder of a debt security of any series will have the right to begin any proceeding with respect to the applicable indenture or for any remedy only if:
| • | the holder has previously given the trustee written notice of a continuing event of default with respect to that series; |
| • | the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made a written request of, and offered reasonable indemnification to, the trustee to begin the proceeding; |
| • | the trustee has not started the proceeding within 60 days after receiving the request; and |
| • | the trustee has not received directions inconsistent with the request from the holders of a majority in aggregate principal amount of the outstanding debt securities of that series during those 60 days. |
The holders of not less than a majority in aggregate principal amount of any series of debt securities, by notice to the trustee for that series, may waive, on behalf of the holders of all debt securities of that series, any past default or event of default with respect to that series and its consequences. A default or event of default in the payment of the principal of, or premium or interest on, any debt security and certain other defaults may not, however, be waived.
Modification of the Indentures
We, as well as the trustee for a series of debt securities, may enter into one or more supplemental indentures, without the consent of the holders of any of the debt securities, in order to:
| • | evidence the succession of another corporation to us and the assumption of our covenants by a successor; |
| • | add to our covenants or surrender any of our rights or powers; |
| • | add additional events of default for any series; |
| • | add, change or eliminate any provision affecting debt securities that are not yet issued; |
| • | secure the debt securities; |
| • | establish the form or terms of debt securities not yet issued; |
| • | evidence and provide for successor trustees; |
| • | add, change or eliminate any provision affecting registration as to principal of debt securities; |
11
Table of Contents
| • | permit the exchange of debt securities; |
| • | change or eliminate restrictions on payment in respect of debt securities; |
| • | change or eliminate provisions or add any other provisions that are required or desirable in accordance with any amendments to the Trust Indenture Act, on the condition that this action does not adversely affect the interests of any holder of debt securities of any series issued under the indenture in any material respect; or |
| • | cure any ambiguity or correct any mistake. |
In addition, with the consent of the holders of not less than a majority in aggregate principal amount of the outstanding debt securities of all series affected by the supplemental indenture, we and the trustee may execute supplemental indentures adding any provisions to or changing or eliminating any of the provisions of the applicable indenture or any supplemental indenture or modifying the rights of the holders of debt securities of that series. No such supplemental indenture may, however, without the consent of the holder of each debt security that is affected:
| • | change the time for payment of principal or interest on any debt security; |
| • | reduce the principal of, or any installment of principal of, or interest on, any debt security; |
| • | reduce the amount of premium, if any, payable upon the redemption of any debt security; |
| • | reduce the amount of principal payable upon acceleration of the maturity of an original issue discount debt security; |
| • | impair the right to institute suit for the enforcement of any payment on or for any debt security; |
| • | reduce the percentage in principal amount of the outstanding debt securities of any series the consent of whose holders is required for modification or amendment of the indenture or for waiver of compliance with certain provisions of the indenture or for waiver of certain defaults; |
| • | modify the provisions relating to waiver of some defaults or any of the foregoing provisions; |
| • | change the currency of payment; |
| • | adversely affect the right to repayment of debt securities of any series at the option of the holders of those debt securities; or |
| • | change the place of payment. |
Any supplemental indenture will be filed with the SEC as an exhibit to:
| • | a post-effective amendment to the registration statement of which this prospectus is a part; |
| • | an annual report on Form 10-K; |
| • | a quarterly report on Form 10-Q; or |
| • | a current report on Form 8-K. |
Defeasance and Covenant Defeasance
When we use the term defeasance, we mean discharge from some or all of our obligations under an indenture. If we deposit with the trustee sufficient cash or government obligations to pay the principal, interest, any premium and any mandatory sinking fund or analogous payments due to the stated maturity or a redemption date of the debt securities of a particular series, then at our option:
| • | we will be discharged from our obligations for the debt securities of that series, the holders of the debt securities of the affected series will no longer be entitled to the benefits of the indenture, except for |
12
Table of Contents
| registration of transfer and exchange of debt securities and replacement of lost, stolen or mutilated debt securities, and those holders may look only to the deposited funds or obligations for payment, which is referred to as “defeasance”; or |
| • | we will no longer be under any obligation to comply with certain covenants under the applicable indenture as it relates to that series, and some events of default will no longer apply to us, which is referred to as “covenant defeasance.” |
Unless the applicable prospectus supplement specifies otherwise and except as described below, the conditions to both defeasance and covenant defeasance are as follows:
| • | it must not result in a breach or violation of, or constitute a default or event of default under, the applicable indenture, or result in a breach or violation of, or constitute a default under, any other of our material agreements or instruments; |
| • | certain bankruptcy-related defaults or events of default with respect to us must not have occurred and be occurring during the period commencing on the date of the deposit of the trust funds to defease the debt securities and ending on the 91st day after that date; |
| • | we must deliver to the trustee an officer’s certificate and an opinion of counsel addressing compliance with the conditions of the defeasance or covenant defeasance; and |
| • | we must comply with any additional conditions to the defeasance or covenant defeasance that the applicable indenture may impose on us. |
In the event that government obligations deposited with the trustee for the defeasance of such debt securities decrease in value or default subsequent to their being deposited, we will have no further obligation, and the holders of the debt securities will have no additional recourse against us, for any decrease in value or default. If indicated in the prospectus supplement, in addition to obligations of the U.S. or an agency or instrumentality of the U.S., government obligations may include obligations of the government or an agency or instrumentality of the government issuing the currency in which debt securities of such series are payable.
We may exercise our defeasance option for the debt securities even if we have already exercised our covenant defeasance option. If we exercise our defeasance option, payment of the debt securities may not be accelerated because of default or an event of default. If we exercise our covenant defeasance option, payment of the debt securities may not be accelerated because of default or an event of default with respect to the covenants to which the covenant defeasance is applicable. If, however, acceleration occurs, the realizable value at the acceleration date of the money and government obligations in the defeasance trust could be less than the principal and interest then due on the debt securities, because the required deposit in the defeasance trust is based on scheduled cash flow rather than market value, which will vary depending on interest rates and other factors.
Conversion and Exchange Rights
The debt securities of any series may be convertible into or exchangeable for other securities of our company or another issuer or property or cash on the terms and subject to the conditions set forth in the applicable prospectus supplement.
Governing Law
The indentures and the debt securities will be governed by, and construed under, the laws of the State of New York without regard to conflicts of laws principles thereof.
Regarding the Trustee
We may from time to time maintain lines of credit, and have other customary banking relationships, with the trustee under the senior indenture or the trustee under the subordinated indenture.
13
Table of Contents
The indentures and provisions of the Trust Indenture Act of 1939, which we refer to in this prospectus as the Trust Indenture Act, that are incorporated by reference therein, contain limitations on the rights of the trustee, should it become one of our creditors, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claim as security or otherwise. The trustee is permitted to engage in other transactions with us or any of our affiliates; provided, however, that if it acquires any conflicting interest (as defined under the Trust Indenture Act), it must eliminate such conflict or resign.
Additional Terms Applicable to Subordinated Debt Securities
The subordinated debt securities will be unsecured. The subordinated debt securities will be subordinate to the prior payment in full in cash of all senior indebtedness.
The term “senior indebtedness” is defined as:
| • | any of our indebtedness, whether outstanding on the issue date of the subordinated debt securities of a series or incurred later; |
| • | accrued and unpaid interest, including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to us to the extent post-filing interest is allowed in such proceeding, in respect of: |
| • | our indebtedness for money borrowed; and |
| • | indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which we are responsible or liable; |
| • | contingent reimbursement obligations with respect to letters of credit issued or supported by our working capital lenders for our account; and |
| • | obligations, liabilities, fees and expenses that we owe to our working capital lenders; |
unless the instrument creating or evidencing these obligations provides that these obligations are not senior or prior in right of payment to the subordinated debt securities. Notwithstanding the foregoing, “senior indebtedness” will not include:
| • | any of our obligations to our subsidiaries; |
| • | any liability for Federal, state, local or other taxes that we owe; |
| • | any accounts payable or other liability to trade creditors arising in the ordinary course of business, including guarantees of these obligations or instruments evidencing such liabilities; |
| • | any of our indebtedness, and any accrued and unpaid interest in respect of our indebtedness, that is subordinate or junior in any respect to any other of our indebtedness or other obligations; or |
| • | the subordinated debt securities. |
There is no limitation on our ability to issue additional senior indebtedness. The senior debt securities constitute senior indebtedness under the subordinated indenture.
Under the subordinated indenture, no payment may be made on the subordinated debt securities and no purchase, redemption or retirement of any subordinated debt securities may be made in the event:
| • | any senior indebtedness is not paid in full in cash when due; or |
| • | the maturity of any senior indebtedness is accelerated as a result of a default, unless the default has been cured or waived and the acceleration has been rescinded or that senior indebtedness has been paid in full in cash. |
14
Table of Contents
We may, however, pay the subordinated debt securities without regard to the above restriction if the representatives of the holders of the applicable senior indebtedness approve the payment in writing to us and the trustee.
The representatives of the holders of senior indebtedness may notify us and the trustee in writing (a “payment blockage notice”) of a default which can result in the acceleration of that senior indebtedness’ maturity without further notice, except such notice as may be required to effect such acceleration, or the expiration of any grace periods. In this event, we may not pay the subordinated debt securities for 179 days after receipt of that notice. The payment blockage period will end earlier if such payment blockage period is terminated:
| • | by written notice to the trustee and us from the person or persons who gave such payment blockage notice; |
| • | because the default giving rise to such payment blockage notice is cured, waived or otherwise no longer continuing; or |
| • | because such senior debt has been discharged or repaid in full in cash. |
Notwithstanding the foregoing, if the holders of senior indebtedness or their representatives have not accelerated the maturity of the senior indebtedness at the end of the 179-day period, we may resume payments on the subordinated debt securities. Not more than one payment blockage notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to senior indebtedness during that period. No default existing on the beginning date of any payment blockage period initiated by a person or persons may be the basis of a subsequent payment blockage period with respect to the senior indebtedness held by that person unless that default has been cured or waived for a period of not fewer than 90 consecutive days.
If we pay or distribute our assets to creditors upon a total or partial liquidation, dissolution or reorganization of or similar proceeding relating to us or our property, then:
| • | the holders of senior indebtedness will be entitled to receive payment in full in cash of the senior indebtedness before the holders of subordinated debt securities are entitled to receive any payment; and |
| • | until the senior indebtedness is paid in full in cash, any payment or distribution to which holders of subordinated debt securities would be entitled but for the subordination provisions of the subordinated indenture will be made to holders of the senior indebtedness, except that holders of subordinated debt securities may receive certain capital stock and subordinated debt. |
If a distribution is made to holders of subordinated debt securities that, due to the subordination provisions, should not have been made to them, those holders of subordinated debt securities are required to hold it in trust for the holders of senior indebtedness, and pay it over to them as their interests may appear.
After all senior indebtedness is paid in full and until the subordinated debt securities are paid in full, holders of subordinated debt securities will be subrogated to the rights of holders of senior indebtedness to receive distributions applicable to such senior indebtedness.
As a result of the subordination provisions contained in the subordinated indenture, in the event of insolvency, our creditors who are holders of senior indebtedness may recover more, ratably, than the holders of subordinated debt securities. In addition, our creditors who are not holders of senior indebtedness may recover less, ratably, than holders of senior indebtedness and may recover more, ratably, than the holders of subordinated indebtedness. Furthermore, claims of our subsidiaries’ creditors generally will have priority with respect to the assets and earnings of the subsidiaries over the claims of our creditors, including holders of the subordinated debt securities, even though those obligations may not constitute senior indebtedness. The subordinated debt securities, therefore, will be effectively subordinated to creditors, including trade creditors, of our subsidiaries. It is important to keep this in mind if you decide to hold our subordinated debt securities.
15
Table of Contents
The terms of the subordination provisions described above will not apply to payments from money or the proceeds of government securities held in trust by the trustee for any series of subordinated debt securities for the payment of principal and interest on such subordinated debt securities pursuant to the defeasance procedures described under “Defeasance and Covenant Defeasance.”
Book-Entry Delivery and Settlement
We may issue the debt securities in whole or in part in the form of one or more global certificates or notes, which we refer to as global securities, that we will deposit with a depository or its nominee that we identify in the applicable prospectus supplement.
We will describe the specific terms of the depository arrangement covering the debt securities in the prospectus supplement relating to that series. We anticipate that the following provisions will apply to all depository arrangements.
Upon the issuance of the debt securities in the form of one or more global securities, the depository or its custodian will credit, on its book-entry registration and transfer system, the number of shares or principal amount of securities of the individual beneficial interests represented by these global securities to the respective accounts of persons who have accounts with the depository. Ownership of beneficial interests in the global securities will be shown on, and the transfer of this ownership will be effected only through, records maintained by the depository or its nominee with respect to interests of participants and the records of participants with respect to interests of persons other than participants. These accounts initially will be designated by or on behalf of the underwriters, initial purchasers or agents, or by us if we offer and sell the debt securities directly, and ownership of beneficial interests in the global securities will be limited to participants or persons who hold interests through participants. Qualified institutional buyers may hold their interests in the global securities directly through the depository if they are participants in this system, or indirectly through organizations which are participants in this system. The laws of some states of the U.S. may require that some purchasers of securities take physical delivery of the debt securities in definitive registered form. These limits and the laws may impair your ability to own, transfer or pledge interests in the global securities.
So long as the depository, or its nominee, is the registered owner or holder of the debt securities, the depository or its nominee, as the case may be, will be considered the sole owner or holder of the debt securities represented by the global securities for all purposes. No beneficial owner of an interest in the global securities will be able to transfer that interest except in accordance with the depository’s procedures.
We will make dividend payments on, or payments of the principal of, and premium, if any, and interest on, the global securities to the depository or its nominee, as the case may be, as the registered owner of the global securities. We will not have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the global securities or for maintaining, supervising or reviewing any records relating to the beneficial ownership interest.
We expect that the depository or its nominee, upon receipt of any dividend payment on, or payment of the principal of, and premium, if any, and interest on, the global securities, will credit participants’ accounts with payments in amounts proportionate to their respective beneficial interests in the debt securities as shown on the records of the depository or its nominee. We also expect that payments by participants to owners of beneficial interests in the global securities held through the participants will be governed by standing instructions and customary practice, as is now the case with securities held for the accounts of customers registered in the names of nominees for their customers. These payments will be the responsibility of the participants. Transfers between participants in the depository will be effected in the ordinary way through the depository’s settlement system in accordance with the depository rules and will be settled in same day funds.
16
Table of Contents
We will issue securities in certificated form in exchange for global securities (subject, in the case of the third bullet point, to the procedures of the depository) if:
| • | the depository notifies us that it is unwilling or unable to continue as a depository for the global securities or ceases to be a “clearing agency” registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and a successor depository is not appointed by us within 90 days of the notice; |
| • | an event of default under the instrument governing the debt securities has occurred and is continuing; or |
| • | we determine that the debt securities will no longer be represented by global securities. |
17
Table of Contents
General
We are authorized under our articles of incorporation, as amended (our “articles of incorporation”), to issue up to 40,000,000 shares of common stock, no par value, and 20,000,000 shares of preferred stock, no par value, all of which are undesignated as to series. Under our articles of incorporation, our board of directors has the authority to issue such preferred stock in one or more series and to fix the rights, preferences, privileges, and restrictions of such preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation, preferences, sinking fund terms, and the number of shares constituting any series.
Common Stock
As of December 31, 2023, we had 9,738,183 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding. We will disclose in an applicable prospectus supplement the number of shares of common stock and preferred stock then outstanding.
The following section summarizes the material terms and provisions of our common stock. This summary is not a complete legal description of our common stock, and is qualified in its entirety by reference to our articles of incorporation and our bylaws, as amended, because they, rather than this description, define the rights of the holders of our common stock.
The holders of our common stock are entitled to one vote per share on each matter submitted for a vote. Holders of our common stock are not entitled to cumulate their votes in the election of directors. Generally, all matters to be voted on by shareholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all holders of common stock present in person or represented by proxy, voting together as a single class.
Holders of our common stock will share ratably (based on the number of shares of common stock held) if and when any dividend is declared by the board of directors out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends by us and subject to any restrictions or preferential rights on the payment of dividends imposed by the terms of any outstanding series of preferred stock.
Shares of our common stock have no preemptive rights, no redemption or sinking fund provisions, and are not liable for further call or assessment. The holders of such common stock are entitled to receive dividends when and as declared by our board of directors out of funds legally available for dividends.
In the event of our liquidation, dissolution or winding up, the holders of our common stock are entitled to share ratably in all assets of the Company remaining after the payment of its liabilities, subject to the prior distribution rights of any series of preferred stock then outstanding. Our common stock is not subject to redemption nor do holders of our common stock have any preemptive rights to purchase additional shares of common stock. Holders of shares of our common stock do not have subscription, redemption or conversion rights. There are no redemption or sinking fund provisions applicable to the common stock. All of the outstanding shares of common stock are validly issued, fully paid and non-assessable.
Our common stock is listed on The New York Stock Exchange under the symbol “HCI.”
Preferred Stock
If we offer preferred stock, we will file the terms of the preferred stock with the SEC and the prospectus supplement and/or other offering material relating to that offering will include a description of the specific terms of the offering, including any of the following applicable specific terms:
| • | the series, the number of shares offered and the liquidation value of the preferred stock; |
18
Table of Contents
| • | the price at which the preferred stock will be issued; |
| • | the dividend rate, the dates on which the dividends will be payable and other terms relating to the payment of dividends on the preferred stock; |
| • | the liquidation preference of the preferred stock; |
| • | the voting rights of the preferred stock; |
| • | whether the preferred stock is redeemable or subject to a sinking fund, and the terms of any such redemption or sinking fund; |
| • | whether the preferred stock is convertible or exchangeable for any other securities, and the terms of any such conversion; and |
| • | any additional rights, preferences, qualifications, limitations and restrictions of the preferred stock. |
It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of our common stock until our board of directors determines the specific rights of the holders of the preferred stock. However, these effects might include:
| • | restricting dividends on the common stock; |
| • | diluting the voting power of the common stock; |
| • | impairing the liquidation rights of the common stock; and |
| • | delaying or preventing a change in control of our company. |
Indemnification of Directors and Executive Officers and Limitation of Liability
Our bylaws, as amended, provide for indemnification of our officers and directors to the fullest extent permitted by Florida law. In addition, we have entered into indemnification agreements with our officers and directors pursuant to which we have agreed to hold harmless and indemnify such officers and directors to the fullest extent permitted by law, as such may be amended from time to time. These indemnification agreements also provide for the advancement of expenses by our company and, under certain circumstances, obligate us to pay, in whole or in part, certain amounts paid in judgment or settlement.
There is no pending litigation or proceeding involving any of our directors, officers, employees or other agents as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director, officer, employee or other agent.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is therefore unenforceable.
Anti-Takeover Provisions
Our articles of incorporation and bylaws, each as amended, contain certain provisions that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by the board of directors. In addition, certain provisions of Florida law may hinder or delay an attempted takeover of us other than through negotiation with our board of directors. These provisions, each described further below, could have the effect of discouraging certain attempts to acquire us or remove incumbent management even if some or a majority of our shareholders were to deem such an attempt to be in their best interest, including attempts that might result in the shareholders’ receiving a premium over the market price for the shares of our common stock and preferred stock held by shareholders.
19
Table of Contents
Classified Board of Directors
Our articles of incorporation and bylaws provide that our board of directors shall be divided into three classes of directors, with the classes as nearly equal in number as possible. As a result, approximately one-third of our board of directors is elected each year. We believe that the classification of our board of directors facilitates the continuity and stability of our business strategies and policies. However, our classified board could have the effect of making the replacement of incumbent directors more time consuming and difficult. At least two annual meetings of shareholders, instead of one, will generally be required to effect a change in a majority of our board of directors.
Undesignated Preferred Stock
Our articles of incorporation provide our board of directors with the ability to authorize undesignated preferred stock, as well as to classify and reclassify any unissued shares thereof, without the need for shareholder approval, in accordance with the Florida Business Corporation Act (“FBCA”). This authority to issue, classify and/or reclassify shares of preferred stock without shareholder approval makes it possible for our board of directors to issue one or more series of preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of our company.
Requirements for Advance Notification of Shareholder Nominations and Proposals
Our bylaws establish advance notice procedures with respect to shareholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of our board of directors or a committee of the board of directors. These provisions could make the proposal of business by our shareholders, including the nomination of directors to replace incumbent directors, more time consuming and difficult.
Board of Directors Size and Vacancies
Under our bylaws, our board of directors has the power to set the size of the board. Additionally, any vacancy on our board of directors, including a vacancy resulting from an enlargement of the board of directors, may be filled by vote of a majority of the remaining directors, even if less than a quorum. The ability to increase or decrease the size of the board of directors, and to fill any vacancies resulting from any such enlargement, could make it more difficult for a third party to acquire control of us.
Provisions of Florida Law
We are governed by two provisions of the FBCA that may deter or frustrate takeovers of Florida corporations. The Florida Control Share Act (FBCA § 607.0902) generally provides that shares acquired in excess of certain specified thresholds, without first obtaining the approval of our board of directors, will not possess any voting rights unless such voting rights are approved by a majority of our disinterested shareholders.
The Florida Affiliated Transactions Act (FBCA § 607.0901) requires that, subject to certain exceptions, any affiliated transaction with a shareholder that owns more than 15% of the voting shares of the corporation, referred to as an “interested shareholder,” receive the approval of either the corporation’s disinterested directors or a supermajority vote of disinterested shareholders, or, absent either such approval, that a statutory “fair price” be paid to the shareholders in the transaction. The shareholder vote requirement is in addition to any shareholder vote required under any other section of the FBCA or our articles of incorporation. For a publicly traded corporation such as us, this supermajority vote may be difficult to obtain because the votes of the shares beneficially owned by the interested shareholder are not counted.
Florida law also authorizes us to indemnify our directors, officers, employees and agents under certain circumstances and to limit the personal liability of corporate directors for monetary damages, except where the
20
Table of Contents
directors (1) breach their fiduciary duties and (2) such breach constitutes or includes certain violations of criminal law, a transaction from which the directors derived an improper personal benefit, certain unlawful distributions or certain other reckless, wanton or willful acts or misconduct. Our bylaws provide for the indemnification of our current and former directors and officers to the fullest extent permitted by law.
Trading
Our common stock is listed on the New York Stock Exchange under the symbol “HCI.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Equiniti Trust Company, LLC. The transfer agent’s address is 6201 15th Avenue, Brooklyn, NY 11219, and its telephone number is 1-800-937-5449.
21
Table of Contents
Warrants
We may issue warrants for the purchase of debt securities, preferred stock, common stock or other securities. Warrants may be issued independently or together with debt securities, preferred stock or common stock offered by any prospectus supplement and/or other offering material and may be attached to or separate from any such offered securities. Each series of warrants will be issued under a separate warrant agreement to be entered into between us and a bank or trust company, as warrant agent, all as will be set forth in the prospectus supplement and/or other offering material relating to the particular issue of warrants. The warrant agent will act solely as our agent in connection with the warrants and will not assume any obligation or relationship of agency or trust for or with any holders of warrants or beneficial owners of warrants.
The following summary of certain provisions of the warrants does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all provisions of the warrant agreements.
Reference is made to the prospectus supplement and/or other offering material relating to the particular issue of warrants offered pursuant to such prospectus supplement and/or other offering material for the terms of and information relating to such warrants, including, where applicable:
| • | the designation, aggregate principal amount, currencies, denominations and terms of the series of debt securities purchasable upon exercise of warrants to purchase debt securities and the price at which such debt securities may be purchased upon such exercise; |
| • | the number of shares of common stock purchasable upon the exercise of warrants to purchase common stock and the price at which such number of shares of common stock may be purchased upon such exercise; |
| • | the number of shares and series of preferred stock purchasable upon the exercise of warrants to purchase preferred stock and the price at which such number of shares of such series of preferred stock may be purchased upon such exercise; |
| • | the designation and number of units of other securities purchasable upon the exercise of warrants to purchase other securities and the price at which such number of units of such other securities may be purchased upon such exercise; |
| • | the date on which the right to exercise such warrants shall commence and the date on which such right shall expire; |
| • | U.S. federal income tax consequences applicable to such warrants; |
| • | the number of warrants outstanding as of the most recent practicable date; and |
| • | any other terms of such warrants. |
Warrants will be issued in registered form only. The exercise price for warrants will be subject to adjustment in accordance with provisions described in the applicable prospectus supplement and/or other offering material.
Each warrant will entitle the holder thereof to purchase such principal amount of debt securities or such number of shares of preferred stock, common stock or other securities at such exercise price as will in each case be set forth in, or calculable from, the prospectus supplement and/or other offering material relating to the warrants, which exercise price may be subject to adjustment upon the occurrence of certain events as set forth in such prospectus supplement and/or other offering material. After the close of business on the expiration date, or such later date to which such expiration date may be extended by us, unexercised warrants will become void. The place or places where, and the manner in which, warrants may be exercised shall be specified in the prospectus supplement and/or other offering material relating to such warrants.
22
Table of Contents
Prior to the exercise of any warrants to purchase debt securities, preferred stock, common stock or other securities, holders of such warrants will not have any of the rights of holders of debt securities, preferred stock, common stock or other securities, as the case may be, purchasable upon such exercise, including the right to receive payments of principal of, premium, if any, or interest, if any, on the debt securities purchasable upon such exercise or to enforce covenants in the applicable indenture, or to receive payments of dividends, if any, on the preferred stock, or common stock purchasable upon such exercise, or to exercise any applicable right to vote.
23
Table of Contents
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue stock purchase contracts, including contracts obligating holders to purchase from us, and obligating us to sell to the holders, a specified number of shares of common stock or other securities at a future date or dates, which we refer to in this prospectus as “stock purchase contracts.” The terms and conditions for any purchase and sale rights or obligations, as well as the price per share of the underlying securities and the number or value of the underlying securities, may be fixed at the time the stock purchase contracts are issued or may be determined by reference to a specific formula set forth in the stock purchase contracts.
The stock purchase contracts may be issued separately or as part of units consisting of a stock purchase contract and debt securities, preferred securities, warrants, other securities or debt obligations of third parties, including U.S. treasury securities, securing the holders’ obligations to purchase the securities under the stock purchase contracts, which we refer to herein as “stock purchase units.” The stock purchase contracts may require holders to secure their obligations under the stock purchase contracts in a specified manner. The stock purchase contracts also may require us to make periodic payments to the holders of the stock purchase units or vice versa, and those payments may be unsecured or refunded on some basis.
The stock purchase contracts, and, if applicable, collateral or depositary arrangements, relating to the stock purchase contracts or stock purchase units, will be filed with the SEC in connection with the offering of stock purchase contracts or stock purchase units. The prospectus supplement and/or other offering material relating to a particular issue of stock purchase contracts or stock purchase units will describe the terms of those stock purchase contracts or stock purchase units, including the following:
| • | if applicable, a discussion of material U.S. federal income tax considerations; and |
| • | any other information we think is important about the stock purchase contracts or the stock purchase units. |
If we issue stock purchase units where debt obligations of third parties are used as security for your obligations to purchase or sell shares of common stock or preferred stock or other securities, we will include in the prospectus supplement and/or other offering material relating to the offering information about the issuer of the debt securities. Specifically, if the issuer has a class of securities registered under the Exchange Act and is either eligible to register its securities on Form S-3 under the Securities Act or meets the listing criteria to be listed on a national securities exchange, we will include a brief description of the business of the issuer, the market price of its securities and how you can obtain more information about the issuer. If the issuer does not meet the criteria described in the previous sentence, we will include substantially all of the information that would be required if the issuer were making a public offering of the debt securities.
24
Table of Contents
This prospectus also relates to possible registration of securities for resales by certain of our security holders to be named in a prospectus supplement, who we refer to in this prospectus as the “selling security holders.” Because we are a well-known seasoned issuer, we may add secondary sales of securities by any selling security holders by filing a prospectus supplement with the SEC. We may register these securities to permit selling security holders to resell their securities when they deem appropriate. A selling security holder may resell all, a portion or none of their securities at any time and from time to time. Selling security holders may also sell, transfer or otherwise dispose of some or all of their securities in transactions exempt from the registration requirements of the Securities Act. We will provide you with a prospectus supplement naming the selling security holders, the amount of securities to be registered and sold and any other terms of the securities being sold by a selling security holder.
25
Table of Contents
We or the selling security holders may sell securities in any one or more of the following ways from time to time: (1) through agents; (2) to or through underwriters; (3) through brokers or dealers; (4) directly to purchasers, including through a specific bidding, auction or other process; (5) in “at the market offerings” to or through a market maker or into an existing trading market, or a securities exchange or otherwise; or (6) through a combination of any of these methods of sale. The applicable prospectus supplement and/or other offering materials will contain the terms of the transaction, the name or names of any underwriters, dealers, or agents and the respective amounts of securities underwritten or purchased by them, the initial public offering price of the securities, and the applicable agent’s commission, dealer’s purchase price or underwriter’s discount. Any dealers and/or agents participating in the distribution of the securities may be deemed to be underwriters, and compensation received by them on resale of the securities may be deemed to be underwriting discounts.
If any securities are sold pursuant to this prospectus by any person other than us, we will disclose as part of a prospectus supplement required information with respect to each selling security holder, including the selling security holder’s name, the nature of any material relationship the selling security holder has had with us or any of our affiliates during the three years preceding such offering, the amount of securities of the class the selling security holder owns prior to the offering, the amount to be offered for the selling security holder’s account, and the amount and (if 1% or more) the percentage of the class to be owned by the selling security holder after completion of the offering.
Any initial offering price, dealer purchase price, discount or commission may be changed from time to time.
The securities may be distributed from time to time in one or more transactions, at negotiated prices, at a fixed price or fixed prices (that may be subject to change), at market prices prevailing at the time of sale, at various prices determined at the time of sale or at prices related to prevailing market prices.
In addition, we and any selling security holder may sell any securities covered by this prospectus in private transactions or under Rule 144 under the Securities Act rather than pursuant to this prospectus.
Offers to purchase securities may be solicited directly by us or the selling security holders or by agents designated by us or the selling security holders, from time to time. Any such agent may be deemed to be an underwriter, as that term is defined in the Securities Act, of the securities so offered and sold.
If underwriters are utilized in the sale of any securities in respect of which this prospectus is being delivered, such securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at fixed public offering prices or at varying prices determined by the underwriters at the time of sale. Securities may be offered to the public either through underwriting syndicates represented by managing underwriters or directly by one or more underwriters. If any underwriter or underwriters are utilized in the sale of securities, unless otherwise indicated in the applicable prospectus supplement and/or other offering material, the obligations of the underwriters are subject to certain conditions precedent, and the underwriters will be obligated to purchase all such securities if they purchase any of them.
