USE OF PROCEEDS
We estimate that the net proceeds from this offering and the Backstop Commitment will be approximately $42.6 million, after deducting expenses related to this offering.
We intend to use the net proceeds received from this offering and the Backstop Commitment for general corporate purposes, which may include investments and acquisitions. We also note that among our general corporate purposes is payment of future amounts owed by us out of our GECC investment management income to MAST Capital and our employees.
On October 18, 2016, we redeemed all of our Senior Secured Notes due 2019 for approximately $31.7 million. The interest rate on the notes was 12.875%.
THE RIGHTS OFFERING
Before deciding whether to exercise your subscription rights, you should carefully read this prospectus, including the information set forth under the heading “Risk Factors” and the information that is incorporated by reference into this prospectus.
Reasons for the Rights Offering
We believe that raising equity capital will better position us to execute on our growth strategy. This offering would allow us to raise equity capital in a cost‑effective manner that allows all of our stockholders the opportunity to participate in the transaction on a pro‑rata basis, and if all stockholders exercise their rights, our stockholders may avoid dilution of their ownership interest in us, subject to the treatment of fractional shares.
Our board of directors considered various factors in evaluating this offering and related transactions, including:
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our current capital resources and our future need for additional liquidity and capital;
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our need for increased financial flexibility in order to enable us to achieve our business plan;
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the size and timing of this offering;
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the potential dilution to our current stockholders if they choose not to participate in this offering;
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alternatives available for raising capital, including debt and other forms of equity raises;
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the potential impact of this offering on the public float for our common stock; and
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the fact that existing stockholders would have the opportunity to participate on a pro rata basis to purchase additional shares of our common stock, subject to the restrictions described in this prospectus.
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The terms of the Backstop Commitment were reviewed, negotiated and approved by our board of directors, with advice from legal counsel.
Our board of directors may continue to explore and evaluate other potential alternative financing transactions that would qualify as “superior transaction,” as defined in the Backstop Agreement. The Backstop Agreement (and this offering) may be terminated by us if we have entered into a definitive agreement to effect a superior transaction. We are required to pay the backstop providers a termination fee of approximately $1.1 million if the Backstop Agreement is terminated by reason of us entering into a definitive agreement with respect to a superior transaction. Any portion of the termination fee and any amount otherwise payable to an officer or director will be waived and retained by us.
Terms of the Offer
We are issuing to our stockholders as of the effective date rights to subscribe for an aggregate of up to shares of our common stock. Each rights holder is being issued one basic subscription privilege for each share of our common stock owned as of the close of business, on November 22, 2016, the effective date (1 for 1).
Each basic subscription privilege entitles the rights holder to purchase shares of our common stock, at a cash price of $ per whole share, which represents a % discount to the closing price of our common stock on the effective date. Rights may only be exercised in the aggregate for whole numbers of shares of our common stock; no fractional shares of our common stock will be issued in this offering. Any fractional shares will be rounded down to the nearest whole share of common stock and any excess subscription payments will be returned by the subscription agent.
Rights holders who fully exercise their basic subscription privilege will be entitled to the over‑subscription privilege which enables such rights holders to subscribe for additional shares of our common stock that remain unsubscribed as a result of any unexercised basic subscription privileges. If sufficient remaining shares are available, all over‑subscription requests will be honored so long as no rights holder receives more than the rights holder’s pro rata share of the shares not purchased by other rights holders through exercises of their basic subscription privileges and other ownership thresholds described herein are not exceeded.
Rights may be exercised at any time during the subscription period, which commenced on November 22, 2016, the effective date, and ends at 5:00 p.m., Eastern time, on December 23, 2016, or the expiration date, unless extended by us (which extension requires the consent of the backstop providers if it results in this offering remaining open for more than 20 days).
The rights will be evidenced by subscription certificates which will be mailed to stockholders, except as discussed below under “Foreign Stockholders.”
For purposes of determining the number of shares a rights holder may acquire in this offering, broker‑dealers, trust companies, banks or others whose shares are held of record by Cede or by any other depository or nominee will be deemed to be the holders of the rights that are issued to Cede or the other depository or nominee on their behalf.
There is no minimum number of rights which must be exercised in order for this offering to close.
Over‑Subscription Privilege
The over‑subscription privilege allows rights holders that fully exercise their basic subscription privilege to purchase additional shares of our common stock that remain unsubscribed as a result of any unexercised basic subscription privileges. You should indicate on your subscription certificate that you submit with respect to the exercise of your rights how many additional shares of our common stock you are willing to acquire pursuant to the over‑subscription privilege. If sufficient remaining shares are available, we will seek to honor over‑subscription requests in full so long as no rights holder receives more than the rights holder’s pro rata share of the shares not purchased by other rights holders through exercises of their basic subscription privileges and other ownership thresholds described herein are not exceeded.
Banks, brokers, trustees and other nominee holders of rights will be required to certify to the subscription agent, before any over‑subscription privileges may be exercised with respect to any particular beneficial owner, as to the aggregate number of rights exercised pursuant to the subscription right and the number of shares subscribed for pursuant to the over‑subscription privileges by such beneficial owner.
We will not offer or sell in connection with this offering any shares of common stock that are not subscribed for pursuant to the basic subscription privileges or the over‑subscription privileges. The backstop providers, however, have agreed to backstop this offering pursuant to the Backstop Commitment.
Expiration of this Offer
This offering will expire at 5:00 p.m., Eastern time, on December 23, 2016, unless extended by us, and rights may not be exercised thereafter.
Subject to the terms of the Backstop Agreement, our board of directors may determine to extend the subscription period, and thereby postpone the expiration date, to the extent our board of directors determines that doing so is in the best
interest of our stockholders. An extension requires the consent of the backstop providers if it results in this offering remaining open for more than 20 days.
Any extension of this offering will be followed as promptly as practicable by announcement thereof, and in no event later than 9:00 a.m., New York City time, on the next business day following the previously scheduled expiration date. Without limiting the manner in which we may choose to make such announcement, we will not, unless otherwise required by law, have any obligation to publish, advertise or otherwise communicate any such announcement other than by issuing a press release or such other means of announcement as we deem appropriate.
Transferability
On the effective date, all of our shares began trading on Nasdaq along with the associated rights as a unit under the symbol “GECXU” and CUSIP 39036P 308.
If you transfer shares of our common stock during the period of the rights offering and have not exercised the rights attached to the transferred shares before your transfer, you have transferred GECXU units consisting of the rights associated with the transferred shares of common stock along with the shares of common stock.
If you exercise your rights before the expiration date, your trading unit will terminate and be transformed into:
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shares of our common stock trading on Nasdaq under “GECX” and new CUSIP 39036P 209; and
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the right to receive shares of our common stock upon payment of the subscription price and otherwise complying with the terms of the rights certificate. The shares that will be issued upon exercise of rights will be listed on Nasdaq under “GEC” and new CUSIP 39036P 209.
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If you do not exercise your rights and remain a holder of our common stock through the expiration date, on the expiration date your shares which had been trading as GECXU units and GECX will be listed on Nasdaq as GEC shares and have the new 39036P 209 CUSIP.
Whether or not a holder transfers the underlying common stock to which the rights originally attached subsequent to any exercise of rights, the new shares of our common stock in the subscription, and over-subscription as applicable, will be issued to the holder who exercised the rights, and not any subsequent transferee of the underlying common stock.
Determination of the Subscription Price
The $ subscription price was set by our board of directors using the formula negotiated with the Backstop Providers in the Backstop Agreement. In approving the subscription price, our board of directors considered, among other things, the following factors:
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the historical and current market price of our common stock;
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the 20% discount to the thirty consecutive trading day average of the daily volume‑weighted‑average prices of our common stock on the Nasdaq as compared to comparable precedent transactions, including the range of discounts to the market value (on an actual basis and a pro forma basis taking into account the Subscription Price and size of this offering) represented by the subscription prices in other rights offerings;
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the subscription price represents a % discount to the closing price of our common stock on the effective date;
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the backstop subscription price at which Gracie Investing, LLC and the other non‑affiliate backstop providers were willing to provide their Backstop Commitment;
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the fact that the rights will not be tradable separately from the shares of our common stock;
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the fact that rights holders will have an over‑subscription privilege;
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the low level of execution risk of raising capital in this offering with the Backstop Commitment;
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the terms and expenses of this offering relative to other alternatives for raising capital, including fees payable to backstop providers and the dealer managers and our ability to access capital through such alternatives;
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the size of this offering; and
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the general condition of the securities market.
