Exhibit 2.1

AGREEMENT AND PLAN OF DISTRIBUTION

BY AND BETWEEN

ACUITY BRANDS, INC.

AND

ZEP INC.

DATED AS OF OCTOBER 31, 2007

 

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TABLE OF CONTENTS

 

				Page
Article I		DEFINITIONS		2
Section 1.1.		General		2
Section 1.2.		Reference; Interpretation		14
Article II		DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS		14
Section 2.1.		The Distribution and Other Transactions		14
Section 2.2.		Assumption and Satisfaction of Liabilities		17
Section 2.3.		Resignations		17
Section 2.4.		Further Assurances		17
Section 2.5.		Limited Representations or Warranties		18
Section 2.6.		Removal of Parent Group from Certain Guarantees; Releases of Parent Group from Liabilities		18
Section 2.7.		Removal of SpinCo Group from Certain Guarantees; Releases of SpinCo Group from Liabilities		19
Section 2.8.		Witness Services		20
Section 2.9.		Conveyancing and Assumption Instruments		20
Section 2.10.		Ancillary Agreements		20
Section 2.11.		Corporate Names; Trademarks		21
Section 2.12.		Post-Distribution Remittances		22
Section 2.13.		Non-Solicitation		22
Section 2.14.		Termination of Intercompany Agreements		23
Section 2.15.		Non-Competition		23
Section 2.16.		Dividend; Net Cash Flow Adjustment		25
Article III		INDEMNIFICATION		27
Section 3.1.		Indemnification by Parent		27
Section 3.2.		Indemnification by SpinCo		27
Section 3.3.		Procedures for Indemnification		27
Section 3.4.		Indemnification Payments		29
Article IV		ACCESS TO INFORMATION		30
Section 4.1.		Provision of Corporate Records		30
Section 4.2.		Access to Information		30
Section 4.3.		Reimbursement; Other Matters		30
Section 4.4.		Confidentiality		30
Section 4.5.		Privileged Matters		31
Section 4.6.		Ownership of Information		33
Section 4.7.		Retention of Records		33
Section 4.8.		Limitation of Liability; Release		33
Section 4.9.		Other Agreements Providing for Exchange of Information		34
Article V		DISPUTE RESOLUTION		34

 

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Section 5.1.		Negotiation		34
Section 5.2.		Mediation		34
Section 5.3.		Arbitration		34
Section 5.4.		Continuity of Service and Performance		35
Section 5.5.		Other Remedies		35
Article VI		INSURANCE		36
Section 6.1.		Policies and Rights Included Within Assets		36
Section 6.2.		Post-Distribution Date Claims		36
Section 6.3.		Administration; Other Matters		36
Section 6.4.		Agreement for Waiver of Conflict and Shared Defense		38
Section 6.5.		Cooperation		39
Article VII		MISCELLANEOUS		39
Section 7.1.		Complete Agreement; Construction		39
Section 7.2.		Ancillary Agreements		39
Section 7.3.		Counterparts		39
Section 7.4.		Survival of Agreements		39
Section 7.5.		Distribution Expenses		39
Section 7.6.		Notices		40
Section 7.7.		Waivers		40
Section 7.8.		Amendments		40
Section 7.9.		Successors and Assigns		41
Section 7.10.		Termination		41
Section 7.11.		Subsidiaries		41
Section 7.12.		Third-Party Beneficiaries		41
Section 7.13.		Title and Headings		41
Section 7.14.		Exhibits and Schedules		41
Section 7.15.		GOVERNING LAW		41
Section 7.16.		Consent to Jurisdiction		41
Section 7.17.		Severability		42
Section 7.18.		Consolidation, Merger, Etc.		42
EXHIBITS
Exhibit		Description of Exhibit
Exhibit A		Employee Benefits Agreement
Exhibit B		Tax Disaffiliation Agreement
Exhibit C		Transition Services Agreement
SCHEDULES
Schedule		Description of Schedule
Schedule 1.1(t)		Corporate Transactions

 

