Shareholder Agreement
In connection with the issuance of 5,278,921 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”) to Spectrum Brands Holdings, Inc., a Delaware corporation (“Spectrum”) on January 28, 2019 (the “Closing Date”) upon the consummation of the acquisition of the Auto Care Business described under Item 2.01 below (the “Acquisition”), the Company entered into a Shareholder Agreement (the “Shareholder Agreement”) with Spectrum. Spectrum transferred the Shares to a subsidiary which subsidiary became subject to the Shareholder Agreement by executing a joinder thereto. The provisions of the Shareholder Agreement that are applicable to Spectrum also apply to the subsidiary holding the Shares following the transfer by Spectrum.
The Shareholder Agreement containsa 24-month standstill provision beginning on the Closing Date that is applicable to Spectrum, pursuant to which, among other things, subject to certain exceptions contained in the Shareholder Agreement, Spectrum will be prohibited, either acting alone or in concert with others, from supporting or engaging in certain transactions involving the Company or seeking to knowingly or intentionally control or influence management, the board of directors (the “Board”) or policies of the Company with respect to such matters. In addition, for a period of 18 months beginning on the Closing Date, subject to certain limitations and qualifications contained in the Shareholders Agreement, Spectrum will be required to vote in favor of the Board’s director nominees and in accordance with the Board’s recommendations identified on the Company’s proxy or information statement on all other matters at any meeting of the Company’s shareholders.
In addition, pursuant to the Shareholder Agreement, beginning after the 12 month anniversary of the Closing Date, the Company is required, at the request of Spectrum, to use commercially reasonable efforts to file a shelf registration statement covering the resale by Spectrum of the Shares and any additional shares of Common Stock acquired by Spectrum (the “Additional Shares”) in one or more registered offerings. Spectrum will also have certain rights pursuant to the Shareholder Agreement to demand registration of Shares and any Additional Shares in an underwritten takedown under the shelf registration and to participate in certain registered underwritten public offerings by the Company. The Company will be subject to customary obligations regarding the registration of the Shares and the Additional Shares, the maintenance of an active shelf registration statement and the offer and resale of the Shares and any Additional Shares, subject to customary limitations and exceptions, including the Company’s right to defer the registration in certain circumstances and certain cutbacks by the underwriters. The Shareholders Agreement includes customary indemnification provisions in favor of Spectrum and related parties against certain losses and liabilities (including reasonable costs of investigation and legal expenses) arising out of or based upon any filing or other disclosure made by the Company under the securities laws relating to any such registration. The Company will bear the costs of registration, as wellas one-half of any roadshow expenses and the fees of Spectrum’s outside counsel, subject to certain limitations; Spectrum will be responsible for the selling expenses.
Pursuant to the Shareholder Agreement, subject to certain exceptions, Spectrum agreed not to transfer any of the Shares or other equity securities in the Company, or engage in certain hedging transactions from the closing of the Acquisition until the day that is 12 months after the Closing Date and, following such period, subject to certain limitations, Spectrum agreed not to transfer the Shares or other equity securities in the Company to any person or entity who would thereafter beneficially own more than 4.9% of the Company’s outstanding shares of equity securities after giving effect to such transaction. From and after the 18 month anniversary of the Closing Date, the Company has the right to repurchase any or all of the Shares then held by Spectrum or its affiliates for a purchase price per share equal to, as more specifically described in and subject to adjustment as set forth in the Shareholder Agreement, the greater of (a) the volume-weighted average sales price per share for the ten consecutive trading days beginning on the 12th trading day immediately preceding notice of the repurchase from the Company and (b) $65.117, which equals 110% of the Common Stock VWAP, as defined in Item 2.01 below.
A copy of the Shareholder Agreement is filed as Exhibit 10.1 to this Current Report on Form8-K and is incorporated herein by reference. The description above is a summary of such agreement, does not purport to be complete, and is qualified in its entirety by the complete text of such agreement.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
As previously reported in a Current Report on Form8-K filed with the Securities and Exchange Commission (the “SEC”) on November 15, 2018, the Company entered into a definitive Acquisition Agreement (the “Acquisition Agreement”) with Spectrum on November 15, 2018. On January 28, 2019, pursuant to the terms and conditions of the Acquisition Agreement, the Company completed the previously announced acquisition of the global auto care business (the “Auto Care Business”) from Spectrum.
At the closing of the acquisition, following certain adjustments made in accordance with the Acquisition Agreement, the Company paid an estimated cash purchase price of approximately $938.7 million, which estimated cash purchase price is subject to further post-closing adjustments described in the Acquisition Agreement (the “Cash Purchase Price”), and issued to Spectrum 5,278,921 shares of Common Stock (the “Stock Consideration”), as stock consideration. The number of shares of Common Stock constituting the Stock Consideration was determined by dividing $312.5 million by the volume-weighted average sales price per share of the Common Stock for the 10 consecutive trading days immediately preceding the date of the Acquisition Agreement (the “Common Stock VWAP”), as more specifically described in the Acquisition Agreement.
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