Delaware
|
5091
|
20-8397425
|
||
(State or other jurisdiction of incorporation
or organization)
|
(Primary Standard Industrial
Classification Code Number)
|
(I.R.S. Employer Identification Number) |
Jennifer Bellah Maguire
Peter W. Wardle
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071
(213)
229-7242
|
Marc D. Jaffe
Stelios G. Saffos
Latham & Watkins LLP
885 Third Avenue New York, New York 10022 (212)
906-1200
|
Large accelerated filer
☐
|
Accelerated filer
☐
|
Non-accelerated filer
☒
|
Smaller reporting company
☐
|
Emerging growth company
☐
|
|
||||||||
Title of Each Class of
Securities to be Registered
|
Amount
to be
Registered(1)
|
Proposed
Maximum Aggregate Offering Price
Per Unit(2)
|
Proposed
Maximum
Aggregate
Offering
Price(1)(2)
|
Amount of
Registration Fee
|
||||
Common Stock, $0.001 par value per share | 33,350,000 | $29.86 | $995,831,000 |
$108,64
6
|
||||
|
||||||||
|
(1) |
Includes 4,350,000 shares of common stock that the underwriters have the option to purchase. See “Underwriting.”
|
(2) |
Estimated solely for the purpose of calculating the registration fee under Rule 457(c) of the Securities Act of 1933, as amended, based on the average of the high and low prices of a share of common stock on The Nasdaq Global Select Market on February 4, 2021, which was $29.86.
|
Per Share | Total | |||||||
Public offering price
|
$ | $ | ||||||
Underwriting discounts and commissions(1)
|
$ | $ | ||||||
Proceeds to the selling stockholders, before expenses
|
$ | $ |
(1) |
See the section titled “Underwriting” for a description of compensation payable to the underwriters and estimated offering expenses.
|
Goldman Sachs & Co. LLC
|
Morgan Stanley
|
BofA Securities
|
Jefferies
|
Nomura
|
Baird
|
Guggenheim Securities
|
Piper Sandler
|
William Blair
|
Telsey Advisory Group
|
Loop Capital Markets
|
Ramirez & Co., Inc.
|
AmeriVet Securities
|
Page
|
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F-1
|
• |
Acquire or reactivate consumers via optimized marketing strategy.
|
• |
Capture outsized share of new pool and spa consumers.
|
• |
Increase loyalty membership penetration and introduce program upgrades.
in-store
and online to convert more of our consumers to loyalty members. In addition, we are in the process of enhancing our loyalty program to offer more value-added features and further drive member engagement. We will explore opportunities to drive interest by selectively offering special incentives and rewards as well as introducing new value-added features. We believe these initiatives will drive higher transaction frequency and basket size, which will result in increased category spend and higher lifetime value with existing consumers.
|
• |
Enhance retention marketing.
|
• |
Expand our product and service offering.
|
• |
If we are unable to achieve comparable sales growth, our profitability and performance could be materially adversely impacted.
|
• |
Past growth may not be indicative of future growth.
|
• |
Loss of key members of management could adversely affect our business.
|
• |
We are subject to legal or other proceedings that could have a material adverse effect on us.
|
• |
Disruptions from disasters and similar events could have a material adverse effect on our business.
|
• |
We face competition by manufacturers, retailers, distributors, and service providers in the residential, professional, and commercial pool and spa care market.
|
• |
The demand for our swimming pool and spa related products and services may be adversely affected by unfavorable economic conditions.
|
• |
The outbreak of
COVID-19
could adversely impact our business and results of operations.
|
• |
The demand for pool chemicals may be affected by consumer attitudes towards products for environmental or safety reasons.
|
• |
Our results of operations may fluctuate from quarter to quarter for many reasons, including seasonality.
|
• |
We are susceptible to adverse weather conditions.
|
• |
If our online systems do not function effectively, our operating results could be adversely affected.
|
• |
Any limitation or restriction to sell on online platforms could harm our profitability.
|
• |
A significant disturbance or breach of our technological infrastructure could adversely affect our financial condition and results of operations.
|
• |
Improper activities by third parties and other events or developments may result in future intrusions into or compromise of our networks, payment card terminals or other payment systems.
|
• |
We may acquire other companies or technologies, which could fail to result in a commercial product and otherwise disrupt our business.
|
• |
Our operating results will be harmed if we are unable to effectively manage and sustain our future growth or scale our operations.
|
• |
Our business includes the packaging and storage of chemicals and an accident related to these chemicals could subject us to liability and increased costs.
|
• |
Product supply disruptions may have an adverse effect on our profitability and operating results.
|
• |
The cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer.
|
• |
The commercial success of our planned or future products is not guaranteed.
|
• |
We may implement a product recall or voluntary market withdrawal, which could significantly increase our costs, damage our reputation, and disrupt our business.
|
• |
If we do not manage product inventory effectively and efficiently, it could adversely affect profitability.
|
• |
If we do not continue to obtain favorable purchase terms with manufacturers, it could adversely affect our operating results.
|
• |
The nature of our business subjects us to compliance with employment, environmental, health, transportation, safety, and other governmental regulations.
|
• |
Product quality, warranty claims or safety concerns could impact our sales and expose us to litigation.
|
• |
If we are unable to adequately protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce or defend our rights.
|
• |
If we infringe on or misappropriate the proprietary rights of others, we may be liable for damages.
|
• |
Our substantial indebtedness could materially adversely affect our financial condition and our ability to operate our business.
|
• |
Our ability to generate sufficient cash depends on numerous factors beyond our control, and we may be unable to generate sufficient cash flow to service our debt obligations.
|
• |
Restrictive covenants in the agreements governing our Credit Facilities may restrict our ability to pursue our business strategies, and failure to comply with these restrictions could result in acceleration of our debt.
|
• |
Incurrence of substantially more debt could further exacerbate the risks associated with our substantial leverage.
|
• |
The phaseout of the London Interbank Offered Rate (LIBOR), or the replacement of LIBOR with a different reference rate, may adversely affect interest rate.
|
• |
Our stock price may be volatile, resulting in substantial losses for investors.
|
• |
Future sales of shares by existing stockholders could cause our stock price to decline.
|
• |
Stockholders’ ability to influence corporate matters may be limited because a small number of stockholders beneficially own a substantial amount of our common stock and continue to have substantial control over us.
|
• |
Transactions engaged in by our principal stockholders, our officers or directors involving our common stock may have an adverse effect on the price of our stock.
|
• |
We do not intend to pay dividends for the foreseeable future.
|
• |
Anti-takeover provisions in our charter and under Delaware law could limit certain stockholder actions.
|
• |
Certain provisions of our fifth amended and restated certificate of incorporation may have the effect of discouraging lawsuits against our directors and officers.
|
• |
We will continue to incur increased costs as a result of being a public company.
|
• |
If we are unable to effectively implement or maintain a system of internal control over financial reporting, we may not be able to accurately or timely report our financial results.
|
• |
We were previously a “controlled company” within the meaning of the corporate governance standards of Nasdaq, and, as a result, you may not have the same protections afforded to stockholders of other companies during the transition period afforded to us by the rules of Nasdaq.
|
Issuer
|
Leslie’s, Inc. | |
Common stock offered by the selling stockholders
|
29,000,000 shares (or 33,350,000 shares if the underwriters exercise in full their option to purchase additional shares).
|
|
Option to purchase additional shares
|
The selling stockholders have granted the underwriters a 30-day option to purchase up to 4,350,000 additional shares of our common stock from the selling stockholders at the public offering price. | |
Common stock to be outstanding immediately after the offering
|
186,873,341 shares.
|
|
Use of proceeds
|
The selling stockholders will receive all net proceeds from the sale of the shares of common stock to be sold in this offering, and we will not receive any of these proceeds. See the sections entitled “Use of Proceeds,” “Principal and Selling Stockholders” and “Underwriting.” | |
Nasdaq Trading Symbol
|
“LESL” |
• |
no vesting of the restricted stock units described below; and
|
• |
no exercise by the underwriters of their option to purchase additional shares of common stock.
|
• |
8,146,795 shares of common stock reserved for future issuance under our 2020 Omnibus Incentive Plan;
|
• |
5,690,649 shares of common stock issuable upon the settlement of restricted stock units outstanding as of February 7, 2021; and
|
• |
4,589,412 shares of common stock issuable upon the exercise of stock options outstanding as of February 7, 2021 under our 2020 Omnibus Incentive Plan, at a weighted average exercise price of $17.03 per share.
|
(dollars in thousands)
|
||||||||||||||||||||
Three Months Ended
|
Fiscal Year Ended
|
|||||||||||||||||||
January 2,
2021
|
December 28,
2019 |
October 3,
2020(1) |
September 28,
2019 |
September 29,
2018 |
||||||||||||||||
Statement of operations data:
|
||||||||||||||||||||
Sales
|
$ | 145,006 | $ | 122,978 | $ | 1,112,229 | $ | 928,203 | $ | 892,600 | ||||||||||
Cost of merchandise and services sold
|
93,291 | 81,900 | 651,516 | 548,463 | 535,464 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross profit
|
51,715 | 41,078 | 460,713 | 379,740 | 357,136 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Selling, general and administrative expenses
|
77,489 | 59,721 | 314,338 | 258,152 | 241,669 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (loss)
|
(25,774 | ) | (18,643 | ) | 146,375 | 121,588 | 115,467 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Other expense:
|
||||||||||||||||||||
Interest expense
|
11,516 | 22,417 | 84,098 | 98,578 | 91,656 | |||||||||||||||
Loss on debt extinguishment
|
7,281 | — | — | — | — | |||||||||||||||
Other expenses, net
|
— | 137 | 1,089 | 7,453 | 1,759 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total other expense
|
18,797 | 22,554 | 85,187 | 106,031 | 93,415 | |||||||||||||||
Income (loss) before taxes
|
(44,571 | ) | (41,197 | ) | 61,188 | 15,557 | 22,052 | |||||||||||||
Income tax benefit (expense)
|
(14,314 | ) | (15,010 | ) | 2,627 | 14,855 | 4,926 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss)
|
$ | (30,257 | ) | $ | (26,187 | ) | $ | 58,561 | $ | 702 | $ | 17,126 | ||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance sheet data:
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 104,077 | $ | 1,938 | $ | 157,072 | $ | 90,899 | $ | 77,569 | ||||||||||
Total current assets
|
355,627 | 242,926 | 372,133 | 282,089 | 255,332 | |||||||||||||||
Total assets
|
747,108 | 651,286 | 746,438 | 479,721 | 453,160 | |||||||||||||||
Total current liabilities
|
192,871 | 198,489 | 258,196 | 165,522 | 137,165 | |||||||||||||||
Total liabilities
|
1,133,518 | 1,564,221 | 1,573,437 | 1,367,078 | 1,342,109 | |||||||||||||||
Total stockholders’ deficit
|
(386,410 | ) | (912,935 | ) | (826,999 | ) | (887,357 | ) | (888,949 | ) |
(1) |
Consisted of 53 weeks. Please see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for an explanation of our fiscal calendar.
|
(2) |
Please see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors and Measures We Use to Evaluate Our Business.”
|
(3) |
Please see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a reconciliation from our net income to adjusted EBITDA and net income to adjusted net income.
|
• |
acquire new consumers, retain existing consumers, and grow our share of the market;
|
• |
penetrate new markets;
|
• |
provide a relevant omni-channel experience to rapidly evolving consumer expectations through our proprietary mobile app and
e-commerce
websites;
|
• |
generate sufficient cash flows or obtain sufficient financing to support expansion plans and general operating activities;
|
• |
identify suitable acquisition candidates and successfully integrate acquired businesses;
|
• |
maintain favorable supplier arrangements and relationships; and
|
• |
identify and divest assets that do not continue to create value consistent with our objectives.
|
• |
it may be difficult for us to satisfy our obligations, including debt service requirements under our existing or future debt agreements, resulting in possible defaults on and acceleration of such debt;
|
• |
our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, or other general corporate purposes may be impaired;
|
• |
a substantial portion of cash flow from operations may be dedicated to the payment of principal and interest on our debt, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures, future business opportunities, and acquisitions or for other purposes;
|
• |
we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited;
|
• |
our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt and restrictive covenants contained in the agreements governing our existing and any future debt; and
|
• |
our ability to borrow additional funds or to refinance debt may be limited.
|
• |
incur additional debt or issue certain preferred shares;
|
• |
pay dividends on or make distributions in respect of our common stock or make other restricted payments;
|
• |
make certain investments;
|
• |
sell certain assets;
|
• |
create liens;
|
• |
consolidate, merge, sell, or otherwise dispose of our assets;
|
• |
make certain payments in respect of certain debt obligations;
|
• |
enter into certain transactions with our affiliates; and
|
• |
designate our subsidiaries as unrestricted subsidiaries.
|
• |
the likelihood that an active trading market for our common stock will be sustained;
|
• |
the liquidity of any such market;
|
• |
the ability of our stockholders to sell their shares of common stock; or
|
• |
the price that our stockholders may obtain for their common stock.
|
• |
actual or anticipated fluctuations in our results of operations;
|
• |
the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections;
|
• |
failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates or ratings or negative reports by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors;
|
• |
announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations, or capital commitments;
|
• |
changes in operating performance and stock market valuations of other retail companies generally, or those in our industry in particular;
|
• |
price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;
|
• |
changes in our board of directors or management;
|
• |
sales of large blocks of our common stock, including sales by our executive officers or directors;
|
• |
lawsuits threatened or filed against us;
|
• |
changes in laws or regulations applicable to our business;
|
• |
changes in our capital structure, such as future issuances of debt or equity securities;
|
• |
short sales, hedging, and other derivative transactions involving our capital stock;
|
• |
general economic conditions in the United States;
|
• |
other events or factors, including those resulting from war, incidents of terrorism, pandemics, or other public health emergencies or responses to these events; and
|
• |
the other factors described in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”
|
• |
permit the board of directors to establish the number of directors and fill any vacancies and newly created directorships;
|
• |
provide that, from and after the date on which our private equity sponsors cease to beneficially own at least a majority of the outstanding shares of our common stock (the “Trigger Event”), a director may be removed only for cause and only by the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class;
|
• |
provide that, from and after the Trigger Event, the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, is required in order to amend certain provisions of our fifth amended and restated certificate of incorporation regarding the amendment of our fifth amended and restated certificate of incorporation, the composition and authority of our board of directors, the election and removal of directors, limitations of director liability, stockholder meetings, corporate opportunities, choice of forum and the interpretation of our fifth amended and restated certificate of incorporation;
|
• |
authorize the board of directors to amend our bylaws without the assent or vote of shareholders, provided that, from and after the Trigger Event, stockholders may amend the bylaws with the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class;
|
• |
from and after the Trigger Event and with the exception of actions required or permitted to be taken by the holders of preferred stock, prohibit stockholder action by written consent, instead requiring stockholder actions to be taken at a meeting of our stockholders;
|
• |
permit our board of directors, without further action by our stockholders, to fix the rights, preferences, privileges, and restrictions of preferred stock, the rights of which may be greater than the rights of our common stock;
|
• |
restrict the forum for certain litigation against us to Delaware;
|
• |
establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; and
|
• |
provide for a staggered board.
|
• |
faulty human judgment and simple errors, omissions, or mistakes;
|
• |
fraudulent action of an individual or collusion of two or more people;
|
• |
inappropriate management override of procedures; and
|
• |
the possibility that any enhancements to controls and procedures may still not be adequate to assure timely and accurate financial control.
|
• |
a majority of our board of directors consists of “independent directors,” as defined under the rules of such exchange;
|
• |
our board of directors has a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
|
• |
our board of directors has a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
|
• |
our ability to execute on our growth strategies;
|
• |
our ability to maintain favorable relationships with suppliers and manufacturers;
|
• |
competition from mass merchants and specialty retailers;
|
• |
impacts on our business from the sensitivity of our business to weather conditions, changes in the economy, and the housing market;
|
• |
our ability to implement technology initiatives that deliver the anticipated benefits, without disrupting our operations;
|
• |
our ability to attract and retain senior management and other qualified personnel;
|
• |
regulatory changes and development affecting our current and future products;
|
• |
our ability to obtain additional capital to finance operations;
|
• |
our ability to establish and maintain intellectual property protection for our products, as well as our ability to operate our business without infringing the intellectual property rights of others;
|
• |
impacts on our business from the
COVID-19
pandemic; and
|
• |
other risks and uncertainties, including those listed in the section titled “Risk Factors.”
|
Cash and cash equivalents
|
$ | 104,077 | ||
Debt:
|
||||
Term Loan—due on August 16, 2023
|
809,093 | |||
ABL Credit Facility—due on August 13, 2025
|
0 | |||
Stockholder’s equity:
|
||||
Common stock, $0.001 par value, 1,001,000,000 authorized, 186,618,446 shares, issued and outstanding
|
187 | |||
Preferred stock, $0.001 par value, no shares authorized, issued and outstanding, actual, 1,000,000 shares authorized and no shares issued and outstanding, as adjusted
|
0 | |||
Additional paid in capital
|
192,753 | |||
Retained deficit
|
(579,350 | ) | ||
|
|
|||
Total stockholders’ deficit
|
(386,410 | ) | ||
|
|
|||
Total capitalization
|
$ | 422,683 | ||
|
|
Three Months Ended
|
Fiscal Year Ended
|
|||||||||||||||||||
(dollars in thousands, except per
share amounts) |
January 2,
2021 |
December 28,
2019 |
October 3,
2020(1) |
September 28,
2019 |
September 29,
2018 |
|||||||||||||||
Statement of operations data:
|
||||||||||||||||||||
Sales
|
$ | 145,006 | $ | 122,978 | $ | 1,112,229 | $ | 928,203 | $ | 892,600 | ||||||||||
Cost of merchandise and services sold
|
93,291 | 81,900 | 651,516 | 548,463 | 535,464 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross profit
|
51,715 | 41,078 | 460,713 | 379,740 | 357,136 | |||||||||||||||
Selling, general and administrative expenses
|
77,489 | 59,721 | 314,338 | 258,152 | 241,669 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income
|
(25,774 | ) | (18,643 | ) | 146,375 | 121,588 | 115,467 | |||||||||||||
Other expense:
|
||||||||||||||||||||
Interest expense
|
11,516 | 22,417 | 84,098 | 98,578 | 91,656 | |||||||||||||||
Loss on debt extinguishment
|
7,281 | — | — | — | — | |||||||||||||||
Other expenses, net
|
— | 137 | 1,089 | 7,453 | 1,759 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total other expense
|
18,797 | 22,554 | 85,187 | 106,031 | 93,415 | |||||||||||||||
Income (loss) before taxes
|
(44,571 | ) | (41,197 | ) | 61,188 | 15,557 | 22,052 | |||||||||||||
Income tax benefit (expense)
|
(14,314 | ) | (15,010 | ) | 2,627 | 14,855 | 4,926 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss)
|
$ | (30,257 | ) | $ | (26,187 | ) | $ | 58,561 | $ | 702 | $ | 17,126 | ||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Per share data:
|
||||||||||||||||||||
Basic and diluted
|
$ | (0.17 | ) | $ | (0.17 | ) | $ | 0.37 | $ | 0.00 | $ | 0.11 | ||||||||
Balance sheet data:
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 104,077 | $ | 1,938 | $ | 157,072 | $ | 90,899 | $ | 77,569 | ||||||||||
Total current assets
|
355,627 | 242,926 | 372,133 | 282,089 | 255,332 | |||||||||||||||
Total assets
|
747,108 | 651,286 | 746,438 | 479,721 | 453,160 | |||||||||||||||
Total current liabilities
|
192,871 | 198,489 | 258,196 | 165,522 | 137,165 | |||||||||||||||
Total liabilities
|
1,133,518 | 1,564,221 | 1,573,437 | 1,367,078 | 1,342,109 | |||||||||||||||
Total stockholders’ deficit
|
(386,410 | ) | (912,935 | ) | (826,999 | ) | (887,357 | ) | (888,949 | ) |
Three Months Ended
|
Fiscal Year Ended
|
|||||||||||||||||||
(dollars in thousands, except per share
amounts) |
January 2,
2021 |
December 28,
2019 |
October 3,
2020(1) |
September 28,
2019 |
September 29,
2018 |
|||||||||||||||
Cash flow data:
|
||||||||||||||||||||
Net cash provided by (used in) operating activities
|
$ | (119,294 | ) | $ | (81,256 | ) | $ | 103,409 | $ | 57,821 | $ | 43,280 | ||||||||
Net cash used in investing activities
|
(302 | ) | (11,920 | ) | (26,811 | ) | (36,996 | ) | (40,219 | ) | ||||||||||
Net cash provided by (used in) financing activities
|
66,601 | 4,215 | (10,425 | ) | (7,495 | ) | (24,386 | ) | ||||||||||||
Other financial and operations data:
|
||||||||||||||||||||
Number of new locations and acquired
|
— | 6 | 10 | 28 | 38 | |||||||||||||||
Number of locations open at end of period
|
936 | 932 | 936 | 952 | 940 | |||||||||||||||
Comparable sales growth(2)
|
15.7 | % | 3.4 | % | 18.0 | % | 0.4 | % | (1.3 | )% | ||||||||||
Adjusted EBITDA(3)
|
$ | (243 | ) | $ | (9,004 | ) | $ | 182,770 | $ | 160,003 | $ | 151,799 | ||||||||
Adjusted EBITDA as a percentage of sales(3)
|
(0.2 | )% | (7.3 | )% | 16.4 | % | 17.2 | % | 17.0 | % | ||||||||||
Adjusted net income (loss)(3)
|
$ | (10,619 | ) | $ | (24,314 | ) | $ | 64,973 | $ | 12,765 | $ | 22,927 | ||||||||
Adjusted net income (loss) per share
|
(0.06 | ) | (0.16 | ) | $ | 0.42 | $ | 0.08 | $ | 0.15 |
(1) |
Consisted of 53 weeks. Please see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for an explanation of our fiscal calendar.
|
(2) |
Please see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors and Measures We Use to Evaluate Our Business.”
|
(3) |
Please see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors and Measures We Use to Evaluate Our Business” for a reconciliation from our net income to adjusted EBITDA and net income to adjusted net income.
