Rayovac 2013 Annual Report Download - page 129

SPECTRUM BRANDS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(Amounts in thousands, except per share figures)
(13) Related Party Transactions
Merger Agreement and Exchange Agreement
On June 16, 2010 (the “Closing Date”), SB Holdings completed the merger with Russell Hobbs, Inc.
(“Russell Hobbs”) (the “Merger) pursuant to the Agreement and Plan of Merger, dated as of February 9, 2010, as
amended on March 1, 2010, March 26, 2010 and April 30, 2010, by and among SB Holdings, Russell Hobbs,
Spectrum Brands, Battery Merger Corp., and Grill Merger Corp. (the “Merger Agreement”). As a result of the
Merger, each of Spectrum Brands and Russell Hobbs became a wholly-owned subsidiary of SB Holdings. At the
effective time of the Merger, (i) the outstanding shares of Spectrum Brands common stock were canceled and
converted into the right to receive shares of SB Holdings common stock, and (ii) the outstanding shares of
Russell Hobbs common stock and preferred stock were canceled and converted into the right to receive shares of
SB Holdings common stock.
Pursuant to the terms of the Merger Agreement, on February 9, 2010, Spectrum Brands entered into support
agreements with Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations
Fund, L.P. and Global Opportunities Breakaway Ltd. (together the “Harbinger Parties”) and Avenue International
Master, L.P. and certain of its affiliates (the “Avenue Parties”), in which the Harbinger Parties and the Avenue
Parties agreed to vote their shares of Spectrum Brands common stock acquired before the date of the Merger
Agreement in favor of the Merger and against any alternative proposal that would impede the Merger.
Immediately following the consummation of the Merger, the Harbinger Parties owned approximately 64%
of the outstanding SB Holdings common stock and the stockholders of Spectrum Brands (other than the
Harbinger Parties) owned approximately 36% of the outstanding SB Holdings common stock.
On January 7, 2011, the Harbinger Parties contributed 27,757 shares of SB Holdings common stock to
Harbinger Group Inc. (“HRG”) and received in exchange for such shares an aggregate of 119,910 shares of HRG
common stock (such transaction, the “Share Exchange”), pursuant to a Contribution and Exchange Agreement
(the “Exchange Agreement”). Immediately following the Share Exchange, (i) HRG owned approximately 54.4%
of the outstanding shares of SB Holding’s common stock and the Harbinger Parties owned approximately 12.7%
of the outstanding shares of SB Holdings common stock, and (ii) the Harbinger Parties owned 129,860 shares of
HRG common stock, or approximately 93.3% of the outstanding HRG common stock.
In connection with the Merger, the Harbinger Parties and SB Holdings entered into a stockholder agreement,
dated February 9, 2010 (the “Stockholder Agreement”), which provides for certain protective provisions in favor
of minority stockholders and provides certain rights and imposes certain obligations on the Harbinger Parties,
including:
• for so long as the Harbinger Parties and their affiliates beneficially own 40% or more of the
outstanding voting securities of SB Holdings, the Harbinger Parties and the Company will cooperate to
ensure, to the greatest extent possible, the continuation of the structure of the SB Holdings board of
directors as described in the Stockholder Agreement;
• the Harbinger Parties will not effect any transfer of equity securities of SB Holdings to any person that
would result in such person and its affiliates owning 40% or more of the outstanding voting securities
of SB Holdings, unless specified conditions are met; and
• the Harbinger Parties will be granted certain access and informational rights with respect to SB
Holdings and its subsidiaries.
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