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): July 25, 2014
PMFG, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-34156 | 51-0661574 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 14651 North Dallas Parkway, Suite 500 Dallas, Texas |
75254 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (214) 357-6181
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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into Material Definitive Agreement
On July 25, 2014, PMFG, Inc. (the “Company”) entered into an agreement (the “Agreement”) with Cannell Capital LLC, Tristan Partners, L.P., Tristan Offshore Fund, Ltd., J. Carlo Cannell, Dilip Singh, Alfred John Knapp, Jr., Mark D. Stolper, John M. Climaco, Charles M. Gillman and Kenneth H. Shubin Stein (collectively, the “Group”) resolving matters related to the election of directors at the Company’s 2014 annual meeting of stockholders (the “Annual Meeting”). The Group previously submitted a letter nominating Dr. Shubin Stein and Mr. Gillman for election to the Board at the Annual Meeting.
In accordance with the Agreement, on July 25, 2014, the Board appointed Mr. Gillman as a Class III director to fill an existing vacancy on the Board, the term of which will expire at the Company’s annual meeting of stockholders in 2015 (the “2015 Meeting”). On the same date, the Board also increased the size of the Board from six to seven members and appointed Dr. Shubin Stein as a Class I director to fill the newly created vacancy, the term of which will expire at the Company’s annual meeting of stockholders in 2016 (the “2016 Meeting”). Pursuant to the Agreement, the Company has agreed to nominate Mr. Gillman for reelection at the 2015 Meeting and to nominate Dr. Shubin Stein for reelection at the 2016 Meeting.
Concurrently, the Group agreed to withdraw its nominations with respect to the Annual Meeting and not to solicit proxies or make any other proposals at the Annual Meeting or initiate, encourage or participate in any withhold or similar campaign at the Annual Meeting. Further, the Group agreed to vote its shares of the Company’s common stock for the election of Robert McCashin and Howard Westerman at the Annual Meeting and for the other proposals that the Board recommends that stockholders approve at the Annual Meeting. As of June 4, 2014, the Group beneficially owned an aggregate of 1,137,794 shares of the Company’s common stock.
The Company agreed to reimburse the Group for up to $160,000 of its reasonable, documented out-of-pocket expenses incurred in connection with the matters related to the Annual Meeting and the negotiation and execution of the Agreement.
The foregoing description of the Agreement is not complete and is qualified in its entirety by the full text of such agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Pursuant to the Agreement described in Item 1.01 to this Current Report on Form 8-K, Kenneth H. Shubin Stein and Charles M. Gillman were appointed as directors effective July 25, 2014.
As of the date of this report, no decision has been made with respect to which committee or committees of the Board that Dr. Shubin Stein or Mr. Gillman will be appointed as a member.
Item 7.01 Regulation FD Disclosure.
Included below is biographical information for each of the newly appointed directors of the Company.
Kenneth H. Shubin Stein, M.D., CFA, age 45, is the Founder and Portfolio Manager of Spencer Capital Management, a private investment firm, since its founding in 2002. He is also the Chairman of Spencer Capital Holdings. Dr. Shubin Stein was a portfolio manager at Promethean Investment Group LLC, an investment firm, from September 2001 to December 2002, and an Orthopedic Resident at Mount Sinai Hospital from July 2000 until August 2001. Dr. Shubin Stein served on the board of directors of Celebrate Express, Inc., an online retailer of party supplies, from August 2006 to August 2008 and the board of directors of MRV Communications, Inc., a global provider in converged packet and optical solutions that empower the optical edge and network integration services for leading communications service providers, from November 2009 to October 2011.
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Dr. Shubin Stein is a graduate of the Albert Einstein College of Medicine where he completed a five year medical and research program with a focus on molecular genetics. He has a B.A. from Columbia College with a dual concentration in Premedical Studies and Political Science. Dr. Shubin Stein is an adjunct professor at Columbia Business School.
