UNITED STATES
SECURITIES 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): July 18, 2016
Great Elm Capital Group, Inc.
(Exact name of registrant as specified in its charter)
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Delaware |
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001-16073 |
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94-3219054 |
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(State or Other Jurisdiction
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(Commission
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(I.R.S. Employer
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20 First Street, First Floor
Los Altos, California 94022
(Address of principal executive offices) (Zip Code)
(650) 518-7111
(Registrant’s telephone number, including area code)
N/A
(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 obligations of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On July 18, 2016, Richard S. Chernicoff accepted the registrant’s employment offer as described in Item 5.02.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 18, 2016, Mr. Chernicoff was appointed, on an interim basis, as chief executive officer of the registrant. The registrant’s employment offer to Mr. Chernicoff is an exhibit to this report and includes base salary, bonus and equity incentives but does not include any severance arrangement. Mr. Chernicoff will remain a member of the registrant’s board of directors. Mr. Chernicoff’s biographical information is incorporated by reference from the registrant’s proxy statement filed on October 28, 2015.
On July 18, 2016, Hugh Steven Wilson was appointed Chairman of the Board of Directors of the registrant.
On July 18, 2016, as a result of Mr. Chernicoff becoming an executive officer of the registrant, Mr. Chernicoff no longer meets the independence requirements to be a member of the registrant’s audit committee. The registrant has already begun recruiting a new independent director to join the registrant’s board of directors and its audit committee not later than the end of September 2016.
Item 9.01 Financial Statements and Exhibits
The exhibit index attached hereto is incorporated by reference.
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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Dated: July 19, 2016 |
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GREAT ELM CAPITAL GROUP, INC. |
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By: |
/s/ James D. Wheat |
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James D. Wheat |
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Chief Financial Officer |
Exhibit 10.1
July 18, 2016
Mr. Richard S. Chernicoff
4309 Forest Avenue SE
Mercer Island, WA 98040
Dear Rich:
This offer letter (this “Offer Letter”) confirms the terms of your service, on an interim basis, as Chief Executive Officer of Great Elm Capital Group, Inc. (the “Company”)
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1. |
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Title. You will serve as the Company’s President and Chief Executive Officer on an interim basis reporting directly to the board of directors of the Company (the “Board”). |
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You will continue to serve on the Board, but, while you serve as interim CEO, the Company will regard you as an employee director. |
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2. |
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Employment Location. You are expected to relocate the Company’s headquarters to Boston by the end of September 2016. Significant travel is expected in the performance of your duties. Subject to applicable IRS guidelines, the Company will reimburse your reasonable out-of-pocket costs in connection with commuting with the goal of your relocating to Boston within the year. |
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3. |
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Employment Start Date. Subject to completion of immigration formalities, your employment with the Company will begin on the date hereof. |
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4. |
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Base Salary. Your annual base salary will be $200,000, less applicable withholdings and deductions, commencing upon your start date and paid in accordance with standard U.S. payroll practices. |
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For so long as you serve as Chief Executive Officer of the Company and the Company does not have an in-house General Counsel, your annual base pay will be increased by $100,000. |
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5. |
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Bonus. |
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(a) |
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The compensation committee of the Board (the “Compensation Committee”) will consider on an annual basis whether to award you a bonus. The Company has not set any bonus target and you acknowledge that this bonus is completely discretionary and may therefore be zero. For the period from your start date to December 31, 2016, you will be entitled to a guaranteed bonus of $60,000. |
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(b) |
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The Company will pay you as soon as practicable after the date hereof, $100,000 in consideration of your work on the PanOptis transaction. |
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(c) |
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If, as and when the merger of Full Circle with and into Great Elm Capital Corp. occurs, the Company will pay you a $150,000 transaction bonus. |
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(d) |
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You and the Compensation Committee may negotiate additional transaction related bonuses in the future, but the Company has no commitment to do so. |