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Schedule 1.1(yy)		Parent Assets
Schedule 1.1(zz)		Parent Business
Schedule 1.1(ddd)(B)		Parent Liabilities
Schedule 1.1(ddd)		Parent Business Litigation
Schedule 1.1(eee)		Parent Policies
Schedule 1.1(fff)		Parent Shared Policies
Schedule 1.1(ggg)		Parent Subsidiaries
Schedule 1.1(vvv)(E)		SpinCo Assets
Schedule 1.1(xxx)		SpinCo Business
Schedule 1.1(zzz)		SpinCo Closing Statement Guidelines
Schedule 1.1(eeee)(B)		SpinCo Specific Liabilities
Schedule 1.1(eeee)(D)		SpinCo Balance Sheet Liabilities
Schedule 1.1(eeee)		SpinCo Business Litigation
Schedule 1.1(gggg)		SpinCo Policies
Schedule 1.1(iiii)		SpinCo Subsidiaries
Schedule 2.1(h)		Consents
Schedule 2.1(i)		Registration Statement/Information Statement Liability (Parts 1 & 2)
Schedule 2.3		Resignations
Schedule 2.6		Guarantees (from which Parent Group are to be released)
Schedule 2.7(a)		Guarantees (from which SpinCo Group are to be released)
Schedule 2.14		Intercompany Agreements
Schedule 2.16		SpinCo Closing Statement
Schedule 6.3(c)		Additional Coverage Premium Sharing

 

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AGREEMENT AND PLAN OF DISTRIBUTION

This AGREEMENT AND PLAN OF DISTRIBUTION (this “ Agreement ”), dated as of October 31, 2007, by and between ACUITY BRANDS, INC., a Delaware corporation (“ Parent ”), and ZEP INC. a Delaware corporation and, prior to the Distribution (as defined herein), a wholly owned subsidiary of Parent (“ SpinCo ”).

W I T N E S S E T H:

WHEREAS, Parent Group (as defined herein) currently conducts the Parent Business (as defined herein), owns substantially all of the Parent Assets (as defined herein) and is subject to the Parent Liabilities (as defined herein);

WHEREAS, SpinCo Group (as defined herein) currently conducts the SpinCo Business (as defined herein), owns substantially all of the SpinCo Assets (as defined herein) and is subject to the SpinCo Liabilities (as defined herein);

WHEREAS, Parent is the owner of all of the issued and outstanding shares of capital stock of SpinCo;

WHEREAS, the Board of Directors of Parent has determined that it would be advisable and in the best interests of Parent and its stockholders for Parent to distribute to the holders of the issued and outstanding shares of common stock, par value $0.01 per share, of Parent (the “ Parent Common Stock ”) as of the Distribution Record Date (as defined herein) 100% of the issued and outstanding shares of common stock, par value $0.01 per share, of SpinCo (the “ SpinCo Common Stock ”), together with the associated preferred stock purchase rights (each share of such stock, together with the associated preferred stock purchase right, a “ SpinCo Share ”), on the basis of one SpinCo Share for every two shares of Parent Common Stock (the “ Distribution ”);

WHEREAS, in connection with the Distribution, (i) the Board of Directors of Parent has determined that it would be advisable and in the best interests of Parent and its stockholders for Parent to take certain steps to transfer certain Assets (as defined herein) to SpinCo and have SpinCo assume certain Liabilities (as defined herein) of Parent, and (ii) the Board of Directors of SpinCo has determined that it would be advisable and in the best interests of SpinCo and its stockholders for SpinCo to take certain steps to transfer certain Assets to Parent and have Parent assume certain Liabilities of SpinCo;

WHEREAS , for federal income tax purposes, the Corporate Transactions (as defined herein) and Distribution are intended to qualify as a “reorganization” under Sections 3681(a)(1)(D) and 355 of Internal Revenue Code of 1986, as amended (the “ Code ”), and the Treasury regulations promulgated thereunder, and this Agreement is adopted as a “plan of reorganization” within the meaning of Section 361 of the Code; and

WHEREAS, the parties hereto have determined to set forth the principal corporate and other transactions required to effect the Distribution and to set forth other agreements that will govern certain other matters prior to and following the Distribution.

 

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NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. General. Unless otherwise defined herein or unless the context otherwise requires, as used in this Agreement, the following terms shall have the following meanings:

(a) “ Acceptance Date ” shall have the meaning set forth in Section 2.16(c) of this Agreement.

(b) “ Acceptance Notice ” shall have the meaning set forth in Section 2.16(c) of this Agreement.

(c) “ Accounting Firm ” shall mean the Atlanta, Georgia office of PricewaterhouseCoopers LLP (or such other independent accounting firm of national standing that the parties shall mutually designate).

(d) “ Action ” shall mean any demand, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal.

(e) “ Adjusted EBITDA ” shall mean, with respect to any specified Person or business, such Person’s or business’ net income before interest, taxes, depreciation and amortization, on a fully-allocated basis and as adjusted to reflect applicable special or non-recurring items in a manner consistent with customary methodology used in business valuations.

