UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 6, 2021 (December 31, 2020 )
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of principal executive offices including zip code)
(704 ) 275-9113
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Item 1.02 Termination of a Material Definitive Agreement
On December 31, 2020, Altisource Asset Management Corporation (“AAMC” or the “Company”) and Front Yard Residential Corporation (“Front Yard”) completed the transition contemplated by the Termination and Transition Agreement, dated August 13, 2020 (the “Termination Agreement”), that was previously disclosed in the Company’s Current Report on Form 8-K filed on August 18, 2020 and terminated the Amended and Restated Asset Management Agreement, dated as of May 7, 2019 (the “AMA”), by and among Front Yard, Front Yard Residential L.P. and AAMC.
Pursuant to the Termination Agreement and in connection with the termination of the AMA, AAMC was paid by Front Yard an aggregate termination fee (the “Termination Fee”) of $46,000,000, of which $30,000,000 was paid to AAMC in cash and $16,000,000 was paid to AAMC in Front Yard’s common stock.
Additionally, in connection with the termination of the AMA, the Company transferred the equity interests of the Company’s Indian subsidiary, the equity interests of the Company’s Cayman Islands subsidiary and certain other assets used in connection with the operation of Front Yard’s business to Front Yard for aggregate consideration of the equity interests in Front Yard's Indian subsidiary and $8,200,000 (the “Purchase Price”), of which $3,200,000 was paid to AAMC in cash and $5,000,000 was paid to AAMC in Front Yard’s common stock.
For the portions of the Termination Fee and Purchase Price that were paid in Front Yard’s common Stock, the value of each share of common stock was determined by the volume-weighted average share price of Front Yard common stock for the five business days immediately preceding December 31, 2020.
The foregoing description of the Termination Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Termination Agreement, which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 18, 2020 and is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Departure of Certain Officers
In accordance with the resignation letter entered into by George G. Ellison and the Company, dated August 13, 2020, that was previously disclosed in the Company’s Current Report on Form 8-K filed on August 18, 2020, Mr. Ellison resigned as Co-Chief Executive Officer of AAMC. Following the resignation of Mr. Ellison, Indroneel Chatterjee remained as the sole Chief Executive Officer of AAMC.
In connection with the termination of the AMA, Robin N. Lowe resigned as Chief Financial Officer of AAMC and Mr. Lowe and the Company entered into a resignation letter agreement (the “Lowe Resignation Agreement”). Pursuant to the terms of the Lowe Resignation Agreement, Mr. Lowe resigned as an officer and employee of the Company effective at the close of business on December 31, 2020. The Lowe Resignation Agreement also contains mutual releases by the Company and Mr. Lowe for all claims, known or unknown, for acts occurring prior to the date of the Lowe Resignation Agreement and Mr. Lowe agreed to abide by confidentiality and non-disparagement covenants contained in the Lowe Resignation Agreement.
Also, in connection with the termination of the AMA, Stephen H. Gray resigned as General Counsel and Secretary of AAMC. Pursuant to his resignation letter, Mr. Gray resigned as an officer and employee of the Company effective at the close of business on December 31, 2020.
The resignations of Messrs. Lowe and Gray were in connection with the termination of the AMA and, to the knowledge of the Company’s executive officers, were not the result of any disagreement with the Company.
The foregoing description of the Lowe Resignation Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Lowe Resignation Agreement, which is filed as Exhibit 10.1, and is incorporated herein by reference.
