Rayovac 2011 Annual Report Download - page 144

SPECTRUM BRANDS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(In thousands, except per share amounts)
• 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.
Pursuant to a joinder to the Stockholder Agreement entered into by the Harbinger Parties and HRG, upon
consummation of the Share Exchange, HRG became a party to the Stockholder Agreement, and is subject to all
of the covenants, terms and conditions of the Stockholder Agreement to the same extent as the Harbinger Parties
were bound thereunder prior to giving effect to the Share Exchange.
Certain provisions of the Stockholder Agreement terminate on the date on which the Harbinger Parties or
HRG no longer constitutes a Significant Stockholder (as defined in the Stockholder Agreement). The Stockholder
Agreement terminates when any person (including the Harbinger Parties or HRG) acquires 90% or more of the
outstanding voting securities of SB Holdings.
Also in connection with the Merger, the Harbinger Parties and SB Holdings entered into a registration rights
agreement, dated as of February 9, 2010 (the “SB Holdings Registration Rights Agreement”), pursuant to which
the Harbinger Parties have, among other things and subject to the terms and conditions set forth therein, certain
demand and so-called “piggy back” registration rights with respect to their shares of SB Holdings common stock.
On September 10, 2010, the Harbinger Parties and HRG entered into a joinder to the SB Holdings Registration
Rights Agreement, pursuant to which, effective upon the consummation of the Share Exchange, HRG will
become a party to the SB Holdings Registration Rights Agreement, entitled to the rights and subject to the
obligations of a holder thereunder.
Other Agreements
On August 28, 2009, in connection with Spectrum Brands’ emergence from Chapter 11 reorganization
proceedings, Spectrum Brands entered into a registration rights agreement with the Harbinger Parties, the
Avenue Parties and D.E. Shaw Laminar Portfolios, L.L.C. (“D.E. Shaw”), pursuant to which the Harbinger
Parties, the Avenue Parties and D.E. Shaw have, among other things and subject to the terms and conditions set
forth therein, certain demand and so-called “piggy back” registration rights with respect to their holdings of
Spectrum Brands’ 12% Notes.
In connection with the Merger, Russell Hobbs and Harbinger Master Fund entered into an indemnification
agreement, dated as of February 9, 2010 (the “Indemnification Agreement”), by which Harbinger Master Fund
agreed, among other things and subject to the terms and conditions set forth therein, to guarantee the obligations
of Russell Hobbs to pay (i) a reverse termination fee to Spectrum Brands under the merger agreement and
(ii) monetary damages awarded to Spectrum Brands in connection with any willful and material breach by
Russell Hobbs of the Merger Agreement. The maximum amount payable by Harbinger Master Fund under the
Indemnification Agreement was $50,000 less any amounts paid by Russell Hobbs or the Harbinger Parties, or
any of their respective affiliates as damages under any documents related to the Merger. No such amounts
became due under the Indemnification Agreement. Harbinger Master Fund also agreed to indemnify Russell
Hobbs, SB Holdings and their subsidiaries for out-of-pocket costs and expenses above $3,000 in the aggregate
that become payable after the consummation of the Merger and that relate to the litigation arising out of Russell
Hobbs’ business combination transaction with Applica. In February 2011, the parties to the litigation reached a
full and final settlement of their disputes. Neither the Company, Applica or any other subsidiary of the Company
was required to make any payments in connection with the settlement.
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