Exhibit 10.1

 

SHARED SERVICES AGREEMENT

 

THIS SHARED SERVICES AGREEMENT (this “Agreement”) is made as of March 31, 2020
(the “Effective Date”) by and between 1347 Property Insurance Holdings, Inc., a
Delaware corporation (the “Company”), and Fundamental Global Management, LLC, a
Delaware limited liability company (the “FGM”). Each party hereto shall be
referred to as, individually, a “Party” and, collectively with each other Party,
the “Parties.”

 

WHEREAS, the Company desires to engage FGM to provide the Services described
herein, and FGM wishes to be engaged to provide such Services, on the terms and
subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the Parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1 Defined Terms. Except as otherwise noted, for all purposes of this
Agreement, the following terms shall have the respective meanings set forth in
this Section 1.1, which meanings shall apply equally to the singular and plural
forms of the terms so defined:

 

“Affiliate” means, with respect to any Person, (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person
or (ii) any officer, director, general partner, managing member, manager or
trustee of such Person. For purposes of this definition, the terms
“controlling,” “controlled by” or “under common control with” shall mean, with
respect to any Persons, the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise, or
the power to elect at least 50% of the directors, general partners, managers or
Persons exercising similar authority with respect to such Person.

 

“Agreement” has the meaning set forth in the preamble of this Agreement.

 

“Automatic Renewal Term” has the meaning set forth in Section 2.2 hereof.

 

“Board” means, with respect to the Company, the Board of Directors of the
Company, or any committee thereof that has been duly authorized by the Board of
Directors to make a decision on, or bind the Company, as to the matter in
question.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which
banks in The City of New York are required, permitted or authorized, by
applicable law or executive order, to be closed for regular banking business.

 

“Direct Expenses” has the meaning set forth in Section 7.2(a) hereof.

 

 

 

 

“Effective Date” has the meaning set forth in the preamble of this Agreement.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Federal Securities Laws” means, collectively, the Securities Act, the Exchange
Act and the rules and regulations promulgated thereunder.

 

“FGM” has the meaning set forth in the preamble of this Agreement.

 

“Fiscal Quarter” means the Company’s fiscal quarter for purposes of its
reporting obligations under the Exchange Act.

 

“GAAP” means generally accepted accounting principles in effect in the United
States, consistently applied.

 

“Governing Documents” means the Certificate of Incorporation and Bylaws of the
Company, each as may be amended, revised, supplemented or otherwise modified
from time to time.

 

“Indebtedness” means, with respect to any Person, (i) any liability for borrowed
money, or under any reimbursement obligation relating to a letter of credit,
(ii) all indebtedness (including bond, note, debenture, purchase money
obligation or similar instrument) for the acquisition of any businesses,
properties or assets of any kind (other than property, including inventory, and
services purchased, trade payables, other expenses accruals and deferred
compensation items arising in the Ordinary Course of Business), (iii) all
obligations under leases that have been or should be, in accordance with GAAP,
recorded as capital leases, (iv) any liabilities of others described in the
preceding clauses (i) to (iii) (inclusive) that such Person has guaranteed or
that is otherwise its legal liability, and (v) (without duplication) any
amendment, supplement, modification, deferral, renewal, extension or refunding
of any liability of the types referred to in clauses (i) through (iv) above.

 

“Indemnitee” has the meaning set forth in Section 9.1 hereof.

 

“Independent Director” means a director who (i)(a) is not an officer or employee
of the Company, or an officer, director or employee of any of the Subsidiaries
of the Company or their Subsidiaries, and (b) was not appointed as a director
pursuant to the terms of this Agreement, and (ii) satisfies the independence
requirements under the Exchange Act and the rules and regulations of the
principal securities exchange on which the Company’s shares are traded.

 

“Initial Term” has the meaning set forth in Section 2.2 hereof.

 

“Investment Advisers Act” means the Investment Advisers Act of 1940, as amended.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended.

 

“Losses” has the meaning set forth in Section 9.1 hereof.

 

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“Ordinary Course of Business” means, with respect to any Person, an action taken
by such Person if such action is (i) taken in the normal day-to-day business or
operations of such Person and (ii) which is not required to be specifically
authorized or approved by the board of directors of such Person.

 

“Party” and “Parties” have the meaning set forth in the preamble of this
Agreement.

 

“Person” means an individual, a partnership, a joint venture, a corporation, an
association, a joint stock company, a limited liability company, a trust, an
estate, a nominee, an unincorporated organization or a government or any
department or agency or political subdivision thereof.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Services” has the meaning set forth in Section 3.1(a) hereof.

 

“Subsidiary” means, with respect to the Company, any other Person in which the
Company, directly or indirectly through one or more Affiliates or otherwise,
beneficially owns at least fifty percent (50%) of either the ownership interest
(determined by equity or economic interests) in, or the voting control of, such
other Person.

 

“Termination Fee” means, as of the date of termination, an amount equal to the
sum of the aggregate Shared Services Fee paid to FGM for the two Fiscal Quarters
immediately preceding the date of termination.

 

“Wind-Down Costs” has the meaning set forth in Section 8.4(c) hereof.

 

In addition, the words “herein,” “hereof’ and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision, and the words “includes” or “including”
shall be deemed to mean “includes” or “including without limitation.”

 

ARTICLE II

ENGAGEMENT OF FGM; TERM

 

Section 2.1 Engagement. The Company hereby engages FGM to perform the Services
as set forth in Section 3.1 hereof, and FGM hereby accepts such engagement, on
the terms and subject to the conditions set forth herein.

 

Section 2.2 Term. This Agreement is effective as of the Effective Date and shall
continue in operation, unless terminated in accordance with the terms hereof,
until the third (3rd) anniversary of the Effective Date (the “Initial Term”).
After the Initial Term, this Agreement shall be deemed renewed automatically
each year for an additional one-year period (an “Automatic Renewal Term”) unless
terminated in accordance with the terms hereof.

