Mgt Capital Investments, Inc 8-K, filed Jun 10, 2020
Mgt Capital Investments, Inc. (MGTI)
About this 8-K
Mgt Capital Investments, Inc filed this 8-K on June 10, 2020.
Items reported
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
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): June 10, 2020
MGT Capital Investments, Inc.
| Delaware | 001-32698 | 13-4148725 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
150 Fayetteville Street, Suite 1110 Raleigh, North Carolina |
27601 | (914) 630-7430 | ||
(Address of principal executive offices) |
(Zip Code) | (Registrant’s telephone number, including area code) |
(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:
| [ ] | 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)) |
Securities registered pursuant to Section 12(b) of the Act:
None
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 8.01. Other Events.
On May 7, 2020, MGT Capital Investments, Inc. (the “Company”) entered into a stipulation of settlement (the “Federal Stipulation”) in connection with a shareholder derivative action filed by shareholder Tyler Tomczak against certain directors and officers of the Company, and naming the Company as a nominal defendant, in the United States District Court for the Southern District of New York, and a shareholder derivative action filed by shareholder Arthur Aviles against certain directors and officers of the Company, and naming the Company as a nominal defendant, in the United States District Court for the District of Delaware (the “Federal Court Derivative Actions”). The consideration for the settlement of the Federal Court Derivative Actions is as follows: (i) the Company shall adopt the revised Director & Officer Questionnaire set out as Exhibit A to the Federal Stipulation; and (ii) defendants Robert B. Ladd, H. Robert Holmes, and Michael Onghai shall collectively pay or cause to be paid $65,000 to the Company. Further the Company shall, subject to court approval, pay a fee and expense award to counsel for the plaintiffs in the Federal Court Derivative Actions of $30,000 and incentive awards of $400 to each of the two plaintiffs in the Federal Court Derivative Actions. A copy of the Federal Stipulation is attached hereto as Exhibit 99.1. A copy of the notice of the proposed settlement of the Federal Court Derivative Actions for current stockholders of the Company is attached hereto as Exhibit 99.2.
The foregoing description of the Federal Stipulation does not purport to be complete and is qualified in its entirety by reference to the Federal Stipulation.
The information contained in this Item 8.01 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The furnishing of the information in this Current Report on Form 8-K is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the information contained in this Item 8.01 of this Current Report on Form 8-K constitutes material investor information that is not otherwise publicly available.
This Item 8.01 of this Current Report on Form 8-K and exhibits may contain types of statements, which are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and which involve risks, uncertainties and reflect the Registrant’s judgment as of the date of this Current Report on Form 8-K. Forward-looking statements may relate to, among other things, operating results and are indicated by words or phrases such as “expects,” “should,” “will,” and similar words or phrases. These statements are subject to inherent uncertainties and risks that could cause actual results to differ materially from those anticipated at the date of this Current Report on Form 8-K. The Company disclaims any obligation to, and will not, update any forward-looking statements to reflect events or circumstances after the date hereof. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information presented within.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Description | |
| 99.1 | Federal Stipulation. | |
| 99.2 | Notice of Proposed Settlement of the Federal Court Derivative Actions. |
Signature
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.
| MGT Capital Investments, Inc. | |||
| Date: | June 10, 2020 | By: | /s/ Robert S. Lowrey |
| Name: | Robert S. Lowrey | ||
| Title: | Chief Financial Officer | ||
Exhibit 99.1
Exhibit 99.2
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
TYLER TOMCZAK, Derivatively on Behalf of MGT CAPITAL INVESTMENTS, INC., |
No. 19-8046 | ||
| Plaintiff, | |||
| v. | |||
| Hon. Victor Marrero | |||
ROBERT B. LADD, ROBERT HOLMES and MICHAEL ONGHAI, |
|||
| Defendants, | |||
| and | |||
| MGT CAPITAL INVESTMENTS, INC., | |||
| Nominal Defendant. | |||
| No. 19-1700 | |||
ARTHUR AVILES, Derivatively on Behalf of MGT CAPITAL INVESTMENTS, INC., |
|||
| Plaintiff, | |||
| v. | |||
ROBERT B. LADD, ROBERT HOLMES and MICHAEL ONGHAI, |
|||
| Defendants, | |||
| and | |||
| MGT CAPITAL INVESTMENTS, INC., a Delaware corporation | |||
| Nominal Defendant. | |||
NOTICE OF PENDENCY AND PROPOSED SETTLEMENT
OF STOCKHOLDER DERIVATIVE ACTIONS
| TO: | ALL CURRENT OWNERS OF MGT CAPITAL INVESTMENTS, INC. (“MGT”) COMMON STOCK (TICKER SYMBOL: MGTI) AS OF JUNE 1, 2020, WHO CONTINUE TO OWN SUCH SHARES THROUGH AUGUST 7, 2020 (“CURRENT MGT STOCKHOLDERS”). |
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT AND DISMISSAL OF STOCKHOLDER DERIVATIVE LITIGATION AND CONTAINS IMPORTANT INFORMATION REGARDING YOUR RIGHTS.