|
Three Months Ended
|
||||||||
January 2,
2021 |
December 28,
2019 |
|||||||
Net loss
|
$ | (30,257 | ) | $ | (26,187 | ) | ||
Interest expense
|
11,516 | 22,417 | ||||||
Income tax benefit
|
(14,314 | ) | (15,010 | ) | ||||
Depreciation and amortization expenses(a)
|
6,595 | 7,276 | ||||||
(Gain) loss on disposition of assets(b)
|
(1,758 | ) | 443 | |||||
Management fee(c)
|
382 | 1,323 | ||||||
Equity-based compensation expense(d)
|
12,160 | 597 | ||||||
Mark-to-market
|
— | 22 | ||||||
Loss on debt extinguishment(f)
|
7,281 | — | ||||||
Other(g)
|
8,152 | 115 | ||||||
|
|
|
|
|||||
Adjusted EBITDA
|
$ | (243 | ) | $ | (9,004 | ) | ||
|
|
|
|
|||||
Three Months Ended
|
||||||||
January 2,
2021 |
December 28,
2019 |
|||||||
Net loss
|
$ | (30,257 | ) | $ | (26,187 | ) | ||
(Gain) loss on disposition of assets(b)
|
(1,758 | ) | 443 | |||||
Management fee(c)
|
382 | 1,323 | ||||||
Equity-based compensation expense(d)
|
12,160 | 597 | ||||||
Mark-to-market
|
— | 22 | ||||||
Loss on debt extinguishment(f)
|
7,281 | — | ||||||
Other(g)
|
8,152 | 115 | ||||||
Tax effects of these adjustments(h)
|
(6,579 | ) | (627 | ) | ||||
|
|
|
|
|||||
Adjusted net loss
|
$ | (10,619 | ) | $ | (24,314 | ) | ||
|
|
|
|
(a) |
Includes depreciation related to our distribution centers and stores, which is included within the cost of merchandise and services sold line item in our condensed consolidated statements of operations.
|
(b) |
Consists of (gain) loss on disposition of assets associated with store closures or the sale of property and equipment.
|
(c) |
Represents amounts paid or accrued in connection with our management services agreement. The management services agreement terminated upon the completion of our IPO in the first quarter of fiscal year 2021.
|
(d) |
Represents
non-cash
charges related to equity-based compensation.
|
(e) |
Includes
non-cash
charges related to the change in fair value of our interest rate cap agreements.
|
(f) |
Represents
non-cash
expense due to the
write-off
of deferred financing costs related to the repayment of our senior unsecured floating rate notes due 2024 during the first quarter of fiscal year 2021.
|
(g) |
Other
non-recurring,
non-cash
or discrete items as determined by management, such as transaction related costs, personnel-related costs, legal expenses, strategic project costs, and miscellaneous costs. The first quarter of fiscal year 2021 includes
one-time
payments of contractual amounts incurred in connection with our IPO.
|
(h) |
Represents the tax effect of the total adjustments based on our actual statutory tax rate for fiscal year 2020 and our estimated statutory tax rate for fiscal year 2021.
|
Fiscal Year Ended
|
||||||||||||
October 3,
2020 |
September 28,
2019 |
September 29,
2018 |
||||||||||
Net income
|
$ | 58,561 | $ | 702 | $ | 17,126 | ||||||
Interest expense
|
84,098 | 98,578 | 91,656 | |||||||||
Income tax expense
|
2,627 | 14,855 | 4,926 | |||||||||
Depreciation and amortization expenses(a)
|
28,925 | 30,424 | 31,611 | |||||||||
Loss on disposition of assets(b)
|
785 | 1,751 | 1,057 | |||||||||
Management fee(c)
|
4,900 | 4,533 | 3,223 | |||||||||
Equity-based compensation expense(d)
|
1,785 | 2,130 | 1,785 | |||||||||
Mark-to-market
|
22 | 4,288 | (3,045 | ) | ||||||||
Other(f)
|
1,067 | 2,742 | 3,460 | |||||||||
|
|
|
|
|
|
|||||||
Adjusted EBITDA
|
$ | 182,770 | $ | 160,003 | $ | 151,799 | ||||||
|
|
|
|
|
|
|||||||
Fiscal Year Ended
|
||||||||||||
October 3,
2020 |
September 28,
2019 |
September 29,
2018 |
||||||||||
Net income
|
$ | 58,561 | $ | 702 | $ | 17,126 | ||||||
Loss on disposition of assets(b)
|
785 | 1,751 | 1,057 | |||||||||
Management fee(c)
|
4,900 | 4,533 | 3,223 | |||||||||
Equity-based compensation expense(d)
|
1,785 | 2,130 | 1,785 | |||||||||
Mark-to-market
|
22 | 4,288 | (3,045 | ) | ||||||||
Other(f)
|
1,067 | 2,742 | 3,460 | |||||||||
Tax effects of these adjustments(g)
|
(2,147 | ) | (3,381 | ) | (206 | ) | ||||||
|
|
|
|
|
|
|||||||
Adjusted net income
|
$ | 64,973 | $ | 12,765 | $ | 23,400 | ||||||
|
|
|
|
|
|
(a) |
Includes depreciation related to our distribution centers and stores, which is included within the cost of merchandise and services sold line item in our consolidated statements of operations.
|
(b) |
Consists of loss on disposition of assets associated with store closures or the sale of property and equipment.
|
(c) |
Represents amounts paid or accrued in connection with our management services agreement. The management services agreement terminated upon the completion of our IPO.
|
(d) |
Represents
non-cash
charges related to equity-based compensation.
|
(e) |
Includes
non-cash
charges related to the change in fair value of our interest rate cap agreements.
|
(f) |
Other
non-recurring,
non-cash
or discrete items as determined by management, such as transaction related costs, personnel-related costs, legal expenses, strategic project costs, and miscellaneous costs.
|
(g) |
Represents the tax effect of the total adjustments based on our statutory tax rate for each fiscal year.
|
• |
Required team members who are experiencing symptoms or have been in close contact with someone who has symptoms or has been exposed to the coronavirus to stay home;
|
• |
Provided additional employee benefits related to
COVID-19;
|
• |
Distributed personal protective equipment and implemented new monitoring protocols, including the installation of contactless temperature scanners in our corporate offices and distribution centers;
|
• |
Enhanced facility cleaning including routine sanitization of high touch surfaces;
|
• |
Implemented social distancing guidelines and capacity restrictions in our locations and reduced operating hours;
|
• |
Encouraged contactless payments and introduced curbside pickup and contact-free service calls;
|
• |
Incurred front line recognition pay for associates in our locations, distribution centers, and service technicians during the third and fourth quarters of 2020;
|
• |
Executed remote workforce plan for associates in our corporate offices; and
|
• |
Enacted mandatory travel restrictions.
|
Three Months Ended
|
||||||||
(dollars in thousands, except per share amounts)
|
January 2,
2021 |
December 28,
2019 |
||||||
Statement of operations data:
|
||||||||
Sales
|
$ | 145,006 | $ | 122,978 | ||||
Cost of merchandise and services sold
|
93,291 | 81,900 | ||||||
|
|
|
|
|||||
Gross profit
|
51,715 | 41,078 | ||||||
Selling, general and administrative expenses
|
77,489 | 59,721 | ||||||
|
|
|
|
|||||
Operating loss
|
(25,774 | ) | (18,643 | ) | ||||
Other expense:
|
||||||||
Interest expense
|
11,516 | 22,417 | ||||||
Loss on debt extinguishment
|
7,281 | — | ||||||
Other expenses, net
|
— | 137 | ||||||
|
|
|
|
|||||
Total other expense
|
18,797 | 22,554 | ||||||
Loss before taxes
|
(44,571 | ) | (41,197 | ) | ||||
Income tax benefit
|
(14,314 | ) | (15,010 | ) | ||||
|
|
|
|
|||||
Net loss
|
$ | (30,257 | ) | $ | (26,187 | ) | ||
|
|
|
|
|||||
Net loss per share
|
||||||||
Basic and diluted
|
$ | (0.17 | ) | $ | (0.17 | ) | ||
Weighted average shares outstanding
|
||||||||
Basic and diluted
|
176,989,755 | 156,500,000 | ||||||
Percentage of Sales(1)
|
(%) | (%) | ||||||
|
|
|
|
|||||
Sales
|
100.0 | 100.0 | ||||||
Cost of merchandise and services sold
|
64.3 | 66.6 | ||||||
|
|
|
|
|||||
Gross Margin
|
35.7 | 33.4 | ||||||
Selling, general and administrative expenses
|
53.4 | 48.6 | ||||||
|
|
|
|
|||||
Operating loss
|
(17.8 | ) | (15.2 | ) | ||||
Interest expense
|
7.9 | 18.2 | ||||||
Loss on debt extinguishment
|
5.0 | — | ||||||
Other expenses, net
|
— | 0.1 | ||||||
Total other expense
|
13.0 | 18.3 | ||||||
Loss before taxes
|
(30.7 | ) | (33.5 | ) | ||||
Income tax benefit
|
(9.9 | ) | (12.2 | ) | ||||
|
|
|
|
|||||
Net loss
|
(20.9 | ) | (21.3 | ) | ||||
|
|
|
|
|||||
Other financial and operations data:
|
||||||||
Number of new and acquired locations
|
— | 6 | ||||||
Number of open at end of period
|
936 | 932 | ||||||
Comparable sales growth(2)
|
15.7 | % | 3.4 | % | ||||
Adjusted EBITDA(3)
|
$ | (243 | ) | $ | (9,004 | ) | ||
Adjusted EBITDA as a percentage of sales(3)
|
(0.2 | )% | (7.3 | )% | ||||
Adjusted net loss(3)
|
$ | (10,619 | ) | $ | (24,314 | ) | ||
Adjusted net loss per share
|
$ | (0.06 | ) | $ | (0.16 | ) |
(1) |
Components may not add to totals due to rounding.
|
(2) |
See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors and Measures We Use to Evaluate Our Business.”
|
(3) |
See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors and Measures We Use to Evaluate Our Business” for a reconciliation from our net income to adjusted EBITDA and net income to adjusted net income.
|
Fiscal Year Ended
|
||||||||||||
(dollars in thousands, except per share amounts)
|
October 3,
2020 |
September 28,
2019 |
September 29,
2018 |
|||||||||
Statement of operations data:
|
||||||||||||
Sales
|
$ | 1,112,229 | $ | 928,203 | $ | 892,600 | ||||||
Cost of merchandise and services sold
|
651,516 | 548,463 | 535,464 | |||||||||
|
|
|
|
|
|
|||||||
Gross profit
|
460,713 | 379,740 | 357,136 | |||||||||
Selling, general and administrative expenses
|
314,338 | 258,152 | 241,669 | |||||||||
|
|
|
|
|
|
|||||||
Operating income
|
146,375 | 121,588 | 115,467 | |||||||||
Other expense:
|
||||||||||||
Interest expense
|
84,098 | 98,578 | 91,656 | |||||||||
Other expenses, net
|
1,089 | 7,453 | 1,759 | |||||||||
|
|
|
|
|
|
|||||||
Total other expense
|
85,187 | 106,031 | 93,415 | |||||||||
Income before taxes
|
61,188 | 15,557 | 22,052 | |||||||||
Income tax expense
|
2,627 | 14,855 | 4,926 | |||||||||
|
|
|
|
|
|
|||||||
Net income
|
$ | 58,561 | $ | 702 | $ | 17,126 | ||||||
|
|
|
|
|
|
|||||||
Percentage of Sales(1)
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|||
|
|
|
|
|
|
|||||||
Sales
|
100.0 | 100.0 | 100.0 | |||||||||
Cost of merchandise and services sold
|
58.6 | 59.1 | 60.0 | |||||||||
|
|
|
|
|
|
|||||||
Gross Margin
|
41.4 | 40.9 | 40.0 | |||||||||
Selling, general and administrative expenses
|
28.3 | 27.8 | 27.1 | |||||||||
|
|
|
|
|
|
|||||||
Operating income
|
13.2 | 13.1 | 12.9 | |||||||||
Interest expense
|
7.6 | 10.6 | 10.3 | |||||||||
Other expenses, net
|
0.1 | 0.8 | 0.1 | |||||||||
Total other expense
|
7.7 | 11.4 | 10.5 | |||||||||
Income before taxes
|
5.5 | 1.7 | 2.5 | |||||||||
Income tax expense
|
0.2 | 1.6 | 0.6 | |||||||||
|
|
|
|
|
|
|||||||
Net income
|
5.3 | 0.1 | 1.9 | |||||||||
|
|
|
|
|
|
|||||||
Other financial and operations data:
|
||||||||||||
Number of new and acquired locations
|
10 | 28 | 38 | |||||||||
Number of locations open at end of period
|
936 | 952 | 940 | |||||||||
Comparable sales growth(2)
|
18.0 | % | 0.4 | % | (1.3 | )% | ||||||
Adjusted EBITDA(3)
|
$ | 182,770 | $ | 160,003 | $ | 151,799 | ||||||
Adjusted EBITDA as a percentage of sales(3)
|
16.4 | % | 17.2 | % | 17.0 | % | ||||||
Adjusted net income(3)
|
$ | 64,973 | $ | 12,765 | $ | 22,927 | ||||||
Adjusted net income per share
|
$ | 0.42 | $ | 0.08 | $ | 0.15 |
(1) |
Components may not add to totals due to rounding.
|
(2) |
See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors and Measures We Use to Evaluate Our Business.”
|
(3) |
See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors and Measures We Use to Evaluate Our Business” for a reconciliation from our net income to adjusted EBITDA and net income to adjusted net income.
|
Three Months Ended
|
||||||||
January 2,
2021 |
December 28,
2019 |
|||||||
Net cash used in operating activities
|
$ | (119,294 | ) | $ | (81,256 | ) | ||
Net cash used in investing activities
|
(302 | ) | (11,920 | ) | ||||
Net cash provided by financing activities
|
66,601 | 4,215 | ||||||
|
|
|
|
|||||
Net decrease in cash and cash equivalents
|
$ | (52,995 | ) | $ | (88,961 | ) | ||
|
|
|
|
Fiscal Year Ended
|
||||||||||||
October 3,
2020 |
September 28,
2019 |
September 29,
2018 |
||||||||||
Net cash provided by operating activities
|
$ | 103,409 | $ | 57,821 | $ | 43,280 | ||||||
Net cash used in investing activities
|
(26,811 | ) | (36,996 | ) | (40,219 | ) | ||||||
Net cash used in financing activities
|
(10,425 | ) | (7,495 | ) | (24,386 | ) | ||||||
|
|
|
|
|
|
|||||||
Net increase (decrease) in cash and cash equivalents
|
$ | 66,173 | $ | 13,330 | $ | (21,325 | ) | |||||
|
|
|
|
|
|
Payments Due By Period
|
||||||||||||||||||||||||||||
(in millions)
|
Total
|
2021
|
2022
|
2023
|
2024
|
2025
|
Thereafter
|
|||||||||||||||||||||
Term Loan
|
$ | 811.1 | $ | 8.3 | $ | 8.3 | $ | 794.5 | $ | — | $ | — | $ | — | ||||||||||||||
Senior Unsecured Notes
|
390.0 | — | — | — | 390.0 | — | — | |||||||||||||||||||||
Purchase commitments(1)
|
340.5 | 112.6 | 70.9 | 67.2 | 50.2 | 33.9 | 5.7 | |||||||||||||||||||||
Operating lease obligations(2)
|
243.2 | 68.0 | 59.1 | 46.9 | 34.0 | 19.9 | 15.3 | |||||||||||||||||||||
Letters of credit
|
11.6 | 11.6 | — | — | — | — | — | |||||||||||||||||||||
ABL Credit Facility(3)
|
4.7 | 0.8 | 0.8 | 0.8 | 0.8 | 0.8 | 0.7 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total
|
$ | 1,801.1 | $ | 201.3 | $ | 139.1 | $ | 909.4 | $ | 475.0 | $ | 54.6 | $ | 21.7 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Purchase obligations include all legally binding contracts and primarily relate to firm commitments for inventory purchases. Purchase orders that are not binding agreements are excluded from the table above.
|
(2) |
Operating lease obligations relate to our stores, office, distribution, and manufacturing facilities. All of these obligations require cash payments to be made by us over varying periods of time. Certain leases are renewable at our option for periods of one to ten years and certain of these arrangements are cancelable on short notice while others require payments upon early termination.
|
(3) |
We are required to pay a commitment fee of 0.375% based on the unused portion of the ABL Credit Facility.
|
• |
Acquire or reactivate consumers via optimized marketing strategy.
|
• |
Capture outsized share of new pool and spa consumers.
|
• |
Increase loyalty membership penetration and introduce program upgrades.
in-store
and online to convert more of our consumers to loyalty members. In addition, we are in the process of enhancing our loyalty program to offer more value-added features and further drive member engagement. We will explore opportunities to drive interest by selectively offering special incentives and rewards as well as introducing new value-added features. We believe these initiatives will drive higher transaction frequency and basket size, which will result in increased category spend and higher lifetime value with existing consumers.
|
• |
Enhance retention marketing.
|
• |
Expand our product and service offering.
|
• |
Residential Pool.
|
• |
Residential Spa.
|
• |
Professional Pool.
|
• |
Commercial Pool.
|
1
|
“Other” includes all sales related to certain acquired businesses where detailed information is not available on a consistent basis. Sales included in “Other” may be associated with other classifications presented in this chart.
|
• |
Residential Locations.
in-store
and
on-site
service offerings including our
in-store
water test. Our residential locations are supported by a team of associates, including pool and spa care experts and experienced service technicians, who are committed to decoding pool care for consumers and performing
on-site
installation and repair services. On average, our residential locations average 3,500 square feet, and have on average 900
in-store
SKUs. Our residential locations have service counters through which we also provide products and services to professional consumers. Our residential locations feature relatively modest upfront investment of approximately $300,000, modest ongoing maintenance capital expenditures, and achieve strong performance levels by year four, including sales of $525,000,
4-wall
EBITDA margins of over 20%, and an attractive
cash-on-cash
|
• |
Digital Network.
e-commerce
websites and marketplace storefronts allows us to seamlessly serve the needs of all digital consumers through curated pricing and targeted merchandising strategies. In the last two years, we have invested in integrating our online and physical platforms and enhancing our ability to serve our consumers by developing omni-channel capabilities including BOPIS, BORIS, SFS, and STS, among other services, which are due to launch in calendar year 2021. In addition to our owned
e-commerce
websites, we are the leading partner for Amazon in the pool category, and accounted for more than 30% of Amazon’s estimated pool and spa care business in the year ended October 3, 2020.
|
• |
PRO Locations.
in-store
SKUs. Our PRO locations also serve residential and commercial consumers.
|
• |
Commercial Service Centers.
in-field
service network offers unparalleled convenience to commercial consumers.
|
• |
Hot Tub Discovery Centers.
®
Hot Tub Discovery Centers and eight MyLife
®
Hot Tub Showrooms in select Leslie’s residential locations, where we feature our proprietary MyLife
®
brand line of spas.
|
• |
Regional and Local Independent Retailers
|
• |
Home Improvement Retailers
|
• |
Mass-Market Retailers
|
• |
Wholesale Distributors
end-consumer,
but rather serves as an intermediary that supplies product to retailers as well as the professional channel.
|
State
|
Number of
Locations
|
|||
Alabama
|
9 | |||
Arizona
|
91 | |||
Arkansas
|
3 | |||
California
|
168 | |||
Connecticut
|
16 | |||
Delaware
|
3 | |||
Florida
|
88 | |||
Georgia
|
34 | |||
Illinois
|
9 | |||
Indiana
|
12 | |||
Iowa
|
1 | |||
Kansas
|
6 | |||
Kentucky
|
6 | |||
Louisiana
|
14 | |||
Maryland
|
9 | |||
Massachusetts
|
11 | |||
Michigan
|
5 | |||
Mississippi
|
4 | |||
Missouri
|
13 | |||
Nebraska
|
2 | |||
Nevada
|
25 | |||
New Hampshire
|
3 | |||
New Jersey
|
32 | |||
New Mexico
|
3 | |||
New York
|
32 | |||
North Carolina
|
13 | |||
Ohio
|
16 | |||
Oklahoma
|
21 | |||
Oregon
|
5 | |||
Pennsylvania
|
33 | |||
Rhode Island
|
1 | |||
South Carolina
|
9 | |||
Tennessee
|
13 | |||
Texas
|
197 | |||
Utah
|
3 | |||
Virginia
|
15 | |||
Washington
|
11 | |||
|
|
|||
Total Locations
|
936 | |||
|
|
Name
|
Age
|
Position(s)
|
||
Steven L. Ortega
|
59 | Chairman | ||
Michael R. Egeck
|
62 | Chief Executive Officer and Director | ||
Steven M. Weddell
|
46 | Executive Vice President, Chief Financial Officer, Secretary and Treasurer | ||
Paula F. Baker
|
53 | Chief Revenue Officer | ||
Yolanda Daniel
|
54 | Director | ||
Jodeen Kozlak
|
57 | Director | ||
Marc Magliacano
|
46 | Director | ||
Matthew Lischick
|
36 | Director | ||
Eric Kufel
|
54 | Director | ||
Susan O’Farrell
|
57 | Director | ||
John Strain
|
52 | Director |
• |
the Class I directors consist of Yolanda Daniel, Michael Egeck and Eric Kufel, and their terms will expire at the first annual meeting of stockholders occurring after the IPO;
|
• |
the Class II directors consist of Jodeen Kozlak, Matthew Lischick and John Strain, and their terms will expire at the second annual meeting of stockholders occurring after the IPO; and
|
• |
the Class III directors consist of Marc Magliacano, Susan O’Farrell and Steven Ortega, and their terms will expire at the third annual meeting of stockholders occurring after the IPO.
|
• |
a majority of our board of directors consists of “independent directors,” as defined under the rules of such exchange;
|
• |
our board of directors has a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
|
• |
our board of directors has a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
|
• |
selecting a qualified firm to serve as the independent registered public accounting firm to audit our financial statements;
|
• |
helping to ensure the independence and performance of the independent registered public accounting firm;
|
• |
reviewing financial statements and discussing the scope and results of the independent audit and quarterly reviews with the independent registered public accounting firm, and reviewing, with management and the independent registered public accounting firm, our interim and
year-end
results of operations and the reports and certifications regarding internal controls over financial reporting and disclosure controls;
|
• |
preparing the audit and risk committee report that the SEC requires to be included in our annual proxy statement;
|
• |
reviewing the adequacy and effectiveness of our disclosure controls and procedures and developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters;
|
• |
reviewing our policies on risk assessment and risk management;
|
• |
reviewing related party transactions; and
|
• |
approving or, as required,
pre-approving,
all audit and all permissible
non-audit
services and fees, other than de minimis
non-audit
services, to be performed by the independent registered public accounting firm.
|
• |
reviewing, approving and determining, or making recommendations to our board of directors regarding the compensation of our executive officers;
|
• |
overseeing our overall compensation philosophy and compensation policies, plans and benefit programs for service providers, including our executive officers;
|
• |
administering our equity compensation plans; and
|
• |
reviewing, approving, and making recommendations to our board of directors regarding incentive compensation and equity compensation plans.