 

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ARTICLE III

OBLIGATIONS OF THE PARTIES

 

Section 3.1 Obligations of FGM.

 

(a) Subject to the oversight and supervision of the Board and the terms and
conditions of this Agreement, FGM shall during the term of this Agreement
(including any Automatic Renewal Term) (i) perform the services as set forth in
Schedule A hereto (collectively, the “Services”) and (ii) comply with the
provisions of the Governing Documents, as amended from time to time, and the
operational objectives and business plans of the Company in existence from time
to time. The Company has, as of the Effective Date, provided FGM with the
Governing Documents, internal policies and all stated operational objectives and
business plans of the Company (and the Subsidiaries, as applicable) approved by
the Board, and thereafter shall promptly provide FGM with all amendments to the
Governing Documents, internal policies and all stated operational objectives and
business plans of the Company (and the Subsidiaries, as applicable) approved by
the Board and any other available information reasonably requested by FGM in
order to perform the Services.

 

(b) In connection with the performance of its obligations under this Agreement,
FGM shall be required to obtain authorization and approval of the Company’s
Board in accordance with the Company’s internal policies regarding action
requiring Board approval, as otherwise required by the Board (or any applicable
committee thereof) or the Company’s officers, or as otherwise required by
applicable law.

 

(c) In connection with the performance of the Services under this Agreement, FGM
shall use reasonable efforts to comply with the Company’s internal compliance
policies and procedures.

 

(d) In connection with the performance of its obligations under this Agreement,
FGM is not permitted to, and nothing in this Agreement shall require FGM to,
engage in any activities that would cause it to become an “investment adviser”
as defined in Section 202(a)(11) of the Investment Advisers Act, or any
successor provision thereto.

 

(e) While FGM is providing the Services under this Agreement, FGM shall also be
permitted to provide services, including services similar to the Services
covered hereby, to any other Persons, including any Affiliates of FGM, but FGM
shall not render any services to any other Person on behalf of the Company or
the Subsidiaries except as may be directed by the Board. This Agreement and
FGM’s obligation to provide the Services under this Agreement shall not create
an exclusive relationship between FGM and its Affiliates, on the one hand, and
the Company and the Subsidiaries, on the other.

 

Section 3.2 Obligations of the Company

 

(a) The Company shall, and shall cause the Subsidiaries to, do all things
reasonably necessary as requested by FGM consistent with the terms of this
Agreement to enable FGM to fulfill its obligations under this Agreement.

 

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(b) The Company shall take reasonable steps to (i) direct its officers and
employees to act in accordance with the terms of this Agreement and the
reasonable directions of FGM in fulfilling FGM’s obligations hereunder and
allowing FGM to exercise its powers and rights hereunder and (ii) provide to FGM
all access, information and reports (including monthly management reports and
all other relevant reports), which FGM may reasonably require on such dates as
FGM may reasonably require.

 

(c) Without the prior written consent of FGM, the Company shall not amend any
provision of the Governing Documents that adversely affects the rights of FGM
hereunder.

 

(d) The Company agrees that, in connection with the performance by FGM of its
obligations hereunder, FGM may recommend to the Company, and may engage in,
transactions with any of FGM’s Affiliates; provided, that any such transactions
between the Company and any of FGM’s Affiliates shall be subject to the
authorization and approval of the Independent Directors.

 

(e) The Company shall take any and all actions necessary to ensure that it does
not engage in any activities that would cause the Company to become an
“investment company” as defined in Section 3(a)(1) of the Investment Company
Act, or any successor provision thereto, subject to any grace periods set forth
therein.

 

Section 3.3 Other Activities and Competition.

 

(a) Except to the extent otherwise agreed between FGM and the Company in
writing, FGM, its members (including any natural persons) and any of its
Affiliates, agents, representatives or employees may engage in or possess an
interest in other investments, business ventures or entities of any nature or
description, independently or with others, similar or dissimilar to, or that
compete with, the business of the Company or the Subsidiaries, and may provide
advice and other assistance to any such investment, business venture or entity,
and the Company shall have no rights by virtue of this Agreement in and to such
investments, business ventures or entities or the income or profits derived
therefrom, and the pursuit of any such investment or venture, even if
competitive with the business of the Company or the Subsidiaries, shall not be
deemed wrongful or improper. None of FGM, its members or any of its Affiliates,
agents, representatives or employees shall be obligated to present any
particular investment or business opportunity to the Company even if such
opportunity is of a character that, if presented to the Company, could be taken
by the Company or its Subsidiaries, and FGM, its members or any of its
Affiliates, agents, representatives or employees shall have the right to take
for its own account (individually or as a partner or fiduciary) or to recommend
to others any such particular investment or business opportunity. While
information and recommendations supplied to the Company and the Subsidiaries
shall, in FGM’s reasonable and good faith judgment, be appropriate under the
circumstances and in light of the policies of the Company and the Subsidiaries,
such information and recommendations may be different in certain material
respects from the information and recommendations supplied by FGM or any
Affiliate of FGM to others.

 

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(b) The Company acknowledges and agrees that (i) personnel and members of FGM
and its Affiliates may work on other projects and matters, and that conflicts
may arise with respect to the allocation of personnel and (ii) there may be
circumstances where FGM and/or its personnel and members acquire knowledge of a
corporate opportunity of the Company or the Subsidiaries and FGM, its personnel,
members and/or its Affiliates, and such corporate opportunity may be pursued by
FGM, its personnel, members and/or its Affiliates or shared with other parties
(in lieu of the Company or the Subsidiaries).

 

Section 3.4 Change of Services.

