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): March 31,
2020
1347
PROPERTY INSURANCE HOLDINGS, INC.
(Exact
Name of Registrant as Specified in Charter)
Commission
File Number: 001-36366
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Delaware |
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46-1119100 |
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(State
or Other Jurisdiction
of
Incorporation)
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(IRS
Employer
Identification
No.)
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970
Lake Carillon Drive, Suite 314, St. Petersburg, FL |
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33716 |
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(Address
of Principal Executive Offices) |
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(Zip
Code) |
Registrant’s
telephone number, including area code: (813)
579-6213
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:
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425) |
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) |
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b)) |
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading
Symbol(s)
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Name
of each exchange on which registered
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Common Stock, $0.001 par value per share |
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PIH |
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The Nasdaq Stock Market LLC |
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8.00% Cumulative Preferred Stock, Series A, $25.00 par value per
share |
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PIHPP |
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The Nasdaq Stock Market LLC |
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.
[ ]
Item
1.01. Entry into a Material Definitive Agreement.
As
part of the previously announced strategy of 1347 Property
Insurance Holdings, Inc. (the “Company”), on March 31, 2020, the
Company entered into a Shared Services Agreement and a joint
venture agreement with affiliates of Fundamental Global Investors,
LLC (“FGI”), the beneficial owner of approximately 45% of the
Company’s outstanding common stock. D. Kyle Cerminara, Chairman of
the Company’s Board, serves as Chief Executive Officer, Co-Founder
and Partner of FGI, and Lewis M. Johnson, Co-Chairman of the
Company’s Board, serves as President, Co-Founder and Partner of
FGI.
Shared Services Agreement
On
March 31, 2020, the Company entered into a Shared Services
Agreement (the “Shared Services Agreement”) with Fundamental Global
Management, LLC (“FGM”) pursuant to which FGM will provide the
Company with certain services related to the day-to-day management
of the Company, including assisting with regulatory compliance,
evaluating the Company’s financial and operational performance,
providing a management team to supplement the executive officers of
the Company, and such other services consistent with those
customarily performed by executive officers and employees of a
public company (collectively, the “Services”). In exchange for the
Services, the Company will pay FGM a fee of $456,250 per quarter
(the “Shared Services Fee”), commencing in the second quarter of
2020, plus reimbursement of expenses incurred by FGM in connection
with the performance of the Services, subject to certain
limitations approved by the Company’s Board of Directors or
Compensation Committee from time to time.
The
Shared Services Agreement has an initial term of three years, and
thereafter renews automatically for successive one-year terms
unless terminated in accordance with its terms. The Shared Services
Agreement may be terminated by FGM or by the Company, by a vote of
the Company’s independent directors, at the end of the initial or
automatic renewal term upon 120 days’ notice, subject to payment by
the Company of certain costs incurred by FGM to wind down the
provision of Services and, in the case of a termination by the
Company without cause, payment of a termination fee equal to the
Shared Services Fee paid for the two quarters preceding
termination.
The
foregoing description of the Shared Services Agreement does not
purport to be complete and is qualified in its entirety by
reference to the complete Shared Services Agreement, a copy of
which is filed as Exhibit 10.1 to this Current Report on Form 8-K
and is incorporated herein by reference.
Joint Venture Agreement
On
March 31, 2020, the Company entered into the Limited Liability
Company Agreement (the “LLC Agreement”) of Fundamental Global Asset
Management, LLC (“FGAM”), a newly-formed joint venture owned 50% by
each of the Company and FGI Funds Management, LLC, an affiliate of
FGI (“FGIFM” and together with the Company, each a “Member” and
collectively, the “Members”). The purpose of FGAM is to sponsor,
capitalize and provide strategic advice to investment managers
(“Underlying Managers”) in connection with the launch and/or growth
of their asset management business and the investment products they
sponsor (each, a “Sponsored Fund”).
FGAM
is governed by a Board of Managers consisting of four managers, two
of which will be appointed by each Member. It is the current intent
of the Company to appoint two of its independent directors to the
Board of Managers of FGAM. Certain major actions, including any
decision to sponsor a new investment manager, will require the
prior consent of both Members.
The
LLC Agreement provides that each Member will contribute its
proportionate interest of the amount of capital determined by the
Board of Managers to be required to operate FGAM (“Operating
Capital”). Unless otherwise agreed, the Company will contribute the
capital required to be contributed to a Sponsored Fund (“Seed
Capital”), as well as any amounts required to be contributed to an
Underlying Manager for working capital purposes (“Working
Capital”). Proceeds attributable to a contribution, directly or
indirectly through an Underlying Manager, to a Sponsored Fund will
be distributed to the Members in proportion to their capital
contributions in respect of Seed Capital. All other proceeds
received by FGAM attributable to a Sponsored Fund, including
proceeds from revenue shares or ownership interests in Underlying
Managers, will be distributed as follows: (i) first, to the Members
until they have received cumulative distributions up to an amount
of the Operating Capital funded by them; (ii) second, to the
Members until they have received cumulative distributions up to an
amount of Working Capital previously funded by them, plus a return
of 5% per annum; and (iii) third, to the Members in proportion to
their percentage interests.
In
addition, neither FGIFM nor any of affiliates may participate in a
Sponsored Fund Transaction other than through FGAM unless FGIFM has
first presented the opportunity to FGAM and either the Board of
Managers or the Company has rejected such opportunity.
Notwithstanding the foregoing, if such opportunity requires in
excess of $5 million, FGIFM may offer amounts in excess of $5
million to a third party, subject to certain conditions.
The
foregoing description of the LLC Agreement does not purport to be
complete and is qualified in its entirety by reference to the
complete LLC Agreement, a copy of which is filed as Exhibit 10.2 to
this Current Report on Form 8-K and is incorporated herein by
reference.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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1347
PROPERTY INSURANCE HOLDINGS, INC. |
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Date: |
April
6, 2020 |
By: |
/s/
John S. Hill |
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John
S. Hill |
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Chief
Financial Officer |