If a dealer is utilized in the sale of the securities in respect of which this prospectus is delivered, we or the selling security holders will sell such securities to the dealer, as principal. The dealer may then resell such securities to the public at varying prices to be determined by such dealer at the time of resale. Transactions through brokers or dealers may include block trades in which brokers or dealers will attempt to sell shares as agent but may position and resell as principal to facilitate the transaction or in cross trades, in which the same broker or dealer acts as agent on both sides of the trade. Any such dealer may be deemed to be an underwriter, as such term is defined in the Securities Act, of the securities so offered and sold.
26
Table of Contents
Offers to purchase securities may be solicited directly by us or the selling security holders and the sale thereof may be made by us or the selling security holders directly to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale thereof.
If so indicated in the applicable prospectus supplement and/or other offering material, we may authorize agents and underwriters to solicit offers by certain institutions to purchase securities from us at the public offering price set forth in the applicable prospectus supplement and/or other offering material pursuant to delayed delivery contracts providing for payment and delivery on the date or dates stated in the applicable prospectus supplement and/or other offering material. Such delayed delivery contracts will be subject only to those conditions set forth in the applicable prospectus supplement and/or other offering material.
Agents, underwriters and dealers may be entitled under relevant agreements with us or the selling security holders to indemnification by us against certain liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which such agents, underwriters and dealers may be required to make in respect thereof. The terms and conditions of any indemnification or contribution will be described in the applicable prospectus supplement and/or other offering material.
We may also sell shares of our common stock through various arrangements involving mandatorily or optionally exchangeable securities, and this prospectus may be delivered in connection with those sales.
We or the selling security holders may enter into derivative, sale or forward sale transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement and/or other offering material indicates, in connection with those transactions, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement and/or other offering material, including in short sale transactions and by issuing securities not covered by this prospectus but convertible into, exchangeable for or representing beneficial interests in securities covered by this prospectus, or the return of which is derived in whole or in part from the value of such securities. The third parties may use securities received under derivative, sale or forward sale transactions or securities pledged by us or the selling security holders or borrowed from us, the selling security holders or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from us or the selling security holders in settlement of those transactions to close out any related open borrowings of stock. The third party in such sale transactions will be an underwriter and will be identified in the applicable prospectus supplement (or a post-effective amendment) and/or other offering material.
Underwriters, broker-dealers or agents may receive compensation in the form of commissions, discounts or concessions from us or the selling security holders. Underwriters, broker-dealers or agents may also receive compensation from the purchasers of shares for whom they act as agents or to whom they sell as principals, or both. Compensation as to a particular underwriter, broker-dealer or agent will be in amounts to be negotiated in connection with transactions involving shares and might be in excess of customary commissions. In effecting sales, broker-dealers engaged by us or the selling security holders may arrange for other broker-dealers to participate in the resales.
Each series of securities offered other than common stock will be a new issue and, other than the common stock, which is listed on the New York Stock Exchange, will have no established trading market. We may elect to list any series of securities on an exchange, and in the case of the common stock, on any additional exchange, but, unless otherwise specified in the applicable prospectus supplement and/or other offering material, we will not be obligated to do so. No assurance can be given as to the liquidity of the trading market for any of the securities.
Agents, underwriters and dealers may engage in transactions with, or perform services for, us and/or our subsidiaries in the ordinary course of business.
Any underwriter may engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance with Regulation M under the Exchange Act. Overallotment involves sales in excess of the
27
Table of Contents
offering size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Short covering transactions involve purchases of the securities in the open market after the distribution is completed to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the dealer are purchased in a covering transaction to cover short positions. Those activities may cause the price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of the activities at any time. An underwriter may carry out these transactions on the New York Stock Exchange, in the over-the-counter market or otherwise.
The specific terms of any lock-up provision or transfer restrictions in respect of any given offering will be described in the applicable prospectus supplement.
The place and time of delivery for securities will be set forth in the accompanying prospectus supplement and/or other offering material for such securities.
28
Table of Contents
The validity of the securities offered by this prospectus will be passed upon for us by Foley & Lardner LLP, Tampa, Florida. The validity of the securities offered by this prospectus will be passed upon for any underwriters or agents by counsel named in the applicable prospectus supplement. The opinions of Foley & Lardner LLP and counsel for any underwriters or agents may be conditioned upon and may be subject to assumptions regarding future action required to be taken by us and any underwriters, dealers or agents in connection with the issuance of any securities. The opinions of Foley & Lardner LLP and counsel for any underwriters or agents may be subject to other conditions and assumptions, as indicated in the prospectus supplement.
The consolidated financial statements incorporated in this prospectus by reference from our Annual Report on Form 10-K for the year ended December 31, 2022, have been audited by FORVIS, LLP, an independent registered public accounting firm, as stated in their report thereon. Such consolidated financial statements have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. We also filed a registration statement on Form S-3, including exhibits, under the Securities Act with respect to the securities offered by this prospectus. This prospectus is a part of the registration statement, but does not contain all of the information included in the registration statement or the exhibits. The SEC maintains a web site, www.sec.gov, that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. You may review the registration statement and any other document we file on the SEC’s web site. Our SEC filings are also available to the public on our website, https://hcigroup.com/. The information on our website, however, is not, and should not be deemed to be, a part of this prospectus.
We are “incorporating by reference” specified documents that we file with the SEC, which means:
| • | incorporated documents are considered part of this prospectus; |
| • | we are disclosing important information to you by referring you to those documents; and |
| • | information we file with the SEC will automatically update and supersede information contained in this prospectus. |
We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of filing of the registration statement of which this prospectus is a part and before the end of the offering of the securities pursuant to this prospectus:
| • | our Annual Report on Form 10-K for the year ended December 31, 2022 (as filed on March 10, 2023); |
| • |
29
Table of Contents
| • | our Current Reports on Form 8-K filed on May 31, 2023, June 8, 2023, June 13, 2023, June 14, 2023, July 7, 2023, September 21, 2023, October 2, 2023, November 6, 2023, November 9, 2023, December 7, 2023 and January 10, 2024; and |
| • |
Notwithstanding the foregoing, information furnished under Items 2.02 and 7.01 of any Current Report on Form 8-K, including the related exhibits under Item 9.01, is not incorporated by reference in this prospectus.
You may request a copy of any of these filings, at no cost, by request directed to us at the following address or telephone number:
HCI Group, Inc.
Attn: Andrew Graham
3802 Coconut Palm Drive
Tampa, Florida 33619
(813) 849-9500
You should not assume that the information in this prospectus, any prospectus supplement and/or other offering material, as well as the information we file or previously filed with the SEC that we incorporate by reference in this prospectus, any prospectus supplement and/or other offering material, is accurate as of any date other than its respective date. Our business, financial condition, results of operations and prospects may have changed since that date.
30
Table of Contents
PROSPECTUS SUPPLEMENT
HCI Group, Inc.
Up to $75,000,000
Common Stock
We have entered into an equity distribution agreement (the “Sales Agreement”), dated January 22, 2024, with Truist Securities, Inc. and Citizens JMP Securities, LLC (each, an “Agent” and collectively, the “Agents”), as sales agent relating to the shares of our common stock, no par value, offered by this prospectus supplement and the accompanying prospectus. In accordance with the terms of the Sales Agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $75,000,000 from time to time through the Agents.
Sales of common stock, if any, under this prospectus supplement and the accompanying prospectus may be made in transactions that are deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on or through the New York Stock Exchange, the existing trading market for our common stock, on any other existing trading market for the common stock or to or through a market maker other than on an exchange. In addition, with our prior written approval, the Agents may also sell shares of our common stock by any other method permitted by law, including in block trades and privately negotiated transactions. The Agents are not required to sell any specific number or dollar amount of shares, but will act as sales agents on a reasonable efforts basis and subject to the terms of the Sales Agreement and consistent with their normal trading and sales practices. There is no arrangement for funds to be received in any escrow, trust or similar arrangement.
We will pay the Agents a fixed commission, or allow a discount, for their services in acting as Agents in the sale of common stock equal to up to 3.0% of the gross sales price per share of all shares sold through them as Agents under the Sales Agreement. In connection with the sale of common stock on our behalf, each of the Agents may be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation to the Agents will be deemed to be underwriting commissions or discounts. We have also agreed to provide indemnification and contribution to the Agents with respect to certain liabilities, including liabilities under the Securities Act.
The net proceeds we receive from any sales under this prospectus supplement will be the gross proceeds from such sales less the commissions and any other costs we may incur in offering the common stock. See “Use of Proceeds” and “Plan of Distribution” for additional information.
Our common stock is listed on the New York Stock Exchange under the symbol “HCI.” On January 18, 2024, the closing price of one share of our common stock on the New York Stock Exchange was $89.44 per share.
Investment in our common stock involves risks. See the section entitled “Risk Factors” on page S-6 of this prospectus supplement and the risk factors contained in the documents incorporated by reference in this prospectus supplement and the accompanying prospectus for a discussion of certain factors which should be considered before investing in our common stock.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
| Truist Securities | JMP Securities A CITIZENS COMPANY |
The date of this prospectus supplement is January 22, 2024.
Table of Contents
| S-i | ||||
| S-ii | ||||
| S-1 | ||||
| S-4 | ||||
| S-6 | ||||
| S-8 | ||||
| S-9 | ||||
| S-11 | ||||
| S-11 | ||||
| S-12 | ||||
| S-13 |
We are responsible for the information contained and incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized anyone to give you any other information, and we take no responsibility for any other information that others may give you. If you are in a jurisdiction where offers to sell, or solicitations of offers to purchase, the securities offered by this documentation are unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this document does not extend to you. The information contained in this document speaks only as of the date of this document, unless the information specifically indicates that another date applies. Our business, financial condition, results of operations and prospects may have changed since those dates.
Table of Contents
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the accompanying prospectus are part of an automatic “shelf” registration statement on Form S-3 that we filed with the Securities and Exchange Commission (the “SEC”) as a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act. Under this “shelf” registration process, we may offer and sell any combination of the securities described in the accompanying prospectus, from time to time, in one or more offerings. Under this prospectus supplement, we may from time to time offer and sell shares of our common stock having an aggregate offering price of up to $75,000,000, at prices and on terms to be determined by market conditions at the time of the offering. This prospectus supplement describes the specific details regarding this offering, including the amount of our common stock being offered, the risks of investing in our common stock, and other items.
This document is in two parts. The first part is this prospectus supplement, which describes the terms of this offering and also adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference herein or therein. The second part, the accompanying prospectus, including the documents incorporated by reference into the accompanying prospectus, provides more general information. Generally, when we refer to this prospectus, we are referring to both parts of this document combined. To the extent there is a conflict between the information contained in this prospectus supplement and the information contained in the accompanying prospectus or any document incorporated by reference herein or therein filed prior to the date of this prospectus supplement, you should rely on the information in this prospectus supplement; provided that if any statement in one of these documents is inconsistent with a statement in another document having a later date—for example, a document incorporated by reference in this prospectus supplement or in the accompanying prospectus—the statement in the document having the later date modifies or supersedes the earlier statement.
We have not, and the Agents have not, authorized anyone to provide you with information different from, or in addition to, that contained or incorporated by reference in this prospectus supplement, the accompanying prospectus or any free writing prospectus prepared by or on behalf of us or to which we may have referred you in connection with this offering. We and the Agents take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. The information in this prospectus supplement and the accompanying prospectus is accurate only as of its date, regardless of the time of delivery of this prospectus supplement and accompanying prospectus or of any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed materially since such date.
This prospectus supplement does not contain all of the information that is important to you. You should also read and consider the information in the documents to which we have referred you in the sections entitled “Where You Can Find More Information” and “Incorporation of Certain Information by Reference” in this prospectus supplement.
We are offering to sell, and seeking offers to buy, these securities only in jurisdictions where offers and sales are permitted. The distribution of this prospectus supplement and the accompanying prospectus and the offering of the securities in certain jurisdictions may be restricted by law. For investors outside of the United States: neither we nor the Agents have done anything that would permit this offering or possession or distribution of this prospectus supplement and accompanying prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus supplement and the accompanying prospectus. This prospectus supplement and the accompanying prospectus do not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this prospectus supplement and the accompanying prospectus by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.
Unless the context otherwise indicates, references in this prospectus supplement to “we,” “our,” “us,” the “Company,” and “HCI” refer, collectively, to HCI Group, Inc., a Florida corporation, and its consolidated subsidiaries.
S-i
Table of Contents
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, included or incorporated by reference in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein, including, without limitation, estimates, projections, outlook, guidance, statements relating to our business plans, strategy, objectives, expected operating results and future financial position, and the assumptions upon which those statements are based, are forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. These forward-looking statements are based solely on our current beliefs and are not guarantees of future performance. Therefore, these forward-looking statements are subject to inherent risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including but not limited to:
| • | the future availability of insurance policy assumptions and acquisitions; |
| • | the effect of governmental regulation on the insurance industry and other industries in which we operate; |
| • | any failure of our information technology systems or cybersecurity breach; |
| • | the frequency and extent of insurance claims; |
| • | uncertainties inherent in our reserve estimates; |
| • | the occurrence of catastrophic events, particularly in the state of Florida; |
| • | our ability to sell insurance products through independent agents; |
| • | restrictions on our ability to change premium rates; |
| • | increased rate pressure on premiums due to competition and market conditions; |
| • | changes in the demand for, pricing of, availability of or collectability of reinsurance; |
| • | the success and economic viability of the anchor tenants for our real estate investments; and |
| • | other risks and uncertainties that we identify under “Risk Factors” on page S-6 of this prospectus supplement, in the accompanying prospectus, in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, in any prospectus supplement, in any other offering material, and in any other documents that we file from time to time with the SEC that are incorporated by reference into this prospectus supplement, any prospectus and/or any other offering material. |
We caution you that no forward-looking statement is a guarantee of future performance, and you should not place undue reliance on these forward-looking statements which reflect our views only as of the date of this prospectus supplement. We assume no obligation, and disclaim any duty, to update or revise publicly any forward-looking statements, whether written or oral, and whether as a result of new information, future events or otherwise, except to the extent required by law.
S-ii
Table of Contents
This summary highlights information contained in greater detail elsewhere in this prospectus supplement, the accompanying prospectus and in the documents incorporated by reference herein and therein. This summary does not contain all of the information that you should consider in making your investment decision. You should read the entire prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein carefully before making an investment in our common stock. You should carefully consider, among other things, our consolidated financial statements and related notes incorporated by reference in this prospectus supplement from our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and the sections titled “Risk Factors” in this prospectus supplement and such reports and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our most recent Annual Report and Quarterly Reports and other documents incorporated by reference in this prospectus supplement and the accompanying prospectus.
Overview
HCI Group, Inc. is a Florida-based company that, through its subsidiaries, is engaged in various business activities, including property and casualty insurance, information technology services, insurance management, real estate, and reinsurance.
Our largest subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc. (“Homeowners Choice”), provides property and casualty insurance primarily to residential property owners and tenants in Florida. Homeowners Choice began operations by participating in a “take-out program” through which we assumed insurance policies issued by Citizens Property Insurance Corporation (“Citizens”), a Florida state-supported insurer. The take-out program is a legislatively mandated program designed to reduce the State’s risk exposure by encouraging private companies to assume policies from Citizens. Opportunities to acquire large numbers of policies from Citizens meeting our strict underwriting criteria diminished in recent years. However, recently, circumstances within the Florida homeowners insurance industry have changed and we plan to selectively pursue additional assumption transactions with Citizens. On September 1, 2023, we received approval from the Florida Office of Insurance Regulation to assume up to 75,000 policies from Citizens.
TypTap Insurance Group, Inc. (“TTIG”), our majority-owned InsurTech subsidiary, provides homeowners insurance and produces insurance-related technologies. It 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. TypTap is primarily engaged in the property and casualty insurance business, focusing on homeowners multi-peril policies. TypTap utilizes technology developed by Exzeo to receive, analyze, approve and process policy applications and issue resulting policies automatically.
Our general operating and growth strategies are to continually optimize our existing book of insurance business, organically expand our insurance business, manage our costs and expenses, diversify our business operations, develop and deploy new technologies to streamline operational processes, and maintain a strong balance sheet so we can quickly pursue accretive opportunities when they arise. Our growth strategies also include assumption of business from other insurance companies.
We have a Bermuda domiciled wholly owned reinsurance subsidiary, Claddaugh Casualty Insurance Company Ltd. (“Claddaugh”), which provides reinsurance to Homeowners Choice and TypTap. We selectively retain risk in Claddaugh. Claddaugh fully collateralizes its exposure to Homeowners Choice 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.
S-1
Table of Contents
Homeowners Choice and TypTap have provided reinsurance to a non-affiliated insurance company in connection with the transition of business from that insurance company to Homeowners Choice and TypTap pending regulatory approvals.
Our real estate operations consist of multiple properties we own and operate for investment purposes and also properties we own and use for our own operations. Our portfolio of investment properties includes three waterfront properties consisting of a total of 26.1 acres and a five-acre submerged land lease. One waterfront property contains a building structure that we currently lease to the operator of Crabby’s on the Pass restaurant and a marina. Another houses retail space and a marina with high and dry storage. We acquired the restaurant and marina operations in connection with our purchase of two waterfront properties and we continue to operate two marinas to enhance the property values. The remaining waterfront property consists of nine acres of vacant land. Additional investment properties include an Aldi-anchored retail center in Clearwater, Florida, a second grocery-anchored retail center that is currently under development in Haines City, Florida, a Thornton’s filling station with inline retail in Riverview, Florida, and an office building totaling approximately 180,000 square feet in the Westshore area of Tampa.
Our real estate used in operations consists of an office building located in the Sabal Palms Industrial Park in Tampa, Florida with gross area of 67,289 square feet, an office building located in the Westshore area of Tampa, Florida with gross area of 72,249 square feet, and an office building with gross area of approximately 16,000 square feet in Ocala, Florida. The Ocala location, in addition to day-to-day operational use, serves as our alternative site in the event we experience any significant disruption at our Tampa offices.
Our information technology operations include a team of experienced software developers with extensive knowledge in designing and creating web-based applications. The operations, which are located 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. Products created thus far have been solely for use by the Company’s insurance-related subsidiaries.
Recent Developments
Citizens Assumptions
Effective November 21, 2023, our subsidiary, Homeowners Choice assumed approximately 53,750 policies from Citizens. The assumption of the policies, which amount to approximately $196 million of in-force premium, is based upon an approval in September 2023 by the Florida Office of Insurance Regulation. Additionally, our subsidiary, TypTap, assumed approximately 6,700 policies from Citizens in December 2023 and assumed approximately 9,500 policies from Citizens in January 2024.
Condo Owners Reciprocal Exchange
On November 30, 2023, the Company received regulatory approval from the Florida Office of Insurance Regulation to form Condo Owners Reciprocal Exchange (“CORE”), an HCI sponsored reciprocal insurer, which will focus on writing commercial residential policies for condominium owners in Florida. A reciprocal insurer is an unincorporated aggregation of at least 25 policyholders operating through an attorney-in-fact to provide insurance among themselves. A reciprocal insurer is essentially owned by its policyholders, but its operations such as underwriting, claims and management services are provided by an attorney-in-fact for a predetermined management fee.
Redemption of 4.25% Convertible Senior Notes due 2037
On January 10, 2024, the Company announced that it had notified the holders of its outstanding 4.25% Convertible Senior Notes due 2037 (the “Notes”) of its election to redeem the remaining $24 million principal
S-2
Table of Contents
balance of the Notes. As a result of such notice, the Notes became immediately convertible into shares of our common stock. The current conversion rate, which is subject to adjustment, is 16.5893 shares of common stock per $1,000 principal amount of Notes. The redemption date of the Notes is March 15, 2024.
Redemption of Preferred Stock of TypTap Insurance Group, Inc.
On January 22, 2024, we entered into a redemption agreement (“Redemption Agreement”) with CB Snowbird Holdings, L.P., a Delaware limited partnership (“Centerbridge”) whereby we redeemed all of Centerbridge’s preferred shares in TTIG for approximately $103 million (the “Redemption”). As a result of the Redemption, Centerbridge no longer has any equity interest in TTIG. The Redemption Agreement contained representations and warranties and mutual releases customary for this type of transaction. Pursuant to the Redemption Agreement, the parties agreed that each of the Parent Guaranty Agreement, dated February 26, 2021, by us in favor of Centerbridge and the TTIG Shareholders Agreement, dated February 26, 2021, are terminated effective immediately.
In connection with the Redemption, we entered into an amended and restated common stock purchase warrant with Centerbridge, dated January 22, 2024, allowing for the issuance of 750,000 shares of our common stock at an exercise price of $54.40 per share (the “Warrant”). The Warrant contains substantially similar terms and conditions as the common stock purchase warrant, dated February 26, 2021, with Centerbridge (the “Original Warrant”), except that shares of our common stock underlying the Warrant expire as follows: 300,000 shares expire February 26, 2025; 150,000 shares expire December 31, 2026; 150,000 shares expire December 31, 2027; and the remaining 150,000 shares expire December 31, 2028. As with the Original Warrant, the Warrant may be exercised with cash or on a “cashless” basis, at the option of Centerbridge and is subject to customary adjustments in its exercise price and/or number of shares for which the Warrant is exercisable as a result of future stock splits, stock dividends, reverse stock splits, and the like with respect to our common stock, and also upon certain dividends, distributions of stock purchase rights, and fundamental transactions by us.
Also in connection with the Redemption, we entered into a registration rights agreement, dated January 22, 2024, with Centerbridge (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, we agreed, by January 31, 2024, to register the resale of the Warrant and the shares underlying the Warrant upon exercise by Centerbridge. In addition to the initial registration, we granted Centerbridge certain demand and piggyback registration rights. Additionally, Centerbridge agreed that, without our prior written consent, neither it nor its affiliates will transfer the Warrant, any shares underlying the Warrant in excess of 300,000 shares in a single transaction (other than a brokers’ transaction) or shares underlying the Warrant directly to a holder who is or, to their knowledge, after such transfer would be required to file an original or amended statement on Schedule 13D. The Registration Rights Agreement is set to terminate upon the earliest to occur of (1) the time in which Rule 144(b)(1) under the Securities Act is available for the resale of the shares underlying the Warrant; (2) no holder under the Registration Rights Agreement holds registerable securities (as defined therein); and (3) June 30, 2029; provided, however, that so long as Centerbridge holds the Warrant, the right to registration under the Registration Rights Agreement with respect to any other registrable securities will not terminate. The piggyback registration rights under the Registration Rights Agreement expire upon the earlier of June 26, 2025 and the term of the Registration Rights Agreement.
Corporate Information
We were incorporated under the laws of the State of Florida on November 30, 2006. Our principal executive offices are located at 3802 Coconut Palm Drive, Tampa, Florida 33619, and our telephone number is (813) 405-3600. Our website address is https://hcigroup.com. The information contained on our website or that can be accessed through our website is not incorporated by reference in this prospectus supplement.
S-3
Table of Contents
The following summary contains basic information about this offering. The summary is not intended to be complete. You should read the full text and more specific details contained elsewhere in this prospectus supplement.
| Issuer |
HCI Group, Inc. |
| Common stock offered by us |
Shares of our common stock having an aggregate offering price of up to $75,000,000. |
| Common stock to be outstanding after this offering(1) |
Up to 10,576,733 shares, after giving effect to the assumed sale of 838,550 shares of our common stock at a price of $89.44 per share, which was the closing price of our common stock on the New York Stock Exchange on January 18, 2024. The actual number of shares issued will depend on the price at which shares are sold from time to time during this offering. |
| Plan of Distribution |
The Sales Agents may, according to the terms of the Sales Agreement, sell the shares of our common stock offered under this prospectus supplement in an “at-the-market offering”. See “Plan of Distribution” on page S-9 of this prospectus supplement. |
| New York Stock Exchange symbol |
HCI |
| Use of proceeds |
We currently intend to use potential net proceeds from the sale of the securities offered under this prospectus supplement for working capital purposes and other general corporate purposes, which may include financing of capital expenditures, repayment or refinancing of outstanding debt, financing acquisitions or investments, financing other business opportunities, and general working capital purposes. See “Use of Proceeds” on page S-8 of this prospectus supplement. |
| Risk factors |
See “Risk Factors” and the other information included or incorporated by reference in this prospectus supplement and the accompanying prospectus for a discussion of certain factors you should carefully consider before deciding to invest in shares of our common stock. |
| (1) | The number of shares of common stock outstanding after this offering, as reflected above, is based on the actual number of shares outstanding as of December 31, 2023, which was 9,738,183, and does not include, as of that date: |
| • | 590,000 shares of common stock issuable upon exercise of stock options outstanding as of December 31, 2023, at a weighted-average exercise price of $51.54 per share; |
| • | 750,000 shares of common stock issuable upon exercise of warrants outstanding as of December 31, 2023, at an exercise price of $54.40 per share; |
| • | 962,206 shares of common stock available for future issuance under our 2012 Omnibus Incentive Plan, as amended, or the 2012 Plan, as of December 31, 2023; and |
S-4
Table of Contents
| • | up to 2,538,613 shares of common stock issuable upon conversion of our 4.25% convertible notes and 4.75% convertible notes outstanding as of December 31, 2023, excluding the effect of the related forward purchase agreement for the 4.25% convertible notes that was entered into at the date of such issuance. |
S-5
Table of Contents
An investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, as well as those set forth under the heading “Risk Factors” in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are incorporated by reference in this prospectus supplement. Our business, financial condition or results of operations could be materially and adversely affected by any of these risks and uncertainties. In that case, the trading price of our common stock could decline and you might lose all or part of your investment. In addition, the risks and uncertainties discussed below are not the only ones we face. Our business, financial condition or results of operations could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material, and these risks and uncertainties could result in a loss of all or part of your investment. In assessing the risks and uncertainties described below, you should also refer to the other information contained in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein, including our consolidated financial statements and the related notes thereto, before making a decision to invest in our common stock.
Risks Related to this Offering
Management will have broad discretion as to the use of the net proceeds from this offering, and we may not use the proceeds effectively.
Our management will have broad discretion as to the application of the net proceeds from this offering and could use them for purposes other than those contemplated at the time of this offering. Our stockholders may not agree with the manner in which our management chooses to allocate and spend the net proceeds. Moreover, our management may use the net proceeds for corporate purposes that may not positively impact our results of operations or increase the market value of our common stock. Our failure to apply these funds effectively could have a material adverse effect on our business, delay the development of our products and/or cause the price of our common stock to decline.
If we raise additional capital in the future, your ownership in us could be diluted.
In order to raise additional capital, we may at any time, including during this offering, offer additional shares of common stock or other securities convertible into or exchangeable for our common stock at prices that may not be the same as the price per share in this offering. We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders, including investors who purchase common stock in this offering. The price per share at which we sell additional shares of common stock or securities convertible into common stock in future transactions may be higher or lower than the price per share in this offering. To the extent that we raise additional capital through the further sale of equity securities or convertible debt securities, your ownership interest will be diluted.
Sales of a substantial number of our shares of common stock in the public market could cause our stock price to fall.
We may issue and sell additional shares of common stock in the public markets, including during this offering. As a result, a substantial number of shares of our common stock may be sold in the public market. Sales of a substantial number of shares of our common stock in the public markets, including during this offering, or the perception that such sales could occur, could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.
S-6
Table of Contents
The exercise of our outstanding options and warrants will dilute stockholders and could decrease our stock price.
The exercise of our outstanding options and warrants may adversely affect our stock price due to sales of a large number of shares or the perception that such sales could occur. These factors also could make it more difficult to raise funds through future offerings of our securities, and could adversely impact the terms under which we could obtain additional equity capital. Exercise of outstanding options and warrants or any future issuance of additional shares of common stock or other equity securities, including but not limited to options, warrants or other derivative securities convertible into our common stock, may result in significant dilution to our stockholders and may decrease our stock price.
The common stock offered hereby will be sold in “at-the-market offerings”, and investors who buy shares at different times will likely pay different prices.
Investors who purchase shares in this offering at different times will likely pay different prices, and so may experience different outcomes in their investment results. We will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares sold, and there is no minimum or maximum sales price. Investors may experience a decline in the value of their shares as a result of share sales made at prices lower than the prices they paid.
The actual number of shares we will issue under the Sales Agreement, at any one time or in total, is uncertain.
Subject to certain limitations in the Sales Agreement and compliance with applicable law, we have the discretion to deliver a sales notice to the Agents at any time throughout the term of the Sales Agreement. The number of shares that are sold by the Agents after delivery of a sales notice will fluctuate based on the market price of the common stock during the sales period and limits we set with the Agents. Because the price per share of each share sold will fluctuate based on the market price of our common stock during the sales period, it is not possible at this stage to predict the number of shares that will ultimately be issued.
S-7
Table of Contents
We may issue and sell shares of our common stock having an aggregate offering price of up to $75,000,000 from time to time using this prospectus supplement. The amount of proceeds we will receive from this offering, if any, will depend upon the number of shares of common stock sold and the market price at which they are sold. Because there is no minimum offering amount required as a condition to this offering, the actual total offering amount, commissions and proceeds to us, if any, are not determinable at this time. There can be no assurance that we will be able to sell any shares under or fully utilize the Sales Agreement with the Agents.
We currently intend to use potential net proceeds from the sale of the securities offered under this prospectus supplement for working capital purposes and other general corporate purposes, which may include financing of capital expenditures, repayment or refinancing of outstanding debt, financing acquisitions or investments, financing other business opportunities, and general working capital purposes.
Although we have identified some potential uses of the net proceeds to be received from this offering, we cannot specify these uses with certainty. Our management will have broad discretion in the application of the net proceeds from this offering and could use them for purposes other than those contemplated at the time of this offering. Our stockholders may not agree with the manner in which our management chooses to allocate and spend the net proceeds. Moreover, our management may use the net proceeds for corporate purposes that may not positively impact our results of operations or increase the market value of our common stock.
Pending any use, as described above, we plan to deposit the net proceeds in money market accounts with our primary bank or otherwise invest the net proceeds in high-quality, short-term, interest-bearing securities.
S-8
Table of Contents
We have entered into a Sales Agreement with Truist Securities, Inc. and Citizens JMP Securities, LLC, as Agents, under which we may offer and sell from time to time shares of our common stock having an aggregate gross sales price of up to $75,000,000 through the Agents.
Sales of the common stock, if any, will be made through ordinary brokers’ transactions at market prices by methods deemed to be an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act, including sales made directly on the New York Stock Exchange, on any other existing trading market for the common stock, or to or through a market maker other than on an exchange. In addition, with our prior written approval, the Agents may also sell shares of our common stock by any other method permitted by law, including in block trades and privately negotiated transactions.