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Subscription Agent and Information Agent
Computershare will act as the subscription agent and MacKenzie Partners, Inc. will act as the information agent in connection with this offering. Computershare will receive for their administrative, processing, invoicing and other services fees estimated to be approximately $85,000, plus reimbursement for all out‑of‑pocket expenses related to this offering.
Completed subscription certificates must be sent together with full payment of the subscription price for all whole shares subscribed for through the exercise of the subscription privilege and the over‑subscription privilege to the subscription agent by one of the methods described below. We will accept only properly completed and duly executed subscription certificates actually received at any of the addresses listed below, at or prior to the expiration date or by the close of business on the third business day after the expiration date following timely receipt of a notice of guaranteed delivery. See “Payment for Shares” below. In this prospectus, close of business means 5:00 p.m., New York City time, on the relevant date.
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Subscription Certificate Delivery Method
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Address/Number
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By Notice of Guaranteed Delivery:
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You may deliver the notice of guaranteed delivery to the subscription agent in the same manner as the rights certificate at the addresses set forth below. Eligible institutions only may also deliver the notice of guaranteed delivery to the subscription agent by facsimile at (617) 360‑6810, confirmation of faxes only: (781) 575‑2332.
This number is ONLY for confirmation of a fax; for information about this offering, please contact the Information Agent.
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The information agent will send you additional copies of the form of notice of guaranteed delivery if you need them. Please call the information agent at the numbers noted within this prospectus.
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By Overnight Courier:
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Computershare Trust Company, N.A.
Attn: Corporate Actions Voluntary Offer
250 Royall Street, Suite V
Canton, MA 02021
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By First Class Mail:
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Computershare Trust Company, N.A.
Attn: Corporate Actions Voluntary Offer
P.O. Box 43011
Providence, RI 02940‑3011
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Delivery to an address other than one of the addresses listed above may not constitute valid delivery and, accordingly, may be rejected by us.
Any questions or requests for assistance concerning the method of subscribing for shares or for additional copies of this prospectus or subscription certificates or notices of guaranteed delivery may be directed to the information agent at its telephone number and address listed below:
105 Madison Avenue New York, New York 10016
(212) 929‑5500 (Call Collect) or
Call Toll Free (800) 322‑2885
Email:rightsoffer@mackenziepartners.com
You may also contact your broker or nominees for information with respect to this offering.
Methods for Exercising Rights
Exercise of the Basic Subscription Privilege
Basic subscription privileges are evidenced by subscription certificates that, except as described below under “Foreign Stockholders,” will be mailed to rights holders or, if a rights holder’s shares are held by a depository or nominee on his, her or its behalf, to such depository or nominee. Basic subscription privileges may be exercised by completing and signing the subscription certificate that accompanies this prospectus and mailing it in the envelope provided, or otherwise delivering the completed and duly executed subscription certificate to the subscription agent, together with payment in full for the shares at the estimated subscription price by the expiration date. Basic subscription privileges may also be exercised by contacting your broker, trustee or other nominee, who can arrange, on your behalf, to guarantee delivery of payment and delivery of a properly completed and duly executed subscription certificate pursuant to a notice of guaranteed delivery by the close of business on the third business day after the expiration date. A fee may be charged by your broker, trustee or other nominee for this service. Completed subscription certificates and related payments must be received by the subscription agent on or before the expiration date (unless payment is effected by means of a notice of guaranteed delivery as described below under “Payment for Shares”) at the offices of the subscription agent at the address set forth above. All exercises of basic subscription privileges are irrevocable.
Exercise of the Over‑Subscription Privilege
Rights holders who fully exercise all basic subscription privileges issued to them may participate in the over‑subscription privilege by indicating on their subscription certificate the number of shares of our common stock they are willing to acquire. If sufficient remaining shares of our common stock are available after the primary subscription, we will seek to honor over‑subscriptions requests in full so long as no rights holder receives more than the rights holder’s pro rata share of the shares not purchased by other rights holders through exercises of their basic subscription privileges and other ownership thresholds described herein are not exceeded. All exercises of over‑subscription privileges are irrevocable.
Rights Holders Whose Shares are Held by a Nominee
Rights holders whose shares are held by a nominee, such as a bank, broker‑dealer or trustee, must contact that nominee to exercise their rights. In that case, the nominee will complete the subscription certificate on behalf of the rights holder and arrange for proper payment by one of the methods set forth under “Payment for Shares” below.
Nominees
Nominees, such as brokers, trustees or depositories for securities, who hold shares for the account of others, should notify the respective beneficial owners of the shares as soon as possible to ascertain the beneficial owners’ intentions and to obtain instructions with respect to the rights. If the beneficial owner so instructs, the nominee should complete the subscription certificate and submit it to the subscription agent with the proper payment as described under “Payment for Shares” below.
General
All questions as to the validity, form, eligibility (including times of receipt and matters pertaining to beneficial ownership) and the acceptance of subscription forms and the subscription price will be determined by us, which determinations will be final and binding. No alternative, conditional or contingent subscriptions will be accepted. We reserve the right to reject any or all subscriptions not properly submitted or the acceptance of which would, in the opinion of our counsel, be unlawful.
We reserve the right to reject any exercise of subscription rights if such exercise is not in accordance with the terms of this offering or not in proper form or if the acceptance thereof or the issuance of shares of our common stock thereto could be deemed unlawful. We reserve the right to waive any deficiency or irregularity with respect to any subscription certificate. Subscriptions will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as we determine in our sole discretion. We will not be under any duty to give notification of
any defect or irregularity in connection with the submission of subscription certificates or incur any liability for failure to give such notification.
Foreign Stockholders
Subscription certificates will not be mailed to foreign stockholders. Foreign stockholders will receive written notice of this offering. The subscription agent will hold the rights to which those subscription certificates relate for these stockholders’ accounts until instructions are received to exercise the rights, subject to applicable law.
Payment for Shares
Participating rights holders may choose between the following methods of payment:
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(1)
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A participating rights holder may send the subscription certificate together with payment for the shares acquired pursuant to the subscription privilege and any additional shares subscribed for pursuant to the over‑subscription privilege to the subscription agent based on the subscription price in the executed subscription certificate, must be received by the subscription agent at one of the subscription agent’s offices set forth above (see “—Subscription Agent”), at or prior to the expiration date.
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(2)
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A participating rights holder may request an Eligible Guarantor Institution as that term is defined in Rule 17Ad‑15 under the Securities Exchange Act of 1934, as amended, or the
Exchange Act
, to send a notice of guaranteed delivery or otherwise guaranteeing delivery of (a) payment of the full subscription price for the whole shares subscribed for pursuant to the subscription privilege and any additional shares subscribed for pursuant to the over‑subscription privilege and (b) a properly completed and duly executed subscription certificate. The subscription agent will not honor a notice of guaranteed delivery unless a properly completed and duly executed subscription certificate and full payment for the shares is received by the subscription agent at or prior to 5:00 p.m., Eastern time, on December 23, 2016, unless this offering is extended by us.
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Payments by a participating rights holder must be in U.S. dollars by personal check or bank draft drawn on a bank or branch located in the United States and payable to Computershare Trust Company, N.A. The subscription agent will deposit all funds received by it prior to the final payment date into a segregated account pending pro‑ration and distribution of the shares.
The method of delivery of subscription certificates and payment of the subscription price to us will be at the election and risk of the participating rights holders, but, if sent by mail it is recommended that such certificates and payments be sent by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to the subscription agent and clearance of payment prior to the expiration date or the date guaranteed payments are due under a notice of guaranteed delivery (as applicable). Because uncertified personal checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment, by means of certified or cashier’s check or money order.
Whichever of the two methods described above is used, issuance of the shares purchased is subject to collection of checks and actual payment.
If a participating rights holder who subscribes for shares pursuant to the subscription privilege or over‑subscription privilege does not make payment of any amounts due by the expiration date, the date guaranteed payments are due under a notice of guaranteed delivery or within ten business days of the confirmation date, as applicable, the subscription agent reserves the right to take any or all of the following actions:
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reallocate the shares to other participating rights holders in accordance with the Over‑Subscription Privilege;
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apply any payment actually received by it from the participating rights holder toward the purchase of the greatest whole number of shares which could be acquired by such participating rights holder upon exercise of the subscription and/or the over‑subscription privilege; and/or
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exercise any and all other rights or remedies to which it may be entitled, including the right to set off against payments actually received by it with respect to such subscribed for shares.
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All questions concerning the timeliness, validity, form and eligibility of any exercise of rights will be determined by us, whose determinations will be final and binding. We may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine, or reject the purported exercise of any right. Subscriptions will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as we determine. The subscription agent will not be under any duty to give notification of any defect or irregularity in connection with the submission of subscription certificates or incur any liability for failure to give such notification.
