Sec Form 13D Filing - Percy Rockdale LLC filing for INNOVATE Corp. (VATE) - 2020-05-14

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CUSIP No.  404139107

CUSIP No.  404139107

 

CUSIP No.  404139107

 

CUSIP No.  404139107

 

CUSIP No.  404139107

 

CUSIP No.  404139107

The following constitutes Amendment No. 3 to the Schedule 13D filed by the undersigned (the “Amendment No. 3”). This Amendment No. 3 amends the Schedule 13D as specifically set forth herein.

 

 

Item 3 of the Schedule 13D is hereby amended and restated in its entirety as follows:

All of the Shares to which this Statement relates were purchased on behalf of the Reporting Person using the investment capital of the respective Reporting Person.  The aggregate amount of funds used for the purchase of the securities held by the Percy Reporting Persons reported herein was approximately $5,896,152.55, excluding commissions.  The aggregate amount of funds used for the purchase of the securities held by Mr. Brokaw reported herein was approximately $111,177.41 excluding commissions.  The aggregate amount of funds used for the purchase of the securities held by Mr. Courtis reported herein was approximately $832,656.84 excluding commissions.

 

 

Item 4 of the Schedule 13D is hereby amended to add the following:

On May 13, 2020, MG Capital Management Ltd., Percy Rockdale LLC, and Rio Royal LLC (collectively, “MG Capital Parties”) entered into a cooperation agreement (the “MG Capital Agreement”) with the Issuer. Also on May 13, 2020, in connection with the MG Capital Agreement, the Issuer entered into an agreement (the “Lancer Capital Agreement”) with Lancer Capital LLC (“Lancer Capital”), as well as an agreement (the “JDS1 Agreement”) with JDS1, LLC and CCUR Holdings, Inc. (collectively, “JDS1”) (the Lancer Capital Agreement and JDS1 Agreement, collectively with the MG Capital Agreement, the “Investor Agreements”). Pursuant to the MG Capital Agreement, the board of directors of the Issuer (the “Board”) agreed, among other things, (i) to increase the size of the Board from six (6) to ten (10) directors, (ii) to appoint each of Kenneth S. Courtis, Shelly C. Lombard, Avram A. Glazer and Michael Gorzynski (collectively, the “New Directors”) to the Board and (iii) to nominate and recommend each of the New Directors, and current directors Wayne Barr, Jr., Warren H. Gfeller and Philip A. Falcone, for election to the Board at the 2020 annual meeting of stockholders (the “2020 Annual Meeting”) for a term expiring at the Issuer’s 2021 annual meeting of stockholders (the “2021 Annual Meeting”), subject to satisfaction of certain customary conditions. Mr. Glazer will also be appointed as Chairman of the Board, effective immediately. In connection with the MG Capital Agreement, the MG Capital Parties (a) agreed to irrevocably withdraw their notice of nomination of individuals for election as directors of the Company at the 2020 Annual Meeting that the MG Capital Parties submitted to the Issuer on February 13, 2020 and (b) determined not to submit to the Issuer the consents solicited from stockholders of the Issuer in connection with their consent solicitation that expired on May 12, 2020.

The Investor Agreements provide that each of the MG Capital Parties, JDS1 and Lancer Capital will appear in person or by proxy at any annual or special meeting of the Issuer’s stockholders held during the Standstill Period (as defined below), will not participate or vote in any solicitation of written consents of the Issuer’s stockholders during the Standstill Period (unless expressly requested to do so by the Board), and will vote all shares of Common Stock beneficially owned by the MG Capital Parties, JDS1 or Lancer Capital (as applicable) at such meeting or in such consent solicitation in favor of all directors nominated by the Board for election and against the removal of any member of the Board. Each of the MG Capital Parties, JDS1 and Lancer Capital will also vote (i) in accordance with the Board’s recommendation with respect to any “say-on-pay” proposal and (ii) in accordance with the Board’s recommendation with respect to any other Issuer proposal or stockholder proposal or nomination presented at such meeting or solicitation of consents; provided, however, that in the event that both Institutional Shareholder Services Inc. (“ISS”) and Glass, Lewis & Co., LLC (“Glass Lewis”) recommend otherwise with respect to the Issuer’s “say-on-pay” proposal presented at an annual or special meeting held during the Standstill Period, the MG Capital Parties, JDS1 and Lancer Capital may each vote in accordance with the recommendation of ISS and Glass Lewis. The Issuer agreed to hold the 2020 Annual Meeting no later than July 8, 2020.

Under the terms of each of the Investor Agreements, the MG Capital Parties, JDS1 and Lancer Capital have each agreed to abide by customary standstill restrictions until thirty (30) days prior to the deadline for submission of stockholder nominations of individuals for election as directors of the Issuer at the 2021 Annual Meeting (the “Standstill Period”), including, among other things, not (i) to make any proposal or other matter to the Issuer’s stockholders at any annual or special meeting of the Issuer’s stockholders, (ii) to engage in any solicitation of proxies from the Issuer’s stockholders or (iii) to seek additional representation on the Board or the removal of any member of the Board.

Pursuant to the MG Capital Agreement, until the completion of the 2020 Annual Meeting, the size of the Board will not be increased above ten (10) directors without unanimous Board approval, and following the 2020 Annual Meeting and during the Standstill Period, the size of the Board will not be increased above seven (7) directors without unanimous Board approval. In connection with the Issuer entering into the Investor Agreements, on May 13, 2020, each of Robert V. Leffler, Jr., Lee S. Hillman and Julie Totman Springer notified the Board that they have chosen not to stand for re-election at the 2020 Annual Meeting.

Under the terms of each of the Investor Agreements, the parties also agreed to customary mutual non-disparagement obligations. Pursuant to the MG Capital Agreement, the Company agreed to reimburse the MG Capital Parties, within five (5) business days following receipt of reasonably satisfactory documentation thereof, for their fees and expenses (including all legal, public relations, proxy advisory and out-of-pocket expenses, the “Expenses”) incurred in preparation for and in connection with the matters relating to the consent solicitation run by the MG Capital Parties, the 2020 Annual Meeting and the negotiation, execution and effectuation of the Agreement, in an amount equal to $352,290.25 (the “Initial Reimbursement”). Between the date of the Initial Reimbursement and the date of the 2020 Annual Meeting, the Issuer will reimburse MG Capital for the Expenses in an aggregate amount not exceeding $650,000 (inclusive of the Initial Reimbursement).

In connection with the MG Capital Agreement, on May 13, 2020, the Percy Reporting Persons, Mr. Courtis and Mr. Brokaw have terminated their “group” (for the purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) and terminated that certain Joint Filing Agreement dated as of February 13, 2020, pursuant to which they had agreed to jointly file this Schedule 13D. The termination of the Joint Filing Agreement is deemed to be effective immediately after the filing of this Amendment No. 3.

On May 14, 2020, the Company and the MG Capital Parties issued a joint press release announcing the signing of the Investor Agreements. A copy of the press release is attached hereto as Exhibit 99.1.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the MG Capital Agreement, a copy of which is attached hereto as Exhibit 99.2, which is incorporated herein by reference.