 

(a) The Company and FGM shall have the right at any time during the term of this
Agreement (including any Automatic Renewal Term) to jointly agree to change the
Services provided by FGM.

 

(b) Any change in the Services shall be authorized in writing and evidenced by
an amendment to this Agreement, as provided in Section 12.9 hereof. Unless
otherwise agreed in writing, the provisions of this Agreement shall apply to all
changes in the Services.

 

ARTICLE IV

POWERS OF FGM

 

Section 4.1 Powers of FGM.

 

(a) FGM shall, subject to the oversight and supervision of the Board and the
terms and conditions of this Agreement, have the power and obligation to perform
the Services for and on behalf of the Company, with all such powers as may
reasonably be incident to such responsibilities. FGM shall also perform such
other duties and may exercise such other powers as from time to time may be
assigned to FGM by the Board.

 

(b) Notwithstanding anything to the contrary set forth herein and except as such
authority is provided to FGM by the Board or a committee thereof, FGM shall have
no power to enter into any contract for or on behalf of the Company or otherwise
subject it to any obligation, such power to be the sole right and obligation of
the Company, acting through its Board and/or the officers of the Company.

 

(c) Subject to Section 4.2 and for purposes other than to delegate its duties
and powers to perform the Services hereunder, FGM shall have the power to engage
agents, consultants, contractors and advisors (including accounting, financial,
tax and legal advisors) that it deems necessary or desirable in connection with
the performance of its obligations hereunder, which costs therefor shall be
subject to reimbursement or direct payment by the Company in accordance with
Section 7.2 hereof. For the avoidance of doubt, FGM may not engage investment
advisers on behalf of the Company or the Subsidiaries unless such authority is
provided to FGM by the Board or a committee thereof.

 

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Section 4.2 Delegation. FGM may delegate or appoint one or more other Persons,
which may or may not be Affiliates of FGM, as its agent, to perform any or all
of the Services hereunder; provided, however, that, if such agent is not an
Affiliate of FGM, those Services shall not be critical to the ability of FGM to
satisfy its obligations hereunder, as determined in the sole discretion of FGM;
provided, further, that, in each case, FGM shall not be relieved of any of its
obligations or duties owed to the Company or the Subsidiaries hereunder as a
result of such delegation. FGM shall be permitted to share information of the
Company and the Subsidiaries with its appointed agents subject to appropriate
confidentiality arrangements. For the avoidance of doubt, any reference to FGM
herein shall include its delegates or appointees pursuant to this Section 4.2.

 

ARTICLE V

INSPECTION OF RECORDS

 

Section 5.1 Books and Records of the Company. At reasonable times and on
reasonable notice, FGM and any Person authorized by FGM shall have access to,
and the right to inspect, for any reasonable purpose, during the term of this
Agreement (including any Automatic Renewal Term) and for a period of three (3)
years after termination hereof, the books, records and data stored in computers
and all documentation of the Company and the Subsidiaries pertaining to all
Services performed by FGM or the Shared Services Fee, Direct Expenses to be paid
by the Company to FGM, in each case, hereunder. There shall be no cost or
expense charged by any Party to another Party pursuant to the exercise of rights
under this Section 5.1.

 

ARTICLE VI

REPRESENTATIONS OF THE COMPANY

AND FGM AS TO AUTHORITY

 

Section 6.1 Representations as to Authority. Each Party represents to the other
that it is duly authorized with full power and authority to execute, deliver and
perform its obligations and duties under this Agreement. The Company represents
that the engagement of FGM has been duly authorized by the Board and is in
accordance with the Governing Documents of the Company.

 

ARTICLE VII

SHARED SERVICES FEE; DIRECT EXPENSES

 

Section 7.1 Shared Services Fee. Subject to the terms and conditions set forth
in this Section 7.1, for the term of this Agreement, including any Automatic
Renewal Term, the Company shall pay FGM a shared services fee for the Services
provided under this Agreement equal to $456,250 for each Fiscal Quarter (or
$1,825,000 on an annual basis) (the “Shared Services Fee”) within 10 days
following the beginning of each Fiscal Quarter.

 

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Section 7.2 Reimbursement of Expenses.

 

(a) Subject in all respects to the Company’s Expenditure and Contract
Authorization Matrix, as reviewed and approved by the Board from time to time
(the “Authority Matrix”), the Company shall reimburse FGM for the following
amounts that are actually incurred by FGM during the term of this Agreement in
connection with the performance of the Services (collectively, the “Direct
Expenses”) or timely pay said Direct Expenses directly upon prior agreement of
the Company:

 

(i) costs of legal, tax, accounting, consulting, auditing, administrative and
other similar services rendered for the Company and the Subsidiaries by
providers retained by FGM;

 

(ii) the cost of liability insurance to indemnify the Company’s directors and
officers;

 

(iii) costs associated with the establishment and maintenance of any of the
Company’s or any Subsidiary’s credit or other indebtedness of the Company or any
Subsidiary (including commitment fees, accounting fees, legal fees, closing and
other similar costs) or any of the Company’s or any Subsidiary’s securities
offerings;

 

(iv) expenses connected with communications to holders of the Company’s or any
Subsidiary’s securities and other bookkeeping and clerical work necessary in
maintaining relations with holders of such securities and in complying with the
continuous reporting and other requirements of governmental bodies or agencies,
including all costs of preparing and filing required reports with the Securities
and Exchange Commission, the costs payable by the Company to any transfer agent
and registrar in connection with the listing and/or trading of the Company’s
stock on any exchange, the fees payable by the Company to any such exchange in
connection with its listing, costs of preparing, printing and mailing the
Company’s annual report to its stockholders and proxy materials with respect to
any meeting of the Company’s stockholders;

 

(v) costs associated with any computer software or hardware, electronic
equipment or purchased information technology services from third party vendors
that is used by the Company and/or the Subsidiaries;