Participating rights holders will have no right to rescind their subscription after receipt of their payment for shares.
Delivery of Shares
Stockholders whose shares are held of record by Cede or by any other depository or nominee on their behalf or their broker‑dealers’ behalf will have any shares that they acquire credited to the account of Cede or the other depository or nominee. With respect to all other stockholders, we will credit your shares by book entry and only issue stock certificates if required by law. We will not credit the shares you purchase until you provide the subscription agent with information for your bank, broker or other nominee. If we are required to deliver a physical certificate for shares you acquire, the certificate will be mailed after payment for all the shares subscribed for has cleared, which may take up to 15 business days from the expiration date.
Termination
We may terminate this offering in the discretion of our board of directors. If we terminate this offering, we may be liable to the backstop providers (except backstop providers who are our officers or directors) for the $1,098,900 termination fee pursuant to the Backstop Agreement. If this offering is terminated, all rights will expire without value and we will promptly arrange for the refund, without interest or penalty, of all funds received from rights holders. All monies received by the subscription agent in connection with this offering will be held by the subscription agent, on our behalf, in a segregated interest‑bearing account at a negotiated rate. All such interest shall be payable to us even if we determine to terminate this offering and return your subscription payment.
Ownership Restrictions
We have adopted a Tax Rights Plan that prohibits the acquisition of more than 4.99% of our outstanding shares of our common stock. The Tax Rights Plan was adopted to prevent the occurrence of an equity ownership shift that would result in a limitation on our ability to utilize our net operating loss carryforwards for Federal income tax purposes. Our certificate of incorporation has a corresponding limitation on ownership of our common stock. Our board of directors has the right to waive the ownership limits under our certificate of incorporation and under our Tax Rights Plan. We have structured this offering so that the rights are distributed pro rata among our stockholders, and, accordingly, no change in our ownership percentages will occur as a result of the offering.
The backstop providers will make a non‑pro rata increase in ownership of our common stock. Our board of directors has granted Gracie Investing, LLC a conditional waiver under our Tax Rights Plan and the applicable provision of our certificate of incorporation to allow Gracie Investing, LLC to acquire up to 10% of our outstanding common stock per the Backstop Agreement.
Each person exercising its rights will be required to represent to us in the subscription certificate that, together with any of its affiliates or associates, it will not beneficially own more than 4.99% of our outstanding shares of common stock (calculated immediately upon closing of this offering after giving effect to the Backstop Commitment) as a result of the exercise of rights. With respect to any stockholder who already beneficially owns in excess of 4.99% of our outstanding shares of common stock, we will require such holder to represent to us in the subscription certificate that they will not, via the exercise of their rights, increase their proportionate interest in our common stock.
Any rights holder found to be in violation of either such representation will have granted to us in the subscription certificate, with respect to any such excess shares, (1) an irrevocable proxy and (2) a right for a limited period of time to
repurchase such excess shares at the lesser of the subscription price and market price, each as set forth in more detail in the subscription certificate.
Notwithstanding the above, in no case shall any backstop provider become the beneficial owner of more than 19.9% of our outstanding shares of common stock as result of the transactions described in this prospectus, and the maximum number of shares issued to each investor in connection with the Backstop Commitment shall be proportionately reduced as necessary to give effect to such limitation.
No Recommendation to Stockholders
Neither our board of directors nor our dealer managers have made, nor will they make, any recommendation to stockholders regarding the exercise of rights under this offering. We cannot predict the price at which our shares of common stock will trade after this offering. You should consult with your legal, tax and financial advisors prior to making your independent investment decision about whether or not to exercise your rights.
As of the effective date, the MAST Funds beneficially owned approximately 18.6% of our common stock, and Mr. Reed, a member of our board of directors, is a partner in MAST Capital. All of the members of our board of directors (except Mr. Serota who joined our board of directors after the backstop agreement was executed) are backstop providers. You should not view the intentions of the MAST Funds or the members of our board of directors as a recommendation or other indication, by them or MAST Capital regarding whether the exercise of the subscription rights is or is not in your best interests.
Stockholders who exercise rights risk investment loss on new money invested. We cannot assure you that the market price for our common stock will remain above the subscription price or that anyone purchasing shares at the subscription price will be able to sell those shares in the future at the same price or a higher price. If you do not exercise or sell your rights, you will lose any value represented by your rights, and if you do not exercise your rights in full, your percentage ownership interest in Great Elm will be diluted. For more information on the risks of participating in this offering, see the section of this prospectus entitled “Risk Factors.”
Effect of This Offering on Existing Stockholders; Interests of Certain Stockholders, Directors and Officers
After giving effect to this offering, assuming that it is fully subscribed, we would have approximately shares of common stock outstanding, representing an increase of approximately % in our outstanding shares as compared to the effective date. If you fully exercise the rights that we distribute to you, your proportional interest in us will remain the same. If you do not exercise any rights, or you exercise less than all of your rights, your interest in us will be diluted, as you will own a smaller proportional interest in Great Elm compared to your interest prior to this offering.
As of the effective date, the MAST Funds beneficially owned approximately 18.6% of our common stock. The MAST Funds will have the right to subscribe for and purchase shares of our common stock under their basic subscription privileges and over‑subscription privileges, but they have no obligation to do so.
Further, by virtue of the MAST Funds’ ownership, they are able to control or otherwise exert substantial influence over us, including our business strategy and policies, mergers or other business combinations, acquisition or disposition of assets, future issuances of our common stock, debt or other securities, the incurrence of debt or obtaining other sources of financing, and other matters relating to our business and operations. The MAST Funds’ interests may not always be consistent with our interests or with the interests of our other stockholders. To the extent that conflicts of interest may arise between us and the MAST Funds and their affiliates, those conflicts may be resolved in a manner adverse to us or our other stockholders.
Gracie Investing, LLC requested that members of our board of directors participate in the Backstop Commitment. If the Backstop Commitment were fully exercised, members of our board of directors would in the aggregate acquire shares of our common stock, for an aggregate purchase price of $ million. In addition, the backstop providers, including our board members, will be entitled to registration rights with respect to any shares of our common stock they acquire under the Backstop Commitment. See “The Backstop Agreement—Registration Rights” for more information.
Options to purchase 141,437 shares of our common stock that were issued to Richard Chernicoff are subject to anti-dilution protection that will reduce the exercise price of such options from $6.99 per share to the subscription price. We agreed that if we issued rights or made a distribution while such options were outstanding, we would treat such rights on an as-if-exercised basis with respect to such rights or distribution, including the rights.
If the Backstop Commitment were fully exercised, GECM employees and their affiliates who are not members of our board of directors would in the aggregate acquire shares of our common stock, for an aggregate purchase price of $ million. In addition, the backstop providers, including the GECM employees and their affiliates, will be entitled to registration rights with respect to any shares of our common stock they acquire under the Backstop Commitment. See “The Backstop Agreement—Registration Rights” for more information.
U.S. Federal Income Tax Considerations of the Rights Offering
U.S. Holders (as defined herein) generally will not recognize gain or loss on the receipt, exercise or expiration of the rights. See “U.S. Federal Income Tax Considerations” for a more complete discussion, including additional qualifications and limitations. In addition, you should consult your own tax advisors as to the tax consequences to you of the receipt, exercise and expiration of the rights in light of their particular circumstances.
Shares of Our Common Stock Outstanding After this Offering
As of the effective date, 10,449,210 shares of our common stock were issued and outstanding. Assuming no additional shares of common stock have been or will be issued by us after the effective date and prior to consummation of this offering and assuming it is fully subscribed, we expect approximately shares of our common stock will be outstanding immediately after completion of this offering.
Other Matters
The rights certificates are governed by New York law. We are not making this offering in any state or other jurisdiction in which it is unlawful to do so, nor are we distributing or accepting any offers to purchase any shares of our common stock from rights holders who are residents of those states or other jurisdictions or who are otherwise prohibited by federal or state laws or regulations to accept or exercise the rights. We may delay the commencement of this offering in those states or other jurisdictions, or change the terms of this offering, in whole or in part, in order to comply with the securities laws or other legal requirements of those states or other jurisdictions. Subject to state securities laws and regulations, we also have the discretion to delay allocation and distribution of any shares you may elect to purchase by exercise of your rights in order to comply with state securities laws. We may decline to make modifications to the terms of this offering requested by those states or other jurisdictions, in which case, if you are a resident in those states or jurisdictions or if you are otherwise prohibited by federal or state laws or regulations from accepting or exercising the rights, you will not be eligible to participate in this offering. However, we are not currently aware of any states or jurisdictions that would preclude participation in this offering.