Appointment of Certain Officers
The Board of Directors of AAMC (the “Board”) promoted Chris Moltke-Hansen to Chief Financial Officer effective January 1, 2021 and designated him as the Company’s principal financial officer and principal accounting officer. Mr. Moltke-Hansen, age 34, joined the Company in 2018 and was subsequently promoted to Managing Director of Finance in October 2020. In his previous positions with the Company, Mr. Moltke-Hansen was responsible for managing the Company’s financial and SEC reporting and the accounting policies of the Company and its primary client, Front Yard. Prior to joining AAMC in 2018, Mr. Moltke-Hansen was Vice President of Financial Control at Credit Suisse, a leading global wealth manager and investment bank, which he joined in 2011 and where he held various positions of increasing responsibility. In his roles at Credit Suisse, Mr. Moltke-Hansen worked extensively across the bank to support the financial, operational, regulatory, and compliance aspects of the bank’s U.S. parent company and subsidiaries. Mr. Moltke-Hansen began his career in the audit practice of a BDO Alliance USA firm. Mr. Moltke-Hansen is a Certified Public Accountant and holds a Bachelor of Science in Accounting from Elon University.
Pursuant to the terms of an amended and restated employment agreement by and between the Company and Mr. Moltke-Hansen (the “Employment Agreement”) that was entered into effective as of January 1, 2020, Mr. Moltke-Hansen will receive an annual base salary of $250,000.00 and an annual cash incentive bonus target of $225,000.00, with the maximum payout opportunity of 200% of this base salary based on the achievement of annual performance targets to be established by the Board or the Compensation Committee of the Board. In addition, Mr. Moltke-Hansen is eligible to receive equity awards under the Company’s equity incentive plan(s). Mr. Moltke-Hansen received a one-time cash inducement award of $250,000.00 on October 15th, 2020 (the “Payment Date”), subject to an obligation to repay 100% of such inducement award if terminated by the Company for “Cause” (as defined in the Employment Agreement) or resignation by Mr. Moltke-Hansen without “Good Reason” (as defined in the Employment Agreement) within the first year following the Payment Date or 50% of such signing award if terminated by the Company for “Cause” or resignation by Mr. Moltke-Hansen without “Good Reason” during the second year following the Payment Date.
Mr. Moltke-Hansen will also receive an initial equity award of 5,000 restricted shares, which will be made under the Company’s 2020 Equity Incentive Plan (the “Plan”) and subject to the terms and conditions of the Plan. The restricted shares will vest annually over a three year period on the first three anniversaries of October 15, 2020.
The Employment Agreement also provides that if the Company terminates Mr. Moltke-Hansen’s employment for a reason other than “Cause,” his death or his “Disability,” or he resigns for “Good Reason” (each as defined in the Employment Agreement) he would be entitled to: (i) 50% of the sum of his annual base salary and target bonus; (ii) 100% of his prorated annual bonus based on his prior year annual bonus; (iii) vesting acceleration of 100% of the unvested portion of his then-outstanding equity awards (except as prohibited by the Plan); (iv) Company-reimbursed COBRA continuation coverage for up to six months, and (v) any other accrued and unpaid amounts due to him by the Company. The severance benefits will be subject to execution of a customary release, providing, among other things, confirmation of his confidentiality, non-disparagement and non-solicitation obligations.
There are no arrangements or understandings between Mr. Moltke-Hansen and any other person pursuant to which he was selected as an officer of the Company. There are no family relationships between Mr. Moltke-Hansen and any director or executive officer of the Company nor is Mr. Moltke-Hansen party to any related person transactions, in each case as required to be disclosed under Item 401 or 404 of Regulation S-K.
The foregoing description of the Employment Agreement is not complete and is qualified in its entirety by reference to the full text of the Employment Agreement, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Item 7.01 Regulation FD
On January 6, 2021, the Company issued a press release announcing the completion of the transactions contemplated by the Termination Agreement and the termination of the AMA as well as certain changes to the Company’s management team. A copy of the press release is attached hereto as Exhibit 99.1.
