8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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): September 21, 2020 (September 17, 2020)

HERITAGE GLOBAL INC.

(Exact name of registrant as specified in its charter)

Florida	001-39471	59-2291344
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

12625 High Bluff Drive, Suite 305, San Diego, California	92130
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (858) 847-0656

Not Applicable

(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):

☐ 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 (l7 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	HGBL	Nasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01 Entry into a Material Definitive Agreement.

On September 17, 2020 (the “Effective Date”), Heritage Global Inc., a Florida corporation (the “Company”), entered into an Employment Agreement (the “New Employment Agreement”) with Kirk Dove, the President and Chief Operating Officer of the Company. Upon the Effective Date, Kirk Dove resigned from his position as President and Chief Operating Officer of the Company and terminated the existing Employment Agreement, dated February 29, 2012, between the Company and Kirk Dove (the “Prior Employment Agreement”) and replaced it with the New Employment Agreement. Pursuant to the terms of the New Employment Agreement, Kirk Dove will continue his employment with the Company in an advisory capacity until December 31, 2024, after which time the New Employment Agreement will terminate and Kirk Dove’s employment with the Company will cease (the “Termination Date”). Kirk Dove is the brother of Ross Dove, the Company’s Chief Executive Officer. The New Employment Agreement was approved by the Company’s Compensation Committee and Audit Committee.

Subject to certain conditions under the New Employment Agreement, the Company has agreed to provide Kirk Dove with a prorata portion of his current base salary and any annual bonus amount owed pursuant to the Prior Employment Agreement for the remainder of 2020; thereafter, the Company will pay Kirk Dove an annual salary of $200,000 until the Termination Date. In addition, the New Employment Agreement provides for an automobile allowance, reimbursement of reasonable expenses, and participation in the Company’s health insurance benefits.

Pursuant to its terms, either Kirk Dove or the Company may terminate the New Employment Agreement upon a material breach by the other party that is not cured within thirty days. The New Employment Agreement contains standard covenants prohibiting the solicitation of employees and customers or suppliers of the Company during the two-year period following the Termination Date and competition against the Company prior to the Termination Date. In addition, Kirk Dove will be subject to a lockup restriction and the Company’s insider trading policy until the Termination Date.

Amendment to Stock Option Award

In connection with Mr. Kirk Dove’s resignation, the Company and Kirk Dove also entered into an amendment (the “Option Amendment”) to the Stock Option Award granted to Kirk Dove on December 9, 2016 (the “Option”). The Option Amendment provides for the continued vesting of the unvested portion of shares granted under the Option, which will become fully vested on December 9, 2020.

The foregoing descriptions of the New Employment Agreement and the Option Amendment are qualified in their entirety by reference to the full text of the New Employment Agreement and the Option Amendment, copies of which are filed herewith as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K, respectively, and are incorporated herein by reference.

Item 1.02 Termination of a Material Definitive Agreement.

See Item 1.01 of this Current Report on Form 8-K, which is incorporated herein by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

See Item 1.01 of this Current Report on Form 8-K, which is incorporated herein by reference.

On the Effective Date, the Board of Directors of the Company (the “Board”), with the approval of the Company’s Audit Committee, made the following executive officer appointments:

• Ross Dove (67), Chief Executive Officer of the Company, was appointed as President and Chief Executive Officer to fill the vacancy created by Kirk Dove’s resignation. Ross Dove has served as the Company’s Chief Executive Officer since May 2015. Ross Dove is the brother of Kirk Dove and the uncle of Nick Dove.

• Nick Dove (30) was appointed as President, Industrial Assets Division of the Company. Nick Dove previously served as Executive Vice President of Sales of Heritage Global Partners since August 2017. From July 2012 to July 2017, Nick Dove served as one of Heritage Global Partners’ Director of Sales. Nick Dove is the son of Kirk Dove and nephew of Ross Dove.

• David Ludwig (63) was appointed as President, Financial Assets Division of the Company. Mr. Ludwig previously served as President of National Loan Exchange, Inc. (“NLEX”), a wholly owned subsidiary of the Company, and has served in such capacity since the Company acquired NLEX in 2014. There are no family relationships between Mr. Ludwig and any other director or executive officer of the Company. As part of the operations of NLEX, the Company leases office space in Edwardsville, IL that is owned by Mr. Ludwig. The total amount paid for the lease in the six months ended June 30, 2020 and the year ended December 31, 2019 was $55,000and $110,000, respectively, which was paid in its entirety directly to Mr. Ludwig.