|
• |
identifying, evaluating, and selecting, or making recommendations to our board of directors regarding, nominees for election to our board of directors and its committees;
|
• |
evaluating the performance of our board of directors and of individual directors;
|
• |
considering and making recommendations to our board of directors regarding the composition of our board of directors and its committees;
|
• |
reviewing developments in corporate governance practices;
|
• |
evaluating the adequacy of our corporate governance practices and reporting;
|
• |
reviewing the succession planning for our executive officers; and
|
• |
developing and making recommendations to our board of directors regarding corporate governance guidelines and matters.
|
Name
|
All Other Compensation
|
Total
|
||||||
John Strain
|
$ | 125,000 | (1) | $ | 125,000 |
(1) |
Represents the amount paid to Mr. Strain for his service on the board of managers of our indirect parent entity and the boards of certain of our indirect parent entity’s subsidiaries, including the Company.
|
Position
|
Retainer ($)
|
|
Non-Executive
Chairman
|
125,000 | |
Board Member (other than the
Non-Executive
Chairman)
|
65,000 | |
Audit Committee:
|
||
Chairperson
|
20,000 | |
Committee Member
|
10,000 | |
Compensation Committee:
|
||
Chairperson
|
15,000 | |
Committee Member
|
10,000 | |
Nominating and Corporate Governance Committee:
|
||
Chairperson
|
10,000 | |
Committee Member
|
5,000 |
• |
transaction from which the director derives an improper personal benefit;
|
• |
act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
|
• |
unlawful payment of dividends or redemption of shares; or
|
• |
breach of a director’s duty of loyalty to the corporation or its stockholders.
|
• |
Steven L. Ortega, our former Chief Executive Officer and current Chairman;
|
• |
Michael R. Egeck, our Chief Executive Officer;
|
• |
Steven M. Weddell, our Executive Vice President and Chief Financial Officer; and
|
• |
Paula F. Baker, our Chief Revenue Officer.
|
Named Executive Officer
|
Base Salary
|
|||
Steven L. Ortega
|
$ | 1,000,000 | ||
Michael R. Egeck
|
$ | 1,000,000 | ||
Steven M. Weddell
|
$ | 450,000 | ||
Paula F. Baker
|
$ | 400,000 |
• |
6,038,069 restricted stock units were granted in respect of forfeited unvested incentive units. Certain of these restricted stock units will vest based on time only, in accordance with the relevant vesting schedules of the forfeited unvested incentive units in respect of which they are issued. The restricted stock units issued in respect of the unvested performance-vesting incentive units held by each of Messrs. Ortega and Egeck will vest only upon the achievement of volume weighted average price (“VWAP”) targets established by our compensation committee for each such named executive officer, with such VWAP measured over rolling
20-day
trading periods, with the first such rolling
20-day
trading period commencing on the
six-month
anniversary of the consummation of the IPO.
|
Name
|
Restricted
Stock Units
|
|||
Steven L. Ortega
|
582,632 | |||
Michael R. Egeck
|
2,535,064 | |||
Steven M. Weddell
|
234,587 | |||
Paula F. Baker
|
282,022 |
• |
4,566,765 stock options were granted, which included stock options that will vest based on time and performance, granted to the named executive officers. The time-vesting stock options will vest over a four-year period following the consummation of our IPO, and the performance-vesting stock options will vest 50% on the Company’s achievement of the net income target for fiscal year 2021 and 50% on the Company’s achievement of the net income target for fiscal year 2022. Our named executive officers received the following stock options exercisable at a
|
price of $17 per share in connection with the consummation of the IPO. For each named executive officer, 2/3 of the granted stock options will be subject to time-vesting only and 1/3 of the granted stock options will be subject to performance-vesting only.
|
Name
|
Stock Options
|
|||
Steven L. Ortega
|
147,060 | |||
Michael R. Egeck
|
1,176,472 | |||
Steven M. Weddell
|
735,295 | |||
Paula F. Baker
|
117,648 |
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
All Other
Compensation
($)(1)
|
Total
($)
|
|||||||||||||||||||||
Steven L. Ortega(2)
|
2020 | 1,000,000 | — | — | 700,000 | 78,950 | 1,778,950 | |||||||||||||||||||||
Former Chief Executive Officer and current Chairman
|
||||||||||||||||||||||||||||
Michael R. Egeck
|
2020 | 654,987 | (3) | — | 6,575,632 | (4) | 1,460,916 | 143,235 | 8,834,770 | |||||||||||||||||||
Chief Executive Officer
|
||||||||||||||||||||||||||||
Steven M. Weddell
|
2020 | 450,000 | — | — | 900,000 | 39,665 | 1,389,665 | |||||||||||||||||||||
Executive Vice President
and Chief Financial Officer |
||||||||||||||||||||||||||||
Paula F. Baker(5)
|
2020 | 327,224 | 75,000 | (6) | 633,750 | (7) | 327,224 | 127,342 | 1,490,539 | |||||||||||||||||||
Chief Revenue Officer
|
(1) |
The amounts in this column are detailed in the table immediately below.
|
Company
Contribution
to 401(k)
Plan(a)
|
Personal
Use of
Company
Plane(b)
|
Gross-Up
on
Company
Plane
Use(b)
|
Relocation
Services(c)
|
Cash
Allowance(d)
|
Gross-Up
on Cash
Allowance(e)
|
Reimbursement
of Legal
Expenses(f)
|
Total
|
|||||||||||||||||||||||||
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||||||||||||||||||||
Steven L. Ortega
|
5,600 | 15,680 | 2,218 | — | 31,114 | 24,338 | — | 78,950 | ||||||||||||||||||||||||
Michael R. Egeck
|
— | 88,320 | 9,239 | — | 25,000 | 19,555 | 1,121 | 143,235 | ||||||||||||||||||||||||
Steven M. Weddell
|
5,600 | — | — | — | 19,114 | 14,951 | — | 39,665 | ||||||||||||||||||||||||
Paula F. Baker
|
— | — | — | 127,342 | — | — | — | 127,342 |
(a) |
The amounts in this column represent the Company’s matching 401(k) plan contributions for the relevant named executive officers.
|
(b) |
The amounts in the “Personal Use of Company Plane” column represent the aggregate incremental cost to us of each of Mr. Ortega’s and Mr. Egeck’s personal use of Company-owned aircraft in accordance with the terms of the Company’s corporate aircraft policy, under which Messrs. Ortega, Egeck and Weddell were permitted personal use of the Company-owned aircraft and were entitled to
gross-ups
on related imputed income up to, respectively, 20, 20 and 10 hours of actual flight time per year, which estimated
gross-ups
are reflected in the
“Gross-Up
on Company Plane Use” column. The Company-owned aircraft was sold on October 14, 2020, so we do not anticipate any named executive officers incurring additional costs under the Company’s corporate aircraft policy.
|
(c) |
The amount in this column represents the aggregate amount of relocation benefits paid by the Company to Ms. Baker.
|
(d) |
The amounts in this column represent the annual cash allowances provided to Messrs. Ortega, Egeck and Weddell for expenses related to employment that might be considered partially or wholly personal in nature. We eliminated these cash allowance arrangements in connection with our IPO.
|
(e) |
The amounts in this column represent the estimated
gross-ups
to be paid by the Company on the cash allowances provided to Messrs. Ortega, Egeck and Weddell.
|
(f) |
The amount in this column represents Company reimbursement for legal expenses incurred by Mr. Egeck in connection with the negotiation of his employment agreement with us.
|
(2) |
Mr. Ortega served as our Chief Executive Officer at the beginning of fiscal year 2020 (i.e., from September 29, 2019 to September 30, 2019) and became our Executive Chairman on October 1, 2019, the position in which he served for the remainder of fiscal year 2020. Accordingly, his compensation as reported in the Summary Compensation Table represents his compensation for both roles.
|
(3) |
For fiscal year 2020, Mr. Egeck received a prorated base salary of $654,987.
|
(4) |
Mr. Egeck received an award of profits interest units in our then parent company, and the amount reflects the aggregate grant date fair value of these profits interest units, computed in accordance with FASB ASC Topic 718 and based on the valuation assumptions described in Note 14 to our consolidated financial statements included elsewhere in this prospectus.
|
(5) |
Ms. Baker joined us in November 2019 as our Chief Performance Officer (originally titled Chief People Officer) and transitioned to the role of Chief Revenue Officer in March 2020.
|
(6) |
Ms. Baker received a
sign-on
bonus of $75,000 in connection with commencement of her employment.
|
(7) |
Ms. Baker received an award of profits interest units in our then parent company, and the amount reflects the aggregate grant date fair value of these profits interest units, computed in accordance with FASB ASC Topic 718 and based on the valuation assumptions described in Note 14 to our consolidated financial statements included elsewhere in this prospectus.
|
Estimated Future
Payouts Under Non-
Equity Incentive Plans
(1)
|
||||||||||||||||||||||||
Name
|
Grant
Date
|
Target
($)
|
Maximum
($)
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
(2)
|
Exercise
Price of
Option
Awards
($/Sh)
(3)
|
Grant Date
Fair Value
of Option
Awards
($)
(4)
|
||||||||||||||||||
Steven L. Ortega
|
— | 350,000 | 700,000 | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Michael R. Egeck
|
— | 654,987 | 1,309,974 | — | — | — | ||||||||||||||||||
2/4/2020 | — | — | 3,935,675 | N/A | 6,575,632 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Steven M. Weddell
|
— | 450,000 | 900,000 | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Paula F. Baker
|
— | 163,612 | 327,224 | — | — | — | ||||||||||||||||||
11/21/2019 | — | — | 375,000 | N/A | 633,750 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Represents target and maximum annual cash incentive award opportunities. The target amount is based upon achievement of the EBITDA targets listed in “Annual Cash Bonus Opportunities.” The actual amounts earned by each NEO are set forth in the Summary Compensation Table.
|
(2) |
The equity awards disclosed in this table are incentive units in our then parent company, which are intended to be treated as profits interests for U.S. federal income tax purposes. For more information on the incentive units, see “Long Term Equity Incentives” above. Despite the fact that the incentive units do not require the payment of an exercise price or have an option expiration date, we believe they are economically similar to stock options and, as such, they are reported in this table as “Option” awards. All outstanding incentive units were cancelled in connection with the IPO and restricted stock units were granted in respect of any unvested incentive units, as described under “Long Term Equity Incentives” above.
|
(3) |
These awards are not traditional options, and therefore, there is no exercise price or expiration date associated with them. As the incentive units were intended to be treated as “profits interests” for U.S. federal income tax purposes, each was granted with the distribution threshold necessary to result in a liquidation value of $0.
|
(4) |
The grant date fair value (computed in accordance with FASB ASC Topic 718) is generally the amount that the Company would expense in its financial statements over the award’s service period, but does not include a reduction for forfeitures. This does not represent the actual value that may be realized by an NEO upon settlement of the award.
|
Option Awards(1)
|
||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Number of
Securities
Underlying
Unexercised
Unearned Options
(#)
|
Option Exercise
Price
($)(2)
|
Option Expiration
Date
|
|||||||||||||||
Steven L. Ortega
|
1,414,064 | 249,541 | (3) | 215,288 | (4) | N/A | N/A | |||||||||||||
Michael R. Egeck
|
1,913,176 | 1,147,906 | (5) | 874,594 | (4) | N/A | N/A | |||||||||||||
Steven M. Weddell
|
1,060,548 | 187,156 | (6) | — | N/A | N/A | ||||||||||||||
Paula F. Baker
|
150,000 | 225,000 | (7) | — | N/A | N/A |
(1) |
The equity awards disclosed in this table are incentive units in our then parent company, which were intended to be treated as profits interests for U.S. federal income tax purposes. For more information on the incentive units, see “Long Term Equity Incentives” above. Despite the fact that the incentive units do not require the payment of an exercise price or have an option expiration date, we believe they are economically similar to stock options and, as such, they are reported in this table as “Option” awards. Awards reflected as “Unexercisable” are time-vesting incentive units that have not yet vested. Awards reflected as “Unearned” are performance-vesting incentive units that have not yet vested and will not have vested as of completion of our IPO. Awards reflected as “Exercisable” are incentive units that have vested (or will vest in connection with our IPO) but remain outstanding. All incentive units were cancelled in connection with the consummation of our IPO and were replaced with restricted stock units, as described in “Compensation Discussion and Analysis—Elements of Compensation—Restricted Stock Unit Awards and Stock Options.”
|
(2) |
These awards are not traditional options, and therefore, there is no exercise price or expiration date associated with them. As the incentive units were intended to be treated as “profits interests” for U.S. federal income tax purposes, each was granted with the distribution threshold necessary to result in a liquidation value of $0.
|
(3) |
These incentive units were scheduled to vest on April 21, 2021, so long as Mr. Ortega remained continuously employed by our then parent company or any of its affiliates through that date.
|
(4) |
These incentive units were scheduled to vest upon key investors in our then prior parent company receiving a certain level of returns on their investment in our then parent company and its subsidiaries, including the Company.
|
(5) |
12.5% of these incentive units were scheduled to vest on each
six-month
anniversary of August 4, 2020, in each case, so long as Mr. Egeck remained continuously employed by our then parent company or any of its affiliates through the applicable vesting date.
|
(6) |
These incentive units were scheduled to vest on April 21, 2021, so long as Mr. Weddell remained continuously employed by our then parent company or any of its affiliates through that date.
|
(7) |
25% of these incentive units were scheduled to vest on each anniversary of November 21, 2019, in each case, so long as Ms. Baker remained continuously employed by our then parent company or any of its affiliates through the applicable vesting date.
|
Name
|
Potential
Payment
on Change
of Control
($)
|
Potential
Payment on
Voluntary
Termination or
Termination
for Cause
($)
|
Potential
Payment on
Involuntary
Termination
(Without
Cause) or
Termination
by Executive
for Good
Reason
($)
|
|||||||||
Steven L. Ortega
|
||||||||||||
Cash Severance
|
— | — | 2,704,500 | |||||||||
COBRA Reimbursement
|
— | — | 24,738 | |||||||||
Total
|
— | — | 2,729,238 | |||||||||
|
|
|
|
|
|
|||||||
Michael R. Egeck
|
||||||||||||
Cash Severance
|
— | — | 1,750,000 | |||||||||
COBRA Reimbursement
|
— | — | — | |||||||||
Total
|
— | — | 1,750,000 | |||||||||
Steven M. Weddell
|
||||||||||||
Cash Severance
|
— | — | 1,804,500 | |||||||||
COBRA Reimbursement
|
— | — | 40,212 | |||||||||
Total
|
— | — | 1,844,712 | |||||||||
|
|
|
|
|
|
|||||||
Paula F. Baker
|
||||||||||||
Cash Severance
|
— | — | 200,000 | |||||||||
COBRA Reimbursement
|
— | — | — | |||||||||
Total
|
— | — | 200,000 |
Shares of common
stock beneficially
owned prior to
this offering |
Shares of common stock
beneficially owned after this offering assuming no exercise of underwriters’ option |
Shares of common stock
beneficially owned after this offering assuming full exercise of underwriters’ option |
||||||||||||||||||||||||||
Name of Beneficial Owner
|
Shares
of common stock |
Percentage
of Total Outstanding common stock (%) |
Shares of
common stock offered pursuant to this prospectus |
Shares of
common stock |
Percentage
of total outstanding common stock (%) |
Shares of
common stock |
Percentage
of total outstanding common stock (%) |
|||||||||||||||||||||
5% and Selling Stockholders
(1)
|
||||||||||||||||||||||||||||
Entities Affiliated with L Catterton
(2)
|
|
74,878,363
|
|
|
40.1
|
%
|
|
15,531,014
|
|
|
59,347,349
|
|
|
31.8
|
%
|
|
56,984,873
|
|
|
30.5
|
%
|
|||||||
Explorer Investment Pte. Ltd.
(3)
|
|
45,357,459
|
|
|
24.3
|
%
|
|
9,407,889
|
|
|
35,949,570
|
|
|
19.2
|
%
|
|
34,518,504
|
|
|
18.5
|
%
|
|||||||
Named Executive Officers and Directors
|
||||||||||||||||||||||||||||
Steven L. Ortega
(4)
|
|
3,444,416
|
|
|
1.8
|
%
|
|
554,183
|
|
|
2,890,233
|
|
|
1.5
|
%
|
|
2,805,935
|
|
|
1.5
|
%
|
|||||||
Michael R. Egeck
(4)
|
|
3,189,283
|
|
|
1.7
|
%
|
|
661,510
|
|
|
2,527,773
|
|
|
1.4
|
%
|
|
2,427,148
|
|
|
1.3
|
%
|
|||||||
Steven M. Weddell
(4)
|
|
2,260,113
|
|
|
1.2
|
%
|
|
468,786
|
|
|
1,791,327
|
|
|
1.0
|
%
|
|
1,720,019
|
|
|
*
|
|
|||||||
Paula R. Baker
(4)
|
|
265,218
|
|
|
*
|
|
|
55,011
|
|
|
210,207
|
|
|
*
|
|
|
201,840
|
|
|
*
|
|
|||||||
Yolanda Daniel
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Jodeen Kozlak
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Marc Magliacano
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Matthew Lischick
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Eric Kufel
(4)
|
|
60,392
|
|
|
*
|
|
|
12,526
|
|
|
47,866
|
|
|
*
|
|
|
45,960
|
|
|
*
|
|
|||||||
Susan O’Farrell
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
John Strain
(4)
|
|
67,056
|
|
|
*
|
|
|
13,909
|
|
|
53,147
|
|
|
*
|
|
|
51,032
|
|
|
*
|
|
|||||||
All Directors and Executive Officers as a group (11 persons)
|
|
9,286,478
|
|
|
5.0
|
%
|
|
1,765,925
|
|
|
7,520,553
|
|
|
4.0
|
%
|
|
7,251,934
|
|
|
3.9
|
%
|
|||||||
Other Selling Stockholders
|
||||||||||||||||||||||||||||
Leslie’s, Inc.
(5)
|
13,471,993 | 7.2 | % | 2,651,812 | 10,820,181 | 5.8 | % | 10,428,568 | 5.6 | % |
Shares of common
stock beneficially
owned prior to
this offering |
Shares of common stock
beneficially owned after this offering assuming no exercise of underwriters’ option |
Shares of common stock
beneficially owned after this offering assuming full exercise of underwriters’ option |
||||||||||||||||||||||||||
Name of Beneficial Owner
|
Shares
of common stock |
Percentage
of Total Outstanding common stock (%) |
Shares of
common stock offered pursuant to this prospectus |
Shares of
common stock |
Percentage
of total outstanding common stock (%) |
Shares of
common stock |
Percentage
of total outstanding common stock (%) |
|||||||||||||||||||||
Lawrence Hayward
|
2,218,542 | 1.2 | % | 460,162 | 1,758,380 | * | 1,688,383 | * | ||||||||||||||||||||
Danhakl Descendants Trust No. 2
|
1,133,856 | * | 235,181 | 898,675 | * | 862,901 | * | |||||||||||||||||||||
ZELT 2012 Trust
|
1,133,856 | * | 226,771 | 907,085 | * | 907,085 | * | |||||||||||||||||||||
Mary Ann E. and Steven L. Ortega Family Trust
|
772,582 | * | 160,247 | 612,335 | * | 587,959 | * | |||||||||||||||||||||
Michael Hatch
|
553,482 | * | 114,801 | 438,681 | * | 428,482 | * | |||||||||||||||||||||
Rabbit Creek Investments, L.L.C.
|
515,818 | * | 106,989 | 408,829 | * | 392,554 | * | |||||||||||||||||||||
Other selling stockholder investors
(6)
|
698,473 | * | 105,134 | 593,339 | * | 585,115 | * |
* |
Represents less than one percent.
|
(1) |
Selling stockholders also include Steven L. Ortega, Michael R. Egeck, Steven M. Weddell, Paula R. Baker, Eric Kufel, and John Strain who are included in the table above under Named Executive Officers and Directors, and the individuals included in the table above under Other Selling Stockholders.
|
(2) |
All of the shares of common stock are held by Bubbles Investor Aggregator, L.P. (“Bubbles Aggregator”). C8 Management, L.L.C. is the general partner of Bubbles Aggregator, and the management of C8 Management, L.L.C. is controlled by a managing board. J. Michael Chu and Scott A. Dahnke are the members of the managing board of C8 Management, L.L.C. and as such could be deemed to share voting control and investment power over shares that may be deemed to be beneficially owned by the entities affiliated with Catterton Management Company, L.L.C., but each disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein. The address of the entities and individuals mentioned in this footnote is 599 West Putnam Avenue, Greenwich, CT 06830.
|
(3) |
Explorer Investment Pte. Ltd. (the “GIC Investor”) shares the power to vote and the power to dispose of these shares with GIC Special Investments Pte. Ltd. (“GIC SI”), and GIC, both of which are private limited companies incorporated in Singapore. GIC SI is wholly owned by GIC and is the private equity investment arm of GIC. GIC is wholly owned by the Government of Singapore and was set up with the sole purpose of managing Singapore’s foreign reserves. The Government of Singapore disclaims beneficial ownership of these shares. The business address for the GIC Investor is 168 Robinson Road,
#37-01
Capital Tower, Singapore 068912.
|
(4) |
The shares represented on this row as being offered pursuant to this prospectus are being sold through Leslie’s, Inc. on behalf of such individual, as described below.
|
(5) |
Represents shares held and sold by Leslie’s, Inc. for the benefit of and on behalf of certain of its employees who have elected to participate in the offering. Leslie’s, Inc. will remit all proceeds from the sale of such shares to these employees promptly following the consummation of this offering.
|
(6) |
Consists of selling stockholder investors not otherwise listed in this table who collectively beneficially own less than 1% of our common stock prior to the offering.
|
• |
1 billion shares are designated as common stock; and
|
• |
1 million shares are designated as preferred stock.
|
• |
186,873,341 shares of common stock; and
|
• |
no shares of preferred stock.
|
• |
the amounts exceeded or will exceed $120,000; and
|
• |
any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest.
|
• |
banks, insurance companies, or other financial institutions;
|
• |
pass-through entities or investors therein;
|
• |
tax-exempt
organizations or governmental organizations;
|
• |
controlled foreign corporations, passive foreign investment companies, and corporations that accumulate earnings to avoid United States federal income tax;
|
• |
brokers or dealers in securities or currencies;
|
• |
traders in securities that elect to use a
mark-to-market
|
• |
United States expatriates and former citizens or former long-term residents of the United States;
|
• |
persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction,” or other risk reduction transaction;
|
• |
persons who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation;
|
• |
tax-qualified
retirement plans;
|
• |
“qualified foreign pension funds” (within the meaning of Section 897(l)(2) of the Code) and entities all of the interest which are held by qualified foreign pension funds;
|
• |
“qualified shareholders” (within the meaning of Section 897(k)(3) of the Code) or investors therein;
|
• |
persons deemed to sell our common stock under the constructive sale provisions of the Code; and
|
• |
persons who actually or constructively own more than 5% of our common stock.