Charles M. Gillman, age 44, is the Executive Managing Director of IDWR Office, a multi-family investment firm. He has held this position since June 2013. Prior to his position at IDWR Office, Mr. Gillman served as the Portfolio Manager of Nadel & Gussman, LLC, an oil and gas company. Mr. Gillman currently serves on the board of directors of Digirad Corporation, a diagnostic imaging solutions company, On Track Innovation Systems Ltd., a developer of cashless payment solutions and The Penn Club of New York. Mr. Gillman has also previously served on the board of directors of Aetrium Incorporated, a provider of IC handling solutions to the semiconductor and electronic components industries, Littlefield Corporation, a charitable giving corporation, Infusystems Holdings, Inc., a healthcare services company, CompuMed Inc., a provider of telemedicine solutions and MRV Communications, a global provider on converged pack and optical solutions that empower the optical edge and network integration services for leading communications service providers.
Mr. Gillman graduated Summa Cum Laude from the University of Pennsylvania – The Wharton School.
Item 9.01 Financial Statements and Exhibits
| 10.1 | Agreement, dated July 25, 2014, between PMFG, Inc. and Cannell Capital LLC, Tristan Partners, L.P., Tristan Offshore Fund, Ltd., J. Carlo Cannell, Dilip Singh, Alfred John Knapp, Jr., Mark D. Stolper, John M. Climaco, Charles M. Gillman and Kenneth H. Shubin Stein |
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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.
| PMFG, INC. | ||
| By: |
/s/ Ronald L. McCrummen | |
| Ronald L. McCrummen | ||
| Executive Vice President and Chief Financial Officer | ||
Date: July 25, 2014
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EXHIBIT INDEX
| 10.1 | Agreement, dated July 25, 2014, between PMFG, Inc. and Cannell Capital LLC, Tristan Partners, L.P., Tristan Offshore Fund, Ltd., J. Carlo Cannell, Dilip Singh, Alfred John Knapp, Jr., Mark D. Stolper, John M. Climaco, Charles M. Gillman and Kenneth H. Shubin Stein |
Exhibit 10.1
AGREEMENT
This Agreement (this “Agreement”) is made and entered into as of July 25, 2014, by and among Cannell Capital LLC, Tristan Partners, L.P., Tristan Offshore Fund, Ltd., J. Carlo Cannell, Dilip Singh, Alfred John Knapp, Jr., Mark D. Stolper, John M. Climaco, Charles M. Gillman and Kenneth H. Shubin Stein (collectively, the “Group”) and PMFG, Inc., a Delaware corporation (the “Company”).
RECITALS
WHEREAS, the Company and the Group have engaged in discussions and communications concerning the Company’s business, financial performance and strategic plans;
WHEREAS, the Group is deemed to beneficially own shares of common stock of the Company (the “Common Stock”) totaling, in the aggregate, 1,137,794 shares, or approximately 5.4%, of the Common Stock of the Company issued and outstanding on the date hereof;
WHEREAS, Tristan Partners, L.P. submitted a nomination letter to the Company on June 2, 2014 nominating director candidates to be elected to the Company’s board of directors (the “Board”) at the 2014 annual meeting of stockholders of the Company (the “2014 Annual Meeting”); and
WHEREAS, the Company and the Group have determined to come to an agreement with respect to the election of directors to the Board at the 2014 Annual Meeting, certain matters related to the 2014 Annual Meeting and certain other matters, all as provided in this Agreement.
NOW THEREFORE, the parties hereby agree as follows:
1. The Company agrees, and represents and warrants that (i) Charles M. Gillman (the “Class III Appointee”) will be appointed as of the date hereof as a Class III director to fill an existing vacancy on the Board; (ii) the size of the Board will be increased from six to seven members, (iii) Kenneth H. Shubin Stein (the “Class I Appointee” and together with the Class III Appointee, the “Appointees”) will be appointed as of the date hereof as a Class I director of the Company to fill the newly created vacancy, (iv) the Company shall nominate the Class III Appointee as a Class III director nominee of the Company to stand for election at the 2015 annual meeting of the stockholders of the Company (the “2015 Annual Meeting”) and recommend that the Company’s stockholders vote in favor of the election of the Class III Appointee at the 2015 Annual Meeting and cause all proxies received by the Company to be voted in favor of the Class III Appointee unless the proxy provides otherwise, and (v) the Company shall nominate the Class I Appointee as a Class I director nominee of the Company to stand for election at the 2016 annual meeting of the stockholders of the Company (the “2016 Annual Meeting”) and recommend that the Company’s stockholders vote in favor of the election of the Class I Appointee at the 2016 Annual Meeting and cause all proxies received by the Company to be voted in favor of the Class III Appointee unless the proxy provides otherwise. The nominations, recommendations and voting set forth in clauses (iv) and (v) above will be subject to the approval of the Board after exercising its fiduciary duties in good faith.
