with respect to the time for which they severally hold office into three classes, as nearly equal in number as possible.” Specifically, the Letter Agreement contemplated that Leucadia would, unless it determined to appoint its appointee to Class II, appoint one of its designees to Class III of the Board, which would have resulted in a 3-2-4 imbalance among the three classes of the Board and which Plaintiff alleges would have violated the Charter. The complaint seeks, among other things, injunctive relief and an unspecified award of compensatory damages and costs and disbursements.
On July 1, 2014, HRG announced that pursuant to the Letter Agreement, two Leucadia director nominees, Andrew Whittaker and Joseph Steinberg, had been appointed to Class I and Class II of the Board, respectively, resulting in each Board Class consisting of an equal number of directors, thereby mooting Plaintiff’s claim regarding the alleged Charter violation (the “Charter Remediation”).
On December 19, 2014, the parties entered a Stipulation and Agreement of Compromise and Settlement to resolve this action (the “Settlement”), which consisted of (a) an acknowledgment by Leucadia that, as a result of this action, it effectuated the Charter Remediation; (b) an agreement by HRG to make certain amendments to the Company’s Corporate Governance Guidelines; (c) an agreement by HCP LLC to reimburse HRG for the fees and costs paid to outside counsel in connection with negotiating the Letter Agreement and the Acknowledgment, which fees and costs were estimated to be (the “Expense Reimbursement”); (d) a two-year prohibition on Leucadia’s investment bank affiliate, Jefferies Group LLC, representing a third-party buyer in connection with a sale of HRG or substantially all of the assets of HRG unless such representation was approved by the disinterested directors of HRG prior to such representation; and (e) certain supplemental disclosures. The Settlement was subject to, among other things, Court approval.
On June 8, 2015, the Court heard oral argument and entered an order denying final approval of the Settlement. In denying Settlement approval, the Court proposed that, among other things, Plaintiff could voluntarily dismiss its claims and seek the payment of a mootness fee to Plaintiff’s counsel for causing the Charter Remediation and, in the event HCP LLC effectuated the Expense Reimbursement.
On October 8, 2015, HCP, LLC made the Expense Reimbursement.
On January 7, 2016, the Court approved a stipulation under which Plaintiff agreed to dismiss the action. HRG has agreed to pay Plaintiff’s counsel $190,000 in attorneys’ fees and expenses. The Court has not been asked to review, and will pass no judgment on, the payment of a fee or its reasonableness.
Information about our risk factors is contained in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015. We believe that at December 31, 2015, there has been no material change to this information.
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
During the fiscal quarter ended December 31, 2015, HRG did not sell any equity securities that were not registered under the Securities Act of 1933, as amended. On May 29, 2014, the HRG’s board of directors authorized a program to purchase up to $100.0 million of HRG’s shares of common stock. During the fiscal quarter ended December 31, 2015 we did not repurchase any of our common stock. At December 31, 2015, there were $12.3 million of shares that may yet be repurchased under the plans of the program authorized by HRG’s board of directors.
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Item 3. | Defaults upon Senior Securities |
None.
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Item 4. | Mine Safety Disclosures |
Not applicable.
None.