On September 18, 2020, Morris Perlis notified the Company of his refusal to stand for re-election to the Board at the 2021 annual

meeting of shareholders (“2021 Annual Meeting”), and his term of service will expire on the dateof such meeting. Mr. Perlis’s decision not to stand for re-election is not the result of any disagreement with the Company on any matter relating to its operations, policies or practices. Pursuant to the Company’s Amended and Restated Articles of Incorporation and Bylaws as amended, the Board plans to engage in a search process and nominate a replacement candidate to the Board for election at the 2021 Annual Meeting.

Item 7.01 Regulation FD Disclosure.

On September 21, 2020, the Company issued a press release announcing the changes to management discussed in Item 5.02 of this Current Report on Form 8-K. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

No.	Description
10.1	Employment Agreement, dated September 17, 2020, by and between Global Heritage Inc. and Kirk Dove
10.2	Amendment to Stock Option Award, dated September 20, 2020, by and between Global Heritage Inc. and Kirk Dove
99.1	Press Release, dated September 21, 2020

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: September 21, 2020	HERITAGE GLOBAL INC.
	(Registrant)
	By:	/s/ Scott A. West
		Scott A. West
		Chief Financial Officer
		(principal financial officer)

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is made and entered into as of September 17, 2020 (“Effective Date”) by and between Heritage Global Inc., a Florida corporation (the “Company”), and Kirk Dove (“Employee”). Company and Employee are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

Employee is employed by Company pursuant to an Employment Agreement dated February 29, 2012 (the “Prior Employment Agreement”).  The Parties desire to replace the Prior Employment Agreement with this Agreement.

Intending to be legally bound, the Parties agree as follows:

SECTION 1.
DUTIES AND RESPONSIBILITIES

1.1Job Duties. Employee will provide guidance and advice with respect to Company’s strategy and operations and support for Company’s operations as reasonably specified by Company’s CEO from time to time, including maintaining key contacts for the benefit of Company. Employee will not be required to perform services at any particular location except as the Parties may agree from time to time.  Effective as of the Effective Date, Employee hereby resigns each position he may hold as a director or officer of Company and any of its affiliates.  

1.2Cooperation.  Employee will cooperate with Company with respect to any claim against Company or its affiliates, and make himself available as a witness in any action, investigation, or other proceeding before any court, government agency, arbitrator, or mediator in which he may be called to appear by Company regarding any business, property, or operations of Company or any of its affiliates.

1.3Compliance with Law and Code of Conduct. Employee must at all times comply with (i) all applicable law, including without limitation all laws regulating the purchase and sale of Company securities, and (ii) Company’s Code of Conduct (the “Code of Conduct”). Without limiting the foregoing, Employee must at all times comply with the provisions in the Code of Conduct related to (i) the purchase or sale of Company securities with knowledge of nonpublic material information, (ii) prohibitions on trading in Company securities during any quiet period, and (iii) Section 16 reporting obligations and SEC Rule 144 compliance, to the extent that such requirements apply to Employee under applicable law or as a result of Employee’s role with the Company (e.g. participation on Company’s investment committee).

1.4 Lockup.  If an underwriter or similar third-party requires any director or officer of director of Company to enter into an agreement restricting such director or officer’s ability to buy or sell securities of Company in connection with such offering, Employee will enter into the same agreement immediately upon request by Company.

SECTION 2.
COMPENSATION

2.1Compensation.

2.1.1Pay.  During the Term, Company will pay Employee each of the following amounts:

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a)For the remainder of 2020: (i) a prorata portion of the base salary that Company currently pays to Employee under the Prior Employment Agreement, and (ii) an amount equal to any annual bonus for 2020 that would otherwisehave been paid under the Prior Employment Agreement but that has not yet been paid to Employee.

b)Commencing on January 1, 2021, annual compensation equal to $200,000 per year, payable in equal monthly installments in arrears.

c)An automobile allowance equal to $1,169 per month, payable in arrears.

2.1.2Insurance.  During the Term, Executive will be entitled to participate in Company’s health insurance benefits subject to and in accordance with their terms.

2.1.3 Withholding. All payments to Employee under this Agreement will be reduced by any withholding required by applicable law.

2.2Expenses. Company will reimburse Employee for all reasonable expenses of types authorized by Company and incurred by Employee in performing consulting services under this Agreement. Employee will comply with such approval and reporting requirements as Company may establish from time to time.

