AGREEMENT AND PLAN OF MERGER
dated as of
October 22, 2000
between
HONEYWELL INTERNATIONAL INC.
and
GENERAL ELECTRIC COMPANY
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER..................................................1
Section 1.1 The Merger...............................................1
Section 1.2 Conversion of Shares.....................................2
Section 1.3 Surrender and Payment....................................3
Section 1.4 Stock Options and Equity Awards..........................4
Section 1.5 Adjustments..............................................5
Section 1.6 Fractional Shares........................................6
Section 1.7 Withholding Rights.......................................7
Section 1.8 Lost Certificates........................................7
Section 1.9 Shares Held by Honeywell Affiliates......................7
Section 1.10 Appraisal Rights........................................7
ARTICLE II CERTAIN GOVERNANCE MATTERS..................................8
Section 2.1 Board of Directors.......................................8
Section 2.2 Certificate of Incorporation of the
Surviving Corporation....................................8
Section 2.3 By-laws of the Surviving Corporation.....................8
Section 2.4 Directors and Officers of the
Surviving Corporation....................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF HONEYWELL.................8
Section 3.1 Corporate Existence and Power............................8
Section 3.2 Corporate Authorization..................................9
Section 3.3 Governmental Authorization..............................10
Section 3.4 Non-Contravention.......................................10
Section 3.5 Capitalization..........................................11
Section 3.6 Subsidiaries............................................11
Section 3.7 Commission Filings......................................12
Section 3.8 Financial Statements....................................13
Section 3.9 Disclosure Documents....................................13
Section 3.10 Absence of Certain Changes.............................14
Section 3.11 No Undisclosed Material Liabilities....................15
Section 3.12 Litigation.............................................15
Section 3.13 Taxes..................................................15
Section 3.14 Employee Benefit Plans.................................16
Section 3.15 Compliance with Laws...................................19
Section 3.16 Finders' or Advisors' Fees.............................19
Section 3.17 Environmental Matters..................................19
Section 3.18 Opinion of Financial Advisor...........................20
Section 3.19 Pooling; Tax Treatment.................................20
Section 3.20 Takeover Statutes......................................20
Section 3.21 Intellectual Property Matters..........................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT...................21
Section 4.1 Corporate Existence and Power...........................21
Section 4.2 Corporate Authorization.................................22
Section 4.3 Governmental Authorization..............................22
Section 4.4 Non-Contravention.......................................23
Section 4.5 Capitalization..........................................23
Section 4.6 Commission Filings......................................24
Section 4.7 Financial Statements....................................24
Section 4.8 Disclosure Documents....................................24
Section 4.9 Absence of Certain Changes..............................25
Section 4.10 No Undisclosed Material Liabilities....................25
Section 4.11 Litigation.............................................25
Section 4.12 Finders' or Advisors' Fees.............................25
Section 4.13 Pooling; Tax Treatment.................................26
ARTICLE V COVENANTS OF HONEYWELL.....................................26
Section 5.1 Conduct of Honeywell....................................26
Section 5.2 Honeywell Stockholder Meeting...........................28
ARTICLE VI COVENANTS OF PARENT........................................29
Section 6.1 Obligations of Merger Subsidiary........................29
Section 6.2 Director and Officer Liability..........................29
Section 6.3 Stock Exchange Listing..................................31
Section 6.4 Employee Benefits.......................................31
Section 6.6 Consultant Agreement....................................32
ARTICLE VII COVENANTS OF PARENT AND HONEYWELL..........................32
Section 7.1 Reasonable Best Efforts.................................32
Section 7.2 Proxy Materials; Certain Filings........................34
Section 7.3 Access to Information...................................34
Section 7.4 Tax and Accounting Treatment............................35
Section 7.5 Public Announcements....................................36
Section 7.6 Further Assurances......................................36
Section 7.7 Notices of Certain Events...............................36
Section 7.8 Affiliates..............................................36
Section 7.9 Payment of Dividends....................................37
Section 7.10 No Solicitation........................................37
Section 7.11 Letters from Accountants...............................39
Section 7.12 Takeover Statutes......................................40
Section 7.13 Honeywell Name and Integrity of Franchise.............40
Section 7.14 Transfer Statutes......................................40
Section 7.15 Section 16(b)..........................................40
ARTICLE VIII CONDITIONS TO THE MERGER...................................40
Section 8.1 Conditions to the Obligations
of Each Party...........................................40
Section 8.2 Conditions to the Obligations of
Parent and Merger Subsidiary............................41
Section 8.3 Conditions to the Obligations of Honeywell..............42
ARTICLE IX TERMINATION................................................43
Section 9.1 Termination.............................................43
Section 9.2 Effect of Termination...................................44
Section 9.3 Fee and Expenses........................................44
ARTICLE X MISCELLANEOUS..............................................45
Section 10.1 Notices................................................45
Section 10.2 Non-Survival of Representations
and Warranties.........................................46
Section 10.3 Amendments; No Waivers.................................46
Section 10.4 Expenses...............................................46
Section 10.5 Successors and Assigns.................................47
Section 10.6 Governing Law..........................................47
Section 10.7 Jurisdiction...........................................47
Section 10.8 Waiver of Jury Trial...................................47
Section 10.9 Counterparts; Effectiveness............................47
Section 10.10 Entire Agreement; No Third Party Beneficiaries.........48
Section 10.11 Captions...............................................48
Section 10.12 Severability...........................................48
EXHIBIT
Exhibit A - Form of Honeywell Affiliate Letter
DEFINITIONS
Section
Acquisition Proposal....................................Section 7.10(c)
Action..................................................Section 3.12
Affected Employees......................................Section 6.5(b)
Agreement...............................................Preamble
Certificate.............................................Section 1.2(c)
Closing.................................................Section 1.1(d)
Closing Date............................................Section 1.1(d)
Code....................................................Recitals
Commission..............................................Recitals
Confidentiality Agreement...............................Section 7.3
Delaware Law............................................Section 1.1(b)
EC Merger Regulation....................................Section 3.3
Effective Time..........................................Section 1.1(a)
End Date................................................Section 9.1(b)(i)
Environmental Laws......................................Section 3.17(b)
ERISA...................................................Section 3.14(a)
Exchange Act............................................Section 3.3
Exchange Agent..........................................Section 1.3(a)
Exchange Ratio..........................................Section 1.2(a)(iii)
Form S-4................................................Section 7.2
GAAP....................................................Recitals
Honeywell...............................................Preamble
Honeywell 10-Q..........................................Section 3.7
Honeywell Balance Sheet.................................Section 3.8
Honeywell Balance Sheet Date............................Section 3.8
Honeywell Commission Documents..........................Section 3.7(a)
Honeywell Common Stock..................................Recitals
Honeywell Convertible Security..........................Section 3.5
Honeywell Disclosure Schedules..........................Article III
Honeywell Employee Plans................................Section 3.14(a)
Honeywell Stock Option..................................Section 1.4(a)
Honeywell Stock Plans...................................Section 1.4(a)
Honeywell Stockholder Approval..........................Section 3.2(a)
Honeywell Stockholder Meeting...........................Section 5.2(a)
Honeywell Subsidiary Convertible Security...............Section 3.6(b)
Hazardous Material......................................Section 3.17(b)
HSR Act.................................................Section 3.3
Indemnitees.............................................Section 6.2(a)
Intellectual Property...................................Section 3.21(b)
Proxy Statement/Prospectus..............................Section 7.2
Lien....................................................Section 3.4
Material Adverse Effect.................................Section 3.1
Merger..................................................Recitals
Merger Consideration....................................Section 1.2(b)
Merger Subsidiary.......................................Preamble
NYSE....................................................Section 1.6
Parent..................................................Preamble
Parent 10Q..............................................Section 4.6(a)
Parent Balance Sheet....................................Section 4.7
Parent Balance Sheet Date...............................Section 4.7
Parent Commission Documents.............................Section 4.6(a)
Parent Common Stock.....................................Section 1.2(a)(iii)
Parent Convertible Security.............................Section 4.5
Parent Disclosure Schedules.............................Article IV
Person..................................................Section 1.3(c)
Securities Act..........................................Section 1.4(c)
Subsidiary..............................................Section 3.6(a)
Superior Proposal.......................................Section 7.10(c)
Surviving Corporation...................................Section 1.1(b)
Tax Returns.............................................Section 3.13
Taxes...................................................Section 3.13
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement")
dated as of October 22, 2000 by and between HONEYWELL INTERNATIONAL INC., a
Delaware corporation ("Honeywell"), and GENERAL ELECTRIC COMPANY, a New
York corporation ("Parent").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent and
Honeywell have approved this Agreement, and deem it advisable and in the
best interests of their respective stockholders to consummate the merger of
a Subsidiary of Parent to be formed as soon as practicable after the date
hereof ("Merger Subsidiary") with and into Honeywell on the terms and
conditions set forth in this Agreement (the "Merger");
WHEREAS, for United States federal income tax purposes,
it is intended that the Merger qualify as a "reorganization" within the
meaning of Section 368 of the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the
Merger be accounted for as a "pooling of interests" under United States
generally accepted accounting principles ("GAAP") and the rules and
regulations of the Securities and Exchange Commission (the "Commission").
WHEREAS, in order to induce Parent to execute and deliver
this Agreement, Parent and Honeywell are entering into a stock option
agreement (the "Option Agreement") pursuant to which Honeywell is granting
Parent the option to purchase shares of common stock, par value $1.00 per
share, of Honeywell (the "Honeywell Common Stock"), constituting 19.9% of
the issued and outstanding Honeywell Common Stock, upon the terms and
subject to the conditions set forth therein.
NOW, THEREFORE, in consideration of the promises and the
respective representations, warranties, covenants, and agreements set forth
herein, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger.
(a) As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger, Honeywell and Merger
Subsidiary will file a certificate of merger with the Secretary of State of
the State of Delaware and make all other filings or recordings required by
Delaware Law to be made in connection with the Merger. The Merger shall
become effective at such time as the certificate of merger is duly filed
with the Secretary of State of the State of Delaware or, if agreed to by
Honeywell and Parent, at such later time as is specified in the certificate
of merger (the "Effective Time").
(b) At the Effective Time, Merger Subsidiary shall be merged with and into
Honeywell in accordance with the requirements of the General Corporation
Law of the State of Delaware (the "Delaware Law"), whereupon the separate
existence of Merger Subsidiary shall cease, and Honeywell shall be the
surviving corporation in the Merger (the "Surviving Corporation").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to
all of the restrictions, disabilities and duties of Honeywell and Merger
Subsidiary, all as provided under Delaware Law.
(d) The closing of the Merger (the "Closing") shall take place (i) at the
offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New
York, New York, as soon as practicable, but in any event within three
business days, after the day on which the last to be fulfilled or waived of
the conditions set forth in Article VIII (other than those conditions that
by their nature are to be fulfilled at the Closing, but subject to the
fulfillment or waiver of such conditions) shall be fulfilled or waived in
accordance with this Agreement or (ii) at such other place and time or on
such other date as Honeywell and Parent may agree in writing (the date of
the Closing being the "Closing Date").