 

(vi) expenses incurred by managers, officers, personnel and agents of FGM for
travel on the Company’s or any Subsidiary’s behalf and other out-of-pocket
expenses incurred by managers, officers, personnel and agents of FGM while
providing the Services;

 

(vii) the costs of maintaining compliance with all U.S. federal, state and local
rules and regulations or those of any other regulatory agency;

 

(viii) license fees;

 

(ix) all insurance costs incurred in connection with the operation of the
Company’s and the Subsidiaries’ business, including for the costs attributable
to the insurance that FGM elects to carry or incur for itself and its personnel
related to the provision of Services;

 

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(x) expenses relating to any office(s) or office facilities, including, but not
limited to disaster backup recovery sites and facilities, maintained for the
Company and the Subsidiaries separate from the office or offices of FGM;

 

(xi) expenses connected with the payments of interest, dividends or
distributions in cash or any other form authorized or caused to be made by the
Board to or on account of holders of the Company’s or any Subsidiary’s
securities, including in connection with any dividend reinvestment plan;

 

(xii) any judgment or settlement of pending or threatened proceedings (whether
civil, criminal or otherwise) against the Company or any of the Subsidiaries, or
against any trustee, director, partner, member or officer of the Company or of
any of the Subsidiaries in his, her or its capacity as such for which the
Company or any of the Subsidiaries is required to indemnify such Person by any
court or governmental agency; and

 

(xiii) all other expenses actually incurred by FGM which are reasonably
necessary for, or incurred in connection with, the performance by FGM of its
duties and functions under this Agreement.

 

In the event any Direct Expenses are not within the limitations set forth in the
Authority Matrix, the reimbursement of any such Direct Expenses shall be subject
to the prior approval of the Company’s Compensation Committee.

 

(b) Prior to the Effective Date, FGM has provided the Compensation Committee
with complete records regarding the Direct Expenses incurred on behalf of the
Company for the period from January 1, 2020 to, but excluding, the Effective
Date (the “Pre-Effective Date Direct Expenses”). Within ten Business Days
following the Effective Date, the Company shall pay FGM an amount equal to the
Pre-Effective Date Direct Expenses.

 

(c) Any Direct Expenses reimbursement required to be made in accordance with
this Section 7.2 shall be made promptly (an in any event within thirty (30)
days) after the approval of the Compensation Committee, if required, and the
delivery of supporting documentation, in U.S. dollars by wire transfer in
immediately available funds to an account or accounts designated by FGM from
time to time. FGM shall maintain cumulative books and records with respect to
the details of any calculations made pursuant to this Section 7.2, which records
shall be available for inspection and reproduction at any time upon request by
the Board or the Compensation Committee, including pursuant to the reviews
provided for in Section 7.2(d).

 

(d) Except as otherwise provided for in this Section 7.2, all reimbursements
made pursuant to this Section 7.2 shall, at least annually, be reviewed by the
Company’s Compensation Committee in connection with the preparation of the
Company’s quarterly and year-end consolidated financial statements. If the
Company’s Compensation Committee identifies any discrepancy in such
reimbursements, then the Company’s Compensation Committee, on behalf of the
Company, and FGM shall mutually resolve such discrepancy.

 

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(e) Nothing herein shall obligate FGM to advance any Direct Expenses on behalf
of the Company.

 

ARTICLE VIII

TERMINATION

 

Section 8.1 Termination by FGM. FGM may resign and terminate this Agreement at
any time with 120 days’ prior written notice to the Company of FGM’s intention
to terminate this Agreement, which right shall not be contingent upon the
finding of a replacement service provider. However, if FGM resigns, until the
date upon which the resignation becomes effective, FGM shall, upon request of
the Board, use reasonable efforts to assist the Board to find a replacement
service provider.

 

Section 8.2 Termination by the Company.

 

(a) The Company’s Board may terminate this Agreement and FGM’s appointment only
at the end of the Initial Term or at the end of any Automatic Renewal Term with
120 days’ prior written notice if, at any time, the Independent Directors of the
Company’s Board unanimously vote to terminate this Agreement. For the avoidance
of doubt, the Initial Term or subsequent Automatic Renewal Terms will
automatically renew at the end of Initial Term or each such Automatic Renewal
Term (as applicable) unless the Agreement is terminated as described in this
Section 8.2(a) or Section 8.1.

 

(b) The Company’s Board, by unanimous vote of its Independent Directors, may
terminate this Agreement and FGM’s appointment with immediate effect by written
notice if, at any time:

 

(i) (x) FGM materially breached the terms of this Agreement and such breach
continued unremedied for sixty (60) days after FGM receives written notice from
the Company setting forth the terms of such breach or (y) FGM (A) acted with
gross negligence, willful misconduct, or bad faith in performing its duties and
obligations under this Agreement or (B) engaged in fraudulent or dishonest acts
in connection with the business or operations of the Company; or

 

(ii) FGM has been convicted of a felony under federal or state law.

 

Section 8.3 Directions. After a written notice of termination has been given
under this Article VIII, the Company may direct FGM to undertake any actions
reasonably necessary to transfer any aspect of the ownership or control of the
assets of the Company to the Company or to any nominee of the Company and to do
all other things reasonably necessary to bring the appointment of FGM to an end,
and FGM shall comply with all such reasonable directions. In addition, FGM
shall, at the Company’s expense, deliver to any new service provider or the
Company any books or records held by FGM under this Agreement and shall execute
and deliver such instruments and do such things as may reasonably be required to
permit new management of the Company to effectively assume its responsibilities.

 

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Section 8.4 Payments Upon Termination.