|
• |
an individual who is a citizen or resident of the United States;
|
• |
a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States, any state thereof, or the District of Columbia;
|
• |
an estate whose income is subject to United States federal income tax regardless of its source; or
|
• |
a trust (x) whose administration is subject to the primary supervision of a United States court and which has one or more “United States person” (as defined in the Code) who have the authority to control all substantial decisions of the trust or (y) which has made an election under applicable Treasury regulations to be treated as a United States person for United States federal income tax purposes.
|
• |
the gain is effectively connected with your conduct of a United States trade or business (and, if an applicable income tax treaty requires, the gain is attributable to a permanent establishment or fixed base maintained by you in the United States);
|
• |
you are an individual who is present in the United States for a period or periods aggregating 183 days or more during the taxable year in which the sale or disposition occurs and certain other conditions are met; or
|
• |
our common stock constitutes a United States real property interest by reason of our status as a “United States real property holding corporation,” (a “USRPHC”), for United States federal income tax purposes, at any time during the shorter of the five-year period ending on the date of the sale or other taxable disposition of, or your holding period for, our common stock.
|
Underwriters
|
Number of Shares
|
|||
Goldman Sachs & Co. LLC
|
||||
Morgan Stanley & Co. LLC
|
||||
BofA Securities, Inc.
|
||||
Jefferies LLC
|
||||
Nomura Securities International, Inc.
|
||||
Robert W. Baird & Co. Incorporated
|
||||
Guggenheim Securities, LLC
|
||||
Piper Sandler & Co.
|
||||
William Blair & Company, L.L.C
|
||||
Telsey Advisory Group LLC
|
||||
Loop Capital Markets LLC
|
||||
Samuel A. Ramirez & Company, Inc.
|
||||
AmeriVet Securities, Inc.
|
||||
|
|
|||
Total
|
29,000,000 |
Per Share
|
Without Option
|
With Option
|
||||||||||
Public offering price
|
$ | $ | $ | |||||||||
Underwriting discount
|
$ | $ | $ | |||||||||
Proceeds, before expenses, to the selling stockholder
|
$ | $ | $ |
(a) |
to any legal entity which is a qualified investor as defined under the EU Prospectus Regulation;
|
(b) |
to fewer than 150 natural or legal persons (other than qualified investors as defined under the EU Prospectus Regulation), subject to obtaining the prior consent of representatives for any such offer; or
|
(c) |
in any other circumstances falling within Article 1(4) of the EU Prospectus Regulation, provided that no such offer of the shares shall require the Issuer or any Manager to publish a prospectus pursuant to Article 3 of the EU Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the EU Prospectus Regulation.
|
(a) |
to any legal entity which is a qualified investor as defined under the UK Prospectus Regulation;
|
(b) |
to fewer than 150 natural or legal persons (other than qualified investors as defined under the UK Prospectus Regulation), subject to obtaining the prior consent of representatives for any such offer; or
|
(c) |
in any other circumstances falling within Article 1(4) of the UK Prospectus Regulation,
|
• |
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
|
• |
a trust (where the trustee is not an accredited investor) the sole purpose of which is to hold investments and each beneficiary of which is an individual who is an accredited investor,
|
• |
securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except:
|
• |
to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or 276(4)(i)(B) of the SFA;
|
• |
where no consideration is or will be given for the transfer;
|
• |
where the transfer is by operation of law;
|
• |
as specified in Section 276(7) of the SFA; or
|
• |
as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.
|
F-2
|
||||
F-3
|
||||
F-4
|
||||
F-5
|
||||
F-6
|
||||
F-7
|
F-25
|
||||
F-26
|
||||
F-27
|
||||
F-28
|
||||
F-29
|
As of
|
October 3,
2020
|
September 28,
2019
|
||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 157,072 | $ | 90,899 | ||||
Accounts and other receivables, net
|
31,481 | 33,872 | ||||||
Inventories, net
|
148,966 | 149,729 | ||||||
Prepaid expenses and other current assets
|
34,614 | 7,589 | ||||||
|
|
|
|
|||||
Total current assets
|
372,133 | 282,089 | ||||||
Property and equipment, net
|
66,391 | 78,506 | ||||||
Operating lease
right-of-use
|
177,655 | — | ||||||
Goodwill and other intangibles, net
|
121,186 | 117,724 | ||||||
Deferred tax assets
|
6,583 | — | ||||||
Other assets
|
2,490 | 1,402 | ||||||
|
|
|
|
|||||
Total assets
|
$ | 746,438 | $ | 479,721 | ||||
|
|
|
|
|||||
Liabilities and stockholders’ deficit
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$ | 92,372 | $ | 68,347 | ||||
Accrued expenses
|
101,167 | 82,121 | ||||||
Operating lease liabilities
|
54,459 | — | ||||||
Income taxes payable
|
1,857 | 6,713 | ||||||
Current portion of long-term debt
|
8,341 | 8,341 | ||||||
|
|
|
|
|||||
Total current liabilities
|
258,196 | 165,522 | ||||||
Deferred tax liabilities
|
— | 1,240 | ||||||
Operating lease liabilities, noncurrent
|
130,234 | — | ||||||
Long-term debt, net
|
1,179,550 | 1,186,493 | ||||||
Other long-term liabilities
|
5,457 | 13,823 | ||||||
|
|
|
|
|||||
Total liabilities
|
1,573,437 | 1,367,078 | ||||||
|
|
|
|
|||||
Commitments and contingencies
|
||||||||
Stockholders’ deficit
|
||||||||
Common stock, $0.001 par value, 156,500,000 shares authorized, issued, and outstanding at October 3, 2020 and September 28, 2019
|
157 | 157 | ||||||
Capital deficit
|
(278,063 | ) | (279,848 | ) | ||||
Retained deficit
|
(549,093 | ) | (607,666 | ) | ||||
|
|
|
|
|||||
Total stockholders’ deficit
|
(826,999 | ) | (887,357 | ) | ||||
|
|
|
|
|||||
Total liabilities and stockholders’ deficit
|
$ | 746,438 | $ | 479,721 | ||||
|
|
|
|
Fiscal Year Ended
|
October 3,
2020
|
September 28,
2019
|
September 29,
2018
|
|||||||||
Sales
|
$ | 1,112,229 | $ | 928,203 | $ | 892,600 | ||||||
Cost of merchandise and services sold
|
651,516 | 548,463 | 535,464 | |||||||||
|
|
|
|
|
|
|||||||
Gross profit
|
460,713 | 379,740 | 357,136 | |||||||||
Selling, general and administrative expenses
|
314,338 | 258,152 | 241,669 | |||||||||
|
|
|
|
|
|
|||||||
Operating income
|
146,375 | 121,588 | 115,467 | |||||||||
Other expense:
|
||||||||||||
Interest expense
|
84,098 | 98,578 | 91,656 | |||||||||
Other expenses, net
|
1,089 | 7,453 | 1,759 | |||||||||
|
|
|
|
|
|
|||||||
Total other expense
|
85,187 | 106,031 | 93,415 | |||||||||
Income before taxes
|
61,188 | 15,557 | 22,052 | |||||||||
Income tax expense
|
2,627 | 14,855 | 4,926 | |||||||||
|
|
|
|
|
|
|||||||
Net income
|
$ | 58,561 | $ | 702 | $ | 17,126 | ||||||
|
|
|
|
|
|
|||||||
Net income per share
|
||||||||||||
Basic and diluted
|
$ | 0.37 | $ | 0.00 | $ | 0.11 | ||||||
Weighted average shares outstanding
|
||||||||||||
Basic and diluted
|
156,500,000 | 156,500,000 | 156,500,000 |
Common Stock
|
Capital
Deficit
|
Retained
Deficit
|
Totals
|
|||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||
Balance, September 30, 2017
|
156,500,000 | $ | 157 | $ | (283,763 | ) | $ | (624,395 | ) | $ | (908,001 | ) | ||||||||
Equity-based compensation
|
— | — | 1,785 | — | 1,785 | |||||||||||||||
Recovery of deemed distributions
|
— | — | — | 141 | 141 | |||||||||||||||
Net income
|
— | — | — | 17,126 | 17,126 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, September 29, 2018
|
156,500,000 | $ | 157 | (281,978 | ) | (607,128 | ) | (888,949 | ) | |||||||||||
Equity-based compensation
|
— | — | 2,130 | — | 2,130 | |||||||||||||||
Payment of dividend
|
— | — | — | (1,240 | ) | (1,240 | ) | |||||||||||||
Net income
|
— | — | — | 702 | 702 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, September 28, 2019
|
156,500,000 | $ | 157 | $ | (279,848 | ) | $ | (607,666 | ) | $ | (887,357 | ) | ||||||||
Impact of adoption of new accounting pronouncements
|
— | — | — | 12 | 12 | |||||||||||||||
Equity-based compensation
|
— | — | 1,785 | — | 1,785 | |||||||||||||||
Net income
|
— | — | — | 58,561 | 58,561 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, October 3, 2020
|
156,500,000 | $ | 157 | $ | (278,063 | ) | $ | (549,093 | ) | $ | (826,999 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
October 3,
2020
|
September 28,
2019
|
September 29,
2018
|
|||||||||
Operating activities
|
||||||||||||
Net income
|
$ | 58,561 | $ | 702 | $ | 17,126 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
28,925 | 30,424 | 31,611 | |||||||||
Equity-based compensation
|
1,785 | 2,130 | 1,785 | |||||||||
Amortization of deferred financing costs and debt discounts
|
3,489 | 3,240 | 3,013 | |||||||||
Provision for doubtful accounts
|
577 | 463 | 259 | |||||||||
Deferred income taxes
|
(7,823 | ) | (754 | ) | 1,405 | |||||||
Loss on disposition of assets
|
785 | 1,751 | 1,057 | |||||||||
Loss on extinguishment of debt
|
— | — | 488 | |||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts and other receivables
|
1,813 | (5,632 | ) | (4,304 | ) | |||||||
Inventories
|
1,762 | (3,797 | ) | (4,920 | ) | |||||||
Prepaid expenses and other current assets
|
(26,912 | ) | (1,670 | ) | 289 | |||||||
Other assets
|
(1,070 | ) | 4,518 | (2,759 | ) | |||||||
Accounts payable and accrued expenses
|
39,336 | 23,832 | 2,039 | |||||||||
Income taxes payable
|
(4,856 | ) | 2,614 | (3,809 | ) | |||||||
Operating lease assets and liabilities, net
|
7,037 | — | — | |||||||||
|
|
|
|
|
|
|||||||
Net cash provided by operating activities
|
103,409 | 57,821 | 43,280 | |||||||||
|
|
|
|
|
|
|||||||
Investing activities
|
||||||||||||
Purchases of property and equipment
|
(20,630 | ) | (27,444 | ) | (28,786 | ) | ||||||
Acquisitions, net of cash acquired
|
(6,188 | ) | (9,616 | ) | (11,758 | ) | ||||||
Proceeds from disposition of fixed assets
|
7 | 64 | 325 | |||||||||
|
|
|
|
|
|
|||||||
Net cash used in investing activities
|
(26,811 | ) | (36,996 | ) | (40,219 | ) | ||||||
|
|
|
|
|
|
|||||||
Financing activities
|
||||||||||||
Borrowings on revolving commitment
|
238,750 | 190,900 | 148,400 | |||||||||
Repayments to revolving commitment
|
(238,750 | ) | (190,900 | ) | (148,400 | ) | ||||||
Principal payments on Term Loan
|
(10,425 | ) | (6,255 | ) | (23,662 | ) | ||||||
Recovery of deemed distribution
|
— | — | 141 | |||||||||
Payment of dividend
|
— | (1,240 | ) | — | ||||||||
Payment of deferred financing costs
|
— | — | (865 | ) | ||||||||
|
|
|
|
|
|
|||||||
Net cash used in financing activities
|
(10,425 | ) | (7,495 | ) | (24,386 | ) | ||||||
|
|
|
|
|
|
|||||||
Net increase (decrease) in cash and cash equivalents
|
66,173 | 13,330 | (21,325 | ) | ||||||||
Cash and cash equivalents, beginning of period
|
90,899 | 77,569 | 98,894 | |||||||||
|
|
|
|
|
|
|||||||
Cash and cash equivalents, end of period
|
$ | 157,072 | $ | 90,899 | $ | 77,569 | ||||||
|
|
|
|
|
|
|||||||
Supplemental disclosure of cash payments for:
|
||||||||||||
Interest
|
$ | 88,678 | $ | 90,478 | $ | 90,055 | ||||||
Income taxes
|
15,305 | 12,944 | 7,329 | |||||||||
|
|
|
|
|
|
Buildings and improvements |
5–39 years
|
|
Vehicles, machinery, and equipment |
3–10 years
|
|
Office furniture and equipment |
3–7 years
|
|
Leasehold improvements |
5–10 years, not to exceed the lease life
|
Balance, September 29, 2018
|
$ | 84,518 | ||
Acquisitions
|
4,283 | |||
Other adjustments
|
938 | |||
|
|
|||
Balance, September 28, 2019
|
89,739 | |||
Acquisitions
|
3,556 | |||
|
|
|||
Balance, October 3, 2020
|
$ | 93,295 | ||
|
|
Weighted
Average
Useful Life
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
|||||||||||||
(In years)
|
(In thousands)
|
|||||||||||||||
Trade name and trademarks (finite life)
|
2.6 | $ | 5,540 | $ | (5,139 | ) | $ | 401 | ||||||||
Trade name and trademarks (indefinite life)
|
Indefinite | 17,750 | — | 17,750 | ||||||||||||
Non-compete
|
4.9 | 8,633 | (6,872 | ) | 1,761 | |||||||||||
Consumer relationships
|
3.8 | 17,200 | (10,118 | ) | 7,082 | |||||||||||
Internally developed software
|
2.9 | 4,000 | (3,434 | ) | 566 | |||||||||||
Other
|
1.6 | 1,000 | (958 | ) | 42 | |||||||||||
|
|
|
|
|
|
|||||||||||
Total
|
$ | 54,123 | $ | (26,521 | ) | $ | 27,602 | |||||||||
|
|
|
|
|
|
Gross Carrying
Value
|
Accumulated
Amortization
|
Net Carrying
Amount
|
||||||||||
(In thousands)
|
||||||||||||
Trade name and trademarks (finite life)
|
$ | 5,540 | $ | (5,026 | ) | $ | 514 | |||||
Trade name and trademarks (indefinite life)
|
17,150 | — | 17,150 | |||||||||
Non-compete
|
7,733 | (6,181 | ) | 1,552 | ||||||||
Consumer relationships
|
16,200 | (8,655 | ) | 7,545 | ||||||||
Internally developed software
|
4,000 | (3,180 | ) | 820 | ||||||||
Other
|
1,000 | (925 | ) | 75 | ||||||||
|
|
|
|
|
|
|||||||
Total
|
$ | 51,623 | $ | (23,967 | ) | $ | 27,656 | |||||
|
|
|
|
|
|
Fiscal Year Ended
|
Amount
|
|||
2021
|
$ | 1,892 | ||
2022
|
1,936 | |||
2023
|
1,703 | |||
2024
|
1,065 | |||
2025
|
968 | |||
Thereafter
|
2,122 | |||
|
|
|||
Total
|
$ | 9,686 | ||
|
|
(In thousands)
|
||||||||
As of
|
October 3,
2020
|
September 28,
2019
|
||||||
Raw materials
|
$ | 1,967 | $ | 1,768 | ||||
Finished goods
|
146,999 | 147,961 | ||||||
|
|
|
|
|||||
Total inventories, net
|
$ | 148,966 | $ | 149,729 | ||||
|
|
|
|
Balance at
Beginning of
Period
|
Additions
|
Deductions
|
Balance
at End
of Period
|
|||||||||||||
Charged
to Costs
and Expenses
|
Sale or
Disposal
of Inventories
|
|||||||||||||||
(In Thousands)
|
||||||||||||||||
2018
|
$ | 3,382 | $ | 1,019 | $ | (856 | ) | $ | 3,545 | |||||||
2019
|
$ | 3,545 | $ | 1,345 | $ | (1,268 | ) | $ | 3,622 | |||||||
2020
|
$ | 3,622 | $ | 2,659 | $ | (1,342 | ) | $ | 4,939 |
(In thousands)
|
||||||||
As of
|
October 3,
2020
|
September 28,
2019
|
||||||
Land
|
$ | 5,813 | $ | 5,813 | ||||
Buildings and improvements
|
16,148 | 15,976 | ||||||
Vehicles, machinery, and equipment
|
34,639 | 34,831 | ||||||
Leasehold improvements
|
164,501 | 166,640 | ||||||
Office furniture, equipment, and other
|
154,570 | 146,455 | ||||||
Software and construction in process
|
9,960 | 6,769 | ||||||
|
|
|
|
|||||
385,631 | 376,484 | |||||||
Less: accumulated depreciation and amortization
|
(319,240 | ) | (297,978 | ) | ||||
|
|
|
|
|||||
Total
|
$ | 66,391 | $ | 78,506 | ||||
|
|
|
|
As of
|
October 3,
2020
|
September 28,
2019
|
||||||
Accrued payroll and employee benefits
|
$ | 32,420 | $ | 14,694 | ||||
Occupancy expenses
|
3,573 | 14,669 | ||||||
Interest
|
9,377 | 17,520 | ||||||
Sales taxes
|
11,164 | 9,045 | ||||||
Self-insurance reserves
|
6,518 | 6,242 | ||||||
Customer deposits
|
13,286 | 6,246 | ||||||
All other current liabilities
|
24,829 | 13,705 | ||||||
|
|
|
|
|||||
Total accrued expenses
|
$ | 101,167 | $ | 82,121 | ||||
|
|
|
|
As of
|
Effective
Interest Rate(1)
|
October 3,
2020
|
September 28,
2019
|
|||||||||
Term Loan—due on August 16, 2023
|
3.65 | %(2) | $ | 811,178 | $ | 821,605 | ||||||
Senior Unsecured Notes—due on August 16, 2024
|
9.50 | %(3) | 390,000 | 390,000 | ||||||||
ABL Credit Facility
|
1.89 | %(4) | — | — | ||||||||
|
|
|
|
|
|
|||||||
Total long-term debt
|
1,201,178 | 1,211,605 | ||||||||||
Less: current portion of long-term debt
|
(8,341 | ) | (8,341 | ) | ||||||||
Less: unamortized discount
|
(9,348 | ) | (11,589 | ) | ||||||||
Less: deferred financing charges
|
(3,939 | ) | (5,182 | ) | ||||||||
|
|
|
|
|||||||||
Long-term debt, net
|
$ | 1,179,550 | $ | 1,186,493 | ||||||||
|
|
|
|
(1) |
Effective interest rates as of October 3, 2020.
|
(2) |
Carries interest at a specified margin over LIBOR of 3.50% with a minimum rate of 0.00%. Prior to February 27, 2018, the Term Loan carried interest with a specified margin over LIBOR of 3.75% with a minimum rate of 1.00%.
|
(3) |
Carries interest at a specified margin over LIBOR of 8.50% with a minimum rate of 1.00%.
|
(4) |
Carries interest at a specific margin of 0.75% and 1.00% with respect to Base Rate loans and between 1.75% and 2.00% with respect to Eurodollar Rate loans. Prior to August 13, 2020, the ABL Credit Facility carried interest at a specific margin of 0.25% and 0.75% with respect to Base Rate loans and between 1.25% and 1.75% with respect to Eurodollar Rate loans.
