Rayovac 2006 Annual Report Download - page 70

58 SPECTRUM BRANDS | 2006 ANNUAL REPORT
ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
On February 7, 2005, the Company acquired all of the equity
interests of United pursuant to the Agreement and Plan of
Merger (as amended, the “Merger Agreement”) by and among
the Company, Lindbergh Corporation and United dated as of
January 3, 2005 fi led as an exhibit to the Current Report on
Form 8-K fi led by the Company on January 4, 2005. Pursuant to
the terms of the Merger Agreement, Lindbergh Corporation
merged with and into United, with United continuing as the sur-
viving corporation (the “Merger”). The purchase price for the
acquisition, excluding fees and expenses, consisted of $70 mil-
lion in cash, 13.75 million shares of the Company’s Common
Stock and the assumption of outstanding United indebtedness,
which was $911.5 million as of January 21, 2005. The purchase
price was determined through negotiations between representa-
tives of the Company, who were operating under supervision and
direction of an acquisition committee of the Board of Directors
of the Company, and representatives of United. The acquisition
committee consisted of Messrs. Lupo, Bowlin and Carmichael
and Ms. Thomas and former director Neil P. Defeo.
Certain affi liates of Thomas H. Lee Partners, L.P. were the
majority shareholders of United as of immediately prior to the
consummation of the Company’s acquisition of United, and as a
result of the Company’s acquisition of United, are signifi cant
shareholders of the Company. In addition, two of the Company’s
directors, Messrs. Schoen and Brizius, are members of Thomas
H. Lee Advisors, LLC, which is the general partner of Thomas H.
Lee Partners, L.P., which is the manager of THL Equity Advisors
IV, LLC, which, in turn, is the general partner of each of the
Thomas H. Lee related funds that were shareholders of United
immediately prior to the Merger and now are signifi cant share-
holders of the Company.
Mr. Jones, Chairman of the Board and Chief Executive Offi cer
of the Company, and trusts for his family members, collectively
owned 202,935 shares of United common stock as of immedi-
ately prior to the Merger, which shares were converted into an
aggregate of 36,239 shares of Company Common Stock pursu-
ant to the Merger. Mr. Jones was a member of the Board of
Directors of United from January 20, 1999 to December 31,
2003 and provided consulting services to United under an agree-
ment that was terminated on September 28, 2004. Mr. Shepherd,
a member of the Company’s Board of Directors, is an investor in
Thomas H. Lee Equity Fund IV, L.P., a large shareholder of
United immediately prior to the Merger, and, as a result of the
Merger, currently is a large shareholder of the Company.
In connection with the acquisition of United, the Company
entered into certain agreements with UIC Holdings, L.L.C.
(“Holdings”), the majority stockholder of United as of the date
we entered into the defi nitive agreement to acquire United,
Thomas Lee Partners, L.P. and certain of its affi liates and certain
former stockholders of United. The agreements are described
further below.
On February 7, 2005, the Company entered into a registra-
tion rights agreement (the “Registration Rights Agreement”)
with certain former stockholders of United, including certain
affi liates of Thomas H. Lee Partners, L.P. and an affi liate of Banc
of America Securities LLC, pursuant to which the Company
agreed to prepare and fi le with the SEC, not later than nine
months following the consummation of the acquisition of United
on February 7, 2005, a registration statement to permit the pub-
lic offering and resale under the Securities Act of 1933 on a con-
tinuous basis of shares of Common Stock issued in connection
with its acquisition of United (the “Shelf Registration Statement”).
Pursuant to the Registration Rights Agreement, the Company
also granted to the former stockholders of United certain rights
to require the Company, on not more than three occasions, to
amend the Shelf Registration Statement or prepare and fi le a new
registration statement to permit an underwritten offering of
shares of the Company’s stock received by them in the acquisi-
tion of United as well as certain rights to include those shares in
any registration statement proposed to be fi led by the Company.
On February 7, 2005, the Company entered into a standstill
agreement (the “Standstill Agreement”) with Thomas H. Lee
Equity Fund IV, L.P., THL Equity Advisors IV, LLC, Thomas H.
Lee Partners, L.P. and Thomas H. Lee Advisors, L.L.C. (the
“Restricted Parties”). Pursuant to the Standstill Agreement, the
Restricted Parties are prohibited until February 7, 2010 from
acquiring ownership in excess of 28% of the Company’s out-
standing voting capital stock, on a fully-diluted basis, soliciting
proxies or consents with respect to the Company’s voting capital
stock, soliciting or encouraging third parties to acquire or seek
to acquire the Company, a signifi cant portion of the Company’s
assets or more than 5% of the Company’s outstanding voting cap-
ital stock or joining or participating in a pooling agreement, syn-
dicate, voting trust or other similar arrangement with respect to
the Company’s voting capital stock for the purpose of acquiring,
holding, voting or disposing of such voting capital stock.
2006 Form 10-K Annual Report
Spectrum Brands, Inc.