Section 1.2 Conversion of Shares.
(a) At the Effective Time by virtue of the Merger and without any
action on the part of the holder thereof:
(i) each share of Honeywell Common Stock held by Honeywell as treasury
stock or owned by Parent immediately prior to the Effective Time
shall be canceled, and no payment shall be made with respect
thereto;
(ii) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into
and become one share of common stock of the Surviving Corporation
with the same rights, powers and privileges as the shares so
converted and shall constitute the only outstanding shares of
capital stock of the Surviving Corporation; and
(iii) each share of Honeywell Common Stock outstanding immediately prior
to the Effective Time shall, except as otherwise provided in
Section 1.2(a)(i), be converted into the right to receive 1.055
shares (the "Exchange Ratio") of common stock, par value $0.06 per
share, of Parent (the "Parent Common Stock").
(b) All Parent Common Stock issued as provided in Section 1.2(a)(iii) shall
be of the same class and shall have the same terms as the currently
outstanding Parent Common Stock. The shares of Parent Common Stock to be
received as consideration pursuant to the Merger with respect to shares of
Honeywell Common Stock (together with cash in lieu of fractional shares of
Parent Common Stock as specified below) are referred to herein as the
"Merger Consideration."
(c) From and after the Effective Time, all shares of Honeywell Common Stock
converted in accordance with Section 1.2(a)(iii) shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such shares (a
"Certificate") shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration and any dividends payable
pursuant to Section 1.3(f). From and after the Effective Time, all
certificates representing the common stock of Merger Subsidiary shall be
deemed for all purposes to represent the number of shares of common stock
of the Surviving Corporation into which they were converted in accordance
with Section 1.2(a)(ii).
Section 1.3 Surrender and Payment.
(a) Prior to the Effective Time, Parent shall appoint The Bank of New York
or such other exchange agent reasonably acceptable to Honeywell (the
"Exchange Agent") for the purpose of exchanging certificates for the Merger
Consideration. Parent will make available to the Exchange Agent, as needed,
the Merger Consideration to be delivered in respect of the shares of
Honeywell Common Stock. Promptly after the Effective Time, Parent will
send, or will cause the Exchange Agent to send, to each holder of record of
shares of Honeywell Common Stock as of the Effective Time, a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) in such form as
Honeywell and Parent may reasonably agree, for use in effecting delivery of
shares of Honeywell Common Stock to the Exchange Agent.
(b) Each holder of shares of Honeywell Common Stock that have been
converted into a right to receive the Merger Consideration, upon surrender
to the Exchange Agent of a Certificate, together with a properly completed
letter of transmittal, will be entitled to receive the Merger Consideration
in respect of the shares of Honeywell Common Stock represented by such
Certificate. Until so surrendered, each such Certificate shall, after the
Effective Time, represent for all purposes only the right to receive such
Merger Consideration.
(c) If any portion of the Merger Consideration is to be registered in the
name of a Person other than the Person in whose name the applicable
surrendered Certificate is registered, it shall be a condition to the
registration of the Merger Consideration that the surrendered Certificate
shall be properly endorsed or otherwise be in proper form for transfer and
that the Person requesting such delivery of the Merger Consideration shall
pay to the Exchange Agent any transfer or other taxes required as a result
of such registration in the name of a Person other than the registered
holder of such Certificate or establish to the reasonable satisfaction of
the Exchange Agent that such tax has been paid or is not payable. For
purposes of this Agreement, "Person" means an individual, a corporation, a
limited liability company, a partnership, an association, a trust or any
other entity or organization, including a government or political
subdivision or any agency or instrumentality thereof.
(d) After the Effective Time, there shall be no further registration of
transfers of shares of Honeywell Common Stock. If, after the Effective
Time, Certificates are presented to the Exchange Agent, the Surviving
Corporation or Parent, they shall be canceled and exchanged for the Merger
Consideration provided for, and in accordance with the procedures set
forth, in this Article I.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 1.3(a) that remains unclaimed by the holders of
shares of Honeywell Common Stock one year after the Effective Time shall be
returned to Parent, upon demand, and any such holder who has not exchanged
his shares of Honeywell Common Stock for the Merger Consideration in
accordance with this Section 1.3 prior to that time shall thereafter look
only to Parent for delivery of the Merger Consideration in respect of such
holder's shares. Notwithstanding the foregoing, Parent shall not be liable
to any holder of shares for any Merger Consideration delivered to a public
official pursuant to applicable abandoned property laws.
(f) No dividends or other distributions with respect to shares of Parent
Common Stock shall be paid to the holder of any unsurrendered Certificates
until such Certificates are surrendered as provided in this Section 1.3.
Subject to the effect of applicable laws, following such surrender, there
shall be paid, without interest, to the record holder of the shares of
Parent Common Stock issued in exchange therefor (i) at the time of such
surrender, all dividends and other distributions payable in respect of such
Parent Common Stock with a record date after the Effective Time and a
payment date on or prior to the date of such surrender and not previously
paid and (ii) at the appropriate payment date, the dividends or other
distributions payable with respect to such Parent Common Stock with a
record date after the Effective Time but with a payment date subsequent to
such surrender. For purposes of dividends or other distributions in respect
of Parent Common Stock, all shares of Parent Common Stock to be issued
pursuant to the Merger shall be entitled to dividends pursuant to the
immediately preceding sentence as if issued and outstanding as of the
Effective Time.
Section 1.4 Stock Options and Equity Awards.
(a) At the Effective Time, each outstanding employee or director option to
purchase shares of Honeywell Common Stock (a "Honeywell Stock Option")
granted under Honeywell's plans or agreements pursuant to which Honeywell
Stock Options or other stock-based awards of Honeywell have been or may be
granted (collectively, the "Honeywell Stock Plans"), whether vested or not
vested, shall be deemed assumed by Parent. At and after the Effective Time
(1) each Honeywell Stock Option then outstanding shall entitle the holder
thereof to acquire the number (rounded up to the nearest whole number) of
shares of Parent Common Stock determined by multiplying (x) the number of
shares of Honeywell Common Stock subject to such Honeywell Stock Option
immediately prior to the Effective Time by (y) the Exchange Ratio, and (2)
the exercise price per share of Parent Common Stock subject to any such
Honeywell Stock Option at and after the Effective Time shall be an amount
(rounded up to the nearest one-hundredth of a cent) equal to (x) the
exercise price per share of Honeywell Common Stock subject to such
Honeywell Stock Option prior to the Effective Time, divided by (y) the
Exchange Ratio. Other than as provided above, as of and after the Effective
Time, each Honeywell Stock Option shall be subject to the same terms and
conditions as in effect immediately prior to the Effective Time.
Notwithstanding the foregoing, any adjustment to a Honeywell Stock Option
which is an "incentive stock option" shall be made in a manner consistent
with Section 424(a) of the Code. Prior to the date hereof, Honeywell has
taken all actions necessary to cause holders of restricted shares,
restricted stock units and any other stock-based awards outstanding under
Honeywell Stock Plans, which would otherwise be settled in cash, to receive
a settlement of any such awards in shares of Parent Common Stock (with, in
the case of restricted stock units, each such unit representing one share
of Honeywell Common Stock and with the number of shares of Parent Common
Stock to be issued reflecting the Exchange Ratio). The holder of a
restricted stock unit to be settled in shares of Parent Common Stock shall
receive within ninety days following the Closing Date, a number of shares
of Parent Common Stock equal to (i) the cash value of such restricted stock
unit based upon the "Merger Price Per Share" (as defined in the applicable
Honeywell Stock Plan), divided by (ii) the closing price per share of
Parent Common Stock on the Closing Date. All fractional shares of Parent
Common Stock shall be paid in cash.
(b) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery
upon exercise of Honeywell Stock Options and settlement of other
stock-based awards of Honeywell at and after the Effective Time.
(c) On or as soon as practicable after the Effective Time, Parent shall
file with the Commission a registration statement on an appropriate form or
a post-effective amendment to a previously filed registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Parent Common Stock subject to Honeywell Stock Options and
other stock-based awards of Honeywell, and shall use its reasonable best
efforts to maintain the current status of the prospectus contained therein,
as well as comply with any applicable state securities or "blue sky" laws,
for so long as such options or other stock-based awards remain outstanding.
Section 1.5 Adjustments. If at any time during the period between the date
of this Agreement and the Effective Time, any change in the outstanding
shares of capital stock of Parent or Honeywell shall occur by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any similar transaction, or any stock dividend
thereon with a record date during such period, the Merger Consideration
shall be appropriately adjusted to provide the holders of shares of
Honeywell Common Stock the same economic effect as contemplated by this
Agreement prior to such event.
Section 1.6 Fractional Shares.
(a) No fractional shares of Parent Common Stock shall be issued in the
Merger and no dividend or distribution with respect to Parent Common Stock
shall be payable on or with respect to any fractional share and such
fractional share interests will not entitle the owner thereof to any rights
of a stockholder of Parent.
(b) As promptly as practicable following the Effective Time, the Exchange
Agent shall determine the excess of (x) the number of full shares of Parent
Common Stock delivered to the Exchange Agent by Parent over (y) the
aggregate number of full shares of Parent Common Stock to be distributed to
holders of Honeywell Common Stock (such excess being herein called the
"Excess Shares"). As soon after the Effective Time as practicable, the
Exchange Agent, as agent for such holders of Parent Common Stock, shall
sell the Excess Shares at the then prevailing prices on the New York Stock
Exchange, Inc. (the "NYSE"), all in the manner provided in paragraph (c) of
this Section 1.6.
(c) The sale of the Excess Shares by the Exchange Agent shall be executed
on the NYSE through one or more member firms of the NYSE and shall be
executed in round lots to the extent practicable. The Exchange Agent shall
use all reasonable efforts to complete the sale of the Excess Shares as
promptly following the Effective Time as, in the Exchange Agent's
reasonable judgment, is practicable consistent with obtaining the best
execution of such sales in light of prevailing market conditions. Until the
net proceeds of any such sale or sales have been distributed to such
holders of Honeywell Common Stock, the Exchange Agent will hold such
proceeds in trust for such holders of Honeywell Common Stock. Parent shall
pay all commissions, transfer taxes and other out-of-pocket transaction
costs of the Exchange Agent incurred in connection with such sale or sales
of Excess Shares. In addition, Parent shall pay the Exchange Agent's
compensation and expenses in connection with such sale or sales. The
Exchange Agent shall determine the portion of such net proceeds to which
each holder of Honeywell Common Stock shall be entitled, if any, by
multiplying the amount of the aggregate net proceeds by a fraction the
numerator of which is the amount of the fractional share interest to which
such holder of Honeywell Common Stock is entitled (after taking into
account all shares of Honeywell Common Stock then held by such holder) and
the denominator of which is the aggregate amount of fractional share
interests to which all holders of Certificates representing Honeywell
Common Stock are entitled.
