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Item 3.01.
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Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
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As previously announced in the Company’s Current Report on Form 8-K filed with the Commission on December 21, 2020, on December 28, 2020, the Company notified NASDAQ of
the Holding Company Reorganization and, following such notification, NASDAQ suspended trading of shares of the Company’s common stock (“Company Common Stock”) after the
close of business on December 28, 2020. Following the consummation of the Holding Company Reorganization, shares of Holdings’ common stock commenced trading on NASDAQ under the symbol “GEG” prior to the market opening on the Closing Date. In
addition, following the consummation of the Holding Company Reorganization, (i) NASDAQ filed with the Commission an application on Form 25 to delist the Company Common Stock from NASDAQ and deregister the Company Common Stock under Section 12(b) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (ii) the Company will file a certificate on Form 15 requesting that each of the Company Common
Stock and the Company’s units, par value $0.001 per share, be deregistered under the Exchange Act and that the Company’s reporting obligations under Section 15(d) of the Exchange Act be suspended (except to the extent of the succession of Holdings to
the Exchange Act Section 12(b) registration and reporting obligations of the Company).
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Item 3.02.
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Unregistered Sales of Equity Securities.
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As previously announced in the Company’s Current Report on Form 8-K filed with the Commission on December 21, 2020, on the Closing Date, the Company and Holdings
consummated certain transactions with J.P. Morgan Broker-Dealer Holdings Inc., a Delaware corporation and affiliate of JPMorgan Chase & Co. (or its permitted transferee, the “Holder”),
following the consummation of the Holding Company Reorganization, pursuant to which, among other things, the Company issued to the Holder 35,010 newly issued shares of 9.0% preferred stock (the “Company Preferred Stock”) with a maturity date of December 29, 2027 for $1,000.00 per share and $35,010,000 in the aggregate. The Company Preferred Stock was issued in reliance on the exemption from registration set forth in Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D thereunder.
Company Preferred Stock
The powers, rights, designations and preferences of shares of Company Preferred Stock are set forth in a certificate of designation (the “Certificate of Designation”) filed with the Secretary of State of the State of Delaware on the Closing Date.
Under the terms of the Certificate of Designation, among other things:
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the 9.0% dividend rate will increase to 11.0% in the event certain non-compliance events are in effect, including, among other things, the Company’s failure to (i) pay dividends for
two consecutive quarters, (ii) comply with certain provisions of the Certificate of Designation or the Stockholders Agreement (as defined below), or (iii) redeem the Company Preferred Stock when due;
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for so long as shares of Company Preferred Stock are outstanding, the Company may not declare or pay dividends on any other class or series of capital stock, including the common
stock held by Holdings, unless all aggregate accrued dividends on the Company Preferred Stock are declared and paid prior to, or simultaneously with, any such dividends;
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except as required by law, Company Preferred Stock will not have any voting rights, except the approval of holders of a majority of the outstanding shares of Company Preferred Stock,
voting as a separate class, is required for the Company to (i) amend its organizational documents in a manner that would be adverse and disproportionate to the rights, powers, preferences and privileges of the Company Preferred Stock relative
to any other Company capital stock or (ii) authorize or issue capital stock that ranks pari passu or senior to the Company Preferred Stock;
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holders of Company Preferred Stock will also be entitled to designate a director to the Company’s board of directors in connection with certain failures by the Company to comply with
the terms of the Certificate of Designation;
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share of Company Preferred Stock will have priority over other Company equity in connection with any liquidation or dissolution at a per share amount equal to the $1,000.00 plus then
accrued and unpaid dividends (the “Preferred Liquidation Preference”); and
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at its option, the Company may redeem shares of Company Preferred Stock at any time following December 29, 2023 or, under certain circumstances, prior to such time and the per share
redemption price payable would be an amount equal to (i) 103% of the then applicable Preferred Liquidation Preference if redeemed on or after December 29, 2023 but prior to December 29, 2024, (ii) 102% of the then applicable Preferred
Liquidation Preference if redeemed on or after December 29, 2024 but prior to December 29, 2025, (iii) 101% of the then applicable Preferred Liquidation Preference if redeemed on or after December 29, 2025 but prior to December 29, 2026, or
(iv) the then applicable Preferred Liquidation Preference if redeemed on or after December 29, 2026.