2.4 No Additional Compensation.  Except as expressly provided in this Agreement, Employee is not entitled to any compensation, bonus, severance, or benefits from Company or its affiliates or any professional employer organization used by Company, under the Prior Employment Agreement or otherwise.

SECTION 3.
TERM AND TERMINATION

3.1Term. The term of this Agreement begins on the Effective Date and ends on December 31, 2024 (the “Term”).  Either Party may terminate this Agreement early if the other Party materially breaches any provision of this Agreement and the breach is not cured by the breaching Party within thirty (30) days after the breaching Party's receipt of written notice of such breach (the earliest date that the Term expires or is terminated is the “Termination Date”).  This sentence and Sections 1.2, 1.3, 1.4, 4 and 5 will survive expiration or termination of this Agreement.

SECTION 4.
RESTRICTIVE COVENANTS AND CONFIDENTIALITY

4.1Restrictions.  

4.1.1Noncompete.  In order to protect Company from unfair competition and to prevent the unauthorized disclosure or use of Company’s Proprietary Information (defined below), during the Term Employee shall not, within the Restricted Territory (defined below), directly or indirectly engage in or be associated with any Competitive Activity (defined below). Employee will be deemed to be “associated with a Competitive Activity” if he becomes involved as an owner, employee, employer, consultant, principal, officer, director, independent contractor, agent, partner, advisor or in any other capacity, with or without compensation, calling for the rendition of personal services with or for any third-party that is engaged in a Competitive Activity and his involvement relates to a significant extent to the Competitive Activity of such third-party; provided, however, that Employee will not be prohibited from passive ownership of less than five percent (5%) of any publicly traded corporation that is in competition with Company. “Competitive

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Activity” means (i) engaging in the planning and execution of commercial auctions, (ii) services and consultations related to commercial asset valuation, (iii) engaging any other services being offered by Companyon the date the Term ends. “Restricted Territory” means: (i)each of the United States and Canada, and (ii) anywhere else in the world that Employee has conducted or promoted the business of Company or any of its affiliates prior to the end of the Term. In the alternative, and only if the above territory is deemed by a court of competent jurisdiction to be unreasonable or otherwise invalid orunenforceable, then the Restricted Territory means New York State, California, and each other state and province in which Company or its affiliates conducted business or in which Employee maintained an office or otherwise provided services to Companyor any of its affiliates during the Term.

4.1.2Nonsolicit.  In order to protect Company from unfair competition and to prevent the unauthorized disclosure or use of Company’s Proprietary Information, during the Term Employee shall not, directly or indirectly, for his own account or a third-party: (i) employ as an employee, engage as an independent contractor, or otherwise retain or solicit or seek to so employ, engage, retain or solicit any person who, during any portion of the two (2) years prior to the last day of the Term was, directly or indirectly, employed as an employee, engaged as an independent contractor or otherwise retained by Company or any affiliate of Company; (ii) induce any person (except for individuals considered to be clerical or secretarial staff) to leave his or her employment with Company or any of its affiliates, terminate an independent contractor relationship with Company or any of its affiliates, or terminate or reduce any contractual relationship with Company or any of its affiliates; or (iii) directly or indirectly induce or influence any customer, supplier, or other person that has a business relationship with Company or any of its affiliates to discontinue or reduce the extent of such relationship.

4.2Confidentiality.

4.2.1Protection of Proprietary Information.  Employee acknowledges that Employee has had access to, and will continue to have access to, Proprietary Information (defined below) of Company. During the Term and at all times thereafter, Employee will hold in strictest confidence and will not use or disclose any of Company’s Proprietary Information, except as otherwise required in connection with Employee’s work for Company or as otherwise required by law or court order or as permitted in writing by a duly authorized officer of Company. “Proprietary Information” will include without limitation all: trade secrets, ideas, business plans or models (whether for existing, new, or developing businesses), financial information, employee data, operating data, customer lists, prospective customer lists (to the extent not readily available to the public), vendor or supplier lists, pricing and cost information, marketing information, product information, research information, and Company designs and techniques, and all information of any third-party that Company is obligated to keep confidential, in each case whether communicated orally or in documentary or other tangible form. Employee acknowledges that Company has invested considerable amounts of time and money in attaining and developing all of the information described above, and any unauthorized disclosure or release of such Proprietary Information in any form would irreparably harm Company.