 

(a) Notwithstanding anything in this Agreement to the contrary, upon any
termination of this Agreement pursuant to this Article VIII, the Company shall
pay FGM any Direct Expenses reimbursable to FGM pursuant to Section 7.2 hereof.
Following the date of termination, FGM shall have no obligation to fund any
Direct Expenses of the Company. All payments made pursuant to this Section
8.4(a) shall be made in accordance with Article VII hereof.

 

(b) Upon termination of this Agreement pursuant to the events set forth in
Section 8.2(a), the Company shall pay the Termination Fee to FGM concurrently
with such termination. Any payments made pursuant to this Section 8.4(b) shall
be made in U.S. dollars by wire transfer in immediately available funds to an
account or accounts designated by FGM from time to time.

 

(c) In addition, upon termination of this Agreement for any reason pursuant to
this Article VIII, the Company shall pay FGM an amount concurrently with such
termination equal to the Company’s pro rata share of Wind-Down Costs (as
reasonably determined by FGM). For purposes of this Agreement, “Wind-Down Costs”
shall be equal to the actual costs incurred by FGM and its Affiliates to
wind-down the Services being provided to the Company immediately prior to the
termination date, which costs may include, without limitation, employee
severance payments, lease payments (offset by any ability to sublease leased
space), and other costs associated with winding down the Services. Any payments
made pursuant to this Section 8.4(c) shall be made in U.S. dollars by wire
transfer in immediately available funds to an account or accounts designated by
FGM from time to time.

 

ARTICLE IX

INDEMNITY

 

Section 9.1 Indemnity. The Company agrees that FGM, including any officer,
director, member, partner, principal, employee, agent or other Affiliate of FGM
(each hereinafter referred to as an “Indemnitee”) shall not have any liability,
responsibility or accountability whatsoever in damages or otherwise to the
shareholders of Company or to Company (including its Affiliates) for any debt,
obligation, or liability of, or loss suffered by Company or its Affiliates that
arises out of any act or omission performed or omitted by such Indemnitee,
except to the extent of acts or omissions that constitute fraud, gross
negligence, bad faith, willful misconduct or a knowing violation of law by such
Indemnitee, in each case as finally determined by a court of competent
jurisdiction. Each Indemnitee shall be indemnified by Company, and Company
hereby agrees to defend, indemnify, pay, protect and hold harmless the
Indemnitee (on the demand of and to the satisfaction of such Indemnitee), to the
fullest amount available or permitted under law, from and against any and all
liabilities, obligations, losses, damages, actions, judgments, suits,
proceedings, costs, expenses and disbursements of any kind or nature
(collectively, “Losses”) arising by reason of the fact that such Indemnitee is
or was providing Services to Company (including its Affiliates) or is or was
serving as a director, officer or other representative of Company or a
Subsidiary at the request of Company except to the extent of acts or omissions
that constitute fraud, gross negligence, bad faith, willful misconduct or a
knowing violation of law by such Indemnitee, in each case as finally determined
by a court of competent jurisdiction. The foregoing indemnification includes,
without limitation, all reasonable legal fees, costs and expenses of defense,
appeal and settlement of any and all suits, actions or proceedings instituted
against such Indemnitee or Company (including its Affiliates) and all costs of
investigation in connection therewith that may be imposed on, incurred by or
asserted against the Indemnitee or Company (including its Affiliates) in any way
relating to or arising out of, or alleged to relate to or arise out of, any
action or inaction on the part of Company (including its Affiliates), or on the
part of the Indemnitee, except to the extent of acts or omissions that
constitute fraud, gross negligence, bad faith, willful misconduct or a knowing
violation of law by such Indemnitee, in each case as finally determined by a
court of competent jurisdiction. If any action, suit or proceeding shall be
brought, filed, served, or be pending against Company (including its Affiliates)
or the Indemnitee relating to or arising out of, or alleged to relate to or
arise out of, any action or inaction on either of their parts, the Indemnitee
shall have the right to employ, at the sole expense of Company, separate counsel
of its choice in such action, suit or proceeding.

 

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The rights of any Indemnitee referred to above shall be in addition to any
rights that such Indemnitee shall otherwise have at law or in equity.

 

Any expenses (including reasonable attorneys’ fees) incurred by any Indemnitee
in defending or otherwise in connection with any action, suit or proceeding
shall be paid by Company in advance of the final disposition of such matter if
such Indemnitee expressly agrees to repay in full all such amounts if such
Indemnitee shall ultimately be determined not to be entitled to indemnification
under Section 9.1 hereof.

 

Without the prior written consent of the Company, no Indemnitee shall settle,
compromise or consent to the entry of any judgment in, or otherwise seek to
terminate any, claim, action, proceeding or investigation in respect of which
indemnification could be sought hereunder unless (a) such Indemnitee indemnifies
the Company from any liabilities arising out of such claim, action, proceeding
or investigation, (b) such settlement, compromise or consent includes an
unconditional release of the Company and Indemnitee from all liability arising
out of such claim, action, proceeding or investigation and (c) the parties
involved agree that the terms of such settlement, compromise or consent shall
remain confidential.

 

Section 9.2 Insurance. The Company agrees that it shall maintain reasonably
adequate insurance in support of the indemnity obligation set forth in this
Article IX.

 

ARTICLE X

LIMITATION OF LIABILITY OF FGM

 

Section 10.1 Limitation of Liability. FGM shall not be liable for, and Company
shall not take, or permit to be taken, any action against FGM to hold FGM liable
for, any error of judgment or mistake of law or for any loss suffered by the
Company or the Subsidiaries in connection with the performance of FGM’s duties
under this Agreement, except for a loss resulting from gross negligence, bad
faith, willful misconduct, or fraud or knowing violation of law on the part of
FGM in the performance of its duties and obligations under this Agreement, in
each case as finally determined by a court of competent jurisdiction.