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In addition, the Company is required to redeem shares of Company Preferred Stock at the then applicable redemption price upon the earlier of (i) December 29, 2027 and
(ii) the consummation of certain transactions that would result in an “ownership change” of the Company for purposes of Section 382 of the Internal Revenue Code of 1986, as amended, and as a result of such a transaction the net operating losses
available for use by the Company or its subsidiaries would be below a threshold amount.
The foregoing descriptions of the Certificate of Designation does not purport to be complete and is qualified in its entirety by reference to the full text of the
Certificate of Designation, which is filed as Exhibit 4.1 and incorporated by reference herein.
Stockholders Agreement
In addition to the issuance of shares of Company Preferred Stock, on the Closing Date and following the Holding Company Reorganization, the Holder acquired from Holdings
20% of the outstanding shares of Company Common Stock, and the Company, Holdings and the Holder entered into a Stockholders Agreement on the Closing Date (the “Stockholders Agreement”).
Under the terms of the Stockholders Agreement, among other things:
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for so long as a stockholder maintains beneficial ownership of 20% or more of the shares of Company Common Stock, such stockholder will have the right to nominate a certain number of
directors to the Company’s board of directors that is proportionate to such stockholder’s ownership of Company Common Stock;
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for so long as the Holder owns shares of Company Common Stock, the Company will be required to obtain the prior approval of the Holder before it takes certain actions, including (i)
amending the Company’s organizational documents in a manner materially adverse to the Holder, (ii) entering into certain material transactions or amending certain agreements, in each case, with affiliates of the Company, (iii) issuing
additional shares of Company capital stock, (iv) granting options to purchase shares of Company capital stock, or (v) effecting a Change of Control (as defined in the Stockholders Agreement) other than in connection with a Drag-along Sale (as
defined in the Stockholders Agreement);
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for so long as the Company owns equity securities of Great Elm Healthcare, LLC, a Delaware limited liability company and affiliate of the Company (“Healthcare LLC”), the Company will be required to obtain the prior approval of the Holder before the Company takes certain actions in its capacity as an equity holder of Healthcare LLC;
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for so long as the Holder owns shares of Company Preferred Stock, the Company will be required to obtain the prior approval of the Holder before it takes certain actions, including
(i) entering into certain material transactions or amending certain agreements, in each case, with affiliates of the Company, (ii) taking certain actions in its capacity as an equity holder of Healthcare LLC, and (iii) incurring certain
additional indebtedness;
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for so long as the Holder owns shares of Company Preferred Stock, the Holder will have certain board observer rights with respect to meetings of the Company’s board of directors; and
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the stockholders of the Company will (i) be subject to certain restrictions on the transfer of Company capital stock and (ii) have certain customary preemptive rights, rights of
first refusal, and tag-along and drag-along rights, in each case, with respect to Company capital stock.
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The Stockholders Agreement may terminate upon the earliest of (i) an initial public offering, (ii) a merger or other business combination whereby Company capital stock
becomes traded on a national listing exchange, (iii) the date on which none of the stockholders that are party to the Stockholders Agreement hold any capital stock of the Company, (iv) the dissolution of the Company or (v) unanimous agreement of the
Company’s stockholders.
The foregoing description of certain terms and conditions of the Stockholders Agreement is qualified in its entirety by reference to the full text of the Stockholders
Agreement which is included as Exhibit 4.2 and incorporated herein by reference.
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Item 3.03.
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Material Modification of Rights of Securityholders.
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The information set forth in Items 3.01, 3.02 and 8.01 is hereby incorporated by reference into this Item 3.03.
As previously announced in the Company’s Current Report on Form 8-K filed with the Commission on January 29, 2018, on January 28, 2018, the Company entered into the
Stockholders’ Rights Agreement (the “Company Stockholders’ Rights Agreement”) with Computershare Trust Company, N.A., a federally chartered trust company (“Computershare”), to set forth certain rights of the holders of Company Series A Junior Participating Cumulative Preferred Stock, par value $0.001 per share. As previously
announced in the Company’s Current Report on Form 8-K filed with the Commission on December 21, 2020, in connection with the Holding Company Reorganization, the parties to the Company Stockholders’ Rights Agreement entered into Amendment No. 1 to the
Company Stockholders’ Rights Agreement (the “Amendment”), which terminated the Company Stockholders’ Rights Agreement upon the consummation of the Holding Company
Reorganization.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, which is
filed as Exhibit 4.3 and which is incorporated by reference herein.