EXHIBIT 10.50
Exchange Agreement
August 26, 2021
HCI Group Inc.
4.25% Convertible Senior Notes due 2037
The undersigned investor (the “Investor”), for itself and on behalf of the beneficial owners listed on Exhibit A hereto (“Accounts”) for whom the Investor holds contractual and investment authority (each, including the Investor if it is a party exchanging Notes (as defined below), an “Exchanging Investor”), hereby agrees to exchange, with HCI Group Inc., a Florida corporation (the “Company”), certain 4.25% Convertible Senior Notes due 2037, CUSIP 40416EAD5 (the “Notes”) for shares (“Shares”) of the Company’s common stock, no par value per share (the “Common Stock”), pursuant to this exchange agreement (this “Agreement”). The Investor understands that the exchange (the “Exchange”) is being made without registration of the offer or sale of the Shares under the Securities Act of 1933, as amended (the “Securities Act”), or any securities laws of any state of the United States or of any other jurisdiction in a private placement pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act and that each Exchanging Investor participating in the Exchange is required to be an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act. Capitalized terms used but not defined in this Agreement have the respective meanings set forth in the indenture, dated as of March 3, 2017 (the “Indenture”) between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).
in each case, as adjusted in good faith by the Company for the following events occurring on or after the date hereof and prior to the Closing Date: any stock dividend, stock split, stock combination, reclassification and/or any transaction for which the Conversion Price of the Notes would be adjusted pursuant to the Indenture.
For the avoidance of doubt, in lieu of issuing any fractional share of Common Stock as part of the Share Consideration, the Company will deliver to such Exchanging Investor a cash amount equal to the product of the related fraction and the Last Reported Sale Price on the final Trading Day of the Reference Period (collectively with the cash issued under clause (c) above, the “Cash
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Consideration”). No cash will be paid to any Exchanging Investor in respect of any accrued and unpaid interest on the Exchanged Notes as part of the Share Consideration and the Cash Consideration (collectively, the “Exchange Consideration”); provided that the Exchanging Investor shall receive payment of accrued interest on the Exchanged Notes for the six-month period ended September 1, 2021 in connection with the Company’s payment on or about September 1, 2021 to record holders of the Notes as of August 15, 2021.
“Business Day” means any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.
“Daily VWAP” means, for each Trading Day (as defined below) in the Reference Period (as defined below), the per share volume-weighted average price of the Common Stock 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, and excluding trades greater than 20,000 shares as determined by inputting 20,000 in the upper parameter of the Vol Filter (or if such volume-weighted average price is unavailable, the Last Reported Sale Price on such day). The “Daily VWAP” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
“Last Reported Sale Price” of the Common Stock on any date means the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is traded.
“Market Disruption Event” means (a) a failure by the primary U.S. national or regional securities exchange or market on which the Common Stock is listed or admitted for trading to open for trading during its regular trading session or (b) the occurrence or existence prior to 1:00 p.m., New York City time, on any Scheduled Trading Day (as defined in the Indenture) for the Common Stock for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Common Stock or in any options contracts or futures contracts relating to the Common Stock.
“Reference Period” means the period of five (5) consecutive Trading Days commencing on the first Trading Day following the date hereof.
“Trading Day” means a day on which (a) there is no Market Disruption Event and (b) trading in the Common Stock generally occurs on The New York Stock Exchange (“NYSE”) or, if the Common Stock is not then listed on NYSE, on the principal other U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then listed or admitted for trading, except that if the Common Stock is not so listed or admitted for trading, “Trading Day” means a Business Day.
The Investor agrees that it and any Exchanging Investor shall not deliver a Notice of Conversion with respect to any Exchanged Notes and the Investor and each Exchanging Investor shall hold the Exchanged Notes until the Closing (as defined below). In consideration for the performance of their obligations
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hereunder (including as described in the immediately preceding sentence), the Company agrees to deliver the Exchange Consideration on the Closing Date (as defined below) to each Exchanging Investor in exchange for its Exchanged Notes.