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Equity Incentives. The Compensation Committee has awarded you options to purchase 1.4% of the Company’s fully diluted capitalization at a price equal to 110% of the closing price of the Company’s common stock on the date of this Agreement. The terms of such option are set forth in the award agreement (the “Option Agreement”), including, but not limited to, vesting monthly over two years. |
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Employee Health and Welfare Benefits. You will be offered benefits on a most favored nation’s basis with those offered to other employees of the Company and its subsidiaries. |
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Business Expenses. The Company will reimburse your out of pocket expenses incurred in connection with your service, subject to the Company’s policies as in effect from time to time, and applicable IRS guidelines. |
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Termination. Your employment with the Company is “at will” and may be terminated at any time by the Company or by you. Inasmuch as your appointment is on an interim basis, you will not be entitled to any severance. |
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General Provisions. |
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(a) |
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You will enter into the Company’s standard employee confidentiality and invention assignment before beginning employment. |
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(b) |
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You are required to certify that you are a citizen of the U.S., a noncitizen national of the U.S., a lawful permanent resident, or an alien authorized to work in the U.S before beginning employment. |
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(c) |
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You are expected to devote a substantial majority of your business hours to service of the Company under this Agreement. Subject to the Company’s code of ethics as in effect from time to time, you may continue your outside board service and consulting arrangements. You agree that your outside consulting arrangements will not materially interfere with your devotion to the Company’s business. |
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This Offer Letter and the matters covered hereby will be governed by and construed under the laws of the State of Delaware applicable to contracts made in and wholly to be performed in the State of Delaware. |
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(e) |
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Any dispute under this Offer Letter will be exclusively arbitrated before a single JAMS arbitrator in New York modifying JAMS rules to reduce cost and increase speed of resolution to the maximum extent permitted under JAMS rules and applicable law. The arbitrator shall determine which party was the prevailing party in the dispute taken as a whole and costs as well as reasonable attorneys’ fees shall be assessed against the losing party. |
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(f) |
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This Offer Letter and the Award Agreement constitute our entire agreement with respect to your employment as interim CEO of the Company and no prior negotiations, drafts, arrangements or understandings with respect thereto shall be of any effect. |
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(g) |
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If any provision of this Agreement is held by a court of competent authority to be unenforceable, the parties intend that (i) the remaining provisions of this Agreement shall be enforced in accordance with their terms and (ii) the court shall substitute a replacement provision that is enforceable that, as closely as possible, accomplishes the purposes intended by such original provision. |
If this Offer Letter correctly sets forth the terms of our agreement, please sign and return this Offer Letter whereupon it shall become our binding agreement.
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Very truly yours, |
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/s/ Peter A. Reed |
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Peter A. Reed |
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Chairman, Compensation Committee of the Board of Directors of |
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Great Elm Capital Group, Inc. |
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ACCEPTED AND AGREED TO AS OF THE DATE FIRST WRITTEN ABOVE: |
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/s/ Richard S. Chernicoff |
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Richard S. Chernicoff |
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Exhibit 10.2
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Great Elm Capital Group, Inc. |
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Notice of Stock Option Grant |
ID: 94-3219054 |
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20 First Street, First Floor |
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Los Altos, CA 94022 |
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Richard S. Chernicoff |
Option Number: |
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4309 Forest Avenue SE |
Plan: |
Unwired Planet 2006 Stock Plan |
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Mercer Island, WA 98040 |
Vesting Commencement Date: |
July 18, 2016 |
Effective July 18, 2016 (the “Date of Grant”) you have been awarded an option (the “Option”) to purchase 141,437 shares of common stock, par value $0.001 per share, of Great Elm Capital Group, Inc. (the “Company”) at $6.99 per share.
This Notice of Stock Option Grant (including the exhibits hereto, this “Notice”), together with the 2006 Stock Plan (the “Plan”), as modified by your offer letter (the “Offer Letter”), dated as of the Vesting Commencement Date set forth above (collectively, the “Stock Option Documents”) delivered to you with this Notice, and in effect as of the Date of Grant, contain the terms of your Option. The Plan, the Offer Letter, and the Stock Option Agreement are hereby incorporated by reference and made a part of this Notice. This Option is granted under the 2006 Unwired Planet, Inc. Stock Plan (the “Plan”).