The press release is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be “filed” for any other purpose, including for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in Item 7.01 of this Current Report, including Exhibit 99.1, shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filings, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | |||||||
Resignation Letter Agreement, dated as of December 31, 2020, between Robin N. Lowe and Altisource Asset Management Corporation | ||||||||
Press Release of Altisource Asset Management Corporation, dated January 6, 2021 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Altisource Asset Management Corporation | ||||||||
| January 6, 2021 | By: | /s/ Indroneel Chatterjee | ||||||
Indroneel Chatterjee Chairman and Chief Executive Officer | ||||||||
Exhibit 10.1
December 31, 2020
Altisource Asset Management Corporation
5100 Tamarind Reef
Christiansted, United States Virgin Islands 00820
Re: Resignation
Ladies and Gentlemen:
Effective as of the close of business on December 31, 2020, I hereby irrevocably resign from any and all positions as a director, officer, manager or equivalent position of Altisource Asset Management Corporation (the "Company") and its subsidiaries. The Company acknowledges and agrees that my resignation shall be treated as a termination of my service by the Company without Cause (as defined in any relevant document; or any similar concept if not so defined) for all purposes under any agreement, arrangement, plan, or policy of the Company or by and between the Company and myself.
The Company hereby waives, releases and discharges me from any and all claims, demands, proceedings, causes of action, orders, obligations and liabilities, known or unknown, which the Company or any of its affiliates has or may at any time have had against me for acts occurring prior to the date hereof. The Company shall undertake not to, directly or indirectly, assert any claim or demand, or commence, institute or cause to be commenced, any proceedings of any kind relating to any such released claims.
I hereby waive, release and discharge the Company and its subsidiaries from any and all claims, demands, proceedings, causes of action, orders, obligations and liabilities, known or unknown, which I have or may at any time have had against the Company and its subsidiaries for acts occurring prior to the date hereof; provided, that, such release shall not apply to claims that I have with respect to any equity or equity-based awards of the Company. I shall undertake not to, directly or indirectly, assert any claim or demand, or commence, institute or cause to be commenced, any proceedings of any kind relating to any such released claims.
Notwithstanding anything to the contrary set forth herein and for the avoidance of doubt, this letter does not adversely impact the rights of advancement of expenses and indemnification that I am entitled to as a director, manager, or officer or similar position of the Company (whether pursuant to the Company’s organizational documents, directors & officers insurance or otherwise, in each case, as in effect on the date hereof).
[Signature page follows]
| /s/ Robin N. Lowe | ||
Robin N. Lowe | ||
Acknowledged and agreed:
ALTISOURCE ASSET MANAGEMENT CORPORATION
By: | /s/ Indroneel Chatterjee | ||||
Name: Indroneel Chatterjee Title: Chief Executive Officer | |||||
[Signature Page to Resignation Letter]
Exhibit 99.1
FOR IMMEDIATE RELEASE | FOR FURTHER INFORMATION CONTACT: | ||||
| Investor Relations | |||||
| T: +1-704-275-9113 | |||||
| E: IR@AltisourceAMC.com | |||||
Altisource Asset Management Corporation Reports Completion of Previously Announced Termination of Asset Management Agreement with Front Yard Residential Corporation
CHRISTIANSTED, U.S. Virgin Islands, January 6, 2021 (GLOBE NEWSWIRE) - Altisource Asset Management Corporation (“AAMC” or the “Company”) (NYSE American: AAMC) is pleased to announce that the Company has completed the previously announced transition contemplated by the Termination and Transition Agreement, dated August 13, 2020 (the “Termination Agreement”), by and among Front Yard Residential Corporation (“Front Yard”), Front Yard Residential L.P. and AAMC.
Transaction Highlights
•AAMC was paid by Front Yard an aggregate termination fee of $46,000,000, of which $30,000,000 was paid to AAMC in cash and $16,000,000 was paid to AAMC in Front Yard’s common stock.
•AAMC transferred the equity of the Company’s Indian subsidiary, the equity interests of the Company’s Cayman Islands subsidiary, and certain other assets used in connection with the operation of Front Yard’s business to Front Yard for aggregate consideration of the equity interests in Front Yard’s Indian subsidiary and $8,200,000, of which $3,200,000 was paid to AAMC in cash and $5,000,000 was paid to AAMC in Front Yard’s common stock.
•The announced sale of Front Yard at $16.25 per share is expected to provide liquidity for the 1,624,465 shares of Front Yard stock that AAMC purchased at an average cost of $12.68 per share.
