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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
-------------------------
MEASUREX CORPORATION
(NAME OF SUBJECT COMPANY)
HONEYWELL ACQUISITION CORP.
HONEYWELL INC.
(BIDDERS)
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
-------------------------
583432 10 9
(CUSIP NUMBER OF CLASS OF SECURITIES)
-------------------------
EDWARD D. GRAYSON, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
HONEYWELL INC.
HONEYWELL PLAZA
MINNEAPOLIS, MINNESOTA 55408
(612) 951-1000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
-------------------------
COPY TO:
DAVID J. FRIEDMAN, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
CALCULATION OF FILING FEE
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AMOUNT OF
TRANSACTION VALUATION* FILING FEE
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$618,328,025 $123,666
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</TABLE>
* For purposes of calculating fee only. This amount assumes the purchase of
16,150,375 shares of common stock of Measurex Corporation which are
outstanding and 1,516,140 shares of common stock of Measurex Corporation
which may be issued pursuant to options which are currently exercisable, in
each case at $35.00 in cash per share. The amount of the filing fee
calculated in accordance with Regulation 240.0-11 of the Securities Exchange
Act of 1934, as amended, equals 1/50 of one percentum of the value of shares
to be purchased.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11 (a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: Not applicable.
FORM OR REGISTRATION NO.: Not applicable.
FILING PARTY: Not applicable.
DATE FILED: Not applicable.
Page 1 of pages
The Exhibit Index appears on page 7
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<PAGE> 2
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Honeywell Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Honeywell Inc., a Delaware
corporation ("Honeywell"), to purchase all outstanding shares of Common Stock,
par value $.01 per share (the "Common Stock"), including the associated
preferred share purchase rights (the "Rights", and together with the Common
Stock, the "Shares"), of Measurex Corporation, a Delaware corporation (the
"Company"), at $35.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated January 31,
1997 (the "Offer to Purchase"), a copy of which is attached hereto as Exhibit
(a)(1), and in the related Letter of Transmittal. a copy of which is attached
hereto as Exhibit (a)(2) (which together constitute the "Offer").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Measurex Corporation and the address
of its principal executive offices is One Results Way, Cupertino, California
95014.
(b) The class of securities to which this Statement relates is the Common
Stock, par value $.01 per share (including the associated preferred share
purchase rights), of the Company. The information set forth in the
"Introduction" and Section 1, "Terms of the Offer" of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 6, "Price Range of the Shares;
Dividends on the Shares" of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) The information set forth in the "Introduction" and Section 9,
"Certain Information Concerning Honeywell and the Purchaser" of the Offer to
Purchase is incorporated herein by reference. The name, business address,
present principal occupation or employment, the material occupations, positions,
offices or employments for the past five years and citizenship of each director
and executive officer of the Purchaser and Honeywell and the name, principal
business and address of any corporation or other organization in which such
occupations, positions, offices and employments are or were carried on are set
forth in Schedule I of the Offer to Purchase and incorporated herein by
reference.
(e)-(f) During the last five years, none of the Purchaser or Honeywell or,
to the best of the Purchaser's knowledge, any of the directors or executive
officers of the Purchaser or Honeywell has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) Neither the Purchaser nor Honeywell, nor to the best of the
knowledge of the Purchaser and Honeywell, any of the persons listed in Schedule
I of the Offer to Purchase, has entered into any transaction with the Company,
or any of the Company's affiliates which are corporations, since the
commencement of the Company's third full fiscal year preceding the date of this
Statement, the aggregate amount of which was equal to or greater than one
percent of the consolidated revenues of the Company for (i) the fiscal year in
which such transaction occurred, or (ii) the portion of the current fiscal year
which has occurred if the transaction occurred in such year.
(a)(2) Neither the Purchaser nor Honeywell, nor to the best of the
knowledge of the Purchaser and Honeywell, any of the persons listed in Schedule
I of the Offer to Purchase, has entered into any transaction since the
commencement of the Company's third full fiscal year preceding the date of this
Statement, with the executive officers, directors or affiliates of the Company
which are not corporations, in which the aggregate amount involved in such
transaction or in a series of similar transactions, including all periodic
installments in the case of any lease or other agreement providing for periodic
payments or installments, exceeded $40,000.
