Item 1.01 Entry into a Material Definitive Agreement.
On
Immediately prior to the Merger (as defined below) and pursuant to a Separation
and Distribution Agreement, dated as of
Immediately following the Distribution, in accordance with and subject to the terms and conditions of the Merger Agreement, Merger Sub will merge with and into Newco (the "Merger"), with Newco continuing as the surviving company in the Merger and as a wholly owned subsidiary of the Company.
Agreement and Plan of Merger and Reorganization
Upon consummation of the transactions contemplated by the Merger Agreement, each
share of Newco Common Stock outstanding will automatically be converted into the
right to receive a number of shares of common stock, par value
The Merger Agreement provides that, in connection with the Merger, two individuals designated by the Company will be added to the Apergy's Board of Directors as of the effective time of the Merger.
The Merger Agreement contains customary representations and warranties made by each of the Company, Newco, Apergy and Merger Sub. The Company, Newco and Apergy have also agreed to various covenants in the Merger Agreement, including, among other things, covenants (i) to conduct their respective operations in the ordinary course in all material respects and (ii) not to take certain actions prior to the closing of the Merger without the prior consent of the other party.
Consummation of the Merger is subject to various conditions, including, among others, (i) the Reorganization and the Distribution having taken place in accordance with the Separation Agreement; (ii) the effectiveness of Apergy's registration statement registering Apergy Common Stock to be issued pursuant to the Merger Agreement, and any other required Registration Statement (as defined in the Merger Agreement); (iii) approval of the Stock Issuance by the requisite vote of Apergy's stockholders; (iv) expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and approval by certain foreign regulatory authorities; and (v) receipt of opinions with respect to the tax-free nature of the proposed transaction. The parties have agreed to use their respective reasonable best efforts to obtain all necessary regulatory approvals for the Merger. The obligation of each party to consummate the Merger is also conditioned upon the other party's representations and warranties being true and correct (subject to certain materiality exceptions) and the other party having performed in all material respects its obligations under the Merger Agreement.
The Merger Agreement provides for certain mutual termination rights of the
Company and Apergy, including the right of either party to terminate the Merger
Agreement: (i) if the Merger is not consummated prior to
2
In addition, the Merger Agreement contains specified termination rights for the
Company and Apergy that requires Apergy to pay the Company a termination fee
equal to
Certain additional agreements have been or will be entered into in connection with the transactions contemplated by the Merger Agreement and the Separation Agreement, including, among others:
· an Intellectual Property Matters Agreement between the Company and Newco, pursuant to which (i) the Company will grant Newco exclusive and non-exclusive licenses to certain intellectual property owned by the Company and its affiliates and used in the Newco Business and (ii) Newco will grant the Company exclusive and non-exclusive licenses to certain intellectual property owned by Newco and its affiliates and used in the Company's business; · an Employee Matters Agreement among the Company, Newco and Apergy, which will govern, among other things, the Company, Newco and Apergy's obligations with respect to current and former employees of the Newco Business; · a Transition Services Agreement between the Company and Newco, pursuant to which each party will, on a transitional basis, provide the other party with certain support services and other assistance after the Distribution and Merger; and · a Tax Matters Agreement among the Company, Newco and Apergy, which governs, among other things, the Company, Newco and Apergy's respective rights, responsibilities and obligations with respect to taxes, tax attributes, the preparation and filing of tax returns, responsibility for and preservation of the expected tax-free status of the transactions contemplated by the Separation Agreement and certain other tax matters. Separation Agreement
The Separation Agreement governs the rights and obligations of the Company, Apergy and Newco regarding the Reorganization, and provides, among other things, for the transfer by the Company to Newco of certain assets, and the assumption by Newco of certain liabilities, related to the Newco Business. The Separation Agreement also governs the rights and obligations of the Company and Newco regarding the Distribution. At the Company's election, the Distribution may be effected by means of a pro-rata distribution of Newco Common Stock to the Company's stockholders or through an exchange offer of currently issued and outstanding shares of common stock of the Company for Newco Common Stock, which would be followed by a pro rata, clean-up distribution of any unsubscribed shares.
