Item 1.01 Entry Into A Material Definitive Agreement.
Agreement and Plan of Merger
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Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the "Effective Time"), Zurn will exchange up to 52.5 million newly issued shares of Zurn common stock (the "Merger Consideration") for 100% of the outstanding equity of Elkay. Upon completion of the Merger, the former Elkay stockholders are expected to own approximately 29% of Zurn common stock on a fully diluted basis.
Zurn and Elkay agreed to customary representations, warranties and covenants in the Merger Agreement, including covenants relating to obtaining the requisite approvals of the respective stockholders of Zurn and Elkay. The Merger Agreement also contains customary indemnification obligations for certain matters, which in the case of indemnification of Zurn are the subject of customary escrow arrangements with respect to shares otherwise issuable by Zurn to the Elkay stockholders at the Effective Time.
The closing of the Merger is subject to customary conditions, including, among
others, the absence of Laws or Orders by a Governmental Authority of competent
jurisdiction enjoining or prohibiting the consummation of the transactions
contemplated by the Merger Agreement; the expiration or termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended ("HSR"); the required approvals by the respective
stockholders of Zurn and Elkay; the Registration Statement (as defined below)
having become effective in accordance with the provisions of the Securities Act
of 1933, as amended (the "Securities Act"), and not being subject to any stop
order suspending the Registration Statement; the shares of Zurn common stock to
be issued in the Merger being approved for listing on the
Pursuant to the Merger Agreement, Elkay may not solicit or engage in negotiations with respect to alternative transaction proposals. Additionally, Zurn's board may not change its recommendation to Zurn's stockholders to approve the issuance of the Merger Consideration unless, prior to obtaining Zurn's required stockholder approval, Zurn's board of directors determines in good faith (after consultation with its outside legal counsel and a financial advisor of nationally recognized reputation) that the failure to do so would be inconsistent with its fiduciary duties under applicable law, subject to the terms and conditions of the Merger Agreement.
The Merger Agreement contains certain customary termination rights, including,
among others: the right of either party to terminate the Merger Agreement with
mutual written consent; the right of either party to terminate the Merger
Agreement if Zurn's stockholders fail to approve the issuance of Zurn common
stock in the Merger; the right of Zurn to terminate the Merger Agreement if
Elkay does not deliver its required stockholder vote by
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The Merger Agreement provides for Zurn to call a meeting of stockholders to vote
on the issuance of shares of Zurn common stock pursuant to the Merger. In
connection with the Merger, Zurn will prepare and file a registration statement
on Form S-4 (the "Registration Statement"), in which a proxy statement will be
included as a proxy statement/prospectus (the "Proxy Statement"), to register
the Zurn common stock to be issued to Elkay stockholders in connection with the
Merger and solicit the approval of Zurn's stockholders of the issuance of Zurn
common stock in connection with the Merger, pursuant to the rules and
regulations of the
Concurrently with the closing of the Merger, Zurn will appoint two Elkay
representatives to the Board. The name of the combined company will be
Concurrently with the closing of the Merger, Zurn and certain stockholders of Elkay will enter into a Registration Rights Agreement, substantially in the form attached to the Merger Agreement (the "Registration Rights Agreement"), pursuant to which Zurn will grant such stockholders a right to demand registration of one public offering within the first three years of closing, subject to certain minimum and maximum thresholds and other customary conditions. Zurn will pay certain expenses of the parties incurred in connection with the exercise of their rights under the Registration Rights Agreement, and indemnify them for certain securities law matters in connection with any registration statement.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Merger Agreement has been attached to this Current Report on Form 8-K to provide investors with information regarding its terms. The Merger Agreement is not intended to provide any other factual information about Zurn, Elkay or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement as of the specific dates set forth therein, were solely for the benefit of the parties to the Merger Agreement, may be subject to important qualifications and limitations agreed upon by the parties for the purposes of allocating contractual risk among such parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to such contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties to the Merger Agreement or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Zurn's public disclosures.
Board Observer Agreement
Concurrently with the execution and delivery of the Merger Agreement, Zurn
entered into a Board Observer Agreement (the "Board Observer Agreement") with
Item 7.01 Regulation FD Disclosure.
The information in this Item 7.01, including Exhibit 99.1 and Exhibit 99.2, is furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into the filing of Zurn under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings.
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An Investor Presentation for use by Zurn with certain of its shareholders and other persons with respect to the Merger is furnished as Exhibit 99.2 to this Current Report.
Forward-Looking Statements
This communication contains certain "forward-looking statements" including
statements regarding the anticipated timing and benefits of the pending
combination of
Additional Information
In connection with the Transaction, Zurn intends to file a registration
statement on Form S-4 with the
3 No Offer or Solicitation
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Participants in the Solicitation
This communication is not a solicitation of a proxy from any security holder.
Zurn, Elkay and their respective directors, executive officers, other members of
management and employees may be deemed to be participants in the solicitation of
proxies from Zurn's stockholders in connection with the Transaction. Information
regarding the names and interests in the proposed transaction of Zurn's
directors and officers is contained Zurn's filings with the
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description 2.1* Agreement and Plan of Merger, dated as ofFebruary 12, 2022 , by and among Zurn, Elkay, Merger Sub, andElkay Interior Systems International, Inc. 10.1* Board Observer Agreement, dated as ofFebruary 12, 2022 , by and among Zurn andRonald Katz 10.2* Form of Support Agreement, dated as ofFebruary 13, 2022 , by and among Zurn and the Support Stockholders 10.3* Form of Standstill and Lock-Up Agreement, dated as ofFebruary 12, 2022 , by and among Zurn, and the Elkay stockholders party thereto 99.1 Joint Press Release, dated as ofFebruary 14, 2022 99.2 Investor Presentation 104 Cover Page Inline XBRL data
*Schedules and exhibits to this Exhibit have been omitted in accordance with
Regulation S-K Items 601(a)(5) and/or 601(b)(2). The Registrant agrees to
furnish supplementally a copy of all omitted schedules to the
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