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EX-2.1 - WALKER INNOVATION INC. | v184659_ex2-1.htm |
EX-99.1 - WALKER INNOVATION INC. | v184659_ex99-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported): May 13,
2010
GlobalOptions
Group, Inc.
(Exact
Name of Registrant as Specified in its Charter)
Delaware
|
001-33700
|
30-0342273
|
(State
or Other Jurisdiction
|
(Commission
|
(IRS
Employer
|
of
Incorporation)
|
File
Number)
|
Identification
No.)
|
75
Rockefeller Plaza, 27th
Floor
|
|
New
York, New York
|
10019
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code (212)
445-6262
N/A
(Former
Name or Former Address, if Changed Since Last Report.)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction A.2.
below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
x Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry
into a Material Definitive Agreement.
Entry
into Agreement to Sell Preparedness Services Business Unit
On May
13, 2010, GlobalOptions Group, Inc., a Delaware corporation (the “Company”), and
its wholly-owned subsidiary, GlobalOptions, Inc., a Delaware corporation
(“GlobalOptions” and collectively with the Company, “Sellers”), entered into an
Asset Purchase Agreement (the “Purchase Agreement”) with Witt Group Holdings,
LLC, a Delaware limited liability company (“Buyer”), of which James Lee Witt,
Chief Executive Officer, Mark Merritt, Co-President, Barry Scanlon,
Co-President, and Pate Felts, Senior Advisor, respectively, of the Preparedness
Unit (as defined below) are principals.
Pursuant
to the terms of the Purchase Agreement, Sellers will sell to Buyer the Company’s
Preparedness Services Business Unit (the “Preparedness Unit”), which develops
and implements crisis management and emergency response plans for disaster
mitigation, continuity of operations and other emergency management issues for
governments, corporations and individuals, including all of the Preparedness
Unit’s operating assets, for an aggregate consideration of (i) $10,000,000 in
cash, of which $1,000,000 is to be held in escrow for 12 months following the
Closing, (ii) an earnout payment equal to 40% of any revenues over $15,000,000
earned during the 12-month period following the closing of the transactions
contemplated under the Purchase Agreement (the “Closing”), which payment may not
exceed $12,000,000, and (iii) the assumption of all of the Preparedness Unit’s
liabilities, including its liabilities arising post Closing, including all
termination and severance payments due to James Lee Witt, Mark Merritt, Barry
Scanlon and Pate Felts upon the sale of the Preparedness Unit under their
respective employment agreements, less $286,000, representing a payment due
under the Preparedness Unit’s real estate lease in Washington D.C. The maximum
total consideration payable to Sellers under the Purchase Agreement is
$22,000,000.
In
addition, Buyer has agreed to pay Sellers, within six months of the date of
Closing, the amount by which the working capital of the Preparedness Unit at the
Closing exceeds $6,800,000, and Sellers have agreed to pay Buyer, within six
months of the date of Closing, the amount by which the working capital of the
Preparedness Unit is less than $5,800,000. Sellers have also agreed
to pay Buyer (i) a “true-up” of up to $1,000,000 based on accounts receivable
(other than accounts receivable originating from the State of Louisiana or its
agencies) that remain uncollected as of six months following the Closing, and
(ii) the face amount of any uncollected receivables arising from the bankruptcy
or dissolution of any non-governmental entity. Buyer agreed upon such
payment to transfer to Sellers all rights with respect to such uncollected
receivables.
Sellers
have made customary representations, warranties and covenants in the Purchase
Agreement. The Purchase Agreement contains a “no shop” restriction on
Sellers’ ability to solicit third party proposals, provide information to and
engage in discussions and negotiations with third parties. The no
shop provision is subject to a “fiduciary out” provision that allows Sellers,
under certain circumstances and in compliance with certain obligations, to
provide information and participate in discussions and negotiations with respect
to written third party acquisition proposals submitted after the date of the
Purchase Agreement that the Board of Directors believes in good faith to be bona
fide and determines in good faith, after consultation with its financial
advisors and outside counsel, constitutes or could be expected to result in a
“Superior Proposal,” as defined in the Purchase Agreement. The sale
of the Preparedness Unit is subject to the approval of the Company’s
shareholders and certain other customary closing conditions.