IF THE COURT APPROVES THE SETTLEMENT AND DISMISSAL OF THE DERIVATIVE ACTION, CURRENT MGT STOCKHOLDERS WILL BE FOREVER BARRED FROM CONTESTING THE APPROVAL OF THE PROPOSED SETTLEMENT AND FROM PURSUING RELEASED CLAIMS.
THIS ACTION IS NOT A “CLASS ACTION.” THUS, THERE IS NOT A COMMON FUND UPON WHICH YOU CAN MAKE A CLAIM FOR A MONETARY PAYMENT.
PLEASE TAKE NOTICE that this action is being settled on the terms set forth in a Stipulation and Compromise of Settlement dated May 7, 2020 (the “Stipulation”).1 The purpose of this Notice is to inform you of:
● the existence of the above-captioned derivative actions (“Derivative Actions”),
● the proposed settlement between the Plaintiffs and Defendants reached in the Derivative Actions (the “Settlement”),
● the hearing to be held by the Court to consider the fairness, reasonableness, and adequacy of the Settlement,
● Plaintiffs’ Counsel’s application for fees and expenses, and
● Plaintiffs’ Service Awards.
This Notice describes what steps you may take in relation to the Settlement. This Notice is not an expression of any opinion by the Court about the truth or merits of Plaintiffs’ claims or Defendants’ defenses. This Notice is solely to advise you of the proposed Settlement of the Derivative Actions and of your rights in connection with the proposed Settlement.
Summary
On May 7, 2020, Plaintiffs, MGT, in its capacity as a nominal defendant, defendants Robert B. Ladd, H. Robert Holmes, and Michael Onghai (the “MGT Defendants”), entered into the Stipulation in the above-captioned action filed derivatively on behalf of MGT, in the U.S. District Court for the Southern District of New York (the “Court”) against the MGT Defendants. The Settlement, as documented in the Stipulation, subject to the approval of the Court, is intended by the Settling Parties to fully, finally, and forever compromise, resolve, discharge, and settle the Released Claims and to result in the dismissal of the Derivative Actions with prejudice, upon the terms and subject to the conditions set forth in the Stipulation. The consideration for the Settlement is as follows: (i) the Company shall adopt a certain corporate governance reform, the terms of which are fully set forth in Exhibit A to the Stipulation by MGT and (ii) the MGT Defendants shall collectively pay or cause to be paid $65,000 to the Company. As part of the Settlement, MGT shall pay a Fee and Expense Award to Plaintiffs’ Counsel of $30,000 and Service Awards to two Plaintiffs of $400 each, to be paid in addition to the Fee and Expense Award.
This notice is a summary only and does not describe all of the details of the Stipulation. For full details of the matters discussed in this summary, please see the full Stipulation posted on the Investors page on MGT’s website, mgtci.com/, contact Plaintiffs’ Counsel at the addresses listed below, or inspect the full Stipulation filed with the Clerk of the Court.
1 All capitalized terms used in this notice, unless otherwise defined herein, are defined as set forth in the Stipulation.
What is the Lawsuit About?
The Derivative Actions are brought derivatively on behalf of nominal defendant MGT and allege that the MGT Defendants breached their fiduciary duties by making and/or causing MGT to make false and misleading statements of material fact to the investing public, failing to maintain internal controls at MGT, and engaging in a pump and dump scheme.
Why is there a Settlement?
The Court has not decided in favor of Defendants or Plaintiffs. Instead, both sides agreed to the Settlement to avoid the distraction, costs, and risks of further litigation, and because the Settlement, including the corporate governance reforms adopted by MGT as part of the Settlement, provides a substantial benefit to, and is in the best interests of, MGT and its stockholders.
Defendants deny each and every allegation of wrongdoing or liability arising out of or relating in any way to the events, conduct, statements, acts, or omissions alleged in the Derivative Action. Defendants further assert that, at all times, they acted in good faith, and in a manner they reasonably believed to be and that was in the best interests of MGT and MGT’s stockholders. Defendants assert that they have meritorious defenses to the claims in the Derivative Actions. Nonetheless, Defendants have entered into the Stipulation, without admitting or conceding any fault, liability, wrongdoing, or damage whatsoever, in order to avoid the risks inherent in any lawsuit and the burden and expense of further litigation.
