Item 1.01 Entry Into a Material Definitive Agreement.
IP Cross-License Agreement
On November 30, 2020, immediately upon the completion of the Transactions (the
"Completion"), Coty International and Wella International Operations Switzerland
S.á.r.l. entered into an IP Cross-License Agreement (the "IP Cross-License"),
pursuant to which each party granted to the other a perpetual, irrevocable,
non-exclusive license to certain intellectual property, including certain
specified patents and formulas allocated to each party pursuant to the
Separation Agreement but used in the other party's business. Such licenses are
sublicensable to affiliates and third party service providers, subject to
certain conditions, and in certain cases are subject to specified limitations on
field of use and transferability. The IP Cross-License is not terminable and
will continue in perpetuity, expiring with respect to each item of licensed
intellectual property when no enforceable rights in such intellectual property
remain. The IP Cross-License is assignable by each party in whole or in part to
affiliates and certain successors, but is not otherwise assignable or
transferable without consent of the counterparty.
The foregoing description of the IP Cross-License and the transactions
contemplated thereby, does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the full text of the IP
Cross-License, which is attached as Exhibit 10.2 to this Current Report on Form
8-K and is incorporated herein by reference.
Shareholders' Agreement
On November 30, 2020, immediately upon the Completion, the Company, Coty
International, JVCo, Rainbow Capital, and Purchaser entered into a Shareholders'
Agreement (the "Shareholders' Agreement"), which governs certain rights and
obligations of Coty International and Rainbow Capital as holders of the JVCo
Shares and the affairs of JVCo and its subsidiaries.
A description of the material terms of the Shareholders Agreement has been
previously disclosed under Item 1.01 of the Company's Current Report on Form 8-K
filed with the Securities and Exchange Commission on June 2, 2020 and is
incorporated herein by reference. The foregoing description of the Shareholders'
Agreement and the transactions contemplated thereby, does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
full text of the Shareholders' Agreement, which is attached as Exhibit 10.3 to
this Current Report on Form 8-K and is incorporated herein by reference.
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Item 2.01 Completion of Acquisition or Disposition of Assets.
The information contained in the section above entitled "Introductory Note" is
incorporated herein by reference. In connection with the Sale, and in
consideration for the exchange of all of the outstanding equity interests of
Newco, Purchaser paid the equivalent of approximately $4,122,920,340.71,
consisting of $2,899,696,138.00 in cash and $1,223,224,202.71 in loan notes that
are subsequently contributed for JVCo Shares comprising 11,988,036 ordinary
shares, 372,581,265 A Preference Shares and 655,171,271 B Preference Shares. The
consideration amount was determined pursuant to the terms and conditions of the
Purchase Agreement. Following the Sale, Rainbow Capital held approximately 60%
of the JVCo Shares and the Company indirectly held approximately 40% of the JVCo
Shares.
In addition, KKR Rainbow Aggregator L.P. ("KKR Aggregator") (an affiliate of
funds and/or separately managed accounts advised and/or managed by Kohlberg
Kravis Roberts & Co. L.P. and its affiliates) has in a separate transaction
invested an aggregate of $1 billion directly into Coty through the issuance of
Series B Convertible Preferred Stock, par value $0.01 per share, of the Company
(the "Series B Preferred Stock"). The Series B Preferred Stock conveys to KKR
Aggregator the right to designate two directors to the Company's board of
directors and voting rights on an as-converted basis. Assuming full conversion
of the Series B Preferred Stock and no other changes to the Company's
capitalization (and including the impact of Accrued Dividends (as defined in the
Series B Certificate of Designations), KKR Aggregator would be the second
largest shareholder, with an approximate 17.9% stake.
On November 16, 2020, HFS Holdings S.á r.l. ("HFS"), a private limited liability
company incorporated under the laws of Luxembourg that is beneficially owned by
Peter Harf, a director of the Company, entered into a Purchase and Sale
Agreement with KKR Aggregator and certain of its affiliated investment funds
(the "Preferred Stock Sellers"), pursuant to which HFS agreed to purchase from
the Preferred Stock Sellers, in exchange for an aggregate purchase price of
$150,000,539 ($1,027 per share), 146,057 shares of Series B Preferred Stock that
were issued on July 31, 2020 and all Accrued Dividends thereon the "Series B
Purchase"). The Series B Purchase, which is subject to customary closing
conditions, including the expiration or termination of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, is
expected to close on August 27, 2021.
The foregoing description of the Purchase Agreement and the transactions
contemplated thereby, does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the full text of the Purchase
Agreement, which was attached as Exhibit 2.2 to Coty's Current Report on Form
8-K filed with the Securities and Exchange Commission on November 12, 2020 and
incorporated herein by reference.
The Purchase Agreement has been included to provide investors with information
regarding its terms. It is not intended to provide any other factual information
about Coty, Purchaser, JVCo or Newco. The representations, warranties, covenants
and agreements contained in the Purchase Agreement were made only for purposes
of the Purchase Agreement, as of the specific dates therein, were solely for the
benefit of the parties to the Purchase Agreement and the parties expressly
identified as third-party beneficiaries thereto, as applicable (except as
expressly provided therein), may be subject to limitations agreed upon by the
contracting parties, including being qualified by confidential disclosures made
for the purposes of allocating contractual risk between the parties to the
Purchase Agreement instead of establishing these matters as facts, and may be
subject to standards of materiality applicable to the contracting parties that
differ from those applicable to investors. Investors are not third-party
beneficiaries under the Purchase Agreement and should not rely on the
representations, warranties, covenants and agreements therein or any
descriptions thereof as characterizations of the actual state of facts or
condition of the parties thereto or any of their respective subsidiaries or
affiliates. Moreover, information concerning the subject matter of
representations and warranties may change after the respective dates of the
Purchase Agreement, which subsequent information may or may not be fully
reflected in the parties' public disclosures.
Item 8.01 Other Events.
On December 1, 2020, the Company issued a press release announcing the
completion of the transactions contemplated under the Separation Agreement and
the Purchase Agreement. A copy of the press release is furnished herewith as
Exhibit 99.1 to this Current Report on Form 8-K.
Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the
liabilities under that Section and shall not be deemed to be incorporated by
reference into any filing of the Registrant under the Securities Act of 1933 or
the Exchange Act.
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Item 9.01 Financial Statements and Exhibits.
(b)
The assets and liabilities and the results of operations of the Professional
Beauty Business were reported as discontinued operations in the audited
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2030 and Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 2020.
Accordingly, the Company has not provided pro forma financial statements in this
Item 9.01.
(d) Exhibits.
Exhibit
Number: Description
2.1* Amended and Restated Sale and Purchase Agreement, dated November 11,
2020, by and among Coty Inc., Coty International B.V. and Rainbow UK
Bidco Limited (incorporated by reference to Exhibit 2.2 of Coty Inc.'s
Current Report on Form 8-K, filed with the Securities and Exchange
Commission on November 12, 2020).
10.1* IP Cross-License Agreement, dated as of November 30, 2020, by and
between Coty International B.V. and Wella International Operations
Switzerland S.á.r.l.
10.2* Shareholders' Agreement, dated as of November 30, 2020, by and
between Coty Inc., Coty International B.V., Rainbow Capital Group
Limited, Rainbow JVCo Limited and Rainbow UK Bidco Limited.
99.1 Press Release, dated December 1, 2020.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
* Certain schedules and exhibits have been omitted pursuant to Item 601 of
Regulation S-K and the Company agrees to furnish supplementally to the
Securities and Exchange Commission a copy of any omitted schedules or
exhibits upon request.
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