Upon delivery of a placement notice, the Agents may offer the common stock subject to the terms and conditions of the Sales Agreement on a daily basis or as otherwise agreed upon by us and the Agents. We will designate the maximum amount of common stock to be sold through the Agents on a daily basis or otherwise determine such maximum amount together with the Agents. Subject to the terms and conditions of the Sales Agreement, the Agents will use their reasonable efforts to sell on our behalf all of the shares of common stock requested to be sold by us. We may instruct the Agents not to sell common stock if the sales cannot be effected at or above the price designated by us in any such instruction. We or the Agents may suspend the offering of the common stock being made through the Agents under the Sales Agreement upon proper notice to the other party and subject to other conditions.
We will pay the Agents commissions, in cash, for their services in acting as Agents in the sale of our common stock. The aggregate compensation payable to the Agents shall be equal to up to 3.0% of the gross sales price per share of all shares sold through them as Agents under the Sales Agreement. Because there is no minimum offering amount required as a condition to close this offering, the actual total public offering amount, commissions and proceeds to us, if any, are not determinable at this time. In addition, we have agreed to reimburse a portion of the expenses of the Agents in connection with this offering up to a maximum of $75,000 plus an additional $10,000 per calendar quarter for ongoing services in connection with the transactions under the Sales Agreement. We estimate that the total expenses of the offering payable by us, excluding commissions payable to the Agents under the Sales Agreement, will be approximately $150,000.
Settlement for sales of common stock will occur in accordance with the standard trade settlement timing then in effect (currently the second trading day following the date on which any sales are made), in return for payment of the net proceeds to us. Sales of our common stock as contemplated in this prospectus supplement will be settled through the facilities of The Depository Trust Company or by such other means as we and the Agents may agree upon. There is no arrangement for funds to be received in an escrow, trust or similar arrangement.
The Agents will use their reasonable efforts, consistent with their sales and trading practices, to solicit offers to purchase the common stock shares under the terms and subject to the conditions set forth in the Sales Agreement. In connection with the sales of the common stock on our behalf, each of the Agents may be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation to the Agents will be deemed to be underwriting commissions or discounts. We have also agreed in the Sales Agreement to provide indemnification and contribution to the Agents with respect to certain liabilities, including liabilities under the Securities Act.
The offering of our common stock pursuant to Sales Agreement will terminate automatically upon the sale of all shares of our common stock subject to the Sales Agreement or as otherwise permitted therein. We and the Agents may each terminate the Sales Agreement at any time with written notice.
Our common stock is listed on the New York Stock Exchange under the symbol “HCI.” The transfer agent and registrar for our common stock is Equiniti Trust Company, LLC.
S-9
Table of Contents
Other Relationships
The Agents and their affiliates have engaged, and may from time to time in the future engage, in transactions with, and perform services for, us, such as other commercial banking and lending services, including investment banking and financial advisory services, fairness opinions and other similar services, including those that may be provided in connection with any acquisitions or investments we may make, for which they have received, or may in the future receive, customary compensation. Additionally, in the ordinary course of their various business activities, the Agents and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments.
S-10
Table of Contents
The validity of the shares of common stock offered by this prospectus supplement will be passed upon for us by Foley & Lardner LLP, Tampa, Florida. Certain legal matters with respect to this offering will be passed upon for the Agents by Goodwin Procter LLP, New York, New York.
The consolidated financial statements incorporated in this prospectus supplement by reference from our Annual Report on Form 10-K for the year ended December 31, 2022, have been audited by FORVIS, LLP, an independent registered public accounting firm, as stated in their report thereon. Such consolidated financial statements have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
S-11
Table of Contents
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s website at www..sec.gov. Copies of certain information filed by us with the SEC are also available on our website at https:.//hcigroup.com. Our website is not a part of this prospectus supplement and the information contained on, or accessible through, our website is not incorporated by reference in this prospectus supplement.
This prospectus supplement and the accompanying prospectus are part of a registration statement we filed with the SEC. This prospectus supplement and the accompanying prospectus omit some information contained in the registration statement in accordance with SEC rules and regulations. You should review the information and exhibits in the registration statement for further information about us and our consolidated subsidiaries and the securities we are offering. Statements in this prospectus supplement and the accompanying prospectus concerning any document we filed as an exhibit to the registration statement or that we otherwise filed with the SEC are not intended to be comprehensive and are qualified by reference to these filings and the exhibits attached thereto. You should review the complete document to evaluate these statements.
S-12
Table of Contents
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to incorporate by reference much of the information we file with the SEC, which means that we can disclose important information to you by referring you to those publicly available documents. The information that we incorporate by reference in this prospectus supplement and the accompanying prospectus and information in documents that we file later with the SEC will automatically update and supersede information contained in documents filed earlier with the SEC or contained in this prospectus or a prospectus supplement. We incorporate by reference in this prospectus supplement the documents listed below:
| • | our Annual Report on Form 10-K for the year ended December 31, 2022 (as filed on March 10, 2023); |
| • |
| • | our Current Reports on Form 8-K filed on May 31, 2023, June 8, 2023, June 13, 2023, June 14, 2023, July 7, 2023, September 21, 2023, October 2, 2023, November 6, 2023, November 9, 2023, December 7, 2023 and January 10, 2024; and |
| • |
In addition, we incorporate by reference in this prospectus supplement and the accompanying prospectus any future filings that we may make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, prior to the termination of the offering under this prospectus supplement and the accompanying prospectus. These documents may include annual, quarterly and current reports, as well as proxy statements. Notwithstanding the foregoing, we are not incorporating any document or information deemed to have been furnished and not filed in accordance with SEC rules. You may obtain a copy of any or all of the documents referred to above which may have been or may be incorporated by reference into this prospectus supplement and the accompanying prospectus (excluding certain exhibits to the documents) at no cost to you by writing or telephoning us at the following address:
HCI Group, Inc.
Attn: Andrew Graham
3802 Coconut Palm Drive
Tampa, Florida 33619
(813) 849-9500
S-13
Table of Contents
HCI Group, Inc.
Up to $75,000,000
Common Stock
PROSPECTUS SUPPLEMENT
| Truist Securities | JMP Securities A CITIZENS COMPANY |
January 22, 2024
Table of Contents
PROSPECTUS SUPPLEMENT
HCI Group, Inc.
1,500,000 Shares of Common Stock and
Warrants to purchase up to 750,000 shares of Common Stock
This prospectus supplement relates to (1) the possible issuance of up to 750,000 shares of common stock of HCI Group, Inc., a Florida corporation (“we” or “our”) to the holder of our common stock purchase warrants upon the exercise of such warrants; (2) the possible resale by CB Snowbird Holdings, L.P., a Delaware limited partnership (“selling security holder”), of amended and restated common stock purchase warrants issued in a private placement on January 22, 2024; and (3) the possible resale by the selling security holder of up to 750,000 shares of our common stock issuable upon the exercise of such warrants.
The selling security holder (which term is used herein includes its donees, pledges, assignees, transferees and other successors in interest) may sell any or all of its securities from time to time on the New York Stock Exchange or any other stock exchange, market, or trading facility on which the securities are traded or in private transactions. The sales may be at fixed or negotiated prices. See “Plan of Distribution” which begins on page 25 of the Base Prospectus.
We are not offering any warrants or shares of our common stock for sale under this prospectus supplement and will not receive any of the proceeds from the sale of warrants or common stock by the selling security holder. However, we will generate proceeds in the event of a cash exercise of the warrants by the selling security holder. All expenses of registration incurred in connection with this offering are being borne by us. All selling and other expenses incurred by the selling security holder will be borne by the selling security holder.
The selling security holder may sell any, all or none of the securities offered by this prospectus supplement and we do not know when or in what amount the selling security holder may sell their securities hereunder.
You should carefully read this prospectus supplement, as well as any documents incorporated by reference, before you invest in any of the securities being offered.
Investing in our securities involves a high degree of risk. Please read the “Risk Factors” beginning on page 5 of the Base Prospectus, as well as in the risk factors relating to our business that are incorporated by reference in the Base Prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is January 22, 2024.
Table of Contents
The section entitled “Selling Security Holders” in the Base Prospectus is hereby supplemented as follows:
SELLING SECURITY HOLDER
The “selling security holder” is the entity who may sell warrants or shares of our common stock registered pursuant to this prospectus supplement and the accompanying Base Prospectus. Such selling security holder may currently hold warrants exercisable for shares of our common stock registered pursuant to this prospectus supplement or may receive shares of our common stock registered pursuant to this prospectus supplement upon exercise of such warrants. The table below provides information as of the date of this prospectus supplement regarding the beneficial ownership of our common stock and warrants of the selling security holder, the number of shares of common stock and number of warrants that may be sold by the selling securityholder under this prospectus supplement and the number of shares of common stock and number of warrants that the selling security holder will beneficially own after this offering. Since the selling security holder may sell all, some or none of their warrants or shares, we cannot estimate the aggregate number of shares that the selling security holder will offer pursuant to this prospectus supplement or that the selling security holder will own upon completion of the offering to which this prospectus supplement relates.
The following table does not take into effect any restrictions on transfer contained in the Registration Rights Agreement, dated as of January 22, 2024, between us and the selling security holder (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the selling security holder, so long as it holds Registrable Securities, it or its affiliates will not, without our prior written consent, transfer (1) the Warrant (as defined below); (2) shares of common stock received upon exercise of the Warrant (the “Warrant Shares”) in excess of 300,000 Warrant Shares in a single transaction (other than a brokers’ transaction) or (3) Warrant Shares directly to a holder who is or, to the selling security holder’s knowledge, after such transfer such holder would be required to file an original or amended statement on Schedule 13D in connection with its beneficial ownership of our shares of common stock.
We granted to the selling security holder an amended and restated common stock purchase warrant on January 22, 2024 giving the selling security holder the right to purchase up to 750,000 shares of our common stock at an exercise price of $54.40 per share (the “Warrant”). Shares of our common stock underlying the Warrant expire as follows: 300,000 Warrant Shares expire February 26, 2025; 150,000 Warrant Shares expire December 31, 2026; 150,000 Warrant Shares expire December 31, 2027; and the remaining 150,000 Warrant Shares expire December 31, 2028. The Warrant may be exercised with cash or on a “cashless” basis, at the option of the selling security holder. The Warrant is subject to customary adjustments in its exercise price and/or number of shares for which the Warrant is exercisable as a result of future stock splits, stock dividends, reverse stock splits, and the like with respect to our common stock, and also upon certain dividends, distributions of stock purchase rights, and fundamental transactions by us.
Eric Hoffman, a director of HCI Group, Inc. since February 26, 2021, is the Managing Director of Centerbridge Partners, an affiliate of the selling security holder.
S-1
Table of Contents
The selling security holder named below and their permitted transferees, pledgees, orderees or other successors may from time to time offer the warrants or shares of our common stock offered by this prospectus supplement:
| Shares of Common Stock | Warrants to Purchase Common Stock |
|||||||||||||||||||||||||||||||
| Name |
Number Beneficially Owned Prior to Offering(2) |
Number Registered for Sale Hereby(2) |
Number Beneficially Owned After Offering |
Percent Owned After Offering(1) |
Number Beneficially Owned Prior to Offering(2) |
Number Registered for Sale Hereby(2) |
Number Beneficially Owned After Offering |
Percent Owned After Offering(1) |
||||||||||||||||||||||||
| C.B. Snowbird Holdings, L.P.(3) |
750,000 | 750,000 | — | * | 750,000 | 750,000 | — | * | ||||||||||||||||||||||||
| (1) | Represents less than 1%. The percentage of shares to be beneficially owned after completion of the offering is calculated on the basis of 10,488,183 shares of common stock outstanding (including the Warrant Shares), assuming the exercise of all currently outstanding warrants and the sale of all Warrant Shares by the selling security holder. The percentage of warrants to be beneficially owned after completion of the offering is calculated on the basis of no outstanding warrants, assuming the exercise of all currently outstanding warrants and the sale of all warrants being registered for resale by the selling security holder. |
| (2) | Represents the 750,000 shares of our common stock issuable upon full exercise of the Warrant. |
| (3) | The selling security holder owns common stock purchase warrants to purchase up to 750,000 shares of our common stock, which are fully exercisable as of the date hereof. CSCP III Cayman GP Ltd. is the general partner of the selling security holder. Gavin Baiera may be deemed to have investment discretion and voting power over the warrants and shares of common stock to be received upon exercise of the warrants held by the selling security holder. The address for CB Snowbird Holdings, L.P. is 375 Park Avenue, 11th Floor, New York, NY 10152-0002. |
S-2
Table of Contents
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable by the registrant in connection with the registration of the securities being registered hereby. All amounts shown are estimates, with the exception of the Securities and Exchange Commission registration fee.
| SEC registration fee(1) |
$ | 16,901.02 | ||
| Printing expenses |
(2 | ) | ||
| Accounting fees and expenses |
(2 | ) | ||
| Legal fees and expenses |
(2 | ) | ||
| Miscellaneous (including any applicable listing fees, rating agency fees, trustee and transfer agent fees and expenses) |
(2 | ) | ||
| Total |
$ | (2 | ) |
| (1) | Pursuant to Rules 456(b) and 457(r) under the Securities Act, the SEC registration fee will be paid at the time of any particular offering of such securities under the registration statement other than the $16,901.02 of fees due in connection with (A) the $75,000,000 of our common stock that may be issued and sold from time to time under an equity distribution agreement with Truist Securities, Inc. and Citizens JMP Securities, LLC and (B) the registration of 750,000 shares of our common stock issuable upon the exercise of common stock purchase warrants, the resale of 750,000 shares of common stock for selling security holders that may exercise the common stock purchase warrants and the resale of the common stock purchase warrants. |
| (2) | These fees are calculated based on the securities offered and the number of issuances and accordingly cannot be estimated at this time. |
Item 15. Indemnification of Directors and Officers.
HCI Group, Inc. is incorporated under the laws of the state of Florida. Section 607.0831 of the Florida Business Corporation Act, as amended (the “FBCA”), provides that a director is not personally liable for monetary damages to the corporation or any other person for any statement, vote, decision to take or not to take action, or any failure to take any action, as a director, unless (1) the director breached or failed to perform his or her duties as a director and (2) the director’s breach of, or failure to perform, those duties constitutes (a) a violation of the criminal law, unless the director had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful, (b) a transaction from which the director derived an improper personal benefit, either directly or indirectly, (c) a circumstance under which the liability provisions of Section 607.0834 of the FBCA are applicable, (d) in a proceeding by or in the right of the corporation to procure a judgment in its favor or by or in the right of a shareholder, conscious disregard for the best interest of the corporation, or willful or intentional misconduct, or (e) in a proceeding by or in the right of someone other than the corporation or a shareholder, recklessness or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property. A judgment or other final adjudication against a director in any criminal proceeding for a violation of the criminal law estops that director from contesting the fact that his or her breach, or failure to perform, constitutes a violation of the criminal law; but does not estop the director from establishing that he or she had reasonable cause to believe that his or her conduct was lawful or had no reasonable cause to believe that his or her conduct was unlawful.
Under Section 607.0851 of the FBCA, a corporation has power to indemnify any person who is a party to any proceeding (other than an action by, or in the right of the corporation), because he or she is or was a director or officer of the corporation against liability incurred in connection with such proceeding, including any appeal thereof, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in, or not opposed to, the best interests of the corporation or, with respect to any criminal action or proceeding, has reasonable cause to believe that his or her conduct was unlawful.
Table of Contents
For purposes of the indemnification provisions of the FBCA, “director” or “officer” means an individual who is or was a director or officer, respectively, of a corporation or who, while a director or officer of the corporation, is or was serving at the corporation’s request as a director or officer, manager, partner, trustee, employee, or agent of another domestic or foreign corporation, limited liability company, partnership, joint venture, trust, employee benefit plan, or another enterprise or entity and the terms include, unless the context otherwise requires, the estate, heirs, executors, administrators, and personal representatives of a director or officer.
In addition, under Section 607.0851 of the FBCA, a corporation has the power to indemnify any person, who was or is a party to any proceeding by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director or officer, against expenses and amounts paid in settlement not exceeding, in the judgment of the board of directors, the estimated expense of litigating the proceeding to conclusion, actually and reasonably incurred in connection with the defense or settlement of such proceeding, including any appeal thereof. Such indemnification shall be authorized if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be made under this subsection in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable unless, and only to the extent that, the court in which such proceeding was brought, or any other court of competent jurisdiction, shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.
Section 607.0852 of the FBCA provides that a corporation must indemnify an individual who is or was a director or officer who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the individual was a party because he or she is or was a director or officer of the corporation against expenses incurred by the individual in connection with the proceeding.
Section 607.0853 of the FBCA provides that a corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse expenses incurred in connection with the proceeding by an individual who is a party to the proceeding because that individual is or was a director or an officer if the director or officer delivers to the corporation a signed written undertaking of the director or officer to repay any funds advanced if (1) the director or officer is not entitled to mandatory indemnification under Section 607.0852; and (2) it is ultimately determined under Section 607.0854 or Section 607.0855 (as described below) that the director or officer has not met the relevant standard of conduct described in Section 607.0851 or the director or officer is not entitled to indemnification under Section 607.0859 (as described below).
Section 607.0854 of the FBCA provides that, unless the corporation’s articles of incorporation provide otherwise, notwithstanding the failure of a corporation to provide indemnification, and despite any contrary determination of the board of directors or of the shareholders in the specific case, a director or officer of the corporation who is a party to a proceeding because he or she is or was a director or officer may apply for indemnification or an advance for expenses, or both, to a court having jurisdiction over the corporation which is conducting the proceeding, or to a circuit court of competent jurisdiction. Our amended and restated articles of incorporation do not provide any such exclusion. After receipt of an application and after giving any notice it considers necessary, the court may order indemnification or advancement of expenses upon certain determinations of the court.
Section 607.0855 of the FBCA provides that, unless ordered by a court under Section 607.0854, a corporation may not indemnify a director or officer under Section 607.0851 unless authorized for a specific proceeding after a determination has been made that indemnification is permissible because the director or officer has met the relevant standard of conduct set forth in Section 607.0851.
Section 607.0857 of the FBCA also provides that a corporation shall have the power to purchase and maintain insurance on behalf of and for the benefit of any person who is or was a director or officer of the corporation against any liability asserted against the person and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not the corporation would have the power to indemnify or advance expenses to the individual against such liability under the provisions of Section 607.0857.
Section 607.0858 of the FBCA provides that the indemnification provided pursuant to Section 607.0851 and Section 607.0852, and the advancement of expenses provided pursuant to Section 607.0853, are not exclusive. A corporation may, by a provision in its articles of incorporation, bylaws or any agreement, or by vote of shareholders or disinterested directors, or otherwise, obligate itself in advance of the act or omission giving rise to a proceeding to provide any other or further indemnification or advancement of expenses to any of its directors or officers.
Table of Contents
Section 607.0859 of the FBCA provides that, unless ordered by a court under the provisions of Section 607.0854 of the FBCA, a corporation may not indemnify a director or officer under Section 607.0851 or Section 607.0858, or advance expenses to a director or officer under Section 607.0853 or Section 607.0858, if a judgment or other final adjudication establishes that his or her actions, or omissions to act, were material to the cause of action so adjudicated and constitute: (1) willful or intentional misconduct or a conscious disregard for the best interests of the corporation in a proceeding by or in the right of the corporation to procure a judgment in its favor or in a proceeding by or in the right of a shareholder; (2) a transaction in which a director or officer derived an improper personal benefit; (3) a violation of the criminal law, unless the director or officer had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful; or (4) in the case of a director, a circumstance under which the liability provisions of Section 607.0834 are applicable (relating to unlawful distributions).
Our amended and restated articles of incorporation and bylaws provide that we shall indemnify, and advance any and all reasonable expenses incurred by, any director or former director to the fullest extent permitted by law.
The underwriting agreement for this offering will provide that the underwriters indemnify us against certain civil liabilities that may be incurred in connection with this offering, including certain liabilities under the Securities Act of 1933.
We also maintain director and officer liability insurance against certain claims and liabilities which may be made against our former, current or future directors and officers. In addition, we have individual indemnification agreements with our directors.
Item 16. Exhibits.
The following documents are filed as part of, or incorporated by reference into, this registration statement:
EXHIBIT INDEX
Table of Contents
| * | To be filed by amendment or as an Exhibit to a Current Report on Form 8-K and incorporated herein by reference. |
| ** | To be filed in accordance with the requirements of Section 305(b)(2) of the Trust Indenture Act of 1939 and Rule 5b-3 thereunder. |
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission (the “Commission”) pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
Table of Contents
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement;
| (2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; |
| (4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
| (i) | Each prospectus filed by a registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
| (ii) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; and |
| (5) | That, for the purpose of determining liability of a registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
Table of Contents
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act.
Table of Contents
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Tampa, State of Florida, on January 22, 2024.
| HCI GROUP, INC. | ||
| By: | /s/ Paresh Patel | |
| Paresh Patel | ||
| Chief Executive Officer and | ||
| Chairman of the Board of Directors | ||
| (Principal Executive Officer) | ||
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below constitutes and appoints Andrew Graham and Paresh Patel and each of them individually, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
| Signature | Title | Date | ||
| /s/ Paresh Patel |
Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) |
January 22, 2024 | ||
| Paresh Patel | ||||
| /s/ James Mark Harmsworth |
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
January 22, 2024 | ||
| James Mark Harmsworth | ||||
| /s/ Wayne Burks |
Director | January 22, 2024 | ||
| Wayne Burks | ||||
| /s/ Karin Coleman |
Director | January 22, 2024 | ||
| Karin Coleman | ||||
| /s/ Eric Hoffman |
Director | January 22, 2024 | ||
| Eric Hoffman | ||||
| /s/ Sanjay Madhu |
Director | January 22, 2024 | ||
| Sanjay Madhu | ||||
| /s/ Peter Politis |
Director | January 22, 2024 | ||
| Peter Politis | ||||
| /s/ Gregory Politis |
Director | January 22, 2024 | ||
| Gregory Politis | ||||
| /s/ Anthony Saravanos |
Director | January 22, 2024 | ||
| Anthony Saravanos | ||||
| /s/ Lauren Valiente |
Director | January 22, 2024 | ||
| Lauren Valiente | ||||
| /s/ Susan Watts |
Director | January 22, 2024 | ||
| Susan Watts | ||||
Exhibit 1.2
HCI GROUP, INC.
$75,000,000
Common Stock
(no par value)
Equity Distribution Agreement
January 22, 2024
Truist Securities, Inc.
3333 Peachtree Road NE, 11th Floor
Atlanta, Georgia 30326
Citizens JMP Securities, LLC
600 Montgomery Street, Suite 1100
San Francisco, California 94111
Ladies and Gentlemen:
HCI Group, Inc., a corporation organized under the laws of Florida (the “Company”), confirms its agreement (this “Agreement”) with Truist Securities, Inc. and Citizens JMP Securities, LLC (each, an “Agent” and collectively, the “Agents”) as follows:
1. Description of Shares. The Company proposes to issue and sell through or to the Agents, as sales agents and/or principals, shares of the Company’s common stock, no par value (“Common Stock”), having an aggregate gross sales price of up to $75,000,000 (the “Shares”), from time to time during the term of this Agreement and on the terms set forth in Section 3 of this Agreement. For purposes of selling the Shares through the Agents, the Company hereby appoints the Agents as exclusive agents of the Company for the purpose of soliciting purchases of the Shares from the Company pursuant to this Agreement and each Agent agrees to use its reasonable efforts to solicit purchases of the Shares on the terms and subject to the conditions stated herein. Subject to the terms of this Agreement, the Company hereby reserves the right to issue and sell shares of Common Stock other than through or to the Agents during the term of this Agreement on terms that it deems appropriate. The Company agrees that whenever it determines to sell the Shares directly to an Agent as principal, it will enter into a separate agreement (each, a “Terms Agreement”) in substantially the form of Annex I hereto, relating to such sale in accordance with Section 3 of this Agreement. Certain terms used herein are defined in Section 18 hereof.
2. Representations and Warranties. The Company represents and warrants to, and agrees with, each Agent at the Execution Time and on each such time the following representations and warranties are repeated or deemed to be made pursuant to this Agreement, as set forth below.
(a) The Company has filed or will file with the Securities and Exchange Commission (the “Commission”) an “automatic shelf registration statement” as defined under Rule 405 under the Securities Act of 1933, as amended (the “Act”) on Form S-3, which automatic shelf registration statement will become effective upon filing under Rule 462(e) under the Act (the “Initial Registration Statement”); no other document with respect to the Initial Registration Statement or document incorporated by reference therein has been filed, or transmitted for filing, with the Commission; the base prospectus filed or to be filed as part of the Initial Registration Statement, in the form in which it has been or will be filed with the Commission on or prior to the date of this Agreement relating to the Shares, is hereinafter called the “Basic Prospectus”; the various parts of the Initial Registration Statement, including all exhibits thereto and including any prospectus supplement relating to the Shares that is filed with the Commission and deemed by virtue of Rule 430B under the Securities Act of 1933, as amended (the “Act”) to be part of the Initial Registration Statement, each as amended at the time such part of the Initial Registration Statement becomes effective, are hereinafter collectively called the “Registration Statement”; the Basic Prospectus, together with the final prospectus relating to the Shares filed with Commission pursuant to Rule 424(b) under the Act is hereinafter called the “Prospectus”; any reference herein to the Basic Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3, as of the date of such prospectus; any reference to any amendment or supplement to the Basic Prospectus or the Prospectus shall be deemed to refer to and include any post-effective amendment to the Registration Statement, any prospectus supplement relating to the Shares filed with the Commission pursuant to Rule 424(b) under the Act and any documents filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and incorporated therein, in each case after the date of the Basic Prospectus or the Prospectus, as the case may be; any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the Effective Date that is incorporated by reference in the Registration Statement; and any “issuer free writing prospectus” as defined in Rule 433 under the Act relating to the Shares is hereinafter called an “Issuer Free Writing Prospectus”.
(b) No order preventing or suspending the use of the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission. The Company has not received, and has no notice from the Commission of, any notice pursuant to Rule 401(g)(2) under the Act objecting to the use of the automatic shelf registration statement form. At the time of the initial filing of the Registration Statement, the Company paid the required Commission filing fees relating to the securities covered by the Registration Statement, including the shares of Common Stock that may be sold pursuant to this Agreement, in accordance with Rule 457(r) under the Act.
2
(c) For the purposes of this Agreement, the “Applicable Time” means, with respect to any Shares, the time of sale of such Shares pursuant to this Agreement or any relevant Terms Agreement. At the Execution Time, at each Applicable Time and at each Settlement Date, the Disclosure Package does not and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Disclosure Package based upon and in conformity with written information furnished to the Company by any of the Agents specifically for use therein. Any Issuer Free Writing Prospectus(es) issued at or prior to such Applicable Time, as of each Applicable Time and each Settlement Date, will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each applicable Issuer Free Writing Prospectus will not conflict with the information contained in the Registration Statement, or the Prospectus and each such Issuer Free Writing Prospectus as of such Applicable Time will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Company by any of the Agents specifically for use therein.
(d) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and no such or any other documents were filed with the Commission since the Commission’s close of business on the business day immediately prior to the date of this Agreement and prior to the execution of this Agreement.
(e) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable Effective Date as to each part of the Registration Statement, as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, and as of each Applicable Time and each Settlement Date, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with written information furnished to the Company by any of the Agents specifically for use therein.
3
(f) The Company and its significant subsidiaries (each significant subsidiary as such term is defined in Rule 1.02 of Regulation S-X promulgated under the Act) of the Company (each a “Significant Subsidiary” and collectively, the “Significant Subsidiaries”) have been duly organized or formed and are validly existing as corporations or limited liability companies in active status or good standing (as the case may be) under the laws of their respective places of incorporation or formation, as the case may be, with the corporate power and authority or the power and authority as a limited liability company, as applicable, to own their properties and conduct their business as described in the Prospectus; the Company and each of its Significant Subsidiaries are duly qualified to do business as foreign corporations or foreign limited liability companies, as applicable, under the applicable law of, and are in good standing as such in, each jurisdiction in which they own or lease substantial properties, have an office, or in which substantial business is conducted and such qualification is required except in any such case where the failure to so qualify or be in good standing would not have a material adverse effect upon the Company and its Significant Subsidiaries taken as a whole (a “Material Adverse Effect”); and no proceeding of which the Company has knowledge has been instituted in any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification. The State of Florida is the only jurisdiction in the United States in which the Company or any of its subsidiaries maintains an office or leases property.
(g) Except for CB Snowbird Holdings, L.P.’s equity interest in TypTap Insurance Group, Inc. disclosed in the Company’s Annual Report on Form 10-K and shares issued to affiliates and employees pursuant to the TypTap Insurance Group, Inc. 2021 Equity Incentive Plan, the Company owns directly or indirectly 100 percent of the issued and outstanding shares or limited liability company interests, as applicable, of each of its subsidiaries, free and clear of any claims, liens, encumbrances or security interests and all of such shares or limited liability company interests, as applicable, have been duly authorized and validly issued and are fully paid.
(h) The issued and outstanding shares of capital stock of the Company as set forth in the Prospectus have been duly authorized and validly issued, are fully paid and nonassessable, and conform to the description of the Common Stock contained in the Registration Statement and the Prospectus; and the Shares have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued and fully paid and non-assessable and will conform in all material respects to the description of the Common Stock contained in the Registration Statement and the Prospectus; and the issuance of the Shares is not subject to any preemptive or similar rights.
4
(i) The issue and sale of the Shares and the compliance by the Company with this Agreement and the consummation of the transactions contemplated in this Agreement and the Prospectus will not (i) violate any provision of the Company’s charter or bylaws, (ii) result, except as would not have a Material Adverse Effect, in a breach or violation of any of the terms and provisions of, or constitute a default or change of control under (A) any agreement, franchise, license, indenture, mortgage, deed of trust, or other instrument to which the Company or any subsidiary is a party or by which the Company, any subsidiary or the property of any of them may be bound or affected, or (B) any statute, rule, regulation or order applicable to the Company or any of its subsidiaries of any court, regulatory body, administrative agency or other governmental body having jurisdiction over the Company or any subsidiary or any of their respective properties, or any order of any court, regulatory body, administrative agency or other governmental body entered in any proceeding to which the Company or any subsidiary was or is now a party or by which it is bound. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement, the issuance of the Shares or the consummation of the transactions contemplated herein, except as may be required under state securities or Blue Sky laws, state insurance laws or regulations or The New York Stock Exchange in connection with the offer and sale of the Shares by the Company pursuant to this Agreement. This Agreement has been duly authorized, executed and delivered by the Company.