 

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Section 10.2 Reliance of FGM. FGM may take and may act and rely upon:

 

(a) the opinion or advice of legal counsel, which may be in-house counsel to the
Company or FGM, any U.S.-based law firm, or other legal counsel reasonably
acceptable to the Board, in relation to the interpretation of this Agreement or
any other document (whether statutory or otherwise) or generally in connection
with the Company;

 

(b) advice, opinions, statements or information from bankers, accountants,
auditors, valuation consultants and other Persons consulted by FGM who have been
reasonably selected by FGM in good faith; and

 

(c) any other document or other information provided to FGM in connection with
the Company or the Subsidiaries upon which it is reasonable for FGM to rely. FGM
shall not be liable for anything done, suffered or omitted by it in good faith
in reliance upon such opinion, advice, statement, information or document.

 

ARTICLE XI

LEGAL ACTIONS

 

Section 11.1 Third Party Claims.

 

(a) FGM shall notify the Company promptly of any claim made by any third party
in relation to the assets of the Company and shall send to the Company any
notice, claim, summons or writ served on FGM concerning the Company.

 

(b) FGM shall not, without the prior written consent of the Board, purport to
accept or admit any claims or liabilities of which it receives notification
pursuant to Section 11.1(a) hereof on behalf of the Company or make any
settlement or compromise with any third party in respect of the Company.

 

ARTICLE XII

MISCELLANEOUS

 

Section 12.1 Obligation of Good Faith; No Fiduciary Duties. FGM shall perform
its duties under this Agreement in good faith and for the benefit of the
Company. The relationship of FGM to the Company is as an independent contractor
and nothing in this Agreement shall be construed to impose on FGM an express or
implied fiduciary duty. Neither FGM nor any of its officers or employees shall
have any authority to act for, represent, bind or obligate the Company
(including without limitation entering into engagement letters or other
contractual arrangements with third parties to provide resources or services to
the Company) except as specifically provided herein or except in their capacity
as an officer or director of the Company.

 

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Section 12.2 Binding Effect. This Agreement shall be binding upon, shall inure
to the benefit of and be enforceable by the Parties hereto and their respective
successors and permitted assigns.

 

Section 12.3 Compliance. FGM shall (and must ensure that each of its officers,
agents and employees) be in material compliance with any applicable law,
including the Federal Securities Laws and the securities laws of any applicable
jurisdiction and the Nasdaq Stock Market (or any successors thereto) rules and
regulations, in each case, as in effect from time to time, to the extent that it
concerns the functions of FGM under this Agreement.

 

Section 12.4 Effect of Termination. This Agreement shall be effective as of the
Effective Date and shall continue in full force and effect during the Initial
Term and any Automatic Renewal Term thereafter until termination hereof in
accordance with Article VIII. The obligations of the Company set forth in
Articles VIII and IX and Sections 7.2, 10.1, 12.5, 12.9 and 12.17 hereof shall
survive such termination of this Agreement, subject to applicable law.

 

Section 12.5 Notices. Any notice or other communication required or permitted
under this Agreement shall be deemed to have been duly given (i) five (5)
Business Days following deposit in the mails if sent by registered or certified
mail, postage prepaid, (ii) when sent, if sent by facsimile transmission, if
receipt thereof is confirmed by telephone, (iii) when delivered, if delivered
personally to the intended recipient, (iv) when receipt is electronically
acknowledged, if sent by electronic mail, and (v) two (2) Business Days
following deposit with a nationally recognized overnight courier service, in
each case addressed as follows:

 

If to the Company, to:

 

1347 Property Insurance Holdings, Inc.

970 Lake Carillon Dr., Suite 314

Saint Petersburg, FL 33716

Attn:

 

If to FGM, to:

 

Fundamental Global Management, LLC

4201 Congress Street, Suite 140

Charlotte, North Carolina 28209

Attn:

 

or to such other address, email or facsimile number as any such Party may, from
time to time, designate in writing to all other Parties hereto, and any such
communication shall be deemed to be given, made or served as of the date so
delivered or, in the case of any communication delivered by mail, as of the date
so received.

 

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Section 12.6 Headings. The headings in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.

 

Section 12.7 Applicable Law. This Agreement, the legal relations between and
among the Parties and the adjudication and the enforcement thereof shall be
governed by and interpreted and construed in accordance with the laws of the
State of Delaware, without regard to the conflicts of law provisions thereof to
the extent such principles or rules would require or permit the application of
the laws of another jurisdiction.

 

Section 12.8 Arbitration; Submission to Jurisdiction; Waiver of Jury Trial.

 

(a) Except for injunctive or other equitable relief or as otherwise provided in
this Agreement, any and all legal action or proceeding brought with respect to
any of the obligations arising under or relating to this Agreement shall be
resolved by binding arbitration in Charlotte, North Carolina, before three (3)
arbitrators independent of the parties and selected in accordance with, and the
arbitration shall be administered by JAMS pursuant to, JAMS’ Comprehensive
Arbitration Rules and Procedures excluding its optional Arbitration Appeal
procedures. All arbitration proceedings will be closed to the public and
confidential, and all records relating thereto will be permanently sealed,
except as necessary to obtain court confirmation of the judgment of the
arbitrator, and except as necessary to give effect to res judicata and
collateral estoppel, in which case, all filings with any court shall be sealed
to the extent permissible by the court. Nothing in this Section 12.8(a) is
intended to, or shall, preclude a party to the arbitration from communicating
with, or making disclosures to his, her, or its lawyers, tax advisors, auditors
and insurers, as necessary and appropriate or from making such other disclosures
as may be required by any applicable law. To the maximum extent permitted by
Law, the decision of the arbitrator shall be final and binding and not be
subject to appeal. If a party against whom the arbitrator renders an award fails
to abide by such award, the other party may seek to enforce such award in any
court of competent jurisdiction.