(d) Notwithstanding the provisions of this Section 1.6, Parent may elect,
at its option exercised prior to the Effective Time and in lieu of the
issuance and sale of Excess Shares and the making of the payments
contemplated in such subsections, to pay to the Exchange Agent an amount in
cash sufficient for the Exchange Agent to pay each holder of Honeywell
Common Stock an amount in cash equal to the product obtained by multiplying
(x) the fractional share interest to which such holder would otherwise be
entitled (after taking into account all shares of Honeywell Common Stock
held at the Effective Time by such holder) by (y) the closing price for a
share of Parent Common Stock on the NYSE on the first business day
immediately following the Effective Time and, in such case, all references
herein to the cash proceeds of the sale of the Excess Shares and similar
references shall be deemed to mean and refer to the payments calculated as
set forth in this Section 1.6(d).
(e) As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of Honeywell Common Stock with respect to any
fractional share interests, the Exchange Agent shall promptly pay such
amounts to such holders of Honeywell Common Stock.
Section 1.7 Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration
otherwise payable to any person pursuant to this Article I such amounts as
it is required to deduct and withhold with respect to the making of such
payment under any provision of federal, state, local or foreign tax law. To
the extent that amounts are so withheld by the Surviving Corporation or
Parent, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares
of Honeywell Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as the case
may be.
Section 1.8 Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming the Certificate to be lost, stolen or destroyed and, if
required by Parent or the Surviving Corporation, the posting by that Person
of a bond, in such reasonable amount as the Surviving Corporation may
direct (which shall not exceed amounts generally required by Parent from
holders of Parent Common Stock under similar circumstances), as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration to be paid in
respect of the Shares represented by such Certificates as contemplated by
this Article I.
Section 1.9 Shares Held by Honeywell Affiliates. Anything to the contrary
in this Agreement notwithstanding, no shares of Parent Common Stock (or
certificates therefor) shall be issued in exchange for any Certificate to
any Person who may be an "affiliate" of Honeywell (identified pursuant to
Section 7.8) until the Person shall have delivered to Parent and Honeywell
a duly executed letter as contemplated by Section 7.8.
Section 1.10 Appraisal Rights. In accordance with Section 262 of the
Delaware Law, no appraisal rights shall be available to holders of shares
of Honeywell Common Stock in connection with the Merger.
ARTICLE II
CERTAIN GOVERNANCE MATTERS
Section 2.1 Board of Directors. Prior to the Effective Time, the Board of
Directors of Parent shall take all action necessary to cause the Board of
Directors of Parent to be expanded to add three persons mutually acceptable
to Honeywell and Parent which persons shall be elected to the Board of
Directors of Parent effective as of the Effective Time, and which persons
shall also be nominated for election to the Board of Directors of Parent at
the two annual meetings of stockholders of Parent following the Effective
Time.
Section 2.2 Certificate of Incorporation of the Surviving Corporation. The
certificate of incorporation of the Surviving Corporation shall be amended
as of the Effective Time to contain the provisions in the certificate of
incorporation of Merger Subsidiary immediately prior to the Effective Time,
except that such certificate of incorporation shall provide that the name
of the Surviving Corporation shall be "Honeywell International Inc."
Section 2.3 By-laws of the Surviving Corporation. The by-laws of Merger
Subsidiary in effect at the Effective Time shall be the by-laws of the
Surviving Corporation (until amended in accordance with applicable law).
Section 2.4 Directors and Officers of the Surviving Corporation. From and
after the Effective Time, until successors are duly elected or appointed
and qualified in accordance with applicable law, (a) the directors of
Merger Subsidiary at the Effective Time shall be the directors of the
Surviving Corporation, who shall consist as of the Effective Time of those
people mutually agreed upon by the chief executive officers of Honeywell
and Parent, and (b) the officers of Honeywell at the Effective Time shall
be the officers of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HONEYWELL
Honeywell represents and warrants to Parent that, except
as set forth in the disclosure schedules delivered by Honeywell to Parent
simultaneously with the execution of this Agreement (the "Honeywell
Disclosure Schedule") or the Honeywell Commission Documents filed prior to
the date of this Agreement; it being understood that any matter set forth
in any section of the Honeywell Disclosure Schedule or in the Honeywell
Commission Documents shall be deemed disclosed with respect to such section
of this Article III to which such matter logically relates, so long as the
description of such matter contains sufficient facts to provide reasonable
notice of the relevance of such matter:
Section 3.1 Corporate Existence and Power. Honeywell is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware, and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted, except for those the absence of which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Honeywell. Honeywell is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction where
the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect on Honeywell. For purposes of this Agreement, a "Material Adverse
Effect" with respect to any Person means a material adverse effect on the
financial condition, business, liabilities, properties, assets or results
of operations of such Person and its Subsidiaries, taken as a whole, except
to the extent resulting from (i) any changes in general United States or
global economic conditions, (ii) any changes in general economic conditions
in industries in which the Person operates which changes do not affect
Honeywell or Parent, as the case may be, disproportionately relative to
other entities operating in such industries, or (iii) any decline in the
market price of the common stock of such Person. Honeywell has heretofore
made available to Parent true and complete copies of Honeywell's restated
certificate of incorporation and by-laws as currently in effect.
Section 3.2 Corporate Authorization.
(a) The execution, delivery and performance by Honeywell of this Agreement
and the Option Agreement and the consummation by Honeywell of the
transactions contemplated hereby and thereby are within Honeywell's
corporate powers and, except for any required approval by Honeywell's
stockholders in accordance with Delaware Law (the "Honeywell Stockholder
Approval") in connection with the consummation of the Merger, have been
duly authorized by all necessary corporate action. The affirmative vote of
holders of the outstanding shares of Honeywell Common Stock having votes
representing a majority of the votes of all such outstanding capital stock,
voting together as a single class, in favor of the approval and adoption of
this Agreement and the Merger is the only vote of the holders of any of
Honeywell's capital stock necessary in connection with consummation of the
Merger. Assuming due authorization, execution and delivery of this
Agreement and the Option Agreement by Parent and/or Merger Subsidiary, as
applicable, each of this Agreement and the Option Agreement constitutes a
valid and binding agreement of Honeywell enforceable against Honeywell in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights, and to general
equity principles.
(b) Honeywell's Board of Directors, at a meeting duly called and held, has
(i) determined that this Agreement and the Option Agreement and the
transactions contemplated hereby and thereby (including the Merger) are
fair to and in the best interests of Honeywell's stockholders, (ii)
approved and adopted this Agreement and the Option Agreement and the
transactions contemplated hereby and thereby (including the Merger), in
compliance with any applicable supermajority Board vote required by
Honeywell's by-laws, and (iii) resolved (subject to Section 5.2) to
recommend that Honeywell stockholders vote for the approval and adoption of
this Agreement and the Merger.
Section 3.3 Governmental Authorization. The execution, delivery and
performance by Honeywell of this Agreement and the Option Agreement and the
consummation by Honeywell of the transactions contemplated hereby and
thereby require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing
of a certificate of merger in connection with the Merger in accordance with
Delaware Law, (b) compliance with any applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (c)
compliance with any applicable requirements of Council Regulation No.
4064/89 of the European Community, as amended (the "EC Merger Regulation"),
(d) compliance with any applicable requirements under the Competition Act
of Canada, (e) compliance with any other applicable requirements of foreign
anti-trust, competition, trade regulation or investment laws, (f)
compliance with any applicable environmental transfer statutes, (g)
compliance with any applicable requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act"), (h) compliance with any applicable requirements of
the Securities Act and (i) other actions or filings which if not taken or
made would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Honeywell or prevent or materially delay
Honeywell's consummation of the Merger.
Section 3.4 Non-Contravention. The execution, delivery and performance by
Honeywell of this Agreement and the Option Agreement and the consummation
by Honeywell of the transactions contemplated hereby and thereby do not and
will not (a) contravene or conflict with the restated certificate of
incorporation or by-laws of Honeywell, (b) assuming compliance with the
matters referred to in Section 3.3 and subject to receipt of Honeywell
Stockholder Approval, contravene or conflict with or constitute a violation
of any provision of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to Honeywell or any of its Subsidiaries,
(c) subject to receipt of Honeywell Stockholder Approval, constitute a
default under or give rise to any right of termination, cancellation or
acceleration of any right or obligation of Honeywell or any of its
Subsidiaries or to a loss of any benefit to which Honeywell or any of its
Subsidiaries is entitled under any provision of any agreement, contract,
lease or other instrument binding upon Honeywell or any of its Subsidiaries
or any license, franchise, permit or other similar authorization held by
Honeywell or any of its Subsidiaries, or (d) result in the creation or
imposition of any Lien on any asset of Honeywell or any of its
Subsidiaries, except for such contraventions, conflicts or violations
referred to in clause (b) or defaults, rights of termination, cancellation
or acceleration, or losses or Liens referred to in clause (c) or (d) that
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on Honeywell. For purposes of this Agreement,
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset other than any such mortgage, lien, pledge, charge, security interest
or encumbrance (i) for Taxes not yet due or being contested in good faith
or (ii) which is a carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like lien arising in the ordinary course of business.
Neither Honeywell nor any Subsidiary of Honeywell is a party to any
agreement that (x) limits the ability of Honeywell or any Subsidiary of
Honeywell to compete in or conduct any line of business or compete with any
Person or in any geographic area or during any period of time except to the
extent that any such limitation would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Honeywell or on the Surviving Corporation, immediately after the Effective
Time or (y) immediately after the Effective Time to the knowledge of
Honeywell, would materially limit the ability of Parent or any Subsidiary
of Parent, other than Honeywell and any Subsidiary of Honeywell to compete
in or conduct any material line of business or compete with any Person or
in any geographic area or during any period of time.
Section 3.5 Capitalization. The authorized capital stock of Honeywell
consists of 2,000,000,000 shares of Honeywell Common Stock and 40,000,000
shares of preferred stock, no par value. As of the close of business on
September 30, 2000 (i) there were outstanding 797,720,500 shares of
Honeywell Common Stock and (ii) no shares of Honeywell preferred stock and
no other shares of capital stock or other voting securities of Honeywell
were then outstanding. As of December 31, 1999, approximately 162,466,000
shares of Honeywell Common Stock were held in Honeywell's treasury. All
outstanding shares of capital stock of Honeywell have been duly authorized
and validly issued and are fully paid and nonassessable. Except for (a)
Honeywell Stock Options to acquire no more than 55,239,576 shares of
Honeywell Common Stock issued pursuant to Honeywell Stock Plans, (b) the
option granted to Parent pursuant to the Option Agreement, (c) stock units
for no more than 2,993,561 shares of Honeywell Common Stock and (d) shares
issuable under Honeywell's employee stock purchase plans in the ordinary
course of business consistent with past practice, as of the close of
business on September 30, 2000, there were no outstanding options, warrants
or other rights to acquire from Honeywell, and no preemptive or similar
rights, subscription or other rights, convertible or exchangeable
securities, agreements, arrangements or commitments of any character,
relating to the capital stock of Honeywell, obligating Honeywell to issue,
transfer or sell, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Honeywell or obligating Honeywell to grant, extend or enter into any such
option, warrant, subscription or other right, convertible or exchangeable
security, agreement, arrangement or commitment (each of the foregoing, a
"Honeywell Convertible Security"). Since the close of business on September
30, 2000, Honeywell has not issued any shares of capital stock or any
Honeywell Convertible Securities other than the issuance of Honeywell
Common Stock in connection with the exercise of Honeywell Stock Options
described in clause (a) above and/or as permitted by Section 5.1 hereof.