(j) The accountants who have expressed their opinions with respect to certain of the consolidated financial statements incorporated by reference in the Registration Statement and the Prospectus are an independent registered public accounting firm as required by the 1933 Act and the Exchange Act, and such accountants are not in violation of the auditor independence requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).
(k) The consolidated financial statements of the Company incorporated by reference in the Registration Statement and the Prospectus present fairly, in all material respects, the consolidated financial position of the Company as of the respective dates of such financial statements, and the consolidated results of operations and cash flows of the Company for the respective periods covered thereby, all in conformity with U.S. generally accepted accounting principles (“GAAP”) consistently applied throughout the periods involved, except as disclosed therein.
(l) The summary financial data included or incorporated by reference in the Registration Statement and the Prospectus, if any, present fairly, in all material respects, the information set forth therein.
(m) All disclosures contained in the Registration Statement and the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the Commission’s rules and regulations) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the 1933 Act, to the extent applicable.
5
(n) Neither the Company nor any subsidiary is (i) in violation of its organizational documents or (ii) in default under any consent decree, or in default with respect to any material provision of any lease, loan agreement, franchise, license, permit or other contract obligation to which it is a party; and, to the Company’s knowledge, there does not exist any state of facts which constitutes an event of default as defined in such documents or which, with notice or lapse of time or both, would constitute such an event of default, in each case, except in the case of clause (ii) for violations or defaults that neither singly nor in the aggregate would have a Material Adverse Effect.
(o) There are no material legal or governmental proceedings pending, or to the Company’s knowledge, threatened to which the Company or any of its subsidiaries is or may be a party or of which material property owned or leased by the Company or any of its subsidiaries is or may be the subject, or related to environmental or discrimination matters that are not disclosed in the Registration Statement and the Prospectus, or that question the validity of this Agreement or any action taken or to be taken pursuant hereto.
(p) Except for CB Snowbird Holdings, L.P., there are no holders of securities of the Company having rights to registration thereof or preemptive rights to purchase Common Stock.
(q) The Company and each of its subsidiaries have good and marketable title to all the properties and assets reflected as owned in the financial statements hereinabove described (or elsewhere in the Registration Statement and the Prospectus), subject to no lien, mortgage, pledge, charge or encumbrance of any kind except those, if any, reflected in such financial statements (or elsewhere in the Registration Statement and the Prospectus) or that are not material to the Company and its subsidiaries taken as a whole. The Company and each of its subsidiaries hold their respective leased properties that are material to the Company and its subsidiaries taken as a whole under valid and binding leases.
(r) The Company has not taken and will not take during the term of this Agreement, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result, under the Exchange Act or otherwise, in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares; provided, however, that any repurchase of the Company’s common stock pursuant to a publicly announced share repurchase plan, including as disclosed in the Registration Statement and the Prospectus, shall not be deemed to be a violation of this provision.
(s) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, and except as contemplated by the Registration Statement and the Prospectus, the Company and its subsidiaries, taken as a whole, have not incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions not in the ordinary course of business and there has not been any material adverse change in their condition (financial or otherwise) or results of operations nor any material change in their capital stock, short-term debt or long-term debt.
6
(t) There is no material document of a character required to be described in the Registration Statement and the Prospectus or the Company’s filings pursuant to the Exchange Act which is not described as required.
(u) Except as disclosed in the Registration Statement and the Prospectus, the Company together with its subsidiaries owns and possesses all right, title and interest in and to, or has duly licensed from third parties, all patents, patent rights, trade secrets, inventions, know-how, trademarks, trade names, copyrights, service marks and other proprietary rights (“Trade Rights”) material to the business of the Company and each of its subsidiaries taken as a whole. Neither the Company nor any of its subsidiaries has received any notice of infringement, misappropriation or conflict from any third party as to such material Trade Rights which has not been resolved or disposed of and neither the Company nor any of its subsidiaries has infringed, misappropriated or otherwise conflicted with material Trade Rights of any third parties, which infringement, misappropriation or conflict would have a Material Adverse Effect.
(v) The conduct of the business of the Company and each of its subsidiaries is in compliance in all respects with applicable federal, state, local and foreign laws and regulations, except where the failure to be in compliance would not have a Material Adverse Effect.
(w) The Company and its subsidiaries possess certificates, authorizations, or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by them, and have not received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit that, if determined adversely to the Company or its subsidiaries, would, individually or in the aggregate, have a Material Adverse Effect.
(x) All offers and sales by the Company of the Company’s capital stock or membership interests of its subsidiaries prior to the date hereof were either (i) made pursuant to a registration statement filed by the Company with the Commission under the 1933 Act or (ii) at all relevant times exempt from the registration requirements of the 1933 Act and, in each case, all such offers and sales during the twelve months prior to the date hereof were duly registered with or the subject of an available exemption from the registration requirements of the applicable state and local securities or blue sky laws.
(y) The Company and its subsidiaries have filed all required federal, state, local and non-U.S. income and franchise tax returns that were required to be filed prior to the date hereof, after taking into account all applicable extensions obtained, and have paid all such taxes shown as due thereon and there is no tax deficiency that has been, or to the knowledge of the Company might be, asserted against the Company or its subsidiaries or any of their properties or assets, in each case that would have a Material Adverse Effect.
(z) A registration statement pursuant to Section 12(b) of the Exchange Act to register the Common Stock thereunder has been declared effective by the Commission pursuant to the Exchange Act, and the Common Stock is duly registered thereunder. The Common Stock of the Company is listed on The New York Stock Exchange.
7
(aa) The Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Exchange Act) and such controls and procedures are effective in ensuring that material information relating to the Company, including its subsidiaries, is made known to the principal executive officer and the principal financial officer. The Company has utilized such controls and procedures (to the extent applicable) in preparing and evaluating the disclosures included in the Registration Statement and the Prospectus.
(bb) The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) amounts reflected on the Company’s consolidated balance sheet for assets are compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
(cc) The Company is not, and after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectus will not be, and does not intend to conduct its business in a manner in which it would become, an “investment company” as defined in Section 3(a) of the Investment Company Act of 1940, as amended (“Investment Company Act”).
(dd) At the time of filing the Initial Registration Statement and any post-effective amendment thereto, at the earliest time thereafter that the Company or any offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Act) of the Shares, and at the date hereof, the Company was not and is not an “ineligible issuer” and is a “well-known seasoned issuer” each as defined in Rule 405 under the Act.
(ee) No transaction has occurred between or among the Company and any of its officers or directors, stockholders or any affiliate or affiliates of any such officer or director or stockholder that is required to be described in and is not described in the Registration Statement and the Prospectus or the Company’s filings pursuant to the Exchange Act.
(ff) The Company’s board of directors has validly appointed an audit committee whose composition satisfies the requirements of Section 303A.07 of the Listed Company Manual of The New York Stock Exchange (the “NYSE Rules”), and the board of directors or the audit committee has adopted a charter that satisfies the requirements of the NYSE Rules.
8
(gg) The Company and its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are customary in the businesses in which they are engaged or propose to engage after giving effect to the transactions described in the Registration Statement and the Prospectus. To the knowledge of the Company, all policies of insurance and fidelity or surety bonds insuring the Company, its subsidiaries and their respective businesses, assets, employees, officers and directors are in full force and effect; and the Company and its subsidiaries are in compliance with the terms of such policies and instruments in all material respects.
(hh) The Company is in compliance in all material respects with all applicable provisions of the Sarbanes-Oxley Act and all rules and regulations promulgated thereunder.
(ii) None of the Company and its subsidiaries is involved in any labor dispute nor, to the knowledge of the Company, is any such dispute threatened. The Company is not aware of any threatened or pending litigation between the Company and any of its executive officers and has not received notice from any of its executive officers that such officer does not intend to remain in the employment of the Company.
(jj) The statements set forth or incorporated by reference in the Registration Statement and the Prospectus under the caption “Description of Capital Stock”, insofar as they purport to constitute a summary of the terms of the Securities, under the caption “Material United States Federal Income Tax Consequences for Non-U.S. Holders of Common Stock”, and under the caption “Plan of Distribution”, insofar as they purport to describe the provisions or provide summaries of the laws and documents referred to therein, fairly and accurately summarize the matters referred to therein in all material respects.
(kk) The Company has not sold or issued any shares of Common Stock during the six-month period preceding the date of the Prospectus, including any sales pursuant to Regulation D of the Act, other than (i) shares issued pursuant to employee benefit plans, stock option plans or other employee compensation plans or pursuant to outstanding options, rights, convertible notes or warrants, or (ii) as disclosed in the Registration Statement.
(ll) Neither the Company nor any of its subsidiaries, nor, to the Company’s knowledge, any director, officer, agent, employee or other person associated with or, to the Company’s knowledge, acting on behalf of the Company or any of its subsidiaries, has violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), and the rules and regulations thereunder, including, without limitation, by making use of mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office in contravention of the FCPA.
9
(mm) The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions in which the Company and its subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(nn) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering of the Securities, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
(oo) None of the transactions contemplated by this Agreement (including, without limitation, the use of the proceeds from the sale of the Shares) will violate or result in a violation of Section 7 of the Exchange Act, or any regulation promulgated thereunder, including, without limitation, Regulations T, U, and X of the Board of Governors of the Federal Reserve System.
(pp) The Company is subject to Section 13 or 15(d) of the Exchange Act and, has filed all the material required to be filed pursuant to Section 13, 14 or 15(d) of the Exchange Act and has filed in a timely manner all reports required to be filed thereunder during the 12 calendar months and any portion of a month immediately preceding the date hereof.
(qq) The Company and its subsidiaries’ information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, and databases (collectively, “IT Systems”) are adequate for, and operate and perform in all material respects as required in connection with the operation of the business of the Company and its subsidiaries as currently conducted, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants; the Company and its subsidiaries have implemented and maintained reasonable controls, policies, procedures, and safeguards to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and data (including all personal, personally identifiable, sensitive, confidential or regulated data (“Personal Data”)) used in connection with their businesses, and there have been no breaches, violations, outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the duty to notify any
10
other person, nor any incidents under internal review or investigations relating to the same; the Company and its subsidiaries are presently in compliance in all material respects with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access, misappropriation or modification.
Any certificate signed by any officer of the Company and delivered to any Agent or counsel for any Agent in connection with this Agreement or any Terms Agreement shall be deemed a representation and warranty by the Company, as to matters covered thereby, to such Agent.
3. Sale and Delivery of Shares.
(a) Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees to issue and sell Shares from time to time through the Agents, acting as sales agents, and each Agent agrees to use its reasonable efforts to sell, as sales agent for the Company, the Shares on the following terms.
(i) The Shares are to be sold by one of the Agents on a daily basis or otherwise as shall be agreed to by the Company and such Agent on any day that (A) is a trading day for The New York Stock Exchange (other than a day on which The New York Stock Exchange is scheduled to close prior to its regular weekday closing time), (B) the Company has instructed such Agent by telephone (confirmed promptly by electronic mail) to make such sales and (C) the Company has satisfied its obligations under Section 6 of this Agreement. The Company will designate the maximum amount of the Shares to be sold by such Agent daily as agreed to by such Agent (in any event not in excess of the amount available for issuance under the Prospectus and the then effective Registration Statement) and the minimum price per Share at which such Shares may be sold. Subject to the terms and conditions hereof, such Agent shall use its reasonable efforts to sell on a particular day all of the Shares designated for the sale by the Company on such day. The gross sales price of the Shares sold under this Section 3(a) shall be the market price for shares of the Company’s Common Stock sold by such Agent under this Section 3(a) on The New York Stock Exchange at the time of sale of such Shares. For the avoidance of doubt, the Company shall submit instructions to sell Shares to only one Agent, if any, on any single trading day.
(ii) The Company acknowledges and agrees that (A) there can be no assurance that such Agent will be successful in selling the Shares, (B) such Agent will incur no liability or obligation to the Company or any other person or entity if it does not sell Shares for any reason other than a failure by such Agent to use its reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell such Shares as required under this Agreement, and (C) each Agent shall be under no obligation to purchase Shares on a principal basis pursuant to this Agreement, except as otherwise specifically agreed by such Agent and the Company.
11
(iii) The Company shall not authorize the issuance and sale of, and the relevant Agent shall not be obligated to use its reasonable efforts to sell, any Share at a price lower than the minimum price therefor designated from time to time by the Company’s Board of Directors (the “Board”), or a duly authorized committee thereof, and notified to such Agent in writing. The Company or any Agent may, upon notice to the other party hereto by electronic mail or telephone (and in the case of telephone, confirmed promptly by electronic mail), suspend or terminate the offering (including conducting due diligence sessions and the making or deemed making of representations and warranties and deliveries of certificates, opinion letters and other instruments hereunder) of the Shares for any reason and at any time, or recommence such offering; provided, however, that such suspension or termination shall not affect or impair the parties’ respective obligations with respect to the Shares sold hereunder prior to the giving of such notice.
(iv) Each Agent hereby covenants and agrees not to make any sales of the Shares on behalf of the Company, pursuant to this Section 3(a), other than (A) by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Act, including by means of ordinary brokers’ transactions between members of The New York Stock Exchange that qualify for delivery of a Prospectus to The New York Stock Exchange in accordance with Rule 153 and (B) such other sales of the Shares on behalf of the Company in its capacity as agent of the Company as shall be agreed by the Company and such Agent pursuant to a Terms Agreement.
(v) The compensation to each Agent for sales of the Shares with respect to which such Agent acts as sales agent under this Agreement shall be up to 3.0% of the gross sales price of the Shares sold pursuant to this Section 3(a) and payable as described in the succeeding subsection (vi) below. The foregoing rate of compensation shall not apply when such Agent acts as principal, in which case the Company may sell Shares to such Agent as principal at a price agreed upon at the relevant Applicable Time pursuant to a Terms Agreement. The remaining proceeds, after further deduction for any transaction fees imposed by any governmental or self-regulatory organization in respect of such sales (the “Transaction Fees”), shall constitute the net proceeds to the Company for such Shares (the “Net Proceeds”).
(vi) Each Agent shall provide written confirmation (which may be by facsimile or electronic mail) to the Company as soon as reasonably practicable following the close of trading on The New York Stock Exchange each day in which the Shares are sold under this Section 3(a) setting forth the number of the Shares sold on such day, the aggregate gross sales proceeds and the Net Proceeds to the Company, and the compensation payable by the Company to such Agent with respect to such sales.
12
(vii) Settlement for sales of the Shares pursuant to this Section 3(a) will occur in accordance with the standard trade settlement timing then in effect (currently the second Business Day following the date on which such sales are made) (each such day, a “Settlement Date”). On each Settlement Date, the Shares sold through an Agent for settlement on such date shall be issued and delivered by the Company to such Agent against payment of the aggregate net sales proceeds less any Transaction Fees for the sale of such Shares. Settlement for all such Shares shall be effected by free delivery of the Shares to such Agent’s account at The Depository Trust Company (“DTC”) in return for payments in same day funds delivered to the account designated by the Company. If the Company or its transfer agent (if applicable) shall default on its obligation to deliver the Shares on any Settlement Date, the Company shall (A) indemnify and hold such Agent harmless against any loss, claim or damage arising from or as a result of such default by the Company and (B) pay such Agent any commission to which it would otherwise be entitled absent such default. If an Agent breaches this Agreement by failing to deliver the aggregate gross sales proceeds less any Transaction Fees to the Company on any Settlement Date for the Shares delivered by the Company, such Agent will pay the Company interest based on the effective overnight federal funds rate on such unpaid amount less any compensation due to such Agent.
(viii) At each Applicable Time, Settlement Date and Representation Date (as defined in Section 4(k)), the Company shall be deemed to have affirmed each representation and warranty contained in this Agreement as if such representation and warranty were made as of such date, modified to incorporate disclosures from and, as necessary, relate to the Registration Statement, the Disclosure Package and the Prospectus as amended as of such date. Any obligation of any Agent to use its reasonable efforts to sell the Shares on behalf of the Company shall be subject to the continuing accuracy of the representations and warranties of the Company herein, modified to incorporate disclosures from and, as necessary, relate to the Registration Statement, the Disclosure Package and the Prospectus, as amended as of such date, to the performance by the Company of its obligations hereunder and to the continuing satisfaction of the additional conditions specified in Section 6 of this Agreement.
(b) If the Company wishes to issue and sell the Shares pursuant to this Agreement but other than as set forth in Section 3(a) of this Agreement (each, a “Placement”), it will notify the Agents of the proposed terms of such Placement. If any Agent, acting as principal, wishes to accept such proposed terms (which it may decline to do for any reason in its sole discretion) or, following discussions with the Company wishes to accept amended terms, such Agent and the Company will enter into a Terms Agreement setting forth the terms of such Placement. The terms set forth in a Terms Agreement will not be binding on the Company or such Agent unless and until the Company and such Agent have each executed such Terms Agreement accepting all of the terms of such Terms Agreement. In the event of a conflict between the terms of this Agreement and the terms of a Terms Agreement, the terms of such Terms Agreement will control.
13
(c) Each sale of the Shares to an Agent shall be made in accordance with the terms of this Agreement and, if applicable, a Terms Agreement, which will provide for the sale of such Shares to, and the purchase thereof by, such Agent. A Terms Agreement may also specify certain provisions relating to the reoffering of such Shares by such Agent. The commitment of such Agent to purchase the Shares pursuant to any Terms Agreement shall be deemed to have been made on the basis of the representations and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. Each Terms Agreement shall specify the number of the Shares to be purchased by such Agent pursuant thereto, the price to be paid to the Company for such Shares, any provisions relating to rights of, and default by, underwriters acting together with such Agent in the reoffering of the Shares, and the time and date (each such time and date being referred to herein as a “Time of Delivery”) and place of delivery of and payment for such Shares. Such Terms Agreement shall also specify any requirements for opinions of counsel, accountants’ letters and officers’ certificates pursuant to Section 6 of this Agreement and any other information or documents required by such Agent.
(d) Under no circumstances shall the number and aggregate amount of the Shares sold pursuant to this Agreement and any Terms Agreement exceed (i) the aggregate amount set forth in Section 1 of this Agreement, (ii) the number of shares of the Common Stock available for issuance under the then effective Registration Statement or (iii) the number and aggregate amount of the Shares authorized from time to time to be issued and sold under this Agreement by the Board, or a duly authorized committee thereof, and notified to each Agent in writing.
(e) If any party has reason to believe that the exemptive provisions set forth in Rule 101(c)(1) of Regulation M under the Exchange Act are not satisfied with respect to the Shares, it shall promptly notify the other parties and sales of the Shares under this Agreement and any Terms Agreement shall be suspended until that or other exemptive provisions have been satisfied in the judgment of each party.
(f) Notwithstanding any other provision of this Agreement, the Company shall not request the sale of any Shares that would be sold, and the Agents shall not be obligated to sell, during any period in which the Company is in possession of material non-public information.
14
4. Agreements. The Company agrees with each Agent that:
(a) During any period when the delivery of a prospectus relating to the Shares is required (including in circumstances where such requirement may be satisfied pursuant to Rule 172) to be delivered under the Act, the Company will not file any amendment of the Registration Statement or supplement (including the Prospectus) to the Basic Prospectus or any registration statement, if any, increasing the size of the offering under the Registration Statement, filed pursuant to Rule 462(b) under the Act, which shall become effective upon filing (a “Rule 462(b) Registration Statement”) (other than (i) any documents incorporated by reference or deemed incorporated therein by reference or (ii) any amendment or supplement that relates to the offering of other securities (including, without limitation, shares of Common Stock)), unless the Company has furnished to the Agents a copy for their review prior to filing and will not file any such proposed amendment or supplement to which the Agents reasonably object, unless the Company shall have determined that based on the advice of counsel, such amendment, supplement or filing is required by law. The Company has completed or will complete the Prospectus, in a form approved by the Agents, and file such Prospectus with the Commission pursuant to the applicable paragraph of Rule 424(b) once the Registration Statement is declared effective by the Commission and will cause any supplement to the Prospectus to be properly completed, in a form approved by the Agents, and will file such supplement with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time period prescribed thereby and will provide evidence satisfactory to the Agents of such timely filing. The Company will promptly notify the Agents (i) when the Prospectus, and any supplement thereto, shall have been filed (if required) with the Commission pursuant to Rule 424(b) or when any Rule 462(b) Registration Statement shall have been filed with the Commission (other than (A) any documents incorporated by reference or deemed incorporated therein by reference or (B) any amendment or supplement that relates to the offering of other securities (including, without limitation, shares of Common Stock)), (ii) when, during any period when the delivery of a prospectus (whether physically or through compliance with Rule 172 or any similar rule) is required under the Act in connection with the offering or sale of the Shares, any amendment to the Registration Statement shall have been filed or become effective (other than (A) any documents incorporated by reference or deemed incorporated therein by reference or (B) any amendment or supplement that relates to the offering of other securities (including, without limitation, shares of Common Stock)), (iii) of any request by the Commission or its staff for any amendment of the Registration Statement, or any Rule 462(b) Registration Statement, or for any supplement to the Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any notice objecting to its use or the institution or threatening of any proceeding for that purpose and (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the institution or threatening of any proceeding for such purpose. The Company will use its commercially reasonable efforts to prevent the issuance of any such stop order or the occurrence of any such suspension or objection to the use of the Registration Statement and, upon such issuance, occurrence or notice of objection, to obtain as soon as possible the withdrawal of such stop order or relief from such occurrence or objection, including, if necessary, by filing an amendment to the Registration Statement or a new registration statement and using its commercially reasonable efforts to have such amendment or new registration statement declared effective as soon as practicable.
15
(b) If, during any period in which a prospectus is required to be delivered (whether physically, deemed to be delivered pursuant to Rule 153 or through compliance with Rule 172 or any similar rule) in connection with any sale of Common Stock, any event occurs as a result of which the Disclosure Package would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein in the light of the circumstances under which they were made or the circumstances then prevailing not misleading, the Company will (i) notify promptly the Agents so that any use of the Disclosure Package may cease until it is amended or supplemented; (ii) amend or supplement the Disclosure Package to correct such statement or omission; and (iii) supply any amendment or supplement to each Agent in such quantities as the Agents may reasonably request.
(c) During any period when the delivery of a prospectus relating to the Shares is required (including in circumstances where such requirement may be satisfied pursuant to Rule 172) to be delivered under the Act, any event occurs as a result of which the Prospectus as then supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein in the light of the circumstances under which they were made at such time not misleading, or if it shall be necessary during such same period to amend the Registration Statement, file a new registration statement or supplement the Prospectus to comply with the Act or the Exchange Act or the respective rules thereunder, including in connection with use or delivery of the Prospectus, the Company promptly will (i) notify the Agents of any such event, (ii) prepare and file with the Commission, subject to the second sentence of paragraph (a) of this Section 4, an amendment or supplement or new registration statement which will correct such statement or omission or effect such compliance, (iii) use its commercially reasonable efforts to have any amendment to the Registration Statement or new registration statement declared effective as soon as practicable in order to avoid any disruption in use of the Prospectus and (iv) supply any supplemented Prospectus to each Agent in such quantities as the Agents may reasonably request.
(d) As soon as practicable, the Company will make generally available to its security holders and to the Agents an earnings statement or statements of the Company and its subsidiaries which will satisfy the provisions of Section 11(a) of the Act and Rule 158.
(e) The Company will furnish to each Agent and counsel for such Agent, without charge, if requested, signed copies of the Registration Statement (including exhibits thereto) and, so long as delivery of a prospectus by such Agent or dealer may be required by the Act (including in circumstances where such requirement may be satisfied pursuant to Rule 172), as many copies of the Prospectus and each Issuer Free Writing Prospectus and any supplement thereto as such Agent may reasonably request. The Company will pay the expenses of printing or other production of all documents relating to the offering.
16
(f) The Company will arrange, if necessary, for the qualification of the Shares for sale under the laws of such jurisdictions as the Agents may designate and will maintain such qualifications in effect so long as required for the distribution of the Shares; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the offering or sale of the Shares, in any jurisdiction where it is not now so subject.
(g) The Company agrees that, unless it has or shall have obtained the prior written consent of the Agents, and each Agent agrees with the Company that, unless it has or shall have obtained, as the case may be, the prior written consent of the Company, it has not made and will not make any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405) required to be filed by the Company with the Commission or retained by the Company under Rule 433; provided that the prior written consent of the parties hereto shall be deemed to have been given in respect of the Free Writing Prospectuses included in Schedule I hereto. Any such free writing prospectus consented to by the Agents or the Company is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company agrees that (i) it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus and (ii) it has complied and will comply, as the case may be, with the requirements of Rules 164 and 433 applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the Commission, legending and record keeping.
(h) At any time the Company has outstanding with any Agent any instructions to sell Shares but such instructions have not been fulfilled (excluding, for these purposes, any time that sales of the Shares have been made but not settled), suspended or cancelled, the Company will not offer, sell, contract to sell, pledge, or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition of (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company) directly or indirectly, including the filing (or participation in the filing) of a registration statement with the Commission in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, any other shares of Common Stock or any securities convertible into, or exercisable, or exchangeable for, shares of Common Stock; or publicly announce an intention to effect any such transaction; provided, however, that the Company shall be permitted to engage in any such transaction three Business Days after such fulfilment, suspension or cancellation, as applicable. Notwithstanding the foregoing, the Company may (i) issue and sell Common Stock pursuant to this Agreement or any Terms Agreement, (ii) issue shares of Common Stock or options to purchase shares of its Common Stock or other awards, or shares of Common Stock upon exercise of options or warrants or vesting of awards, or the deemed issuance of Common Stock under Section 16 of the Exchange Act upon the cash settlement or vesting of phantom units, stock appreciation rights or other awards, pursuant to any stock option, stock bonus or other stock plan or arrangement described in the Registration Statement, the Disclosure Package and the Prospectus, as amended or supplemented, or any amendment to or replacement of such plan, (iii) issue shares of Common Stock or securities convertible into or exercisable for shares of
17
Common Stock as consideration in a merger or other acquisition, (iv) file one or more of the following registration statements: (x) a Form S-8 or amendments thereto relating to the issuance of shares of Common Stock or the issuance and exercise of options to purchase shares of Common Stock granted under the employee benefit plans of the Company existing on the date of the Prospectus or any amendment to or replacement of such plan, (y) a universal or resale “shelf” registration statement on Form S-3 or amendments thereto relating to the issuance of Company securities (so long as no Company securities subject to this Section are offered or issued during such period) or resale of Company securities by selling stockholders pursuant to contractual arrangements with the Company, respectively, or (z) to which the Agents have consented, such consent not to be unreasonably withheld, conditioned, or delayed in connection with the Company’s entrance into a definitive agreement relating to an acquisition, (v) issue and sell Common Stock pursuant to any conversions or exercises of preferred stock (or dividends on preferred stock) or warrants disclosed in the Registration Statement, the Disclosure Package and the Prospectus, as amended or supplemented, or (vi) offer and sell shares of Common Stock in firm commitment underwritten offerings; provided, however, that, in the case of clause (vi), the Company shall have suspended the offering of Shares through any Agent at least three Business Days’ prior to the commencement of such firm commitment underwritten offering if the Company has provided to such Agent outstanding instructions by the Company to sell Shares but such instructions have not been fulfilled (excluding, for these purposes, any time that sales of the Shares have been made but not settled), suspended or cancelled. In the event of a firm commitment underwritten offering by the Company, any Agent may (and all Agents shall if requested by the Company) suspend activity under this program for such period of time as may be reasonably requested by the Company or as may be deemed appropriate by such Agent. Notwithstanding anything herein to the contrary, if there are no outstanding sales of Shares (other than sales of Shares that have been made but not settled) and no instructions are outstanding with any Agents to sell any Shares, then the foregoing restrictions shall not apply in any event.
(i) The Company will not (i) take, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares or (ii) sell, bid for, purchase or pay any person (other than as contemplated by this Agreement or any Terms Agreement) any compensation for soliciting purchases of the Shares.
(j) The Company will, at any time during the term of this Agreement, as supplemented from time to time, advise the Agents immediately after it shall have received notice or obtained knowledge thereof, of any information or fact that would materially alter or affect any opinion, certificate, letter and other document provided to the Agents pursuant to Section 6 herein.
18
(k) Upon commencement of the offering of the Shares under this Agreement (and upon the recommencement of the offering of the Shares under this Agreement following the termination of a suspension of sales hereunder), and each time that (i) the Registration Statement or the Prospectus shall be amended or supplemented (other than a prospectus supplement relating solely to the offering of securities other than the Shares, pursuant to clause (ii), a Current Report on Form 8-K which does not include financial statements or a proxy statement for an annual meeting of stockholders), (ii) there is filed with the Commission any document incorporated by reference into the Prospectus (other than a Current Report on Form 8-K which does not include financial statements or a proxy statement for an annual meeting of stockholders), (iii) the Shares are delivered to any Agent as principal at the Time of Delivery pursuant to a Terms Agreement, or (iv) otherwise as any Agent may reasonably request in connection of the filing of a Current Report on Form 8-K or a proxy statement by the Company (such commencement or recommencement date and each such date referred to in (i), (ii), (iii) and (iv) above, a “Representation Date”), the Company shall furnish or cause to be furnished to the Agents forthwith a certificate dated as of and delivered on (or within three Business Days after in the case of (i) or (ii) above) the date of such commencement or recommencement, effectiveness of such amendment, the date of filing with the Commission of such supplement or other document or the Time of Delivery, or promptly upon request, as the case may be, in form satisfactory to the Agents to the effect that the statements contained in the certificate referred to in Section 6(d) of this Agreement which were last furnished to the Agents are true and correct at the time of such commencement or recommencement, amendment, supplement, filing, or delivery, as the case may be, as though made at and as of such time (except that such statements shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to such time) or, in lieu of such certificate, a certificate of the same tenor as the certificate referred to in said Section 6(d), modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such certificate. The requirement to deliver a certificate under this Section 4(k) shall be automatically waived at a time at which no offering of Shares under this Agreement is ongoing, no sale of Shares by the Agents is pending or no Terms Agreement is in effect (a “Waiver”), which Waiver, in each case, shall not apply the next time Shares are sold by the Agents or the Company enters into a Terms Agreement. Notwithstanding the foregoing, if the Company subsequently decides to sell Shares following a Representation Date when the Company relied on a Waiver and did not provide the Agents with a certificate under this Section 4(k), then before any Agent sells any Shares, the Company promptly shall provide the Agent with a certificate required under this Section 4(k).
