Item 1.01 |
Entry into a Material Definitive Agreement. |
On August 28, 2023, Catalent, Inc., a Delaware corporation (the “Company”), entered into a cooperation agreement (the “Cooperation Agreement”) with Elliott Investment Management L.P., a Delaware limited partnership, Elliott Associates, L.P., a Delaware limited partnership, and Elliott International, L.P., a Cayman Islands limited partnership (collectively, “Elliott”).
Pursuant to the Cooperation Agreement, the Company increased the size of the Company’s board of directors (the “Board”) by four (4) and approved the appointment of Steven Barg (the “Investor Designee”), Frank D’Amelio, Stephanie Okey, and Michelle R. Ryan (the “New Independent Directors,” and together with the Investor Designee, the “New Directors”) as members of the Board to fill the vacancies created by such increase in the size of the Board, with an initial term expiring at the Company’s 2023 Annual Meeting of Shareholders (the “2023 Annual Meeting”).
Pursuant to the Cooperation Agreement, the Board appointed John Greisch to the position of Executive Chair. The Company also established an ad hoc Strategic and Operational Review Committee (the “Committee”) of the Board to support the Board and management with respect to the matters set forth in the Committee’s charter, as contemplated by the Cooperation Agreement. The initial five (5) members of the Committee will be Steven Barg, John Greisch, Gregory T. Lucier, Michelle R. Ryan, and Jack Stahl. Mr. Greisch will chair the Committee. The Committee, with the assistance of legal and financial advisors and other consultants, will make recommendations to the Board.
The Cooperation Agreement provides for certain director replacement rights with respect to the New Directors during the Cooperation Period (as defined below), pursuant to which the Company and Elliott will cooperate in good faith to identify mutually acceptable substitutes to the extent any New Director is unable or unwilling to serve, resigns, is removed, or ceases to serve as a director. Elliott’s rights in connection with identifying such replacement directors are subject to Elliott holding a “Net Long Position” (as defined in Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or have economic exposure to, at least 2% of the Company’s then-outstanding common stock.
Under the terms of the Cooperation Agreement, Elliott will abide by customary standstill restrictions (subject to certain exceptions relating to private communications to the Company, among others) until the later of (i) the date that is thirty (30) calendar days prior to the notice deadline under the Company’s Bylaws for the nomination of non-proxy access director candidates for election to the Board at the Company’s 2024 Annual Meeting of Shareholders (the “2024 Annual Meeting”) and (ii) five (5) days following the date on which Mr. Barg, or a replacement thereof who is an employee of Elliott or an affiliate of Elliott, ceases to serve on, or resigns from, the Board (the “Cooperation Period”), including that Elliott will not, among other things, (A) engage in transactions resulting in Elliott’s beneficial ownership exceeding 10% of the Company’s common stock, or its aggregate economic exposure exceeding 14.9% of the Company’s common stock, (B) seek any additional representation on the Board, (C) make any request for stock list materials or other books and records of the Company, (D) engage in any solicitation of proxies, or (E) make certain proposals relating to extraordinary transactions publicly or in a manner that would require public disclosure. The Cooperation Agreement provides that the standstill restrictions will terminate automatically upon certain events, including, among other things, the Company’s material breach of the Cooperation Agreement (subject to cure) or any entry by the Company into certain change-of-control and other extraordinary transactions.
Pursuant to the Cooperation Agreement, Elliott agreed to certain voting commitments and the parties agreed to a customary mutual non-disparagement provision.
To enable the appointment of the New Directors, the Company has initially expanded the size of the Board from twelve (12) to sixteen (16) members. Pursuant to the Cooperation Agreement, each of the New Directors will be nominated by the Board to stand for election at the Company’s 2023 Annual Meeting and the Company has agreed that, from the closing of the 2023 Annual Meeting until the 2024 Annual Meeting, the size of the Board will be no greater than twelve (12) members.