“2020 has been a transitional year for AAMC. We have completed this transaction on-time and effectively for both Front Yard and AAMC. This termination has provided us the opportunity to quickly right-size and optimize our operational footprint while significantly reducing our overhead costs. We have retained key personnel that developed and implemented successful non-performing loan and single-family rental equity investment strategies for AAMC's stakeholders and are now focused on our asset-based lending strategy at this juncture in the economic cycle. With the termination complete, we are solely focused on our new lines of business and generating positive cash flow to increase value for our shareholders,” stated Indroneel Chatterjee, Chief Executive Officer of AAMC.
Management Changes
In connection with the completion of the Termination and Transition Agreement, Altisource Asset Management Corporation has accepted resignation letters from George G. Ellison, Robin N. Lowe, and Stephen H. Gray.
•In accordance with the resignation letter entered by George G. Ellison and the Company, dated August 13, 2020, Mr. Ellison resigned as Co-Chief Executive Officer of AAMC. Following the resignation of Mr. Ellison, Indroneel Chatterjee remained as the sole Chief Executive Officer of AAMC.
•In connection with the Termination Agreement, Robin N. Lowe resigned as Chief Financial Officer of AAMC. Pursuant to the terms of his Agreement, Mr. Lowe resigned as an officer and employee of the Company effective at the close of business on December 31, 2020.
•Also, in connection with the termination of the AMA, Stephen H. Gray resigned as General Counsel and Secretary of AAMC. Pursuant to his resignation letter, Mr. Gray resigned as an officer and employee of the Company effective at the close of business on December 31, 2020.
Appointment of New CFO
Effective January 1, 2021, the Board of Directors of AAMC promoted Chris Moltke-Hansen to Chief Financial Officer of the Company. He will be responsible for overseeing all financial aspects of the company, including financial planning and analysis, accounting and financial reporting, as well as managing the tax, internal audit, treasury, and investor relations functions.
“I am pleased to announce Chris’s promotion from Managing Director to CFO, and welcome him to our Executive Leadership Team,” said Indroneel Chatterjee, Chairman and Chief Executive Officer. “Chris’s experience in leading financial operations, as well as driving operational change and strategic growth is expected to make an immediate impact as we position AAMC for disciplined growth.”
About AAMC
AAMC is an asset management company that provides portfolio management and corporate governance services to investment vehicles. Additional information is available at www.altisourceamc.com.
Forward-looking Statements
This press release contains forward-looking statements that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical fact, including statements about management’s beliefs and expectations. Forward-looking statements are based on management’s beliefs as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of historical fact, actual results may differ materially from those projected. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to: our ability to implement our business strategy; our ability to retain and recruit key employees; our ability to develop and implement new businesses or, to the extent such businesses are developed, our ability to make them successful or sustain the performance of any such businesses; our ability to build, retain and maintain our strategic relationships; our ability to obtain additional asset management clients; the potential for the COVID-19 pandemic to adversely affect our business, financial position, operations, business prospects, customers, employees and third-party service providers; our ability to effectively compete with our competitors; Front Yard's ability to complete its announced merger transaction, which could affect the value of the shares of Front Yard held by us; the failure of our service providers to effectively perform their obligations under their agreements with us; developments in the litigations regarding AAMC's redemption obligations under the Certificate of Designations of its Series A Convertible Preferred Stock (the “Series A Shares”), including AAMC's ability to obtain declaratory relief confirming that AAMC was not obligated to redeem any of the Series A Shares on the March 15, 2020 redemption date since AAMC did not have funds legally available to redeem all, but not less than all, of the Series A Shares requested to be redeemed on that redemption date; general economic and market conditions; governmental regulations, taxes and policies and other risks and uncertainties detailed in the “Risk Factors” and other sections described from time to time in the Company’s current and future filings with the Securities and Exchange Commission. The foregoing list of factors should not be construed as exhaustive.
The statements made in this press release are current as of the date of this press release only. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, whether as a result of new information, future events or otherwise.