(l) On the initial Representation Date and each subsequent Representation Date that the Company delivers a certificate pursuant to Section 4(k), the Company shall furnish or cause to be furnished forthwith to the Agents and to counsel to the Agents a written opinion (including a negative assurance statement) of Foley & Lardner LLP (each, a “Company Counsel”), or other counsel satisfactory to the Agents, each dated and delivered on, or within three Business Days of (in the case Section 4(k)(i) or Section 4(k)(ii) applies), the date of commencement or recommencement, effectiveness of such amendment, the date of filing with the Commission of such supplement or other document or the Time of Delivery, or promptly upon such request, as the case may be, in form and substance satisfactory to the Agents, of the same tenor as the opinions referred to in Section 6(b) of this Agreement, as applicable, but modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such opinion.
19
(m) On the initial Representation Date and each subsequent Representation Date that the Company delivers a certificate pursuant to Section 4(k), Goodwin Procter LLP, counsel to the Agents or other counsel satisfactory to the Agents (“Sales Agents’ Counsel”), shall deliver a written opinion, dated and delivered on, or within three Business Days of (in the case Section 4(k)(i) or Section 4(k)(ii) applies), the date of commencement or recommencement, effectiveness of such amendment, the date of filing with the Commission of such supplement or other document or the Time of Delivery, or promptly upon such request, as the case may be, in form and substance satisfactory to the Agents, of the same tenor as the opinions referred to in Section 6(c) of this Agreement but modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such opinion.
(n) Upon commencement of the offering of the Shares under this Agreement (and upon the recommencement of the offering of the Shares under this Agreement following the termination of a suspension of sales hereunder), and each time that the Company delivers a certificate pursuant to Section 4(k) and (i) the Registration Statement or the Prospectus shall be amended or supplemented (excluding any amendment or supplement that relates to the offering of other securities (including, without limitation, shares of Common Stock)) to include additional or amended financial information (other than pursuant to clause (iii) or (iv)), (ii) the Shares are delivered to any Agent as principal at a Time of Delivery pursuant to a Terms Agreement, (iii) the Company files a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K, or (iv) at any Agent’s reasonable request and upon reasonable advance notice to the Company, there is filed with the Commission any document which contains financial information (other than an Annual Report on Form 10-K or Quarterly Report on Form 10-Q) incorporated by reference into the Prospectus, the Company shall cause each independent accountant that audits the financial statements incorporated by reference into the Prospectus, or other independent accountants satisfactory to the Agents forthwith, to furnish the Agents a letter, dated as of, or within three Business Days of (in the case Section 4(k)(i) or Section 4(k)(ii) applies), the date of commencement or recommencement, effectiveness of such amendment, the date of filing of such supplement or other document with the Commission, or the Time of Delivery, as the case may be, in form satisfactory to the Agents, of the same tenor as the letter referred to in Section 6(e) of this Agreement but modified to relate to the Registration Statement and the Prospectus, as amended and supplemented to the date of such letter.
(o) Upon commencement of the offering of the Shares under this Agreement (and upon the recommencement of the offering of the Shares under this Agreement following the termination of a suspension of sales hereunder), and at each Representation Date, unless a waiver is applicable (or promptly thereafter in the case Section 4(k)(i) or Section 4(k)(ii) applies), the Company will, if requested by the Agents, conduct a due diligence session, in form and substance satisfactory to the Agents, which shall include representatives of the management and the independent accountants of the Company.
20
The Company shall cooperate timely with any reasonable due diligence request from or review conducted by the Agents or its agents from time to time in connection with the transactions contemplated by this Agreement, including, without limitation, providing information and available documents and access to appropriate corporate officers and the Company’s agents during regular business hours and at the Company’s principal offices, and timely furnishing or causing to be furnished such certificates, letters and opinions from the Company, its officers and its agents, as the Agents may reasonably request.
(p) The Company consents to each Agent trading in the Common Stock for such Agent’s own account and for the account of its clients at the same time as sales of the Shares occur pursuant to this Agreement or pursuant to a Terms Agreement.
(q) The Company will disclose in its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, as applicable, the number of Shares sold through the Agents under this Agreement, the Net Proceeds to the Company and the compensation paid by the Company with respect to sales of Shares pursuant to this Agreement during the relevant quarter.
(r) If to the knowledge of the Company, the conditions set forth in Section 6(a), 6(h) and 6(i) shall not be true and correct on the applicable Settlement Date, the Company will offer to any person who has agreed to purchase Shares from the Company as the result of an offer to purchase solicited by any Agent the right to refuse to purchase and pay for such Shares.
(s) Each acceptance by the Company of an offer to purchase the Shares hereunder, and each execution and delivery by the Company of a Terms Agreement, shall be deemed to be an affirmation to the Agents that the representations and warranties of the Company contained in or made pursuant to this Agreement are true and correct as of the date of such acceptance or of such Terms Agreement as though made at and as of such date, and an undertaking that such representations and warranties will be true and correct as of the Settlement Date for the Shares relating to such acceptance or as of the Time of Delivery relating to such sale, as the case may be, as though made at and as of such date (unless made as of a specified date) (except that such representations and warranties shall be deemed to relate to the Registration Statement and the Prospectus and the documents incorporated by reference therein as amended or supplemented as of such date relating to such Shares).
(t) The Company shall ensure that there are at all times sufficient shares of Common Stock to provide for the issuance, free of any preemptive rights, out of its authorized but unissued shares of Common Stock or shares of Common Stock held in treasury, of the maximum aggregate number of Shares authorized for issuance by the Board pursuant to the terms of this Agreement. The Company will use its commercially reasonable efforts to cause the Shares to be listed for trading on The New York Stock Exchange and to maintain such listing.
21
(u) During any period when the delivery of a prospectus relating to the Shares is required (including in circumstances where such requirement may be satisfied pursuant to Rule 172) to be delivered under the Act, the Company will file all documents required to be filed with the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act and the regulations thereunder.
(v) The Company shall cooperate with Agents and use its reasonable efforts to permit the Shares to be eligible for clearance and settlement through the facilities of DTC.
(w) The Company will apply the Net Proceeds from the sale of the Shares in the manner set forth in the Prospectus.
(x) The Company agrees to pay the required Commission filing fees relating to the Shares within the time required by Rule 456(b)(1) under the Act without regard to the proviso therein and otherwise in accordance with the Rules 456(b) and 457(r) under the Act.
5. Payment of Expenses.
(a) The Company agrees to pay the costs and expenses incident to the performance of its obligations under this Agreement, whether or not the transactions contemplated hereby are consummated, including without limitation: (i) the preparation, printing or reproduction and filing with the Commission of the Registration Statement (including financial statements and exhibits thereto), the Prospectus and each Issuer Free Writing Prospectus, and each amendment or supplement to any of them; (ii) the printing (or reproduction) and delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Registration Statement, the Prospectus, and each Issuer Free Writing Prospectus, and all amendments or supplements to any of them, as may, in each case, be reasonably requested for use in connection with the offering and sale of the Shares; (iii) the preparation, printing, authentication, issuance and delivery of certificates for the Shares, including any stamp or transfer taxes in connection with the original issuance and sale of the Shares; (iv) the printing (or reproduction) and delivery of this Agreement, any blue sky memorandum and all other agreements or documents printed (or reproduced) and delivered in connection with the offering of the Shares; (v) the registration of the Shares under the Exchange Act and the listing of the Shares on The New York Stock Exchange; (vi) any registration or qualification of the Shares for offer and sale under the securities or blue sky laws of the several states (including filing fees and the reasonable and documented fees and expenses of counsel for the Agents relating to such registration and qualification); (vii) any filings required to be made with FINRA (including filing fees and the reasonable and documented fees and expenses of counsel for the Agents relating to such filings); (viii) the transportation and other expenses incurred by or on behalf of Company representatives in connection with presentations to prospective purchasers of the Shares; (ix) the fees and expenses of the Company’s accountants and the fees and expenses of counsel (including local and special counsel) for the Company; (x) the reasonable documented out-of-pocket expenses of the Agents, including the reasonable and documented fees, disbursements and expenses of counsel for the Agents in connection with
22
this Agreement and the Registration Statement which shall not exceed $75,000 in connection with the preparation of this Agreement and the commencement of the offering of the Shares plus an additional $10,000 per calendar quarter for ongoing services in connection with the transactions contemplated hereunder (which shall be one outside counsel for all Agents, taken together, unless otherwise agreed by the Company); and (xi) all other costs and expenses incident to the performance by the Company of its obligations hereunder.
6. Conditions to the Obligations of the Agents. The obligations of the Agents under this Agreement and any Terms Agreement shall be subject to (i) the accuracy of the representations and warranties on the part of the Company contained herein, as of the Execution Time, each Representation Date, and as of each Applicable Time, Settlement Date and Time of Delivery (other than those representations and warranties made as of a specific time), (ii) to the performance by the Company of its obligations hereunder and (iii) the following additional conditions:
(a) The Prospectus, and any supplement thereto, required by Rule 424 to be filed with the Commission have been filed in the manner and within the time period required by Rule 424(b) with respect to any sale of Shares; any other material required to be filed by the Company pursuant to Rule 433(d) under the Act, shall have been filed with the Commission within the applicable time periods prescribed for such filings by Rule 433; and no stop order suspending the effectiveness of the Registration Statement or any notice objecting to its use shall have been issued and no proceedings for that purpose shall have been instituted or threatened.
(b) The Company shall have requested and caused each Company Counsel, to furnish to the Agent, on every date specified in Section 4(l) of this Agreement, its opinion, dated as of such date and addressed to the Agents, in the form and substance reasonably satisfactory to the Agents, modified as necessary to relate to the Registration Statement and Prospectus as amended or supplemented.
(c) The Agents shall have received from Sales Agents’ Counsel, on every date specified in Section 4(m) of this Agreement, such opinion or opinions, dated as of such date and addressed to the Agents, with respect to the issuance and sale of the Shares, the Registration Statement, the Disclosure Package, the Prospectus (together with any supplement thereto) and other related matters as the Agents may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished or caused to be furnished to the Agents, on every date specified in Section 4(k) of this Agreement, a certificate of the Company, signed by the Chairman of the Board, the Chief Executive Officer or the President and the principal financial or accounting officer of the Company, dated as of such date, to the effect that the signers of such certificate have carefully examined the Registration Statement, the Disclosure Package and the Prospectus and any supplements or amendments thereto and this Agreement and that:
23
(i) the representations and warranties of the Company in this Agreement are true and correct on and as of such date (other than representations and warranties made as of a specific time), with the same effect as if made on such date and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to such date;
(ii) no stop order suspending the effectiveness of the Registration Statement or any notice objecting to its use has been issued and no proceedings for that purpose have been instituted or, to the Company’s knowledge, threatened; and
(iii) since the date of the most recent financial statements included or incorporated by reference into the Disclosure Package and the Prospectus, there has been no material adverse change on the condition (financial or otherwise), prospects, earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Disclosure Package and the Prospectus.
(e) The Company shall have requested and caused its independent registered public accounting firm (or other firm(s) satisfactory to the Agents) to have furnished to the Agents, on every date specified in Section 4(n) hereof, letters in form and substance satisfactory to the Agents, addressed to the Agents (i) confirming that they are independent public accountants within the meaning of the Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, and (ii) stating, as of the date of such letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the most recent Prospectus, as of a date not more than three days prior to the date of such letter), the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants’ “comfort letters” to underwriters in connection with registered public offerings.
(f) On the initial Representation Date, the Company shall have furnished or caused to be furnished to the Agents a certificate, signed on behalf of the Company by its corporate Secretary, in form and substance reasonably satisfactory to the Agents and their counsel.
(g) Since the respective dates as of which information is disclosed in the Registration Statement, the Disclosure Package and the Prospectus, except as otherwise stated therein, there shall not have been any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Disclosure Package (exclusive of any amendment or supplement thereto) the effect of which is, in the reasonable judgment of the Agents, so material and adverse as to make it impractical or inadvisable to proceed with the offering or delivery of the Shares as contemplated by the Registration Statement (exclusive of any amendment thereof), the Disclosure Package and the Prospectus (exclusive of any amendment or supplement thereto).
24
(h) Between the relevant Applicable Times through the applicable Settlement Date, there shall not have been any decrease in the rating of any of the Company’s debt securities by any “nationally recognized statistical rating organization” (as defined for purposes of Rule 436(g)) or any notice given of any intended or potential decrease in any such rating or of a possible change in any such rating that does not indicate the direction of the possible change.
(i) FINRA shall not have raised any objection with respect to the fairness and reasonableness of the terms and arrangements under this Agreement.
(j) The Shares shall have been listed and admitted and authorized for trading on The New York Stock Exchange, and satisfactory evidence of such actions shall have been provided to the Agents.
(k) Prior to each Settlement Date and Time of Delivery, as applicable, the Company shall have furnished to the Agents such further information, certificates and documents as the Agents may reasonably request.
If any of the conditions specified in this Section 6 shall not have been fulfilled when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance to any Agent and counsel for such Agent, this Agreement, as it relates to such Agent, and all obligations of such Agent hereunder may be canceled at, or at any time prior to, any Settlement Date or Time of Delivery, as applicable, by such Agent. Notice of such cancellation shall be given to the Company in writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be delivered at the office of Goodwin Procter LLP, counsel for the Agents, at The New York Times Building, 620 Eighth Avenue, New York, New York 10018, or at the address of such other Sales Agents’ Counsel, as applicable, on each such date as provided in this Agreement.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Agent, the directors, officers, employees, affiliates and agents of each Agent and each person who controls each Agent within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the
25
registration statement for the registration of the Shares as originally filed or in any amendment thereof, or in the Basic Prospectus, the Prospectus or any Issuer Free Writing Prospectus, or in any amendment thereof or supplement thereto or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by any Agent specifically for inclusion therein. This indemnity agreement will be in addition to any liability that the Company may otherwise have. The Company acknowledges that, except as may be agreed in writing between all the parties after the date of this Agreement, or by the Company with respect to such Agent, the only information furnished in writing by or on behalf of the Agents for inclusion in the Prospectus or any Issuer Free Writing Prospectus consists of the name of the Agents and the statement that such Agent will not engage in any transactions that stabilize the Common Stock under the caption “Plan of Distribution” in the Prospectus.
(b) Each Agent agrees, severally and not jointly, to indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Registration Statement, and each person who controls the Company within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company to such Agent, but only with reference to written information relating to such Agent furnished to the Company by such Agent specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which such Agent may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party’s choice at the indemnifying party’s expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party’s election to appoint counsel
26
to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent: (i) includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.
(d) In the event that the indemnity provided in paragraph (a), (b) or (c) of this Section 7 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company and the Agents agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending the same) (collectively “Losses”) to which the Company and the Agents may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and by the Agents on the other from the offering of the Shares. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Company and the Agents severally shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and of the Agents on the other in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses) received by it, and benefits received by the Agents shall be deemed to be equal to the total discounts and commissions, in each case as determined by this Agreement or any applicable Terms Agreement. Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the Company on the one hand or the Agents on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Agents agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other
27
method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), in no event shall an Agent be required to contribute any amount in excess of the amount by which the discount or commission, as the case may be, applicable to the Shares purchased by such Agent hereunder exceeds the amount of any damages that such Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person who controls an Agent within the meaning of either the Act or the Exchange Act and each director, officer, employee, affiliate and agent of such Agent shall have the same rights to contribution as such Agent, and each person who controls the Company within the meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d).
8. Termination.
(a) The Company shall have the right, by giving written notice as hereinafter specified, to terminate the provisions of this Agreement relating to the solicitation of offers to purchase the Shares in its sole discretion at any time. Any such termination shall be without liability of any party to any other party except that (i) if Shares have been sold through any Agent for the Company, then Section 4(s) shall remain in full force and effect, (ii) with respect to any pending sale, through such Agent for the Company, the obligations of the Company, including in respect of compensation of the Agents, shall remain in full force and effect notwithstanding the termination and (iii) the provisions of Sections 2, 5, 7, 9, 10, 12 and 14 of this Agreement shall remain in full force and effect notwithstanding such termination.
(b) Each Agent shall have the right, by giving written notice as hereinafter specified, to terminate its own obligations under the provisions of this Agreement relating to the solicitation of offers to purchase the Shares in its sole discretion at any time. Any such termination shall have no effect on the obligations of any other Agent under this Agreement and shall be without liability of any party to any other party except that the provisions of Sections 2, 5, 7, 9, 10, 12 and 14 of this Agreement shall remain in full force and effect with respect to such Agent notwithstanding such termination.
(c) This Agreement shall remain in full force and effect unless terminated pursuant to Section 8(a) by the Company or Section 8(b) by all of the Agents or otherwise by mutual agreement of the parties; provided that any such termination by mutual agreement shall in all cases be deemed to provide that Sections 2, 5, 7 and 9 shall remain in full force and effect.
(d) Unless earlier terminated pursuant to this Section 8, this Agreement shall automatically terminate upon the issuance and sale of all of the Shares through the Agents on the terms and subject to the conditions set forth herein; provided that any such termination by mutual agreement shall in all cases be deemed to provide that Sections 2, 5, 7 and 9 shall remain in full force and effect.
28
(e) Any termination of this Agreement shall be effective on the date specified in such notice of termination; provided that such termination shall not be effective until the close of business on the date of receipt of such notice by any Agent or the Company, as the case may be. If such termination shall occur prior to the Settlement Date or Time of Delivery for any sale of the Shares, such sale shall settle in accordance with the provisions of Section 3(a)(vii) of this Agreement.
(f) In the case of any purchase of Shares by any Agent pursuant to a Terms Agreement, the obligations of such Agent pursuant to such Terms Agreement shall be subject to termination, in the absolute discretion of such Agent, by notice given to the Company prior to the Time of Delivery relating to such Shares, if at any time prior to such delivery and payment (i) trading in the Company’s Common Stock shall have been suspended by the Commission or The New York Stock Exchange or trading in securities generally on The New York Stock Exchange shall have been suspended or limited or minimum prices shall have been established on such exchange, (ii) a banking moratorium shall have been declared either by Federal or New York State authorities or (iii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war, or other calamity or crisis the effect of which on financial markets is such as to make it, in the sole judgment of such Agent, impractical or inadvisable to proceed with the offering or delivery of the Shares as contemplated by the Prospectus (exclusive of any amendment or supplement thereto).
9. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Company or its officers and of each Agent set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by the Agents or the Company or any of the officers, directors, employees, affiliates, agents or controlling persons referred to in Section 7 hereof, and will survive delivery of and payment for the Shares.
10. Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to the Agents, will be mailed or delivered to Truist Securities, Inc., 3333 Peachtree Road NE, 11th Floor, Atlanta, Georgia 30326, Attention: Equity Capital Markets; and Citizens JMP Securities, LLC, 600 Montgomery Street, Suite 1100, San Francisco, California 94111, Attention: Equity Capital Markets, in each case with a copy to Goodwin Procter LLP, The New York Times Building, 620 Eighth Avenue, New York, New York 10018, Attention: Thomas S. Levato; or, if sent to the Company, will be mailed or delivered to 3802 Coconut Palm Drive, Tampa, Florida 33619, Attention: Chief Financial Officer, with a copy to Foley & Lardner LLP, 100 North Tampa St., Suite 2700, Tampa, Florida 33602, Attention: Curt P. Creely.
11. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers, directors, employees, agents and controlling persons referred to in Section 8 hereof, and no other person will have any right or obligation hereunder.
29
12. No Fiduciary Duty. The Company hereby acknowledges that (a) the purchase and sale of the Shares pursuant to this Agreement is an arm’s-length commercial transaction between the Company, on the one hand, and each Agent and any affiliate through which it may be acting, on the other, (b) each Agent is acting solely as sales agent and/or principal in connection with the purchase and sale of the Company’s securities and not as a fiduciary of the Company and (c) the Company’s engagement of each Agent in connection with the offering and the process leading up to the offering is as independent contractors and not in any other capacity. Furthermore, the Company agrees that it is solely responsible for making its own judgments in connection with the offering (irrespective of whether any Agent has advised or is currently advising the Company on related or other matters). The Company agrees that it will not claim that any Agent has rendered advisory services of any nature or respect, or owe an agency, fiduciary or similar duty to the Company, in connection with such transaction or the process leading thereto.
13. Integration. This Agreement and any Terms Agreement supersede all prior agreements and understandings (whether written or oral) between the Company and any Agent with respect to the subject matter hereof.
14. Applicable Law. This Agreement and any Terms Agreement will be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York.
15. Waiver of Jury Trial. The parties hereby irrevocably waive, 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 Agreement, any Terms Agreement or the transactions contemplated hereby or thereby.
16. Counterparts. This Agreement and any Terms Agreement may be signed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement.
17. Headings. The section headings used in this Agreement and any Terms Agreement are for convenience only and shall not affect the construction hereof.
18. Definitions. The terms that follow, when used in this Agreement and any Terms Agreement, shall have the meanings indicated.
“Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City.
“Disclosure Package” shall mean (i) the Basic Prospectus, (ii) the Prospectus, (iii) the Issuer Free Writing Prospectuses, if any, identified in Schedule I hereto, (iv) the public offering price of Shares sold at the relevant Applicable Time and (v) any other Free Writing Prospectus that the parties hereto shall hereafter expressly agree in writing to treat as part of the Disclosure Package.
30
“Effective Date” shall mean each date and time that the Registration Statement, any post-effective amendment or amendments thereto and any Rule 462(b) Registration Statement became or becomes effective.
“Execution Time” shall mean the date and time that this Agreement is executed and delivered by the parties hereto.
“Free Writing Prospectus” shall mean a free writing prospectus, as defined in Rule 405.
“Rule 153”, “Rule 158”, “Rule 164”, “Rule 172”, “Rule 401”, “Rule 405”, “Rule 415”, “Rule 424”, “Rule 430B”, “Rule 433”, “Rule 436”, “Rule 456”, “Rule 457” and “Rule 462” refer to such rules under the Act. “
31
If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Company and the Agents.
| Very truly yours, | ||
| HCI GROUP, INC. | ||
| By: | /s/ Paresh Patel | |
| Name: Paresh Patel | ||
| Title: Chief Executive Officer | ||
The foregoing Agreement is
hereby confirmed and accepted
as of the date first written above.
| TRUIST SECURITIES, INC. | ||
| By: | /s/ Keith Carpenter | |
| Name: Keith Carpenter | ||
| Title: Managing Director | ||
| CITIZENS JMP SECURITIES, LLC | ||
| By: | /s/ Jorge Solares-Parkhurst | |
| Name: Jorge Solares-Parkhurst | ||
| Title: Managing Director | ||
32
SCHEDULE I
Schedule of Free Writing Prospectuses included in the Disclosure Package
None
ANNEX I
[Form of Terms Agreement]
HCI GROUP, INC.
Common Stock
TERMS AGREEMENT
, 20
[NAME OF AGENT]
[ADDRESS OF AGENT]
Dear Sirs:
HCI Group, Inc. (the “Company”) proposes, subject to the terms and conditions stated herein and in the Equity Distribution Agreement, dated January 22, 2024 (the “Equity Distribution Agreement”), among the Company and Truist Securities, Inc. and Citizens JMP Securities, LLC, to issue and sell to [NAME OF AGENT] (the “Agent”) the securities specified in the Schedule I hereto (the “Purchased Shares”).
Each of the provisions of the Equity Distribution Agreement not specifically related to the solicitation by the Agent, as agent of the Company, of offers to purchase securities is incorporated herein by reference in its entirety, and shall be deemed to be part of this Terms Agreement to the same extent as if such provisions had been set forth in full herein. Each of the representations and warranties set forth therein (other than representations and warranties made as of a specific time) shall be deemed to have been made at and as of the date of this Terms Agreement and the Time of Delivery, except that each representation and warranty in Section 2 of the Equity Distribution Agreement which makes reference to the Prospectus (as therein defined) shall be deemed to be a representation and warranty as of the date of the Equity Distribution Agreement in relation to the Prospectus, and also a representation and warranty as of the date of this Terms Agreement and the Time of Delivery in relation to the Prospectus as amended and supplemented to relate to the Purchased Shares.
[An amendment to the Registration Statement (as defined in the Equity Distribution Agreement), or a supplement to the Prospectus, as the case may be, relating to the Purchased Shares, in the form heretofore delivered to the Agent is now proposed to be filed with the Securities and Exchange Commission.]
Subject to the terms and conditions set forth herein and in the Equity Distribution Agreement which are incorporated herein by reference, the Company agrees to issue and sell to the Agent and the latter agrees to purchase from the Company the number of shares of the Purchased Shares at the time and place and at the purchase price set forth in the Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign and return to us a counterpart hereof, whereupon this Terms Agreement, including those provisions of the Equity Distribution Agreement incorporated herein by reference, shall constitute a binding agreement between the Agent and the Company.
| HCI GROUP, INC. | ||
| By: |
| |
| Name: | ||
| Title: | ||
ACCEPTED as of the date
first written above.
| [NAME OF AGENT] | ||
| By: |
| |
| Name: | ||
| Title: | ||
Schedule I
to the Terms Agreement
Number of Shares of Purchased Shares:
Purchase Price by the Agent:
Method of and Specified Funds for Payment of Purchase Price:
By wire transfer to a bank account specified by the Company in same day funds.
Method of Delivery:
Free delivery of the Shares to the Agent’s account at The Depository Trust Company in return for payment of the purchase price.
Time of Delivery:
Closing Location:
Documents to be Delivered:
The following documents referred to in the Equity Distribution Agreement shall be delivered as a condition to the closing at the Time of Delivery:
| (1) | The opinions referred to in Section 4(l). |
| (2) | The opinion referred to in Section 4(m). |
| (3) | The accountants’ letter referred to in Section 4(n). |
| (4) | The officers’ certificate referred to in Section 4(k). |
| (5) | Such other documents as the Agent shall reasonably request. |
Exhibit 4.17
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR (IF REQUESTED BY THE COMPANY) TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY OR (II) RULE 144 PROMULGATED UNDER THE SECURITIES ACT.
AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT
HCI GROUP, INC.
| Warrant Shares: 750,000 | Date: January 22, 2024 |
THIS AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, CB Snowbird Holdings, L.P., a Delaware limited partnership, or its assigns (the “Holder”) is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase from HCI Group, Inc., a Florida corporation (the “Company”), up to, in the aggregate, 750,000 shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 3(b) below. The Company and the Holder each acknowledge and agree that this Warrant amends and restates in its entirety and replaces that certain Common Stock Purchase Warrant that was issued by the Company to the Holder on February 26, 2021 (the “Original Issue Date”), which is deemed cancelled as of the date hereof.
Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, no par value.
“Company Sale” means (i) a sale or transfer of 50% or more of the equity securities of the Company to transferees that are not Affiliates of the respective transferors and in which such transferors do not otherwise have an ownership interest, (ii) the sale or disposition of all or substantially all of the Company’s assets, or (iii) any merger, consolidation, or other business combination of the Company with an entity that is not an Affiliate of the Company.
“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.
“Fair Market Value” means, as of any particular date (i) the closing sales price of the Common Stock for such date on the Trading Market on which the Common Stock is at the time be listed, (ii) if there have been no sales of the Common Stock on such Trading Market on any such date, the average of the highest bid and lowest asked prices for the Common Stock on the Trading Market at the end of such date, (iii) if on any such day the Common Stock is not listed on a national securities exchange, the closing sales price of the Common Stock as quoted on the OTC for such date, (iv) if there have been no sales of the Common Stock on the OTC on such date, the average of the highest bid and lowest asked prices for the Common Stock quoted on the OTC at the end of such date or (v) if at any time the Common Stock is not listed on any domestic securities exchange or quoted on the OTC, the fair market value per share as determined in good faith by the Board of Directors; provided, with respect to clause (v) the Holder is entitled to object to the fair market value per share determined by the Board of Directors and require, at the Company’s sole expense, such determination to be made by a nationally recognized investment banking, accounting or valuation firm that is reasonably acceptable to the Board of Directors.
“OTC” means the Financial Industry Regulatory Authority OTC Bulletin Board electronic interdealer quotation system, the OTC Markets Group Inc. electronic interdealer quotation system, including OTCQX, OTCQB and OTC Pink, or any similar quotation system or association.
“Party” means either Company or Holder, as applicable.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Trading Day” means a day on which the Trading Market is open for trading.
“Trading Market” means the New York Stock Exchange or the market or exchange on which the Common Stock is listed or quoted for trading on the date in question.
“Transfer Agent” means the Company and any successor transfer agent of the Company.
“VWAP” means, for each of the 30 consecutive Trading Days preceding the date of testing, 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 “VWAP” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
Section 2. Term of Warrant. Subject to the terms and conditions hereof, the Holder of this Warrant may exercise this Warrant at any time on or after the date of this Warrant as set forth above (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on (i) the fourth (4th) anniversary of the Original Issue Date for all or any part of up to 300,000 Warrant Shares (the “First Termination Date”), (ii) December 31, 2026 for all or any part of up to 150,000 Warrant Shares (the “Second Termination Date”), (iii) December 31, 2027 for all or any part of up to 150,000 Warrant Shares (the “Third Termination Date”), and (iv) December 31, 2028 for all or any part of up to the remaining 150,000 Warrant Shares (the “Fourth Termination Date” and, collectively with the First Termination Date, the Second Termination Date and the Third Termination Date, the “Termination Dates”), in each case unless earlier terminated as provided herein, but not thereafter. For the avoidance of doubt, after (1) the First Termination Date, this Warrant is exercisable in full or part for no more than 450,000 possibly remaining Warrant Shares, (2) the Second Termination Date, this Warrant is exercisable in full or part for no more than 300,000 possibly remaining Warrant Shares, and (3) the Third Termination Date, this Warrant is exercisable in full or part for no more than 150,000 possibly remaining Warrant Shares, in each case, subject to the terms and conditions of this Warrant.
-2-
Section 3. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the applicable Termination Date by delivery to the Company of a duly executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 3(c)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer of immediately available funds or cashier’s check drawn on a United States bank. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder, including partial exercises resulting from any automatic exercise on a Termination Date pursuant to Section 3(c)(vii) hereof, shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $54.40 per share, subject to adjustment hereunder (the “Exercise Price”). The Exercise Price shall be payable, at the Holder’s election set forth in the Notice of Exercise, by (i) a cash payment to the Company of the Exercise Price by wire transfer of immediately available funds to an account designated in writing by the Company or (ii) an election to receive upon such exercise the “net number” of shares of Common Stock, where the Company will withhold a number of Warrant Shares (subject to Section 3(c)(v) hereof) then issuable upon exercise of this Warrant with an aggregate Fair Market Value as of the date of the Notice of Exercise equal to such Exercise Price (a “Cashless Exercise”).
c) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price is received within the earlier of (i) two (2) Trading Days after delivery to the Company of the Notice of Exercise and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
-3-
ii. Delivery of New Warrant Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant at any time prior to the expiration of the Warrant, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to transmit to the Holder the Warrant Shares pursuant to Section 3(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Conditional Exercise. Notwithstanding the foregoing, if an exercise of any portion of this Warrant is to be made in connection with a Company Sale, such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case the Warrant Share Delivery Date shall be the date of such consummation and such exercise shall not be deemed to be effective until immediately prior to such consummation on the Warrant Share Delivery Date.
v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Automatic Exercises upon Termination Dates. If, at any Termination Date under this Warrant, the Holder has remaining Warrant Shares subject to this Warrant expiring at such Termination Date (excluding Warrant Shares that the Holder has delivered a duly executed Notice of Exercise pursuant to Section 3(a) hereof), then such Warrant Shares shall be automatically deemed to be irrevocably exercised pursuant to a Cashless Exercise by the Holder immediately prior to the applicable Termination Date.
