INTRODUCTORY NOTE.
On October 1, 2018, Tenneco Inc. (the “Company”) completed its previously announced acquisition (the “Transaction”) of Federal-Mogul LLC (“Federal-Mogul”) pursuant to the Membership Interest Purchase Agreement, dated as of April 10, 2018 (the “Purchase Agreement”), by and among the Company, Federal-Mogul, American Entertainment Properties Corp. (“AEP” and, together with certain affiliated entities, the “Sellers”) and Icahn Enterprises L.P. (“IEP”). Following the completion of the Transaction, Federal-Mogul was merged with and into the Company, with the Company continuing as the surviving company.
As consideration for the Transaction, the Company paid the Sellers $800 million in cash and issued an aggregate of 5,651,177 shares of Class A Voting Common Stock, par value $0.01, of the Company (“Class A Common Stock”), and 23,793,669 shares of Class BNon-Voting Common Stock, par value $0.01, of the Company (“Class B Common Stock”).
The foregoing description of the Transaction and the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which is filed as Exhibit 2.1 to the Current Report on Form8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) by the Company on April 10, 2018, and which is incorporated herein by reference.
| ITEM 1.01 | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
Shareholders Agreement
Pursuant to the terms of the Purchase Agreement, on October 1, 2018, the Company, AEP, IEP and Icahn Enterprises Holdings L.P. (“IEH”) entered into the Shareholders Agreement (the “Shareholders Agreement”).
Pursuant to the Shareholders Agreement, prior to the earlier of the datethe Spin-Off (as defined in the Shareholders Agreement) is consummated and the date on which IEP and its affiliates cease to own at least 10% of the outstanding Class A Common Stock and Class B Common Stock, measured as a single class, the board of directors of the Company (the “Board”) will nominate for election the then-serving chief executive officer of IEP (or another designee of IEP, if applicable) at each annual meeting of the Company’s stockholders. Ifthe Spin-Off has not occurred by the date that is 18 months after the closing of the Transaction, IEP must cause its designee to resign from the Board at least 30 days prior to IEP taking certain specified actions with respect to the Company.
The Shareholders Agreement also contains a standstill covenant, which prohibits IEP and its affiliates from taking certain actions until the earlier of the date that is (i) 18 months after the closing of the Transaction, ifthe Spin-Off has not occurred by such date, and (ii) one year after the date on which IEP and its affiliates cease to own at least 5% of the outstanding Class A Common Stock and Class B Common Stock, measured as a single class. Subject to certain exceptions, for a period of 150 days following the closing of the Transaction, AEP and IEH may not, directly or indirectly, sell or otherwise transfer, or make any short sale or otherwise dispose of, more than 10% of the shares of Class A Common Stock and Class B Common Stock, measured as a single class, outstanding immediately after the closing of the Transaction.
Furthermore, until the later of (i) the expiration of the standstill restrictions discussed above and (ii) the time when IEP and its affiliates cease to own at least 10% of the outstanding Class A Common Stock and Class B Common Stock, measured as a single class, IEP and its affiliates may not transfer any shares (a) to certain specified types of investors and (b) in an amount equal to 5% or more of the Class A Common Stock issued and outstanding at the time of such transfer (subject to certain carve outs for transfers to certain passive institutional investors).
For so long as IEP and its affiliates own at least 10% of the outstanding Class A Common Stock and Class B Common Stock, measured as a single class, and the Company proposes to issue any equity securities (other than in an excluded issuance), IEP and its affiliates have certain preemptive rights. The Shareholders Agreement also includes registration rights for IEP.
The foregoing description of the Shareholders Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Shareholders Agreement, which is filed as Exhibit 4.1 to this Current Report on Form8-K and is incorporated herein by reference.