2. If, during the period of time beginning on the date of this Agreement and running to the 2015 annual meeting (for the Class III Appointee) or the 2016 annual meeting (for the Class I Appointee), the Appointees (i) resign or are otherwise unable or unwilling to serve as a director of the Company or (ii) are removed in accordance with the Company’s Certificate of Incorporation or Bylaws, the Group will be entitled to nominate an individual or individuals reasonably deemed to be qualified by the Board (after taking into consideration the Company’s criteria for the selection of directors) to serve on the Board in his or their place (each, a “Replacement Appointee”). A Replacement Appointee must (i) satisfy the requirements of the Board Nominations Policy, and (ii) be independent under the Nasdaq listing standards. Once a Replacement Appointee has been agreed upon, the Board will promptly appoint such Replacement Appointee to the Board to serve for the remainder of the Appointee’s applicable term. The appointment set forth in the preceding sentence will be subject to the approval of the Board after exercising its fiduciary duties in good faith. Such Replacement Appointee will be considered as the Appointee for purposes of this Agreement.
3. Concurrently with the execution of this Agreement and the appointment of the Appointees to the Board, the Group agrees to withdraw its nominations with respect to the 2014 Annual Meeting and not to solicit proxies or make any other proposals at the 2014 Annual Meeting or initiate, encourage or participate in any withhold or similar campaign at the 2014 Annual Meeting. The Group will not publicly or privately encourage or support any other stockholders to take any of the actions described in this Section 3.
4. If consistent with the Board’s recommendations to the Company’s stockholders, the Group agrees to vote its shares of Common Stock at the 2014 Annual Meeting for (a) the election of Robert McCashin and Howard Westerman to the Board (b) to approve the compensation of the Company’s ‘named executive officers’ as disclosed in the Compensation Discussion & Analysis in the proxy statement for the 2014 Annual Meeting and (c) to ratify the appointment of Grant Thornton, LLP as the Company’s independent registered public accounting firm for the 2015 fiscal year.
5. The Company shall reimburse the Group for its reasonable, documented out-of-pocket expenses, including the reasonable fees and expenses of its counsel incurred in connection with the matters related to the 2014 Annual Meeting and the negotiation and execution of this Agreement, provided that such reimbursement shall not exceed $160,000 in the aggregate.
6. Promptly following the execution of this Agreement, the Company will publish a press release (the “Press Release”) announcing certain terms of this Agreement, substantially in the form attached hereto as Exhibit A. Prior to the publication of the Press Release, neither the Company nor the Group will publish or make any press release or public announcement regarding this Agreement without the prior written consent of the other party. Until the 2014 Annual Meeting, neither the Company nor the Group, nor the Appointees will knowingly make any public announcement or statement that is inconsistent with or contrary to the statements made in the Press Release, except as it determines in good faith is required by law or the rules of any stock exchange or with the prior written consent of the other party. The parties hereto agree not to say anything disparaging about each other in connection with the matters contained herein or the negotiations leading up to this Agreement.
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7. The Group will provide, as promptly as reasonably practicable, all information relating to the Appointees (and other information, if any) to the extent required under applicable law to be included in the Company’s proxy statement and any other solicitation materials to be delivered to stockholders in connection with the 2014 Annual Meeting. The Company’s proxy statement will contain the same type of information concerning the Appointees as provided for the incumbent directors.