-4-
Section 4. Certain Adjustments.
a) Adjustments.
i. Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 4(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
ii. Issuance of Rights, Options or Warrants. If the Company issues to all of the record holders of its Common Stock any rights, options or warrants entitling them, to subscribe for or purchase shares of the Common Stock (the “Purchase Rights”) at a price per share that is less than the average of the Fair Market Value 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, then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder would have received if the Holder had held the number of shares of Common Stock that would have been issuable to the Holder upon complete exercise of this Warrant (assuming payment of the Exercise Price in cash) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
iii. Distribution Transactions. 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 holders of record of the Common Stock, excluding (a) dividends, distributions or issuances as to which an adjustment was effected pursuant to Section 4(a)(i) or Section 4(a)(ii), (b) dividends or distributions paid exclusively in cash, (c) distributions in a transaction described in Section 4(b); and (d) Spin-Offs as to which the provisions set forth below in this Section 4(a)(iii) 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 Exercise Price shall be decreased based on the following formula:
EP1 = EP0 x ((SPo - FMV) ÷ SP0)
where,
“EP0” means the Exercise Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;
“EP1” means the Exercise Price in effect immediately after the open of business on such Ex-Dividend Date;
“SP0” means the average Fair Market Value 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
-5-
“FMV” means 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 decrease made under the portion of this Section 4(a)(iii) 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, the Holder of this Warrant shall receive 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 had exercised this Warrant in full prior the distribution. If the Board of Directors determines the “FMV” (as defined above) of any distribution for purposes of this Section 4(a)(iii) 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 Fair Market Value 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 Exercise Price pursuant to the foregoing in this Section 4(a)(iii) until the earliest of these triggering events occurs, and the Company will readjust the Exercise Price to the extent any of these rights, options or warrants are not exercised before they expire; 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 4(a)(iii) 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 Exercise Price shall be decreased based on the following formula:
EP1 = EP0 x (MP0 ÷ (FMV + MPo))
where,
“EP0” means the Exercise Price in effect immediately prior to the close of business on the Effective Date of the Spin-Off;
“EP1” means the Exercise Price in effect immediately after the close of business on the Effective Date of the Spin-Off;
“FMV” means the average Fair Market Value 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 Fair Market Value 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” means the average Fair Market Value of the Common Stock over the Valuation Period.
-6-
The adjustment to the Exercise Price under the preceding paragraph will be calculated as of the open of business on the last Trading Day of the Valuation Period, but shall be given effect as of the close of business on the Effective Date of the Spin-Off. If the Warrant Share Delivery Date occurs during the related Valuation Period, the Company will pay or deliver, as the case may be, the cash, shares of its Common Stock or a combination of cash and shares of its Common Stock, if any, on the third Business Day immediately following the last day of the Valuation Period, and 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 last Trading Day of the Valuation Period. If any distribution of the type described in this Section 4(a)(iii) is declared but not so made, the conversion rate shall be immediately readjusted, effective as of the date the Board of Directors or a committee thereof determines not to make such distribution, to the conversion rate that would then be in effect if such distribution had not been declared.
iv. Cash Dividends. If any cash dividend or distribution is made to all holders of record of the Common Stock during any fiscal quarter in an aggregate amount that, together with all other cash dividends or distributions made during such fiscal quarter, exceeds $0.40 per share of Common Stock (appropriately adjusted from time to time for any share dividends or combinations or subdivisions of the Common Stock) (the “Reference Dividend”), the Exercise Price shall be adjusted based on the following formula:
EP1 = EP0 x ((SP0 - C) ÷ SP0)
where,
“EP0” means the Exercise Price in effect immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution;
“EP1” means the Exercise Price in effect immediately after the open of business on such Ex-Dividend Date;
“SP0” means the average Fair Market Value 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 dividend or distribution; and
“C” means the amount in cash per share the Company distributes to all or substantially all holders of its Common Stock that exceeds the Reference Dividend.
Any increase pursuant to this Section 4(a)(iv) 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 Exercise Price shall be increased, effective as of the date the Board of Directors determines not to make or pay such dividend or distribution, to be the Exercise Price 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, the Holder of this Warrant shall receive, 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 had exercised this Warrant in full prior the dividend or distribution.
Notwithstanding the foregoing, ten (10) Business Days following the receipt by the Holder of this Warrant of written notice from the Company that the VWAP of the Common Stock has exceeded $110.00 per share (subject to adjustment for stock splits, stock dividends, reverse stock splits, and the like) for ten (10) consecutive Trading Days, the Holder shall no longer be entitled to any further adjustment pursuant to this paragraph (iv).
-7-
b) Fundamental Transaction. If, at any time while this Warrant is outstanding (except in connection with a Sale Notice, as described below), (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Notwithstanding the foregoing, in the event that the Company elects to provide the Holder with a Sale Notice for a proposed Company Sale that would otherwise be considered a Fundamental Transaction, as described below in Section 4(d)(iii), this Section 4(b) shall not apply to such proposed Company Sale.
-8-
c) Calculations. All calculations under this Section 4 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 4, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
d) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 4, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock (other than a regular dividend that is publicly announced in advance), (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant Register of the Company, at least ten (10) calendar days prior to the applicable record or effective date hereinafter specified, a notice (unless such information is filed with the Commission, in which case a notice shall not be required) stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
iii. Sale Notice. Notwithstanding anything to the contrary set forth in this Warrant, in the event of a proposed Company Sale, the Company may elect to give written notice to the Holder of the proposed Company Sale (a “Sale Notice”). If provided, the Sale Notice will include the latest draft of the proposed definitive purchase agreement or merger agreement relating to the Company Sale unless the Company is contractually prohibited from providing a copy of such draft, in which case the Sale Notice will include a description of the material terms of the proposed Company Sale in reasonable detail. The Sale Notice, if elected to be provided by the Company, shall be provided no less than fifteen (15) Business Days prior to the anticipated closing date of the Company Sale. In the event that the Company does not receive a Notice of Exercise within fifteen (15) Business Days after delivering the Sale Notice, then, if the Holder has remaining Warrant Shares subject to this Warrant (excluding Warrant Shares that the Holder has delivered a duly executed Notice of Exercise pursuant to Section 3(a) hereof), such Warrant Shares shall be automatically deemed to be irrevocably exercised pursuant to a Cashless Exercise by the Holder immediately prior to the closing date of the Company Sale. For avoidance of doubt, Section 4(b) shall not apply in the event of Sale Notice with respect to a Company Sale that would otherwise be considered a Fundamental Transaction.
-9-
Section 5. Transfer of Warrant.
a) Transferability. Subject to the terms and conditions of the Registration Rights Agreement between the Holder and the Company, dated as of the date hereof, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Notwithstanding anything to the contrary contained herein, this Warrant and the Warrant Shares shall not be sold or transferred unless either (i) they first shall have been registered under the Securities Act, or (ii) such sale or transfer shall be exempt from the registration requirements of the Securities Act. Any certificate that may be issued representing Warrant Shares shall bear a restrictive legend regarding no registration under the Securities Act.
b) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 6. Miscellaneous.
a) No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 3(c)(i).
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
-10-
Except and to the extent waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each Party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a Party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each Party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either Party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing Party in such action, suit or proceeding shall be reimbursed by the other Party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. Notwithstanding the foregoing, nothing in this paragraph shall limit or restrict the federal district court in which a Holder may bring a claim under the federal securities laws.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
-11-
h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally or e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 3802 Coconut Palm Drive, Tampa, Florida 33619, Attention: Andrew J. Graham, General Counsel, email address: [***], or such other email address or address as the Company may specify for such purposes by notice to the Holder. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the Party to whom such notice is required to be given.
i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
-12-
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| HCI GROUP, INC. (“Company”) | ||
| By: |
/s/ Paresh Patel | |
| Name: Paresh Patel | ||
| Title: Chief Executive Officer | ||
| Agreed to and accepted as of the date first above indicated: | ||||
| CB SNOWBIRD HOLDINGS, L.P. (“Holder”) | ||||
| By: | CSCP III Cayman GP Ltd., its general partner | |||
| By: /s/ Gavin Baiera | ||||
| Name: Gavin Baiera | ||||
| Title: Authorized Signatory | ||||
NOTICE OF EXERCISE
TO: HCI GROUP, INC.
(1) The undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and [tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any][surrenders Warrant Shares with an Exercise Price of $ , representing the full purchase price for such Warrant Shares at the exercise price per Warrant Shares provided for in such Warrant, together with all applicable transfer taxes, if any].
(2) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
[(3) Pursuant to Section 3(c)(iv) of the Warrant, the foregoing exercise and purchase is conditioned on _________.]
The undersigned hereby represents and warrants as follows:
(a) the undersigned is acquiring such shares of Common Stock for its own account for investment and not for resale or with a view to distribution thereof in violation of the Securities Act of 1933, as amended, and the regulations promulgated thereunder (the “Securities Act”); and
(b) (i) the undersigned is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act and was not organized for the purposes of acquiring the Warrant or such shares of Common Stock or (ii) the undersigned is not a US Person as defined in Regulation S under the Securities Act, and the Warrant is not being exercised on behalf of a US Person. The undersigned’s financial condition is such that it is able to bear the risk of holding such securities for an indefinite period of time and the risk of loss of its entire investment. The undersigned has sufficient knowledge and experience in investing in companies similar to the Company so as to be able to evaluate the risks and merits of investment in the Company.
[SIGNATURE OF HOLDER]
| Name of Investing Entity: |
| Signature of Authorized Signatory of Investing Entity: |
| Name of Authorized Signatory: |
| Title of Authorized Signatory: |
| Date: |
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: |
||
| (Please Print) | ||
| Address: |
||
| (Please Print) | ||
| Phone Number: |
||
| Email Address: |
||
The undersigned hereby agrees that it will not sell, assign or transfer the right, title and interest in and to the Warrant unless applicable federal and state securities laws have been complied with.
Dated: ,
Holder’s Signature:
Holder’s Address:
Exhibit 4.18
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), is made as of January 22, 2024, by and among HCI Group, Inc., a Florida corporation (the “Company”) and CB Snowbird Holdings, L.P., a Delaware limited partnership, who is referred to in this Agreement as a “Holder”.
RECITALS
WHEREAS, This Agreement is made pursuant to that certain Redemption Agreement, dated as the date hereof between the Company, TypTap Insurance Group, Inc., a Florida corporation, and the Holder (the “Redemption Agreement”);
WHEREAS, the Holder and the Company hereby agree that this Agreement shall govern the rights of the Holder to cause the Company to register Registrable Securities (as defined below) held or issuable to the Holder as set forth in this Agreement;
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement:
1.1 “Adverse Disclosure” means public disclosure of material non-public information that, in the Board of Directors’ good faith judgment, after consultation with independent outside counsel to the Company, (a) would be required to be made in any Registration Statement or report filed with the SEC by the Company so that such Registration Statement from and after its effective date, does not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (b) would not be required to be made at such time but for the filing, effectiveness or continued use of such Registration Statement or report; and (c) would have a material adverse effect on the Company or its business or on the Company’s ability to effect a material proposed acquisition, disposition, financing, reorganization, recapitalization or similar transaction.
1.2 “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including, without limitation, any general partner, managing member, manager, officer or director of such Person or any venture capital or private equity fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.
1.3 “Board of Directors” means the board of directors of the Company.
1.4 “Business Day” means any day of the year on which national banking institutions in Tampa, Florida are open to the public for conducting business and are not required or authorized to close.
1.5 “Common Stock” means the common stock, no par value per share, of the Company.
1.6 “Closing” has the meaning set forth in the Redemption Agreement.
1.7 “Damages” means any loss, damage, claim, liability (joint or several) or expenses (including with respect to actions or proceedings, whether commenced or threatened, and including reasonable and documented attorney fees and expenses) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, claim or liability (or any action in respect thereof) arises out of or is based upon: (a) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement of the Company, including any preliminary Prospectus or final Prospectus contained therein or any amendments or supplements thereto, including any Free-Writing Prospectus; (b) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (c) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.
1.8 “Demand Notice” has the meaning given to such term in Section 2.2(a).
1.9 “Demand Suspension” has the meaning given to such term in Section 2.2(e).
1.10 “Excluded Registration” means (a) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan; (b) a registration relating to a transaction under Rule 145 of the Securities Act; (c) a registration in connection with registrations on Form S-4 or S-8 promulgated by the SEC (or any similar forms) or (d) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.
1.11 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
1.12 “Form S-1” means such form under the Securities Act as in effect on the date hereof, Form F-1 or any successor registration form thereto under the Securities Act subsequently adopted by the SEC.
1.13 “Form S-3” means such form under the Securities Act as in effect on the date hereof, Form F-3 or any registration form thereto under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.
1.14 “Free Writing Prospectus” shall mean any “free writing prospectus” as defined in Rule 405 promulgated under the Securities Act.
1.15 “Holder” has the meaning given to such term in the preamble.
1.16 “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of a natural person referred to herein.
1.17 “Initiating Holder” means any of the Holders, after properly initiating a registration request under this Agreement.
1.18 “Notice” has the meaning given to such term in Section 3.4.
1.19 “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.
1.20 “Prospectus” means the prospectus included in any Registration Statement, all amendments and supplements to such prospectus, including pre- and post-effective amendments to such Registration Statement, and all other material incorporated by reference in such prospectus.
1.21 “Redemption Agreement” has the meaning given to such term in the preamble.
1.22 “Registrable Securities” means (a) the Warrant owned by the Holder; (b) any Common Stock held by the Holder that may be issued or distributed or be issuable in respect of the Warrant by way of exercise, conversion, dividend, stock split or other distribution, merger, consolidation, exchange, recapitalization or reclassification or similar transaction, including the Warrant Shares; (c) any Common Stock issued as a distribution with respect to, or in exchange for or in replacement of the Warrant or Warrant Shares; and (d) any Common Stock issued or transferred in exchange for or upon conversion of the Warrant or Warrant Shares as a result of a merger, consolidation, reorganization or otherwise (including, without limitation, any securities issued upon the conversion of the Company to a successor corporation) and any other securities issued to any Holder in connection with any such transaction; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Section 3.1, and excluding for purposes of Section 2 the Warrant, Warrant Shares or Common Stock for which registration rights have terminated pursuant to Section 2.10 of this Agreement.
1.23 “Registration Statement” means any registration statement of the Company filed with, or to be filed with, the SEC under the rules and regulations promulgated under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.
1.24 “SEC” means the Securities and Exchange Commission.
1.25 “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.
1.26 “SEC Rule 415” means Rule 415 promulgated by the SEC under the Securities Act.
1.27 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
1.28 “Underwritten Offering” means a sale of securities of the Company to an underwriter or underwriters for reoffering to the public.
1.29 “Warrant” means the amended and restated common stock purchase warrant issued by the Company to the Holder, dated as of January 22, 2024.
1.30 “Warrant Shares” means the shares of Common Stock issuable by the Company upon exercise of the Warrant.
1.31 “WKSI” means a “well known seasoned issuer” as defined in Rule 405 promulgated under the Securities Act.
2. Registration Rights. The Company covenants and agrees as follows:
2.1 Initial Registration. Within 9 days after the Closing, the Company shall file a Registration Statement on Form S-3 under the Securities Act (or Form S-1, if the Company is not eligible to use Form S-3) covering the resale of Registrable Securities consisting of the Warrant and the Warrant Shares and use its commercially reasonable best efforts to have such Registration Statement declared effective as soon as practicable after the filing thereof. The Company shall keep current a Registration Statement covering the resale of Registrable Securities for the term of this Agreement pursuant to Section 2.10 of this Agreement. In the event the Company files a Registration Statement on Form S-1, the Company shall use its commercially reasonable best efforts to convert it to a Registration Statement on Form S-3 as soon as reasonably practicable after the Company is eligible to use Form S-3.
2.2 Demand Registration.
(a) Requests for Registration. If at any time after the effectiveness of the Registration Statement filed by the Company pursuant to Section 2.1, the Company receives a request from the Initiating Holder that the Company file a Registration Statement on Form S-3 under the Securities Act (or Form S-1, if the Company is not eligible to use Form S-3) with respect to the resale of Registrable Securities not included in the Registration Statement filed pursuant to Section 2.1 having an anticipated aggregate offering price in excess of $20 million, then the Company shall (1) within 10 days after the date such request is given, give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holder; and (2) as soon as practicable, and in any event within 60 days after the date such request is given by the Initiating Holder, file a Registration Statement on Form S-3 under the Securities Act (or Form S-1, if the Company is not eligible to use Form S-3) covering the resale of such Registrable Securities that the Initiating Holder requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders (but subject to the limits set forth herein) for an offering to be made on a continuous basis pursuant to SEC Rule 415, as specified by notice given by each such Holder to the Company within 10 days of the date the Demand Notice is given, and in each case, subject to the limitations set forth in Section 2.2.
(b) Shelf Registrations. If at any time after the effectiveness of the Registration Statement filed by the Company pursuant to Section 2.1 and when it is eligible to use Form S-3, the Company receives a request from the Initiating Holder that the Company file a Registration Statement, including a shelf registration statement (and if at such time the Company is a WKSI, an automatic shelf registration statement) on Form S-3 with respect to outstanding Registrable Securities of the Initiating Holder that are not already included in the Registration Statement filed by the Company pursuant to Section 2.1, then the Company shall (1) within 10 days after the date such request is given, give a Demand Notice to all Holders except the Initiating Holder; and (2) as soon as practicable, and in any event within 30 days after the date such request is given by the Initiating Holder, file a Registration Statement on Form S-3 under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within 10 days of the date the Demand Notice is given, and in each case, subject to the limitations of Section 2.2 and Section 2.4.
(c) At any time, and from time-to-time, during the period during which a shelf registration statement is effective (except during a Demand Suspension, as defined below), the Initiating Holder may notify the Company in writing (the “Takedown Request”), of the intent to sell Registrable Securities covered by the Registration Statement (in whole or in part) in an offering (a “Shelf Offering”). Such Takedown Request shall specify the aggregate number of Registrable Securities requested to be registered in such Shelf Offering. Within four Business Days after receipt by the Company of such Takedown Request, the Company shall deliver a written notice (a “Takedown Notice”) to each other Holder informing each such other Holder of its right to include Registrable Securities in such Shelf Offering. As soon as reasonably practicable and in any event no later than five Business Days after receipt of a Takedown Notice, each such other Holder shall have the right to request in writing that the Company include all or a specific portion of the Registrable Securities held by such other Holder in such Shelf Offering and the Company shall include such Registrable Securities in such Shelf Offering. If the Initiating Holder desires to engage in a “bought deal,” a “registered direct offering” or an “overnight transaction” where no preliminary prospectus is used, the Initiating Holder may notify the Company of the Takedown Request not less than two Business Days prior to the day such offering is first anticipated to commence; notwithstanding anything to the contrary in this Section 2.1(c), no Holder (other than the Initiating Holder) will be permitted to participate in a bought trade without the written consent of the Initiating Holder.
(d) Notwithstanding anything to the contrary in this Agreement, (i) if the SEC or any SEC guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement, the number of Registrable Securities to be registered on such Registration Statement will be reduced to the extent applicable (which reduction shall be pro rata among all such selling shareholders whose securities are included in such Registration Statement); and (ii) in no event shall the Company be permitted to name any Holder or such Holder’s Affiliate as an underwriter without the prior written consent of such Holder.
(e) Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a Registration Statement or Takedown Request pursuant to this Section 2.2 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Board of Directors it would be materially detrimental to the Company and its stockholders for such Registration Statement, including any shelf registration statement, to either become
effective or remain effective for as long as such Registration Statement otherwise would be required to remain effective, or for the Prospectus Supplement, related to the Registration Statement to be filed pursuant to the Takedown Request, to be filed because such action would: (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require the Company to make an Adverse Disclosure; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act (a “Demand Suspension”), then the Company shall have the right to defer taking action with respect to such filing or notify the Holders to suspend the use of the Registration Statement that has already been declared effective, as applicable, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than 60 days during any calendar year; provided, however, that the Company may not invoke this right more than once in any 12-month period, and at least 30 days must elapse between each Demand Suspension. If a Demand Suspension is made because the Registration Statement or Takedown Request would require the Company to make an Adverse Disclosure, such Demand Suspension shall terminate at such time as the public disclosure of such information is made. The Company shall immediately notify the Holders upon the termination of any Demand Suspension, without any further request from a Holder.
(f) The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.2: (i) during the period that is 60 days before the Company’s good faith estimate of the date of filing of, and ending on a date that is 90 days after the effective date of, a Company-initiated registration; provided that the Company complies with the provisions of Section 2.3 hereof and is actively employing in good faith commercially reasonable efforts to cause such Registration Statement to become effective and may only exercise this right once in any 12-month period; or (ii) after the Company has effected up to two registrations requested by the Initiating Holder pursuant to Section 2.2(a); provided that the Holders may only effect one registration pursuant to Section 2.2(a) in any 12-month period. A registration shall not be counted as “effected” for purposes of Section 2.2 until such time as the applicable Registration Statement has been declared effective by the SEC and, in the case of a registration pursuant to Section 2.2(a), remains effective until all Registrable Securities covered by such Registration Statement have been sold or withdrawn.
(g) Any Holders that have requested its Registrable Securities be included in any registration pursuant to Section 2.2 may withdraw all or any portion of its Registrable Securities from such registration at any time prior to the effectiveness of the applicable Registration Statement. The Company shall continue all efforts to secure effectiveness of the applicable Registration Statement in respect of the Registrable Securities of any other Holder that has requested inclusion in the demand registration pursuant to Section 2.2 so long as the Initiating Holder has requested and not withdrawn all of his Registrable Securities to be included in such registration; provided, however, if the Initiating Holder has requested for all of his Registrable Securities to be withdrawn from such registration, the Company shall immediately cease all efforts to secure effectiveness of the applicable Registration Statement, even if one or more other Holders have requested for Registrable Securities to be included in such applicable Registration Statement pursuant to Section 2.2, and such withdrawn registration shall not count towards the limitation on registrations set forth in Section 2.2(e) so long as the applicable Registration Statement has not been filed or submitted to the SEC.
(h) In the event any Holder requests to participate in a registration pursuant to this Section 2.2 in connection with a distribution of Registrable Securities to its partners or members, the registration shall provide for resale by such partners or members, if requested by the Holder.
(i) For purposes of this Section 2.2, the Company shall use commercially reasonable efforts to qualify for registration on Form S-3 for secondary sales and, during such time as the Company is so qualified, shall effect any registration of secondary sales on Form S-3 after such qualification.
(j) For avoidance of doubt, nothing in the Agreement provides any Holder with the right to demand a Registration Statement under Section 2.2 involving an Underwritten Offering.
2.3 Company Offering.
(a) If the Company proposes to offer (including, for this purpose, a registration effected by the Company for its stockholders other than the Holders) any of its securities under the Securities Act in connection with the public offering of such securities (including a “bought deal” or a “registered direct offering”) solely for cash (other than in an Excluded Registration or an “at-the market offering”), the Company shall, at such time, promptly give each Holder notice of such offering (a “Company Offering”). Such notice shall specify, as applicable, the amount of Common Stock to be registered, the proposed filing date of the registration statement or applicable prospectus supplement and the proposed minimum offering price of the Common Stock, in each case, to the extent then known. In the case of an offering under a shelf registration statement previously filed or to be filed by the Company pursuant to Rule 415 under the Securities Act, including where the Company qualifies as a WKSI, such notice shall be sent as promptly as reasonably practicable and in any event no later than 10 days prior to the expected date of filing of such registration statement or commencement of marketing efforts for such offering (and no later than five days prior in the case of a “bought deal,” a “registered direct offering” or an “overnight transaction” where no preliminary prospectus is used). In the case of a Company Offering under a registration statement to be filed that is not a shelf registration statement, such notice shall be given as promptly as reasonably practicable and, in any event, no later than 10 days prior to the expected date of filing of such registration statement. Upon the written request of each Holder given within five Business Days after such notice is given by the Company (except that each Holder shall have two Business Days after the Company gives such notice to request inclusion of Registrable Securities in the Company Offering in the case of a “bought deal,” a “registered direct offering” or an “overnight transaction” where no preliminary prospectus is used), the Company shall, subject to the provisions of Section 2.4, as promptly as reasonably practicable cause to be registered or include in the prospectus supplement, as applicable, all of the Registrable Securities that each such Holder has requested to be included in such registration. The Company shall have the right to terminate or withdraw any offering initiated by it under this Section 2.3 before the effective date of such offering, whether or not any Holder has elected to include Registrable Securities in such offering. The expenses of such withdrawn offering shall be borne by the Company in accordance with Section 2.6.
(b) No offering of Registrable Securities effected pursuant to a request under this Section 2.3 shall be deemed to have been effected pursuant to Section 2.2 or shall relieve the Company of its obligations under Section 2.2.
(c) If a Company Offering is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company will include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration by any Holder which, in the opinion of such underwriters, can be sold, without any such adverse effect, pro rata among such Holders on the basis of the number of Registrable Securities owned by each such Holder and (iii) third, other securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect.
(d) If a Company Offering is an underwritten secondary registration on behalf of holders of the Company’s equity securities, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company will include in such registration (i) first, the securities requested to be included therein by the holders initially requesting such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, (ii) second, the Registrable Securities requested to be included in such registration by any other Holder which, in the opinion of such underwriters, can be sold, without any such adverse effect, pro rata among such Holders on the basis of the number of Registrable Securities owned by each such Holder and (iii) third, other securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect.
(e) Each Holder shall be permitted to withdraw all or part of its Registrable Securities in an offering under this Section 2.3 by giving written notice to the Company of its request to withdraw; provided that (i) such request must be made in writing prior to the effectiveness of such Registration Statement or, in the case of a public offering, at least five Business Days prior to the earlier of the anticipated filing of the “red herring” Prospectus, if applicable, and the anticipated pricing or trade date; and (ii) such withdrawal shall be irrevocable and, after making such withdrawal, the Holder shall no longer have any right to include Registrable Securities in such offering as to which such withdrawal was made.
(f) The parties agree that the rights contained in this Section 2.3 shall expire on the earlier of (i) June 26, 2025 and (ii) the termination of this Agreement pursuant to Section 2.10 hereof.
2.4 Obligations of the Company. Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall in a commercially reasonable manner:
(a) prepare and file a Registration Statement with respect to such Registrable Securities and use commercially reasonable efforts to cause such Registration Statement to become effective, and, to keep such Registration Statement effective for the term of this Agreement pursuant to Section 2.10 of this Agreement or, if earlier, until the distribution contemplated in the Registration Statement has been completed, provided, however, that, subject to the terms and conditions contained herein, in the case of an automatic Registration Statement on Form S-3, where the Company shall use commercially reasonable efforts to keep such Registration Statement effective for three years from the date of effectiveness, if the automatic shelf registration Statement has been outstanding for at least three years, at the end of the third year, refile a new automatic shelf Registration Statement covering the Registrable Securities, and, if at any time when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI, use its commercially reasonable efforts to refile a Registration Statement on Form S-3 and, if such form is not available, Form S-1 and keep such registration statement effective during the period during which such registration statement is required to be kept effective;
(b) (i) prepare and file with the SEC such amendments, including post-effective amendments, and supplements to such Registration Statement, and the Prospectus used in connection with such Registration Statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such Registration Statement through the applicable periods during which the Company is obligated to maintain the effectiveness of such Registration Statement; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424 promulgated by the SEC under the Securities Act; and (iii) respond to any comments received from the SEC with respect to each Registration Statement or any amendment thereto;
(c) that, to the extent practicable, at least five Business Days prior to filing any registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to the holders of the Registrable Securities covered by such registration statement and their counsel, copies of all such documents proposed to be filed;
(d) furnish to the selling Holders such numbers of copies (which, for the avoidance of doubt, may be electronic copies) of the signed Registration Statement, any post-effective amendment thereto, a Prospectus, including a preliminary Prospectus, as required by the Securities Act, any amendments or supplements thereto, any Free Writing Prospectus, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;
(e) use its commercially reasonable efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any selling Holder reasonably requests; provided that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph or (B) consent to general service of process in any such jurisdiction or (C) subject itself to taxation in any such jurisdiction;
(f) if the Company is eligible under the relevant provisions of Rule 430B under the Securities Act, if the Company files any shelf Registration Statement, include in such shelf Registration Statement such disclosures as may be required by Rule 430B under the Securities Act (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Holders) in order to ensure that the Holders may be added to such shelf Registration Statement at a later time through the filing of a Prospectus supplement rather than a post-effective amendment;
(g) use commercially reasonable efforts to cause all such Registrable Securities (that are shares of Common Stock) covered by such Registration Statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;
(h) notify each selling Holder, promptly after the Company receives notice thereof, of the time when such Registration Statement has been declared effective or a supplement to any Prospectus forming a part of such Registration Statement has been filed;
(i) after such Registration Statement becomes effective, promptly notify each selling Holder of any (i) request by the SEC that the Company amend or supplement such Registration Statement or Prospectus; or (ii) stop order or other order suspending the effectiveness of any registration statement, issued or threatened in writing by the SEC in connection therewith, and use commercially reasonable efforts to prevent the entry of such stop order or to remove it or obtain withdrawal of it as soon as practicable if entered;
(j) take no direct or indirect action prohibited by Regulation M under the Exchange Act; provided, however, that to the extent that any prohibition is applicable to the Company, the Company will take such reasonable action as is necessary to make any such prohibition inapplicable;
(k) (xxiii) if the Company does not pay the filing fee covering the Registrable Securities at the time a Registration Statement is filed, pay such fee at such time or times as the Registrable Securities are to be sold; and
(l) promptly notify each seller of Registrable Securities covered by such registration, upon discovery by an executive officer of the Company that the prospectus included in such registration, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly thereafter prepare and file with the SEC and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers or prospective purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they are made.
2.5 Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.