(f) “ Affiliate ” shall mean, when used with respect to any specified Person, a Person that directly or indirectly controls, is controlled by, or is under common control with such specified Person; provided , however , that for purposes of this Agreement, any Person who was a member of both Groups prior to the Distribution shall be deemed to be an Affiliate only of the Group of which such Person is a member following the Distribution. As used herein, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract or otherwise. Any contrary provision of this Agreement notwithstanding, neither Parent nor any Parent Subsidiaries shall be deemed to be an Affiliate of SpinCo, and neither SpinCo nor any SpinCo Subsidiaries shall be deemed to be an Affiliate of Parent.

(g) “ Agent ” shall have the meaning set forth in Section 2.1(b) of this Agreement.

(h) “ Agreement ” shall mean this Agreement.

(i) “ Agreement Disputes ” shall have the meaning set forth in Section 5.1 of this Agreement.

 

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(j) “ Ancillary Agreements ” shall mean all of the written agreements, instruments, understandings, assignments or other arrangements (other than this Agreement) entered into by the parties hereto or any other member of their respective Groups in connection with the transactions contemplated hereby, including the Conveyancing and Assumption Instruments, the Employee Benefits Agreement, the Tax Disaffiliation Agreement, and the Transition Services Agreement.

(k) “ Applicable Rate ” shall mean the rate of interest per annum announced from time to time by JPMorgan Chase Bank, N.A., as its prime lending rate.

(l) “ Assets ” shall mean assets, properties and rights, wherever located (including in the possession of vendors or other third parties or elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person, including the following:

 

(A)

all accounting and other books, records and files whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other form;

 

(B)

all apparatus, computers and other electronic data processing equipment, fixtures, machinery, equipment, furniture, office equipment, automobiles, trucks, other transportation equipment, special and general tools, test devices, prototypes and models and other tangible personal property;

 

(C)

all inventories of materials, parts, raw materials, supplies, work-in-process and finished goods and products;

 

(D)

all interests in real property of whatever nature, including easements, whether as owner, mortgagee or holder of a security interest in real property, lessor, sublessor, lessee, sublessee or otherwise;

 

(E)

all interests in any capital stock or other equity interests of any Subsidiary or any other Person, all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person, all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person and all other investments in securities of any Person;

 

(F)

all customer contracts; service, maintenance, supply, vendor, consulting, transportation and consignment agreements; collective bargaining agreements; employment agreements; license agreements; leases and subleases of personal property; open purchase orders for raw materials, supplies, parts or services; unfilled orders for the manufacture and sale of products; and other contracts, agreements or commitments (collectively, “ Contracts ”);

 

(G)

all deposits, letters of credit and performance and surety bonds;

 

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(H)

all written technical information, data, specifications, research and development information, engineering drawings, operating and maintenance manuals, and materials and analyses prepared by consultants and other Third Parties;

 

(I)

all domestic and foreign patents, copyrights, trade names, trademarks, service marks, logos and registrations and applications for any of the foregoing, together with the goodwill of the business symbolized by any of the foregoing; mask works, trade secrets, inventions, data bases, and other proprietary and confidential information; and licenses from Third Parties granting the right to use any of the foregoing;

 

(J)

all computer applications, programs and other software, including operating software, network software, firmware, middleware, design software, design tools, systems documentation and instructions;

 

(K)

all cost information, sales and pricing data, customer prospect lists, vendor records, customer and vendor lists, customer and vendor data, correspondence and lists, product literature, artwork, design, development and manufacturing files, vendor and customer drawings, formulations and specifications, quality records and reports and other books, records, studies, surveys, reports, plans and documents;

 

(L)

all deferred tax assets, prepaid expenses, trade accounts and other accounts and notes receivable;

 

(M)

all rights under contracts or agreements, all claims or rights against any Person arising from the ownership of any asset, all rights in connection with any bids or offers and all claims, choses in action or similar rights, whether accrued or contingent;

 

(N)

all rights under insurance policies and all rights in the nature of insurance, indemnification or contribution;

 

(O)

all licenses, permits, approvals and authorizations which have been issued by any Governmental Authority;

 

(P)

cash or cash equivalents, bank accounts, lock boxes and other deposit arrangements; and

 

(Q)

interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements.

(m) “ Assignee ” shall have the meaning set forth in Section 2.1(g) of this Agreement.

(n) “ Business Day ” shall mean any day other than a Saturday, Sunday or a day on which commercial banking institutions located in Atlanta, Georgia are authorized or obligated by law or executive order to close.