|
As of
|
October 3,
2020
|
September 28,
2019
|
||||||
Deferred financing costs
|
||||||||
Balance, beginning of year
|
$ | 5,182 | $ | 6,356 | ||||
Financing costs deferred
|
5 | 10 | ||||||
Less: amortization expense
|
(1,248 | ) | (1,184 | ) | ||||
|
|
|
|
|||||
Deferred financing costs, net of accumulated amortization
|
$ | 3,939 | $ | 5,182 | ||||
|
|
|
|
2021
|
$ | 8,341 | ||
2022
|
8,341 | |||
2023
|
794,496 | |||
|
|
|||
Total
|
$ | 811,178 | ||
|
|
Weighted-average remaining lease term
|
4.2 years | |||
Weighted-average discount rate
|
5.9 | % |
2021
|
$ | 68,036 | ||
2022
|
59,097 | |||
2023
|
46,874 | |||
2024
|
33,956 | |||
2025
|
19,864 | |||
Thereafter
|
15,328 | |||
|
|
|||
Total
|
$ | 243,155 | ||
Less: amount of lease payments representing imputed interest
|
58,462 | |||
|
|
|||
Present value of future minimum lease payments
|
184,693 | |||
Less: current operating lease liabilities
|
54,459 | |||
|
|
|||
Operating lease liabilities, noncurrent
|
$ | 130,234 | ||
|
|
(In thousands)
|
||||||||||||
Fiscal 2020
|
Fiscal 2019
|
Fiscal 2018
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | 8,188 | $ | 14,072 | $ | 966 | ||||||
State
|
2,262 | 1,537 | 2,555 | |||||||||
|
|
|
|
|
|
|||||||
Total Current
|
10,450 | 15,609 | 3,521 | |||||||||
|
|
|
|
|
|
|||||||
Deferred:
|
||||||||||||
Federal
|
(5,844 | ) | (418 | ) | 2,752 | |||||||
State
|
(1,979 | ) | (336 | ) | (1,347 | ) | ||||||
|
|
|
|
|
|
|||||||
Total Deferred
|
(7,823 | ) | (754 | ) | 1,405 | |||||||
|
|
|
|
|
|
|||||||
Total income tax provision
|
$ | 2,627 | $ | 14,855 | $ | 4,926 | ||||||
|
|
|
|
|
|
(In thousands)
|
||||||||||||
Fiscal
2020 |
Fiscal
2019 |
Fiscal
2018 |
||||||||||
Federal income tax at statutory rate
|
$ | 12,851 | $ | 3,198 | $ | (190 | ) | |||||
Permanent differences
|
464 | 286 | 27 | |||||||||
Change in valuation allowance
|
(11,373 | ) | 11,060 | 5,738 | ||||||||
State taxes, net of federal benefit
|
2,503 | 208 | 891 | |||||||||
Federal rate change
|
— | — | (1,540 | ) | ||||||||
Other
|
(1,818 | ) | 103 | — | ||||||||
|
|
|
|
|
|
|||||||
Total income tax provision
|
$ | 2,627 | $ | 14,855 | $ | 4,926 | ||||||
|
|
|
|
|
|
(In thousands)
|
||||||||
As of
|
October 3,
2020
|
September 28,
2019
|
||||||
Deferred tax assets:
|
||||||||
Compensation accruals
|
$ | 5,433 | $ | 948 | ||||
Deferred rent
|
— | 1,228 | ||||||
Inventory
|
1,053 | 681 | ||||||
Interest limitation
|
6,919 | 17,886 | ||||||
Lease liabilities
|
46,644 | — | ||||||
Property and equipment
|
— | 590 | ||||||
Reserves and other accruals
|
354 | — | ||||||
|
|
|
|
|||||
Total deferred tax assets
|
60,403 | 21,333 | ||||||
Deferred tax liabilities:
|
||||||||
Property, plant, and equipment
|
(611 | ) | — | |||||
Intangibles
|
(3,258 | ) | (2,456 | ) | ||||
Reserves and other accruals
|
— | (2,673 | ) | |||||
Leased assets
|
(44,014 | ) | — | |||||
Deferred financing cost
|
(512 | ) | (646 | ) | ||||
|
|
|
|
|||||
Total deferred tax liabilities
|
(48,395 | ) | (5,775 | ) | ||||
Valuation allowance
|
(5,425 | ) | (16,798 | ) | ||||
|
|
|
|
|||||
Deferred tax assets (liabilities), net
|
$ | 6,583 | $ | (1,240 | ) | |||
|
|
|
|
Balance at
Beginning of
Period
|
Additions
Charged to
Costs and
Expenses
|
Deductions
|
Balance at End
of Period
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
2018
|
$ | — | $ | 5,738 | $ | — | $ | 5,738 | ||||||||
2019
|
$ | 5,738 | $ | 11,060 | $ | — | $ | 16,798 | ||||||||
2020
|
$ | 16,798 | $ | — | $ | (11,373 | ) | $ | 5,425 |
2021
|
$ | 112,551 | ||
2022
|
70,888 | |||
2023
|
67,229 | |||
2024
|
50,196 | |||
2025
|
33,900 | |||
Thereafter
|
5,687 | |||
|
|
|||
Total
|
$ | 340,451 | ||
|
|
Fiscal Year Ended
|
October 3,
2020
|
September 28,
2019
|
September 29,
2018
|
|||||||||
Expected volatility
|
23.5 | % | 22.9 | % | 21.0 | % | ||||||
Risk-free interest rate
|
1.4 | % | 2.5 | % | 2.2 | % | ||||||
Dividend yield
|
0.0 | % | 0.0 | % | 0.0 | % | ||||||
Expected term (in years)
|
4.0 | 4.0 | 4.0 | |||||||||
Weighted-average grant date fair value per Incentive Unit
|
$ | 1.87 | $ | 1.69 | $ | 1.54 |
Number of
Incentive Units
|
||||
Outstanding, September 30, 2017
|
7,841,743 | |||
Granted
|
1,020,000 | |||
Exercised
|
— | |||
Forfeited
|
(915,750 | ) | ||
|
|
|||
Outstanding, September 29, 2018
|
7,945,993 | |||
Granted
|
3,401,538 | |||
Exercised
|
— | |||
Forfeited
|
(1,084,750 | ) | ||
|
|
|||
Outstanding, September 28, 2019
|
10,262,781 | |||
Granted
|
5,980,675 | |||
Exercised
|
— | |||
Forfeited
|
(2,976,250 | ) | ||
Outstanding, October 3, 2020
|
13,267,206 | |||
|
|
|||
Vested, September 29, 2018
|
1,163,512 | |||
Vested, September 28, 2019
|
1,993,273 | |||
Vested, October 3, 2020
|
3,196,606 |
As of
|
January 2,
2021
|
October 3,
2020
|
December 28,
2019
|
|||||||||
Assets
|
||||||||||||
Current assets
|
||||||||||||
Cash and cash equivalents
|
$ | 104,077 | $ | 157,072 | $ | 1,938 | ||||||
Accounts and other receivables, net
|
37,116 | 31,481 | 49,657 | |||||||||
Inventories
|
174,535 | 148,966 | 185,130 | |||||||||
Prepaid expenses and other current assets
|
39,899 | 34,614 | 6,201 | |||||||||
|
|
|
|
|
|
|||||||
Total current assets
|
355,627 | 372,133 | 242,926 | |||||||||
Property and equipment, net
|
62,628 | 66,391 | 71,805 | |||||||||
Operating lease
right-of-use
|
191,125 | 177,655 | 212,492 | |||||||||
Goodwill and other intangibles, net
|
120,636 | 121,186 | 122,718 | |||||||||
Deferred tax assets
|
14,729 | 6,583 | — | |||||||||
Other assets
|
2,363 | 2,490 | 1,345 | |||||||||
|
|
|
|
|
|
|||||||
Total assets
|
$ | 747,108 | $ | 746,438 | $ | 651,286 | ||||||
|
|
|
|
|
|
|||||||
Liabilities and stockholders’ deficit
|
||||||||||||
Current liabilities
|
||||||||||||
Accounts payable
|
$ | 69,046 | $ | 92,372 | $ | 75,265 | ||||||
Accrued expenses
|
59,086 | 101,167 | 54,381 | |||||||||
Operating lease liabilities
|
56,398 | 54,459 | 60,502 | |||||||||
Income taxes payable
|
— | 1,857 | — | |||||||||
Current portion of long-term debt
|
8,341 | 8,341 | 8,341 | |||||||||
|
|
|
|
|
|
|||||||
Total current liabilities
|
192,871 | 258,196 | 198,489 | |||||||||
Revolving commitment
|
— | — | 6,300 | |||||||||
Deferred tax liabilities
|
— | — | 3,911 | |||||||||
Operating lease liabilities, noncurrent
|
139,796 | 130,234 | 162,329 | |||||||||
Long-term debt, net
|
795,394 | 1,179,550 | 1,185,256 | |||||||||
Other long-term liabilities
|
5,457 | 5,457 | 7,936 | |||||||||
|
|
|
|
|
|
|||||||
Total liabilities
|
1,133,518 | 1,573,437 | 1,564,221 | |||||||||
|
|
|
|
|
|
|||||||
Commitments and contingencies
|
||||||||||||
Stockholders’ deficit
|
||||||||||||
Common stock, $0.001 par value, 205,150,000 shares authorized and 186,618,446 issued and outstanding at January 2, 2021 and 156,500,000 shares authorized, issued, and outstanding at October 3, 2020 and December 28, 2019
|
187 | 157 | 157 | |||||||||
Additional paid in capital (deficit)
|
192,753 | (278,063 | ) | (279,251 | ) | |||||||
Retained deficit
|
(579,350 | ) | (549,093 | ) | (633,841 | ) | ||||||
|
|
|
|
|
|
|||||||
Total stockholders’ deficit
|
(386,410 | ) | (826,999 | ) | (912,935 | ) | ||||||
|
|
|
|
|
|
|||||||
Total liabilities and stockholders’ deficit
|
$ | 747,108 | $ | 746,438 | $ | 651,286 | ||||||
|
|
|
|
|
|
Three months ended
|
||||||||
January 2,
2021
|
December 28,
2019
|
|||||||
Sales
|
$ | 145,006 | $ | 122,978 | ||||
Cost of merchandise and services sold
|
93,291 | 81,900 | ||||||
|
|
|
|
|||||
Gross profit
|
51,715 | 41,078 | ||||||
Selling, general and administrative expenses
|
77,489 | 59,721 | ||||||
|
|
|
|
|||||
Operating loss
|
(25,774 | ) | (18,643 | ) | ||||
Other expense:
|
||||||||
Interest expense
|
11,516 | 22,417 | ||||||
Loss on debt extinguishment
|
7,281 | — | ||||||
Other expenses, net
|
— | 137 | ||||||
|
|
|
|
|||||
Total other expense
|
18,797 | 22,554 | ||||||
Loss before taxes
|
(44,571 | ) | (41,197 | ) | ||||
Income tax benefit
|
(14,314 | ) | (15,010 | ) | ||||
|
|
|
|
|||||
Net loss
|
$ | (30,257 | ) | $ | (26,187 | ) | ||
|
|
|
|
|||||
Net loss per share
|
||||||||
Basic and diluted
|
$ | (0.17 | ) | $ | (0.17 | ) | ||
Weighted average shares outstanding
|
||||||||
Basic and diluted
|
176,989,755 | 156,500,000 |
Common Stock
|
Additional
Paid in
Capital
(Deficit)
|
Retained
Deficit
|
Total
Stockholders’
Deficit
|
|||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||
Balance, September 28, 2019
|
156,500,000 | $ | 157 | $ | (279,848 | ) | $ | (607,666 | ) | $ | (887,357 | ) | ||||||||
Impact of adoption of new accounting pronouncements
|
—
|
|
|
|
—
|
|
|
|
—
|
12 | 12 | |||||||||
Equity-based compensation
|
—
|
|
|
|
—
|
597 | — | 597 | ||||||||||||
Net loss
|
—
|
|
|
|
—
|
|
|
|
—
|
(26,187 | ) | (26,187 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 28, 2019
|
156,500,000 | $ | 157 | $ | (279,251 | ) | $ | (633,841 | ) | $ | (912,935 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, October 3, 2020
|
156,500,000 | $ | 157 | $ | (278,063 | ) | $ | (549,093 | ) | $ | (826,999 | ) | ||||||||
Issuance of shares under stock incentive plans
|
118,446 |
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
||||||
Issuance of common stock upon initial public offering, net of offering costs
|
30,000,000 | 30 | 458,656 | — | 458,686 | |||||||||||||||
Equity-based compensation
|
—
|
|
|
|
—
|
12,160 | — | 12,160 | ||||||||||||
Net loss
|
—
|
|
|
|
—
|
— | (30,257 | ) | (30,257 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, January 2, 2021
|
186,618,446 | $ | 187 | $ | 192,753 | $ | (579,350 | ) | $ | (386,410 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||||
January 2,
2021
|
December 28,
2019
|
|||||||
Operating Activities
|
||||||||
Net loss
|
$ | (30,257 | ) | $ | (26,187 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
6,595 | 7,276 | ||||||
Equity-based compensation
|
12,160 | 597 | ||||||
Amortization of deferred financing costs and debt discounts
|
648 | 848 | ||||||
Provision for doubtful accounts
|
59 | 58 | ||||||
Deferred income taxes
|
(8,146 | ) | 2,672 | |||||
(Gain) loss on disposition of assets
|
(1,758 | ) | 443 | |||||
Loss on debt extinguishment
|
7,281 | — | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts and other receivables
|
(5,694 | ) | (15,842 | ) | ||||
Inventories
|
(25,569 | ) | (34,402 | ) | ||||
Prepaid expenses and other current assets
|
(5,285 | ) | 1,502 | |||||
Other assets
|
127 | 75 | ||||||
Accounts payable and accrued expenses
|
(65,629 | ) | (21,922 | ) | ||||
Income taxes payable
|
(1,857 | ) | (6,713 | ) | ||||
Operating lease assets and liabilities, net
|
(1,969 | ) | 10,339 | |||||
|
|
|
|
|||||
Net cash used in operating activities
|
(119,294 | ) | (81,256 | ) | ||||
|
|
|
|
|||||
Investing Activities
|
||||||||
Purchases of property and equipment
|
(2,706 | ) | (5,738 | ) | ||||
Acquisitions, net of cash acquired
|
— | (6,188 | ) | |||||
Proceeds from disposition of fixed assets
|
2,404 | 6 | ||||||
|
|
|
|
|||||
Net cash used in investing activities
|
(302 | ) | (11,920 | ) | ||||
|
|
|
|
|||||
Financing Activities
|
||||||||
Revolving commitment borrowings
|
— | 6,300 | ||||||
Repayment of senior notes
|
(390,000 | ) | — | |||||
Principal payments on term loan
|
(2,085 | ) | (2,085 | ) | ||||
Proceeds from issuance of common stock upon initial public offering, net
|
458,686 | — | ||||||
|
|
|
|
|||||
Net cash provided by financing activities
|
66,601 | 4,215 | ||||||
|
|
|
|
|||||
Net decrease in cash and cash equivalents
|
(52,995 | ) | (88,961 | ) | ||||
Cash and cash equivalents, beginning of period
|
157,072 | 90,899 | ||||||
|
|
|
|
|||||
Cash and cash equivalents, end of period
|
$ | 104,077 | $ | 1,938 | ||||
|
|
|
|
|||||
Supplemental Disclosure of Cash Payments for:
|
||||||||
Interest
|
$ | 19,635 | $ | 26,473 | ||||
Income taxes
|
920 | 2,875 | ||||||
|
|
|
|
Balance, January 2, 2021
|
$
|
93,295 | ||
Balance, October 3, 2020
|
$
|
93,295 | ||
Balance, December 28, 2019
|
$
|
92,821 |
Weighted
Average
Remaining
Useful Life
|
|
|
Gross
Carrying
Value
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Amount
|
|||||||
(In years)
|
|
|
(In thousands)
|
|||||||||||||
Trade name and trademarks (finite life)
|
|
2.4 |
|
|
$
|
5,540 |
|
|
$
|
(5,167 |
)
|
|
$
|
373 | ||
Trade name and trademarks (indefinite life)
|
|
Indefinite |
|
|
|
17,750 |
|
|
|
—
|
|
|
|
17,750 | ||
Non-compete
agreements
|
|
4.5 |
|
|
|
8,633 |
|
|
|
(6,958 |
)
|
|
|
1,675 | ||
Consumer relationships
|
|
3.6 |
|
|
|
17,200 |
|
|
|
(10,485 |
)
|
|
|
6,715 | ||
Internally developed software
|
|
2.6 |
|
|
|
4,000 |
|
|
|
(3,482 |
)
|
|
|
518 | ||
Other
|
|
1.3 |
|
|
|
1,000 |
|
|
|
(967 |
)
|
|
|
33 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total
|
|
|
|
|
$
|
54,123 |
|
|
$
|
(27,059 |
)
|
|
$
|
27,064 | ||
|
|
|
|
|
|
Weighted
Average
Remaining
Useful Life
|
|
|
Gross
Carrying
Value
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Amount
|
|||||||
(In years)
|
|
|
(In thousands)
|
|||||||||||||
Trade name and trademarks (finite life)
|
|
2.6 |
|
|
$
|
5,540 |
|
|
$
|
(5,139 |
)
|
|
$
|
401 | ||
Trade name and trademarks (indefinite life)
|
|
Indefinite |
|
|
|
17,750 |
|
|
|
—
|
|
|
|
17,750 | ||
Non-compete
agreements
|
|
4.9 |
|
|
|
8,633 |
|
|
|
(6,872 |
)
|
|
|
1,761 | ||
Consumer relationships
|
|
3.8 |
|
|
|
17,200 |
|
|
|
(10,118 |
)
|
|
|
7,082 | ||
Internally developed software
|
|
2.9 |
|
|
|
4,000 |
|
|
|
(3,434 |
)
|
|
|
566 | ||
Other
|
|
1.6 |
|
|
|
1,000 |
|
|
|
(958 |
)
|
|
|
42 | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total
|
|
|
|
|
$
|
54,123 |
|
|
$
|
(26,521 |
)
|
|
$
|
27,602 | ||
|
|
|
|
|
|
|
|
Weighted
Average
Remaining
Useful Life
|
|
Gross
Carrying
Value
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Amount
|
|
|||
|
|
(In years)
|
|
(In thousands)
|
|
|||||||||
Trade name and trademarks (finite life)
|
|
2.3
|
|
$
|
5,540
|
|
|
$
|
(5,054
|
)
|
|
$
|
486
|
|
Trade name and trademarks (indefinite life)
|
|
Indefinite |
|
|
17,750
|
|
|
|
—
|
|
|
|
17,750
|
|
Non-compete
agreements
|
|
4.0
|
|
|
8,633
|
|
|
|
(6,317
|
)
|
|
|
2,316
|
|
Consumer relationships
|
|
3.4
|
|
|
17,200
|
|
|
|
(8,998
|
)
|
|
|
8,202
|
|
Internally developed software
|
|
2.3
|
|
|
4,000
|
|
|
|
(3,244
|
)
|
|
|
756
|
|
Other
|
|
1.3
|
|
|
1,000
|
|
|
|
(933
|
)
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total
|
|
|
$
|
54,123
|
|
|
$
|
(24,546
|
)
|
|
$
|
29,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remainder of fiscal 2021
|
$
|
1,520 | ||
2022
|
|
1,936 | ||
2023
|
|
1,703 | ||
2024
|
|
1,065 | ||
2025
|
|
968 | ||
Thereafter
|
|
2,122 | ||
|
|
|||
Total
|
$
|
9,314 | ||
|
|
|
(In thousands)
|
|||||||||||
As of
|
January 2,
2021
|
October 3,
2020
|
December 28,
2019
|
|||||||||
Raw materials
|
$ | 2,577 | $ | 1,967 | $ | 1,237 | ||||||
Finished goods
|
171,958 | 146,999 | 183,893 | |||||||||
|
|
|
|
|
|
|||||||
Inventories
|
$ | 174,535 | $ | 148,966 | $ | 185,130 | ||||||
|
|
|
|
|
|
(In thousands)
|
|||||||||||||
As of
|
January 2,
2021
|
|
|
|
October 3,
2020
|
|
|
|
December 28,
2019 |
||||
Accrued payroll and employee benefits
|
$
|
19,394 |
|
|
|
$
|
32,420 |
|
|
$ |
12,529
|
||
Occupancy expenses
|
|
3,150 |
|
|
|
|
3,573 |
|
|
5,992
|
|||
Interest
|
|
489 |
|
|
|
|
9,377 |
|
|
12,887
|
|||
Sales taxes
|
|
7,970 |
|
|
|
|
11,164 |
|
|
5,540
|
|||
Self-insurance reserves
|
|
5,993 |
|
|
|
|
6,518 |
|
|
6,607
|
|||
Customer deposits
|
|
9,304 |
|
|
|
|
13,286 |
|
|
3,317
|
|||
All other current liabilities
|
|
12,786
|
|
|
|
|
24,829 |
|
|
7,509
|
|||
Total
|
$
|
59,086 |
|
|
|
$
|
101,167 |
|
$ |
54,381
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
Interest Rate
(1)
|
|
|
January 2,
2021
|
|
|
October 3,
2020
|
|
|
December 28,
2019
|
|
||||
Term Loan—due on August 16, 2023
|
|
|
3.65
|
%
(2)
|
|
$
|
809,093
|
|
|
$
|
811,178
|
|
|
$
|
819,520
|
|
Senior Unsecured Notes—due on August 16, 2024
|
|
|
|
—
|
|
|
|
390,000
|
|
|
|
390,000
|
|
|||
ABL Credit Facility
|
|
|
2.50
|
%
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
6,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total long-term debt
|
|
|
|
809,093
|
|
|
|
1,201,178
|
|
|
|
1,215,820
|
|
|||
Less: current portion of long-term debt
|
|
|
|
(8,341
|
)
|
|
|
(8,341
|
)
|
|
|
(8,341
|
)
|
|||
Less: non current ABL Credit Facility
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(6,300
|
)
|
|||
Less: unamortized discount
|
|
|
|
(2,317
|
)
|
|
|
(9,348
|
)
|
|
|
(11,049
|
)
|
|||
Less: deferred financing charges
|
|
|
|
(3,041
|
)
|
|
|
(3,939
|
)
|
|
|
(4,874
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt, net
|
|
|
$
|
795,394
|
|
|
$
|
1,179,550
|
|
|
$
|
1,185,256
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Effective interest rates as of January 2, 2021.
|
(2)
|
Carries interest at a specified margin over LIBOR of 3.50% with a minimum
LIBOR
of 0.00%.
|
(3)
|
Carries interest at a specific margin of 0.75% and 1.00% with respect to Base Rate loans and between 1.75% and 2.00%
with respect to Eurodollar Rate loans with a minimum LIBOR of 0.75%.
|
2021
|
$
|
6,256 | ||
2022
|
|
8,341 | ||
2023
|
|
794,496 | ||
|
|
|||
Total
|
$
|
809,093 | ||
|
|
Remainder of fiscal 2021
|
$
|
51,836
|
|
|
2022
|
|
60,421
|
|
|
2023
|
|
48,158
|
|
|
2024
|
|
35,187
|
|
|
2025
|
|
21,093
|
|
|
Thereafter
|
|
15,946
|
|
|
|
|
|
||
Total
|
$
|
232,641
|
|
|
Less: amount of lease payments representing imputed interest
|
|
|
36,447
|
|
Present value of future minimum lease payments
|
|
|
196,194
|
|
Less: current obligations under leases
|
|
|
56,398
|
|
|
|
|
|
|
Long-Term lease obligations
|
|
$
|
139,796
|
|
|
|
Remainder of fiscal 2021
|
$
|
106,067 | ||
2022
|
|
76,389 | ||
2023
|
|
72,731 | ||
2024
|
|
55,698 | ||
2025
|
|
34,446 | ||
Thereafter
|
|
5,687 | ||
|
|
|||
Total
|
$
|
351,018 | ||
|
|
|
|
Three months ended
|
|
|||||
|
|
January 2,
2021
|
|
|
December 28,
2019
|
|
||
Weighted average common shares outstanding, used for basic computation
|
|
|
176,989,755
|
|
|
|
156,500,000
|
|
Plus: Incremental shares of potentially dilutive securities
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common and dilutive potential common shares outstanding
|
|
|
176,989,755
|
|
|
|
156,500,000
|
|
Goldman Sachs & Co. LLC
|
Morgan Stanley
|
BofA Securities
|
Jefferies
|
Nomura
|
Baird
|
Guggenheim Securities
|
Piper Sandler
|
William Blair
|
Telsey Advisory Group
|
Loop Capital Markets
|
Ramirez & Co., Inc.
|
AmeriVet Securities
|
SEC registration fee
|
$ | 108,646 | ||
FINRA filing fee
|
149,875 | |||
Legal fees and expenses
|
400,000 | |||
Accounting fees and expenses
|
120,000 | |||
Printing and engraving expenses
|
125,000 | |||
Transfer agent and registrar fees
|
10,000 | |||
Miscellaneous expenses
|
80,000 | |||
|
|
|||
Total
|
$ | 993,521 | ||
|
|
(a) |
Exhibits: The list of exhibits set forth under “Exhibit Index” at the end of this Registration Statement is incorporated herein by reference.