Except as required by the terms of any Honeywell Stock Plans and grants
thereunder and/or as permitted by Section 5.1, there are no outstanding
obligations of Honeywell or any of its Subsidiaries to repurchase, redeem
or otherwise acquire any shares of capital stock of Honeywell or any
Honeywell Convertible Securities.
Section 3.6 Subsidiaries.
(a) Each Subsidiary of Honeywell is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, has all
powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted, except for
those the absence of which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Honeywell. For
purposes of this Agreement, the word "Subsidiary" when used with respect to
any Person means any other Person, whether incorporated or unincorporated,
of which (i) more than fifty percent of the securities or other ownership
interests or (ii) securities or other interests having by their terms
ordinary voting power to elect more than fifty percent of the board of
directors or others performing similar functions with respect to such
corporation or other organization, is directly owned or controlled by such
Person or by any one or more of its Subsidiaries. Each Subsidiary of
Honeywell is duly qualified to do business and is in good standing in each
jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except for
those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Honeywell.
(b) Except for directors' qualifying shares and except as set forth in
Honeywell's annual report on Form 10-K for the fiscal year ended December
31, 1999, all of the outstanding capital stock of, or other ownership
interests in, each Significant Subsidiary (as such term is defined in rule
12b-2 under the Exchange Act) of Honeywell is, directly or indirectly,
owned by Honeywell. All shares of capital stock of, or other ownership
interests in, Subsidiaries of Honeywell, directly or indirectly, owned by
Honeywell are owned free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other ownership
interests), except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Honeywell.
There are no outstanding options, warrants or other rights to acquire from
Honeywell or any of its Subsidiaries, and, except as may be required by
applicable foreign corporate laws, no preemptive or similar rights,
subscriptions or other rights, convertible or exchangeable securities,
agreements, arrangements or commitments of any character, relating to the
capital stock of any Subsidiary of Honeywell, obligating Honeywell or any
of its Subsidiaries to issue, transfer or sell, any capital stock, voting
securities or other ownership interests in, or any securities convertible
into or exchangeable for any capital stock, voting securities or ownership
interests in, any Subsidiary of Honeywell or obligating Honeywell or any
Subsidiary of Honeywell to grant, extend or enter into any such option,
warrant, subscription or other right, convertible or exchangeable security,
agreement, arrangement or commitment (each of the foregoing, a "Honeywell
Subsidiary Convertible Security"). There are no outstanding obligations of
Honeywell or any of its Subsidiaries to repurchase, redeem or otherwise
acquire from any Person (other than Honeywell or a wholly owned Subsidiary
of Honeywell) any outstanding shares of capital stock of any Subsidiary of
Honeywell or any Honeywell Subsidiary Convertible Securities.
Section 3.7 Commission Filings.
(a) Honeywell has filed, or will file at or prior to the time due, all
forms, reports and documents required to be filed by it with the Commission
since December 31, 1997. Honeywell has made available to Parent (i) its
annual reports on Form 10-K for its fiscal years ended December 31, 1997,
1998 and 1999, (ii) its quarterly reports on Form 10-Q for its fiscal
quarters ended after December 31, 1999, (iii) its proxy or information
statements relating to meetings of, or actions taken without a meeting by,
the stockholders of Honeywell held since December 31, 1999, and (iv) all of
its other reports, statements, schedules and registration statements filed
with the Commission since December 31, 1999 (the documents referred to in
this Section 3.7(a) being referred to collectively as the "Honeywell
Commission Documents"). Honeywell's quarterly report on Form 10-Q for its
fiscal quarter ended June 30, 2000 is referred to as the "Honeywell 10-Q".
No Subsidiary of Honeywell is required to file any form, report or other
document with the Commission.
(b) As of its filing date, each Honeywell Commission Document complied as
to form in all material respects with the applicable requirements of the
Exchange Act and the Securities Act.
(c) As of its filing date, each Honeywell Commission Document filed
pursuant to the Exchange Act did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading.
(d) Each registration statement, as amended or supplemented, if applicable,
filed by Honeywell pursuant to the Securities Act since December 31, 1997,
as of the date such statement or amendment became effective did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.
Section 3.8 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of
Honeywell (including any related notes and schedules) included in its
annual reports on Form 10-K and the quarterly reports on Form 10-Q referred
to in Section 3.7 present fairly, in all material respects, the financial
position of Honeywell and its subsidiaries as of the dates thereof and
their results of operations and cash flows for the periods then ended
(subject to normal year-end adjustments and the absence of notes in the
case of any unaudited interim financial statements), in each case in
conformity with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto). For purposes of this Agreement, "Honeywell
Balance Sheet" means the consolidated balance sheet of Honeywell as of June
30, 2000 set forth in the Honeywell 10-Q and "Honeywell Balance Sheet Date"
means June 30, 2000.
Section 3.9 Disclosure Documents. None of the information supplied or to be
supplied by Honeywell for inclusion or incorporation by reference in the
Proxy Statement/Prospectus or in the Form S-4 or any amendment or
supplement thereto will, at the time the Proxy Statement/Prospectus or any
such supplement or amendment thereto is first mailed to the stockholders of
Honeywell or at the time the stockholder vote on the Honeywell Stockholder
Approval or at the time the Form S-4 or any such amendment or supplement
becomes effective under the Securities Act or at the Effective Time, as the
case may be, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. No
representation or warranty is made by Honeywell in this Section 3.9 with
respect to statements made or incorporated by reference therein based on
information supplied by Parent or Merger Subsidiary for inclusion or
incorporation by reference in the Proxy Statement/Prospectus or the Form
S-4. The Proxy Statement/Prospectus will comply as to form in all material
respects with the requirements of the Exchange Act.
Section 3.10 Absence of Certain Changes.
(a) Since the Honeywell Balance Sheet Date there has not been any event,
occurrence or development which would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Honeywell.
(b) Since the Honeywell Balance Sheet Date and, prior to the date hereof,
Honeywell and its Subsidiaries have conducted their respective businesses
in the ordinary course, consistent with past practices, and there has not
been:
(i) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock
of Honeywell (other than regular quarterly cash dividends payable
by Honeywell in respect of the shares of Honeywell Common Stock
consistent with past practice), or any repurchase (other than
repurchases of Honeywell Common Stock which occurred subsequent to
the Honeywell Balance Sheet Date and prior to the date hereof),
redemption or other acquisition by Honeywell or any of its
Significant Subsidiaries of any outstanding shares of their
capital stock or any Honeywell Convertible Securities or Honeywell
Subsidiary Convertible Securities (except (x) in accordance with
any dividend reinvestment plan as in effect on the date of this
Agreement in the ordinary course of the operation of such plan
consistent with past practice and/or (y) as otherwise permitted by
Section 5.1);
(ii) any amendment of any material term of any outstanding
security of Honeywell or any of its Significant Subsidiaries;
(iii) any transaction or commitment made, or any contract,
agreement or settlement entered into, by (or judgment, order or
decree affecting) Honeywell or any of its Subsidiaries relating to
its assets or business (including the acquisition or disposition
of any material amount of assets) or any relinquishment by
Honeywell or any of its Subsidiaries of any contract or other
right, in either case, material to Honeywell and its Subsidiaries
taken as a whole, other than transactions, commitments, contracts,
agreements or settlements (including without limitation
settlements of litigation and tax proceedings) in the ordinary
course of business consistent with past practice and those
contemplated by this Agreement;
(iv) any change in any method of accounting or accounting
practice by Honeywell or any of its Subsidiaries, except for any
such change which is not material or which is required by reason
of a concurrent change in GAAP; or
(v) any (A) grant of any severance or termination pay to (or
amendment to any such existing arrangement with) any director,
officer or employee of Honeywell or any of its Subsidiaries, (B)
entering into of any employment, deferred compensation,
supplemental retirement or other similar agreement (or any
amendment to any such existing agreement) with any director,
officer or employee of Honeywell or any of its Subsidiaries, (C)
increase in, or accelerated vesting and/or payment of, benefits
under any existing severance or termination pay policies or
employment agreements or (D) increase in or enhancement of any
rights or features related to compensation, bonus or other
benefits payable to directors, officers or employees of Honeywell
or any of its Subsidiaries, in each case other than in the
ordinary course of business consistent with past practice or as
permitted by this Agreement.
Section 3.11 No Undisclosed Material Liabilities. There are no liabilities
of Honeywell or any Subsidiary of Honeywell of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, other
than:
(a) liabilities disclosed or provided for in the Honeywell Balance Sheet or
in the notes thereto;
(b) liabilities incurred since such date that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Honeywell;
(c) liabilities disclosed in Honeywell Commission Documents filed prior to
the date of this Agreement; and
(d) liabilities under this Agreement.
Section 3.12 Litigation. There is no action, suit, investigation or
proceeding (an "Action") pending against, or to the knowledge of Honeywell
threatened against or affecting, Honeywell or any of its Subsidiaries or
any of their respective properties or any of their respective officers or
directors before any court or arbitrator or any governmental body, agency
or official except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Honeywell or
prevent or materially delay the consummation of the Merger.
Section 3.13 Taxes. Except as reserved for in the Honeywell Balance Sheet
(including the notes thereto) or as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Honeywell, (i) all Honeywell Tax Returns required to be filed with any
taxing authority by, or with respect to, Honeywell and its Subsidiaries
have been filed in accordance with all applicable laws; (ii) Honeywell and
its Subsidiaries have timely paid all Taxes shown as due and payable on
Honeywell Tax Returns that have been so filed, and, as of the time of
filing, Honeywell Tax Returns correctly reflected the facts regarding the
income, business, assets, operations, activities and the status of
Honeywell and its Subsidiaries (other than Taxes which are being contested
in good faith and for which adequate reserves are reflected on the
Honeywell Balance Sheet); (iii) Honeywell and its Subsidiaries have made
provision for all Taxes payable by Honeywell and its Subsidiaries for which
no Honeywell Tax Return has yet been filed; (iv) the charges, accruals and
reserves for Taxes with respect to Honeywell and its Subsidiaries reflected
on the Honeywell Balance Sheet are adequate under GAAP to cover the Tax
liabilities accruing through the date thereof; (v) there is no action,
suit, proceeding, audit or claim now proposed or pending against or with
respect to Honeywell or any of its Subsidiaries in respect of any Tax where
there is a reasonable possibility of an adverse determination; and (vi)
neither Honeywell nor any of its Subsidiaries is liable for any Tax imposed
on any entity other than such Person, except as the result of the
application of Treas. Reg. Sections 1.1502-6 (and any comparable provision
of the tax laws of any state, local or foreign jurisdiction) to the
affiliated group of which Honeywell is the common parent. For purposes of
this Agreement, "Taxes" shall mean any and all taxes, charges, fees, levies
or other assessments, including, without limitation, all net income, gross
income, gross receipts, excise, stamp, real or personal property, ad
valorem, withholding, social security (or similar), unemployment,
occupation, use, production, service, service use, license, net worth,
payroll, franchise, severance, transfer, recording, employment, premium,
windfall profits, environmental (including taxes under Section 59A of the
Code), customs duties, capital stock, profits, disability, sales,
registration, value added, alternative or add-on minimum, estimated or
other taxes, assessments or charges imposed by any federal, state, local or
foreign governmental entity and any interest, penalties, or additions to
tax attributable thereto. For purposes of this Agreement, "Tax Returns"
shall mean any return, report, form or similar statement required to be
filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund,
amended return or declaration of estimated Tax.