 

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(o) “ Claims Administration ” shall mean the processing of claims made under the Parent Shared Policies, including the reporting of claims to the insurance carriers, management and defense of claims and providing for appropriate releases upon settlement of claims.

(p) “ Code ” shall have the meaning set forth in the recitals to this Agreement.

(q) “ Commission ” shall mean the U.S. Securities and Exchange Commission.

(r) “ Contracts ” shall have the meaning set forth in the definition of Assets.

(s) “ Conveyancing and Assumption Instruments ” shall mean, collectively, the various agreements, instruments and other documents to be or heretofore entered into to effect the Corporate Transactions or otherwise to effect the transfer of Assets and the assumption of Liabilities in the manner contemplated by this Agreement, the Ancillary Agreements and the Corporate Transactions.

(t) “ Corporate Transactions ” shall mean, collectively, (a) each of the mergers, transfers, conveyances, contributions, assignments, dividends, assumptions, redemptions, purchases and other transactions described and set forth on Schedule 1.1(t) attached hereto, and (b) such other mergers, transfers, conveyances, contributions, assignments, dividends, assumptions, redemptions, purchases and other transactions that may be appropriate or required to be accomplished, effected or consummated by Parent or SpinCo or any of their respective Subsidiaries and Affiliates so that: (i) the SpinCo Assets, SpinCo Liabilities and SpinCo Business shall be owned, directly or indirectly, by SpinCo after giving effect to the Distribution; and (ii) the Parent Assets, Parent Liabilities and Parent Business shall be owned, directly or indirectly, by Parent after giving effect to the Distribution.

(u) “ Distribution ” shall have the meaning set forth in the recitals to this Agreement.

(v) “ Distribution Date ” shall mean such date as may be determined by the Board of Directors of Parent, or such committee of such Board of Directors as shall be designated by the Board of Directors of Parent, as the date as of which the Distribution shall be effected.

(w) “ Distribution Record Date ” shall mean such date as may be determined by the Board of Directors of Parent, or such committee of such Board of Directors as shall be designated by the Board of Directors of Parent, as the record date for the Distribution.

(x) “ Effective Time ” shall mean 11:59 p.m., Atlanta, Georgia time, on the Distribution Date.

(y) “ Employee Benefits Agreement ” shall mean the Employee Benefits Agreement by and between Parent and SpinCo, which agreement shall be entered into prior to or on the Distribution Date in the form attached hereto as Exhibit A .

(z) “ Environmental Laws ” shall mean any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, principles of common law, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions (including the Comprehensive Environmental Response, Compensation and Liability

 

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Act, 42 U.S.C. 9601, et seq. ), whether now or hereafter in existence, relating to the environment, natural resources, human health or safety, endangered or threatened species of fish, wildlife and plants, or to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes into the environment (including indoor or outdoor air, surface water, groundwater and surface or subsurface soils), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes or the investigation, cleanup or other remediation thereof.

(aa) “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

(bb) “ Final Closing Statement ” shall have the meaning set forth in Section 2.16(c) of this Agreement.

(cc) “ Final Determination Date ” shall have the meaning set forth in Section 2.16(c) of this Agreement.

(dd) “ Governmental Authority ” shall mean any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official, the NYSE or other regulatory, administrative or governmental authority.

(ee) “ Group ” shall mean, with respect to Parent, the Parent Group and, with respect to SpinCo, the SpinCo Group.

(ff) “ Indemnifiable Losses ” shall mean any and all Losses suffered by an Indemnitee, net of any insurance proceeds actually received by such Indemnitee with respect to such Losses.

(gg) “ Indemnifying Party ” shall have the meaning set forth in Section 3.3 of this Agreement.

(hh) “ Indemnitee ” shall have the meaning set forth in Section 3.3 of this Agreement.

(ii) “ Information Statement ” shall mean the Information Statement filed with the Commission as part of the Registration Statement and mailed to the holders of shares of Parent Common Stock in connection with the Distribution, including any amendments or supplements thereto.

(jj) “ Insurance Administration ” shall mean, with respect to each Parent Shared Policy, (A) the accounting for premiums, retrospectively rated premiums, defense costs, indemnity payments, deductibles and retentions, as appropriate, under the terms and conditions of each of the Parent Shared Policies; (B) the reporting to excess insurance carriers of any losses or claims which may cause the applicable limits of any Parent Shared Policy to be exceeded; (C) the distribution of Insurance Proceeds as contemplated by this Agreement; and (D) any and all other actions reasonably necessary for the administration of the Parent Shared Policies.

