FORM OF PERFORMANCE-BASED RESTRICTED STOCK AGREEMENT

PERFORMANCE-BASED RESTRICTED STOCK AGREEMENT

FOR

[RECIPIENT]

Award of Restricted Stock. Federated National Holding Company (the “Company”) hereby grants, as of [GRANT DATE] (the "Date of Grant"), to [RECIPIENT] ("Recipient"), [QUANTITY] restricted shares of the Company's Common Stock, par value $0.01 per share (collectively the "Restricted Stock"). The Restricted Stock is being issued pursuant to the Company's 2012 Stock Incentive Plan, as amended to date and as it may hereafter be amended (the "Plan"), which is incorporated herein for all purposes. The Restricted Stock shall be subject to the terms, provisions and restrictions set forth in this Agreement and in the Plan. As a condition to entering into this Agreement, and as a condition to the issuance of any shares of Restricted Stock (or any other securities of the Company), the Recipient agrees to be bound by all of the terms and conditions herein and in the Plan and all applicable laws and regulations. Unless otherwise provided herein, terms used herein that are defined in the Plan and not defined herein shall have the meanings attributable thereto in the Plan.

Vesting of Restricted Stock.

(a)Time-Vesting of Restricted Stock. All of the Restricted Stock shall be subject to time-vesting. Except as otherwise provided in this Section 2, the shares of Restricted Stock shall become vested in the following amounts, at the following times and upon the following conditions, provided that the continuous service of the Recipient continues through and on the applicable Time-Vesting Date:


	Number of Shares of Restricted Stock		Time-Vesting Date
	[number of shares]		[Date(s)]

Other than in accordance with this Section 2, there shall be no proportionate or partial vesting of shares of Restricted Stock in or during the months, days or periods prior to the Time-Vesting Date and all vesting of shares of Restricted Stock shall occur only on the Time-Vesting Date.

(b)Performance-Vesting of Restricted Stock. In addition to the time-vesting provision contained in Section 2(a) above, all of the shares of Restricted Stock shall be subject to performance-vesting, based on the performance goals established by the Administrator on [date] (the “Performance Goals”) and the achievement of which is substantially uncertain as of the Date of Grant. Other than in accordance with this Section 2, the shares of Restricted Stock shall vest on the Time-Vesting Date if and only if and to the extent that the Performance Goals described on Exhibit A are achieved, as approved by the Administrator.

(c)Change in Control. [In the event that a Change in Control of the Company occurs during the Recipient's continuous service and the Recipient’s employment is terminated without Cause or for Good Reason within the [●]-month period following the Change in Control (a “Change in Control Termination”), the shares of Restricted Stock subject to this Agreement shall become immediately and fully vested as of the date of the Change in Control Termination, and shall be delivered, subject to any requirements under this Agreement, to the Recipient on the date of the Change in Control Termination. For the avoidance of doubt, if a Change in Control of the Company occurs prior to a Time-Vesting Date and during the Recipient's continuous service, and a Change in Control Termination occurs, then the requirement to achieve the Performance Goals is immediately and irrevocably waived.]

(d)Administrator Discretion to Accelerate Vesting. Notwithstanding any other term or provision of this Agreement, the Administrator shall be authorized, in its sole discretion, based upon its review and evaluation of the performance of the Recipient and of the Company, to accelerate the vesting of any shares of Restricted Stock under this Agreement, at such times and upon such terms and conditions as the Administrator shall deem advisable, provided that such action does not result in the loss of a tax deduction of the compensation attributable to the vesting of the shares of Restricted Stock under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").

(e)Termination of Recipient's Employment due to Death or Disability. In the event that the Recipient's continuous service terminates prior to the Time-Vesting Date in connection with (i) the Recipient's death or (ii) the Recipient's Disability, [then a pro rata number] [or (as such term is defined in the Recipient's employment agreement dated [date of employment agreement] (the "Recipient's Employment Agreement")), then all] [then none] of shares of Restricted Stock subject to this Agreement shall be immediately and fully vested as of the date of such death or termination of employment, as the case may be, and shall, to the extent so vested, be delivered, subject to any requirements under this Agreement, to (x) the Recipient or (y) the beneficiary or beneficiaries designated by the Recipient, or if the Recipient has not so designated any beneficiary(ies), or no designated beneficiary survives the Recipient, such shares shall be delivered to the personal representative of the Recipient's estate, as the case may be. [The pro rata number of shares of Restricted Stock that shall time vest under this Section 2(e) shall be equal to (x) [insert number of shares granted under this Agreement] multiplied by (y) a fraction, the numerator of which shall be equal to the number of full and partial months following the Date of Grant during which the Recipient was employed by the Company and the denominator of which shall be [insert time vesting period in months].] [For the avoidance of doubt, if the Recipient's Continuous Service terminates in connection with his death or Disability, then the requirement to achieve the Performance Goals is immediately and irrevocably waived.]

