Item 1.01
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Entry into a Material Definitive Agreement.
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On June 18, 2018, Charah Solutions,
Inc. (the Company) completed its initial public offering (the Offering) of 7,352,941 shares of the Companys common stock, par value $0.01 per share (Common Stock), at a price to the public of $12.00 per
share ($11.16 net of underwriting discounts and commissions), pursuant to the Companys Registration Statement on Form
S-1
(File
No. 333-225051)
(as amended,
the Registration Statement). The material terms of the Offering are described in the prospectus, dated June 13, 2018 (the Prospectus), filed by the Company with the Securities and Exchange Commission (the
Commission) on June 15, 2018. The Company granted the underwriters an option for a period of 30 days to purchase up to an additional 1,102,941 shares of Common Stock.
Registration Rights Agreement
On
June 18, 2018, in connection with the closing of the Offering, the Company entered into a Registration Rights Agreement (the Registration Rights Agreement) with certain stockholders identified on the signature pages thereto as the
Holders (the Holders).
Pursuant to, and subject to the limitations set forth in, the Registration Rights Agreement, at any
time after the
180-day
lock-up
period described in the Prospectus, Bernhard Capital Partners Management, LP, a Delaware limited Partnership (collectively, with its
affiliates, BCP) has the right to require the Company by written notice to prepare and file a registration statement registering the offer and sale of a number of their shares of Common Stock. The Company is required to use all
commercially reasonable efforts to maintain the effectiveness of any such registration statement until all shares covered by such registration statement have been sold.
In addition, pursuant to the Registration Rights Agreement, BCP has the right to require the Company, subject to certain limitations set forth
therein, to effect a distribution of any or all of their shares of Common Stock by means of an underwritten offering. Further, subject to certain exceptions, if at any time the Company proposes to register an offering of its equity securities or
conduct an underwritten offering, whether or not for its account, then the Company must notify BCP of such proposal before the anticipated filing date or commencement of the underwritten offering, as applicable, to allow them to include a specified
number of their shares in that registration statement or underwritten offering, as applicable. Additionally, CEP Holdings, Inc., a Delaware corporation (CEP Holdings) has the right to require the Company, subject to certain limitations
set forth therein, to effect a distribution of any or all of its shares of Common Stock by means of an underwritten offering on one occasion.
These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of
shares to be included in a registration or offering and the Companys right to delay or withdraw a registration statement under certain circumstances. The Company will generally pay all registration expenses in connection with its obligations
under the Registration Rights Agreement, regardless of whether a registration statement is filed or becomes effective. Registrable Securities means all shares of Common Stock owned at any particular point in time by a Holder other than shares
(i) sold pursuant to an effective registration statement under the Securities Act of 1933, as amended (the Securities Act) or otherwise transferred to a person that is not entitled to the registration and other rights under the
Registration Rights Agreement, (ii) sold in a transaction pursuant to Rule 144 under the Securities Act (or any similar provision then in force under the Securities Act) and the transferee thereof does not receive restricted
securities as defined in Rule 144 under the Securities Act, (iii) that have ceased to be outstanding or (iv) that are eligible for resale without restriction (including any limitation thereunder on volume or manner of sale) and
without the need for current public information pursuant to any section of Rule 144 under the Securities Act, unless such shares are held by a holder that beneficially owns shares representing 5% or more of the aggregate voting power of shares of
Common Stock eligible to vote in the election of directors of the Company.
The foregoing description of the Registration Rights Agreement
is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is attached as Exhibit 4.1 to this Current Report on Form
8-K
and incorporated in this Item 1.01 by
reference.
Stockholders Agreement
In connection with the closing of the Offering, on June 18, 2018, the Company entered into a stockholders agreement (the
Stockholders Agreement) with CEP Holdings, BCP and certain members of management. Among other things, the Stockholders Agreement provides BCP with the right to nominate a number of directors to the Companys board of
directors (the Board) in a proportionate amount to the number of shares of Common Stock that it holds, as follows:
(i) a
majority of the directors as long as BCP owns at least 50% of the Common Stock;
(ii) at least 40% of the directors as long as BCP owns at least 40% but less than 50% of the
Common Stock;
(iii) at least 30% of the directors as long as BCP owns at least 30% but less than 40% of the Common Stock;
(iv) at least 20% of the directors as long as BCP owns at least 20% but less 30% of the Common Stock; and
(v) at least 10% of the directors as long as BCP owns at least 5% but less than 20% of the Common Stock.
The Stockholders Agreement also provides CEP Holdings with the right to nominate Charles E. Price as a director, so long as CEP Holdings
owns at least 10% of the outstanding shares of the Common Stock or Charles E. Price holds the title of the Companys Chief Executive Officer. In addition, the Stockholders Agreement provides for a
365-day
lock-up
period for certain members of management.
The foregoing description of the Stockholders Agreement is qualified in its entirety by reference to the full text of the
Stockholders Agreement, which is attached as Exhibit 4.2 to this Current Report on Form
8-K
and incorporated in this Item 1.01 by reference.