Rayovac 2015 Annual Report Download - page 50

human error, leaks and ruptures, explosions, floods, fires, inclement weather and natural disasters, power loss or
other infrastructure failures, mechanical failure, unscheduled downtime, regulatory requirements, the loss of
certifications, technical difficulties, labor disputes, inability to obtain material, equipment or transportation,
environmental hazards such as remediation, chemical spills, discharges or releases of toxic or hazardous
substances or gases, and other risks. Many of these hazards could cause personal injury and loss of life, sever
damage to, or destruction of, property and equipment and environmental contamination. In addition, the
occurrence of material operation problems at AAG’s facility due to any of these hazards could cause a disruption
in the production of its products. AAG may also encounter difficulties or interruption as a result of the
application of enhanced manufacturing technologies or changes to production lines to improve AAG’s
throughput or to upgrade or repair its production lines. AAG’s insurance policies have coverage in case of
significant damage to its manufacturing facility but may not fully compensate AAG for the cost of replacement
for any such damage and any loss from business interruption. As a result, AAG may not be adequately insured to
cover losses resulting from significant damage to its manufacturing facility. Any damage to its facility or
interruption in manufacturing could result in production delays and delays in meeting contractual obligations
which could have a material adverse effect on AAG’s relationship with its customers and on its results of
operations, financial condition or cash flows in any given period.
Risks Related to the Company’s Common Stock
HRG and its significant stockholders 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 its significant stockholders, 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 certain of its stockholders.
This influence and actual control may have the effect of discouraging offers to acquire the Company
because any such consummation would likely require the consent of HRG and perhaps certain of its stockholders.
HRG may also delay or prevent a change in control of the Company. See “Risks Related to our Business—The
sale or other disposition by HRG 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 the Company would constitute a change of
control under the agreements governing the Company’s debt.”
In addition, because HRG owns more than 50% of the voting power of the Company, the Company is
considered a controlled company under the NYSE listing standards. As such, the NYSE corporate governance
rules requiring that a majority of the Company’s board of directors and the Company’s entire compensation
committee be independent do not apply. As a result, the ability of the Company’s independent directors to
influence its business policies and affairs may be reduced.
If HRG were to sell substantial amounts of the Company’s common stock in the public market, or investors
perceive that these sales could occur, the market price of the Company’s common stock could be adversely
affected. The Company has entered into a registration rights agreement (the “Registration Rights Agreement”)
with HRG, certain of HRG’s stockholders and certain other of our stockholders. If requested properly under the
terms of the Registration Rights Agreement, these stockholders have the right to require the Company to register
all or some of such shares for sale under the Securities Act in certain circumstances, and also have the right to
include those shares in a registration initiated by the Company. If the Company is required to include the shares
of its common stock held by these stockholders pursuant to these registration rights in a registration initiated by
the Company, sales made by such stockholders may adversely affect the price of the Company’s common stock
and ability to raise needed capital. In addition, if these stockholders exercise their demand registration rights and
cause a large number of shares to be registered and sold in the public market or demand that the Company
register its shares on a shelf registration statement, such sales or shelf registration may have an adverse effect on
the market price of the Company’s common stock.
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