The
Purchase Agreement may be terminated by Sellers and/or Buyer for a number of
reasons, including but not limited to the following: (i) by Sellers or Buyer if
the transactions contemplated under it do not close on or before October 31,
2010; (ii) by Sellers or Buyer as a result of the other parties’ material breach
of any of their representations, warranties, covenants or agreements under the
Purchase Agreement; and (iii) by Sellers or Buyer upon the Company’s failure to
obtain shareholder approval for the transactions contemplated at a meeting held
to vote on such matter. Upon termination by Buyer resulting from the
Company’s failure to recommend the transactions contemplated by the Purchase
Agreement to its stockholders or the Company’s failure to (i) file a proxy
statement with the Securities and Exchange Commission (“SEC”), (ii) respond to
SEC comments or (iii) hold a special meeting of stockholders, within specified
time periods, Sellers will pay Buyer $500,000 plus up to $500,000 of expenses
(“Buyer Expenses”). Sellers will also pay $500,000 plus Buyer
Expenses in the event they terminate the agreement because they have received a
Superior Proposal. Sellers will pay Buyer only Buyer Expenses if
despite the Company’s good faith efforts it fails to secure approval of the
Purchase Agreement by its shareholders, and $500,000 plus Buyer Expenses if
Sellers fail to exercise good faith efforts. Upon termination by
Buyer resulting from Sellers’ material breach of any of their representations,
warranties, covenants or agreements, Sellers will pay Buyer $500,000 plus 50% of
Buyer Expenses. Juggernaut Capital Partners, L.P. has agreed to
provide a guarantee of up to $250,000 to be used for the payment of
indemnification expenses or termination fees in the event that Sellers terminate
the Purchase Agreement as a result of Buyer’s material breach of any of its
representations, warranties, covenants or agreements.
In
connection with their entry into the Purchase Agreement, Sellers have also
agreed to provide certain transition services to Buyer following the closing of
the transactions contemplated in the Purchase Agreement.
The
foregoing description of the Purchase Agreement does not purport to be complete
and is qualified in its entirety by reference to the full text of the Purchase
Agreement, which is filed herewith as Exhibit 2.1 and is
incorporated herein by reference. The Purchase Agreement has been
included to provide investors and stockholders with information regarding its
terms. It is not intended to provide any other factual information about the
Company. The Purchase Agreement contains representations and
warranties that the parties to the Purchase Agreement made to and solely for the
benefit of each other, and the assertions embodied in such representations and
warranties are qualified by information contained in confidential disclosure
schedules that the parties exchanged in connection with signing the Purchase
Agreement. Accordingly, investors and stockholders should not rely on
such representations and warranties as characterizations of the actual state of
facts or circumstances, since they were only made as of the date of the Purchase
Agreement and are modified in important part by the underlying disclosure
schedules.
Modification
of Employment Agreements
In
connection with the Company’s entry into the Purchase Agreement, the
Compensation Committee of the Company’s Board of Directors determined that a
“change of control,” as defined under the employment agreements of Dr. Schiller,
the Company’s Chief Executive Officer, and Mr. Nyweide, the Company’s Chief
Financial Officer and Executive Vice President (a “Change of Control”), would
result from the completion of the sale of the Preparedness Unit. In
the event of a Change of Control, Dr. Schiller and Mr. Nyweide’s employment
agreements provide that Dr. Schiller and Mr. Nyweide may terminate their
employment with the Company for “good reason,” as defined under their employment
agreements, Dr. Schiller and Mr. Nyweide will become entitled to certain
severance payments should they terminate their employment, and all stock
options, restricted stock and restricted stock units held by Dr. Schiller and
Mr. Nyweide will vest immediately and all performance conditions of any and all
cash bonuses and performance stock options or restricted stock will be deemed to
be met.