(f)Termination of Recipient's Employment [due to] [or Other Than] a Termination [for Cause or] without [Good Reason] [or Cause, or due to Death or Disability]. In the event that the Recipient's continuous service terminates prior to the Time-Vesting Date due to a termination of the Recipient's employment [other than a termination of the Recipient's employment by the Company without Cause or due to the Recipient's death or Disability] [or (i) by the Company for Cause (as such term is defined in the Recipient's Employment Agreement) or (ii) by the Recipient without Good Reason (as such term is defined in the Recipient's Employment Agreement)], then all of the shares of Restricted Stock subject to this Agreement shall be immediately forfeited upon

such termination of continuous service and revert back to the Company without any payment to the Recipient. The Administrator shall have the power and authority to enforce on behalf of the Company any rights of the Company under this Agreement in the event of the Recipient's forfeiture of shares pursuant to this Section 2(f).

(g)Termination of Recipient's Employment due to a Termination without Cause [for Good Reason prior to [vesting date]]. In the event that the Recipient's continuous service terminates [prior to vesting date] due to a termination of the Recipient's employment by the Company without Cause [or by the Recipient for Good Reason], [[then [a pro rata number of shares] [or all] of Restricted Stock subject to this Agreement shall immediately time-vest as of the date of such termination of employment, but shall only fully vest upon the achievement of the Performance Goal prior to [vesting date], and shall be delivered, subject to any requirements under this Agreement, to the Recipient within 10 days following the date the Performance Goal has been achieved] [then all of the shares of Restricted Stock subject to this Agreement shall be immediately forfeited upon such termination of continuous service and revert back to the Company without any payment to the Recipient]]. [The pro rata number of shares of Restricted Stock that shall time-vest under this Section 2(g) shall be equal to (x) [insert number of shares granted under this Agreement] multiplied by (y) a fraction, the numerator of which shall be equal to the number of full and partial months following the Date of Grant during which the Recipient was employed by the Company and the denominator of which shall be [insert time vesting period in months ].] For the avoidance of doubt, if the Performance Goal is not achieved prior to [vesting date], then all of the shares of Restricted Stock subject to this Agreement shall be immediately forfeited as of [vesting date] and shall revert back to the Company without any payment to the Recipient.

Delivery of Restricted Stock.

(a)One or more stock certificates evidencing the shares of Restricted Stock shall be issued in the name of the Recipient but shall be held and retained by the Records Administrator of the Company until the date (the "Applicable Date") on which the shares (or a portion thereof) subject to this Restricted Stock award become fully vested shares pursuant to Section 2 above. All such stock certificates shall bear the following legend, along with such other legends that the Administrator shall deem necessary and appropriate or which are otherwise required or indicated pursuant to any applicable law:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO SUBSTANTIAL VESTING AND OTHER RESTRICTIONS AS SET FORTH IN THE RESTRICTED STOCK AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES, AND INCLUDE VESTING CONDITIONS WHICH MAY RESULT IN THE COMPLETE FORFEITURE OF THE SHARES.

(b)The Recipient shall deposit with the Company stock powers or other instruments of transfer or assignment, duly endorsed in blank with signature(s) guaranteed, corresponding to each certificate representing shares of Restricted Stock until such shares become fully vested shares. If the Recipient shall fail to provide the Company with any such stock power or other instrument of

transfer or assignment, the Recipient hereby irrevocably appoints the Secretary of the Company as his attorney-in-fact, with full power of appointment and substitution, to execute and deliver any such power or other instrument which may be necessary to effectuate the transfer of the Restricted Stock (or assignment of distributions thereon) on the books and records of the Company.

(c)On or after each Applicable Date, upon written request to the Company by the Recipient, the Company shall promptly cause a new certificate or certificates to be issued for and with respect to all shares that become fully vested shares on that Applicable Date, which certificate(s) shall be delivered to the Recipient as soon as administratively practicable after the date of receipt by the Company of the Recipient's written request The new certificate or certificates shall continue to bear those legends and endorsements that the Company shall deem necessary or appropriate (including those relating to restrictions on transferability and/or obligations and restrictions under applicable securities laws).

Rights with Respect to Restricted Stock.