4.2.2Return of Proprietary Information.  Promptly following the Termination Date, Employee will return to Company all Proprietary Information of Company.  Employee will not to keep any copy of any Proprietary Information of Company in any form following the Termination Date.

SECTION 5.
GENERAL PROVISIONS

5.1Governing Law. This Agreement will be governed by and construed and enforced in accordance with the laws of the State of California, without regard to its conflict of laws principles.

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5.2Jurisdiction Exclusive venue for any action arising out of or related to this Agreement will be in state or federal court located in the County of Los Angeles, California, and each party consents to the jurisdiction of such courts and waives any defense based on lack of personal jurisdiction or inconvenient forum.

5.3Enforcement/Remedies/Attorney’s Fees.  The Parties agree that money damages are not an adequate remedy for any breach of Sections 1.3, 1.4 or 4. In the event of a breach or threatened breach of this Agreement, in addition to any other remedy available to Company, Company is entitled to specific performance and/or injunctive to enforce or prevent any violation of Section 1.3, 1.4 or 4, without posting a bond or other security.

5.4Severability. The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision. The Parties hereto further agree that any such invalid or unenforceable provision will be deemed modified so that it will be enforced to the greatest extent permissible under law, and to the extent that any court or arbitrator of competent jurisdiction determines any restriction herein to be unreasonable in any respect, such court or arbitrator may limit this Agreement to render it reasonable in the light of the circumstances in which it was entered into and specifically enforce this Agreement as limited.

5.5Entire Agreement. This Agreement is the entire agreement of the Parties, replaces the Prior Employment Agreement, and supersedes all prior agreements between them with respect to the subject matter hereof; provided that Section 4 of the Prior Employment Agreement remains in full force and effect.  In the event of a conflict between Section 4 of the Prior Agreement and Section 4 of this Agreement, the provision that is both most protective of Company’s interests and enforceable shall control.

5.6Amendment, Modification or Waiver. No provision of this Agreement may be amended or waived, unless such amendment or waiver is agreed to in writing, signed by Employee and by a duly authorized officer of Company. No waiver by any Party hereto of any breach by another Party hereto of any condition or provision of this Agreement to be performed by such other Party will be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time.

5.7Binding Effect; Assignment. This Agreement will be binding upon and inure to the benefit of the Parties, their successors and their permitted assigns; provided that Employee may not assign his rights or duties hereunder and any such assignment will be null and void.

5.8Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

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The Parties hereby execute this Agreement as of the Effective Date.

HERITAGE GLOBAL INC.

By: /s/ James Sklar

Name:

Title: EVP, General Counsel and Secretary

EMPLOYEE

/s/ Kirk Dove

Kirk Dove

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EX-10.2

Exhibit 10.2

AMENDMENT TO
STOCK OPTION AWARD

This Amendment (“Amendment”) to the Stock Option Award (“Agreement”) granted on December 9, 2016, by and between Heritage Global Inc. (“Company”) and Kirk Dove (“Optionee”), is made as of September 20, 2020, by and among the Company and the Optionee.  

R E C I T A L S

WHEREAS, the Optionee was granted an option to purchase shares of the Company’s common stock (the “Option”) pursuant to the terms and conditions of the Agreement and the Company’s 2016 Stock Option Plan (“Plan”).

WHEREAS, the Optionee is currently employed by the Company.

WHEREAS, the Company and the Optionee anticipate that the Optionee will transition to providing different services as an employee of the Company (“Status Change”).

WHEREAS, the Company and Optionee desire to amend the Agreement to, among other things, clarify that the Option granted pursuant to the Agreement will continue to vest while the Optionee provides services in his new role with the Company, even if such services are reduced below a full-time level or provided as an independent contractor.

NOW, THEREFORE, in consideration of the Optionee’s continued service, mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.Amendment to Section 2 of the Agreement.  Section 2 of the Agreement is amended and restated in its entirety as follows:

“Vesting:  So long as this option has not expired pursuant to Paragraph 3 hereof or terminated pursuant to Paragraph 4 hereof, this option will become vested and exercisable in four (4) equal annual installments on each of the first four (4) anniversaries of the Date of Grant.”