On May
13, 2010, the Company entered into modifications of its employment agreements
with Dr. Schiller and Mr. Nyweide to induce them to remain with the Company in
the event that they become entitled to terminate their employment agreements as
a result of the occurrence of a Change of Control.
Schiller
Modification
The
modification (the “Schiller Modification”) to Dr. Schiller’s employment
agreement (the “Schiller Employment Agreement”) provides that in the event of
the sale of two of the Company’s four divisions, provided that at least one such
sale requires the approval of the Company’s stockholders (a “Sales Event”), Dr.
Schiller will continue to serve as Chairman and Chief Executive Officer of the
Company for one year following the Sales Event, although at a reduced level of
responsibility. Beginning on the first day of the month immediately
following a Sales Event, Dr. Schiller will receive a base salary of $180,000 per
annum, plus living expenses as provided under the Schiller Employment Agreement,
for the duration of the Schiller Modification. In addition to his
base salary, Dr. Schiller will be eligible for a discretionary cash bonus one
year after the Sales Event. Following the completion of the term of the Schiller
Modification, the Company has the option to continue to employ Dr. Schiller on a
month-to-month basis for $20,000 per month.
Notwithstanding
Dr. Schiller’s continued employment following a Sales Event, after the
occurrence of a Sales Event, the Company is required to deposit all funds that
would have been required to be paid to Dr. Schiller under the Schiller
Employment Agreement had he terminated his employment for Good Reason (as
defined under the Schiller Employment Agreement) as a result of the Sales Event,
into a “rabbi trust.” Pursuant to the Schiller Modification, such
funds will be paid to Dr. Schiller six months after his separation from service
for any reason (for purposes of Section 409A of the Internal Revenue Code, the
deferred compensation rules, which may include a point in time when Dr. Schiller
works part-time).
The
Schiller Modification also provides that upon Dr. Schiller’s termination without
Cause (as defined under the Schiller Employment Agreement), for Good Reason not
including a Sales Event, or as a result of death or Disability (as defined under
the Schiller Employment Agreement) prior to the end of the term of the Schiller
Modification, Dr. Schiller will receive his salary and benefits through the end
of the term. In addition, if an asset purchase agreement or similar agreement
has been signed that would constitute a Sales Event if consummated, and Dr.
Schiller’s employment is terminated without Cause prior to its consummation, Dr.
Schiller will be entitled to these payments if such Sales Event occurs or
another Change of Control occurs within six months of the date of
termination.
Nyweide
Modification
The
modification (the “Nyweide Modification”) to Mr. Nyweide’s employment agreement
(the “Nyweide Employment Agreement”) provides that in the event of a Sales
Event, Mr. Nyweide will continue to serve as Chief Financial Officer and
Executive Vice President of the Company for 18 months following the Sales Event.
Following a Sales Event, Mr. Nyweide will receive his current base salary of
$375,000 per annum for the first twelve months of such term and a reduced base
salary of $180,000 per annum for the remaining six months, during which period
his responsibilities are intended to be reduced. In addition to his base salary,
Mr. Nyweide will be eligible to receive a performance bonus of $150,000 in
connection with a Sales Event, and a performance bonus of $250,000 in the event
of a sale of the Company’s fourth and final division. Following the
completion of the term of the Nyweide Modification, the Company has the option
to continue to employ Mr. Nyweide on a month-to-month basis under the same terms
and conditions.
Notwithstanding
Mr. Nyweide’s continued employment following a Sales Event, after the occurrence
of a Sales Event, the Company is required to deposit all funds that would have
been required to be paid to Mr. Nyweide under the Nyweide Employment Agreement
had he terminated his employment for Good Reason (as defined under the Nyweide
Employment Agreement) as a result of the Sales Event, into a “rabbi
trust.” Pursuant to the Nyweide Modification, such funds will be paid
to Mr. Nyweide six months after his separation from service for any
reason.