8. Each of the parties to this Agreement shall keep confidential all Confidential Information learned through Board participation of the Appointees unless disclosure is required by applicable laws or regulations or by a regulator having jurisdiction over such party. The term “Confidential Information” shall mean any information that is confidential to the Company; provided that Confidential Information will not include information which (i) becomes lawfully available to the public other than as a result of a disclosure by such party or its representatives, (ii) was lawfully available to such party on a non-confidential basis prior to its disclosure by the Company or its representatives or (iii) lawfully becomes available to such party on a non-confidential basis from a source other than the Company or the Company’s representatives or agents, provided that such source is not bound by a confidentiality agreement with the Company of which such party has been made aware.
9. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not strictly performed in accordance with its terms and that each party to this Agreement shall be entitled to an injunction to prevent breaches of this Agreement and to enforce specifically the performance of the provisions hereof, in addition to any other remedy to which any party may be entitled at law or in equity. In addition, the nonperforming party shall pay the costs and expenses of the other party in obtaining such injunction and/or specific performance, including, without limitation, attorney fees.
10. The validity, interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware (without giving effect to any choice or conflict of law provision). The parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the courts of the State of Delaware located in Wilmington, Delaware for any action, suit or proceeding arising out of or relating to this Agreement. The parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement in such courts and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
11. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) when delivered by hand (with written confirmation of receipt), (ii) upon sending if sent by electronic mail or facsimile, with electronic confirmation of sending, (iii) one day after being sent by nationally recognized overnight carrier to the addresses set forth below or (iv) when actually delivered if sent by any other method that results in delivery (with written confirmation of receipt):
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If to the Company:
PMFG, Inc.
14651 North Dallas Parkway
Suite 500
Dallas, Texas 75254
Attn: Chief Executive Officer
Facsimile: 214.351.4172
with a copy to:
Jones Day
2727 N. Harwood Street
Dallas, Texas 75201
Attn: James E. O’Bannon
Facsimile: (214) 969-5100
If to the Group:
Spencer Capital Management, LLC:
1995 Broadway, Suite 1801
New York, New York 10023
Attn: Kenneth Shubin Stein
Facsimile: (646) 349-9642
with a copy to:
DLA Piper LLP (US)
1251 Avenue of Americas
New York, New York 10020
Attn: Patrick Costello
Facsimile: (212) 884-8533
in each case, or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.
12. This Agreement sets forth the complete and exclusive statement of the terms of the Agreement between the parties hereto and fully supersedes any and all prior agreements or understandings between the parties hereto pertaining to the subject matter hereof.
13. Should any part, term or provision of this Agreement be declared or determined by any court to be illegal, invalid or otherwise unenforceable, the legality, validity and enforceability of the remaining parts, terms or provisions hereof shall be deemed not to be affected, and the Agreement shall be interpreted and enforced as if such illegal, invalid or unenforceable part, term or provision, to the extent possible, is not contained herein.
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14. The parties acknowledge and agree that they participated jointly in the negotiation and drafting of this Agreement and the rule of construction that ambiguities are construed against the drafter is hereby waived.
15. This Agreement may not be modified, amended, supplemented, or terminated except by a written instrument executed by the parties hereto.
16. All the terms and provisions of this Agreement shall inure to the benefit of and shall be enforceable by the successors and permitted assigns of the parties hereto. No party shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other parties hereto.
17. This Agreement may be executed in one or more counterparts, each of which shall be an original, and all of which together shall be deemed to be one and the same Agreement. Executed counterparts may be delivered via e-mail in Portable Document Format (.pdf) or via facsimile transmission.
