| Item 1.01 | Entry into a Material Definitive Agreement. |
On December 6, 2022, Shoals Technologies Group, Inc. (the “Company”) entered into an amendment (the “LLCA Amendment”) to the Third Amended and Restated Limited Liability Company Agreement, dated as of January 29, 2021 (as amended or otherwise modified from time to time, the “LLC Agreement”) of Shoals Parent LLC, a subsidiary of the Company (“Shoals Parent”), by and among Shoals Parent, the Company and the other members party thereto, including Dean Solon and certain of his affiliates (the “Solon Group”), pursuant to which the parties agreed to, among other things, make certain changes to the LLC Agreement upon the Solon Group’s beneficial ownership of common stock falling below 10% of the total voting power for a specified period of time, including by providing that, upon the occurrence of such ownership event, the distribution tax rate used to determine the amount of tax distributions to be made to members of Shoals Parents will be based on the highest effective income marginal tax rate applicable to a corporation organized under the laws of the State of Delaware instead of the highest effective marginal income tax rate applicable to corporate or individual taxpayers (whichever is higher) that may potentially apply to any member of Shoals Parent. The foregoing description of the LLCA Amendment does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the LLCA Amendment, a copy of which is filed as Exhibit 10.1 hereto, and is incorporated by reference herein.
| Item 1.02 | Termination of a Material Definitive Agreement. |
As previously announced, on November 29, 2022, the Company entered into an amendment (the “TRA Amendment”) to its Tax Receivable Agreement, dated as of January 29, 2021 (as amended or otherwise modified from time to time, the “Tax Receivable Agreement”), pursuant to which the parties thereto agreed to grant the Company a right to terminate the Tax Receivable Agreement until December 31, 2022 (the “TRA Termination Right”) in exchange for a termination consideration of $58.1 million payable in cash (the “TRA Termination Consideration”). On November 29, 2022, the Company exercised its TRA Termination Right, and the Tax Receivable Agreement was terminated on December 6, 2022.
On December 1, 2022, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”), by and among the Company, Shoals Parent, the Solon Group, as selling stockholders (the “Selling Stockholders”), and J.P. Morgan Securities LLC and Guggenheim Securities, LLC, as representatives of the several underwriters (the “Underwriters”), relating to the public offering of 2,000,000 shares of Class A common stock by the Company and 24,000,000 shares of Class A common stock by the Selling Stockholders (collectively, the “Offering”). The Underwriting Agreement contains customary representations, warranties, covenants and indemnification obligations of the Company and the Underwriters, as well as termination and other customary provisions. Pursuant to the Underwriting Agreement, the Selling Stockholders have granted the Underwriters an overallotment option (the “Overallotment Option”) to purchase up to an additional 3,900,000 shares of Class A common stock. On December 2, 2022, the Underwriters exercised in full their Overallotment Option.
The Offering was made pursuant to the Company’s automatic shelf registration statement on Form S-3 (File No. 333-268610) that became effective under the Securities Act of 1933, as amended (the “Securities Act”) when filed with the SEC on November 30, 2022, and a related prospectus supplement dated December 1, 2022.
The Offering closed on December 6, 2022. The Company intends to use the net proceeds from the Offering to fund a portion of the TRA Termination Consideration, with the remainder to be paid with cash on hand. The Company will not receive any of the proceeds from the sale of Class A common stock by the Selling Stockholders.
The foregoing summary of the Underwriting Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of such agreement, a copy of which is attached as Exhibit 1.1 hereto, and is incorporated by reference herein.
Kirkland and Ellis LLP has issued an opinion, dated December 6, 2022, regarding certain legal matters with respect to the Offering, a copy of which is filed as Exhibit 5.1 hereto.
This Current Report on Form 8-K does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of any securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the registration requirements of the Securities Act.
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