 

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(kk) “ Insurance Proceeds ” shall mean those monies (A) received by an insured from an insurance carrier or (B) paid by an insurance carrier on behalf of an insured.

(ll) “ Insured Claims ” shall mean those Liabilities that, individually or in the aggregate, are covered within the terms and conditions of any of the Parent Shared Policies, whether or not subject to deductibles, self-insured retentions, co-insurance, uncollectibility or retrospectively-rated premium adjustments.

(mm) “ Intercompany Agreement ” shall mean any contract, agreement or lease between a member of the Parent Group and a member of the SpinCo Group entered into prior to the Effective Date excluding this Agreement and the Ancillary Agreements.

(nn) “ IRS ” shall mean the U.S. Internal Revenue Service.

(oo) “ Law ” shall mean all laws, statutes and ordinances and all regulations, rules and other pronouncements of Governmental Authorities having the effect of law of the United States, any foreign country, or any domestic or foreign state, province, commonwealth, city, country, municipality, territory, protectorate, possession or similar instrumentality, or any Governmental Authority thereof.

(pp) “ Liabilities ” shall mean any and all debts, liabilities, obligations, responsibilities, response actions, losses, damages (whether compensatory, punitive or treble), fines, penalties and sanctions, absolute or contingent, matured or unmatured, liquidated or unliquidated, foreseen or unforeseen, joint, several or individual, asserted or unasserted, accrued or unaccrued, known or unknown, whenever arising, including those arising under or in connection with any Law (including any Environmental Law), Action, threatened Action, order or consent decree of any Governmental Authority or any award of any arbitration tribunal, and those arising under any contract, guarantee, commitment or undertaking, whether sought to be imposed by a Governmental Authority, private party, or party to this Agreement, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, or otherwise, and including any costs, expenses, interest, attorneys’ fees, disbursements and expenses of counsel, expert and consulting fees and costs related thereto or to the investigation or defense thereof.

(qq) “ Losses ” shall mean all losses, liabilities, damages, claims, demands, judgments or settlements of any nature or kind, known or unknown, fixed, accrued, absolute or contingent, liquidated or unliquidated, including all reasonable costs and expenses (legal, accounting or otherwise as such costs are incurred) relating thereto.

(rr) “ Non-Competition Period ” shall mean the period beginning on the Distribution Date and ending on the second anniversary of the Distribution Date.

(ss) “ Non-Solicitation Period ” shall mean the period beginning on the Distribution Date and ending on the fourth anniversary of the Distribution Date.

(tt) “ Notices ” shall have the meaning set forth in Section 7.6 of this Agreement.

(uu) “ NYSE ” shall mean the New York Stock Exchange, Inc.

 

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(vv) “ Parent ” shall have the meaning set forth in the preamble to this Agreement.

(ww) “ Parent Acquired Entities ” shall have meaning set forth in Section 2.15(c) of this Agreement.

(xx) “ Parent Activities ” shall mean the business of designing, manufacturing and/or distributing lighting fixtures and equipment and/or providing related services.

(yy) “ Parent Assets ” shall mean, collectively, all the rights and Assets owned or held by Parent or any Parent Subsidiary immediately after giving effect to the Corporate Transactions, except the SpinCo Assets, and all of the Assets set forth on Schedule 1.1(yy) .

(zz) “ Parent Business ” shall mean each and every business conducted at any time by Parent Group (including those businesses set forth on Schedule 1.1(zz) ), including each and every business conducted in the past and each and every business which has been discontinued, sold or transferred (including those businesses set forth on Schedule 1.1(zz) ), but excluding the SpinCo Business.

(aaa) “ Parent Common Stock ” shall have the meaning set forth in the recitals to this Agreement.

(bbb) “ Parent Group ” shall mean Parent and each Person (other than any member of the SpinCo Group) that is a Parent Subsidiary.

(ccc) “ Parent Indemnitee ” shall mean:

 

(A)

Parent and each Affiliate thereof after giving effect to the Corporate Transactions and the Distribution; and

 

(B)

each of the respective past, present and future Representatives of any of the entities described in the immediately preceding clause (A) and each of the heirs, executors, successors and assigns of any of such Representatives, except in the case of clauses (A) and (B), the SpinCo Indemnitees.