2.6 Expenses of Registration. All expenses incurred in connection with registrations pursuant to Section 2 shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.2 if the registration request is subsequently withdrawn at the request of the Initiating Holder (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration); provided further, that if, at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information then the Holders shall not be required to pay any of such expenses.
2.7 Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.
2.8 Indemnification. If any Registrable Securities are included in a Registration Statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify, defend, and hold harmless each selling Holder, and the partners, members, officers, directors, and stockholders of each such Holder; one legal counsel and one accountant for the Holders, and each Person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld, conditioned, or delayed), nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, controlling Person, or other aforementioned Person expressly for use in connection with such registration.
(b) To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify, defend, and hold harmless the Company, and each of its directors, each of its officers who has signed the Registration Statement, each Person (if any) who controls the Company within the meaning of the Securities Act, and legal counsel and accountants for the Company, any other Holder selling securities in such Registration Statement, and any controlling Person of any such Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in
connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld, conditioned, or delayed); and provided, further, that in no event shall the aggregate amounts payable by such Holder by way of indemnity or contribution under Section 2.8(b) and Section 2.8(d) exceed the proceeds from the offering received by such Holder, except in the case of fraud or willful misconduct by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the indemnified party under this Section 2.8 except to the extent that such failure actually and materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8.
(d) To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either: (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such case; or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such Registration Statement; and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided, further, that in no event shall any Holder’s liability pursuant to this Section 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Section 2.8(b), exceed the proceeds from the offering received by such Holder, except in the case of willful misconduct or fraud by such Holder.
(e) The obligations of the Company and Holders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.
2.9 Reports Under Exchange Act. With a view to making available to the Holder the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:
(a) make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144;
(b) use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and
(c) furnish to the Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act, and the Exchange Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies); and (ii) such other information as may be reasonably requested in availing the Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to Form S-3 (at any time after the Company so qualifies to use such form).
2.10 Termination of Registration Rights. The right of any Holder to request registration or inclusion of Registrable Securities in any registration shall terminate at the earliest to occur of (1) with respect to Registrable Securities other than the Warrant, such time as SEC Rule 144(b)(1) under the Securities Act (or any successor provision) is available for the sale of all of such Holder’s Registrable Securities without any need to comply with the public information requirements of SEC Rule 144(b)(1) (or any successor provision) or any such Registrable Securities are sold pursuant to SEC Rule 144; (2) no Holder holds Registrable Securities; and (3) June 30, 2029. Notwithstanding anything to the contrary herein, for so long as the Holders hold the Warrant, the right to registration of any Holder hereunder with respect to any other Registrable Security shall not be terminated pursuant to this Section 2.10.
3. Miscellaneous.
3.1 Successors and Assigns; Transfer Restrictions.
(a) The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (a) is an Affiliate of such Holder or (b) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; provided, however, that the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred. For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate, member or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided, further, that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.
(b) CB Snowbird Holdings, L.P. hereby agrees that, without the prior written consent of the Company, not to be unreasonably withheld, neither it nor its Affiliates shall transfer (1) the Warrant; (2) any Warrant Shares in excess of 300,000 Warrant Shares in a single transaction (other than a brokers’ transaction) or (3) Warrant Shares directly to a holder who is or, to the Holder’s knowledge, after such transfer such holder would be required to file an original or amended statement on Schedule 13D pursuant to Rule 13d-1(a), 13d-1(e), 13d-1(f) or 13d-1(g) of the General Rules and Regulations under the Exchange Act in connection with its beneficial ownership of shares of Common Stock.
3.2 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
3.3 Titles and Subtitles. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.
3.4 Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (a) personal delivery to the party to be notified; (b) when sent, if sent by electronic mail during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next Business Day; (c) five days after having been sent by registered or certified
mail, return receipt requested, postage prepaid; or (d) one Business Day after the Business Day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the Holder at the e-mail address or address of such Holder appearing on the books of the Company, or to the principal office of the Company and to the attention of the Chief Executive Officer, in the case of the Company, or to such email address or address as subsequently modified by written notice given in accordance with this Section 3.4.
3.5 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the Holders; provided that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver. Any amendment, termination, or waiver effected in accordance with this Section 3.5 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision. Notwithstanding the foregoing, in no event may the demand registration rights granted to any Holder pursuant to Section 2.2 of this Agreement be removed without the prior written consent of such Holder.
3.6 Severability. In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.
3.7 Entire Agreement. This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.
3.8 Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without regard to the conflicts of law principles of such State that may lead to the application of the laws of any other jurisdiction. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the courts of the State of Delaware sitting in New Castle County and to the jurisdiction of the United States District Court sitting in Wilmington, Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement; (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the courts of the State of Delaware sitting in New Castle County or the United States District Court sitting in Wilmington, Delaware; and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.
3.9 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
3.10 Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.
3.11 Other Interpretive Matters. For purposes of this Agreement, (a) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period is excluded, and if the last day of such period is a non-Business Day, the period in question ends on the next succeeding Business Day; (b) unless the context otherwise requires, all references in this Agreement to any “Article,” “Section” or “Exhibit” are to the corresponding Article, Section or Exhibit of this Agreement; (c) the word “including,” or any variation thereof, means “including, without limitation” and does not limit any general statement that it follows to the specific or similar items or matters immediately following it; and (d) all references to dollar amounts are expressed in United States Dollars. As used herein, the singular shall include the plural, the plural shall include the singular and any use of the male or female gender shall include the other gender, all wherever the same shall be applicable and when the context shall admit or require.
3.12 No Recourse. Notwithstanding anything to the contrary that may be expressed or implied in this Agreement, and notwithstanding the fact that any Holder or its Affiliates or any of its or their successors or permitted assignees may be a partnership or a limited liability company, the Company, by its acceptance of the benefits hereof, covenants, agrees and acknowledges that no Person other than the Holders and their respective successors and permitted assignees shall have any obligation hereunder, and that it has no rights of recovery against, and no
recourse hereunder against, any former, current or future director, officer, agent, advisor, attorney, representative, Affiliate, manager or employee of any Holder (or any of its successors or assignees), against any former, current or future general or limited partner, manager, member or stockholder of any Holder or any Affiliate thereof or against any former, current or future director, officer, agent, advisor, attorney, representative, employee, Affiliate, assignee, general or limited partner, stockholder, manager or member of any of the foregoing, whether by or through attempted piercing of the corporate veil, by the enforcement of any judgment or assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law.
3.13 Specific Performance. The rights of each party to consummate the transactions contemplated hereby are agreed to be unique, and recognizing that the remedy at law for any breach or threatened breach by a party hereto of the agreements and conditions set forth herein would be inadequate, and further recognizing that any such breach or threatened breach would cause immediate, irreparable and permanent damage to the parties, the extent of which would be impossible or difficult to ascertain, the parties hereto agree that in the event of any such breach or threatened breach, and in addition to any and all remedies at law or otherwise provided herein, any party hereto may specifically enforce the terms of this Agreement and may obtain temporary and/or permanent injunctive relief (including a mandatory injunction) without the necessity of proving actual damage or the lack of an adequate remedy at law and, to the extent permissible under applicable rules, provision and statutes, a temporary injunction may be granted immediately upon the commencement of any suit hereunder regardless of whether the breaching party or parties have actually received notice thereof. Such remedy shall be cumulative and not exclusive, and shall be in addition to any other remedy or remedies available to the parties.
3.14 Other Registration Rights. The Company shall not hereafter enter into any agreement with respect to its securities, including any other registration rights agreement, which violates the rights granted to the Holders in this Agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.
| COMPANY: | ||
| HCI GROUP, INC. | ||
| By: | /s/ Paresh Patel | |
| Name: | Paresh Patel | |
| Title: | Chief Executive Officer | |
[Signature Page to Registration Rights Agreement]
| HOLDER: | ||
| CB SNOWBIRD HOLDINGS, L.P. | ||
| By: CSCP III Cayman GP Ltd., its general partner | ||
| By: | /s/ Gavin Baiera | |
| Name: Gavin Baiera | ||
| Title: Authorized Signatory | ||
[Signature Page to Registration Rights Agreement]
Exhibit 4.19
STOCK REDEMPTION AGREEMENT
THIS STOCK REDEMPTION AGREEMENT (the “Agreement”) is made and entered into effective as of January 22, 2024 (the “Effective Date”), by and among CB Snowbird Holdings, L.P., a Delaware limited partnership (“Seller”), TypTap Insurance Group, Inc., a Florida corporation (the “Company”), and HCI Group, Inc., a Florida corporation (“HCI”).
RECITALS
WHEREAS, Seller owns 8,000,000 shares of Series A-1 Preferred Stock of the Company (“A-1 Preferred Stock”) and 2,000,000 shares of Series A-2 Preferred Stock of the Company (“A-2 Preferred Stock” and collectively with the A-1 Preferred Stock, the “Preferred Stock”), which constitute all of the securities of the Company in which Seller has or may claim an interest; and
WHEREAS, Seller desires to sell to the Company, and the Company desires to redeem from Seller, the Preferred Stock upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the covenants and mutual promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Redemption of Preferred Stock.
(a) Redemption; Redemption Price. At the Closing (as defined below), the Company shall purchase and redeem from Seller, and Seller shall sell, assign and transfer to the Company, all of the Preferred Stock (together with any other securities of the Company in which Seller has an interest, if any), free and clear of all restrictions on transfer, pledges, security interests, liens, claims, encumbrances and demands, in exchange for $102,923,386.63 in cash (the “Redemption Price”).
(b) Closing. The sale, transfer and redemption of the Preferred Stock (the “Redemption”) under this Agreement (the “Closing”) shall occur on the date hereof or such other date as is mutually agreed upon (the “Closing Date”) by electronic transmittal of executed documents by Seller and the Company. Effective as of the Closing, the redeemed Preferred Stock will be deemed cancelled by the Company and will no longer be considered issued or outstanding.
(c) Closing Deliverables. At the Closing, (i) Seller shall deliver to the Company a duly executed copy of the Stock Power in the form attached hereto as Exhibit A (the “Stock Power”), (ii) Company shall pay to Seller an amount in cash equal to the Redemption Price, and (iii) Seller shall deliver to HCI and HCI shall deliver to Seller a duly executed copy of the Registration Rights Agreement in the form attached hereto as Exhibit B (the “Registration Rights Agreement”).
(d) Payments to Seller. All payments under this Agreement to Seller shall be made by wire transfer to Seller’s bank account pursuant to the wire transfer instructions listed on the attached Exhibit C.
1
(e) No Further Right in any Preferred Stock or Distributions. Notwithstanding anything to the contrary in the Company’s Amended and Restated Articles of Incorporation, dated as of February 26, 2021 (as amended, the “Amended and Restated Articles”) or the Shareholders Agreement, dated as of February 26, 2021 (the “Shareholders Agreement”), from and after the Closing, neither Seller nor any affiliate of Seller or any of their respective directors, officers, employees, members or partners (each, a “Seller Party”, and collectively, the “Seller Parties”) shall have any right to (or claim against or relating to) any of the Preferred Stock or any dividend distributions or any other distributions from the Company (whether in respect of the Preferred Stock or any other other equity interests of the Company), and Seller hereby fully and forever waives any claim Seller may have against or relating to any of the Preferred Stock or any dividend distributions or any other distributions from the Company (whether in respect of the Preferred Stock or any other other equity interests of the Company).
2. Representations and Warranties of Seller. Seller hereby makes the following representations and warranties to the Company as of the Effective Date (all of which are true, accurate, complete and correct as of each of the Effective Date and the Closing Date), all of which shall survive the Effective Date, the Closing and the consummation of the Redemption:
(a) Authority. Seller has full power, legal right, authority and capacity to execute and deliver this Agreement, the Stock Power and the Registration Rights Agreement, and to carry out the Redemption and perform the obligations contemplated by this Agreement. The execution, delivery and performance of this Agreement, the Stock Power, the Registration Rights Agreement and any other documents in connection herewith by Seller constitute the valid and legally binding obligations of Seller, enforceable against Seller in accordance with their respective terms.
(b) Preferred Stock. Seller is the holder and owner of, and has good, marketable and valid title to, all of the Preferred Stock, free and clear of all restrictions on transfer, liens, pledges, security interests, claims and demands. Seller has not transferred, assigned, or pledged any Preferred Stock to any other person or entity. On the Closing Date, the Company will receive good, marketable and valid title to all of the Preferred Stock. Other than the Preferred Stock being redeemed hereunder, neither Seller nor any Seller Party holds or owns (or has any right to acquire) any additional securities of the Company, and as a result of this Agreement and the Redemption, Seller has no further right, in law or equity, to any securities of the Company, whether issued or not, in any fashion whatsoever.
(c) Information. Seller has received all the information that Seller considers necessary or appropriate for deciding whether to enter into this Agreement and to consummate the Redemption.
(d) Advice. Seller understands and agrees that nothing in this Agreement or any other materials presented by or on behalf of the Company to Seller in connection with the Redemption constitutes legal, tax, investment, financial, accounting or other advice. Seller has consulted such legal, tax, financial, accounting, investment and other advisors as Seller, in Seller’s sole discretion, has deemed necessary or appropriate in connection with the Redemption. Seller acknowledges and agrees that Seller has not relied on any legal, tax, investment, financial, accounting or other advice furnished by or on behalf of the Company.
(e) No Other Representations or Warranties. Except for the representations and warranties contained in this Section 2, none of Seller nor any affiliate or representative of Seller has made or is making any representation or warranty of any kind or nature whatsoever, oral or written, express or implied with respect to the Company, this Agreement or the transactions contemplated by this Agreement.
2
3. Release.
(a) Seller Release. For and in consideration of the Redemption and other mutual promises and agreements set forth herein, Seller, on behalf of Seller and the Seller Parties (collectively, the “Seller Releasor”), hereby fully and forever releases the Company or any affiliate of the Company or any of their respective directors, officers, employees, members, partners or managers of the Company (collectively, “Company Parties”) solely in their capacity as director, officer, employee, member, partner or manager of the Company and the respective successors and assigns of the Company and Company Parties from, and agrees not to sue or otherwise institute or cause to be instituted any legal or administrative proceedings concerning any claim, duty, obligation or cause of action relating to, or arising from, any matters of any kind or nature, whether currently known or unknown, express or implied, matured or unmatured, suspected or unsuspected, contingent or vested, liquidated or unliquidated, that Seller Releasor may possess with respect to any agreement or transaction that a Seller Releasor entered into with the Company prior to the Effective Date and the Redemption contemplated by this Agreement arising from any omissions, acts, facts, matters, causes or things that have occurred up until and including the Effective Date, including, without limitation:
(i) Any and all claims relating to, or arising from, the Seller Releasor’s right to purchase or receive, or actual purchase or receipt of, units, equity or interests in the Company, including, without limitation, any claims for misrepresentation, breach of fiduciary duty or breach of duty under applicable state law;
(ii) Any and all claims arising under the Securities Act of 1933, as amended, or any other federal, state, blue sky or local law dealing with any securities of the Company;
(iii) Any and all claims or rights arising from or in connection with the Amended and Restated Articles, the Shareholders Agreement or any transaction entered into with a Seller Releasor prior to the Effective Date by the Company and the Redemption contemplated by this Agreement; and
(iv) Any and all claims for attorneys’ fees and costs.
Notwithstanding the forgoing, Seller Releasor does not release the Company or the Company Parties from, and specifically reserves all rights related to, (i) the matters described in Section 6 of this Agreement, (ii) any rights or claims of Seller or the Seller Parties for damages actually incurred by Seller or the Seller Parties which result or have resulted primarily from any criminal or fraudulent act of the Company or the Company Parties or (iii) any omissions or acts of the Company or the Company Parties or facts, matters, causes or things which arise from and after the Effective Date. Seller agrees that the release set forth in this Section 3(a) shall be and remain in effect in all respects as a complete general release as to the matters released as described above. Seller further acknowledges and agrees that, except for the payments expressly set forth in Section 1 and
3
9 of this Agreement, there are no further distributions, payments, amounts, or benefits owed to Seller by the Company. This release does not extend to any obligations incurred under this Agreement. Seller represents that Seller is not aware of any claims against the Company or the Company Parties. Seller acknowledges that it has been advised by legal counsel, or has had full opportunity to seek advice of legal counsel and has voluntarily declined to seek such advice. SELLER UNDERSTANDS THAT THIS AGREEMENT RELEASES ALL CLAIMS SELLER MAY HAVE AGAINST THE COMPANY AND THE COMPANY PARTIES BASED ON ACTS OR OMISSIONS OCCURRING ON OR BEFORE THE EFFECTIVE DATE WITH RESPECT TO THE MATTERS RELEASED AS DESCRIBED ABOVE, EVEN IF SELLER DOES NOT, AT THE TIME SELLER SIGNS THIS AGREEMENT, HAVE KNOWLEDGE OF THOSE ACTS OR OMISSIONS.
(b) The Company, on behalf of the Company and the Company Parties (collectively, the “Company Releasor”), hereby fully and forever releases the Seller and the Seller Parties solely in their capacities as a director, officer, employee, member, partner or manager of the Seller or a Seller Party and the respective successors and assigns of Seller and Seller Parties from, and agrees not to sue or otherwise institute or cause to be instituted any legal or administrative proceedings concerning any claim, duty, obligation or cause of action relating to, or arising from, any matters of any kind or nature, whether currently known or unknown, express or implied, matured or unmatured, suspected or unsuspected, contingent or vested, liquidated or unliquidated, that the Company Releasor may possess with respect to any agreement or transaction that the Company entered into with the Seller prior to the Effective Date and the Redemption contemplated by this Agreement arising from any omissions, acts, facts, matters, causes or things that have occurred up until and including the Effective Date, including, without limitation:
(i) Any and all claims relating to, or arising from, the Seller’s investment in the Company, including the Seller’s purchase of the Preferred Stock;
(ii) Any and all claims or rights arising from or in connection with the Amended and Restated Articles, the Shareholders Agreement or any transaction entered into with the Company prior to the Effective Date by a Seller Releasor and the Redemption contemplated by this Agreement; and
(iii) Any and all claims for attorneys’ fees and costs.
Notwithstanding the forgoing, Company Releasor does not release Seller or the Seller Parties from, and specifically reserves all rights related to, (i) any breach of fiduciary duty with respect to any Seller Party that serves on the board of directors of the Company or HCI, (ii) any rights or claims of the Company or the Company Parties for damages actually incurred by the Company or the Company Parties, which result or have resulted primarily from any criminal or fraudulent act of the Seller or the Seller Parties or (iii) any omissions or acts of Seller or the Seller Parties or facts, matters, causes or things which arise from and after the Effective Date. The Company agrees that the release set forth in this Section 3(b) shall be and remain in effect in all respects as a complete general release as to the matters released as described above. The Company further acknowledges and agrees that there are no further distributions, payments, amounts, or benefits owed to the Company by Seller. This release does not extend to any obligations incurred under this Agreement. The
4
Company represents that the Company is not aware of any claims against the Seller or the Seller Parties. The Company acknowledges that it has been advised by legal counsel, or has had full opportunity to seek advice of legal counsel and has voluntarily declined to seek such advice. THE COMPANY UNDERSTANDS THAT THIS AGREEMENT RELEASES ALL CLAIMS THE COMPANY MAY HAVE AGAINST SELLER AND THE SELLER PARTIES BASED ON ACTS OR OMISSIONS OCCURRING ON OR BEFORE THE EFFECTIVE DATE WITH RESPECT TO THE MATTERS RELEASED AS DESCRIBED ABOVE, EVEN IF THE COMPANY DOES NOT, AT THE TIME THE COMPANY SIGNS THIS AGREEMENT, HAVE KNOWLEDGE OF THOSE ACTS OR OMISSIONS.
4. Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to Seller as of the Effective Date (all of which are true, accurate, complete and correct as of each of the Effective Date and the Closing Date), all of which shall survive the Effective Date, the Closing and the consummation of the Redemption:
(a) Authority. The Company has full power, legal right, authority and capacity to execute and deliver this Agreement, and to carry out the Redemption and perform the obligations contemplated by this Agreement. The execution, delivery and performance of this Agreement and any other documents in connection herewith by the Company constitute the valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms.
(b) No Consents. Except for HCI’s waiver by Fifth Third Bank with respect to the Parent Guaranty and Amended and Restated Articles of Incorporation of the Company, the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated by this Agreement will not require the Company to give notice to, or obtain the consent or approval of, any third party.
(c) No Other Representations or Warranties. Except for the representations and warranties contained in this Section 4, none of the Company nor any affiliate or representative of Seller has made or is making any representation or warranty of any kind or nature whatsoever, oral or written, express or implied with respect to the Company, this Agreement or the transactions contemplated by this Agreement.
5. Representations and Warranties of HCI. HCI hereby makes the following representations and warranties to Seller as of the Effective Date (all of which are true, accurate, complete and correct as of each of the Effective Date and the Closing Date), all of which shall survive the Effective Date, the Closing and the consummation of the Redemption:
(a) Authority. HCI has full power, legal right, authority and capacity to execute and deliver this Agreement and the Registration Rights Agreement. The execution, delivery and performance of this Agreement, the Registration Rights Agreement and any other documents in connection herewith by HCI constitute the valid and legally binding obligations of HCI, enforceable against HCI in accordance with their respective terms.
5
(b) SEC Filings. HCI has filed all required forms, reports and documents with the U.S. Securities and Exchange Commission since January 1, 2023 (“SEC Documents”), each of which complied at the time of filing in all material respects with all applicable requirements of the Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as amended, in each case, as in effect on the dates such forms, reports and documents were filed. None of the SEC Documents contained, when filed, any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein in light of the circumstances under which they were made not misleading, except to the extent superseded by a SEC Document filed subsequently and prior to the date hereof.
(c) No Other Representations or Warranties. Except for the representations and warranties contained in this Section 5, none of HCI nor any affiliate or representative of Seller has made or is making any representation or warranty of any kind or nature whatsoever, oral or written, express or implied with respect to HCI, this Agreement or the transactions contemplated by this Agreement.
6. Board Matters; Corporate Opportunities.
(a) For so long as Eric Hoffman continues to serve on the board of directors of HCI and, solely with respect to clause (ii) hereof, for six years thereafter: (i) he shall at all times be entitled to compensation and reimbursement in connection with his service on the board of directors of HCI consistent with the policies and practices of HCI generally applicable to independent members of its board of directors, (ii) HCI shall maintain in effect at all times directors’ and officers’ liability insurance and fiduciary liability insurance with insurers of recognized financial responsibility in such amounts as the board of directors of HCI determines to be prudent and customary for HCI’s business and operations and HCI’s articles of incorporation and bylaws shall at all times provide for indemnification, exculpation and advancement of expenses to the fullest extent permitted under applicable law and (iii) HCI shall not take any action, including making or recommending any amendment to its articles of incorporation or bylaws, that would reasonably be expected to affect adversely Seller’s rights under this Section 6 (including Section 6(c)), without the prior written consent of Seller.
(b) For so long as either Samuel Rappaport or Steve Shafran continues to serve on the board of directors of the Company and, solely with respect to clause (i) hereof, for six years thereafter: (i) the Company shall maintain directors’ and officers’ liability insurance and fiduciary liability insurance with insurers of recognized financial responsibility in such amounts as the board of directors of the Company determines to be prudent and customary for the Company’s business and operations, and the articles of incorporation and bylaws of the Company shall at all times provide for indemnification, exculpation and advancement of expenses to the fullest extent permitted under applicable law and (ii) the Company shall reimburse each of them for their reasonable and documented out-of-pocket expenses incurred in connection with attending regular and special meetings of the board of directors of the Company and any committee thereof.
(c) To the fullest extent permitted by applicable law, HCI agrees that Eric Hoffman, Seller, any affiliate of Seller, or any portfolio company or Seller or any affiliate of such portfolio company (collectively, “Covered Persons”) may, and shall have no duty not to, (i) invest in, carry on and conduct, whether directly, or as a partner in any partnership, or as a joint venturer in any joint venture, or as an officer, director, stockholder, equityholder or investor in any person, or as a participant in any syndicate, pool, trust or association, any business of any kind, nature or description, whether or not such business is competitive with or in the same or similar lines of business as HCI or any of its affiliates, (ii) do business with any client, customer, vendor,
6
policyholder, reinsurer or lessor of any of HCI or its affiliates; or (iii) make investments in any kind of property in which HCI may make investments. To the fullest extent permitted by applicable law, HCI and the Company, on behalf of themselves and their respective affiliates, renounce any interest or expectation to participate in any business or investments of any Covered Person as currently conducted or as may be conducted in the future, and waive any claim against a Covered Person, and shall, jointly and severally, indemnify each Covered Person against any and all losses, claims, damages, liabilities, costs, expenses (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses), judgments, fines, penalties, charges and amounts paid in settlement (collectively, “Losses”), in each case to which such Covered Person may become subject, as a result of, arising in connection with or relating to a Covered Person’s breach of any fiduciary duty by reason of such person’s participation in any such business or investment. HCI shall pay in advance any reasonable out-of-pocket expenses incurred by a Covered Person in the defense of any claim for which such Covered Person is, or would reasonably be expected to be, entitled to indemnification under this Section 6. HCI and the Company each agree that, in the event that a Covered Person acquires knowledge of a potential transaction or matter that may constitute a corporate opportunity for both (x) the Covered Person and (y) HCI, the Company or any of their respective subsidiaries, the Covered Person shall not have any duty to offer or communicate information regarding such corporate opportunity to HCI, the Company or their respective subsidiaries. To the fullest extent permitted by applicable law, HCI and the Company hereby renounce any interest or expectation in any potential transaction or matter of which the Covered Person acquires knowledge, except for any corporate opportunity which is expressly offered to a Covered Person in writing solely in his or her capacity as a member of the board of directors of either HCI or the Company, and waives any claim against each Covered Person, and shall indemnify each Covered Person against any Losses incurred by such Covered Person, and any and all Losses to which such Covered Person may become subject, as a result of, arising in connection with or relating to a Covered Person’s breach of any fiduciary duty solely by reason of the fact that such Covered Person (A) pursues or acquires any corporate opportunity for its own account or the account of any affiliate or other person, (B) directs, recommends, sells, assigns or otherwise transfers such corporate opportunity to another person or (C) does not communicate information regarding such corporate opportunity to HCI, the Company, or any of their respective affiliates; provided, that, in each such case, any corporate opportunity that is expressly offered to a Covered Person in writing solely in his or her capacity as a member of the board of directors of either HCI or the Company shall belong to the Company or to HCI, as applicable.
7. Termination of Agreements. Effective immediately upon the Closing, the parties hereto (including HCI) agree that each of the Shareholders Agreement and the Parent Guaranty Agreement, dated as of February 26, 2021, shall be terminated, effective immediately, and each shall be null and void and of no further force and effect and there shall be no liability on the part of any party thereto to any other party under such agreements. For the avoidance of doubt, the Indemnification Agreement, dated as of February 26, 2021, between HCI and Eric Hoffman and the Indemnification Agreement, dated as of February 26, 2021 between the Company and Eric Hoffman remain in full force and effect.
8. Conflicts. In the event of a conflict between the terms or provisions of this Agreement and the Amended and Restated Articles or the Shareholders Agreement, the terms of this Agreement shall control. By executing this Agreement, each of the parties hereto hereby acknowledges (or waives), to the extent applicable, compliance with any notice or other requirements provided for in the Amended and Restated Articles or the Shareholders Agreement with respect thereto.
7
9. Expenses. HCI or one of its affiliates will pay for or reimburse Seller for its costs and expenses incurred in the negotiation, preparation, execution and performance of this Agreement and the transactions contemplated hereby that are contemplated to occur at the Closing in an amount not to exceed $60,000.
10. Miscellaneous.
(a) Governing Law; Venue; Attorneys’ Fees. This Agreement shall be governed by the substantive laws of the State of Florida without regard to its conflict of laws provisions or the laws of any other jurisdiction. The parties hereto hereby agree that the exclusive venue of any action, proceeding, counterclaim, crossclaim or other litigation relating to, involving or resulting from this Agreement shall lie exclusively in the state or federal courts situated in Hillsborough County or the Middle District, Tampa Division, in the state of Florida, and each party hereto hereby consents to the jurisdiction of such courts for such purpose. In the event that either party hereto is required to engage the services of legal counsel to enforce or interpret the terms and conditions of this Agreement against the other party, regardless of whether such action results in litigation, the prevailing party shall be entitled to reasonable attorneys’ fees and costs of legal assistants from the other party, which shall include any fees or costs incurred at trial or in any appellate proceeding, and expenses and other costs, including any accounting expenses incurred.
(b) Successors; Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Neither party hereto may assign this Agreement without the prior written consent of the other party.
(c) Amendment; Waiver. This Agreement may be amended or modified only by a written instrument executed by the parties hereto. Any failure by a party to this Agreement to enforce any of the provisions of this Agreement shall not be construed to be a waiver of such provisions or any right to enforce each and every provision in the future. A waiver of any breach of this Agreement shall not be construed as a waiver of any other or subsequent breach.
(d) Entire Agreement. This Agreement, the Stock Power and the Registration Rights Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof, and this Agreement, the Stock Power and the Registration Rights Agreement supersede all prior agreements and undertakings, both written and oral, among the parties hereto with respect to the subject matter described herein.
(e) Headings. The headings of sections of this Agreement are for reference purposes only and do not define or limit, and shall not be used to interpret or construe, the contents of this Agreement.
(f) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
8
(g) Specific Performance. The rights of each party to consummate the transactions contemplated hereby are agreed to be unique, and recognizing that the remedy at law for any breach or threatened breach by a party hereto of the agreements and conditions set forth herein would be inadequate, and further recognizing that any such breach or threatened breach would cause immediate, irreparable and permanent damage to the parties, the extent of which would be impossible or difficult to ascertain, the parties hereto agree that in the event of any such breach or threatened breach, and in addition to any and all remedies at law or otherwise provided herein, any party hereto may specifically enforce the terms of this Agreement and may seek temporary and/or permanent injunctive relief (including a mandatory injunction) without the necessity of proving actual damage or the lack of an adequate remedy at law and, to the extent permissible under applicable rules, provision and statutes, a temporary injunction may be granted immediately upon the commencement of any suit hereunder regardless of whether the breaching party or parties have actually received notice thereof. Such remedy shall be cumulative and not exclusive, and shall be in addition to any other remedy or remedies available to the parties.
(h) Survival. The provisions of Sections 6, 9 (to the extent such obligation is not satisfied at the Closing) and 10 shall survive the Closing of the transactions contemplated by this Agreement. The representations and warranties of the parties contained in this Agreement shall survive the Closing until twelve months following the Closing.