|
(a) |
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
|
(b) |
The undersigned registrant hereby undertakes that:
|
(i) |
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of
|
1933 shall be deemed to be part of this registration statement as of the time it was declared effective. |
(ii) |
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
Exhibit
Number
|
Description
|
|
1.1* | Form of Underwriting Agreement. | |
3.1 |
Fifth Amended and Restated Certificate of Incorporation, effective as of November 2, 2020 (filed with the SEC as Exhibit 3.1 to the Company’s Form
8-K
filed on November 2, 2020 and incorporated herein by reference)
|
|
3.2 |
Amended and Restated Bylaws, effective as of November 2, 2020 (filed with the SEC as Exhibit 3.2 to the Company’s Form
8-K
filed November 2, 2020 and incorporated herein by reference)
|
|
4.1 |
Indenture, dated as of August 16, 2016, by and among Leslie’s Poolmart, Inc., Leslie’s Holdings, Inc., the other guarantors party thereto and U.S. Bank National Association, as Trustee (filed with the SEC as Exhibit 4.1 to the Company’s Form
S-1/A
filed October 22, 2020 and incorporated herein by reference)
|
|
4.2 |
First Supplemental Indenture, dated as of October 26, 2016, by and among Leslie’s Poolmart, Inc., Leslie’s Holdings, Inc., the other guarantors party thereto and U.S. Bank National Association, as Trustee (filed with the SEC as Exhibit 4.2 to the Company’s
Form S-1/A
filed October 22, 2020 and incorporated herein by reference)
|
|
4.3 |
Second Supplemental Indenture, dated as of February 3, 2017, by and among Leslie’s Poolmart, Inc., Leslie’s Holdings, Inc., the other guarantors party thereto and U.S. Bank National Association, as Trustee (filed with the SEC as Exhibit 4.3 to the Company’s
Form S-1/A
filed October 22, 2020 and incorporated herein by reference)
|
|
4.4 |
Form of Registration Rights and Lock-up Agreement between Leslie’s, Inc., Bubbles Investor Aggregator, L.P., Explorer Investment Pte. Ltd. and certain other investors (executed as of November 2, 2020 and filed with the SEC as Exhibit 4.4 to the Company’s Form
S-1/A
filed October 28, 2020 and incorporated herein by reference)
|
|
4.5* | First Amendment to Registration Rights and Lock-up Agreement between Leslie’s, Inc. and Bubbles Investor Aggregator, L.P. | |
5.1* | Opinion of Gibson, Dunn & Crutcher LLP | |
10.1 |
Form of Indemnification Agreement between Leslie’s, Inc. and its directors and officers (filed with the SEC as Exhibit 10.1 to the Company’s Form
S-1/A
filed October 26, 2020 and incorporated herein by reference)
|
|
10.2# |
2020 Omnibus Incentive Plan (filed with the SEC as Exhibit 10.2 to the Company’s
Form S-1/A
filed October 22, 2020 and incorporated herein by reference)
|
|
10.3# |
Form of Stock Option Agreement pursuant to 2020 Omnibus Incentive Plan (filed with the SEC as Exhibit 10.3 to the Company’s Form
S-1/A
filed October 22, 2020 and incorporated herein by reference)
|
|
10.4# |
Form of Restricted Stock Unit Agreement pursuant to 2020 Omnibus Incentive Plan (filed with the SEC as Exhibit 10.4 to the Company’s Form
S-1/A
filed October 22, 2020 and incorporated herein by reference)
|
|
10.5# |
Amended and Restated Employment Agreement, dated as of October 19, 2020, by and between Leslie’s, Inc. and Michael R. Egeck (filed with the SEC as Exhibit 10.5 to the Company’s Form
S-1/A
filed October 22, 2020 and incorporated herein by reference)
|
* |
Filed herewith.
|
# |
Indicates management contract or compensatory plan.
|
LESLIE’S, INC.
|
||
By: |
/s/ Michael R. Egeck
|
|
Name: Michael R. Egeck
Title: Chief Executive Officer
|
Signature
|
Title
|
Date
|
||
/s/ Steven L. Ortega
Steven L. Ortega
|
Chairman | February 8, 2021 | ||
/s/ Michael R. Egeck
Michael R. Egeck
|
Chief Executive Officer (Principal Executive Officer) and Director | February 8, 2021 | ||
/s/ Steven M. Weddell
Steven M. Weddell
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | February 8, 2021 | ||
/s/ Yolanda Daniel
Yolanda Daniel
|
Director | February 8, 2021 | ||
/s/ Jodeen Kozlak
Jodeen Kozlak
|
Director | February 8, 2021 | ||
/s/ Marc Magliacano
Marc Magliacano
|
Director | February 8, 2021 | ||
/s/ Matthew Lischick
Matthew Lischick
|
Director | February 8, 2021 |
Signature
|
Title
|
Date
|
||
/s/ Eric Kufel
Eric Kufel
|
Director | February 8, 2021 | ||
/s/ Susan O’Farrell
Susan O’Farrell
|
Director | February 8, 2021 | ||
/s/ John Strain
John Strain
|
Director | February 8, 2021 |
EXHIBIT 1.1
Leslies, Inc.
Common Stock
Underwriting Agreement
February [●], 2021
Goldman Sachs & Co. LLC
Morgan Stanley & Co. LLC
BofA Securities, Inc.
As representatives (the Representatives) of the several Underwriters
named in Schedule I hereto,
c/o Goldman Sachs & Co. LLC
200 West Street
New York, New York 10282
c/o Morgan Stanley & Co. LLC
1585 Broadway
New York, New York 10036
c/o BofA Securities, Inc.
One Bryant Park
New York, New York 10036
Ladies and Gentlemen:
Bubbles Investor Aggregator, L.P. (Bubbles Investor), Explorer Investment Pte. Ltd. (the GIC Investor) and the other stockholders named in Schedule II hereto (the Non-Sponsor Selling Stockholders and, together with Bubbles Investor and the GIC Investor, the Selling Stockholders) of Leslies, Inc., a Delaware corporation (the Company), propose, subject to the terms and conditions stated in this agreement (the Agreement), to sell to the Underwriters named in Schedule I hereto (the Underwriters) an aggregate of [●] shares of common stock, par value $0.001 per share (Stock) of the Company and, at the election of the Underwriters, up to [●] additional shares of Stock. The [●] shares to be sold by the Selling Stockholders are herein called the Firm Shares and the [●] additional shares to be sold by the Selling Stockholders are herein called the Optional Shares. The Firm Shares and the Optional Shares that the Underwriters elect to purchase pursuant to Section 2 hereof are herein collectively called the Shares.
1. (a) The Company represents and warrants to, and agrees with, each of the Underwriters that:
(i) A registration statement on Form S1 (File No. 333-[●]) (the Initial Registration Statement) in respect of the Shares has been filed with the Securities and Exchange Commission (the Commission); the Initial Registration Statement and any post-effective
amendment thereto, each in the form heretofore delivered to you, have been declared effective by the Commission in such form; other than a registration statement, if any, increasing the size of the offering (a Rule 462(b) Registration Statement), filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the Act), which became effective upon filing, no other document with respect to the Initial Registration Statement has been filed with the Commission; and no stop order suspending the effectiveness of the Initial Registration Statement, any post-effective amendment thereto or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose has been initiated or, to the Companys knowledge, threatened by the Commission (any preliminary prospectus included in the Initial Registration Statement or filed with the Commission pursuant to Rule 424(a) under the Act is hereinafter called a Preliminary Prospectus; the various parts of the Initial Registration Statement and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and including the information contained in the form of final prospectus filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the Initial Registration Statement at the time it was declared effective, each as amended at the time such part of the Initial Registration Statement became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective, are hereinafter collectively called the Registration Statement; the Preliminary Prospectus relating to the Shares that was included in the Registration Statement immediately prior to the Applicable Time (as defined in Section 1(a)(iii) hereof) is hereinafter called the Pricing Prospectus; such final prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is hereinafter called the Prospectus; any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Act or Rule 163B under the Act is hereinafter called a Testing-the-Waters Communication; and any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Act is hereinafter called a Written Testing-the-Waters Communication; and any issuer free writing prospectus as defined in Rule 433 under the Act relating to the Shares is hereinafter called an Issuer Free Writing Prospectus);
(ii) (A) No order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission, and (B) each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with either the Underwriter Information (as defined in Section 9(b) of this Agreement) or the information relating to the Selling Stockholders furnished in writing by or on behalf of such Selling Stockholders expressly for use in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any other Issuer Free Writing Prospectus or any amendment or supplement thereto (the Selling Stockholder Information);
(iii) For the purposes of this Agreement, the Applicable Time is [●] p.m. (Eastern time) on the date of this Agreement; the Pricing Prospectus, as supplemented by the information listed on Schedule III(c) hereto, taken together (collectively, the Pricing Disclosure Package), as of the Applicable Time, did not, and as of each Time of Delivery (as defined in Section 4(a) of this Agreement) will not, include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the
2
circumstances under which they were made, not misleading; and each Issuer Free Writing Prospectus and each Written Testing-the-Waters Communication does not conflict with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus, and each Issuer Free Writing Prospectus and each Written Testing-the-Waters Communication, as supplemented by and taken together with the Pricing Disclosure Package, as of the Applicable Time, did not, and as of each Time of Delivery, will not, include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in reliance upon and in conformity with either the Underwriter Information or the Selling Stockholder Information;
(iv) No documents were filed with the Commission since the Commissions close of business on the business day immediately prior to the date of this Agreement and prior to the execution of this Agreement, except as set forth on Schedule III(b) hereto;
(v) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to each part of the Registration Statement, as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, and as of each Time of Delivery, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with either the Underwriter Information or the Selling Stockholder Information;
(vi) Neither the Company nor any of its subsidiaries has, since the date of the latest audited financial statements included in the Pricing Prospectus, (i) sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree or (ii) entered into any transaction or agreement (whether or not in the ordinary course of business) that is material to the Company and its subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that is material to the Company and its subsidiaries taken as a whole, in each case otherwise than as set forth or contemplated in the Pricing Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, there has not been (A) any change in the capital stock (other than as a result of (x) the exercise, if any, of stock options or the award, if any, of stock options or restricted stock in the ordinary course of business pursuant to the Companys equity plans that are described in the Pricing Prospectus and the Prospectus or (y) the issuance, if any, of stock upon conversion of Company securities as described in the Pricing Prospectus and the Prospectus) or long-term debt of the Company or any of its subsidiaries or (B) any Material Adverse Effect (as defined below); as used in this Agreement, Material Adverse Effect shall mean any material adverse change or effect, or any development involving a prospective material adverse change or effect, in or affecting (x) the business, properties, general affairs, prospects, management, financial position, stockholders equity or results of operations of the Company and its subsidiaries, taken as a whole, except as set forth or contemplated in the Pricing Prospectus, or (y) the ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated in the Pricing Prospectus and the Prospectus;
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(vii) The Company and its subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Pricing Prospectus or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not materially interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries;
(viii) Each of the Company and each of its subsidiaries has been (i) duly organized and is validly existing and in good standing under the laws of its jurisdiction of organization, with power and authority (corporate and other) to own its properties and conduct its business as described in the Pricing Prospectus, and (ii) duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except, in the case of this clause (ii), where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect; and each subsidiary of the Company has been listed in the Registration Statement;
(ix) The Company has an authorized capitalization as set forth in the Pricing Prospectus and all of the issued shares of capital stock of the Company, including the Shares to be sold by the Selling Stockholders, have been duly and validly authorized and issued and are fully paid and non-assessable and conform, in all material respects, to the description of the Stock contained in the Pricing Disclosure Package and the Prospectus; and all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and (except, in the case of any foreign subsidiary, for directors qualifying shares) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except for such liens or encumbrances described in the Pricing Prospectus and the Prospectus;
(x) [Reserved];
(xi) The sale of the Shares to be sold by the Selling Stockholders and the compliance by the Company with this Agreement and the consummation of the transactions contemplated in this Agreement and the Pricing Prospectus will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (A) any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, except, in the case of this clause (A) for such defaults, breaches, or violations that would not, individually or in the aggregate, have a Material Adverse Effect, (B) the certificate of incorporation or by-laws (or other applicable organizational document) of the Company or any of its subsidiaries, or (C) any statute or any judgment, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, except in the case of this clause (C), as would not, individually or in the aggregate, have a Material Adverse Effect; and no consent,
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approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the sale of the Shares or the consummation by the Company of the transactions contemplated by this Agreement, except such as have been obtained under the Act, the approval by FINRA of the underwriting terms and arrangements and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters;
(xii) Neither the Company nor any of its subsidiaries is (i) in violation of its certificate of incorporation or by-laws (or other applicable organization document), (ii) in violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, or (iii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except, in the case of the foregoing clauses (ii) and (iii), for such defaults as would not, individually or in the aggregate, have a Material Adverse Effect;
(xiii) The statements set forth in the Pricing Prospectus and the Prospectus under the caption Description of Capital Stock, insofar as they purport to constitute a summary of the terms of the Stock, are accurate, complete and fair in all material respects;
(xiv) The statements set forth in the Pricing Prospectus and the Prospectus under the caption Certain Material United States Federal Income Tax Considerations, insofar as such statements constitute a summary of the legal matters or documents referred to therein, are accurate in all material respects;
(xv) Other than as set forth in the Pricing Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries or, to the Companys knowledge, any officer or director of the Company is a party or of which any property or assets of the Company or any of its subsidiaries or, to the Companys knowledge, any officer or director of the Company is the subject which, if determined adversely to the Company or any of its subsidiaries (or such officer or director), would individually or in the aggregate have a Material Adverse Effect; and, to the Companys knowledge, no such proceedings are threatened or contemplated by governmental authorities or others;
(xvi) The Company is not an investment company, as such term is defined in the Investment Company Act of 1940, as amended (the Investment Company Act);
(xvii) At the time of filing the Initial Registration Statement and any post-effective amendment thereto, at the earliest time thereafter that any offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Act) of the Shares, and at the date hereof, the Company was not and is not an ineligible issuer, as defined in Rule 405 under the Act;
(xviii) Ernst & Young LLP, who have certified certain financial statements of the Company and its subsidiaries, are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder;
(xix) The Company maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) that (i) complies with the requirements of the Exchange Act,
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(ii) has been designed by the Companys principal executive officer and principal financial officer, or under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and (iii) is sufficient to provide reasonable assurance that (A) transactions are executed in accordance with managements general or specific authorization, (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets, (C) access to assets is permitted only in accordance with managements general or specific authorization and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and the Companys internal control over financial reporting is effective and the Company is not aware of any material weaknesses in its internal control over financial reporting;
(xx) Since the date of the latest audited financial statements included in the Pricing Prospectus, there has been no change in the Companys internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting;
(xxi) The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that material information relating to the Company and its subsidiaries is made known to the Companys principal executive officer and principal financial officer by others within those entities; and such disclosure controls and procedures are effective;
(xxii) This Agreement has been duly authorized, executed and delivered by the Company;
(xxiii) None of the Company or any of its subsidiaries or any director or officer of the Company or any of its subsidiaries nor, to the knowledge of the Company, any employee, agent, affiliate or other person associated with or acting on behalf of the Company or any of its subsidiaries has (i) made, offered, promised or authorized any unlawful contribution, gift, entertainment or other unlawful expense (or taken any act in furtherance thereof); (ii) made, offered, promised or authorized any direct or indirect unlawful payment; or (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, the Bribery Act 2010 of the United Kingdom or any other applicable anti-bribery or anti-corruption law;
(xxiv) The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with the requirements of applicable anti-money laundering laws, including, but not limited to, the Bank Secrecy Act of 1970, as amended by the USA PATRIOT ACT of 2001, and the rules and regulations promulgated thereunder, and the anti-money laundering laws of the various jurisdictions in which the Company and its subsidiaries conduct business (collectively, the Money Laundering Laws) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened;
(xxv) (A) None of the Company or any of its subsidiaries or any director or officer of the Company or any of its subsidiaries nor, to the knowledge of the Company, any employee, agent or affiliate of the Company or any of its subsidiaries is an individual or entity (Person)
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currently the subject or the target of any sanctions administered or enforced by the U.S. Government, including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC), or the U.S. Department of State and including, without limitation, the designation as a specially designated national or blocked person, the European Union, Her Majestys Treasury, the United Nations Security Council, or other relevant sanctions authority (collectively, Sanctions), nor is the Company or any of its subsidiaries located, organized, or resident in a country or territory that is the subject or target of Sanctions; and (B) for the past five years, the Company or any of its subsidiaries have not knowingly engaged in, and are not, as of the date of this Agreement, knowingly engaged in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject or target of Sanctions;
(xxvi) The financial statements included in the Registration Statement, the Pricing Prospectus and the Prospectus, together with the related schedules and notes, present fairly in all material respects the financial position of the Company and its subsidiaries at the dates indicated and the statement of operations, stockholders equity and cash flows of the Company and its subsidiaries for the periods specified; said financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) applied on a consistent basis throughout the periods involved. The supporting schedules, if any, present fairly in all material respects in accordance with GAAP the information required to be stated therein. The selected financial data and the summary financial information included in the Registration Statement, the Pricing Prospectus and the Prospectus present fairly in all material respects the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included therein. Except as included therein, no historical or pro forma financial statements or supporting schedules are required to be included in the Registration Statement, the Pricing Prospectus or the Prospectus under the Act or the rules and regulations promulgated thereunder. All disclosures contained in the Registration Statement, the Pricing Prospectus and the Prospectus regarding non-GAAP financial measures (as such term is defined by the rules and regulations of the Commission) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Act in all material respects, to the extent applicable;
(xxvii) Any statistical and market-related data included in the Pricing Prospectus and the Prospectus are based on or derived from sources that the Company reasonably believes to be reliable and accurate and, to the extent required, the Company has obtained the written consent to the use of such data from such sources;
(xxviii) Except as would not, in the aggregate, reasonably be expected to result in a Material Adverse Effect, (A) the Company and its subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, Intellectual Property) necessary to carry on the business now operated by them, and (B) neither the Company nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein;
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(xxvix) (A) The minimum funding standard under Sections 412 and 430 of the Internal Revenue Code of 1986, as amended (the Code) and Sections 302 and 303 of the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder (ERISA), has been satisfied by each pension plan (as defined in Section 3(2) of ERISA) that has been established or maintained by the Company, its subsidiaries and their ERISA Affiliates (as defined below); (B) each of the Company and its subsidiaries has fulfilled its obligations, if any, under Section 515 of ERISA; (C) each pension plan and welfare plan established or maintained by the Company and its Subsidiaries is in compliance with the currently applicable provisions of ERISA; (D) the fair market value of the assets under each pension plan established or maintained by the Company and its subsidiaries exceeds the present value of all benefits accrued under such pension plan (determined based on those assumptions used to fund such pension plan); (E) no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any pension plan established or maintained by the Company and its subsidiaries excluding transactions effected pursuant to a statutory or administrative exemption; and (F) none of the Company and its subsidiaries has incurred or, except as set forth or contemplated in the Pricing Prospects and the Prospectus, would reasonably be expected to incur any withdrawal liability under Section 4201 of ERISA, any liability under Section 4062, 4063, or 4064 of ERISA, or any other liability under Title IV of ERISA (other than contributions to pension plans or premiums to the Pension Benefit Guaranty Corporation, in the ordinary course and without default); except, in each case with respect to clauses (A) through (F) hereof, as would not reasonably be expected to result in a Material Adverse Effect. ERISA Affiliate means any trade or business (whether or not incorporated) that, together with the Company, could be deemed a single employer within the meaning of Section 4001(b)(1) of ERISA or within the meaning of Section 414(b), (c), (m) or (o) of the Code, and the regulations issued thereunder;
(xxx) (A)(x) To the Companys knowledge, there has been no security breach or attack or other compromise of or relating to any of the Companys and its subsidiaries information technology and computer systems, networks, hardware, software, data (including the data of their respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of them), equipment or technology (IT Systems and Data), except as set forth in the Pricing Prospectus and the Prospectus and (y) the Company and its subsidiaries have not been notified of, and have no knowledge of any event or condition that would reasonably be expected to result in, any security breach, attack or compromise to their IT Systems and Data, (B) the Company and its subsidiaries have complied, and are presently in compliance, with, all applicable laws, statutes or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority and all industry guidelines, standards, internal policies and contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification and (C) the Company and its subsidiaries have implemented backup and disaster recovery technology consistent with industry standards and practices, except, in each case with respect to clauses (A) through (C) hereof, as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;
(xxxi) (i) The holders of shares of Stock or securities convertible into or exercisable or exchangeable for Stock (such shares of Stock or other such securities collectively, the Securities) representing substantially all of holders of the Securities that did not deliver executed lock-up agreements to the underwriters pursuant to Section 8(j) of that certain
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Underwriting Agreement, dated as of October 28, 2020, by and among the Company, the representatives of the underwriters party thereto and the Company stockholders party thereto in connection with the companys initial public offering (the IPO Underwriting Agreement) as of the date hereof and (ii) the holders of any Securities that are issuable pursuant to an award granted prior to the date of the effectiveness of the Registration Statement and issued pursuant to any employee benefit plan in effect on the date hereof and described in the Pricing Disclosure Package are, in each case, bound by market standoff provisions with the Company that impose restrictions on transfer (subject to certain exceptions set forth in such provisions) with respect to such holders Securities during the Lock-Up Period (as defined in Section 5(e)(i) below) without the consent of the Company (Market Standoff Provisions) that are enforceable by the Company. Each such Market Standoff Provision is in full force and effect as of the date hereof and shall remain in full force and effect during the Lock-Up Period (as defined in Section 5(e)(i) below), except that this provision shall not prevent the Company from effecting a waiver or amendment to permit a transfer of Securities which, if such Securities were subject to the terms of the lock-up agreement described in Section 8(j) of the IPO Underwriting Agreement, would be permissible under such lock-up agreement without any consent, waiver or amendment of or approval by the Representatives.