(a)Except as otherwise provided in this Agreement, the Recipient shall have, with respect to all of the shares of Restricted Stock all of the rights of a holder of shares of Common Stock of the Company, including without limitation (i) the right to vote such Restricted Stock, (ii) the right to receive dividends, if any, as may be declared on the Restricted Stock from time to time, and (iii) the rights available to all holders of shares of Common Stock of the Company upon any merger, consolidation, reorganization, liquidation or dissolution, stock split-up, stock dividend or recapitalization undertaken by the Company; provided, however, that all of such rights shall be subject to the terms, provisions, conditions and restrictions set forth in this Agreement (including without limitation conditions under which all such rights shall be forfeited). Any shares issued to the Recipient as a dividend with respect to shares of Restricted Stock shall have the same status and bear the same legend as the shares of Restricted Stock and shall be held by the Company, if the shares of Restricted Stock that such dividend is attributed to is being so held, unless otherwise determined by the Administrator. In addition, notwithstanding any provision to the contrary herein, any cash dividends declared with respect to shares of Restricted Stock subject to this Agreement shall be (i) held in escrow by the Administrator until such time as the shares of Restricted Stock that such cash dividends are attributed to shall become fully vested shares, and in the event that such shares of Restricted Stock are subsequently forfeited, the cash dividends attributable to such portion shall be forfeited as well and (ii) paid on the date such shares vest in full, provided that such payment shall be made in no event later than March 15 of the year following the year in which such vesting date occurs.

(b)If at any time while this Agreement is in effect (or shares granted hereunder shall be or remain unvested while Recipient's continuous service continues and has not yet terminated or ceased for any reason), there shall be any increase or decrease in the number of issued and outstanding shares of the Common Stock of the Company through the declaration of a stock dividend or through any recapitalization resulting in a stock split-up, combination or exchange of such shares, then and in that event, the Administrator shall make any adjustments it deems fair and appropriate, in view of such change, in the number of shares of Restricted Stock then subject to this Agreement. If any such adjustment shall result in a fractional share, such fraction shall be disregarded.

(c)Notwithstanding any term or provision of this Agreement to the contrary, the existence of this Agreement, or of any outstanding Restricted Stock awarded hereunder, shall not affect in any manner the right, power or authority of the Company to make, authorize or consummate: (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business; (ii) any merger, consolidation or similar transaction by or of the Company; (iii) any offer, issue or sale by the Company of any capital stock of the Company, including any equity or debt securities, or preferred or preference stock that would rank prior to or on parity with the Restricted Stock and/or that would include, have or possess other rights, benefits and/or preferences superior to those that the Restricted Stock includes, has or possesses, or any warrants, options or rights with respect to any of the foregoing; (iv) the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the stock, assets or business of the Company; or (vi) any other corporate transaction, act or proceeding (whether of a similar character or otherwise).

(d)Acknowledgements of Recipient Regarding Forfeiture of Non-Vested Shares and Company Clawback Policy. By signing this Agreement where indicated below, the Recipient hereby acknowledges and agrees as follows:

(i)If the Recipient’s continuous service with the Company and its subsidiaries is terminated for any reason, any shares of Restricted Stock that are not vested, and that do not become vested pursuant to Section 2 hereof as a result of such termination, shall be forfeited immediately upon such termination of continuous service and revert back to the Company without any payment to the Recipient. The Administrator shall have the power and authority to enforce on behalf of the Company any rights of the Company under this Agreement in the event of the Recipient’s forfeiture of non-vested shares pursuant to this Section.

(ii)The Company’s Board of Directors (the “Board”) has adopted a Clawback Policy, as may be amended from time to time (the “Clawback Policy”), which authorizes the Company, when directed by the Board in its discretion, to seek to recover from any current or former executive officer that has been determined by the Board to have engaged in “Misconduct” any “Incentive-Based Compensation” (each as defined in the Clawback Policy) awarded to such executive officer during the time period specified in the Clawback Policy. The Restricted Stock granted hereby may constitute Incentive-Based Compensation that is subject to the Clawback Policy.

Transferability. Unless otherwise determined by the Administrator, the shares of Restricted Stock are not transferable unless and until they become fully vested shares in accordance with this Agreement, otherwise than by will or under the applicable laws of descent and distribution. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Recipient. Except as otherwise permitted pursuant to the first sentence of this Section, any attempt to effect a Transfer of any shares of Restricted Stock prior to the date on which the shares become fully vested shares shall be void ab initio. For purposes of this Agreement, "Transfer" shall mean any sale, transfer, encumbrance, gift, donation, assignment, pledge, hypothecation, or other disposition, whether similar or dissimilar to those previously enumerated, whether voluntary or involuntary, and including, but not limited to, any disposition by operation of law, by court order, by judicial process, or by foreclosure, levy or attachment.