Section 3.14 Employee Benefit Plans.
(a) For purposes of this Agreement, the term "Honeywell Employee Plans"
shall mean and include: each material management, consulting, non-compete,
employment, severance or similar contract, plan, including, without
limitation, all Honeywell Stock Plans, arrangement or policy applicable to
any director, former director, employee or former employee of Honeywell and
each material plan, program, policy, agreement or arrangement (written or
oral), providing for compensation, bonuses, profit-sharing, stock option or
other stock-related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance coverage (including any
self-insured arrangements), health or medical benefits, disability
benefits, workers' compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance benefits) or other
employee benefits of any kind, whether funded or unfunded, which is
maintained, administered or contributed to by Honeywell or any Subsidiary
and covers any employee or director or former employee or director of
Honeywell or any Subsidiary, or under which Honeywell has any liability
contingent or otherwise (including but not limited to each material
"employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), but excluding
any such plan that is a "multiemployer plan," as defined in Section 3(37)
of ERISA).
Honeywell agrees to deliver to Parent a list of each
Honeywell Employee Plan maintained in the United States by Honeywell, by
December 31, 2000. Honeywell does not have any express or implied
commitment with respect to arrangements in the United States (i) to create,
or incur any material liability with respect to or cause to exist any other
material employee benefit plan, program or arrangement, (ii) to enter into
any material contract or agreement to provide compensation or benefits to
any officer or director or (iii) to modify, change or terminate any
material plan in any material respect, other than with respect to a
modification, change or termination required by ERISA or the Code.
(b) Each Honeywell Employee Plan has been established and maintained in
compliance with its terms and with the requirements (including funding
requirements) prescribed by any and all statutes, orders, rules and
regulations (including but not limited to ERISA and the Code) which are
applicable to such Plan, except where failure to so comply would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Honeywell.
(c) Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Honeywell, (i) neither
Honeywell nor any affiliate of Honeywell has incurred a liability under
Title IV of ERISA that has not been satisfied in full, and no condition
exists that presents a material risk to Honeywell or any affiliate of
Honeywell of incurring any such liability other than liability for premiums
due the Pension Benefit Guaranty Corporation (which premiums have been paid
when due), (ii) all contributions required to be made under the terms of
any Honeywell Employee Plan have been made, and, (iii) where applicable to
a Honeywell Employee Plan, Honeywell and its affiliates have complied with
the minimum funding requirements under Section 412 of the Code and Section
302 of ERISA with respect to each such Honeywell Employee Plan.
(d) Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Honeywell, each Honeywell
Employee Plan which is intended to be qualified under Section 401(a) of the
Code is so qualified and has been so qualified during the period from its
adoption to date, and each trust forming a part thereof is exempt from
federal income tax pursuant to section 501(a) of the Code and, to
Honeywell's knowledge, no circumstances exist which will adversely affect
such qualification or exemption.
(e) No Honeywell Employee Plan provides that any director or officer or
other employee of Honeywell or any of its Subsidiaries will become entitled
to any retirement, severance or similar benefit or enhanced or accelerated
benefit (including any acceleration of vesting or lapse of repurchase
rights or obligations with respect to any Honeywell Stock Plans or other
benefit under any compensation plan or arrangement of Honeywell) solely as
a result of the transactions contemplated hereby (or as a result of any
termination of employment in connection with the transactions contemplated
hereby).
(f) Since the Honeywell Balance Sheet Date, there has been no amendment to,
or change in employee participation or coverage under, any Honeywell
Employee Plan which would increase materially the expense of maintaining
such Honeywell Employee Plan above the level of the expense incurred in
respect thereof for the 12 months ended on the Honeywell Balance Sheet
Date.
(g) Honeywell and its Subsidiaries are in compliance with all applicable
federal, state, local and foreign statutes, laws (including without
limitation, common law), judicial decisions, regulations, ordinances,
rules, judgments, orders and codes respecting employment, employment
practices, labor, terms and conditions of employment and wages and hours,
and no work stoppage or labor strike against Honeywell and its Subsidiaries
are pending or threatened, nor are Honeywell and its Subsidiaries involved
in or threatened with any labor dispute, grievance, or litigation relating
to labor matters involving any employees, in each case except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Honeywell. There are no suits, actions, disputes, claims
(other than routine claims for benefits), investigations or audits pending
or, to the knowledge of Honeywell, threatened relating to discrimination in
employment or employment practices or in connection with any Honeywell
Employee Plan, but excluding any of the foregoing which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Honeywell.
(h) The execution of this Agreement shall not constitute an event causing
Honeywell to fund any "rabbi" or similar trust.
(i) No material employee benefit plan contributed to by Honeywell or its
Subsidiaries is a multiemployer plan within the meaning of Section 3(37) or
4001(a)(3) of ERISA.
(j) Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Honeywell with respect to
each Honeywell Employee Plan that is not subject to United States law (a
"Foreign Benefit Plan"), (i) all employer and employee contributions to
each Foreign Benefit Plan required by Law or by the terms of such Foreign
Benefit Plan have been made or, if applicable, accrued in accordance with
normal accounting practices, (ii) the fair market value of the assets of
each funded Foreign Benefit Plan, the liability of each insurer for any
Foreign Benefit Plan funded through insurance or the book reserve
established for any Foreign Benefit Plan, together with any accrued
contributions, is sufficient to procure or provide for the benefit
obligations, as of the date of this Agreement, with respect to all current
and former participants in such plan according to the reasonable actuarial
assumptions and valuations most recently used to determine employer
contributions to such Foreign Benefit Plan and no transaction contemplated
by this Agreement shall cause such assets or insurance to be less than such
benefit obligations, and (iii) each Foreign Benefit Plan required to be
registered has been registered and has been maintained in good standing
with applicable regulatory authorities.
Section 3.15 Compliance with Laws.
(a) Honeywell and its Subsidiaries have, since January 1, 1998 conducted
their business and operations in compliance with all applicable provisions
of any laws, statutes, ordinances or regulations, except for any failures
to be in compliance that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Honeywell.
(b) Neither Honeywell nor any of its Subsidiaries has failed to obtain any
licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its properties or to the conduct of its
business, which failure would, individually, or in the aggregate,
reasonably be excepted to have a Material Adverse Effect on Honeywell, and,
after giving effect to the transactions contemplated hereby, all such
licenses, permits, franchises and other governmental authorizations will
continue to be valid and in full force and effect, except where the failure
to be valid and in full force and effect would not have a Material Adverse
Effect on Honeywell.
Section 3.16 Finders' or Advisors' Fees. Except for Bear, Stearns & Co.
Inc., a copy of whose engagement agreement has been previously provided to
Parent, there is no investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on behalf of Honeywell
or any of its Subsidiaries who might be entitled to any fee or commission
in connection with the transactions contemplated by this Agreement.
Section 3.17 Environmental Matters.
(a) Except for matters which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Honeywell, (i)
no written notice, notification, demand, request for information, citation,
summons, complaint or order has been received by, and no investigation,
action, claim, suit, proceeding or review is pending or, to the knowledge
of Honeywell or any of its Subsidiaries, threatened by any Person against,
Honeywell or any of its Subsidiaries, and no penalty has been assessed
within the past three years against Honeywell or any of its Subsidiaries,
in each case with respect to any matters relating to or arising out of any
Environmental Law; (ii) Honeywell and its Subsidiaries are in compliance
with all Environmental Laws; and (iii) there are no liabilities of or
relating to Honeywell or any of its Subsidiaries relating to or arising out
of any Environmental Law and there is no existing condition, situation or
set of circumstances which would reasonably be expected to result in such a
liability.
(b) For purposes of this Section 3.17 and Section 4.17, the term
"Environmental Laws" means federal, state, local and foreign statutes,
laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, codes, injunctions, permits and governmental agreements relating to
human health and the environment, including, but not limited to, Hazardous
Materials; and the term "Hazardous Material" means all substances or
materials regulated as hazardous, toxic, explosive, dangerous, flammable or
radioactive under any Environmental Law including, but not limited to: (i)
petroleum, asbestos, or polychlorinated biphenyls and (ii) in the United
States, all substances defined as Hazardous Substances, Oils, Pollutants or
Contaminants in the National Oil and Hazardous Substances Pollution
Contingency Plan, 40 C.F.R. ss. 300.5.
Section 3.18 Opinion of Financial Advisor. Honeywell has received the
opinion of Bear, Stearns & Co. Inc., to the effect that, as of the date of
its opinion, the Exchange Ratio is fair from a financial point of view to
the holders of shares of Honeywell Common Stock.
Section 3.19 Pooling; Tax Treatment.
(a) Honeywell intends that the Merger be accounted for under the "pooling
of interests" method under the requirements of Opinion No. 16 (Business
Combinations) of the Accounting Principles Board of the American Institute
of Certified Public Accountants and the rules and regulations of the SEC.
(b) Neither Honeywell nor any of its affiliates has taken or agreed to take
any action or is aware of any fact or circumstance with respect to
Honeywell or its affiliates that would prevent (i) the Merger from
qualifying (A) for "pooling of interests" accounting treatment as described
in (a) above or (B) as a reorganization within the meaning of Section
368(a) of the Code and (ii) the merger between Honeywell and AlliedSignal
Inc. consummated on December 1, 1999 (the "Allied Merger") from qualifying
for "pooling of interests" accounting treatment as described in (a) above.
Section 3.20 Takeover Statutes. The Board of Directors of Honeywell has
taken the necessary action to render Section 203 of the Delaware Law, and
any other potentially applicable anti-takeover or similar statute or
regulation, inapplicable to this Agreement and the Option Agreement and the
transactions contemplated hereby and thereby.
Section 3.21 Intellectual Property Matters.