THE BACKSTOP AGREEMENT
The Backstop Commitment
On September 13, 2016, we entered into a backstop agreement with a consortium of backstop providers led by Gracie Investing, LLC. On October 13, 2016, we amended and restated the original backstop agreement to reduce the formula for setting the subscription price and remove the provision in the original backstop agreement that provided for a commitment fee to the backstop providers. The backstop providers agreed to purchase from us, an aggregate number of shares of our common stock equal to the lesser of (a) $36.6 million or (b) (x) $45 million, minus (y) the aggregate proceeds of this offering, at a price per share equal to the subscription price, subject to the terms and conditions of the Backstop Agreement. Notwithstanding the above, in no case shall any backstop provider become the beneficial owner of more than 19.9% of our outstanding shares of common stock as result of the transactions described in this prospectus, and the maximum number of shares issued to each backstop provider in connection with the Backstop Commitment shall
be proportionately reduced as necessary to give effect to such limitation. The Backstop Commitment is scheduled to close not later than the third trading day following the expiration date.
Expense Reimbursement
Regardless of whether the transactions contemplated by the Backstop Agreement are consummated, we have agreed to reimburse the backstop providers for all reasonable out‑of‑pocket fees and expenses (including attorneys’ fees and expenses) incurred by them in connection with the Backstop Agreement and the transactions contemplated thereby, other than if the Backstop Agreement is terminated due to a breach by the backstop providers.
Closing Conditions
The closing of the transactions contemplated by the Backstop Agreement is subject to the satisfaction or waiver of customary conditions, including:
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receipt of all applicable regulatory approvals, including under the Hart‑Scott‑Rodino Act;
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compliance with covenants;
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the accuracy of representations and warranties set forth in the Backstop Agreement;
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the absence of a material adverse effect on us or on the ability of the backstop providers to perform their obligations under the Backstop Agreement;
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the effectiveness of the registration statement related to this offering;
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consummation of this offering; and
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approval for listing on the Nasdaq of shares of our common stock to be issued in this offering.
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Termination
The Backstop Agreement may be terminated at any time prior to the closing of the transactions contemplated by the Backstop Agreement as follows:
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by mutual written agreement of the backstop providers and us;
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by any party, if the closing of the transactions contemplated by the Backstop Agreement does not occur by December 31, 2016;
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by any party, if any governmental entity shall have taken action prohibiting any of the contemplated transactions; and
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by the backstop providers, if we breach any of our representations, warranties, covenants or agreements set forth in the Backstop Agreement that would result in the applicable condition to closing not being satisfied, and such breach is not cured within 10 days of receipt of written notice by the investors;
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by us, if there is a breach of any of the backstop providers’ representations, warranties, covenants or agreements set forth in the Backstop Agreement that would result in the applicable condition to closing not being satisfied, and such breach is not cured within 10 days of receipt of written notice by us (but if the non‑defaulting backstop providers perform the defaulting backstop providers’ obligations, we would not have a termination right); or
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by either party if we enter into a definitive agreement with respect to a “superior transaction,” as defined in the Backstop Agreement, subject to payment by us of the termination fee described below.
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In general, a “superior transaction” is defined in the Backstop Agreement as (a) a debt or equity financing transaction (other than this offering and the Backstop Commitment) or (b) a transaction involving the sale of 50% or more of our total voting power or of all or substantially all of our consolidated assets, that, in either case, our board of directors determines in good faith is in the best interests of our stockholders, including, in the case of a debt or equity financing transaction, a determination that such transaction would provide us with liquidity in an amount in excess of that expected to result from this offering and the Backstop Commitment or result in more favorable economic terms for us than this offering and the Backstop Commitment.
We are required to pay the backstop providers a termination fee equal to an aggregate of 3% of the backstop commitment, $1,098,900 million, if the Backstop Agreement is terminated by reason of us entering into a definitive
agreement with respect to a “superior transaction.” Any amount otherwise payable to our officers and directors who are backstop providers will be waived and retained by us.
Indemnification
We agreed to indemnify the backstop providers and their affiliates and each of their respective officers, directors, partners, employees, agents and representatives for losses arising out of this offering and the related registration statement and prospectus (other than with respect to statements made in reliance on information provided to us in writing by the backstop providers for use herein) and claims, suits or proceedings challenging the authorization, execution, delivery, performance or termination of a rights offering, the Backstop Agreement and certain ancillary agreements and/or any of the transactions contemplated thereby, other than losses arising out of or related to any breach by the backstop providers of the Backstop Agreement.
The backstop providers agreed to indemnify us and our affiliates and each of our respective officers, directors, partners, employees, agents and representatives for losses arising out of or relating to statements or omissions in the registration statement or prospectus for this offering (or any amendment or supplement thereto) made in reliance on or in conformity with written information relating to the backstop providers furnished to us by or on behalf of the backstop providers expressly for use therein.
Registration Rights
The purchase of shares of our common stock by the backstop providers pursuant to the Backstop Agreement would be effected in a transaction exempt from the registration requirements of the Securities Act and would not be registered pursuant to the registration statement of which this prospectus forms a part. Concurrently with entering the Backstop Agreement, we entered into a registration rights agreement, or the
Registration Rights Agreement
, with the Backstop providers. Under the Registration Rights Agreement, with respect to the shares of our common stock acquired by the backstop providers in this offering or in the Backstop Commitment, we agreed to:
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file, within 70 days of the closing of the Backstop Commitment, a shelf registration statement with respect to the resale of such shares and keep that registration statement effective for so long as the shares are not freely resalable under Rule 144;
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file up to four registration statements upon receipt of a request from the backstop providers; and
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provide the backstop providers with the right to have their shares registered in other registration statements we may file.
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We will pay the expenses of the backstop providers party to the registration agreement in connection with their exercise of the registration rights, other than underwriting commissions or selling commissions attributable to the registrable securities sold by the holders thereof, as well as reimburse the holders of registrable securities included in any registration for the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the registrable securities included in such registration. Our obligation to bear all registration expenses is absolute and does not depend on whether any contemplated offering is completed or whether any registration statement is declared effective.
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes United States federal income tax considerations to U.S. Holders (defined below) relating to the receipt, exercise and expiration of the rights received by such U.S. Holders in this offering. It addresses only U.S. Holders that hold our common stock as capital assets within the meaning of Section 1221 of the Code. The following summary does not purport to be a complete analysis of all of the potential U.S. federal income tax considerations that may be relevant to particular holders of rights in light of their particular circumstances nor does it deal with persons that are subject to special tax rules, such as brokers, dealers in securities or currencies, financial institutions, insurance companies, tax‑exempt entities or qualified retirement plans, holders of 4.99% or more of a class of our stock by vote or value (whether such stock is actually or constructively owned), regulated investment companies, common trust funds, holders subject to the alternative minimum tax, persons holding rights or shares of our common
stock as part of a straddle, hedge or conversion transaction or as part of a synthetic security or other integrated transaction, traders in securities that elect to use a mark‑to‑market method of accounting for their securities holdings, holders that have a “functional currency” other than the United States dollar, U.S. expatriates, and persons that are not U.S. Holders. In addition, the discussion below does not address persons who hold an interest in a partnership or other entity that holds rights, tax consequences arising under the laws of any state, local or non‑U.S. jurisdiction or other U.S. federal tax consequences (e.g., estate or gift tax) other than those pertaining to the income tax, or the consequences of the Medicare tax on net investment income.
The following is based on the Code, the Treasury regulations promulgated thereunder (the
Treasury Regulations
) and administrative rulings and court decisions, in each case as in effect on the date hereof, all of which are subject to change, possibly with retroactive effect.
As used herein, the term “U.S. Holder” means a beneficial holder of rights that is:
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a citizen or individual resident of the United States;
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a corporation (or an entity treated as a corporation for U.S. federal tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof;
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an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
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a trust if (1) a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons, within the meaning of Section 7701(a)(30) of the Code, have authority to control all of its substantial decisions, or (2) it was in existence on August 20, 1996, was treated as a U.S. person under the Code on the previous day and has properly elected under applicable Treasury Regulations to continue to be treated as a United States person.
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The tax treatment of a partner in a partnership, or other entity treated as a partnership for U.S. federal tax purposes, may depend on both the partnership’s and the partner’s status. Partnerships that are beneficial owners of rights, and partners in such partnerships, are urged to consult their own tax advisors regarding the U.S. federal, state, local and non‑U.S. tax consequences to them of the receipt, exercise and expiration of the rights.
This summary is of a general nature only. It is not intended to constitute, and should not be construed to constitute, legal or tax advice to any particular holder. Holders should consult their own tax advisors as to the tax consequences in their particular circumstances.