The Separation Agreement also sets forth other agreements between the Company, Newco and Apergy related to the Distribution, including provisions concerning the termination and settlement of intercompany accounts and the obtaining of necessary governmental approvals and third-party consents. The Separation Agreement also sets forth agreements that govern certain aspects of the relationship between the Company, Newco and Apergy after the Distribution, including provisions with respect to release of claims, indemnification, insurance, access to financial and other information and access to and provision of records. The parties have mutual ongoing indemnification obligations following the Distribution with respect to losses related to the Newco Business and the Company's business, respectively.
Additionally, at or prior to the Separation Effective Time (as defined in the
Separation Agreement), Newco will make a cash distribution to the Company equal
to
3
Consummation of the Distribution is subject to the satisfaction or waiver of all conditions under the Merger Agreement (other than those conditions that are to be satisfied contemporaneously with the Distribution and/or the Merger, provided that such conditions are capable of being satisfied at such time).
The Merger Agreement, Separation Agreement and Employee Matters Agreement have been filed, and the above descriptions have been included, to provide investors and securityholders with information regarding the terms of such agreements. They are not intended to provide any other factual information about the Company, Apergy, Newco, Merger Sub, their respective subsidiaries or affiliates, or the Newco Business. The Merger Agreement contains representations and warranties that the Company and Newco, on the one hand, and Apergy and Merger Sub on the other hand, made to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the contract between the parties to the Merger Agreement and may be subject to important qualifications and limitations agreed by the parties in connection with negotiating the terms of the contract. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to stockholders, or may have been used for the purpose of allocating risk between the parties rather than establishing matters as facts. For the foregoing reasons, such representations and warranties should not be relied upon as statements of factual information.
Cautionary Notes on Forward Looking Statements
This communication includes "forward-looking statements" as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, including statements regarding the proposed transaction between Apergy, ChampionX and Ecolab. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "forecast," "outlook," "target," "endeavor," "seek," "predict," "intend," "strategy," "plan," "may," "could," "should," "will," "would," "will be," "will continue," "will likely result," or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. All statements, other than historical facts, including, but not limited to, statements regarding the expected timing and structure of the proposed transaction, the ability of the parties to complete the proposed transaction, the expected benefits of the proposed transaction, including future financial and operating results and strategic benefits, the tax consequences of the proposed transaction, and the combined company's plans, objectives, expectations and intentions, legal, economic and regulatory conditions, and any assumptions underlying any of the foregoing, are forward looking statements.
These forward-looking statements are based on Apergy, ChampionX and Ecolab's current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from Apergy, ChampionX and Ecolab's current expectations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) that one or more closing conditions to the transaction, including certain regulatory approvals, may not be satisfied or waived, on a timely basis or otherwise, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the proposed transaction, may require conditions, limitations or restrictions in connection with such approvals or that the required approval by the stockholders of Apergy may not be obtained; (2) the risk that the proposed transaction may not be completed on the terms or in the time frame expected by Apergy, ChampionX or Ecolab, or at all; (3) unexpected costs, charges or expenses resulting from the proposed transaction; (4) uncertainty of the expected financial performance of the combined company following completion of the proposed transaction; (5) failure to realize the anticipated benefits of the proposed transaction, including as a result of delay in completing the proposed transaction or integrating the businesses of Apergy and ChampionX, or at all; (6) the ability of the combined company to implement its business strategy; (7) difficulties and delays in the combined company achieving revenue and cost synergies; (8) inability of the combined company to retain and hire key personnel; (9) the occurrence of any event that could give rise to termination . . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description 2.1* Agreement and Plan of Merger and Reorganization, datedDecember 18, 2019 , by and amongEcolab Inc. ,ChampionX Holding Inc. , Apergy Corporation andAthena Merger Sub, Inc. 2.2* Separation and Distribution Agreement, datedDecember 18, 2019 , by and amongEcolab Inc. ,ChampionX Holding Inc. and Apergy Corporation 10.1* Employee Matters Agreement, datedDecember 18, 2019 , by and amongEcolab Inc. ,ChampionX Holding Inc. and Apergy Corporation 104 The cover page from this Current Report on Form 8-K, formatted in Inline XBRL * Schedules omitted pursuant to item 601(b)(2) of Regulation S-K.The Company agrees to furnish supplementally a copy of any omitted schedule to theSEC upon request, provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, as amended, for any schedule or exhibit so furnished. 5
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