ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Agreements with Vontier Corporation
On October 8, 2020, Fortive Corporation ("Fortive") entered into definitive
agreements with Vontier Corporation ("Vontier"), a wholly owned subsidiary of
Fortive at that time, that, among other things, set forth the terms and
conditions of the separation of Vontier from Fortive (the "Separation") and the
distribution of 80.1% of Vontier's outstanding common stock to holders of
Fortive common stock (provided that fractional Fortive shares that holders of
Fortive common stock would otherwise have been entitled to receive were
aggregated and are being sold in the public market by the distribution agent,
with the proceeds to be distributed ratably to such holders of Fortive common
stock) (the "Distribution"). The agreements provide a framework for Fortive's
relationship with Vontier from and after the Separation, including the
allocation between Vontier and Fortive of Fortive's and Vontier's assets,
employees, services, liabilities and obligations attributable to periods prior
to, at and after the Separation. In connection with the Separation, Fortive and
Vontier entered into a Separation and Distribution Agreement (the "Separation
Agreement"), an Employee Matters Agreement (the "Employee Matters Agreement"), a
Tax Matters Agreement (the "Tax Matters Agreement"), a Transition Services
Agreement (the "Transition Services Agreement"), an Intellectual Property
Matters Agreement (the "Intellectual Property Matters Agreement"), an FBS
License Agreement (the "FBS License Agreement") and a Stockholder's and
Registration Rights Agreement (the "Registration Rights Agreement"), each dated
as of October 8, 2020. A summary of certain material features of the Separation
Agreement, the Employee Matters Agreement, the Tax Matters Agreement, the
Transition Services Agreement, the Intellectual Property Matters Agreement, the
FBS License Agreement and the Registration Rights Agreement, all of which are
referenced below, can be found in the section entitled "Certain Relationships
and Related Person Transactions-Agreements with Fortive" in Vontier's
Information Statement, which is included as Exhibit 99.1 to Amendment No. 1 to
Vontier's Registration Statement on Form 10-12B (File No. 001-39483) filed with
the Securities and Exchange Commission on September 21, 2020 (the "Information
Statement"). These summaries are incorporated by reference into this Item 1.01
in their entirety.
Separation Agreement
The Separation Agreement sets forth, among other things, the agreements between
Fortive and Vontier regarding the principal transactions necessary to effect the
Separation and the Distribution. It also sets forth other agreements that govern
certain aspects of Fortive's ongoing relationship with Vontier after the
completion of the Separation and the Distribution. The description of the
Separation Agreement set forth under this Item 1.01 is qualified in its entirety
by reference to the complete terms and conditions of the Separation Agreement
filed as Exhibit 2.1 hereto and incorporated herein by reference.
Employee Matters Agreement
The Employee Matters Agreement sets forth, among other things, the allocation of
assets, liabilities and responsibilities relating to employee compensation and
benefit plans and programs and other related matters in connection with the
Separation, including the treatment of outstanding equity and other incentive
awards and certain retirement and welfare benefit obligations. The description
of the Employee Matters Agreement set forth under this Item 1.01 is qualified in
its entirety by reference to the complete terms and conditions of the Employee
Matters Agreement filed as Exhibit 10.1 hereto and incorporated herein by
reference.
Tax Matters Agreement
The Tax Matters Agreement governs Fortive's and Vontier's respective rights,
responsibilities and obligations after the Distribution with respect to tax
liabilities (including taxes, if any, incurred as a result of any failure of the
Distribution or certain related transactions to qualify for tax-free treatment
for U.S. federal income tax purposes) and benefits, tax attributes, the
preparation and filing of tax returns, the control of audits and other tax
proceedings and other matters regarding taxes. The description of the Tax
Matters Agreement set forth under this Item 1.01 is qualified in its entirety by
reference to the complete terms and conditions of the Tax Matters Agreement
filed as Exhibit 10.2 hereto and incorporated herein by reference.
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Transition Services Agreement
The Transition Services Agreement sets forth the terms and conditions pursuant
to which Fortive and its subsidiaries and Vontier and its subsidiaries will
provide to each other various services. The charges for the transition services
generally are expected to allow the providing company to fully recover all
out-of-pocket costs and expenses it actually incurs in connection with providing
the service, plus, in some cases, the allocated indirect costs of providing the
services, generally without profit. The description of the Transition Services
Agreement set forth under this Item 1.01 is qualified in its entirety by
reference to the complete terms and conditions of the Transition Services
Agreement filed as Exhibit 10.3 hereto and incorporated herein by reference.
Intellectual Property Matters Agreement
The Intellectual Property Matters Agreement sets forth the terms and conditions
pursuant to which Fortive has granted to Vontier a non-exclusive, royalty-free,
fully paid-up, irrevocable, sublicenseable (subject to the restrictions below)
license to use certain intellectual property rights retained by Fortive. Fortive
. . .