[Signatures to follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
| PMFG, INC. | ||
| By: |
/s/ Peter J. Burlage | |
| Name: Peter J. Burlage | ||
| Title: Chief Executive Officer | ||
| CANNELL CAPITAL LLC | ||
| By: |
/s/ J. Carlo Cannell | |
| Name: J. Carlo Cannell | ||
| Title: Managing Member | ||
| TRISTAN PARTNERS, L.P. by Cannell Capital LLC, its general partner | ||
| By: |
/s/ J. Carlo Cannell | |
| Name: J. Carlo Cannell | ||
| Title: Managing Member | ||
| TRISTAN OFFSHORE FUND, LTD. by Cannell Capital LLC, its general partner | ||
| By: |
/s/ J. Carlo Cannell | |
| Name: J. Carlo Cannell | ||
| Title: Managing Member | ||
| /s/ J. Carlo Cannell J. CARLO CANNELL | ||
| /s/ Dilip Singh DILIP SINGH | ||
| /s/ Alfred John Knapp, Jr. ALFRED JOHN KNAPP, JR. | ||
[Signature Page to Agreement]
| /s/ Mark D. Stolper MARK D. STOLPER |
| /s/ John M. Climaco JOHN M. CLIMACO |
| /s/ Charles M. Gillman CHARLES M. GILLMAN |
| /s/ Kenneth H. Shubin Stein KENNETH H. SHUBIN STEIN |
[Signature Page to Agreement (continued)]
EXHIBIT A
PMFG, Inc. (Parent of Peerless Mfg. Co.) Appoints
Charles M. Gillman and Kenneth H. Shubin Stein to Board of Directors
Dallas July 25, 2014 — PMFG, Inc. (NASDAQ:PMFG) today announced that it has expanded the Board of Directors from six to seven members. Charles M. Gillman has been appointed to fill the vacancy resulting from the retirement of Sherrill Stone as a director in January 2014. Kenneth H. Shubin Stein, MD, CFA has been appointed to fill the vacancy created as a result of the expansion of the Board.
Peter J. Burlage, Chief Executive Officer of PMFG, said, “We are pleased that Mr. Gillman and Dr. Shubin Stein have agreed to join our Board of Directors. We are confident that they will contribute and provide additional insight and new perspective to PMFG.”
Dr. Shubin Stein said, “We are delighted to join the PMFG Board and believe that Charles Gillman and I will enhance the composition of the Board. We look forward to working together constructively with other Board members and management to help maximize long-term value for stockholders.”
In connection with today’s announcement, PMFG entered into an agreement with Cannell Capital LLC and a group of PMFG stockholders (the “Group”) that had previously nominated Mr. Gillman and Dr. Shubin Stein to be elected to the Board of Directors at PMFG’s 2014 annual meeting of stockholders. Under the agreement, the Group has agreed to withdraw its nominations and vote all shares held by the Group in favor of all of the Board’s director nominees at the 2014 annual meeting.
About PMFG, Inc.
We are a leading provider of custom engineered systems and products designed to help ensure that the delivery of energy is safe, efficient and clean. We primarily serve the markets for natural gas infrastructure, power generation and petrochemical processing. Headquartered in Dallas, Texas, we market our systems and products worldwide.
Safe Harbor Under The Private Securities Litigation Reform Act of 1995
Certain statements contained in this press release that are not historical facts are forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by such forward-looking statements. The words “anticipate,” “except,” “believe,” “intend” and similar expressions identify forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for such forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. Other important information regarding factors that may affect the Company’s future performance is included in the public reports that the Company files with the SEC, including the information under Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 29, 2013. The Company undertakes no obligation to revise any forward-looking statements or to update them to reflect events or circumstances occurring after the date of this release, or to reflect the occurrence of unanticipated events, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The inclusion of any statement in this release does not constitute an admission by the Company or any other person that the event or circumstances described in such statement are material.
| CONTACT: | For further Information Contact: | |
| Mr. Peter J. Burlage, Chairman and Chief Executive Officer | ||
| Mr. Ronald L. McCrummen, Chief Financial Officer | ||
| PMFG, Inc. | ||
| 14651 North Dallas Parkway, Suite 500 | ||
| Dallas, Texas 75254 | ||
| Phone: (214) 357-6181 | ||
| Fax: (214) 351-4172 www.peerlessmfg.com
or
| ||
| Mr. Shawn Severson, | ||
| Managing Director, Energy Technology Practice | ||
| The Blueshirt Group | ||
| Phone: (415) 489-2198 shawn@blueshirtgroup.com |