The Exchange shall occur in accordance with the procedures set forth in Exhibit B.2 hereto (the “Exchange Procedures”); provided that each of the Company and the Investor acknowledges that the delivery of the Shares to any Exchanging Investor may be delayed due to procedures and mechanics within the system of The Depositary Trust Company (“DTC”) or other events beyond the Company’s control and that such a delay will not be a default under this Agreement so long as (i) the Company is using its reasonable best efforts to effect the issuance of the Shares and any such delay does not exceed five (5) Business Days after the Closing Date (provided that if such time limit is exceeded, the Investor may terminate this agreement by written notice to the Company), or (ii) such delay arises due to a failure by Investor to deliver settlement instructions in accordance with Section 3(o); provided, further, that no delivery of Shares will be made until the Exchanged Notes have been properly submitted for exchange in accordance with the Exchange Procedures and no accrued interest will be payable by reason of any delay in making such delivery.
The closing of the Exchange (the “Closing”) shall take place remotely via the exchange of documents and signatures at 10:00 a.m., New York City time, on the first Business Day after the last day of the Reference Period (the “Closing Date”), or at such other time and place as the Company and the Investor may mutually agree. On the Closing Date, subject to satisfaction of the conditions precedent specified herein and the prior receipt by the Company from the Investor of the Exchanged Notes, the Company shall deliver the Share Consideration to the DTC account specified by the Investor for each relevant Exchanging Investor in Exhibit B.1.
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If to the Company: | HCI Group Inc. 3802 Coconut Palm Drive Tampa, Florida 33619 |
with a copy to (which shall not constitute notice):
| Curt Creely, Esquire Foley & Lardner LLP 100 North Tampa St., Suite 2700 Tampa, Florida 33602 ccreely@foley.com
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[SIGNATURE PAGE FOLLOWS]
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| HCI Group Inc.
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| By Name: Paresh Patel Title: Chief Executive Officer |
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Please confirm that the foregoing correctly sets forth the agreement between the Company and the Investor by signing in the space provided below for that purpose.
AGREED AND ACCEPTED:
Investor: |
CITADEL EQUITY FUND LTD., in its capacity as described in the first paragraph hereof
By Name: Title: Authorized Signatory |
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Exchanging Investor Information
Exchanging Investor | Aggregate Principal Amount of Exchanged Notes |
Citadel Equity Fund Ltd | 46,997,000 |
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Exchanging Investor:
Citadel Equity Fund Ltd.
______________________________________________
Investor Address:
131 South Dearborn Street, Chicago, Illinois 60603
Telephone: 312-395-3269
Country of Residence:
Cayman Islands
Taxpayer Identification Number:
98-0339176
Details regarding any position, transaction, or agreement with Citadel are highly confidential, and may not be shared with unauthorized parties. Accordingly, communications between the issuer and a Prime Broker for Citadel cannot include details regarding Citadel positions or transactions that pertain to another Prime Broker. |
Barclays: 10,930,000 principal
Account for Notes:
DTC Participant Number: 229
DTC Participant Name: Barclays Capital Inc
DTC Participant Phone Number: 212-528-1151
DTC Participant Contact Email: N/A – Citadel can coordinate email communication if necessary
FFC Account #: N/A
Account # at Bank/Broker: N/A
Account for Shares (if different from Notes):
DTC Participant Number:
DTC Participant Name:
DTC Participant Phone Number:
DTC Participant Contact Email:
FFC Account #:
Account # at Bank/Broker:
Wire instructions:
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Bank Name: | The Bank of New York Mellon |
Bank Routing #: | 021000018 |
Account Number: | 8901328197 |
Account Name | Barclays Bank PLC Prime Broker |
FFC Account Name: | Citadel Equity Fund Ltd |
FFC Account Number: | 22056679 |
Broker Contact Name: | Richard Reid |
Broker Contact Phone: | 212-528-1151 |
BNP Paribas: 12,544,000 principal