U.S. Federal Income Tax Characterization of the Rights Offering
We believe that the receipt of rights in this offering will be treated as a non‑taxable transaction and not as a taxable distribution of property for U.S. federal income tax purposes. However, holders of our common stock should be aware that we can provide no assurance that the IRS will take a similar view or would agree with the tax consequences described in this summary.
Receipt of the Rights
A U.S. Holder generally will not recognize income, gain, deduction or loss on the receipt of rights in this offering. A U.S. Holder’s tax basis in its rights will depend on the relative fair market value of the rights received by such U.S. Holder and such U.S. Holder’s shares of our common stock at the time the rights are distributed. If the rights received by a U.S. Holder have a fair market value equal to at least 15% of the fair market value of such U.S. Holder’s shares of our common stock on the date of the distribution, the U.S. Holder must allocate its adjusted tax basis in its shares of our common stock between its common stock and the rights in proportion to their then relative fair market values. If the rights received by a U.S. Holder have a fair market value that is less than 15% of the fair market value of such U.S. Holder’s shares of our common stock on the date of distribution, the U.S. Holder’s tax basis in its rights will be zero unless the U.S. Holder elects to allocate its adjusted tax basis in its shares of our common stock in the manner described in the previous sentence. A U.S. Holder makes this election by attaching a statement to its U.S. federal income tax return for the year in which rights are received. The election, once made, is irrevocable. A U.S. Holder making this election must retain a copy of the election and the tax return with which it was filed to substantiate the gain or loss, if any,
recognized on any later disposition of shares of our common stock received upon exercise of its rights. The holding period for the rights received by a U.S. Holder in this offering will include the U.S. Holder’s holding period for its shares of our common stock with respect to which the rights are received.
Exercise of the Rights
A U.S. Holder will not recognize gain or loss on the exercise of a right. The U.S. Holder’s tax basis in the shares of our common stock received as a result of the exercise of a right will equal the sum of the exercise price paid for the shares of our common stock and the U.S. Holder’s tax basis in the right determined as described under “Receipt of the Rights” above. The holding period for the shares of our common stock received as a result of the exercise of the right will begin on the exercise date.
A U.S. Holder that exercises rights should be aware that the exercise of such rights could result in a loss that would otherwise be recognized with respect to such U.S. Holder’s other shares of our common stock to be disallowed under the “wash sale” rules. If the “wash sale” rules apply to a U.S. Holder’s loss with respect to its other shares of our common stock, the U.S. Holder’s tax basis in any shares of our common stock received as a result of the exercise of rights would be increased to reflect the amount of the disallowed loss. U.S. Holders are urged to consult their tax advisors regarding how the “wash sale” rules apply to them in light of their particular circumstances.
Expiration of the Rights
A U.S. Holder that allows a right to expire will not recognize gain or loss and will not allocate any tax basis to the right as described under “Receipt of the Rights” above.
The above summary is not intended to constitute a complete analysis of all tax consequences relating to the receipt, exercise and expiration of the rights. You should consult your own tax advisor concerning the tax consequences of your particular situation.
DESCRIPTION OF OUR CAPITAL STOCK
General
Our authorized capital stock consists of 350,000,000 shares of common stock, $0.001 par value per share, and 5,000,000 shares of preferred stock, $0.001 par value per share. As of November 22, 2016, there were 10,449,210 shares of our common stock outstanding and no shares of our preferred stock outstanding.
The following summary description of our capital stock is based on the provisions of our certificate of incorporation and bylaws and the applicable provisions of the Delaware General Corporation Law. This information is qualified entirely by reference to the applicable provisions of our certificate of incorporation, bylaws and the Delaware General Corporation Law. For information on how to obtain copies of our certificate of incorporation and bylaws, which are exhibits to the registration statement of which this prospectus is a part, see “Where You Can Find Additional Information” and “Incorporation of Certain Information by Reference.”
Common Stock
Holders of shares of our common stock are entitled to one vote for each share held of record on all matters to be voted on by our stockholders, including the election of directors. Our certificate of incorporation and bylaws do not provide for cumulative voting rights. Because of this, the holders of a majority of our common stock entitled to vote in any election of directors can elect all of the directors standing for election. Subject to the preferences that may be applicable to any then outstanding preferred stock, the holders of our outstanding shares of common stock are entitled to receive dividends, if any, as may be declared from time to time by our board of directors out of legally available funds. In the event of our liquidation, dissolution or winding up, holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities, subject to the satisfaction of any liquidation preference granted to the holders of any outstanding shares of preferred
stock. Holders of our common stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to our common stock. The rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future.
Preferred Stock
Pursuant to our certificate of incorporation, our board of directors has the authority, without further action by the stockholders (unless such stockholder action is required by applicable law or Nasdaq rules), to designate and issue up to 5,000,000 shares of preferred stock in one or more series, to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of preferred stock and the number of shares constituting any such series and the designation thereof, or any of them; and to increase or decrease the number of shares of any series subsequent to the issuance of that series, but not below the number of shares of such series then outstanding.
We will fix the rights, preferences and privileges of the preferred stock of each such series, as well as any qualifications, limitations or restrictions thereon, in the certificate of designation relating to that series. We will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the form of any certificate of designation that describes the terms of the series of preferred stock we are offering before the issuance of that series of preferred stock. This description will include:
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the title and stated value;
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the number of shares we are offering;
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the liquidation preference per share;
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the dividend rate, period and payment date and method of calculation for dividends;
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whether dividends will be cumulative or non‑cumulative and, if cumulative, the date from which dividends will accumulate;
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the procedures for any auction and remarketing, if any;
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the provisions for a sinking fund, if any;
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the provisions for redemption or repurchase, if applicable, and any restrictions on our ability to exercise those redemption and repurchase rights;
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any listing of the preferred stock on any securities exchange or market;
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whether the preferred stock will be convertible into our common stock, and, if applicable, the conversion price, or how it will be calculated, and the conversion period;
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whether the preferred stock will be exchangeable into debt securities, and, if applicable, the exchange price, or how it will be calculated, and the exchange period;
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voting rights, if any, of the preferred stock;
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preemptive rights, if any;
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restrictions on transfer, sale or other assignment, if any;
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whether interests in the preferred stock will be represented by depositary shares;
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a discussion of any material United States federal income tax considerations applicable to the preferred stock;
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the relative ranking and preferences of the preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs;
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any limitations on the issuance of any class or series of preferred stock ranking senior to or on a parity with the series of preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs; and
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any other specific terms, preferences, rights or limitations of, or restrictions on, the preferred stock.
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The Delaware General Corporation Law provides that the holders of preferred stock will have the right to vote separately as a class (or, in some cases, as a series) on an amendment to our certificate of incorporation if the amendment would change the par value, the number of authorized shares of the class or the powers, preferences or special rights of the class or series so as to adversely affect the class or series, as the case may be. This right is in addition to any voting rights that may be provided for in the applicable certificate of designation.
Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in our control and may adversely affect the market price of the common stock and the voting and other rights of the holders of common stock. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of our common stock.
Delaware Anti‑Takeover Law and Provisions of our Certificate of Incorporation and Bylaws
Delaware Anti‑Takeover Law.
We are subject to Section 203 of the Delaware General Corporation Law. Section 203 generally prohibits a public Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless:
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prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
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upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (a) shares owned by persons who are directors and also officers and (b) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
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on or subsequent to the date of the transaction, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66
2
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3
% of the outstanding voting stock which is not owned by the interested stockholder.
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Section 203 defines a business combination to include:
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any merger or consolidation involving the corporation and the interested stockholder;
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any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;
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subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; and
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the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
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In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation or any entity or person affiliated with or controlling or controlled by the entity or person.
Certificate of Incorporation and Bylaws.
Provisions of our certificate of incorporation and bylaws may delay or discourage transactions involving an actual or potential change in our control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our common stock. Among other things, our certificate of incorporation and bylaws:
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permit our board of directors to issue up to 5,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate;
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provide that the authorized number of directors may be fixed from time to time by a bylaw or amendment thereof duly adopted by our board of directors;
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provide that any vacancies resulting from death, resignation, disqualification, removal, or other causes, as well as newly created directorships, may, except as otherwise required by law and subject to the rights of the holders of any series of preferred stock, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;
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require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and not be taken by written consent;
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provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner, and also specify requirements as to the form and content of a stockholder’s notice; do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of our common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose); and provide that special meetings of our stockholders may be called only by our board of directors; and
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restricts any direct or indirect transfer (such as transfers of our stock that result from the transfer of interests in other entities that own our stock) if the effect would be to (a) increase the direct or indirect ownership of our stock by any Person (as defined below) from less than 4.99% to 4.99% or more; or (b) increase the percentage of our common stock owned directly or indirectly by a Person owning or deemed to own 4.99% or more of our common stock.