(ddd) “ Parent Liabilities ” shall mean:

 

(A)

any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be retained or assumed by Parent or any member of the Parent Group, and all agreements, obligations and Liabilities of any member of the Parent Group under this Agreement or any of the Ancillary Agreements;

 

(B)

all Liabilities set forth on Schedule 1.1(ddd)(B) ; and

 

(C)

all Liabilities (other than Taxes and any employee-related Liabilities which are specifically covered by the Tax Disaffiliation Agreement and

 

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the Employee Benefits Agreement, respectively) primarily relating to, arising out of or resulting from:

 

(1)

the operation of the Parent Business, as conducted at any time prior to, on or after the Distribution Date (including any Liability relating to, arising out of or resulting from any act or failure to act by any Representative (whether or not such act or failure to act is or was within such Person’s authority));

 

(2)

the operation of any business conducted by Parent or any Parent Subsidiary at any time after the Distribution Date (including any Liability relating to, arising out of or resulting from any act or failure to act by any Representative (whether or not such act or failure to act is or was within such Person’s authority)); or

 

(3)

any Parent Assets, whether arising before, on or after the Distribution Date.

Notwithstanding the foregoing, the Parent Liabilities shall not include: (x) any Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be retained or assumed by SpinCo or any member of the SpinCo Group; or (y) all agreements and obligations of any member of the SpinCo Group under this Agreement or any of the Ancillary Agreements. Any contrary provision of this Agreement notwithstanding, any Liabilities or Losses in respect of any Action relating to the Parent Business, including the matters set forth on Schedule 1.1(ddd) , shall constitute Parent Liabilities.

(eee) “ Parent Policies ” shall mean all Policies, current or past, that are owned or maintained by or on behalf of Parent or any Parent Subsidiary that do not provide coverage to or with respect to the SpinCo Assets or the SpinCo Business, or any part thereof, including those Policies set forth on Schedule 1.1(eee) .

(fff) “ Parent Shared Policies ” shall mean all Policies, current or past, which are owned or maintained by or on behalf of Parent or any Parent Subsidiary which provide coverage to or with respect to the SpinCo Group, the SpinCo Assets or the SpinCo Business, or any part thereof, other than SpinCo Policies, including those Policies set forth on Schedule 1.1(fff) .

(ggg) “ Parent Subsidiaries ” shall mean all of the Subsidiaries of Parent (including the Subsidiaries set forth on Schedule 1.1(ggg) ), other than SpinCo and the SpinCo Subsidiaries.

(hhh) “ Person ” shall mean any natural person, corporation, business trust, limited liability company, joint venture, association, company, partnership or government, or any agency or political subdivision thereof.

(iii) “ Policies ” shall mean insurance policies and insurance contracts of any kind (other than those policies or contracts providing benefits under life insurance or other employee benefit plans or programs), including primary, excess and umbrella policies, master comprehensive general liability policies, director and officer liability, fiduciary liability, automobile, aircraft, property and casualty, workers’ compensation and employee dishonesty

 

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insurance policies, bonds and self-insurance and captive insurance company arrangements, together with the rights, benefits and privileges thereunder.

(jjj) “ Proposed Closing Statement ” shall have the meaning set forth in Section 2.16(b) of this Agreement.

(kkk) “ Records ” shall have the meaning set forth in Section 4.1 of this Agreement.

(lll) “ Registration Statement ” shall mean the registration statement on Form 10 to effect the registration of the SpinCo Common Stock pursuant to the Exchange Act.

(mmm) “ Related Parent Business ” shall have the meaning set forth in Section 2.15(b) of this Agreement.

(nnn) “ Related SpinCo Business ” shall have the meaning set forth in Section 2.15(c) of this Agreement.

(ooo) “ Representative ” shall mean, with respect to any Person, any of such Person’s directors, officers, members, employees, agents, consultants, advisors, accountants, attorneys and representatives.

(ppp) “ Review Period ” shall have the meaning set forth in Section 2.16(c) of this Agreement.

(qqq) “ Rules ” shall have the meaning set forth in Section 5.3 of this Agreement.

(rrr) “ Securities Act ” shall mean the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

(sss) “ SpinCo ” shall have the meaning set forth in the preamble to this Agreement.

(ttt) “ SpinCo Acquired Entities ” shall have the meaning set forth in Section 2.15(b) of this Agreement.

(uuu) “ SpinCo Activities ” shall mean the business of producing and/or marketing, and/or providing related services with respect to, cleaning and maintenance products and/or equipment, including anti-bacterial and industrial hand care products, cleaners, degreasers, deodorizers, disinfectants, floor finishes, sanitizers and pest and weed control products.