Account for Notes:
DTC Participant Number: 2147
DTC Participant Name: BNP Paribas, New York Branch
DTC Participant Phone Number: 312-237-3329
DTC Participant Contact Email: N/A – Citadel can coordinate email communication if necessary
FFC Account #: N/A
Account # at Bank/Broker: N/A
Account for Shares (if different from Notes):
DTC Participant Number:
DTC Participant Name:
DTC Participant Phone Number:
DTC Participant Contact Email:
FFC Account #:
Account # at Bank/Broker:
Wire Instructions:
Bank Name: | BNP Paribas, NA |
Bank Routing #: | 026 007 689 |
Account Number: | 61661700177 |
Account Name | BNP Paribas Prime Brokerage, Inc. |
FFC Account Name: | Citadel Equity Fund Ltd |
FFC Account Number: | 3130196912 |
Broker Contact Name | Bill Gardner |
Broker Contact Phone: | 312-237-3329 |
UBS: 11,786,000 principal
Account for Notes:
DTC Participant Number: 642
DTC Participant Name: UBS Securities LLC
DTC Participant Phone Number: 212-713-1116
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DTC Participant Contact Email: N/A – Citadel can coordinate email communication if necessary
FFC Account #: N/A
Account # at Bank/Broker: N/A
Account for Shares (if different from Notes):
DTC Participant Number:
DTC Participant Name:
DTC Participant Phone Number:
DTC Participant Contact Email:
FFC Account #:
Account # at Bank/Broker:
Wire Instructions:
Bank Name: | UBS AG, STAMFORD |
Bank Routing #: | 026 007 993 |
Account Number: | 101-WA-797414-000 |
Account Name: | UBS Securities LLC |
FFC Account Name: | Citadel Equity Fund Ltd |
FFC Account Number: | 75292374 |
Broker Contact Name: | Michael Hallett |
Broker Contact Phone: | 212-713-1116 |
Wells Fargo: 11,737,000 principal
Account for Notes:
DTC Participant Number: 2072
DTC Participant Name: Wells Fargo Bank, N.A.
DTC Participant Phone Number: 212-822-4892
DTC Participant Contact Email: N/A – Citadel can coordinate email communication if necessary
FFC Account #: N/A
Account # at Bank/Broker: N/A
Account for Shares (if different from Notes):
DTC Participant Number:
DTC Participant Name:
DTC Participant Phone Number:
DTC Participant Contact Email:
FFC Account #:
Account # at Bank/Broker:
Wire Instructions:
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Bank Name: | Wells Fargo Bank, N.A |
Bank Routing #: | 121000248 |
Account Number: | 4087268249 |
Account Name: | Wells Fargo Bank, N.A. |
FFC Account Name: | Citadel Equity Fund Ltd |
FFC Account Number: | 2RU00069 |
Broker Contact Name: | DJ Johnson |
Broker Contact Phone: | 212-822-4892 |
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Exchange Procedures
NOTICE TO INVESTOR
These are the Exchange Procedures for the settlement of the exchange of 4.25% Convertible Senior Notes due 2037, CUSIP 40416EAD5 (the “Exchanged Notes”) of HCI Group, Inc., a Florida corporation (the “Company”), for the Shares to be issued as Exchange Consideration (as defined in and pursuant to the Agreement between you and the Company), which is expected to occur on or about September 3, 2021. To ensure timely settlement for the Exchange Consideration, please follow the instructions as set forth below.
These instructions supersede any prior instructions you received. Your failure to comply with these instructions may delay your receipt of the Exchange Consideration.
To deliver Exchanged Notes:
You must direct the eligible DTC participant through which you hold a beneficial interest in the Exchanged Notes on September [●], 3, 2021, no later than 9:00 a.m., New York City time, to perform a free delivery through DTC for the aggregate principal amount of Exchanged Notes set forth on Exhibit A of the Agreement to be exchanged for Shares.
To receive Exchange Consideration:
You must direct the eligible DTC participant on September 3, 2021, no later than 9:00 a.m., New York City time, to perform a free delivery through DTC for the aggregate principal amount of Exchanged Notes set forth on Exhibit A of the Agreement to be exchanged for Shares.
American Stock Transfer is the Transfer Agent and Registrar for the Common Stock.
Closing: On September 3, 2021, after the Company receives your Exchanged Notes and your delivery instructions as set forth above, and subject to the satisfaction of the conditions to Closing as set forth in your Exchange Agreement, the Company will deliver the Exchange Consideration in respect of the Exchanged Notes in accordance with the delivery instructions above.
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