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“Person” means any individual, firm, corporation or other legal entity, including persons treated as an entity pursuant to Treasury Regulation § 1.382‑3(a)(1)(i), and includes any successor (by merger or otherwise) of such entity.
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Restricted transfers include sales to Persons whose resulting percentage ownership (direct or indirect) of our common stock would exceed the 4.99% thresholds discussed above or to Persons whose direct or indirect ownership of our common stock would by attribution cause another Person to exceed such threshold. Complicated common stock ownership rules prescribed by the Code (and regulations issued thereunder) will apply in determining whether a Person is a 4.99% stockholder under the transfer restriction in our certificate of incorporation. A transfer from one member of a “public group” (as that term is defined under Section 382) to another member of the same public group does not increase the percentage of our common stock owned directly or indirectly by the public group, and, therefore, such transfers are not restricted.
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For purposes of determining the existence and identity of, and the amount of our common stock owned by, any stockholder, we will be entitled to rely on the existence or absence of certain public securities filings as of any date, subject to our actual knowledge of the ownership of our common stock. Our certificate of incorporation includes our right to require a proposed transferee, as a condition to registration of a transfer of our common stock, to provide all information reasonably requested regarding such person’s direct and indirect ownership of our common stock.
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Any of these provisions may be amended by a majority of the board of directors.
Tax Benefits Preservation Agreement
Our board of directors (the
Board
) adopted a tax benefits preservation agreement on January 20, 2015 (the
Tax Rights Plan
).
Description of Rights Plan
The following description of the Tax Rights Plan is qualified in its entirety by reference to the text of the Tax Rights Plan, which is an exhibit to the registration statement to which this prospectus forms a part. We urge you to read carefully the Tax Rights Plan in its entirety as the discussion below is only a summary.
Tax Rights Dividend.
Pursuant to the terms of the Rights Plan, our board of directors declared a dividend distribution of one Preferred Stock Purchase Right (a
Tax Right
) for each outstanding share of common stock to stockholders of record as of the close of business on January 29, 2015. In addition, one Tax Right will automatically attach to each share of common stock issued between the January 29, 2015 and the Distribution Date (as hereinafter defined). Each Tax Right entitles the registered
holder thereof to purchase from us a unit consisting of one ten‑thousandth of a share (a
Unit
) of Series A Junior Participating Cumulative Preferred Stock, par value $0.001 per share (
Series A Preferred Stock
), at a cash exercise price of $15.00 per Unit (the
Exercise Price
), subject to adjustment, under the conditions specified in the Tax Rights Plan.
Tax Rights Distribution Date.
Initially, the Tax Rights are not exercisable and are attached to and trade with all shares of common stock outstanding as of, and issued subsequent to, the January 29, 2015. The Tax Rights will separate from our common stock and will become exercisable upon the earlier of:
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the close of business on the tenth calendar day following the first public announcement that a person or group of affiliated or associated persons (an
Acquiring Person
) has acquired beneficial ownership of 4.99% or more of the outstanding shares of our common stock, other than as a result of repurchases of stock by us or certain inadvertent actions by a stockholder (the date of said announcement being referred to as the
Stock Acquisition Date
), or
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the close of business on the tenth business day (or such later day as our independent directors may determine) following the commencement of a tender offer or exchange offer that could result upon its consummation in a person or group becoming the beneficial owner of 4.99% or more of the outstanding shares of our common stock (the earlier of such dates being herein referred to as the
Distribution Date
).
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Notwithstanding the foregoing, with respect to (a) any person whose name is listed on Schedule A to the Tax Rights Plan, or (b) who beneficially owns (for purposes of the Rights Plan) 4.99% or more of the outstanding shares of common stock as of January 29, 2015 (such person being referred to in the Rights Plan as a
Grandfathered Person
), the Distribution Date will not occur unless such Grandfathered Person has acquired beneficial ownership of shares of common stock either:
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in excess of the percentage listed on Schedule A to the Rights Plan, for any Grandfathered Person whose name is listed on Schedule A to the Rights Plan, or
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representing an additional
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2
% of the outstanding shares of our common stock beneficially owned as of the record date, for any other Grandfathered Person not listed on Schedule A to the Rights Plan (the
Grandfathered Percentage
).
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Until the Distribution Date (or earlier redemption, exchange or expiration of the Tax Rights):
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the Tax Rights will be evidenced by the common stock certificates and will be transferred with and only with such common stock certificates,
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new common stock certificates issued after the January 29, 2015 will contain a notation incorporating the Tax Rights Plan by reference, and
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the surrender for transfer of any certificates for common stock will also constitute the transfer of the Tax Rights associated with the common stock represented by such certificate.
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As soon as practicable after the Distribution Date, one or more certificates evidencing one Tax Right for each share of common stock of the Company so held, subject to adjustment as provided herein (the
Tax Right Certificates
) will be mailed to holders of record of common stock as of the close of business on the Distribution Date and, thereafter, the separate Tax Right Certificates alone will represent the Tax Rights. Except as otherwise determined by our independent directors, only shares of common stock issued prior to the Distribution Date will be issued with Tax Rights.
Process for Potential Exemption.
Any person who wishes to effect any acquisition of shares of common stock that would, if consummated, result in such person beneficially owning more than 4.99% of the outstanding shares of common stock (or in the case of a Grandfathered Person, the Grandfathered Percentage), may request that our independent directors grant an exemption with respect to such acquisition under the Rights Plan. Our independent directors may deny such an exemption request if
they determine, in their sole discretion, that the acquisition of beneficial ownership of common stock by such person could jeopardize or endanger the availability to us of the NOLs or for whatever other reason they deem reasonable, desirable or appropriate. Any exemption granted may be granted in whole or in part, and may be subject to limitations or conditions (including a requirement that the person agree that it will not acquire beneficial ownership of shares of common stock in excess of the maximum number and percentage of shares approved by our independent directors).
Our board of directors granted the MAST Funds an exemption under the Tax Rights Plan and the corresponding provision of our certificate of incorporation to acquire up to 19.9% of our outstanding shares of common stock.
Subscription and Merger Rights.
In the event that a Stock Acquisition Date occurs, proper provision will be made so that each holder of a Tax Right (other than an Acquiring Person or its associates or affiliates, whose Tax Rights shall become null and void) will thereafter have the right to receive upon exercise, in lieu of a number of Units, that number of shares of our common stock (or, in certain circumstances, including if there are insufficient shares of common stock to permit the exercise in full of the Tax Rights, Units, other securities, cash or property, or any combination of the foregoing) having a market value of two times the Exercise Price (such right being referred to as the
Tax Subscription Privilege
). If, at any time following the Stock Acquisition Date:
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we consolidate with, or merges with and into, any other person, and we are not the continuing or surviving corporation,
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any person consolidates with us or merges with and into us and we are the continuing or surviving corporation of such merger and, in connection with such merger, all or part of the shares of our common stock are changed into or exchanged for stock or other securities of any other person or cash or any other property or
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50% or more of our assets or earning power is sold, mortgaged or otherwise transferred, each holder of a Tax Right (other than an Acquiring Person or its associates or affiliates, whose Tax Rights shall become null and void) will thereafter have the right to receive, upon exercise, common stock of the acquiring company having a market value equal to two times the Exercise Price of the Right (such right being referred to as the
Merger Right
).
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The holder of a Tax Right will continue to have the Merger Right whether or not such holder has exercised the Tax Subscription Privilege. Tax Rights that are or were beneficially owned by an Acquiring Person may (under certain circumstances specified in the Tax Rights Plan) become null and void.
Until a Tax Right is exercised, the holder will have no rights as a stockholder of our company (beyond those as an existing stockholder), including the right to vote or to receive dividends. While the distribution of the Tax Rights will not be taxable to stockholders or to us, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Tax Rights become exercisable for Units, other securities of ours, other consideration or for common stock of an acquiring company.
Exchange Feature.
At any time after a person becomes an Acquiring Person, our independent directors may, at their option, exchange all or any part of the then outstanding and exercisable Tax Rights for shares of common stock or Units at an exchange ratio specified in the Tax Rights Plan. Notwithstanding the foregoing, our independent directors generally will not be empowered to effect such exchange at any time after any person becomes the beneficial owner of 50% or more of our common stock.
Adjustments.
