Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On October 12, 2021, as recommended by SGRP's Governance Committee, the Board of
Directors of SGRP (the "Board") appointed Mr. Michael Wager and Mr. Sean M.
Whelan to the Board and to the Audit Committee. On October 14, 2021, Mr. Wager
and Mr. Whelan agreed to become directors on SGRP's Board.
Mr. Michael Wager is an attorney who has specialized in securities,
reorganizations, M&A and regulatory compliance throughout his career. He is
currently a Senior Counsel with Taft Stettinius & Hollister LLP serving in an
advisory role and the Chief Strategy Officer for Byrna Technologies. Mr. Wager
is also currently a member of the board and has served as the Chairman of the
Audit and Governance Committees for Michael Anthony Holdings. Mr. Wager earned
his Bachelor of Arts, Political Science Degree at the American University,
College of Public Affairs, his Master of Arts, Political Science Degree at
Columbia University, Graduate School of Arts and Sciences, and his Juris Doctor
Degree at New York University School of Law.
Mr. Sean M. Whelan is currently the Chief Executive Officer, and was previously
the Chief Financial Officer, for Encore Rehabilitation Services. He has also
held the Chief Financial Officer role for several other public and private
companies including Smile America Partners, Bedrock Manufacturing, LLC, Diplomat
Pharmacy and InfuSystem Holdings, Inc. Mr. Whelan is currently a Board member
and Chairman of the Audit Committee with Zomedica Corp (NYSE American: ZOM) and
also a Board member with OptioRx; he previously served as an Executive Board
member with Diplomat Pharmacy and InfuSystem Holding, Inc. Mr. Whelan earned his
Bachelor of Business Administration Degree and his Master of Accounting Degree
at the University of Michigan's Ross School of Business and is a CPA.
SGRP's Governance Committee and Board have determined that Mr. Wager and Mr.
Whelan each satisfies the applicable requirements for general Board independence
under Nasdaq Listing Rule 5605(b)(1) and the heightened independence and
financial literacy criteria for Audit Committee membership under Nasdaq Listing
Rule 5605(c)(2)(A). Their appointments and the other events and determinations
described in Item 8.01 below complete SGRP's actions to regain compliance with
Nasdaq's majority independent Board and Audit Committee requirements, which
Nasdaq confirmed on October 20, 2021.
Item 8.01. Other Events.
On June 15, 2021, Nasdaq notified SGRP that, due to the simultaneous
resignations of all three directors on its audit committee, SGRP no longer
complied with Nasdaq's majority independent board and audit committee
requirements, and pursuant to its discretionary authority, Nasdaq requested that
the Company submit a plan of compliance by June 29, 2021, which deadline it
subsequently extended to July 6, 2021. See SGRP's Current Report on Form 8-K as
filed with the SEC on July 2, 2021.
On July 2, 2021, SGRP submitted a plan of compliance (the "Plan") to Nasdaq, in
which SGRP outlined its efforts to find and appoint three independent directors
to the Board and Audit Committee, by October 1, 2021, thereby enabling the
Company to regain compliance with Nasdaq's rules, which efforts include the
retention of Caldwell Partners to lead SGRP's independent director search and
identify suitable candidates.
On July 16, 2021, Nasdaq responded in a letter to SGRP accepting the Plan to
appoint three independent directors to the Board and Audit Committee giving SGRP
until October 15, 2021 to implement the Plan and regain compliance with the
majority independent board and Audit Committee requirement rules. See SGRP's
Current Report on Form 8-K as filed with the SEC on July 30, 2021.
On October 20, 2021, Nasdaq confirmed that SGRP is now in compliance with
Nasdaq's majority independent Board and Audit Committee requirements as a result
of the events and determinations described in Item 8.01 below.
Correction of Failure to Maintain the Required Majority Board Independence
(Nasdaq Listing Rule 5605(b)(1)).
In addition to appointing and determining the independence of Mr. Wager and Mr.
Whelan (see above), SGRP's Governance Committee and Board recently determined
(effective as of August 1, 2021) that its existing Directors Mr. Robert G. Brown
and Mr. James R. Brown Sr., and previously determined that its existing
directors Mr. Peter W. Brown and Mr. Panagiotis ("Panos") N. Lazaretos, each
satisfies the applicable requirements for general Board independence under
Nasdaq Listing Rule 5605(b)(1).
Accordingly, SGRP gave notice to Nasdaq on October 15, 2021 (the "Compliance
Notice"), that as of such date, the Board is composed of the following eight
members, six of whom have been determined by the Board to meet the general
independence requirements for directors set forth in Nasdaq Listing Rule
5605(a)(2): William H. Bartels, James R. Brown Sr. (independent), Peter W. Brown
(independent), Robert G. Brown (independent), Panagiotis ("Panos") N. Lazaretos
(independent), Michael Wager (independent), Sean M. Whelan (independent) and
Michael R. Matacunas.