 

(b) Except as provided in Section 12.8(a), each of the Parties submits to the
exclusive jurisdiction of the Court of Chancery of the State of Delaware,
provided that if jurisdiction is not then available in the Court of Chancery of
the State of Delaware, then any such legal action or proceeding may be brought
in any federal court located in the State of Delaware and each of the Parties
hereby irrevocably submits to and accepts with regard to any such action or
proceeding, for itself and in respect of its property, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts. Each Party
hereby further irrevocably waives any claim that any such courts lack
jurisdiction over such Party, and agrees not to plead or claim, in any legal
action or proceeding with respect to this Agreement or the transactions
contemplated hereby brought in any of the aforesaid courts, that any such court
lacks jurisdiction over such Party. Each Party irrevocably consents to the
service of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such party, at its
address for notices set forth in Section 12.5 hereof; such service to become
effective ten (10) days after such mailing. Each Party hereby irrevocably waives
any objection to such service of process and further irrevocably waives and
agrees not to plead or claim in any action or proceeding commenced hereunder or
under any other documents contemplated hereby that service of process was in any
way invalid or ineffective. The foregoing shall not limit the rights of any
Party to serve process in any other manner permitted by applicable law. The
foregoing consents to jurisdiction shall not constitute general consents to
service of process in the State of Delaware for any purpose except as provided
above and shall not be deemed to confer rights on any Person other than the
respective Parties.

 

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(a) Each of the Parties hereby waives any right it may have under the laws of
any jurisdiction to commence by publication any legal action or proceeding with
respect this Agreement. To the fullest extent permitted by applicable law, each
of the Parties hereby irrevocably waives the objection which it may now or
hereafter have to the laying of the venue of any suit, action or proceeding
arising out of or relating to this Agreement in any of the courts referred to in
this Section 12.8 and hereby further irrevocably waives and agrees not to plead
or claim that any such court is not a convenient forum for any such suit, action
or proceeding.

 

(b) The Parties agree that any judgment obtained by any Party or its successors
or assigns in any action, suit or proceeding referred to above may, in the
discretion of such Party (or its successors or assigns), be enforced in any
jurisdiction, to the extent permitted by applicable law.

 

(c) The Parties agree that the remedy at law for any breach of this Agreement
may be inadequate and that should any dispute arise concerning any matter
hereunder, this Agreement shall be enforceable in a court of equity by an
injunction or a decree of specific performance. Such remedies shall, however, be
cumulative and nonexclusive, and shall be in addition to any other remedies
which the Parties may have.

 

(d) Each Party hereby waives, to the fullest extent permitted by applicable law,
any right it may have to a trial by jury in respect of any litigation as between
the Parties directly or indirectly arising out of, under or in connection with
this Agreement or the transactions contemplated hereby or disputes relating
hereto. Each Party (i) certifies that no representative, agent or attorney of
any other Party has represented, expressly or otherwise, that such other Party
would not, in the event of litigation, seek to enforce the foregoing waiver and
(ii) acknowledges that it and the other Parties have been induced to enter into
this Agreement by, among other things, the mutual waivers and certifications in
this Section 12.8.

 

Section 12.9 Amendment; Waivers. No term or condition of this Agreement may be
amended, modified or waived without the prior written consent of the Party
against whom such amendment, modification or waiver will be enforced; provided,
that any amendment of Article VII shall not be effective as to any Party hereto
unless, in addition to the above, it is approved by a unanimous vote of the
Independent Directors. Any waiver granted hereunder shall be deemed a specific
waiver relating only to the specific event giving rise to such waiver and not as
a general waiver of any term or condition hereof.

 

Section 12.10 Remedies to Prevailing Party. If any action at law or equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys’ fees, costs, and necessary
disbursements in addition to any other relief to which such party may be
entitled.

 

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Section 12.11 Severability. Each provision of this Agreement is intended to be
severable from the others so that if, any provision or term hereof is illegal,
invalid or unenforceable for any reason whatsoever, such illegality, invalidity
or unenforceability shall not affect or impair the validity of the remaining
provisions and terms hereof; provided, however, that the provisions governing
payment of the Shared Services Fee described in Article VII hereof are not
severable.

 

Section 12.12 Benefits Only to Parties. Except with respect to Indemnitees as
provided in Article IX, nothing expressed by or mentioned in this Agreement is
intended or shall be construed to give any Person other than the Parties and
their respective successors or permitted assigns, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the Parties and
their respective successors and permitted assigns, and for the benefit of no
other Person.

 

Section 12.13 Further Assurances. Each Party hereto shall take any and all such
actions, and execute and deliver such further agreements, consents, instruments
and any other documents as may be necessary from time to time to give effect to
the provisions and purposes of this Agreement.

 

Section 12.14 No Strict Construction. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event any ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by all Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of any
provision of this Agreement.

 

Section 12.15 Entire Agreement. This Agreement, including the Schedules attached
hereto which are incorporated herein by reference, constitutes the sole and
entire agreement of the Parties with regards to the subject matter of this
Agreement. Any written or oral agreements, statements, promises, negotiations or
representations not expressly set forth in this Agreement are of no force and
effect.

 

Section 12.16 Assignment. This Agreement shall not be assignable by either Party
without the prior written consent of the other Party, except by FGM to any
Person with which FGM may merge or consolidate or to which FGM transfers
substantially all of its assets, or to an Affiliate of FGM, and then only in the
event that such assignee assumes all of the obligations to the Company and the
Subsidiaries hereunder.

 

 17 

 

 

Section 12.17 Confidentiality.