Tax Matters: Section 83(b) Election.

(a)If the Recipient properly elects, within thirty (30) days of the Date of Grant, to include in gross income for federal income tax purposes an amount equal to the fair market value (as of the Date of Grant) of the Restricted Stock pursuant to Section 83(b) of the Code, the Recipient shall make arrangements satisfactory to the Company to pay to the Company any federal, state or local income taxes required to be withheld with respect to the Restricted Stock. If the Recipient shall fail to make such tax payments as are required, the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind (including without limitation, the withholding of any shares that otherwise would be issued to you under this Agreement) otherwise due to the Recipient any federal, state or local taxes of any kind required by law to be withheld with respect to the Restricted Stock.

(b)If the Recipient does not properly make the election described in Section 6(a) above, die Recipient shall, no later than the date or dates as of which the restrictions referred to in this Agreement hereof shall lapse, pay to the Company, or make arrangements satisfactory to the Administrator for payment of, any federal, state or local taxes of any kind required by law to be withheld with respect to the Restricted Stock (including without limitation the vesting thereof), including (if permitted by the Company) by providing instructions to the Company to net settle the vested Restricted Stock to be transferred to the Recipient under Section 3 above. If the Recipient fails to comply with the tax obligations set forth in the immediately preceding sentence (the "Tax Obligations"), then the Recipient hereby irrevocably authorizes and instructs a broker to be designated by the Company in its sole discretion to sell for the account of the Recipient a sufficient number of shares of the Restricted Stock (based upon prevailing market prices at the time of such sale) necessary to satisfy the Recipient's Tax Obligations, to remit to the Company the proceeds of such sale in such amount necessary to satisfy the Tax Obligations and to remit any balance resulting from such sale to the Recipient. The Company and any such broker shall be entitled to use and to rely upon the stock powers and other instruments of transfer provided pursuant to Section 3(b) above. In addition, the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to Recipient any federal, state, or local taxes of any kind required by law to be withheld with respect to the Restricted Stock.

(c)Tax consequences on the Recipient (including without limitation federal, state, local and foreign income tax consequences) with respect to the Restricted Stock (including without limitation the grant, vesting and/or forfeiture thereof) are the sole responsibility of the Recipient The Recipient shall consult with his or her own personal accountants) and/or tax advisor(s) regarding these matters, the making of a Section 83(b) election, and the Recipient's filing, withholding and payment (or tax liability) obligations.

Amendment, Modification and Assignment; Non-Transferability. This Agreement may only be modified or amended in a writing signed by the parties hereto. No promises, assurances, commitments, agreements, undertakings or representations, whether oral, written, electronic or otherwise, and whether express or implied, with respect to the subject matter hereof, have been made by either party which are not set forth expressly in this Agreement. Unless otherwise consented to in writing by the Company, in its sole discretion, this Agreement (and Recipient's rights hereunder) may not be assigned, and the obligations of Recipient hereunder may not be delegated, in whole or in part. The rights and obligations created hereunder shall be binding on the

Recipient and his or her heirs and legal representatives and on the successors and assigns of the Company.

Complete Agreement. This Agreement (together with those agreements and documents expressly referred to herein, for the purposes referred to herein) embody the complete and entire agreement and understanding between the parties with respect to the subject matter hereof, and supersede any and all prior promises, assurances, commitments, agreements, undertakings or representations, whether oral, written, electronic or otherwise, and whether express or implied, which may relate to the subject matter hereof in any way.

Miscellaneous.

(a)No Right to (Continued) Employment or Service. This Agreement and the grant of Restricted Stock hereunder shall not confer, or be construed to confer, upon the Recipient any right to employment or service, or continued employment or service, with the Company or any subsidiary.

(b)No Limit on Other Compensation Arrangements. Nothing contained in this Agreement shall preclude the Company or any subsidiary from adopting or continuing in effect other or additional compensation plans, agreements or arrangements, and any such plans, agreements and arrangements may be either generally applicable or applicable only in specific cases or to specific persons.

(c)Severability. If any term or provision of this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or under any applicable law, rule or regulation, then such provision shall be construed or deemed amended to conform to applicable law (or if such provision cannot be so construed or deemed amended without materially altering the purpose or intent of this Agreement and the grant of Restricted Stock hereunder, such provision shall be stricken as to such jurisdiction and the remainder of this Agreement and the award hereunder shall remain in full force and effect).