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Therefore, SGRP is in compliance with the majority board independence
requirement of Nasdaq Listing Rule 5605(b)(1) as of October 15, 2021, and on
October 20, 2021, Nasdaq confirmed such compliance.
Correction of Failure to Maintain the Required Audit Committee Composition and
Independence (Nasdaq Listing Rule 5605(c)(2)(A).
In addition to appointing Mr. Wager and Mr. Whelan to the Audit Committee and
determining that each satisfies the required heightened independence and
financial literacy criteria (see above), SGRP's Governance Committee and Board
recently appointed Mr. Panagiotis ("Panos") N. Lazaretos to the Audit Committee.
Accordingly, SGRP advised Nasdaq in the Compliance Notice that, as of October
15, 2021, the Audit Committee of the Corporation is composed of three
independent directors, Michael Wager, Sean M. Whelan, and Panos Lazaretos, each
of whom SGRP's Governance Committee and Board have determined meet the
heightened independence and financial literacy criteria under Nasdaq Listing
Rule 5605(c)(2)(A).
In addition, SGRP's Governance Committee and Board have determined that Mr.
Whelan meets the definition of an "Audit Committee financial expert" under Item
407(d)(5)(ii) and (iii) of Regulation S-K.
Therefore, SGRP is in compliance with the Audit Committee composition
requirements in Nasdaq Listing Rule 5605(c)(2)(A) as of October 15, 2021, and on
October 20, 2021, Nasdaq confirmed such compliance.
Forward Looking Statements
This Current Report on Form 8-K (this "Current Report") contains
"forward-looking statements" within the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, made by, or respecting, the
Corporation and its subsidiaries (the "Company"), and this Current Report has
been filed by the Corporation with the SEC. "Forward-looking statements" are
defined in Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and other applicable federal and state securities
laws, rules and regulations, as amended (together with the Securities Act and
the Exchange Act, "Securities Laws").
All statements (other than those that are purely historical) are forward-looking
statements. Words such as "may," "will," "expect," "intend," "believe,"
"estimate," "anticipate," "continue," "plan," "project," or the negative of
these terms or other similar expressions also identify forward-looking
statements. Forward-looking statements made by the Corporation in this Current
Report may include (without limitation) statements regarding: risks,
uncertainties, cautions, circumstances and other factors ("Risks") such as
(among other things) the impact of adding two new director to the Board, the
potential negative effects of the novel coronavirus and COVID-19 pandemic on the
Company's business, the Corporation's compliance with applicable Nasdaq director
independence rules, the Company's cash flow or financial condition, or the
pursuit or achievement of the Company's corporate objectives.
You should carefully review and consider the Company's forward-looking
statements (including all risk factors and other cautions and uncertainties) and
other information made, contained or noted in or incorporated by reference into
this Current Report, but you should not place undue reliance on any of them. The
results, actions, levels of activity, performance, achievements or condition of
the Company (including its affiliates, assets, business, clients, capital, cash
flow, credit, expenses, financial condition, income, liabilities, liquidity,
locations, marketing, operations, performance, prospects, sales, strategies,
taxation or other achievement, results, Risks, trends or condition) and other
events and circumstances planned, intended, anticipated, estimated or otherwise
expected by the Company (collectively, " Expectations"), and our forward-looking
statements (including all Risks) and other information reflect the Company's
current views about future events and circumstances. Although the Company
believes those Expectations and views are reasonable, the results, actions,
levels of activity, performance, achievements or condition of the Company or
other events and circumstances may differ materially from our Expectations and
views, and they cannot be assured or guaranteed by the Company, since they are
subject to Risks and other assumptions, changes in circumstances and
unpredictable events (many of which are beyond the Company's control). In
addition, new Risks arise from time to time, and it is impossible for the
Company to predict these matters or how they may arise or affect the Company.
Accordingly, the Company cannot assure you that its Expectations will be
achieved in whole or in part, that it has identified all potential Risks, or
that it can successfully avoid or mitigate such Risks in whole or in part, any
of which could be significant and materially adverse to the Company and the
value of your investment in the Company's common stock.
These forward-looking statements reflect the Company's Expectations, views,
Risks and assumptions only as of the date of this Current Report, and the
Company does not intend, assume any obligation, or promise to publicly update or
revise any forward-looking statements (including any Risks or Expectations) or
other information (in whole or in part), whether as a result of new information,
new or worsening Risks or uncertainties, changed circumstances, future events,
recognition, or otherwise.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits: NONE
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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