(vvv) “ SpinCo Assets ” shall mean collectively, all the Assets that are owned by SpinCo or any SpinCo Subsidiaries as of the Effective Time and after giving effect to the Corporate Transactions, including:

 

(A)

the capital stock of the SpinCo Subsidiaries;

 

(B)

all of the Assets reflected on the SpinCo Balance Sheet (exclusive of any such Assets disposed of in the ordinary course of business, consistent with

 

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past practice, since the date of the SpinCo Balance Sheet) or the accounting records supporting such balance sheet;

 

(C)

all of the Assets expressly allocated to SpinCo or any of the SpinCo Subsidiaries under this Agreement or any of the Ancillary Agreements;

 

(D)

any other Asset acquired by Parent or any of the Parent Subsidiaries from the date of the SpinCo Balance Sheet to the Effective Time that is owned by Parent, any of the Parent Subsidiaries, SpinCo or any of the SpinCo Subsidiaries as of the Effective Time and that is of a nature or type that would have resulted in such Asset being included as an Asset on the SpinCo Balance Sheet had it been acquired on or prior to the date of the SpinCo Balance Sheet, determined on a basis consistent with the determination of the Assets included on the SpinCo Balance Sheet; and

 

(E)

all of the Assets set forth on Schedule 1.1(vvv)(E) .

(www) “ SpinCo Balance Sheet ” shall mean the combined balance sheet of the SpinCo Group, including any notes thereto, as of September 30, 2007.

(xxx) “ SpinCo Business ” shall mean each and every business currently conducted, and that will be conducted from and after the Effective Time, by SpinCo Group (including those businesses set forth on Schedule 1.1(xxx ), and each and every business conducted prior to the Effective Time by Parent Group that is of a nature or type that was or would have been included in Parent’s specialty products segment for financial reporting purposes that has been discontinued, sold or transferred by Parent Group (including those businesses set forth on Schedule 1.1(xxx) .

(yyy) “ SpinCo Closing Cash ” shall have the meaning set forth in Section 2.16(a) of this Agreement.

(zzz) “ SpinCo Closing Statement Guidelines ” shall mean the guidelines attached hereto as Schedule 1.1(zzz) .

(aaaa) “ SpinCo Common Stock ” shall have the meaning set forth in the recitals to this Agreement.

(bbbb) “ SpinCo Financing Arrangements ” shall mean (a) that certain 5-Year Revolving Credit Agreement, dated as of October 19, 2007, by and among SpinCo, Acuity Specialty Products, Inc. (“ ASP ”), and one or more other subsidiary borrowers thereto, the institutions from time to time parties as “Lenders” thereto, JP Morgan Chase Bank, National Association, as the swing line lender, letter of credit issuer and administrative agent, Bank of America, N.A., as syndication agent and Keybank National Association, Wachovia Bank, National Association (“ Wachovia ”), Regions Bank and Wells Fargo Bank, N.A., as co-documentation agents; and (b) that certain Amended and Restated Credit Agreement dated as of October 19, 2007 by and among Acuity Enterprise, Inc., ASP, certain other entities identified therein, Variable Funding Capital Company LLC, and Wachovia, as agent.

 

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(cccc) “ SpinCo Group ” shall mean SpinCo, the SpinCo Subsidiaries and the corporations, partnerships and other entities which are contemplated to remain or become a Subsidiary of SpinCo in connection with the Corporate Transactions and the Distribution.

(dddd) “ SpinCo Indemnitees ” shall mean:

 

(A)

SpinCo and each Affiliate thereof after giving effect to the Corporate Transactions and the Distribution; and

 

(B)

each of the respective past, present and future Representatives of any of the entities described in the immediately preceding clause (i) and each of the heirs, executors, successors and assigns of any of such Representatives.

(eeee) “ SpinCo Liabilities ” shall mean:

 

(A)

any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be retained or assumed by SpinCo or any member of the SpinCo Group, and all agreements, obligations and Liabilities of any member of the SpinCo Group under this Agreement or any of the Ancillary Agreements;

 

(B)

all Liabilities set forth on Schedule 1.1(eeee)(B) ;

 

(C)

all Liabilities (other than Taxes and any employee-related Liabilities which are specifically covered by the Tax Disaffiliation Agreement and the Employee Benefits Agreement, respectively), primarily relating to, arising out of or resulting from:

 

(1)

the operation of the SpinCo Business, as conducted at any time prior to, on or after the Distribution Date (including any Liability relating to, arising out of or resulting from any act or failure to act by any Representative with respect to the SpinCo Business (whether or not such act or failure to act is or was within such Person’s authority));