(a) Honeywell and its Subsidiaries own, free and clear of all Liens, or
have the right to use pursuant to valid license, sublicense, agreement or
permission all items of Intellectual Property necessary for their
operations as presently conducted or as contemplated to be conducted,
except where the failure to have such rights, individually or in the
aggregate, would not be reasonably be expected to have a Material Adverse
Effect on Honeywell. The conduct of Honeywell's and its Subsidiaries'
businesses as currently conducted or contemplated to be conducted does not
interfere, infringe, misappropriate or violate any of the Intellectual
Property rights of any third party, except for interferences,
infringements, misappropriations and violations which, individually or in
the aggregate, would not be reasonably expected to have a Material Adverse
Effect on Honeywell. To Honeywell's knowledge, no third party has
interfered with, infringed upon, misappropriated, diluted, violated or
otherwise come into conflict with any Intellectual Property rights of
Honeywell or any of its Subsidiaries, except for misappropriations and
violations which, individually or in the aggregate, would not be reasonably
expected to have a Material Adverse Effect on Honeywell.
(b) The term "Intellectual Property" as used in this Agreement means,
collectively, patents, trademarks, service marks, trade dress, logos, trade
names, Internet domain names, designs, slogans and general intangibles of
like nature, copyrights and all registrations, applications, reissuances,
continuations, continuations-in-part, revisions, extensions, reexaminations
and associated good will with respect to each of the foregoing, computer
software (including source and object codes), computer programs, computer
data bases and related documentation and materials, data, documentation,
technology, trade secrets, confidential business information (including
ideas, formulae, algorithms, models, methodologies, compositions, know-how,
manufacturing and production processes and techniques, research and
development information, drawings, designs, plans, proposals and technical
data, financial, marketing and business data and pricing and cost
information) and other intellectual property rights (in whatever form or
medium).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to Honeywell that, except
as set forth in the disclosure schedules delivered by Parent to Honeywell
simultaneously with the execution of this Agreement (the "Parent Disclosure
Schedule") or the Parent Commission Documents filed prior to the date of
this Agreement; it being understood that any matter set forth in any
section of the Parent Disclosure Schedule or in the Parent Commission
Documents shall be deemed disclosed with respect to such section of this
Article IV to which such matter logically relates, so long as the
description of such matter contains sufficient facts to provide reasonable
notice of the relevance of such matter.
Section 4.1 Corporate Existence and Power. Parent is and prior to the
Effective Time, Merger Subsidiary will be, a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as
now conducted, except for those the absence of which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent. Parent is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect on Parent. From and after the date of its incorporation, Merger
Subsidiary will not engage in any activities other than in connection with
or as contemplated by this Agreement. Parent has heretofore made available
to Honeywell true and complete copies of Parent's certificate of
incorporation and by-laws as currently in effect and, promptly after the
incorporation of Merger Subsidiary, will make available to Honeywell the
Certificate of Incorporation and by-laws of Merger Subsidiary. As of the
date hereof, neither Parent nor any of its Subsidiaries owns any shares of
Honeywell Common Stock.
Section 4.2 Corporate Authorization.
(a) The execution, delivery and performance by Parent of this Agreement and
the Option Agreement, and the consummation by Parent and Merger Subsidiary
of the transactions contemplated hereby and thereby are within the
corporate powers of Parent and will be within the corporate powers of
Merger Subsidiary prior to the Effective Time, and have been duly
authorized by all necessary corporate action of Parent and will have been
duly authorized by all necessary corporate action of Merger Subsidiary
prior to the Effective Time. Assuming due authorization, execution and
delivery of this Agreement and the Option Agreement by Honeywell, this
Agreement constitutes a valid and binding agreement of each of Parent and
Merger Subsidiary and the Option Agreement constitutes a valid and binding
agreement of Parent, in each case enforceable against such party in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. The shares of Parent Common Stock issued pursuant to the
Merger, when issued in accordance with the terms hereof, will be duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.
(b) Parent's Board of Directors, at a meeting duly called and held, has (i)
determined that this Agreement and the Option Agreement and the
transactions contemplated hereby and thereby (including the Merger) are
fair to and in the best interests of Parent's stockholders and (ii)
approved this Agreement and the Option Agreement and the transactions
contemplated hereby and thereby.
Section 4.3 Governmental Authorization. The execution, delivery and
performance by Parent of this Agreement and by Parent of the Option
Agreement, and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby and thereby require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority other than (a) the filing of a certificate of merger in
connection with the Merger and a certificate of merger in connection with
the merger contemplated by Section 2.1, in each case in accordance with
Delaware Law, (b) compliance with any applicable requirements of the HSR
Act, (c) compliance with any applicable requirements of the EC Merger
Regulation, (d) compliance with any applicable requirements under the
Competition Act of Canada, (e) compliance with any other applicable
requirements of foreign anti-trust, competition, trade regulation or
investments laws, (f) compliance with any applicable environmental transfer
statutes, (g) compliance with any applicable requirements of the Exchange
Act, (h) compliance with any applicable requirements of the Securities Act,
and (i) other actions or filings which if not taken or made would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent or prevent or materially delay Parent's and/or
Merger Subsidiary's consummation of the Merger.
Section 4.4 Non-Contravention. The execution, delivery and performance by
Parent of this Agreement and by Parent of the Option Agreement and the
consummation by Parent and Merger Subsidiary of the transactions
contemplated hereby and thereby do not and will not (a) contravene or
conflict with the certificate of incorporation or by-laws of Parent or
Merger Subsidiary, (b) assuming compliance with the matters referred to in
Section 4.3, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Parent or any of its Subsidiaries, (c)
constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Parent or any of
its Subsidiaries or to a loss of any benefit to which Parent or any of its
Subsidiaries is entitled under any provision of any agreement, contract,
lease or other instrument binding upon Parent or any of its Subsidiaries or
any license, franchise, permit or other similar authorization held by
Parent or any of its Subsidiaries or (d) result in the creation or
imposition of any Lien on any asset of Parent or any of its Subsidiaries,
except for such contraventions, conflicts or violations referred to in
clause (b) or defaults, rights of termination, cancellation or
acceleration, or losses or Liens referred to in clause (c) or (d) that
would not, individually or in the aggregate, reasonably be expected to
prevent or materially delay the consummation of the Merger.
Section 4.5 Capitalization. The authorized capital stock of Parent consists
of 13,200,000,000 shares of Parent Common Stock and 50,000,000 shares of
preferred stock, par value $1.00 per share. As of the close of business on
June 30, 2000, there were outstanding 9,898,772,000 shares of Parent Common
Stock and no other shares of capital stock or other voting securities of
Parent were outstanding. All outstanding shares of capital stock of Parent
have been duly authorized and validly issued and are fully paid and
nonassessable. Except for (a) employee or director stock options to acquire
no more than 343,000,000 shares of Parent Common Stock and (b) shares of
Parent Common Stock to be issued in connection with the Merger, as of the
close of business on September 30, 2000, there were no outstanding options,
warrants or other rights to acquire from Parent, and no preemptive or
similar rights, subscription or other rights, convertible or exchangeable
securities, agreements, arrangements, or commitments of any character,
relating to the capital stock of Parent, obligating Parent to issue,
transfer or sell any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Parent or obligating Parent to grant, extend or enter into any such option,
warrant, subscription or other right, convertible or exchangeable security,
agreement, arrangement or commitment (each of the foregoing, a "Parent
Convertible Security"). Since the close of business on June 30, 2000
through the date hereof, Parent has not issued any shares of capital stock
or Parent Convertible Securities, other than in connection with the
exercise of employee stock options and/or in the ordinary course of
business. Except as required by the terms of any employee or director stock
options or employee stock ownership plan and/or as may be entered into in
the ordinary course of business, there are no outstanding obligations of
Parent or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of Parent and of any Parent Convertible
Securities.
Section 4.6 Commission Filings.
(a) Parent has filed, or will file at or prior to the time due, all forms,
reports and documents required to be filed by it with the Commission since
December 31, 1997. Parent has made available to Honeywell (i) its annual
reports on Form 10-K for its fiscal years ended December 31, 1997, 1998 and
1999, (ii) its quarterly reports on Form 10-Q for its fiscal quarters ended
after December 31, 1999, (iii) its proxy or information statements relating
to meetings, of, or actions taken without a meeting by, the stockholders of
Parent held since December 31, 1999, and (iv) all of its other reports,
statements, schedules and registration statements filed with the Commission
since December 31, 1999 (the documents referred to in this Section 4.7(a)
being referred to collectively as the "Parent Commission Documents").
Parent's quarterly report on Form 10-Q for its fiscal quarter ended June
30, 2000 is referred to as the "Parent 10-Q".
(b) As of its filing date, each Parent Commission Document complied as to
form in all material respects with the applicable requirements of the
Exchange Act and the Securities Act.
(c) As of its filing date, each Parent Commission Document filed pursuant
to the Exchange Act did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading.
(d) Each registration statement, as amended or supplemented, if applicable,
filed by Parent pursuant to the Securities Act since December 31, 1997, as
of the date such statement or amendment became effective did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.
Section 4.7 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of
Parent (including any related notes and schedules) included in the annual
reports on Form 10-K and the quarterly reports on Form 10-Q referred to in
Section 4.6 present fairly, in all material respects, the financial
position of Parent and its subsidiaries as of the dates thereof and their
results of operations and cash flows for the periods then ended (subject to
normal year-end adjustments and the absence of notes in the case of any
unaudited interim financial statements), in each case in conformity with
GAAP applied on a consistent basis (except as may be indicated in the notes
thereto). For purposes of this Agreement, "Parent Balance Sheet" means the
consolidated balance sheet of Parent as of December 31, 1999 set forth in
the Parent 10-K and "Parent Balance Sheet Date" means December 31, 1999.
Section 4.8 Disclosure Documents. Neither the Proxy Statement/Prospectus
nor any amendment or supplement thereto, will, at the date the Proxy
Statement/Prospectus or any such amendment or supplement is first mailed to
stockholders of Honeywell or at the time the stockholders vote on the
Honeywell Stockholder Approval, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Neither the Form S-4 nor any amendment or supplement
thereto will at the time it becomes effective under the Securities Act or
at the Effective Time contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. No representation or warranty
is made by Parent in this Section 4.9 with respect to statements made or
incorporated by reference therein based on information supplied by
Honeywell for inclusion or incorporation by reference in the Proxy
Statement/Prospectus or the Form S-4. The Form S-4 and the Proxy
Statement/Prospectus will comply as to form in all material respects with
the requirements of the Exchange Act.
Section 4.9 Absence of Certain Changes. Since the Parent Balance Sheet
Date, there has not been any event, occurrence or development which would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.
Section 4.10 No Undisclosed Material Liabilities. There are no liabilities
of Parent or any Subsidiary of Parent of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, other
than:
(a) liabilities disclosed or provided for in the Parent Balance Sheet or in
the notes thereto;
(b) other liabilities incurred since such date that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect on Parent;
(c) liabilities disclosed in the Parent Commission Documents filed prior to
the date of this Agreement; and
(d) liabilities under this Agreement.
Section 4.11 Litigation. There is no Action pending against, or to the
knowledge of Parent threatened against or affecting, Parent or any of its
Subsidiaries or any of their respective properties or any of their
respective officers or directors before any court or arbitrator or any
governmental body, agency or official except as would not reasonably be
expected to prevent or materially delay the consummation of the Merger.