The Exercise Price payable, and the number of Units or other securities or property issuable, upon exercise of the Tax Rights are subject to adjustment from time to time to prevent dilution
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in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Series A Preferred Stock,
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if holders of the Series A Preferred Stock are granted certain rights or warrants to subscribe for Series A Preferred Stock or convertible securities at less than the current market price of the Series A Preferred Stock, or
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§
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|
upon the distribution to holders of the Series A Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above).
|
With certain exceptions, no adjustment in the Exercise Price will be required until cumulative adjustments amount to at least 1% of the Exercise Price. We are not obligated to issue fractional Units. If we elect not to issue fractional Units, in lieu thereof an adjustment in cash will be made based on the fair market value of the Series A Preferred Stock on the last trading date prior to the date of exercise.
Redemption.
The Tax Rights may be redeemed in whole, but not in part, at a price of $0.001 per Tax Right (payable in cash, common stock or other consideration deemed appropriate by our independent directors) by our independent directors only until the earlier of (i) the time at which any person becomes an Acquiring Person or (ii) the expiration date of the Tax Rights Plan. Immediately upon the action of our independent directors ordering redemption of the Tax Rights, the Tax Rights will terminate and thereafter the only right of the holders of Tax Rights will be to receive the redemption price.
Amendment.
Our independent directors in their sole discretion at any time prior to the time at which any person becomes an Acquiring Person may amend the Tax Rights Plan. After such time our independent directors may, subject to certain limitations set forth in the Tax Rights Plan, amend the Tax Rights Plan only to cure any ambiguity, defect or inconsistency, to shorten or lengthen any time period, or to make changes that do not adversely affect the interests of Tax Rights holders (excluding the interests of an Acquiring Person or its associates or affiliates).
Expiration Date.
The Tax Rights are not exercisable until the Distribution Date and will expire at the earlier of:
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§
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the time when the Tax Rights are redeemed as provided therein;
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§
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the time when the Tax Rights are exchanged as provided therein;
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§
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the repeal of Section 382 of the Code if our independent directors determine that the Rights Plan is no longer necessary for the preservation of Tax Benefits (as defined in the Rights Plan) or
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§
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the beginning of our taxable year to which our board of directors determines that no Tax Benefits may be carried forward, unless previously redeemed or exchanged by us.
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Miscellaneous.
The certificate of designations establishing the Series A Preferred Stock and the form of Tax Right Certificate are attached as Exhibits A and B, respectively, to the Tax Rights Plan. The foregoing description of the Tax Rights does not purport to be complete and is qualified in its entirety by reference to the Tax Rights Plan, which is incorporated herein by reference.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare. Our transfer agent and registrar’s address is 330 N. Brand Blvd., Suite 701, Glendale, CA 91203‑2149.
PLAN OF DISTRIBUTION
As soon as practicable after the effective date, rights will be distributed to holders who owned shares of our common stock as of the close of business on the effective date. If you wish to exercise your rights and purchase shares of our common stock in this offering, you should timely comply with the procedures described in “The Rights Offering.”
The common stock offered pursuant to this offering is being offered by us directly to all holders of our common stock. We intend to distribute subscription certificates, copies of this prospectus and the accompanying exhibits, and other relevant documents to those persons that were holders of our common stock at the effective date. If this offering is not fully subscribed by the holders of our common stock, the backstop providers will purchase up to $36.6 million of shares of common stock pursuant to the Backstop Commitment.
We have retained Oppenheimer & Co. Inc. and Janney Montgomery Scott LLC to act as dealer managers in connection with this offering. The dealer managers will facilitate meetings with holders of our common stock. The dealer managers will not underwrite this offering and have no obligation to purchase, or procure purchases of, the rights or the shares of our common stock offered hereby or otherwise act in any capacity whatsoever as an underwriter. We agreed to pay the dealer managers a fee of 3.5% of gross proceeds we receive in this offering. We and the dealer managers agreed to each pay 50% of the dealer managers legal fees, which in total are capped at $75,000. The formula for setting the subscription price was specified in the Backstop Agreement before we engaged the dealer managers, and they did not provide us advice in connection with the setting of the subscription price.
The dealer managers will not receive any fees in connection with the Backstop Commitment. We are not paying any commitment fee to the backstop providers.
We have also agreed to reimburse the dealer managers for fees relating to state securities law compliance. In addition, we agreed to indemnify the dealer managers with respect to certain liabilities, including liabilities under the federal securities laws.
The dealer managers have not prepared any report or opinion constituting a recommendation or advice to us or to our stockholders in connection with this offering, nor have the dealer managers prepared an opinion as to the fairness of the subscription price or the terms of this offering. The dealer managers express no opinion and make no recommendation to the holders of our common stock as to the purchase by any person of any shares of our common stock. The dealer managers also express no opinion as to the prices at which shares to be distributed in connection with this offering may trade if and when they are issued or at any future time.
Other than the dealer managers, we have not employed any brokers, dealers or underwriters in connection with the solicitation of exercise of rights, and, except as described herein, no other commissions, fees or discounts will be paid in connection with this offering.
Computershare is acting as the subscription agent and MacKenzie Partners, Inc. is acting as the information agent for this offering. We will pay all customary fees and expenses of the subscription agent and the information agent related to this rights offering. We also have agreed to indemnify each of the subscription agent and the information agent with respect to certain liabilities that it may incur in connection with this offering. Our officers and directors may solicit responses from the holders of rights in connection with this offering, but such officers and directors will not receive any commissions or compensation for such services other than their normal compensation.
The dealer managers and their its affiliates have from time to time provided, and may in the future provide, various investment banking, financial advisory and other services for us and our affiliates, including, but not limited to, MAST
Capital, the MAST Funds and their other portfolio companies, for which they have received or will receive customary compensation.
In connection with this offering, the dealer managers may engage in stabilizing transactions in accordance with Regulation M under the Exchange Act. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. These stabilizing transactions may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our units of common stock with attached rights and our common stock. As a result, the price of our units of common stock with attached rights and our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on Nasdaq or otherwise and, if commenced, may be discontinued at any time.
Except for the Backstop Agreement or as otherwise disclosed in this prospectus, we have not agreed to enter into any standby or other arrangements to purchase or sell any rights or any underlying shares of our common stock.
The expenses of this rights offering, not including the fees to be paid to the dealer managers, are estimated to be approximately $0.6 million.
LEGAL MATTERS
The validity of the rights and the shares of our common stock offered by this prospectus have been passed upon for us by Skadden, Arps, Slate, Meagher & Flom LLP, Palo Alto, California.
EXPERTS
The audited financial statements and management’s assessment of the effectiveness of internal control over financial reporting incorporated by reference in this prospectus and elsewhere in the registration statement have been so incorporated by reference in reliance upon the reports of Grant Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in accounting and auditing.
INCORPORATION BY REFERENCE
The SEC allows us to “incorporate by reference” certain documents that we have filed with the SEC into this prospectus, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is deemed to be part of this prospectus, except for any information superseded by information contained directly in this prospectus. This prospectus incorporates by reference our (File No. 001‑16073):
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§
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Annual Report on Form 10‑K for the year ended June 30, 2016;
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§
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Quarterly Report on Form 10-Q for the quarter ended September 30, 2016; and
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§
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Current Reports on Form 8‑K filed on July 6, July 20, July 26, August 17, September 13, 2016, October 17, 2016, November 3, 2016, November 9, 2016 and November 18, 2016.
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You may obtain documents incorporated by reference into this prospectus at no cost by writing or telephoning us at the following address:
Great Elm Capital Group, Inc.
Attention: Investor Relations
200 Clarendon Street, 51
st
Floor
Boston, MA 02116
(617) 375‑3006
Any statements contained in a document incorporated by reference in this prospectus shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus (or in any other subsequently filed document which also is incorporated by reference in this prospectus) modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed to constitute a part of this prospectus except as so modified or superseded.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We make periodic filings and other filings required to be filed by us as a reporting company under Sections 13 and 15(d) of the Exchange Act. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1‑800‑SEC‑0330. In addition, the SEC maintains an Internet site at
www.sec.gov
that contains the reports, proxy and information statements, and other information that we file with the SEC. Also visit us at greatelmcap.com. Information contained on our website is not incorporated into this prospectus and you should not consider information contained on our website to be part of this prospectus.
You may obtain copies of this prospectus and the documents incorporated by reference without charge by writing to our investor relations team at 200 Clarendon Street, 51
st
Floor, Boston, MA 02116. You may refer any questions regarding this offering to, our information agent:
105 Madison Avenue New York, New York 10016
(212) 929‑5500 (Call Collect) or
Call Toll Free (800) 322‑2885
Email:rightsoffer@mackenziepartners.com
For information regarding replacement of lost rights certificates, you may contact the Information Agent by calling toll‑free number above.