(i) No Recourse. Notwithstanding anything to the contrary that may be expressed or implied in this Agreement, and notwithstanding the fact that Seller or its affiliates or any of its or their successors or permitted assignees may be a partnership or a limited liability company, each of the Company and HCI, by its acceptance of the benefits hereof, covenants, agrees and acknowledges that no person other than Seller and their respective successors and permitted assignees shall have any obligation hereunder, and that it has no rights of recovery against, and no recourse hereunder against, any former, current or future director, officer, agent, advisor, attorney, representative, affiliate, manager or employee of Seller (or any of its successors or assignees), against any former, current or future general or limited partner, manager, member or stockholder of Seller or any affiliate thereof or against any former, current or future director, officer, agent, advisor, attorney, representative, employee, affiliate, assignee, general or limited partner, stockholder, manager or member of any of the foregoing, whether by or through attempted piercing of the corporate veil, by the enforcement of any judgment or assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law.
[Signature pages follow]
9
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have executed the foregoing Agreement as of the Effective Date.
| CB SNOWBIRD HOLDINGS, L.P. | ||
| By: CSCP III Cayman GP Ltd., its general partner | ||
| /s/ Gavin Baiera | ||
| Gavin Baiera | ||
| Authorized Signatory | ||
| Address: | ||
| c/o Centerbridge Partners, L.P. | ||
| 375 Park Avenue, 11th Floor | ||
| New York, NY 10152-0002 | ||
| Attn: The Office of the General Counsel Eric Hoffman | ||
| TYPTAP INSURANCE GROUP, INC. | ||
| /s/ Paresh Patel | ||
| Paresh Patel | ||
| Chief Executive Officer | ||
| Address: | ||
| 3802 Coconut Palm Drive | ||
| Tampa, Florida 33619 | ||
| Attention: Brook Baker, General Counsel | ||
| HCI GROUP, INC. | ||
| /s/ Paresh Patel | ||
| Paresh Patel | ||
| Chief Executive Officer | ||
| Address: | ||
| 3802 Coconut Palm Drive | ||
| Tampa, Florida 33619 | ||
| Attention: Andrew Graham, General Counsel | ||
[Signature Page to Redemption Agreement]
EXHIBIT A
STOCK POWER
This STOCK POWER (the “Stock Power”) is entered into effective as of January 22, 2024 (the “Effective Date”) by CB Snowbird Holdings, L.P., a Delaware limited partnership (the “Selling Shareholder”), in favor of TypTap Insurance Group, Inc., a Florida corporation (the “Company”).
RECITALS
WHEREAS, the Selling Shareholder, the Company and HCI Group, Inc., a Florida corporation are parties to that certain Redemption Agreement (the “Redemption Agreement”), dated as of the Effective Date, pursuant to which the Selling Shareholder has agreed to sell, assign and transfer all of the Selling Shareholder’s Preferred Stock (as defined in the Redemption Agreement) to the Company; and
WHEREAS, the Selling Shareholder owns those certain shares of Preferred Stock (as such term is defined in the Redemption Agreement).
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Selling Shareholder, intending to be legally bound, hereby agrees as follows:
| 1. | Assignment. As of the date hereof, the Selling Shareholder hereby sells, delivers, transfers and assigns to the Company all of the Selling Shareholder’s right, title and interest in and to all of the Preferred Stock, and the Selling Shareholder acknowledges that the Selling Shareholder shall no longer have any further right, in law or equity, to any securities or equity interests of the Company. |
| 2. | Further Assurances. At any time and from time to time, at the request of the Company, the Selling Shareholder shall execute and deliver to the Company any additional, new, or confirmatory instruments and all other and further instruments to carry into effect the intent and purposes hereof. |
| 3. | Binding Effect. This Stock Power shall be binding upon and inure to the benefit of the parties hereto, and their respective heirs, personal representatives, successors and assigns. |
| 4. | Governing Law. This Stock Power will be governed by and construed and interpreted in accordance with the substantive laws of the State of Florida, without giving effect to any choice of law or conflicts of law provision or rule that would cause the application of the laws of a jurisdiction other than the State of Florida. |
[Signature Page to Follow]
Exhibit A - 1
IN WITNESS WHEREOF, the undersigned has executed this Stock Power effective as of the date first set forth above.
| SELLING SHAREHOLDER: | ||
| CB SNOWBIRD HOLDINGS, L.P. | ||
| By: CSCP III Cayman GP Ltd., its general partner | ||
|
| ||
| Gavin Baiera | ||
| Authorized Signatory | ||
| Address: | ||
| c/o Centerbridge Partners, L.P. | ||
| 375 Park Avenue, 11th Floor | ||
| New York, NY 10152-0002 | ||
| Attn: The Office of the General Counsel | ||
Exhibit A - 2
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
(SEE ATTACHED)
Exhibit B
EXHIBIT C
WIRE TRANSFER INSTRUCTIONS
Exhibit C
Exhibit 5.1
|
ATTORNEYS AT LAW
100 NORTH TAMPA STREET, SUITE 2700 TAMPA, FL 33602-5810 P.O. BOX 3391 TAMPA, FL 33601-3391 813.229.2300 TEL 813.221.4210 FAX WWW.FOLEY.COM |
January 22, 2024
HCI Group, Inc.
3802 Coconut Palm Drive
Tampa, Florida 33619
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-3 (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), of HCI Group, Inc., a Florida corporation (the “Company”), proposed to be filed by the Company with the Securities and Exchange Commission (the “Commission”) on or about the date hereof, you have requested our opinions set forth below.
You have provided us with a copy of the Registration Statement, which relates to the issuance and sale from time to time, pursuant to Rule 415 of the General Rules and Regulations of the Commission promulgated under the Securities Act (the “Rules and Regulations”), of any of the following: (i) shares of the Company’s common stock, no par value (the “Common Stock”); (ii) shares of the Company’s preferred stock, no par value (the “Preferred Stock”); (iii) debt securities of the Company, which may be either senior or subordinated (the “Debt Securities”); (iv) warrants (the “Warrants”) to purchase Common Stock, Preferred Stock, Debt Securities or other securities of the Company; (v) contracts (the “Stock Purchase Contracts”) that obligate holders to purchase from the Company, and the Company to sell to these holders, shares of Common Stock, shares of Preferred Stock or Debt Securities at a future date; and (vi) units (the “Stock Purchase Units”) consisting of a combination of a Stock Purchase Contract and Debt Securities, Preferred Stock and Warrants. The Common Stock, the Preferred Stock, the Debt Securities, the Warrants, the Stock Purchase Contracts, and the Stock Purchase Units are referred to herein collectively as the “Securities.”
We understand that (i) any Stock Purchase Units may be issued pursuant to one or more unit agreements (each, a “Unit Agreement”) between the Company and the unit agent named therein (“Unit Agent”) substantially in the form to be filed as an exhibit to a post-effective amendment to the Registration Statement or as an exhibit to a document filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and incorporated into the Registration Statement by reference; (ii) any Debt Securities will be issued in one or more series pursuant to (a) an indenture for subordinated Debt Securities substantially in the form of exhibit 4.8 to the Registration Statement (the “Subordinated Indenture”) or (b) an indenture for senior Debt Securities substantially in the form of exhibit 4.7 to the Registration Statement (the “Senior Indenture” and, together with the Subordinated Indenture, the “Indentures”), in each case, between the Company, the registrar named therein (the
| AUSTIN | DETROIT | MEXICO CITY | SACRAMENTO | TAMPA | ||||
| BOSTON | HOUSTON | MIAMI | SAN DIEGO | WASHINGTON, D.C. | ||||
| CHICAGO | JACKSONVILLE | MILWAUKEE | SAN FRANCISCO | BRUSSELS | ||||
| DALLAS | LOS ANGELES | NEW YORK | SILICON VALLEY | TOKYO | ||||
| DENVER | MADISON | ORLANDO | TALLAHASSEE |
January 22, 2024
Page 2
“Registrar”) and the trustee named therein (the “Trustee”), and (iii) any Warrants may be issued pursuant to one or more warrant agreements (each, a “Warrant Agreement”) between the Company and the warrant agent named therein (“Warrant Agent”) substantially in the form to be filed as an exhibit to a post-effective amendment to the Registration Statement or as an exhibit to a document filed under the Exchange Act and incorporated into the Registration Statement by reference. As used herein, “Transaction Agreements” means the Unit Agreements, the Indentures, the Warrant Agreements and the Stock Purchase Contracts.
In connection with this opinion, we have examined (i) the Registration Statement, including the prospectus constituting a part thereof and the exhibits thereto (including those incorporated by reference), each constituting a part of the Registration Statement; (ii) the Company’s Articles of Incorporation, as amended (“Articles of Incorporation”), and the Company’s Bylaws, as amended (“Bylaws”); (iii) the Subordinated Indenture; (iv) the Senior Indenture; (v) resolutions of the Board of Directors of the Company relating to the registration of the Securities; and (vi) originals or copies, certified or otherwise identified to our satisfaction of such records, agreements and instruments of the Company, certificates and receipts of public officials and of officers or other representatives of the Company, and such other documents and records, and such matters of law, as we have deemed necessary or appropriate as a basis for the opinions stated below. In our examination, we have assumed the genuineness of all signatures, including endorsements, the legal capacity and competency of all natural persons, the authenticity of all documents submitted to us as originals and the conformity to the original documents of all documents submitted to us as facsimile, electronic, certified or photostatic copies, and the authenticity of the originals of such copies. As to various questions of fact material to this opinion, we have relied upon, without independent verification of their accuracy, certificates of public officials, statements and representations of officers and other representatives of the Company, and statements of fact contained in documents we have examined.
The opinions expressed herein presume that all of the following (collectively, the “general conditions”) shall have occurred prior to the issuance of the Securities referred to therein: (i) the Registration Statement, and any amendments thereto (including post-effective amendments), will comply with the Securities Act and the applicable Rules and Regulations and has become effective under the Securities Act; (ii) an appropriate Prospectus Supplement describing the Securities offered thereby will have been prepared and filed with the SEC in compliance with the Securities Act and the applicable Rules and Regulations; (iii) all Securities will be issued and sold in compliance with applicable federal and state securities laws and in the manner stated in the Registration Statement and any applicable Prospectus Supplement; (iv) the applicable Transaction Agreements shall have been duly authorized, executed and delivered by the Company and the other parties thereto, including, if such Securities are to be sold or otherwise distributed pursuant to an underwritten offering, the underwriting agreement or purchase agreement with respect thereto; (v) the terms of the applicable Transaction Agreements and the issuance and sale of such Securities have been duly established in conformity with the requisite organizational documents of the Company, so as not to violate any
January 22, 2024
Page 3
applicable law, or any of its organizational documents, or result in a default under or breach of any agreement or instrument binding upon the Company, so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company, the Warrant Agent, the Unit Agent, the Trustee, and the Registrar, as applicable; (vi) the issuance and sale of such Securities (and the terms and conditions thereof) have been duly authorized and approved on behalf of the Company; (vi) a Form T-1 will be filed with the Commission with respect to the trustee executing any indenture or any supplemental indenture to such indenture; (vii) any Securities issuable upon conversion, exchange or exercise of any Security being offered will have been duly authorized, created and, if appropriate, reserved for issuance upon such conversion, exchange or exercise and (viii) with respect to shares of Common Stock or Preferred Stock offered, there will be sufficient shares of Common Stock or Preferred Stock authorized under the Company’s Articles of Incorporation and not otherwise reserved for issuance.
Based upon the foregoing and subject to the qualifications and assumptions stated herein, we are of the opinion that:
1. With respect to any shares of the Common Stock offered by the Company pursuant to the Registration Statement (the “Offered Common Stock”), when (a) the general conditions shall have been satisfied, (b) if the Offered Common Stock is to be certificated, certificates in the form required under the Florida Business Corporation Act representing the shares of Offered Common Stock are duly executed and countersigned, and (c) the shares of Offered Common Stock are registered in the Company’s share registry and delivered upon payment of the agreed-upon consideration therefor, the shares of Offered Common Stock, when issued and sold or otherwise distributed in accordance with the provisions of the applicable Transaction Agreements and, if distributed pursuant to an underwritten offering, in accordance with the provisions of the underwriting agreement or purchase agreement with respect thereto, will be duly authorized by all requisite corporate action on the part of the Company under the Florida Business Corporation Act and validly issued, fully paid and nonassessable, provided that the consideration therefor is not less than the par value per share of the Common Stock.
2. With respect to any shares of the Preferred Stock offered by the Company pursuant to the Registration Statement (the “Offered Preferred Stock”), when (a) the general conditions shall have been satisfied, (b) the Board of Directors of the Company, or a duly authorized committee thereof, has duly adopted a Certificate of Amendment to the Company’s Articles of Incorporation establishing voting powers, designations, preferences and relative, participating, optional or other special rights, if any, or the qualifications, limitations or restrictions, if any, and other terms of such shares of the Offered Preferred Stock, as set forth in or contemplated by the Registration Statement, the exhibits thereto and any Prospectus Supplement relating to such Preferred Stock, in accordance with the Florida Business Corporation Act, (c) such Certificate of Amendment to the Company’s Articles of Incorporation with respect to any such established voting powers, designations,
January 22, 2024
Page 4
preferences and relative, participating, optional or other special rights, if any, or the qualifications, limitations or restrictions, if any, and other terms of such shares of Offered Preferred Stock shall have been duly filed with and accepted for record by the State of Florida in the form and manner required by law, (d) if the Offered Preferred Stock is to be certificated, certificates in the form required under the Florida Business Corporation Act representing the shares of Offered Preferred Stock are duly executed and countersigned, and (e) the shares of Offered Preferred Stock are registered in the Company’s share registry and delivered upon payment of the agreed-upon consideration therefor, the shares of Offered Preferred Stock, when issued and sold or otherwise distributed in accordance with the provisions of the applicable Transaction Agreements and, if distributed pursuant to an underwritten offering, in accordance with the provisions of the underwriting agreement or purchase agreement with respect thereto, will be duly authorized by all requisite corporate action on the part of the Company under the Florida Business Corporation Act and validly issued, fully paid and nonassessable, provided that the consideration therefor is not less than the par value per share of the Preferred Stock.
3. Each series of Debt Securities will be valid and binding obligations of the Company enforceable in accordance with their terms, when (a) the general conditions shall have been satisfied, (b) the Indenture shall have been qualified under the Trust Indenture Act of 1939, as amended (the “TIA”), and a Form T-1 shall have been filed with the Commission and become effective under the TIA with respect to the trustee executing the Indenture or any related supplemental indenture, (c) the Indenture (and any related supplemental indenture) shall have been duly executed and delivered by the Company, the Trustee, and the Registrar, as applicable, and (d) such series of Debt Securities shall have been (i) duly executed by the Company, authenticated by the Trustee as provided in the Indenture and issued by the Company and (ii) issued and sold or otherwise distributed in accordance with the provisions of the applicable Indenture (and any related supplemental indenture) and, if distributed pursuant to an underwritten offering, in accordance with the provisions of the underwriting agreement or purchase agreement with respect thereto, and upon payment of the agreed-upon consideration therefor.
4. With respect to any Warrants offered by the Company pursuant to the Registration Statement (the “Offered Warrants”), when (a) the general conditions shall have been satisfied, (b) the shares of Common Stock, shares of Preferred Stock or other securities described in the Registration Statement for which the Offered Warrants are exercisable have been duly authorized for issuance by the Company, (c) the terms of the Offered Warrants have been established in accordance with the Warrant Agreement (if any), and (d) the Offered Warrants have been duly executed (if certificated) and delivered in accordance with the provisions of the applicable Warrant Agreement (if any), the Offered Warrants, when issued and sold or otherwise distributed in accordance with the provisions of the applicable Warrant Agreement (if any) and, if distributed pursuant to an underwritten offering, in accordance with the provisions of the underwriting agreement or purchase agreement with respect thereto, and upon payment of the agreed-upon consideration therefor, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms under the laws of the State of Florida.
January 22, 2024
Page 5
5. With respect to any Stock Purchase Contracts offered by the Company pursuant to the Registration Statement (the “Offered Purchase Contracts”), when (a) the general conditions shall have been satisfied, (b) the shares of Common Stock, shares of Preferred Stock, or Debt Securities included in such Offered Purchase Contracts have been duly authorized for issuance by the Company, (c) the terms of the Common Stock, Preferred Stock, or Debt Securities included in the Offered Purchase Contracts have been established in accordance with the applicable Offered Purchase Contracts, and (d) the Offered Purchase Contracts have been duly executed and delivered in accordance with the provisions thereof, the Offered Purchase Contracts, when issued and sold or otherwise distributed in accordance with the provisions of the applicable Stock Purchase Contracts and, if distributed pursuant to an underwritten offering, in accordance with the provisions of the underwriting agreement or purchase agreement with respect thereto, and upon payment of the agreed-upon consideration therefor, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms under the laws of the State of Florida.
6. With respect to any Stock Purchase Units offered by the Company pursuant to the Registration Statement (the “Offered Units”), when (a) the general conditions shall have been satisfied, (b) the shares of Common Stock, shares of Preferred Stock, Stock Purchase Contracts, Debt Securities, Warrants, or other securities or a combination thereof included in such Offered Units have been duly authorized for issuance by the Company, (c) the terms of the Offered Units have been established in accordance with the applicable Unit Agreement (if any), and (d) the Offered Units have been duly executed (if certificated) and delivered in accordance with the provisions of the applicable Unit Agreement (if any), the Offered Units, when issued and sold or otherwise distributed in accordance with the provisions of the applicable Unit Agreement (if any) and, if distributed pursuant to an underwritten offering, in accordance with the provisions of the underwriting agreement or purchase agreement with respect thereto, and upon payment of the agreed-upon consideration therefor, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms under the laws of the State of Florida.
We express no opinion herein as to the laws of any state or jurisdiction other than the State of New York, the Florida Business Corporation Act and the federal laws of the United States of America. Notwithstanding the foregoing, we express no opinion as to the applicability or effect of any state securities laws, including the securities laws of the States of Florida and New York, or as to state laws regarding fraudulent transfers. To the extent that any matter as to which our opinion is expressed herein would be governed by the laws of any jurisdiction other than those set forth above in this paragraph, we do not express any opinion on such matter.
January 22, 2024
Page 6
The opinions stated herein are subject to the following qualifications:
(a) the opinions stated herein are limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, preference and other similar laws affecting creditors’ rights generally, and by general principles of equity (regardless of whether enforcement is sought in equity or at law);
(b) we do not express any opinion with respect to any law, rule or regulation that is applicable to any party to any of the Transaction Agreements or the transactions contemplated thereby solely because such law, rule or regulation is part of a regulatory regime applicable to any such party or any of its affiliates as a result of the specific assets or business operations of such party or such affiliates;
(c) except to the extent expressly stated in the opinions contained herein, we have assumed that each of the Transaction Agreements constitutes the valid and binding obligation of each party to such Transaction Agreement, enforceable against such party in accordance with its terms;
(d) to the extent relevant to our opinions in paragraphs 3, 4, 5, and 6, and not covered by our opinions in paragraphs 1 or 2, we have assumed that any securities, currencies or commodities underlying, comprising or issuable upon exchange, conversion or exercise of any Debt Securities, Warrants, Stock Purchase Contracts or Stock Purchase Units are validly issued, fully paid and non-assessable (in the case of an equity security) or a legal, valid and binding obligation of the issuer thereof, enforceable against such issuer in accordance with its terms; and
(e) we have assumed that any Debt Securities, Warrants, Stock Purchase Contracts and Stock Purchase Units that may be issued will be manually authenticated, signed or countersigned, as the case may be, by duly authorized officers of any Registrar and Trustee, Warrant Agent, and Unit Agent, as the case may be.
In addition, in rendering the foregoing opinions we have assumed that:
(y) neither the execution and delivery by the Company of the Transaction Agreements nor the performance by the Company of its obligations thereunder, including the issuance and sale of the applicable Securities: (i) constitutes or will constitute a violation of, or a default under, any lease, indenture, instrument or other agreement to which the Company, or its property is subject, (ii) contravened or will contravene any order or decree of any governmental authority to which the Company or its property is subject, or (iii) except to the extent expressly stated in the opinions contained herein, violates or will violate any law, rule or regulation to which the Company or its property is subject; and
January 22, 2024
Page 7
(z) neither the execution and delivery by the Company of the Transaction Agreements nor the performance by the Company of its obligations thereunder, including the issuance and sale of the applicable Securities, requires or will require the consent, approval, licensing or authorization of, or any filing, recording or registration with, any governmental authority under any law, rule or regulation of any jurisdiction.
This opinion is being furnished to you for submission to the Commission as an exhibit to the Registration Statement in accordance with the requirements of Item 16 of Form S-3 and Item 601(b)(5) of Regulation S-K promulgated under the Securities Act. We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement with the Commission on the date hereof and to the use of the name of our firm in the section entitled “Legal Matters” in the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Securities Act or the rules and regulations promulgated thereunder by the Commission.
This opinion is limited to the matters stated in this letter, and no opinion may be implied or inferred beyond the matters expressly stated in this letter. This opinion is given as of the date hereof, and we assume no obligation to advise you after the date hereof of facts or circumstances that come to our attention or changes in the law, including judicial or administrative interpretations thereof, that occur which could affect the opinions contained herein. This opinion may not be used for any other purpose without our records written consent, which we may grant or withhold in our sole discretion.
Very truly yours,
/s/ Foley & Lardner LLP
Foley & Lardner LLP
Exhibit 5.2
|
|
ATTORNEYS AT LAW
100 North Tampa Street, Suite 2700 Tampa, FL 33602-5810 P.O. Box 3391 Tampa, FL 33601-3391 813.229.2300 TEL 813.221.4210 FAX WWW.FOLEY.COM |
January 22, 2024
| HCI Group, Inc. 3802 Coconut Palm Drive Tampa, Florida 33619 |
Ladies and Gentlemen:
We have acted as counsel to HCI Group, Inc., a Florida corporation (the “Company”), in connection with the Company’s proposed issuance and sale, through Truist Securities, Inc. and Citizens JMP Securities, LLC as sales agents (the “Sales Agents”), of up to $75,000,000 of shares of the Company’s common stock, no par value (the “Shares”), from time to time and at various prices in an “at-the-market” offering pursuant to (i) that certain Equity Distribution Agreement, dated January 22, 2024 (the “Offering Agreement”), by and among the Company and the Sales Agents, and (ii) the Company’s Registration Statement on Form S-3 filed by the Company with the Securities and Exchange Commission (the “Commission”) on January 22, 2024 and declared effective by the Commission on January 22, 2024 pursuant to Rule 462(e) promulgated under the Securities Act of 1933, as amended (the “Registration Statement”), the base prospectus filed as part of the Registration Statement (the “Base Prospectus”), and the prospectus supplement contained in the Registration Statement relating to the potential issuance and sale by the Company, from time to time, of the Shares (together with the Base Prospectus, the “Prospectus”).
As counsel to the Company in connection with the proposed potential issuance and sale of the Shares, and as a basis for the opinion hereinafter set forth, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (collectively, the “Documents”): (i) the Offering Agreement, (ii) the Registration Statement and the Prospectus, (iii) the Company’s Articles of Incorporation and Bylaws, each as amended to date, and (iv) the proceedings and actions taken by the Board of Directors of the Company (or a duly authorized committee thereof) to authorize and approve the transactions contemplated by the Offering Agreement, the execution and delivery of the Offering Agreement, and the issuance and sale of the Shares (the “Resolutions”). We have also considered such matters of law and of fact, including the examination of originals or copies, certified or otherwise identified to our satisfaction, of such records and documents of the Company, certificates of officers, directors and representatives of the Company, certificates of public officials, and such other documents as we have deemed appropriate as a basis for the opinions set forth below.
In expressing the opinion set forth below, we have assumed the following:
1. Each individual executing any of the Documents, whether on behalf of such individual or another person, is legally competent to do so, and that each of the parties executing any of the Documents have duly and validly done so.
2. Each individual executing any of the Documents on behalf of a party (other than the Company) is duly authorized to do so.
3. All Documents submitted to us as originals are authentic. The form and content of all Documents submitted to us as unexecuted drafts do not differ in any respect relevant to this opinion from the form and content of such Documents as executed and delivered. All Documents submitted to us as
| AUSTIN BOSTON CHICAGO DALLAS DENVER |
DETROIT HOUSTON JACKSONVILLE LOS ANGELES MADISON |
MEXICO CITY MIAMI MILWAUKEE NEW YORK ORLANDO |
SACRAMENTO SALT LAKE CITY SAN DIEGO SAN FRANCISCO SILICON VALLEY |
TALLAHASSEE TAMPA WASHINGTON, D.C. BRUSSELS TOKYO |
January 22, 2024
Page 2
certified or photostatic copies conform to the original documents. All signatures on all such Documents are genuine. All public records reviewed or relied upon by us or on our behalf are true and complete. All statements and information contained in the Documents are true and complete. There has been no oral or written modification or amendment to the Documents, or waiver of any provision of the Documents, by action or omission of the parties or otherwise.
4. The Company will issue the Shares in accordance with the Resolutions and, prior to the issuance of any Shares, the Company will have available for issuance, under the Company’s Articles of Incorporation, as amended, the requisite number of authorized but unissued shares of common stock. As of the date hereof, the Company has available for issuance, under the Company’s Articles of Incorporation, as amended, the requisite number of authorized but unissued shares of common stock for the issuance of the Shares.
Our opinion expressed herein is limited to the Florida Business Corporation Act, and we express no opinion as to the laws of any other jurisdiction.
Based upon, subject to and limited by the foregoing, we are of the opinion that, upon the issuance of the Shares pursuant to the terms of the Offering Agreement and the receipt by the Company of the consideration for the Shares (not less than par value) pursuant to the terms of the Offering Agreement, the Shares will be validly issued, fully paid, and nonassessable.
This opinion is issued as of the date hereof, and we assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed herein after the date hereof. This opinion is limited to the matters set forth herein, and no other opinion should be inferred beyond the matters expressly stated.
We consent to the filing of this opinion in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the “Securities Act”), as Exhibit 5.2 to the Registration Statement and to the references to our firm under the caption “Legal Matters” therein and in the Prospectus. In giving our consent, we do not admit that we are “experts” within the meaning of Section 11 of the Securities Act or within the category of persons whose consent is required by Section 7 of the Securities Act.
Very truly yours,
/s/ Foley & Lardner LLP
Foley & Lardner LLP
Exhibit 5.3
|
|
ATTORNEYS AT LAW
100 North Tampa Street, Suite 2700 Tampa, FL 33602-5810 TAMPA, FL 33601-3391 813.229.2300 TEL 813.221.4210 FAX WWW.FOLEY.COM |
January 22, 2024
HCI Group, Inc.
3802 Coconut Palm Drive
Tampa, Florida 33619
Ladies and Gentlemen:
We have acted as counsel to HCI Group, Inc., a Florida corporation (the “Company”), in connection with the preparation of a Registration Statement on Form S-3 (the “Registration Statement”), including the Prospectus constituting a part thereof (the “Base Prospectus”) and the prospectus supplement contained in the Registration Statement relating to the potential resale of the Warrants and the Shares (each as defined below) from time to time and the potential issuance by the Company of the Shares (as defined below) (together with the Base Prospectus, the “Prospectus”), filed on January 22, 2024 and declared effective by the Securities and Exchange Commission (the “Commission”) on January 22, 2024 pursuant to Rule 462(e) promulgated under the Securities Act of 1933, as amended (the “Securities Act”) in connection with the (1) the possible issuance of up to 750,000 shares of common stock, no par value, of the Company to the holder of the Warrants (as defined below) upon the exercise of the Warrants (the “Shares”); (2) the possible resale by the selling security holder identified in the Prospectus of amended and restated common stock purchase warrants issued in a private placement on January 22, 2024 (the “Warrants”); and (3) the possible resale by the selling security holder identified in the Prospectus of up to 750,000 of the Shares. The Shares and the Warrants are referred to collectively herein as the “Securities”).
In connection with our representation, we have examined: (i) the Warrants, (ii) the Registration Statement and the Prospectus, (iii) the Articles of Incorporation of the Company, as amended, (iv) the Bylaws of the Company, as amended and (v) certain proceedings and actions taken by the Board of Directors of the Company in connection with the issuance and sale of the Securities. We have also considered such matters of law and of fact, including the examination of originals or copies, certified or otherwise identified to our satisfaction, of such records and documents of the Company, certificates of officers, directors and representatives of the Company, certificates of public officials, and such other documents as we have deemed appropriate as a basis for the opinions set forth below. In our examination of the above-referenced documents, we have assumed the genuineness of all signatures, the authenticity of all documents, certificates, and instruments submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. We have also assumed with respect to the Shares that there will be sufficient shares of Common Stock authorized under the Articles of Incorporation of the Company, as amended, and not otherwise reserved for issuance when the Warrants are exercised.
The opinions expressed herein are limited in all respects to the federal laws of the United States of America and the applicable provisions of the Florida Business Corporation Act and
| AUSTIN BOSTON CHICAGO DALLAS DENVER |
DETROIT HOUSTON JACKSONVILLE LOS ANGELES MADISON |
MEXICO CITY MIAMI MILWAUKEE NEW YORK ORLANDO |
SACRAMENTO SAN DIEGO SAN FRANCISCO SILICON VALLEY TALLAHASSEE |
TAMPA WASHINGTON, D.C. BRUSSELS TOKYO |
January 22, 2024
laws of the State of New York, and no opinion is expressed with respect to the laws of any other jurisdiction or any effect which such laws may have on the opinions expressed herein. This opinion is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated herein.
Based upon the foregoing examination and in reliance thereon, and subject to the assumptions stated and in reliance on the statements of fact contained in the documents that we have examined, we are of the opinion that:
1. The Shares, when issued and paid for upon exercise of the Warrants and in accordance with the terms of such Warrants, will be validly issued, fully paid and nonassessable.
2. The Warrants constitute valid and binding obligations of the Company enforceable in accordance with their terms.
This opinion is issued as of the date hereof, and we assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed herein after the date hereof. This opinion is limited to the matters set forth herein, and no other opinion should be inferred beyond the matters expressly stated.
We consent to your filing this opinion as an exhibit to the Registration Statement and to the reference to our firm in the Prospectus under the heading “Legal Matters.” In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Foley & Lardner LLP
Foley & Lardner LLP
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in this registration statement on Form S-3 of our reports dated March 10, 2023, with respect to the consolidated financial statements of HCI Group, Inc., and the effectiveness of internal control over financial reporting, appearing in the Annual Report on Form 10-K of HCI Group, Inc. for the year ended December 31, 2022. We also consent to the reference to our firm under the caption “Experts” in this registration statement.
| /s/ FORVIS, LLP |
| Charlotte, North Carolina |
| January 22, 2024 |