Item 2.02 Results of Operations and Financial Condition.
On May 5, 2023, Great Elm Group, Inc. (the "Company") issued the press release
furnished as Exhibit 99.1 to this report.
The foregoing information (including the Exhibit 99.1 hereto) is being furnished
and shall not be deemed "filed" 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, nor shall such information be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as expressly set forth by specific
reference in such filing.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 4, 2023, Peter A. Reed resigned as Chief Executive Officer of the
Company, effective immediately following the filing of the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 2023. Mr. Reed will
continue to be available for consultation through May 5, 2024.
In connection with Mr. Reed's separation, on May 4, 2023, the Company entered
into a severance agreement (the "Severance Agreement") and a consulting
agreement (the "Consulting Agreement") with Mr. Reed. The Severance Agreement
and the Consulting Agreement provide for cash payments for consulting services
of $20,833 per month and healthcare-related benefits through May 5, 2024. Mr.
Reed will also vest in 9,183 shares of unvested common stock of Great Elm
Capital Corp. ("GECC") awarded to Mr. Reed by the Company (50% in September 2023
and 50% in September 2024). The Company will also grant to Mr. Reed, subject to
a one-year lock up, $300,000 of shares of common stock of GECC held by the
Company with the number of shares determined based on a 10-day volume-weighted
average price of GECC's common stock on the 10 trading days following May 5,
2023. Additionally, Mr. Reed's option to purchase (1) 125,000 shares of the
Company's common stock may be exercised until September 18, 2027, (2) 213,000
shares of the Company's common stock may be exercised until September 18, 2027,
and (3) 57,143 shares of the Company's common stock may be exercised until
August 6, 2024. The Severance Agreement and the Consulting Agreement are
attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively.
On May 4, 2023, the Company appointed Jason W. Reese, age 57, as the Company's
Chairman and Chief Executive Officer, effective immediately following Mr. Reed's
resignation. Mr. Reese has been the Executive Chairman of the Company's Board of
Directors (the "Board") since February 2020. Mr. Reese is the Co-Founder,
Chairman and Chief Executive Officer of Imperial Capital Asset Management, LLC
("ICAM") and the Co-Founder of Imperial Capital, LLC ("Imperial Capital"), both
founded in 1997. ICAM is a registered investment advisor which has managed
various hedge funds, investment partnerships, a private REIT and a private
equity fund. Imperial Capital is a registered broker-dealer and an affiliate of
ICAM. Prior to ICAM and Imperial Capital, Mr. Reese was a principal with Gordon
Investment Corporation, a merchant banking firm in New York and Dallas, where he
focused on investing in distressed real estate transactions, high yield
securities and leveraged buyouts. Prior to his time with Gordon, Mr. Reese
worked in the Corporate Finance Group at PaineWebber in New York. Mr. Reese is
currently on the board of directors of City Ventures, LLC, a California-based
private home builder. Mr. Reese graduated with honors from Yale University with
a B.S. in Electrical Engineering.
Certain information regarding transactions with related persons between the
Company and Mr. Reese is disclosed under the heading "Certain Relationships and
Related Transactions" in the Company's Definitive Proxy Statement on Schedule
14A filed with the SEC on October 11, 2022, which information is incorporated by
reference into this Item 5.02.
On May 4, 2023, the Company entered into an offer letter (the "Offer Letter")
with Mr. Reese in connection with his appointment as Chief Executive Officer.
Under the Offer Letter, Mr. Reese's annual compensation will consist of a base
salary of $500,000, which will be subject to annual increase based on Company
and individual performance and market conditions, as determined by the Board.
Additionally, Mr. Reese will be eligible to participate in the Great Elm Capital
Management, Inc. Discretionary Bonus Plan, and the target amount for any target
bonus for each of the first five years of employment will be 200% of base
salary. Mr. Reese will also be granted an option to purchase up to 2,000,000
shares of the Company's common stock, which will vest and become exercisable
upon the achievement of certain milestones. The Offer Letter is attached hereto
as Exhibit 10.3.
Item 8.01 Other Events.
On May 5, 2023, the Company issued the press release attached as Exhibit 99.2 to
this report announcing the officer appointment noted under Item 5.02 above.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
Severance Agreement, dated May 4, 2023, by and between Great Elm
10.1 Group, Inc. and Peter A. Reed
Consulting Agreement, dated May 4, 2023, by and between Great Elm
10.2 Group, Inc. and Peter A. Reed
Offer Letter, dated May 4, 2023, by and between Great Elm Group,
10.3 Inc. and Jason W. Reese
99.1 Press Release, dated May 5, 2023
99.2 Press Release, dated May 5, 2023
The cover page from this Current Report on Form 8-K, formatted as
104 inline XBRL
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