Section 4.12 Finders' or Advisors' Fees. Except for Chase Securities Inc.,
whose fees will be provided by Parent, there is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of Parent or any of its Subsidiaries who might
be entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.
Section 4.13 Pooling; Tax Treatment.
(a) Parent intends that the Merger be accounted for as a "pooling of
interests" as described in Section 3.19(a).
(b) Neither Parent nor any of its affiliates has taken or agreed to take
any action or is aware of any fact or circumstance with respect to Parent
or its affiliates that would prevent the Merger from qualifying (i) for
"pooling of interests" accounting treatment as described in Section 3.19(a)
or (ii) as a reorganization within the meaning of Section 368(a) of the
Code.
ARTICLE V
COVENANTS OF HONEYWELL
Honeywell agrees that:
Section 5.1 Conduct of Honeywell. From the date of this Agreement until the
Effective Time, Honeywell and its Subsidiaries shall, subject to the last
sentence of this Section 5.1, conduct their business in the ordinary course
consistent with past practice and shall use their reasonable best efforts
to preserve intact their business organizations and relationships with
third parties. Without limiting the generality of the foregoing and subject
to the last sentence of this Section 5.1, and except as set forth in
Section 5.1 of the Honeywell Disclosure Schedules or as contemplated by
this Agreement or the Option Agreement, without the prior written consent
of Parent (which shall not be unreasonably withheld), from the date of this
Agreement until the Effective Time:
(a) Honeywell will not, and will not permit any of its Subsidiaries to,
adopt or propose any change in its certificate of incorporation or by-laws;
(b) Honeywell will not, and will not permit any Subsidiary of Honeywell to,
adopt a plan or agreement of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of Honeywell or any of its Subsidiaries (other than
transactions between direct and/or indirect wholly owned Subsidiaries of
Honeywell);
(c) Honeywell will not, and will not permit any Subsidiary of Honeywell to,
issue, sell, transfer, pledge, dispose of or encumber any shares of, or
securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class or series of Honeywell or its any of its Subsidiaries
other than (i) issuances of Honeywell Common Stock pursuant to the exercise
of Honeywell Stock Options that are outstanding on the date of this
Agreement and (ii) pursuant to the terms of the Honeywell Dividend
Reinvestment Plan as in effect as of the date hereof;
(d) Honeywell will not (i) split, combine, subdivide or reclassify its
outstanding shares of capital stock, or (ii) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with
respect to its capital stock other than, subject to Sections 7.4 and 7.9,
regular quarterly cash dividends not in excess of $0.1875 per quarter
payable by Honeywell in respect of shares of Honeywell Stock consistent
with past practice;
(e) Honeywell will not, and will not permit any Subsidiary of Honeywell to,
redeem, purchase or otherwise acquire directly or indirectly any of
Honeywell's capital stock, Honeywell Convertible Securities or Honeywell
Subsidiary Convertible Securities, except for repurchases, redemptions or
acquisitions (x) required by or in connection with the terms of any
Honeywell Stock Plan or (y) in accordance with any dividend reinvestment
plan as in effect on the date of this Agreement in the ordinary course of
the operations of such plan consistent with past practice and, in the case
of each of (x) and (y) above, only to the extent consistent with Section
7.4;
(f) Honeywell will not amend the terms (including the terms relating to
accelerating the vesting or lapse of repurchase rights or obligations) of
any employee or director stock options or other stock based awards;
(g) Honeywell will not, and will not permit any Subsidiary of Honeywell to,
(i) grant any severance or termination pay to (or amend any such existing
arrangement with) any director, officer or employee of Honeywell or any of
its Subsidiaries, (ii) enter into any employment, deferred compensation or
other similar agreement (or any amendment to any such existing agreement)
with any director, officer or employee of Honeywell or any of its
Subsidiaries, (iii) materially increase any benefits payable under any
existing severance or termination pay policies or employment agreements,
(iv) materially increase any compensation, bonus or other benefits payable
to directors, officers or employees of Honeywell or any of its Subsidiaries
or (v) permit any director, officer or employee who is not already a party
to an agreement or a participant in a plan providing benefits upon or
following a "change of control" to become a party to any such agreement or
a participant in any such plan, other than pursuant to a pre-existing
contractual commitment, as required by applicable law, or in the ordinary
course of business consistent with past practice but subject to Sections
7.4 and 7.9;
(h) Honeywell will not, and will not permit any of its Subsidiaries to (i)
acquire a material amount of assets or property of any other Person except
in the ordinary course of business consistent with past practice or (ii)
incur any additional incremental indebtedness in excess of $1.5 billion, in
the aggregate;
(i) other than as contemplated by Section 7.1, Honeywell will not, and will
not permit any of its Subsidiaries to, sell, lease, license or otherwise
dispose of any material amount of assets or property except pursuant to
existing contracts or commitments and except in the ordinary course of
business consistent with past practice;
(j) except for any such change which is not material or which is required
by reason of a concurrent change in GAAP, Honeywell will not, and will not
permit any Subsidiary of Honeywell to, change any method of accounting or
accounting practice used by it;
(k) Honeywell will not, and will not permit any Subsidiary of Honeywell to,
enter into any material joint venture, partnership or other similar
arrangement;
(l) Honeywell will not, and will not permit any of its Subsidiaries to,
take any action that would make any representation or warranty of Honeywell
hereunder inaccurate in any material respect at, or as of any time prior
to, the Effective Time;
(m) Honeywell will not settle or compromise any material Action for an
amount in excess of $100 million or enter into any consent decree,
injunction or similar restraint or form of equitable relief in settlement
of any Action, except for such consent decrees, injunctions or restraints
which would not individually or in the aggregate adversely affect the
businesses or operations of Honeywell, Parent or the combined entity at or
after the Effective Time in any material respect;
(n) take any action to exempt or make any person, entity or action (other
than Parent) not subject to the provision of Section 203 of the Delaware
Law or any other potentially applicable anti-takeover or similar statute or
regulation; and
(o) Honeywell will not, and will not permit any of its Subsidiaries to,
make any election with respect to Taxes or settle any material claim with
respect to Taxes which, in each case, would have a Material Adverse Effect
on Honeywell.
(p) Honeywell will not, and will not permit any of its Subsidiaries to,
agree or commit to do any of the foregoing.
For purposes of this Section 5.1 acquisitions of property, assets or any
business involving the payment of consideration in an amount in excess of
$500 million, in the aggregate, and sales, transactions or dispositions of
assets or property by Honeywell and its Subsidiaries having a fair market
value in excess of $500 million, in the aggregate, shall be deemed to be
material.
Section 5.2 Honeywell Stockholder Meeting.
(a) Honeywell shall cause a meeting of its stockholders (the "Honeywell
Stockholder Meeting") to be duly called and noticed for the purpose of
obtaining the Honeywell Stockholder Approval. In connection with the
Honeywell Stockholder Meeting, Honeywell (x) will mail to its stockholders
as promptly as practicable, the Proxy Statement/Prospectus and all other
proxy materials for the Honeywell Stockholder Meeting, (y) will use its
reasonable best efforts, subject to paragraph (b) of this Section 5.2, to
obtain the Honeywell Stockholder Approval and (z) will otherwise comply
with all legal requirements applicable to the Honeywell Stockholder
Meeting.
(b) Except as provided in the next sentence, the Board of Directors of
Honeywell shall recommend approval and adoption of this Agreement and the
Merger by Honeywell's stockholders. The Board of Directors of Honeywell
shall be permitted (i) not to recommend to Honeywell's stockholders that
they give the Honeywell Stockholder Approval or (ii) to withdraw or modify
in a manner adverse to Parent its recommendation to Honeywell's
stockholders that they give the Honeywell Stockholder Approval, only (w) if
after receiving an Acquisition Proposal that constitutes a Superior
Proposal, the Board of Directors of Honeywell determines in its good faith
judgment, after receiving the advice of outside legal counsel, that, in
light of this Superior Proposal, there is a reasonable probability that the
Board of Directors would be in violation of its fiduciary duties under
applicable law if it failed to withdraw or modify its recommendation, such
determination to be in the sole discretion of the Board of Directors of
Honeywell.
ARTICLE VI
COVENANTS OF PARENT
Section 6.1 Obligations of Merger Subsidiary.
(a) Promptly following the date hereof (and in any event prior to the
Effective Time), Parent shall cause the incorporation of Merger Subsidiary
pursuant to and in accordance with Delaware Law by causing to be filed with
the Secretary of State of the State of Delaware a certificate of
incorporation of Merger Subsidiary and, promptly following the date of such
filing and the incorporation of Merger Subsidiary, Parent shall cause
Merger Subsidiary to take all necessary action to execute a counterpart of,
and become a party to, this Agreement.
(b) Parent will take all action necessary to cause Merger Subsidiary to
perform its obligations under this Agreement and to consummate the Merger
on the terms and conditions set forth in this Agreement.
Section 6.2 Director and Officer Liability.
(a) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation shall, indemnify and hold harmless, to the fullest extent
permitted under applicable law, the individuals who on or prior to the
Effective Time were officers, directors and employees of Honeywell or its
Subsidiaries (collectively, the "Indemnitees") with respect to all acts or
omissions by them in their capacities as such or taken at the request of
Honeywell or any of its Subsidiaries at any time on or prior to the
Effective Time. In the event the Surviving Corporation or Parent or any of
their successors or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all
of its properties and assets to any Person, then and in each such case,
proper provisions shall be made so that the successors and assigns of the
Surviving Corporation or Parent shall assume the obligations of the
Surviving Corporation or the Parent, as the case may be, as set forth in
this Section 6.2. An Indemnitee shall have a right to participate in (but
not control) the defense of any such matter with its own counsel and at its
own expense. Notwithstanding the right of the Surviving Corporation to
assume and control the defense of such litigation, claim or proceeding,
such Indemnitee shall have the right to employ separate counsel and to
participate in the defense of such litigation, claim or proceeding, and the
Surviving Corporation shall bear the reasonable fees, costs and expenses of
such separate counsel and shall pay such fees, costs and expenses promptly
after receipt of an invoice from such Indemnitee if (i) the use of counsel
chosen by the Surviving Corporation to represent such Indemnitee would
present such counsel with a conflict of interest or (ii) such Indemnitee
shall have legal defenses available to it or to other Indemnitees which are
different from or in addition to those available to the Surviving
Corporation; provided, however, that the Indemnitee shall be required to
deliver an undertaking to Honeywell as contemplated by Section 2 of Article
VI of the restated certificate of incorporation of Honeywell. The Surviving
Corporation shall not settle any matter set forth in Section 6.2 of the
Honeywell Disclosure Schedule unless the terms of the settlement provide
that the Indemnitee shall have no responsibility for the discharge of any
settlement amount and impose no other obligations or duties on the
Indemnitee and the settlement discharges all rights against Indemnitee with
respect to such matter. Parent shall cause the Surviving Corporation to
honor all indemnification agreements with Indemnitees (including under
Honeywell's by-laws) in effect as of the date of this Agreement in
accordance with the terms thereof. Honeywell has disclosed to Parent all
such indemnification agreements prior to the date of this Agreement.