The Settlement Hearing and Your Right to Object to the Settlement
On June 1, 2020, the Court entered an order preliminarily approving the Stipulation and the Settlement contemplated therein (the “Preliminary Approval Order”) and providing for the notice of the Settlement to be made to Current MGT Stockholders. The Preliminary Approval Order further provides that the Court will hold a hearing (the “Settlement Hearing”) in-person, telephonically or by video on August 7, 2020 at 1:45 p.m. before the Honorable Victor Marrero, Courtroom 15B, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, NY 10007, to, among other things: (i) determine whether the proposed Settlement is fair, reasonable and adequate and in the best interests of MGT and its stockholders; (ii) consider any objections to the Settlement submitted in accordance with this Notice; (iii) determine whether a judgment should be entered dismissing all claims in the Derivative Actions with prejudice, and releasing the Released Claims against the Released Persons; (iv) consider the agreed-to Fee and Expense Award to Plaintiffs’ Counsel of attorneys’ fees and the reimbursement of expenses; (v) consider the Service Awards to Plaintiffs, which shall be funded from the Fee and Expense Award; and (vi) consider any other matters that may properly be brought before the Court in connection with the Settlement.
Any Current MGT Stockholder who wishes to object to the fairness, reasonableness, or adequacy of the Settlement as set forth in the Stipulation, or to the proposed Fee and Expense Award to Plaintiffs’ Counsel, may file a written objection with the Court. An objector must at least 14 calendar days prior to the Settlement Hearing: (1) file with the Clerk of the Court and serve upon the below listed counsel a written objection to the Settlement setting forth (a) the nature of the objection, (b) proof of ownership of MGT common stock as of June 1, 2020 and through the date of the Settlement Hearing, including the number of shares of MGT common stock held and the date of purchase, (c) any and all documentation or evidence in support of such objection, and (d) the identities of any cases, by name, court, and docket number, in which the stockholder or his, her, or its attorney has objected to a settlement in the last 3 years; and (2) if intending to appear, and requesting to be heard, at the Settlement Hearing, he, she, or it must, in addition to the requirements of (1) above, file with the Clerk of the Court and serve on the below listed counsel (a) a written notice of his, her, or its intention to appear at the Settlement Hearing, (b) a statement that indicates the basis for such appearance, (c) the identities of any witnesses he, she, or it intends to call at the Settlement Hearing and a statement as to the subjects of their testimony, and (d) any and all evidence that would be presented at the Settlement Hearing. Any objector who does not timely file and serve a notice of intention to appear in accordance with this paragraph shall be foreclosed from raising any objection to the Settlement and shall not be permitted to appear at the Settlement Hearing, except for good cause shown.
IF YOU MAKE A WRITTEN OBJECTION, IT MUST BE ON FILE WITH THE CLERK OF THE COURT NO LATER THAN JULY 17, 2020. The Clerk’s address is:
Clerk of the Court
United States district court, southern district of new york
500 Pearl Street, New York, NY 10007
YOU ALSO MUST DELIVER COPIES OF THE MATERIALS TO PLAINTIFFS’ COUNSEL AND DEFENDANTS’ COUNSEL SO THEY ARE RECEIVED NO LATER THAN JULY 17, 2020. Counsel’s addresses are:
Counsel for Plaintiffs
Thomas James McKenna Gainey & McKenna 501 Fifth Avenue, 19th Floor New York, New York 10017
W. Scott Holleman Bragar Eagel & Squire, P.C. 885 Third Avenue, Suite 3040 New York, NY 10022 |
Counsel for Defendants
Karen S. Kennedy John P. Coffey Kramer Levin Naftalis & Frankel LLP 1177 Avenue of the Americas New York, New York 10036 |
An objector may file an objection on his, her or its own or through an attorney hired at his, her or its own expense. If an objector hires an attorney to represent him, her or it for the purposes of making such objection, the attorney must serve a notice of appearance on the counsel listed above and file such notice with the Court no later than 14 calendar days before the Settlement Hearing. Any Current MGT Stockholder who does not timely file and serve a written objection complying with the above terms shall be deemed to have waived, and shall be foreclosed from raising, any objection to the Settlement, and any untimely objection shall be barred.
Any objector who files and serves a timely, written objection in accordance with the instructions above, may appear at the Settlement Hearing either in person or through counsel retained at the objector’s expense. Objectors need not attend the Settlement Hearing, however, in order to have their objections considered by the Court.
If you are a Current MGT Stockholder and do not take steps to appear in this action and object to the proposed Settlement, you will be bound by the Judgment of the Court and will forever be barred from raising an objection to such settlement in the Derivative Actions and from pursuing any of the Released Claims.
You may obtain further information by contacting counsel for Plaintiffs at: Gainey & McKenna, Attn: Thomas James McKenna, 501 Fifth Avenue, 19th Floor, New York, New York 10017, Telephone: (212) 983-1300, Email: tjmckenna@gme-law.com; or Bragar Eagel & Squire, P.C., Attn: W. Scott Holleman, 855 Third Avenue, Suite 3040, New York, NY 10022, Telephone: (646) 860-9449, Email: holleman@bespc.com. Please Do Not Call the Court or Defendants with Questions About the Settlement.
PLEASE DO NOT TELEPHONE THE COURT, COURT CLERK’S OFFICE, OR ANY REPRESENTATIVE OF MGT REGARDING THIS NOTICE