Vesting Schedule
Except as otherwise provided in the Plan, the Option will vest as follows:
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Expiration Date |
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141,437 |
Quarterly (1) |
July 18, 2018 |
July 18, 2026 |
(1) Shares subject to the Option shall vest ratably in equal increments on each quarterly anniversary of the Vesting Commencement Date. Unless your employment is terminated for cause, if you serve part of a quarter, the amount that otherwise would vest in such quarter shall vest as if you served the entire quarter. If the Option would vest with respect to a fractional share, such fractional share shall be rounded (up or down) to the nearest whole share.
Continuous Service
Continuous Service shall include any period in which you provide services to the Company or its subsidiaries (whether as a member of the board of directors (or similar body of unincorporated subsidiaries), officer, employee, counsel or consultant).
Termination of Service
This Option, to the extent then exercisable, may be exercised within a one year following termination of your Continuous Service (but in no event later than the Expiration Date set forth above). You are responsible for keeping track of the latest date for exercise of this Option. The Company has no duty to, and will not, provide you notice of such date.
Distributions
If the Company distributes rights, securities, other property or cash while this Option is outstanding, the Company will reserve an amount of such rights, securities, other property or cash that would have been issued in respect of the maximum number of shares of Company common stock (whether vested or not) then issuable upon full exercise of this Option. Notwithstanding the foregoing, if, on or before the Full Vest Date set forth above, the Company issues (other than upon exercise of incentive equity awards or in a merger or acquisition transaction) shares of its common stock at a price below the then-current exercise price per share of this Option, the exercise price per share of this Option shall be made to equal the per share price received by the Company in such subsequent issuance.
Exercise
You may exercise unvested shares, however (a) any unvested shares of common stock so purchased are subject to a repurchase option in favor of the Company to the extent the vesting conditions in this Option are not met and (b) the Company shall hold in escrow such unvested shares until the applicable vesting conditions in this Option are met, at which point such then vested shares shall be book-entry credited to your account.
Governing Law
This Option will be governed under the laws of the Commonwealth of Massachusetts.
Severability
If one or more of the provisions of the Stock Option Documents shall be held invalid, illegal or unenforceable in any respect:
(a) the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby;
(b) the invalid, illegal or unenforceable provision shall be deemed null and void, subject to “(c)” below; and
(c) to the extent permitted by applicable law, any invalid or illegal, or unenforceable provision shall be construed, interpreted, or revised retroactively to comply with applicable law and to achieve the intent of the Stock Option Documents.
Acknowledgement and Agreement
By signing below, you agree to the terms of this Option (including the exhibits hereto) and making the representations in Exhibit A attached hereto.
Please sign and return one copy of this Option to me.
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/s/ Peter A. Reed |
/s/ Richard S. Chernicoff |
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Peter A. Reed |
Richard S. Chernicoff |
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Chairman, Compensation Committee |
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Exhibit A
Representations and Warranties
(Domestic Optionees)
By accepting the Option, you represent and warrant to the Company that:
(d) you have received and read a copy of the Stock Option Documents, under which the Option is granted and governed;
(e) you have reviewed the Stock Option Documents in their entirety;
(f) you have had an opportunity to obtain the advice of counsel prior to executing the Option;
(g) you fully understand all provisions of the Stock Option Documents;
(h) you hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Stock Option Documents;
(i) your rights to any shares underlying this Option will be earned only over time as you provide services to the Company;
(j) the grant of the Option is not consideration for services you rendered to the Company prior to your Vesting Commencement Date;
(k) nothing in the Stock Option Documents confers upon you any right to continue your employment or consulting relationship with the Company for any period of time, nor does it interfere in any way with your right or the Company’s right to terminate that relationship at any time, for any reason, with or without cause.
* Capitalized terms not defined in this Option have the meanings given to them in the Plan.