2.Amendment to Section 4 of the Agreement.  Section 4 of the Agreement is amended and restated in its entirety as follows:

“Change of Status: Except as otherwise provided herein or in Sections 6.3.3 (relating to permanent and total disability), 6.3.4 (relating to death), and 6.3.5 (relating to “cause”) of the Plan, if your Service terminates before the Expiration Date for any reason, the non-vested portion of this option and all rights granted thereby shall immediately terminate, provided, however, except as provided in Paragraph 5, this option may be exercised by you, to the extent otherwise then exercisable, for a period of three (3) months from the date of your termination of Service or until the expiration of the stated term of this option, whichever period is

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shorter. For purposes of this Agreement, “Service” means any relationship with the Company or any successor entity as a full-time or part-time employee, director, contractor or consultant, andshall be deemed to continue without interruption in the event your status changes from full-time employee to less than full-time employee or to consultant or contractor.”

3.Amendment to Section 5 of the Agreement.  Section 5 of the Agreement is amended and restated in its entirety as follows:

“Termination for Cause.  In the event your Service with the Company is terminated for “cause,” your right to exercise this option, whether vested or non-vested, shall immediately terminate upon notice of discharge.”

4.No Other Changes.  All other terms and conditions as set forth in the Plan and the Agreement shall remain the same. This Agreement supersedes any previous agreements or understandings between the Optionee and the Company with respect to the matters hereof.  

4. Governing Law.  This Amendment shall be governed by and construed in accordance with the law of the State of Florida without regard to conflicts of law principles thereof.

5. Counterparts.  This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, each of the parties has executed this Amendment to the Agreementas of the day and year first above written.

COMPANY:OPTIONEE:

Heritage Global Inc.Kirk Dove

By: /s/ James Sklar/s/ Kirk Dove

Name:

Title: EVP, General Counsel and Secretary

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EX-99.1

Exhibit 99.1

HERITAGE GLOBAL INC. ANNOUNCES EXECUTIVE PROMOTIONS

SAN DIEGO, California (September 21, 2020) – Heritage Global Inc. (NASDAQ: HGBL) (“Heritage Global,” “HGI” or “the Company”), an asset services company specializing in financial and industrial assets, today announced key senior executive promotions in the Company’s Financial Assets and Industrial Assets divisions.  

More specifically, the Company is promoting David Ludwig, previously President of Heritage National Loan Exchange (NLEX), and Nick Dove, formerly Executive Vice President at Heritage Global Partners, to newly formed executive positions. Mr. Ludwig is assuming the role of President, Financial Assets Division, and Mr. Dove is being appointed President, Industrial Assets Division.

“I am proud to announce the promotions of David and Nick to lead our Financial Assets and Industrial Assets divisions. Both individuals have meaningfully contributed to the success of Heritage Global over the years, and I’m confident they will continue to help drive the Company forward,” stated Heritage Global Chief Executive Officer Ross Dove.

Separately, effective January 1, 2021, Kirk Dove,Chief Operating Officer and President of Heritage Global, will be transitioning to a new role – Founding Partner and Senior Advisor. Following the transition, Ross Dove will assume the title of President in addition to serving as Chief Executive Officer of Heritage Global, with the executive management team also including Scott West, Chief Financial Officer, James Sklar, Executive Vice President, General Counsel and Secretary, Nick Dove and David Ludwig.

Allan Silber, Chairman of the Board, and Ross Dove, CEO, jointly stated, “Kirk Dove began this journey with us and guided us since our inception in a long and challenging effort to where we have now arrived on the NASDAQ. We give our heartfelt thanks for Kirk’s leadership, counsel and production. We look forward to many more years of his counsel, guidance and business acumen in his new role as we move forward together.”

Finally, Board member Morris Perlis has informed the Company that he will not seek reelection to the board when his term expires in 2021. The Board expects to add a new member at the next Annual Shareholder Meeting.

About Heritage Global Inc. (www.heritageglobalinc.com)

Heritage Global Inc. (NASDAQ: HGBL) is an asset services company specializing in financial and industrial assets. The company provides a full suite of services including market making, acquisitions, dispositions, valuations and secured lending. Heritage Global focuses on identifying, valuing, acquiring and monetizing underlying tangible and intangible assets across twenty-eight global sectors. The company acts as an adviser, as well as a principal, acquiring or brokering turnkey manufacturing facilities, surplus industrial machinery and equipment, industrial inventories, accounts receivable portfolios, intellectual property, and entire business enterprises.

Contact:

Scott West

Chief Financial Officer

Heritage Global Inc.

858/847-0656

Investor Relations

InvestorRelations@hginc.com

858/242-4741