(b) Each of the Selling Stockholders, severally and not jointly, represents and warrants to, and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary for the execution and delivery by such Selling Stockholder of this Agreement and for the sale and delivery of the Shares to be sold by such Selling Stockholder hereunder, have been obtained, except for such consents, approvals, authorizations and orders as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters, the approval of the underwriting terms and arrangements by FINRA or the approval for listing on the Nasdaq Global Select Market (the Exchange) and except where the failure to obtain any such consent, approval, authorization or order would not reasonably be expected, individually or in the aggregate, to have a material adverse effect on the ability of such Selling Stockholder to consummate the transactions contemplated by this Agreement; and such Selling Stockholder has full right, power and authority to enter into this Agreement and to sell, assign, transfer and deliver the Shares to be sold by such Selling Stockholder hereunder;
(ii) The sale of the Shares to be sold by such Selling Stockholder hereunder and the compliance by such Selling Stockholder with this Agreement and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any statute, indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which such Selling Stockholder is a party or by which such Selling Stockholder is bound or to which any of the property or assets of such Selling Stockholder is subject, nor will such action result in any violation of the provisions of the Articles of Association, Certificate of Limited Partnership or Limited Partnership Agreement of such Selling Stockholder (or similar applicable organizational document) or any statute or any judgment, order, rule or regulation of any court or governmental agency or body having jurisdiction over such Selling Stockholder or any of its subsidiaries or any property or assets of such Selling Stockholder, except for any such conflict, breach, violation or default that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Selling
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Stockholder to consummate the transactions contemplated by this Agreement; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental body or agency is required for the performance by such Selling Stockholder of its obligations under this Agreement and the consummation by such Selling Stockholder of the transactions contemplated by this Agreement in connection with the Shares to be sold by such Selling Stockholder hereunder, except the registration under the Act of the Shares and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters or such that, if not obtained, would not, individually or in the aggregate, affect the validity of the Shares to be sold by such Selling Stockholder or reasonably be expected to materially adversely affect the ability of such Selling Stockholder to consummate the transactions contemplated by this Agreement;
(iii) Such Selling Stockholder has, and immediately prior to each Time of Delivery (as defined in Section 4 hereof) such Selling Stockholder will have, good and valid title to, or a valid security entitlement within the meaning of Section 8-501 of the New York Uniform Commercial Code in respect of, the Shares to be sold by such Selling Stockholder hereunder at such Time of Delivery, free and clear of all liens, encumbrances, equities or claims; and, upon delivery of such Shares and payment therefor pursuant hereto, good and valid title to such Shares, free and clear of all liens, encumbrances, equities or claims, will pass to the several Underwriters;
(iv) [Reserved];
(v) Such Selling Stockholder has not taken and will not take, directly or indirectly, any action that is designed to or that has constituted or might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto are made in reliance upon and in conformity with written information furnished to the Company in writing by such Selling Stockholder pursuant to Items 7 and 11(m) of Form S1 expressly for use therein, such Registration Statement and Preliminary Prospectus did, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will, when they become effective or are filed with the Commission, as the case may be, conform in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, it being understood and agreed for the purposes of this Agreement, the Selling Stockholder Information for such Selling Stockholder consists only of (A) such Selling Stockholders legal name, address and Stock beneficially owned by such Selling Stockholder before and after the offering contemplated hereby and (B) the other information with respect to such Selling Stockholder (excluding percentages) which appear under the caption Principal and Selling Stockholders in the Preliminary Prospectus;
(vii) In order to document the Underwriters compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions herein contemplated, such Selling Stockholder will deliver to you prior to or at the First Time of Delivery an applicable and properly completed and executed United States
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Treasury Department Form W-8 (if such Selling Stockholder is a non-United States Person) or Form W-9 (if such Selling Stockholder is a United States person) (or, in each case, other applicable form or statement specified by Treasury Department regulations in lieu thereof);
(viii) To the extent such Selling Stockholder entered into the Custody Agreement (as defined below), Certificates in negotiable form or book-entry securities entitlements representing all of the Shares to be sold by such Selling Stockholder hereunder have been placed in custody under a Custody Agreement, in the form heretofore furnished to you (the Custody Agreement), duly executed and delivered by such Selling Stockholder to Computershare, Inc., as custodian (the Custodian), and such Selling Stockholder has duly executed and delivered a Power of Attorney, in the form heretofore furnished to you (the Power of Attorney), appointing the persons indicated in Schedule II hereto, and each of them, as such Selling Stockholders attorneys-in-fact (the Attorneys-in-Fact) with authority to execute and deliver this Agreement on behalf of such Selling Stockholder, to determine the purchase price to be paid by the Underwriters to the Selling Stockholders as provided in Section 2 hereof, to authorize the delivery of the Shares to be sold by such Selling Stockholder hereunder and otherwise to act on behalf of such Selling Stockholder in connection with the transactions contemplated by this Agreement and the Custody Agreement;
(ix) To the extent such Selling Stockholder entered into the Custody Agreement, the Shares held in custody for such Selling Stockholder under the Custody Agreement are subject to the interests of the Underwriters hereunder; the arrangements made by such Selling Stockholder for such custody, and the appointment by such Selling Stockholder of the Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable; the obligations of the Selling Stockholders hereunder shall not be terminated by operation of law, whether by the death or incapacity of any individual Selling Stockholder or, in the case of an estate or trust, by the death or incapacity of any executor or trustee or the termination of such estate or trust, or in the case of a partnership or corporation, by the dissolution of such partnership, limited liability company or corporation, or by the occurrence of any other event; if any individual Selling Stockholder or any such executor or trustee should die or become incapacitated, or if any such estate or trust should be terminated, or if any such partnership, limited liability company or corporation should be dissolved, or if any other such event should occur, before the delivery of the Shares to be sold by such Selling Stockholder hereunder, certificates representing the Shares to be sold by such Selling Stockholder hereunder shall be delivered by or on behalf of the Selling Stockholders in accordance with the terms and conditions of this Agreement and of the Custody Agreements; and actions taken by the Attorneys-in-Fact pursuant to the Powers of Attorney shall be as valid as if such death, incapacity, termination, dissolution or other event had not occurred, regardless of whether or not the Custodian, the Attorneys-in-Fact, or any of them, shall have received notice of such death, incapacity, termination, dissolution or other event;
(x) Such Selling Stockholder will not directly or indirectly use the proceeds of the offering of the Shares hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, (i) to fund or facilitate any activities of or business with any person, or in any country or territory, that, at the time of such funding, is the subject or the target of Sanctions, or in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions, or (ii) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of any Money Laundering Laws or any applicable anti-bribery or anti-corruption laws; and
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(xi) [Reserved]; and
(xii) Such Selling Stockholder represents and warrants that it is not (i) an employee benefit plan subject to Title I of ERISA, (ii) a plan or account subject to Section 4975 of the Internal Revenue Code of 1986, as amended or (iii) an entity deemed to hold plan assets of any such plan or account under Section 3(42) of ERISA, 29 C.F.R. 2510.3-101, or otherwise.
(c) Each of the Non-Sponsor Selling Stockholders, severally and not jointly, represents and warrants to, and agrees with, each of the Underwriters and the Company that such Non-Sponsor Selling Stockholder is not prompted by any material information concerning the Company or any of its subsidiaries that is not disclosed in the Pricing Prospectus to sell its Shares pursuant to this Agreement.
2. Subject to the terms and conditions herein set forth, (a) each of the Selling Stockholders agree, severally and not jointly, to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from each of the Selling Stockholders, at a purchase price per share of $[●], the number of Firm Shares (to be adjusted by you so as to eliminate fractional shares) determined by multiplying the aggregate number of Firm Shares to be sold by the Selling Stockholders as set forth opposite their respective names in Schedule II hereto by a fraction, the numerator of which is the aggregate number of Firm Shares to be purchased by such Underwriter as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the aggregate number of Firm Shares to be purchased by all of the Underwriters from the Selling Stockholders hereunder and (b) in the event and to the extent that the Underwriters shall exercise the election to purchase Optional Shares as provided below, the Selling Stockholders, as and to the extent indicated in Schedule II hereto, agree, severally and not jointly, to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from each of the Selling Stockholders, at the purchase price per share set forth in clause (a) of this Section 2 (provided that the purchase price per Optional Share shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm Shares but not payable on the Optional Shares), that portion of the number of Optional Shares as to which such election shall have been exercised (to be adjusted by you so as to eliminate fractional shares) determined by multiplying such number of Optional Shares by a fraction, the numerator of which is the maximum number of Optional Shares which such Underwriter is entitled to purchase as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the maximum number of Optional Shares that all of the Underwriters are entitled to purchase hereunder.
The Selling Stockholders, as and to the extent indicated in Schedule II hereto, hereby grant, severally and not jointly to the Underwriters the right to purchase at their election up to [●] Optional Shares, at the purchase price per share set forth in the paragraph above, for the sole purpose of covering sales of shares in excess of the number of Firm Shares, provided that the purchase price per Optional Share shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm Shares but not payable on the Optional Shares. Any such election to purchase Optional Shares may be exercised only by written notice from you to the Company, given within a period of 30 calendar days after the date of this Agreement and setting forth the aggregate number of Optional Shares to be purchased and the date on which such Optional Shares are to be delivered, as determined by you but in no event earlier than the First Time of Delivery (as defined in Section 4 hereof) or, unless you and the Company otherwise agree in writing, earlier than two or later than ten business days after the date of such notice.
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3. Upon the authorization by you of the release of the Firm Shares, the several Underwriters propose to offer the Firm Shares for sale upon the terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in definitive or book-entry form, and in such authorized denominations and registered in such names as the Representatives may request upon at least forty-eight hours prior notice to the Company and the Selling Stockholders shall be delivered by or on behalf of the Company and the Selling Stockholders to the Representatives, through the facilities of the Depository Trust Company (DTC), for the account of such Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the accounts specified by the Company to the Representatives at least forty-eight hours in advance. The time and date of such delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New York time, on February [●], 2021 or such other time and date as the Representatives and the Company may agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m., New York time, on the date specified by the Representatives in each written notice given by the Representatives of the Underwriters election to purchase such Optional Shares, or such other time and date as the Representatives and the Company may agree upon in writing. Such time and date for delivery of the Firm Shares is herein called the First Time of Delivery, each such time and date for delivery of the Optional Shares, if not the First Time of Delivery, is herein called the Second Time of Delivery, and each such time and date for delivery is herein called a Time of Delivery.
(b) The documents to be delivered at each Time of Delivery by or on behalf of the parties hereto pursuant to Section 8 hereof, including the cross receipt for the Shares and any additional documents requested by the Underwriters pursuant to Section 8(l) hereof will be delivered at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, New York, 10022 (the Closing Location), and the Shares will be delivered at the Closing Location, all at such Time of Delivery. A meeting will be held at the Closing Location at 5:00 p.m., New York City time, on the New York Business Day next preceding such Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, New York Business Day shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commissions close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Act; to make no further amendment or any supplement to the Registration Statement or the Prospectus prior to the last Time of Delivery which shall be disapproved by you promptly after reasonable notice thereof; to advise you, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any amendment or supplement to the Prospectus has been filed and to furnish you with copies thereof; to file promptly all material required to be filed by the Company with the Commission pursuant to Rule 433(d) under the Act; to advise you, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or
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suspending the use of any Preliminary Prospectus or other prospectus in respect of the Shares, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may reasonably request to qualify the Shares for offering and sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Shares, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation (where not otherwise required) or to file a general consent to service of process in any jurisdiction (where not otherwise required);
(c) Prior to 10:00 a.m., New York City time, on the New York Business Day next succeeding the date of this Agreement and from time to time, to furnish the Underwriters with written and electronic copies of the Prospectus in New York City in such quantities as you may reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Shares and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus in order to comply with the Act, to notify you and upon your request to prepare and furnish without charge to each Underwriter and to any dealer in securities as many written and electronic copies as you may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; and in case any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any of the Shares at any time nine months or more after the time of issue of the Prospectus, upon your request but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as you may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as practicable (which may be satisfied by filing with the Commissions Electronic Data Gathering Analysis and Retrieval System (EDGAR), but in any event not later than sixteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);
(e) (i) During the period beginning from the date hereof and continuing to and including the date 90 days after the date of the Prospectus (the Lock-Up Period), not to (A) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, or file with or confidentially submit to the Commission a registration statement under the Act relating to, any securities of the Company that are substantially similar to the Shares,
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including but not limited to any options or warrants to purchase shares of Stock or any securities that are convertible into or exchangeable for, or that represent the right to receive, Stock or any such substantially similar securities, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing or (B) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Stock or any such other securities, whether any such transaction described in clause (A) or (B) above is to be settled by delivery of Stock or such other securities, in cash or otherwise (other than the Shares to be sold hereunder or pursuant to employee stock option plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this Agreement), without the prior written consent of the Representatives.
(ii) In addition, during the Lock-Up Period, the Company agrees to (i) enforce the Market Standoff Provisions and any similar transfer restrictions contained in any agreement between the Company and any of its securityholders, including, without limitation, through the issuance of stop transfer instructions to the Companys transfer agent and equity plan administrator with respect to any transaction that would constitute a breach of, or default under, such transfer restrictions and (ii) not release, amend or waive any such transfer restrictions with respect to any such holder without the prior written consent of the Representatives, except that this provision shall not prevent the Company from releasing stop transfer instructions or effecting such a waiver or amendment to permit a transfer of Securities that would be permissible with respect to such holder under the terms of the lock-up agreement described in Section 8(j) of the IPO Underwriting Agreement.
(f) To furnish to its stockholders as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), to make available to its stockholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail, provided, however, that the Company may satisfy the requirements of this Section 5(f) by filing such information through EDGAR;
(g) During a period of three years from the effective date of the Registration Statement, to furnish to you copies of all reports or other communications (financial or other) furnished to stockholders, and to deliver to you (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange on which any class of securities of the Company is listed; and (ii) such additional information concerning the business and financial condition of the Company as you may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its stockholders generally or to the Commission);
(h) [Reserved];
(i) To use its best efforts to maintain the listing of the Shares on the Exchange;
(j) To file with the Commission such information on Form 10-Q or Form 10-K as may be required by Rule 463 under the Act;
(k) If the Company elects to rely upon Rule 462(b), the Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of this Agreement, and the Company shall at the time of filing
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either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 3a(c) of the Commissions Informal and Other Procedures (16 CFR 202.3a); and
(l) Upon reasonable request of any Underwriter, to furnish, or cause to be furnished, to such Underwriter an electronic version of the Companys trademarks, servicemarks and corporate logo for use on the website, if any, operated by such Underwriter for the purpose of facilitating the on-line offering of the Shares (the License); provided, however, that the License shall be used solely for the purpose described above, is granted without any fee and may not be assigned or transferred.
6. (a) The Company represents and agrees that, without the prior consent of the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a free writing prospectus as defined in Rule 405 under the Act; each Selling Stockholder, severally and not jointly, represents and agrees that, without the prior consent of the Company and the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a free writing prospectus; and each Underwriter represents and agrees that, without the prior consent of the Company and the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a free writing prospectus required to be filed with the Commission; any such free writing prospectus the use of which has been consented to by the Company and the Representatives is listed on Schedule III(a) hereto;
(b) The Company has complied and will comply with the requirements of Rule 433 under the Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission or retention where required and legending; and the Company represents that it has satisfied and agrees that it will satisfy the conditions under Rule 433 under the Act to avoid a requirement to file with the Commission any electronic road show;
(c) The Company agrees that if at any time following issuance of an Issuer Free Writing Prospectus or Written Testing-the-Waters Communication any event occurred or occurs as a result of which such Issuer Free Writing Prospectus or Written Testing-the-Waters Communication would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Representatives and, if requested by the Representatives, will prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus, Written Testing-the-Waters Communication or other document which will correct such conflict, statement or omission; provided, however, that this covenant shall not apply to any statements or omissions in an Issuer Free Writing Prospectus made in reliance upon and in conformity with the Underwriter Information.
(d) The Company represents and agrees that (i) it has not engaged in, or authorized any other person to engage in, any Testing-the-Waters Communications, other than Testing-the-Waters Communications with the prior consent of the Representatives with entities that the Company reasonably believes are qualified institutional buyers as defined in Rule 144A under the Act or institutions that are accredited investors as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Act; and (ii) it has not distributed, or authorized any other person to distribute, any Written Testing-the-Waters Communication, other than those distributed with the prior consent of the Representatives that are listed on Schedule III(d) hereto; and the Company reconfirms that the Underwriters have been authorized to act on its behalf in engaging in Testing-the-Waters Communications;
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(e) Each Underwriter represents and agrees that any Testing-the-Waters Communications undertaken by it were with entities that such Underwriter reasonably believes are qualified institutional buyers as defined in Rule 144A under the Act or institutions that are accredited investors as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Act.
7. The Company covenants and agrees with the several Underwriters that (a) the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Companys counsel and accountants in connection with the registration of the Shares under the Act and all other expenses in connection with the preparation, printing, reproduction and filing of the Registration Statement, any Preliminary Prospectus, any Written Testing-the-Waters Communication, any Issuer Free Writing Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Shares; (iii) all expenses in connection with the qualification of the Shares for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky survey (such fees and expenses of counsel not to exceed $5,000); (iv) all fees and expenses in connection with listing the Shares on the Exchange; (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required review by the Financial Industry Regulatory Authority (FINRA) of the terms of the sale of the Shares (such fees and expenses of counsel not to exceed $15,000); and (vi) the costs and expenses of the Company relating to investor presentations on any road show undertaken in connection with the marketing of the offering of the Shares, including, without limitation, expenses associated with the preparation or dissemination of any electronic road show, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives (not including the Underwriters and their representatives) and officers of the Company and any such consultants (not including the Underwriters and their representatives), and 50% of the cost of any aircraft chartered in connection with the road show; and (b) the Company will pay or cause to be paid: (i) the cost of preparing stock certificates; if applicable (ii) the cost and charges of any transfer agent or registrar, and (iii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that the Company shall bear the cost of any other matters not directly relating to the sale and purchase of the Shares pursuant to this Agreement, and that, except as provided in this Section, and Sections 9, 10 and 12 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, stock transfer taxes on resale of any of the Shares by them, and any advertising expenses connected with any offers they may make.
The Company agrees to pay or cause to be paid all expenses incident to the performance of the Selling Stockholders obligations under this Agreement, including the fees, disbursements and expenses of the counsel for the Selling Stockholders and all other costs and expenses incident to the performance of the obligations of the Selling Stockholders (subject to Section 7(i) above) hereunder for which provision is not otherwise made in this Section.
8. The obligations of the Underwriters hereunder, as to the Shares to be delivered at each Time of Delivery, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company and the Selling Stockholders herein are, at and as of
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the Applicable Time and such Time of Delivery, true and correct, the condition that the Company and the Selling Stockholders shall have performed all of its and their obligations hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Act within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; all material required to be filed by the Company pursuant to Rule 433(d) under the Act shall have been filed with the Commission within the applicable time period prescribed for such filing by Rule 433; if the Company has elected to rely upon Rule 462(b) under the Act, the Rule 462(b) Registration Statement shall have become effective by 10:00 p.m., Washington, D.C. time, on the date of this Agreement; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission no stop order suspending or preventing the use of the Pricing Prospectus, Prospectus or any Issuer Free Writing Prospectus shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to your reasonable satisfaction;
(b) Latham & Watkins LLP, counsel for the Underwriters, shall have furnished to you such written opinion or opinions, dated such Time of Delivery, in form and substance satisfactory to you, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;
(c) Gibson, Dunn & Crutcher LLP, counsel for the Company, shall have furnished to you their written opinion, dated such Time of Delivery, in form and substance reasonably satisfactory to you, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;
(d) (i) Kirkland & Ellis LLP, counsel for Bubbles Investor, shall have furnished to you such written opinion or opinions, dated such Time of Delivery, in form and substance reasonably satisfactory to you, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; and (ii) Sidley Austin LLP, counsel for the GIC Investor, shall have furnished to you such written opinion or opinions, dated such Time of Delivery, in form and substance reasonably satisfactory to you, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;
(e) On the date of the Prospectus at a time substantially concurrent with the execution of this Agreement, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at each Time of Delivery, Ernst & Young LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you;
(f) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included in the Pricing Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus, and (ii) since the respective dates as of which information is given in the Pricing Prospectus there shall not have been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any change or effect, or any development involving a prospective change or effect, in or affecting (x) the business, properties, general affairs, prospects,
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management, financial position, stockholders equity or results of operations of the Company and its subsidiaries, taken as a whole, except as set forth or contemplated in the Pricing Prospectus and the Prospectus, or (y) the ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated in the Pricing Prospectus and the Prospectus, the effect of which, in any such case described in clause (i) and (ii), is in your judgment so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the Pricing Prospectus and the Prospectus;
(g) On or after the Applicable Time (i) no downgrading shall have occurred in the rating accorded the Companys debt securities by any nationally recognized statistical rating organization, as defined in Section 3(a)(62) of the Exchange Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Companys debt securities;
(h) On or after the Applicable Time there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the Exchange; (ii) a suspension or material limitation in trading in the Companys securities on the Exchange; (iii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in your judgment makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the Pricing Prospectus and the Prospectus;
(i) The Shares to be sold at such Time of Delivery shall have been duly listed, subject to official notice of issuance, on the Exchange;
(j) [Reserved];
(k) The Company shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement;
(l) The Company, Bubbles Investor and the GIC Investor shall have furnished or caused to be furnished to you at such Time of Delivery certificates of officers of the Company, Bubbles Investor and GIC Investor, respectively, and such other documents satisfactory to you as to the accuracy of the representations and warranties of the Company, Bubbles Investor and the GIC Investor herein at and as of such Time of Delivery, as to the performance by the Company, Bubbles Investor and the GIC Investor of all of their respective obligations hereunder to be performed at or prior to such Time of Delivery, as to such other matters as you may reasonably request, and the Company shall have furnished or caused to be furnished certificates as to the matters set forth in subsections (a) and (f) of this Section 8; and
(m) On the date of this Agreement and at such Time of Delivery, the Company shall have furnished to you a certificate, dated the respective dates of delivery thereof and addressed to you, of its chief financial officer with respect to certain financial data contained in the Pricing Disclosure Package and the Prospectus, providing management comfort with respect to such information, in form and substance reasonably satisfactory to you.
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9. (a) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Issuer Free Writing Prospectus, any roadshow as defined in Rule 433(h) under the Act (a roadshow), any issuer information filed or required to be filed pursuant to Rule 433(d) under the Act or any Testing-the-Waters Communication, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus or any Testing-the-Waters Communication, in reliance upon and in conformity with the Underwriter Information.
(b) Each of the Selling Stockholders will, severally and not jointly, indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Issuer Free Writing Prospectus, any roadshow or any Testing-the-Waters Communication, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto or any Issuer Free Writing Prospectus, or any roadshow or any Testing-the-Waters Communication, in reliance upon and in conformity with the Selling Stockholder Information provided by such Selling Stockholder; and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Selling Stockholders shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus or any amendment or supplement thereto or any Issuer Free Writing Prospectus in reliance upon and in conformity with the Underwriter Information, provided, further, that the liability of any Selling Stockholder pursuant to this subsection (b) shall not exceed the net proceeds after underwriting commissions and discounts but before deducting expenses from the sale of Shares sold by such Selling Stockholder hereunder.
