Item 1.01 Entry into a Material Definitive Agreement.
On December 6, 2022, Shoals Technologies Group, Inc. (the "Company") entered
into an amendment (the "LLCA Amendment") to the Third Amended and Restated
Limited Liability Company Agreement, dated as of January 29, 2021 (as amended or
otherwise modified from time to time, the "LLC Agreement") of Shoals Parent LLC,
a subsidiary of the Company ("Shoals Parent"), by and among Shoals Parent, the
Company and the other members party thereto, including Dean Solon and certain of
his affiliates (the "Solon Group"), pursuant to which the parties agreed to,
among other things, make certain changes to the LLC Agreement upon the Solon
Group's beneficial ownership of common stock falling below 10% of the total
voting power for a specified period of time, including by providing that, upon
the occurrence of such ownership event, the distribution tax rate used to
determine the amount of tax distributions to be made to members of Shoals
Parents will be based on the highest effective income marginal tax rate
applicable to a corporation organized under the laws of the State of Delaware
instead of the highest effective marginal income tax rate applicable to
corporate or individual taxpayers (whichever is higher) that may potentially
apply to any member of Shoals Parent. The foregoing description of the LLCA
Amendment does not purport to be complete and is subject to, and qualified in
its entirety by, the full text of the LLCA Amendment, a copy of which is filed
as Exhibit 10.1 hereto, and is incorporated by reference herein.
Item 1.02 Termination of a Material Definitive Agreement.
As previously announced, on November 29, 2022, the Company entered into an
amendment (the "TRA Amendment") to its Tax Receivable Agreement, dated as of
January 29, 2021 (as amended or otherwise modified from time to time, the "Tax
Receivable Agreement"), pursuant to which the parties thereto agreed to grant
the Company a right to terminate the Tax Receivable Agreement until December 31,
2022 (the "TRA Termination Right") in exchange for a termination consideration
of $58.1 million payable in cash (the "TRA Termination Consideration"). On
November 29, 2022, the Company exercised its TRA Termination Right, and the Tax
Receivable Agreement was terminated on December 6, 2022.
Item 8.01 Other Events.
On December 1, 2022, the Company entered into an Underwriting Agreement (the
"Underwriting Agreement"), by and among the Company, Shoals Parent, the Solon
Group, as selling stockholders (the "Selling Stockholders"), and J.P. Morgan
Securities LLC and Guggenheim Securities, LLC, as representatives of the several
underwriters (the "Underwriters"), relating to the public offering of 2,000,000
shares of Class A common stock by the Company and 24,000,000 shares of Class A
common stock by the Selling Stockholders (collectively, the "Offering"). The
Underwriting Agreement contains customary representations, warranties, covenants
and indemnification obligations of the Company and the Underwriters, as well as
termination and other customary provisions. Pursuant to the Underwriting
Agreement, the Selling Stockholders have granted the Underwriters an
overallotment option (the "Overallotment Option") to purchase up to an
additional 3,900,000 shares of Class A common stock. On December 2, 2022, the
Underwriters exercised in full their Overallotment Option.
The Offering was made pursuant to the Company's automatic shelf registration
statement on Form S-3 (File No. 333-268610) that became effective under the
Securities Act of 1933, as amended (the "Securities Act") when filed with the
SEC on November 30, 2022, and a related prospectus supplement dated December 1,
2022.
The Offering closed on December 6, 2022. The Company intends to use the net
proceeds from the Offering to fund a portion of the TRA Termination
Consideration, with the remainder to be paid with cash on hand. The Company will
not receive any of the proceeds from the sale of Class A common stock by the
Selling Stockholders.
The foregoing summary of the Underwriting Agreement does not purport to be
complete and is subject to, and qualified in its entirety by, the full text of
such agreement, a copy of which is attached as Exhibit 1.1 hereto, and is
incorporated by reference herein.
Kirkland and Ellis LLP has issued an opinion, dated December 6, 2022, regarding
certain legal matters with respect to the Offering, a copy of which is filed as
Exhibit 5.1 hereto.
This Current Report on Form 8-K does not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any sale of
any securities in any state or jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction. Any offers, solicitations or
offers to buy, or any sales of securities will be made in accordance with the
registration requirements of the Securities Act.
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Forward Looking Statements
This Current Report on Form 8-K includes certain statements that are not
historical facts but are forward-looking statements for purposes of the safe
harbor provisions under the United States Private Securities Litigation Reform
Act of 1995. Forward-looking statements generally are accompanied by words such
as "believe," "may," "will," "estimate," "continue," "anticipate," "intend,"
"expect," "should," "would," "plan," "predict," "potential," "seem," "seek,"
"future," "outlook," and similar expressions that predict or indicate future
events or trends or that are not statements of historical matters. These
forward-looking statements include, but are not limited to, statements regarding
Mr. Whitaker's transition and service following such transition, uses of cash,
estimates and forecasts of revenue and other financial and performance metrics
and projections of market opportunity and expectations. These statements are
based on various assumptions and on the current expectations of the Company's
management and are not predictions of actual performance. These forward-looking
statements are provided for illustrative purposes only and are not intended to
serve as, and must not be relied on by any investor as, a guarantee, an
assurance, a prediction or a definitive statement of fact or probability. Actual
events and circumstances are difficult or impossible to predict and will differ
from assumptions. Many actual events and circumstances are beyond the control of
the Company. These forward-looking statements are subject to a number of risks
and uncertainties, including changes to Mr. Whitaker's personal circumstances,
general economic, financial, legal, political and business conditions and
changes in domestic and foreign markets, as well as other risks and
uncertainties described in the Company's most recent Annual Report on Form 10-K
and subsequent filings with the Securities and Exchange Commission. These
forward-looking statements should not be relied upon as representing the
Company's assessments as of any date subsequent to the date of this Current
Report on Form 8-K. Accordingly, undue reliance should not be placed upon the
forward-looking statements.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
1.1 Underwriting Agreement, dated December 1, 2022, by and among Shoals
Technologies Group, Inc., Shoals Parent LLC, the selling stockholders
party thereto and J.P. Morgan Securities LLC and Guggenheim
Securities, LLC, as representatives of the several underwriters.
5.1 Opinion of Kirkland & Ellis LLP, dated December 6, 2022.
10.1 Amendment No. 1 to the Third Amended and Restated Limited Liability
Company Agreement of Shoals Parent LLC, dated December 6, 2022.
23.1 Consent of Kirkland & Ellis LLP (included in Exhibit 5.1).
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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