(d)No Trust or Fund Created. Neither this Agreement nor the grant of Restricted Stock hereunder shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any subsidiary and the Recipient or any other person. To the extent that the Recipient or any other person acquires a right to receive payments from the Company or any subsidiary pursuant to this Agreement, such right shall be no greater than the right of any unsecured general creditor of the Company.

(e)Law Governing. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Florida (without reference to the conflict of laws rules or principles thereof).

(f)Interpretation. The Recipient accepts the Restricted Stock subject to all of the terms, provisions and restrictions of this Agreement and the Plan. The undersigned Recipient hereby accepts as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under this Agreement.

(g)Headings. Section, paragraph and other headings and captions are provided solely as a convenience to facilitate reference. Such headings and captions shall not be deemed in any way material or relevant to the construction, meaning or interpretation of this Agreement or any term or provision hereof.

(h)Notices. Any notice under this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Company, to the Company's Secretary at Federated National Holding Company, 00000 X.X. 00xx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, or if the Company should move its principal office, to such principal office, and, in the case of the Recipient, to the Recipient's last permanent address as shown on the Company's records, subject to the right of either party to designate some other address at any time hereafter in a notice satisfying the requirements of this Section.

(i)Non-Waiver of Breach. The waiver by any party hereto of the other party's prompt and complete performance, or breach or violation, of any term or provision of this Agreement shall be effected solely in a writing signed by such party, and shall not operate nor be construed as a waiver of any subsequent breach or violation, and the waiver by any party hereto to exercise any right or remedy which he, she or it may possess shall not operate nor be construed as the waiver of such right or remedy by such party, or as a bar to the exercise of such right or remedy by such party, upon the occurrence of any subsequent breach or violation.

(j)Counterparts. This Agreement may be executed in two or more separate counterparts, each of which shall be an original, and all of which together shall constitute one and the same agreement.

(k) Internal Revenue Code Section 409A. The Restricted Stock granted hereunder is intended to be exempt from Section 409A of the Code and the Treasury regulations and other official guidance promulgated thereunder.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have executed this Agreement as of the date first written above.


	FEDERATED NATIONAL HOLDING
	COMPANY


	By:
	Name:
	Title:

	Date:


Agreed and Accepted:

RECIPIENT:


[Recipient’s name]

Date:

EXHIBIT A

PERFORMANCE GOALS

The number of shares of Restricted Stock that may be earned will be determined based on the actual performance level achieved with respect to the following performance measures during the period from [●] through [●] (the “Performance Period”):

[Performance measure];

and [Performance measure] (collectively referred to as the “Performance Goals,” and each individual measure, a “Performance Goal”);

and may be more or less than the number of shares of Restricted Stock set forth in Section 1 of the Agreement.

The chart below sets forth the applicable weighting of each performance measure and the Performance Goals needed to be achieved at each performance level for such performance measure during the Performance Period:


Long-Term Incentive Plan:		Incentive Plan Payout (% Based on [●]% of Base Salary)

Performance Metrics	Weight	Threshold	Target	Maximum
[Performance metric #1]	[●]%	[●]%	[●]%	[●]%
[Performance metric #2]	[●]%	[●]%	[●]%	[●]%
[Performance metric #3]	[●]%	[●]%	[●]%	[●]%

* The number of shares set forth on the first page of the Agreement is the number of shares payable based on target level performance. The actual number of shares of Restricted Stock that will be earned with respect to the [●] performance measure is based on [●]. Each performance measure will be evaluated on a measure by measure basis, and once performance results are determined as to each individual performance measure, those results will be aggregated and the weighting applied. [When assessing each performance measure, actual performance level achieved between each performance level will be interpolated on a straight line basis rounded down to the nearest whole number]; provided that if the actual performance level achieved does not meet threshold performance (i.e., less than [●]%) for the applicable performance measure, then no shares of Restricted Stock will be earned for that performance measure pursuant to this grant. Threshold level performance may be achieved for one performance measure and not another based on the Company’s actual performance during the Performance Period. The actual number of shares of Restricted Stock earned will be determined by the Administrator based on the actual performance level achieved with respect to each of the applicable Performance Goals, factoring in the weighting for each performance measure. The maximum number of shares of Restricted Stock that may be earned pursuant to this grant is capped at [●]% of the number of shares set forth in Section 1 of the Agreement.

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FORM OF PERFORMANCE-BASED RESTRICTED STOCK AGREEMENT

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