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(c) Each Underwriter, severally and not jointly, will indemnify and hold harmless the Company and each Selling Stockholder against any losses, claims, damages or liabilities to which the Company or such Selling Stockholder may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or any roadshow, or any Testing-the-Waters Communication, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or any roadshow, or any Testing-the-Waters Communication, in reliance upon and in conformity with the Underwriter Information; and will reimburse the Company and each Selling Stockholder for any legal or other expenses reasonably incurred by the Company or such Selling Stockholder in connection with investigating or defending any such action or claim as such expenses are incurred. As used in this Agreement with respect to an Underwriter and an applicable document, Underwriter Information shall mean the written information furnished to the Company by such Underwriter through the Representatives expressly for use therein; it being understood and agreed upon that the only such information furnished by any Underwriter consists of the following information in the Prospectus furnished on behalf of each Underwriter: the concession and reallowance figures appearing in the fifth paragraph under the caption Underwriting, and the information contained in the twelfth, thirteenth and fourteenth paragraphs under the caption Underwriting.
(d) Promptly after receipt by an indemnified party under subsection (a), (b) or (c) of this Section 9 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; provided that the failure to notify the indemnifying party shall not relieve it from any liability that it may have under the preceding paragraphs of this Section 9 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under the preceding paragraphs of this Section 9. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.
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(e) If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a), (b) or (c) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party under such subsection, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Stockholders on the one hand and the Underwriters on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Selling Stockholders on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Stockholders on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the net proceeds from the offering (before deducting expenses) received by each Selling Stockholder bears to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Selling Stockholders on the one hand or the Underwriters on the other and the parties relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, each of the Selling Stockholders and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (e) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (e), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters obligations in this subsection (e) to contribute are several in proportion to their respective underwriting obligations and not joint. Notwithstanding anything to the contrary in this Section 9, the liability of any Selling Stockholder pursuant to subsection (b) above or this subsection (e) shall not exceed the net proceeds, after underwriting commissions and discounts but before deducting expenses, from the sale of Shares sold by such Selling Stockholder hereunder.
(f) The obligations of the Company and the Selling Stockholders under this Section 9 shall be in addition to any liability which the Company and the Selling Stockholders may otherwise have and shall extend, upon the same terms and conditions, to each employee, officer and director of each
22
Underwriter and each person, if any, who controls any Underwriter within the meaning of the Act and each broker-dealer or other affiliate of any Underwriter; and the obligations of the Underwriters under this Section 9 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company or any Selling Stockholder within the meaning of the Act.
10. (a) If any Underwriter shall default in its obligation to purchase the Shares that it has agreed to purchase hereunder at a Time of Delivery, you may in your discretion arrange for you or another party or other parties to purchase such Shares on the terms contained herein. If within thirty-six hours after such default by any Underwriter you do not arrange for the purchase of such Shares, then the Company and the Selling Stockholders shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to you to purchase such Shares on such terms. In the event that, within the respective prescribed periods, you notify the Company and the Selling Stockholders that you have so arranged for the purchase of such Shares, or the Company or a Selling Stockholder notifies you that it has so arranged for the purchase of such Shares, you or the Company or the Selling Stockholders shall have the right to postpone such Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in your opinion may thereby be made necessary. The term Underwriter as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you, the Company and the Selling Stockholders as provided in subsection (a) above, the aggregate number of such Shares which remains unpurchased does not exceed one-eleventh of the aggregate number of all the Shares to be purchased at such Time of Delivery, then the Company and the Selling Stockholders shall have the right to require each non-defaulting Underwriter to purchase the number of Shares which such Underwriter agreed to purchase hereunder at such Time of Delivery and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Shares which such Underwriter agreed to purchase hereunder) of the Shares of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you, the Company and the Selling Stockholders as provided in subsection (a) above, the aggregate number of such Shares which remains unpurchased exceeds one-eleventh of the aggregate number of all of the Shares to be purchased at such Time of Delivery, or if the Company and the Selling Stockholders shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement (or, with respect to a Second Time of Delivery, the obligations of the Underwriters to purchase and of the Selling Stockholders to sell the Optional Shares) shall thereupon terminate, without liability on the part of any non-defaulting Underwriter, the Company or the Selling Stockholders, except for the expenses to be borne by the Company, the Selling Stockholders and the Underwriters as provided in Section 7 hereof and the indemnity and contribution agreements in Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
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11. The respective indemnities, agreements, representations, warranties and other statements of the Company, the Selling Stockholders and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, or any of the Selling Stockholders, or any officer or director or controlling person of the Company, or any controlling person of any Selling Stockholder, and shall survive delivery of and payment for the Shares.
12. If this Agreement shall be terminated pursuant to Section 10 hereof, neither the Company nor the Selling Stockholders shall then be under any liability to any Underwriter except as provided in Sections 7 and 9 hereof; but, if for any other reason any Shares are not delivered by or on behalf of the Company and the Selling Stockholders as provided herein, or the Underwriters decline to purchase the Shares for any reason permitted under this Agreement, the Company will reimburse the Underwriters through you for all out-of-pocket expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Shares not so delivered, but the Company and the Selling Stockholders shall then be under no further liability to any Underwriter except as provided in Sections 7 and 9 hereof.
13. In all dealings hereunder, the Representatives shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by the Representatives on behalf of the Underwriters.
In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Company and the Selling Stockholder, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters to properly identify their respective clients.
All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to Goldman Sachs & Co. LLC, 200 West Street, New York, New York 10282, Attention: Registration Department; Morgan Stanley & Co. LLC at 1585 Broadway, New York, New York 10036, Attention: Equity Syndicate Desk, with a copy to the Legal Department; and BofA Securities, Inc. at One Bryant Park, New York, New York 10036, attention of Syndicate Department (facsimile: (646) 855-3073), with a copy to ECM Legal (facsimile: (212) 230-8730); if to any Selling Stockholder shall be delivered or sent by mail, telex or facsimile transmission to such Selling Stockholder at the applicable address set forth in Schedule II hereto; if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth on the cover of the Registration Statement, Attention: Secretary; and if to any stockholder that has delivered a lock-up letter described in Section 8(j) hereof shall be delivered or sent by mail, telex or facsimile transmission to him or her care of the Company, at the address of the Company set forth on the cover of the Registration Statement, or to such other address as such stockholder provides in writing to the Company; provided, however, that any notice to an Underwriter pursuant to Section 9(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters Questionnaire or telex
24
constituting such Questionnaire, which address will be supplied to the Company or the Selling Stockholders by you on request; provided further that notices under subsection 5(e) shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the Representatives at Goldman Sachs & Co. LLC, 200 West Street, New York, New York 10282, Attention: Control Room; Morgan Stanley & Co. LLC at 1585 Broadway, New York, New York 10036, Attention: Equity Syndicate Desk, with a copy to the Legal Department; and BofA Securities, Inc. at One Bryant Park, New York, New York 10036, attention of Syndicate Department (facsimile: (646) 855-3073), with a copy to ECM Legal (facsimile: (212) 230-8730). Any such statements, requests, notices or agreements shall take effect upon receipt thereof.
14. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and the Selling Stockholders and, to the extent provided in Sections 9 and 11 hereof, the officers and directors of the Company and each person who controls the Company, any Selling Stockholders or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Shares from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.
15. Time shall be of the essence of this Agreement. As used herein, the term business day shall mean any day when the Commissions office in Washington, D.C. is open for business.
16. The Company and the Selling Stockholders acknowledge and agree, severally and not jointly, that (i) the purchase and sale of the Shares pursuant to this Agreement is an arms-length commercial transaction between the Company and the Selling Stockholders, on the one hand, and the several Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not the agent or fiduciary of the Company or any Selling Stockholder, (iii) no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company or any Selling Stockholder with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company or any Selling Stockholder on other matters) or any other obligation to the Company or any Selling Stockholder except the obligations expressly set forth in this Agreement and (iv) the Company and each Selling Stockholder has consulted its own legal and financial advisors to the extent it deemed appropriate. The Company and each Selling Stockholder agrees, severally and not jointly, that it will not claim that the Underwriters, or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company or any Selling Stockholder, in connection with such transaction or the process leading thereto. None of the activities of the Underwriters in connection with the transactions contemplated herein constitutes a recommendation, investment advice or solicitation of any action by the Underwriters with respect to any entity or natural person.
17. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company, the Selling Stockholders and the Underwriters, or any of them, with respect to the subject matter hereof.
18. This Agreement and any transaction contemplated by this Agreement and any claim, controversy or dispute arising under or related thereto shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflict of laws that would results in the application of any other law than the laws of the State of New York. The Company and each Selling Stockholder agree that any suit or proceeding arising in respect of this Agreement or any transaction contemplated by this Agreement will be tried exclusively in the U.S. District Court for
25
the Southern District of New York or, if that court does not have subject matter jurisdiction, in any state court located in The City and County of New York and the Company and each Selling Stockholder agree to submit to the jurisdiction of, and to venue in, such courts.
19. The Company, each Selling Stockholder and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
20. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
21. Notwithstanding anything herein to the contrary, the Company and the Selling Stockholders are authorized to disclose to any persons the U.S. federal and state income tax treatment and tax structure of the potential transaction and all materials of any kind (including tax opinions and other tax analyses) provided to the Company and the Selling Stockholders relating to that treatment and structure, without the Underwriters imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, tax structure is limited to any facts that may be relevant to that treatment. This Section 21 is intended to cause the transaction as not having been offered under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) of the Treasury Regulations promulgated under the Internal Revenue Code of 1986, as amended, and shall be construed in a manner consistent with such purpose.
22. Recognition of the U.S. Special Resolution Regimes.
(a) In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.
(b) In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.
(c) As used in this section:
BHC Act Affiliate has the meaning assigned to the term affiliate in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).
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Covered Entity means any of the following:
(i) a covered entity as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(ii) a covered bank as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(iii) a covered FSI as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
Default Right has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
U.S. Special Resolution Regime means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
If the foregoing is in accordance with your understanding, please sign and return to us counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement among each of the Underwriters, the Company and each of the Selling Stockholders. It is understood that your acceptance of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company and the Selling Stockholders for examination, upon request, but without warranty on your part as to the authority of the signers thereof.
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Any person executing and delivering this Agreement as Attorney-in-Fact for a Selling Stockholder represents by so doing that he has been duly appointed as Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing and binding Power-of-Attorney that authorizes such Attorney-in-Fact to take such action.
Very truly yours, | ||
Leslies, Inc. | ||
By: |
|
|
Name: | ||
Title: |
[Signature Page to Underwriting Agreement]
The Selling Stockholders | ||
Bubbles Investor Aggregator, L.P. | ||
By: | C8 Management, L.L.C. | |
Its: | General Partner | |
By: |
|
|
Name: | ||
Title: | ||
Explorer Investment Pte Ltd. | ||
By: |
|
|
Name: | ||
Title: | ||
Leslies Inc. F/B/O/ Shareworks | ||
By: |
|
|
Name: | ||
Title: |
[Signature Page to Underwriting Agreement]
The Selling Stockholders not listed above | ||||
By: |
|
|||
Name: Steven M. Weddell | ||||
As Attorney-in-Fact acting on behalf of each of the Selling Stockholders named in Schedule II to this Agreement other than Bubbles Investor Aggregator, L.P., Explorer Investment Pte. Ltd. an Leslies Inc. F/B/O Shareworks. | ||||
and | ||||
By: |
|
|||
Name: Brad A. Gazaway | ||||
As Attorney-in-Fact acting on behalf of each of the Selling Stockholders named in Schedule II to this Agreement other than Bubbles Investor Aggregator, L.P., Explorer Investment Pte. Ltd. an Leslies Inc. F/B/O Shareworks. |
[Signature Page to Underwriting Agreement]
Accepted as of the date hereof | ||
Goldman Sachs & Co. LLC | ||
By: |
|
|
Name: | ||
Title: | ||
Morgan Stanley & Co. LLC | ||
By: |
|
|
Name: | ||
Title: | ||
BofA Securities, Inc. | ||
By: |
|
|
Name: | ||
Title: | ||
On behalf of each of the Underwriters |
[Signature Page to Underwriting Agreement]
SCHEDULE I
Number of
Optional |
||||||||
Shares to be | ||||||||
Total Number of | Purchased if | |||||||
Firm Shares | Maximum Option | |||||||
Underwriter |
to be Purchased | Exercised | ||||||
Goldman Sachs & Co. LLC |
[● | ] | [● | ] | ||||
Morgan Stanley & Co. LLC |
[● | ] | [● | ] | ||||
BofA Securities, Inc. |
[● | ] | [● | ] | ||||
[Nomura Securities International, Inc. |
[● | ] | [● | ] | ||||
Jefferies LLC |
[● | ] | [● | ] | ||||
Robert W. Baird & Co. Incorporated |
[● | ] | [● | ] | ||||
Guggenheim Securities, LLC |
[● | ] | [● | ] | ||||
Piper Sandler & Co. |
[● | ] | [● | ] | ||||
William Blair & Company, L.L.C. |
[● | ] | [● | ] | ||||
Telsey Advisory Group LLC |
[● | ] | [● | ] | ||||
Loop Capital Markets LLC |
[● | ] | [● | ] | ||||
Samuel A. Ramirez & Company, Inc. |
[● | ] | [● | ] | ||||
AmeriVet Securities, Inc.] |
[● | ] | [● | ] | ||||
|
|
|
|
|||||
Total |
[● | ] | [● | ] | ||||
|
|
|
|
SCHEDULE II
Number of
Optional |
||||||||
Shares to be | ||||||||
Total Number of | Sold if | |||||||
Firm Shares | Maximum Option | |||||||
to be Sold | Exercised | |||||||
The Selling Stockholders: |
||||||||
Bubbles Investor Aggregator, L.P.(a) |
[● | ] | [● | ] | ||||
[●](a) |
[● | ] | [● | ] | ||||
Explorer Investment Pte. Ltd.(b) |
[● | ] | [● | ] | ||||
Leslies Inc. F/B/O Shareworks(c) |
[● | ] | [● | ] | ||||
[●](d) |
[● | ] | [● | ] | ||||
[●](d) |
[● | ] | [● | ] | ||||
|
|
|
|
|||||
Total |
[● | ] | [● | ] | ||||
|
|
|
|
(a) |
This Selling Stockholder is represented by Kirkland & Ellis LLP, 601 Lexington Avenue, New York, NY 10022. |
(b) |
This Selling Stockholder is represented by Sidley Austin LLP, 333 787 Seventh Avenue, New York, NY 10019. |
(c) |
This Selling Stockholder is represented by Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles, CA 90071. |
(d) |
Leslies Inc., 2005 East Indian School Road, Phoenix, AZ 85016. |
SCHEDULE III
(a) Issuer Free Writing Prospectuses not included in the Pricing Disclosure Package
Company Presentation dated February [●], 2021
(b) Additional documents incorporated by reference
None
(c) Information other than the Pricing Prospectus that comprise the Pricing Disclosure Package
The initial public offering price per share for the Shares is $[●]
The number of Shares purchased by the Underwriters is [●]
(d) Written Testing-the-Waters Communications
None
Exhibit 4.5
LESLIES, INC.
FIRST AMENDMENT TO
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
This FIRST AMENDMENT TO REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this Amendment), is dated as of February 7, 2021, by and between Leslies, Inc., a Delaware corporation (the Company), and Bubbles Investor Aggregator, L.P., a Delaware limited partnership (including its successors and permitted assigns, LCP).
RECITALS
WHEREAS, the parties hereto previously entered in the Registration Rights and Lock-Up Agreement, dated as of November 2, 2020 (the Registration Rights Agreement), by and among the Company, LCP, Explorer Investment Pte Ltd, a Singapore Private limited company (including its successors and permitted assigns, GIC), and each of the persons listed on the signature pages thereto under the caption Other Investors or who became party to and bound by the Registration Rights Agreement as an Other Investor on the terms and subject to the conditions of the Registration Rights Agreement;
WHEREAS, in connection with an offer for sale of the Companys common stock, par value $0.001 per share, by certain of the Companys stockholders in an underwritten secondary offering, the parties hereto desire to amend the Registration Rights Agreement to provide for certain notice provisions in the case of a Piggyback Registration under the Registration Rights Agreement; and
WHEREAS, Section 11(a) of the Registration Rights Agreement provides that the Registration Rights Agreement may be amended with the prior written consent of the Company and LCP, and, to the extent such amendment adversely affects the rights or obligations of GIC under the Registration Rights Agreement, with the prior written consent of GIC.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party hereto, the parties hereby agree as follows:
AGREEMENT
1. Effectiveness. Subject to receipt of the prior written consent of GIC to this Amendment, this Amendment will become effective upon the due execution and delivery of this Amendment by the Company and LCP.
2. Amendments to Registration Rights Agreement.
a. Section 2(a) of the Registration Rights Agreement is hereby amended and restated in its entirety and replaced with the following:
Whenever the Company proposes to register any of its equity securities under the Securities Act (including primary and secondary registrations, other than (i) in connection
with the initial Public Offering, (ii) any registration pursuant to a Demand Registration, Shelf Offering or Underwritten Block Trade (which is addressed in Section 1(b), Section 1(d)(i)) and Section 1(d)(ii), respectively, and, with respect to matters of priority, Section 1(e), as applicable to each of them) or (iii) in connection with registrations on Form S-4 or S-8 promulgated by the SEC or any successor or similar forms) (a Piggyback Registration), the Company will give prompt written notice (and in any event within three (3) Business Days after the public filing of the registration statement relating to the Piggyback Registration) to all Holders of its intention to effect such Piggyback Registration and, subject to the terms of Section 2(b), Section 2(c) and Section 3, will include in such Piggyback Registration (and in all related registrations or qualifications under blue sky laws and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein (x) from Holders of a majority of LCP Registrable Securities or Holders of a majority of GIC Registrable Securities, within ten (10) days after the delivery of the Companys notice, or (y) from any other Holder, within 24 hours after delivery of the Companys notice. Any Participating Sponsor Investor may withdraw its request for inclusion at any time prior to executing the underwriting agreement relevant to such Piggyback Registration, or if none, prior to the applicable registration statement becoming effective.
b. Section 11(g)(ii) of the Registration Rights Agreement is hereby amended and restated in its entirety and replaced with the following:
(ii) when sent by electronic mail or facsimile if sent during normal business hours of the recipient, but if not, then on the next Business Day;
3. Capitalized Terms. Capitalized terms used without definition herein shall have the meanings ascribed to them in the Registration Rights Agreement.
4. Agreement in Effect. Except as expressly amended by this Amendment, the Registration Rights Agreement shall remain in full force and effect in accordance with its terms.
5. Amendment or Waiver. Any term of this Amendment may be amended or waived only by an instrument in writing signed by the parties hereto.
6. Headings. The headings in this Amendment are used for convenience only and are not to be considered in construing or interpreting any provision of this Amendment.
7. Entire Agreement. This Amendment supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof. The Registration Rights Agreement, as amended by this Amendment, contains the sole and entire agreement between the parties with respect to the subject matter hereof.
8. Governing Law. This Amendment shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law. Section 11(i) of the Registration Rights Agreement is incorporated herein by reference.
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9. Severability. If one or more provisions of this Amendment are held to be unenforceable under applicable law, to the maximum extent permitted by law, such provision shall be excluded from this Amendment, the balance of this Amendment shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.
10. Electronic Delivery. This Amendment and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent executed and delivered by means of a photographic, photostatic, facsimile or similar reproduction of such signed writing using a facsimile machine or electronic mail will be treated in all manner and respects as an original agreement or instrument and will be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto will re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument will raise the use of a facsimile machine or electronic mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.
11. Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
[Signature Pages Follow]
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IN WITNESS WHEREOF, each of the undersigned has duly executed this Amendment to the Registration Rights Agreement as of the date first written above.
COMPANY: | ||
Leslies, Inc. | ||
By: |
/s/ Steven Weddell |
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Name: | Steven Weddell | |
Title: | Executive Vice President, Chief Financial Officer |
LCP: | ||
Bubbles Investors Aggregator, L.P. | ||
By: C8 Management, L.L.C. Its: General Partner |
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By: | /s/ Marc Magliacano | |
Name: | Marc Magliacano | |
Title: | Authorized Signatory |
Signature Page to First Amendment to Registration Rights and Lock-Up Agreement
Exhibit 5.1
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Gibson, Dunn & Crutcher LLP
333 South Grand Avenue Los Angeles, CA 90071-3197 Tel 213.229.7000 www.gibsondunn.com
Client: 56314-00028 |
February 8, 2021
Leslies, Inc.
2005 East Indian School Road
Phoenix, AZ 85016
Re: | Leslies, Inc. | |
Registration Statement on Form S-1 |
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 (the Registration Statement), of Leslies, Inc., a Delaware corporation (the Company), filed on the date hereof with the Securities and Exchange Commission (the Commission) pursuant to the Securities Act of 1933, as amended (the Securities Act), in connection with the offering by the selling stockholders identified in the Registration Statement (the Selling Stockholders) of up to 33,350,000 shares (the Shares) of the Companys common stock, par value $0.001 per share (the Common Stock).
In arriving at the opinion expressed below, we have examined originals, or copies certified or otherwise identified to our satisfaction as being true and complete copies of the originals, of specimen Common Stock certificates and such other documents, corporate records, certificates of officers of the Company and of public officials and other instruments as we have deemed necessary or advisable to enable us to render the opinions set forth below. In our examination, we have assumed without independent investigation the genuineness of all signatures, the legal capacity and competency of all natural persons, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as copies.
Based upon the foregoing, and subject to the assumptions, exceptions, qualifications and limitations set forth herein, we are of the opinion that the Shares are validly issued, fully paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the Registration Statement, and we further consent to the use of our name under the caption Legal Matters in the Registration Statement and the prospectus that forms a part thereof. In giving these consents, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the Rules and Regulations of the Commission.
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February 8, 2021
Page 2
Very truly yours,
/s/ Gibson, Dunn & Crutcher LLP
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption Experts and to the use of our report dated December 23, 2020, in the Registration Statement (Form S-1) and related Prospectus of Leslies, Inc. for the registration of its common stock.
/s/ Ernst & Young LLP
Phoenix, Arizona
February 8, 2021
Exhibit 23.3
CONSENT OF P.K. DATA, INC.
We hereby irrevocably consent to the use by Leslies, Inc., in connection with its Registration Statement on Form S-1 and related prospectus, and any amendments and supplements thereto (collectively, the Registration Statement), and in connection with investor presentations of Leslies, Inc. and marketing materials related to public offerings of Leslies, Inc. (collectively, the Materials), of our data, as amended and supplemented from time to time, and the use of our name in the Registration Statement and Materials. We also hereby irrevocably consent to the filing of this letter as an exhibit to the Registration Statement.
By: | P.K. DATA, Inc. | |
Name: | J. Maxwell Kennedy | |
Title: | Owner, C.E.O. |
By: |
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CEO, P.K. Data, Inc. |
February 2, 2021