GREAT ELM CAPITAL GROUP, INC.
Up to Shares of Common Stock
Issuable Upon Exercise of Rights to Subscribe for Such Shares at $ per Share
November 22, 2016
Dealer Managers:
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Oppenheimer & Co.
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Janney Montgomery Scott
|
Information Agent:
105 Madison Avenue New York, New York 10016
(212) 929‑5500 (Call Collect) or
Call Toll Free (800) 322‑2885
Email:rightsoffer@mackenziepartners.com
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses payable by Great Elm Capital Group, Inc., a Delaware corporation (the “Registrant”), in connection with the offering of securities described in this registration statement. All amounts shown are estimates, except for the SEC registration fee. The Registrant will bear all expenses shown below.
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|
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SEC registration fee
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$
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4,815
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Nasdaq listing fee
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|
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100,000
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|
Accounting fees and expenses
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|
|
50,000
|
|
Legal fees and expenses
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|
350,000
|
|
Subscription agent fees and expenses
|
|
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25,000
|
|
Printing and engraving expenses
|
|
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65,000
|
|
Information agent fees and expenses
|
|
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30,000
|
|
Other
|
|
|
35,185
|
|
Total
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|
$
|
660,000
|
|
Item 14. Indemnification of Directors and Officers.
Section 102(b)(7) of the General Corporation Law of the State of Delaware (the “DGCL”) allows a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. The Registrant’s certificate of incorporation provides for this limitation of liability.
Section 145 of the DGCL (“Section 145”), provides that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner she or he reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. A Delaware corporation may indemnify any persons who are, were or are a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner she or he reasonably believed to be in or not opposed to the corporation’s best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify her or him against the expenses which such officer or director has actually and reasonably incurred.
Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against her or him and incurred by her or him in any such capacity, or arising out of her or his status as such, whether or not the corporation would otherwise have the power to indemnify her or him under Section 145.
The Registrant’s bylaws provide that the Registrant must indemnify its directors and officers to the fullest extent permitted by the DGCL and must also pay expenses incurred in defending any such proceeding in advance of its final disposition
upon delivery of an undertaking, by or on behalf of an indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to be indemnified.
In addition, the Registrant is party to indemnification agreements with its executive officers and directors pursuant to which the Registrant agreed to indemnify such persons against all expenses and liabilities incurred or paid by such person in connection with any proceeding arising from the fact that such person is or was an officer or director of the Registrant, and to advance expenses as incurred by or on behalf of such person in connection therewith.
The indemnification rights set forth above are not exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of the Registrant’s certificate of incorporation, bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
The Registrant maintains policies of insurance that provide coverage (1) to its directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act and (2) to the Registrant with respect to indemnification payments that the Registrant may make to such directors and officers.
Pursuant to the Backstop Agreement filed as Exhibit 10.1 to this registration statement, the Registrant agreed to indemnify the Investors named therein against civil liabilities that may be incurred in connection with this offering, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).
Item 15. Recent Sales of Unregistered Securities
The offer and sale of securities issuable under the Backstop Agreement was, and will be, made in a transaction exempt from the registration requirements of the Securities Act by virtue of the exemption in Section 4(2) of the Securities Act.
Item 16. Exhibits.
The exhibit index attached hereto is incorporated herein by reference.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
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(1)
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To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
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(i)
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To include any prospectus required by Section 10(a)(3) of the Securities Act;
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(ii)
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To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission (the “Commission”) pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
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(iii)
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To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement;
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provided, however
, that paragraphs (1)(i), (1)(ii) and (1)(iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
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(2)
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That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(3)
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To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
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(4)
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That, for the purpose of determining liability under the Securities Act to any purchaser:
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(i)
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Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
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(ii)
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Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or date of the first sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which the prospectus forms a part, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of this registration statement or made in a document incorporated or deemed incorporated by reference into this registration statement or prospectus that is a part of this registration statement will, as to a purchaser with a time of contract sale prior to such effective date, supersede or modify any statement that was made in this registration statement or prospectus that was a part of this registration statement or made in any such document immediately prior to such effective date.
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(5)
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That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
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(i)
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any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
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(ii)
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any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
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(iii)
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the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
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(iv)
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any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
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(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted against the registrant by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly caused this post-effective amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston, Commonwealth of Massachusetts, on November 18, 2016.
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GREAT ELM CAPITAL GROUP, INC.
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By:
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/s/ Richard S. Chernicoff
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Name:
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Richard S. Chernicoff
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Title:
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Chief Executive Officer
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KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard S. Chernicoff and Peter A. Reed (with full power to each of them to act alone) his or her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign on his or her behalf individually and in each capacity stated below any and all amendments (including post-effective amendments) to this registration statement (including and related registration statement filed pursuant to Rule 462(b) of the Securities Act), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents and either of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities indicated on November 18, 2016.
Signature
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Title
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/s/ Richard S. Chernicoff
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Chief Executive Officer and Director
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Richard S. Chernicoff
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(Principal Executive Officer)
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/s/ James D. Wheat
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Chief Financial Officer
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James D. Wheat
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(Principal Financial Officer and Principal Accounting Officer)
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/s/ Peter A. Reed
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Director
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Peter A. Reed
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Jeffery S. Serota
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Director
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/s/ Boris Teksler
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Director
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Boris Teksler
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/s/ Hugh Steven Wilson
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Director
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Hugh Steven Wilson
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EXHIBIT INDEX
Unless otherwise indicated, all references are to filings by Great Elm Capital Group, Inc., a Delaware corporation formerly known as Unwired Planet, Inc. (the
Registrant
), with the Securities and Exchange Commission under File No. 001-16703.
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Exhibit
No.
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|
Description
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3.1
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Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on November 15, 2013).
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3.2
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Certificate of Ownership and Merger merging Unwired Planet, Inc. with and into Openwave Systems Inc. (incorporated by reference to Exhibit 3.3 to the Form 10-Q filed on May 10, 2012).
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3.3
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Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on January 5, 2016).
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3.4
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Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on June 16, 2016).
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3.5
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Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Form 8-K filed on February 6, 2015).
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4.1
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Form of the Registrant’s common stock certificate (incorporated by reference to Exhibit 4.1 to the Form 10-K filed on September 13, 2016)
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4.2
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Tax Benefits Preservation Agreement, dated as of January 20, 2015, between the Registrant and Computershare Trust Company, N.A., as Rights Agent (incorporated by reference to Exhibit 4.1 to the Form 8-A filed on January 21, 2015).
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4.3
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Form of Subscription Certificate to Purchase Shares (incorporated by reference to Exhibit 4.3 to the Form S-3 filed on September 13, 2016 (File No. 333-213620))
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4.4
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Form of Notice to Stockholders who are Record Holders (incorporated by reference to Exhibit 4.4 to the Form S-3 filed on September 13, 2016 (File No. 333-213620))
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4.5
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|
Form of Notice to Stockholders who are Acting as Nominees (incorporated by reference to Exhibit 4.4 to the Form S-3 filed on September 13, 2016 (File No. 333-213620))
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4.6
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|
Form of Notice to Clients of Stockholders who are Acting as Nominees (incorporated by reference to Exhibit 4.6 to the Form S-3 filed on September 13, 2016 (File No. 333-213620))
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4.7
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Form of Notice of Guaranteed Delivery (incorporated by reference to Exhibit 4.7 to the Form S-3 filed on September 13, 2016 (File No. 333-213620))
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4.8
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|
Form of Beneficial Owner Election Form (incorporated by reference to Exhibit 4.8 to the Form S-3 filed on September 13, 2016 (File No. 333-213620)).
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4.9
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|
Form of Nominee Holder Election Form (incorporated by reference to Exhibit 4.9 to the Form S-3 filed on September 13, 2016 (File No. 333-213620))
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5.1*
|
|
Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
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10.1
|
|
Amended and Restated Backstop Investment Agreement, dated as of October 13, 2016, by and among Registrant and the Investors named therein incorporated by reference to Exhibit 10.1 to the Form S-1 filed on October 14, 2016 (File No. 333-213620)).
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10.2
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Registration Rights Agreement, dated as of September 13, 2016, by and among the Registrant and the holders named therein (incorporated by reference to the Exhibit 10.2 to the Form 8-K filed on September 13, 2016).
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10.3
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Form of Dealer Manager Agreement (incorporated by reference to Exhibit 10.3 to the Form S-3 filed on September 13, 2016 (File No. 333-213620))
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23.1*
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Consent of Grant Thornton LLP
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23.2*
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Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1)
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24.1
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Power of Attorney (included on the signature page hereto)
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* Filed herewith
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