Page 5 of 8 – SEC Filing
In addition, under the terms of the Separation Agreement on the Effective Date, (a) the
Issuer and Mast Capital have agreed that the warrant, dated December 9, 2016, delivered to Mast Capital by the Issuer, is cancelled and replaced by an aggregate of 54,733 shares of Common Stock registered in Mast Capitals name;
(b) the Issuer and Mr. Steinberg have agreed that the Performance Share Award Agreement, dated November 3, 2016, between the Issuer and Mr. Steinberg, granting to Mr. Steinberg 220,923 performance-based restricted shares of
Common Stock, is cancelled and forfeited in full; (c) Mr. Steinberg has agreed to voluntarily resign from employment at Great Elm Capital Management, Inc., a Delaware corporation and subsidiary of the Issuer; (d) the Issuer has agreed
to grant Mast Capital the New Warrant (as defined in Item 5(a) below), the terms and conditions of which are described in Item 5(a) below; (e) the Issuer has agreed to provide (i) demand registration rights exercisable following the first
anniversary of the Effective Date if the New Warrant has been exercised, and (ii) piggy-back registration rights with respect to shares of Common Stock issued or issuable pursuant to the Separation Agreement; (f) the Issuer has, in
accordance with its Amended and Restated Certificate of Incorporation (the Certificate), approved the acquisition by Mast Capital (or its designee under the New Warrant) of any and all shares of Common Stock contemplated under the
Separation Agreement or the New Warrant, and has waived any and all other conditions, notice requirements and other limitations found in Article XIV of the Certificate affecting the acquisition of such shares; (g) the Board has granted an
exemption under the Issuers Tax Benefits Preservation Agreement, dated as of January 20, 2015, with respect to the acquisition by Mast Capital (or its designee under the New Warrant) of any and all shares of Common Stock contemplated by
the Separation Agreement or the New Warrant; and (h) certain parties to the Separation Agreement (including the Issuer and the Reporting Persons) have agreed to mutually release and forever discharge the other releasing parties from any and all
liability whatever arising out of, based upon or relating to actions or omissions occurring on or before the Effective Date, subject to certain limitations, including with respect to claims arising from the Separation Agreement, as set forth in the
Separation Agreement.
Item 5. Interest in Securities of the Issuer
(a) The aggregate percentage of Common Stock reported to be owned by the Reporting Persons is based upon 24,558,614 shares of Common Stock
outstanding, which is derived by adding (i) 24,139,631 shares of Common Stock outstanding as of September 1, 2017, as reported in the Issuers Form 10-K filed with the Securities and Exchange
Commission on September 19, 2017, (ii) the 54,733 shares of Common Stock issued to MAST Capital on the Effective Date pursuant to the terms of the Separation Agreement and (iii) 364,250 shares of Common Stock which could be issuable upon
exercise of the New Warrant, as described below.
MAST Capital (i) holds 54,733 shares of Common Stock, which were issued pursuant to
the Separation Agreement on the Effective Date, and (ii) as the investment manager of the MAST Accounts, may be deemed to beneficially own 1,947,735 shares of Common Stock held by the MAST Accounts.
On September 18, 2017, the Issuer issued to Mast Capital a warrant (the New Warrant) for Mast Capital (or one or more Mast
Funds, as Mast Capitals designee) to purchase up to 420,000 shares of Common Stock; provided, that Mast Capital (or its designee) may not purchase Common Stock pursuant to the New Warrant if such purchase would result in the Reporting Persons
beneficially owning more than 9.9% of the outstanding Common Stock. As of the date hereof, 364,250 shares of Common Stock could be issuable upon exercise of the New Warrant in compliance with such limitation. The New Warrant is exercisable from the
date that is ten trading days following the date of issuance of the New Warrant up to and until the expiration of the Standstill Period. The exercise price for the New Warrant is the simple average of the Weighted Average Price (as defined in the
New Warrant) of the Common Stock for the ten consecutive trading days ending on and including the trading day immediately prior to the date of the exercise of the New Warrant. The foregoing description of the New Warrant is qualified in its entirety
by reference to the full text of the New Warrant, which is attached as Exhibit 99.2 hereto and incorporated by reference herein.
The
total shares of Common Stock which may be deemed to be beneficially owned by MAST Capital are 2,366,718 shares of Common Stock, representing approximately 9.6% of the issued and outstanding shares of Common Stock of the Issuer.
