UNAM Unico American Corp

Item 1.01. Entry into a Material Definitive Agreement.

On September 10, 2021, Crusader Insurance Company (“Crusader”), a subsidiary of Unico American Corporation (the “Company”), and the California Department of Insurance (“CDI”) entered into an Administrative Supervision Agreement, dated as of September 7, 2021 (the “Supervision Agreement”) at the request of the CDI. The Supervision Agreement was requested by the CDI because of CDI’s expressed concerns regarding the financial stability of Crusader and the potential effects on Crusader and Crusader’s California policyholders of any potential bankruptcy of the Company.

The Supervision Agreement among other things, provides for the appointment by CDI of a Special Examiner to provide supervision and regulatory oversight of Crusader. It imposes limitations on Crusader’s ability to take certain actions without the prior written consent of the California Insurance Commissioner (the “Commissioner”), the Special Examiner, or the Special Examiner’s appointed representative. Among the actions that Crusader is prohibited from making without such prior written consent are the following: (i) making payments, engaging in any transaction with or entering into any agreement with, any affiliated or otherwise related person or entity if the cost to Crusader is an individual payment of more than $5,000 or aggregate payments of more than $20,000; (ii) making payments, engaging in any transaction with or entering into any agreement with, any non-affiliated or otherwise unrelated person or entity if the cost to Crusader is an individual payment of more than $5,000 or aggregate payments of more than $20,000; (iii) paying any dividend of any amount; (iv) except as provided in (i) and (ii), making any payments to or on behalf of the Company in connection with any agreement entered into between Crusader and the Company; (v) making any loans to affiliates, officers, directors, shareholders or third parties; (vi) incurring any debt, obligation or liability greater than $5,000; (vii) entering into any new reinsurance contract or treaty or amending any existing reinsurance contract or treaty; (viii) making any material changes in management and essential staffing; (ix) increasing salaries or benefits of officers or directors or making any preferential payment of bonuses or other payments considered legally preferential; and (x) making any other material changes in its normal course of operations, including but not limited to, entering into new lines of business, making major corporate reorganizations, or redomesticating from California. The Supervision Agreement provides that the Special Examiner will meet with Crusader to develop a list of recurring payments under items (i) and (ii) that may not require prior written approval.

The Supervision Agreement does not restrict the Company or Crusader from pursuing a sale or restructuring of Crusader, subject to applicable regulatory approvals and requirements. It requires Crusader to immediately notify the Commissioner or the Special Examiner in writing of any adverse corporate events or developments. The Commissioner reserves the right to amend or supplement the conditions and to take further regulatory action, in his sole discretion, as the Commissioner deems necessary and appropriate.

The Supervision Agreement will remain in effect until the Commissioner provides written notice to Crusader that the Supervision Agreement is terminated, or until the Supervision Agreement is superseded by an administrative or court order.

The foregoing summary of the Supervision Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which is filed as Exhibit 10.1 hereto.