(b) For three years after the Effective Time, Parent shall procure the
provision of officers' and directors' liability insurance in respect of
acts or omissions occurring prior to the Effective Time covering each such
Person currently covered by Honeywell's officers' and directors' liability
insurance policy on terms with respect to coverage and in amounts no less
favorable than those of such policy in effect on the date hereof; provided,
that if the aggregate annual premiums for such insurance at any time during
such period shall exceed 200% of the per annum rate of premium paid by
Honeywell and its Subsidiaries as of the date hereof for such insurance,
then Parent shall, or shall cause its Subsidiaries to, provide only such
coverage as shall then be available at an annual premium equal to 200% of
such rate.
(c) The certificate of incorporation of the Surviving Corporation shall,
from and after the Effective Time, contain provisions no less favorable
with respect to limitation of certain liabilities of directors and
indemnification than are set forth as of the date of this Agreement in
Article Eleventh of the restated certificate of incorporation of Honeywell,
which provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in a manner that would
adversely affect the rights thereunder of individuals who at the Effective
Time were directors, officers or employees of Honeywell.
(d) The obligations of Parent under this Section 6.2 shall not be
terminated or modified in such a manner as to adversely affect any
Indemnitee to whom this Section 6.2 applies without the consent of the
affected Indemnitee (it being expressly agreed that the Indemnitees to whom
this Section 6.2 applies shall be third party beneficiaries of this Section
6.2).
Section 6.3 Stock Exchange Listing. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in
connection with the Merger to be approved for listing on the NYSE, subject
to official notice of issuance.
Section 6.4 Employee Benefits.
(a) From and after the Effective Time, Parent shall cause the Surviving
Corporation to honor in accordance with their terms all benefits and
obligations under Honeywell Employee Plans, each as in effect on the date
of this Agreement (or as amended as contemplated or permitted hereby or
with the prior written consent of Parent). Subject to the previous sentence
and Section 6.4(b), no provision of this Agreement shall be construed as a
limitation on the right of Parent or the Surviving Corporation to amend or
terminate any Honeywell Employee Plan to the extent permitted by the terms
thereof (as in effect on the date hereof) and applicable law, and no
provision of this Agreement shall be construed to create a right in any
employee or beneficiary of such employee under a Honeywell Employee Plan
that such employee or beneficiary would not otherwise have under the terms
of that Honeywell Employee Plan. The "Change of Control" provisions of the
Honeywell Employee Plans set forth on Section 6.4(a) of the Honeywell
Disclosure Schedule will be triggered by the consummation of the Merger.
(b) For a period of at least one year following the Effective Time, Parent
shall provide to employees of Honeywell and its Subsidiaries as of the
Effective Time ("Affected Employees"), for so long as such Affected
Employees remain employed by Parent or its Subsidiaries, employee benefits
(including salary, performance based incentive compensation and stock-based
benefits) which, in the aggregate, are at least as favorable as the
benefits provided pursuant to Honeywell's or its Subsidiaries' (as
applicable) employee benefit plans, programs, policies and arrangements
immediately prior to the Effective Time, provided, however, that the
foregoing shall not be construed to limit Parent's flexibility in
determining the design of any benefit plan or program.
(c) Parent will, or will cause the Surviving Corporation to, give Affected
Employees full credit for purposes of eligibility, vesting, and
determination of the level of and entitlement to benefits under severance
benefit, vacation and other employee benefit plans or arrangements
maintained by Parent or any Subsidiary of Parent (if such Affected
Employees participate in any such employee benefit plan or arrangement) for
such Affected Employees' service with Honeywell or any Subsidiary of
Honeywell to the same extent recognized by Honeywell immediately prior to
the Effective Time for similar Honeywell employee benefit plans or
arrangements, provided, however, that this Section 6.4(c) shall, except as
required by law, not provide crediting of service for benefit accrual
purposes under Parent defined benefit pension plans, or where such
crediting of service would result in a duplication of benefits.
(d) Parent will, or will cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods
with respect to participation and coverage requirements applicable to the
Affected Employees under any welfare benefit plans of Parent that such
employees may be eligible to participate in after the Effective Time, other
than limitations or waiting periods that would have been in effect with
respect to such employees as of the Effective Time under any welfare plan
maintained for the Affected Employees immediately prior to the Effective
Time, and (ii) provide each Affected Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying
any applicable deductible or out-of-pocket requirements under any welfare
plans that such employees are eligible to participate in after the
Effective Time during the same plan year in which such co-payments and
deductibles were paid.
(e) Prior to the Effective Time, Honeywell and Parent shall take all such
action necessary to ensure that no "rabbi" or similar trust maintained by
Honeywell or Parent, respectively, is required to be funded as a result of
the transactions contemplated by this Agreement.
Section 6.5 Consultant Agreement. At the Effective Time, Parent shall enter
into a consulting agreement with Michael R. Bonsignore substantially on the
terms set forth in Section 6.5 of the Honeywell Disclosure Schedule.
ARTICLE VII
COVENANTS OF PARENT AND HONEYWELL
The parties hereto agree that:
Section 7.1 Reasonable Best Efforts.
(a) Subject to Section 7.1(b), Honeywell and Parent shall each cooperate
with the other and use (and shall cause their respective Subsidiaries to
use) their respective reasonable best efforts to promptly (i) take or cause
to be taken all necessary actions, and do or cause to be done all things,
necessary, proper or advisable under this Agreement and applicable laws to
consummate and make effective the Merger and the other transactions
contemplated by this Agreement as soon as practicable, including, without
limitation, preparing and filing promptly and fully all documentation to
effect all necessary filings, notices, petitions, statements,
registrations, submissions of information, applications and other documents
(including, without limitation, any required filings under the HSR Act or
any foreign antitrust, competition or trade regulation law, regulation or
statute, or any amendments to any thereof) and (ii) obtain all approvals,
consents, registrations, permits, authorizations and other confirmations
required to be obtained from any third party necessary, proper or advisable
to consummate the Merger and the other transactions contemplated by this
Agreement. Subject to applicable laws relating to the exchange of
information and in addition to Section 7.1(c), Honeywell and Parent shall
have the right to review in advance, and to the extent practicable each
will consult the other on, all the information relating to Honeywell and
its Subsidiaries or Parent and its Subsidiaries, as the case may be, that
appears in any filing made with, or written materials submitted to, any
third party and/or any governmental authority in connection with the Merger
and the other transactions contemplated by this Agreement.
(b) Without limiting Section 7.1(a), Parent and Honeywell shall:
(i) each use its reasonable best efforts to avoid the entry of, or to
have vacated or terminated, any decree, order, or judgment that
would restrain, prevent or delay the Closing, on or before the End
Date, including without limitation defending through litigation on
the merits any claim asserted in any court by any Person; and
(ii) each use its reasonable best efforts to avoid or eliminate each
and every impediment under any antitrust, competition or trade
regulation law that may be asserted by any governmental authority
with respect to the Merger so as to enable the Closing to occur as
soon as reasonably possible (and in any event no later than the
End Date), including, with respect to Parent, Parent shall take
all such actions, including, without limitation (x) proposing,
negotiating, committing to and effecting, by consent decree, hold
separate order, or otherwise, the sale, divestiture or disposition
of such assets or businesses of Parent (or any of its
Subsidiaries) and (y) otherwise taking or committing to take
actions that limit Parent or its Subsidiaries' freedom of action
with respect to, or its ability to retain, one or more of its or
its Subsidiaries' businesses, product lines or assets, in each
case as may be required in order to avoid the entry of, or to
effect the dissolution of, any injunction, temporary restraining
order, or other order in any suit or proceeding, which would
otherwise have the effect of preventing or materially delaying the
Closing; provided, however, that Parent shall not be required to
take any such actions if such action with respect to a comparable
amount of assets, businesses or products lines of Honeywell would
be reasonably likely, in the aggregate, to have a Material Adverse
Effect on Honeywell and its Subsidiaries, taken as a whole;
provided, further, however, that neither Parent nor Honeywell
shall be required to sell, divest or otherwise dispose of any
assets, businesses or product lines of Honeywell if such actions
would be reasonably likely, in the aggregate, to have a Material
Adverse Effect on Honeywell and its Subsidiaries. Honeywell shall
take such of the foregoing actions as the Parent may request;
provided that any such action is conditioned upon the consummation
of the Merger.
(c) Parent and Honeywell shall keep the other reasonably apprised of the
status of matters relating to the completion of the transactions
contemplated hereby and work cooperatively in connection with obtaining all
required approvals or consents of any governmental authority (whether
domestic, foreign or supranational). In that regard, each party shall
without limitation: (i) promptly notify the other of, and if in writing,
furnish the other with copies of (or, in the case of material oral
communications, advise the other orally of) any communications from or with
any governmental authority (whether domestic, foreign or supranational)
with respect to the Merger or any of the other transactions contemplated by
this Agreement, (ii) permit the other to review and discuss in advance, and
consider in good faith the views of the other in connection with, any
proposed written (or any material proposed oral) communication with any
such governmental authority, (iii) not participate in any meeting with any
such governmental authority unless it consults with the other in advance
and to the extent permitted by such governmental authority gives the other
the opportunity to attend and participate thereat, (iv) furnish the other
with copies of all correspondence, filings and communications (and
memoranda setting forth the substance thereof) between it and any such
governmental authority with respect to this Agreement and the Merger, and
(v) furnish the other with such necessary information and reasonable
assistance as Parent or Honeywell may reasonably request in connection with
its preparation of necessary filings or submissions of information to any
such governmental authority. Parent and Honeywell may, as each deems
advisable and necessary, reasonably designate any competitively sensitive
material provided to the other under this Section as "outside counsel
only." Such materials and the information contained therein shall be given
only to the outside legal counsel of the recipient and will not be
disclosed by such outside counsel to employees, officers, or directors of
the recipient unless express permission is obtained in advance from the
source of the materials (Parent or Honeywell, as the case may be) or its
legal counsel.
Section 7.2 Proxy Materials; Certain Filings. Honeywell and Parent shall
promptly prepare and file with the Commission a proxy statement relating to
the meeting of Honeywell to be held in connection with this Agreement and
the transactions contemplated hereby (the "Proxy Statement/Prospectus").
Honeywell and Parent shall promptly prepare, and Parent shall file with the
Commission, a registration statement on Form S-4 (the "Form S-4") in which
the Proxy Statement/Prospectus will be included as a prospectus, and Parent
shall use its reasonable best efforts to cause the Form S-4 to be declared
effective by the Commission as promptly as practicable after filing. Parent
shall promptly take any action required to be taken under foreign or state
securities or Blue Sky laws in connection with the issuance of Parent
Common Stock in connection with the Merger. Honeywell and Parent shall
cooperate with one another (a) in determining whether any action by or in
respect of, or filing with, any governmental body, agency or official, or
authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material