 

(2)

the operation of any business conducted by SpinCo or any SpinCo Subsidiary at any time after the Distribution Date (including any Liability relating to, arising out of or resulting from any act or failure to act by any Representative (whether or not such act or failure to act is or was within such Person’s authority)); or

 

(3)

any SpinCo Assets; whether arising before, on or after the Distribution Date; and

 

(D)

all Liabilities reflected as liabilities or obligations on the SpinCo Balance Sheet or the accounting records supporting such balance sheet, and all

 

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Liabilities arising or assumed after the date of such balance sheet which, had they arisen or been assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet, determined on a basis consistent with the determination of the Liabilities included on the SpinCo Balance Sheet, subject to any discharge of such Liabilities subsequent to the date of the SpinCo Balance Sheet, including those liabilities set forth on Schedule 1.1(eeee)(D) .

Notwithstanding the foregoing, the SpinCo Liabilities shall not include: (x) any Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be retained or assumed by Parent or any member of the Parent Group; or (y) all agreements and obligations of any member of the Parent Group under this Agreement or any of the Ancillary Agreements. Any contrary provision of this Agreement notwithstanding, any Liabilities or Losses in respect of any Action relating to the SpinCo Business, including the matters set forth on Schedule 1.1(eeee) , shall constitute SpinCo Liabilities.

(ffff) “ SpinCo Net Cash Flow ” shall mean, with respect to the SpinCo Group, (A) the net cash provided by (used for) operating activities, plus (or minus) the net cash provided by (used for) investing activities, plus (or minus) the effect of exchange rate on net assets (excluding intercompany accounts), all as determined for the period beginning on September 1, 2007 and ending on the Distribution Date and in accordance with the SpinCo Closing Statement Guidelines, plus (or minus if it is a negative number) (B) an amount equal to (1) the sum of the net cash provided by (used for) operating activities, plus (or minus) the net cash provided by (used for) investing activities, plus (or minus) the effect of exchange rate on net assets (excluding intercompany accounts), all as determined for the period beginning on September 1, 2006 and ending on August 31, 2007 less (2)Forty Two Million Dollars ($42,000,000).

(gggg) “ SpinCo Policies ” shall mean all Policies, current or past, that are owned or maintained by or on behalf of Parent or any Parent Subsidiary, which relate specifically to the SpinCo Assets or the SpinCo Business but do not relate to the Parent Business or the Parent Assets, and which Policies are either maintained by SpinCo or a member of the SpinCo Group or assignable to SpinCo or a member of the SpinCo Group, including those Policies set forth on Schedule 1.1(gggg) .

(hhhh) “ SpinCo Share ” shall have the meaning set forth in the recitals to this Agreement.

(iiii) “ SpinCo Subsidiaries ” shall mean all of the Subsidiaries listed on Schedule 1.1(iiii) .

(jjjj) “ Subsidiary ” shall mean with respect to any specified Person, any corporation or other legal entity of which such Person or any of its Subsidiaries controls or owns, directly or indirectly, more than 50% of the stock or other equity interest entitled to vote on the election of members to the board of directors or similar governing body.

(kkkk) “ Tax ” shall have the meaning set forth in the Tax Disaffiliation Agreement.

 

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(llll) “ Tax Disaffiliation Agreement ” shall mean the Tax Disaffiliation Agreement by and between Parent and SpinCo, which agreement shall be entered into prior to or on the Distribution Date in the form attached hereto as Exhibit B .

(mmmm) “ Third-Party ” shall mean a Person who is not a party hereto or a Subsidiary thereof.

(nnnn) “ Third-Party Claim ” shall have the meaning set forth in Section 3.3 of this Agreement.

(oooo) “ Transition Services Agreement ” shall mean the Transition Services Agreement by and between Parent and SpinCo, which agreement shall be entered into prior to or on the Distribution Date in the form attached hereto as Exhibit C .

SECTION 1.2. Reference; Interpretation . References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. The words “include”, “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation.” Unless the context otherwise requires, references in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement. Neither this Agreement nor any Ancillary Agreement shall be construed against either party as the principal draftsperson hereof or thereof.

ARTICLE II

DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS

SECTION 2.1. The Distribution and Other Transactions .

(a) Certain Transaction s . On or prior to the Distribution Date:

(i) Following the Corporate Transactions, Parent Group owns the Parent Assets and is subject to the Parent Liabilities.