Rayovac 2013 Annual Report Download - page 40

As a result of the Hardware Acquisition, we may not be able to retain key personnel or recruit additional
qualified personnel, which could materially affect our business and require us to incur substantial
additional costs to recruit replacement personnel.
We are highly dependent on the continuing efforts of our senior management team and other key personnel.
As a result of the Hardware Acquisition, our current and prospective employees could experience uncertainty
about their future roles. This uncertainty may adversely affect our ability to attract and retain key management,
sales, marketing and technical personnel. Any failure to attract and retain key personnel could have a material
adverse effect on our business after consummation of the Hardware Acquisition. In addition, we currently do not
maintain “key person” insurance covering any member of our management team.
General customer uncertainty related to the Hardware Acquisition could harm us.
Our customers may, in response to the consummation of the Hardware Acquisition, delay or defer
purchasing decisions. If our customers delay or defer purchasing decisions, our revenues could materially decline
or any anticipated increases in revenue could be lower than expected.
We only have the right to use certain Stanley Black & Decker trademarks, brand names and logos for a
limited period of time. If we fail to establish in a timely manner a new, independently recognized brand
name with a strong reputation, our revenue and profitability could decline.
In connection with our acquisition of the HHI Business, we received a limited right to use certain Stanley
Black & Decker trademarks, brand names and logos in marketing our products and services for only five years.
Pursuant to a transitional trademark license agreement, Stanley Black & Decker granted us the right to use the
“Stanley” and “Black & Decker” marks and logos, and certain other marks and logos, for up to five years after
the completion of the Hardware Acquisition in connection with certain products and services. When our right to
use the Stanley Black & Decker trademarks, brand names and logos expires, we may not be able to maintain or
enjoy comparable name recognition or status under our new brand. If we are unable to successfully manage the
transition of our business to our new brand, our reputation among our customers could be adversely affected, and
our revenue and profitability could decline.
Risks Related to SB Holdings’ Common Stock
HRG and the Harbinger Parties exercise significant influence over us and their interests in our business
may be different from the interests of our stockholders.
HRG, as our majority stockholder, and Harbinger Capital Partners Fund I, Ltd., Harbinger Capital Partners
Special Situations Fund, L.P. and Global Opportunities Breakaway Ltd. (together the “Harbinger Parties”), as
significant stockholders of HRG, have the ability to influence the outcome of any corporate action by us that
requires stockholder approval, including, but not limited to, the election of directors, approval of merger
transactions and the sale of all or substantially all of our assets. In addition, we are a party to a stockholder
agreement with HRG and the Harbinger Parties.
This influence and actual control may have the effect of discouraging offers to acquire SB Holdings because
any such consummation would likely require the consent of HRG and perhaps HRG and the Harbinger Parties.
HRG and the Harbinger Parties may also delay or prevent a change in control of SB Holdings. See “-Risks Related
to our Business- The sale or other disposition by Harbinger Group Inc., the holder of a majority of the
outstanding shares of our common stock, to non-affiliates of a sufficient amount of the common stock of SB
Holdings would constitute a change of control under the agreements governing Spectrum Brands’ debt.”
In addition, because HRG owns more than 50% of the voting power of SB Holdings, SB Holdings is
considered a controlled company under the NYSE listing standards. As such, the NYSE corporate governance
rules requiring that a majority of SB Holdings’ board of directors and SB Holdings’ entire compensation
committee be independent do not apply. As a result, the ability of SB Holdings’ independent directors to
influence its business policies and affairs may be reduced.
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