The
Nyweide Modification also provides that upon Mr. Nyweide’s termination without
Cause (as defined under the Nyweide Employment Agreement), for Good Reason not
including a Sales Event, or as a result of death or Disability (as defined under
the Nyweide Employment Agreement) prior to the end of the term of the Nyweide
Modification, Mr. Nyweide will receive his salary and benefits through the end
of the term. In addition, if an asset purchase agreement or similar
agreement has been signed that would constitute a Sales Event if consummated,
and Mr. Nyweide’s employment is terminated without Cause prior to its
consummation, Mr. Nyweide will be entitled to these payments if such Sales Event
occurs or another Change of Control occurs within six months of the date of
termination.
Item
5.02.
|
Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
|
See the
disclosure set forth under Item 1.01, which is incorporated by reference into
this Item 5.02.
Item
8.01. Other
Events.
On May
13, 2010, concurrently with the Company’s entry into the Purchase Agreement,
Harvey Schiller, Jeffrey Nyweide, Harvey Partners, LLC, Cipher 06, L.L.C., Vicis
Capital LLC and Howard Safir entered into support agreements relating to an
aggregate of approximately 43.2% of the Company’s common stock outstanding,
pursuant to which they agreed to vote their shares in favor of the transactions
contemplated by the Purchase Agreement; except that such support agreements provide that when
the aggregate number of shares subject to such support agreements exceeds 34.9%
of the voting power of the Company’s outstanding capital stock, then such
agreements shall only apply to the maximum number of shares as would not result
in exceeding such percentage, with any resulting adjustments being allocated pro
rata among the parties to such support agreements on the relative number of
shares subject to such agreements.
On May
13, 2010, the Company issued a press release announcing its entry into the
Purchase Agreement. A copy of the press release is attached hereto as
Exhibit 99.1
and is incorporated herein by reference.
Item
9.01.
|
Financial
Statements and Exhibits.
|
(d)
Exhibits
Exhibit No.
|
Description
|
2.1
|
Asset
Purchase Agreement, dated May 13, 2010, by and among GlobalOptions Group,
Inc., GlobalOptions, Inc. and Witt Group Holdings,
LLC.*
|
99.1
|
Press
Release, dated May 13, 2010.
|
*
Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The
Company agrees to furnish supplementally a copy of any omitted schedule to the
SEC upon request.
Additional Information and
Where to Find It
In
connection with the proposed transaction, the Company will file a proxy
statement with the SEC. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO
READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a
free copy of the proxy statement (when available) and other documents filed by
the Company at the SEC’s website at www.sec.gov. The proxy statement
and such other documents may also be obtained for free from the Company by
directing such request to the Company at 75 Rockefeller Plaza, 27th Floor,
New York, New York 10019, Attention: Chief Financial Officer, or by telephone at
(212) 445-6262.
The
Company and its directors, executive officers and other members of its
management and employees may be deemed to be participants in the solicitation of
proxies from its stockholders in connection with the proposed
transaction. Certain executive officers and directors of the Company
have interests in the transaction that may differ from the interests of
shareholders generally, including without limitation acceleration of vesting of
stock options, restricted stock and restricted stock units, and other benefits
conferred under employment agreements. These interests will be
described in the proxy statement when it becomes
available. Information concerning the interests of the Company’s
participants in the solicitation is set forth in the Company’s proxy statements
and Annual Reports on Form 10-K, previously filed with the SEC, and in the proxy
statement relating to the transaction when it becomes available.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: May
13, 2010
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GLOBALOPTIONS
GROUP, INC.
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By: /s/ Harvey W.
Schiller
|
|
Name:
Harvey W. Schiller
|
|
Title: Chairman
and
Chief Executive Officer
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EXHIBIT
INDEX
Exhibit No.
|
Description
|
2.1
|
Asset
Purchase Agreement, dated May 13, 2010, by and among GlobalOptions Group,
Inc., GlobalOptions, Inc. and Witt Group Holdings,
LLC.*
|
99.1
|
Press
Release, dated May 13, 2010.
|
*
Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The
Company agrees to furnish supplementally a copy of any omitted schedule to the
SEC upon request.