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
Immediately prior to the Distribution, Vontier was a 100% owned subsidiary of
Fortive. The Distribution was completed effective as of 12:01 a.m. on October 9,
2020. Following the completion of the Distribution, Vontier is now an
independent public company trading under the symbol "VNT" on the New York Stock
Exchange, and Fortive retained a 19.9% ownership interest in Vontier. The
Distribution was made to holders of Fortive common stock of record as of the
close of business on September 25, 2020 (the "Record Date"), who received two
shares of Vontier common stock for every five shares of Fortive common stock
held as of the Record Date. Fortive did not issue fractional shares of Vontier
common stock in the Distribution. Fractional shares that holders of Fortive
common stock would otherwise have been entitled to receive were aggregated and
are being sold in the public market by the distribution agent. The aggregate net
cash proceeds of these sales will be distributed ratably to those holders of
Fortive common stock who would otherwise have been entitled to receive
fractional shares.
ITEM 7.01 REGULATION FD DISCLOSURE
Fortive intends to give notice on October 14, 2020 that it will redeem for cash
all of its outstanding 2.350% Senior Notes due 2021 (the "Notes") in accordance
with the terms of the indenture governing the Notes. The redemption date for the
outstanding Notes to be redeemed will be November 13, 2020 (the "Redemption
Date") and the redemption price will be equal to the greater of: (a) 100% of the
principal amount of the Notes, and (b) the sum of the present values of the
remaining scheduled payments of principal and interest on the Notes to be
redeemed (not including any portion of such payments of interest that will be
accrued and unpaid as of the Redemption Date), discounted to the Redemption Date
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the applicable Treasury Rate plus 20 basis points, plus accrued and
unpaid interest up to (but not including) the Redemption Date. As of October 13,
2020, approximately $750 million aggregate principal amount of the Notes is
outstanding.
This information shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as shall be expressly set forth by specific
reference in such a filing.
ITEM 8.01 OTHER EVENTS
As previously reported, on September 29, 2020, Vontier entered into a credit
agreement (the "Credit Agreement") with a syndicate of banks, consisting of a
three-year, $800 million senior unsecured delayed draw term loan facility (the
"Three-Year Term Loans"), a two-year, $1 billion senior unsecured delayed draw
term loan facility (the "Two-Year Term Loans" and together with the Three-Year
Term Loans, the "Term Loans") and a three-year, $750 million senior unsecured
multi-currency revolving credit facility, including a $25 million sublimit for
swingline loans and a $75 million sublimit for the issuance of letters of credit
(the "Revolving Credit Facility" and, together with the Term Loans, the "Credit
Facilities"). At the closing of the Credit Agreement, Vontier did not borrow any
funds under the Credit Agreement. On October 9, 2020, Vontier drew down the full
$1.8 billion available under the Term Loans. Vontier used the proceeds from the
Term Loans to make payments to Fortive, with $1.6 billion used as part of the
consideration for the contribution of certain assets and liabilities to Vontier
by Fortive in connection with the Separation and with $200 million used as a
preliminary adjustment for excess cash balances remaining with Vontier
(collectively, the "Cash Consideration"). Fortive intends to apply the Cash
Consideration to repay certain outstanding indebtedness of Fortive, including
the Notes, and to pay certain of its regular, quarterly cash dividends.
The description of the Credit Agreement is set forth under Item 1.01 in the
Company's Current Report on Form 8-K filed on September 30, 2020 (the "Prior
8-K"), which description is incorporated herein by reference. In addition, the
Credit Agreement was filed as Exhibit 10.1 to the Prior 8-K and is incorporated
herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
The following unaudited pro forma financial information of Fortive is filed as
Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by
reference:
• Unaudited pro forma consolidated condensed balance sheet as of June 26,
2020.
• Unaudited pro forma consolidated condensed statements of earnings for the
six-month period ended June 26, 2020 and each of the years ended
December 31, 2019, 2018 and 2017.
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• Notes to the unaudited pro forma consolidated condensed financial
statements.
Exhibit
No. Description
2.1 Separation and Distribution Agreement, dated as of October 8, 2020,
by and between Vontier Corporation and Fortive Corporation
10.1 Employee Matters Agreement, dated as of October 8, 2020, by and
between Vontier Corporation and Fortive Corporation
10.2 Tax Matters Agreement, dated as of October 8, 2020, by and between
Vontier Corporation and Fortive Corporation
10.3 Transition Services Agreement, dated as of October 8, 2020, by and
between Vontier Corporation and Fortive Corporation
10.4 Intellectual Property Matters Agreement, dated as of October 8,
2020, by and between Vontier Corporation and Fortive Corporation
10.5 FBS License Agreement, dated as of October 8, 2020, by and between
Vontier Corporation and Fortive Corporation
10.6 Stockholder's and Registration Rights Agreement, dated as of
October 8, 2020, by and between Vontier Corporation and Fortive
Corporation
99.1 Unaudited pro forma consolidated condensed financial statements of
Fortive Corporation
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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