 

(a) FGM shall not, and FGM shall cause its Affiliates and their respective
agents and representatives not to, at any time from and after the date of this
Agreement, directly or indirectly, disclose or use any confidential or
proprietary information involving or relating to (x) the Company, including any
information contained in the books and records of the Company and (y) the
Subsidiaries, including any information contained in the books and records of
any such Subsidiaries; provided, however, that disclosure and use of any
information shall be permitted (i) with the prior written consent of the
Company, (ii) as, and solely to the extent, necessary or required for the
performance by FGM, any of its Affiliates or its delegates of any of their
respective obligations under this Agreement, (iii) as, and to the extent,
necessary or required in the operation of the Company’s business or operations
in the Ordinary Course of Business, (iv) to the extent such information is
generally available to, or known by, the public or otherwise has entered the
public domain (other than as a result of disclosure in violation of this Section
12.17 by FGM or any of its Affiliates) or has been independently developed by
FGM without any reliance on confidential information of the Company, (v) as, and
to the extent, necessary or required by any governmental order, applicable law
or any governmental or regulatory authority, subject to Section 12.17(c), and
(vi) as, and to the extent, necessary or required or reasonably appropriate in
connection with the enforcement of any right or remedy relating to this
Agreement or any other agreement between FGM and the Company or any of the
Subsidiaries.

 

(b) For the avoidance of doubt, confidential information includes business
plans, financial information, operational information, strategic information,
legal strategies or legal analysis, formulas, production processes, lists,
names, research, marketing, sales information and any other information similar
to any of the foregoing or serving a purpose similar to any of the foregoing
with respect to the business or operations of the Company or any of the
Subsidiaries. However, the Parties are not required to mark or otherwise
designate information as “confidential or proprietary information,”
“confidential” or “proprietary” in order to receive the benefits of this Section
12.17.

 

(c) In the event that FGM is required by governmental order, applicable law or
any governmental or regulatory authority to disclose any confidential
information of the Company or any of the Subsidiaries that is subject to the
restrictions of this Section 12.17, FGM shall (i) notify the Company or any of
the Subsidiaries in writing as soon as possible, unless it is otherwise
affirmatively prohibited by such governmental order, applicable law or such
governmental or regulatory authority from notifying the Company or any such
Subsidiaries, as the case may be, (ii) cooperate with the Company or any such
Subsidiaries to preserve the confidentiality of such confidential information
consistent with the requirements of such governmental order, applicable law or
such governmental or regulatory authority and (iii) use its commercially
reasonable efforts to limit any such disclosure to the minimum disclosure
necessary or required to comply with such governmental order, applicable law or
such governmental or regulatory authority, in each case, at the sole cost and
expense of the Company.

 

(d) Nothing in this Section 12.17 shall prohibit FGM from keeping or maintaining
any copies of any records, documents or other information that may contain
information that is otherwise subject to the requirements of this Section 12.17,
subject to its compliance with this Section 12.17.

 

(e) FGM shall be responsible for any breach or violation of the requirements of
this Section 12.17 by any of its agents or representatives.

 

Section 12.18 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.

 

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IN WITNESS WHEREOF, the Parties have executed this Shared Services Agreement as
of the date first written above to be effective as of the Effective Date.

 

  1347 PROPERTY INSURANCE HOLDINGS, INC.       By: /s/ John S. Hill   Name: John
S. Hill   Title: EVP, CFO & Secretary         Fundamental Global Management, LLC
      By: /s/ Kyle Cerminara   Name: Kyle Cerminara   Title: Manager

 

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Schedule A

Services

 

Subject to Article VII, FGM agrees and covenants that it shall perform the
following services:

 

(a) manage the Company’s and the Subsidiaries’ day-to-day business and
operations, including assisting the Company and the Subsidiaries in complying
with all regulatory requirements applicable to the Company and the Subsidiaries
in respect of the Company’s and the Subsidiaries’ business activities;

 

(b) evaluate the financial and operational performance of any of the
Subsidiaries, including monitoring the business and operations thereof, and the
financial performance of any of the Company’s or the Subsidiaries’ other assets;

 

(c) provide, as determined necessary by FGM and in accordance with the terms and
conditions of this Agreement and the Governing Documents, a management team to
serve as executive officers of the Company and the Subsidiaries or as members of
the Board (subject to applicable regulatory requirements and the terms of this
Agreement); and

 

(d) subject to the other provisions of this Agreement, perform any other
services for and on behalf of the Company and the Subsidiaries to the extent
that such services are consistent with those that are customarily performed by
the executive officers and employees of a publicly listed company.

 

The foregoing Services shall include, but are not limited to, the following: (1)
working with the Company’s CFO and other staff to ensure that the Company and
the Subsidiaries are establishing and maintaining books and records in
accordance with customary practice and GAAP; (2) recommend to the Board changes
or other modifications in the capital structure of the Company or the
Subsidiaries, including repurchases; (3) recommend to the Board the engagement
of or, if approval is not otherwise required hereunder, engage agents,
consultants or other third party service providers to the Company and the
Subsidiaries, including accountants, lawyers or experts, in each case, as may be
needed by the Company or the Subsidiaries from time to time; (4) maintain the
Company’s and the Subsidiaries’ property and assets in the Ordinary Course of
Business; (5) manage or oversee litigation, administrative or regulatory
proceedings, investigations or any other reviews of the Company’s and/or the
Subsidiaries’ business or operations that may arise in the Ordinary Course of
Business or otherwise, subject to the approval of the Board to the extent
necessary in connection with the settlement, compromise, consent to the entry of
an order or judgment or other agreement resolving any of the foregoing; (6)
establish and maintain appropriate insurance policies with respect to the
Company’s and the Subsidiaries’ business and operations; (7) recommend to the
Board the payment of dividends or other distributions on the equity interests of
the Company; and (8) working with the Company’s CFO to ensure timely calculation
of taxes payable, and the filing of all taxes return due, by the Companies and
the Subsidiaries.

 

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