2
<PAGE> 3
(b) The information set forth in the "Introduction," Section 11,
"Background of the Offer; the Merger Agreement and Certain Other Agreements" and
Section 12, "Purpose of the Offer and the Merger; Plans for the Company; Other
Matters" of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10, "Source and Amount of
Funds" and Section 12, "Purpose of the Offer and the Merger; Plans for the
Company; Other Matters" of the Offer to Purchase is incorporated herein by
reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the "Introduction," Section 11,
"Background of the Offer; the Merger Agreement and Certain Other Agreements,"
and Section 12, "Purpose of the Offer and the Merger; Plans for the Company;
Other Matters" of the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 7, "Effect of the Offer on the
Market for Shares; Stock Listing; Exchange Act Registration; Margin Regulations"
of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in Section 9, "Certain Information
Concerning Honeywell and the Purchaser" of the Offer to Purchase is incorporated
herein by reference.
ITEM 7.CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "Introduction," Section 10, "Source and
Amount of Funds," Section 11, "Background of the Offer; the Merger Agreement and
Certain Other Agreements," Section 12, "Purpose of the Offer and the Merger;
Plans for the Company; Other Matters" and Section 16, "Fees and Expenses" of the
Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16, "Fees and Expenses" of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9, "Certain Information Concerning
Honeywell and the Purchaser" of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the "Introduction," Section 11,
"Background of the Offer; the Merger Agreement and Certain Other Agreements,"
and Section 12, "Purpose of the Offer and the Merger; Plans for the Company;
Other Matters" of the Offer to Purchase is incorporated herein by reference.
Except as described therein, there are no present or proposed material
contracts, arrangements, understandings or relationships between the Purchaser
or Honeywell, or to the best of the knowledge of the Purchaser and Honeywell,
any of the persons listed in Schedule I of the Offer to Purchase, and the
Company, or any of its executive officers, directors, controlling persons or
subsidiaries.
(b)-(c) The information set forth in Section 15, "Certain Legal Matters" of
the Offer to Purchase is incorporated herein by reference.
3
<PAGE> 4
(d) The information set forth in Section 7, "Effect of the Offer on the
Market for Shares; Stock Listing; Exchange Act Registration; Margin
Regulations," and Section 15, "Certain Legal Matters" of the Offer to Purchase
is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated January 31, 1997.
(a)(2) Letter of Transmittal with respect to the Shares.
(a)(3) Letter, dated January 31, 1997, from Bear, Stearns & Co. Inc. to
Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(4) Letter for use by Brokers, Dealers, Banks, Trust Companies and
Nominees to their Clients.
(a)(5) Notice of Guaranteed Delivery with respect to the Shares.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Press Release jointly issued by Honeywell and the Company, dated
January 27, 1997.
(a)(8) Form of Summary Advertisement, dated January 31, 1997.
(b)(1) Form of Credit Agreement and Existing Agreements with certain banks.
(c)(1) Agreement and Plan of Merger, dated as of January 26, 1997, by and
among Honeywell, the Purchaser and the Company.
(c)(2) Employment Agreement, dated January 26, 1997, by and between
Purchaser and David A. Bossen.
(c)(3) Employment Agreement, dated January 26, 1997, by and between
Purchaser and John Gingerich.
(d) None.
(e) Not applicable.
(f) None.
4
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: January 31, 1997 HONEYWELL ACQUISITION CORP.
By: /s/ Lawrence W. Stranghoener
------------------------------------
Name: Lawrence W. Stranghoener
Title: Vice President
5
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: January 31, 1997 HONEYWELL INC.
By: /s/ Lawrence W. Stranghoener
------------------------------------
Name: Lawrence W. Stranghoener
Title: Vice President, Business
Development
6
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INDEX TO EXHIBITS
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SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
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<C> <S> <C>
(a)(1) Offer to Purchase, dated January 31, 1997.
(a)(2) Letter of Transmittal with respect to the Shares.
(a)(3) Letter, dated January 31, 1997, from Bear, Stearns & Co.
Inc. to Brokers, Dealers, Banks, Trust Companies and
Nominees.
(a)(4) Letter for use by Brokers, Dealers, Banks, Trust Companies
and Nominees to their Clients.
(a)(5) Notice of Guaranteed Delivery with respect to the Shares.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Press Release jointly issued by Honeywell and the Company,
dated January 27, 1997.
(a)(8) Form of summary advertisement, dated January 31, 1997.
(b)(1) Form of Credit Agreement and Existing Agreements with
certain banks.
(c)(1) Agreement and Plan of Merger, dated as of January 26, 1997,
by and among Honeywell, the Purchaser and the Company.
(c)(2) Employment Agreement, dated January 26, 1997, by and between
Purchaser and David A. Bossen.
(c)(3) Employment Agreement, dated January 26, 1997, by and between
Purchaser and John Gingerich.
</TABLE>
7
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MEASUREX CORPORATION
BY
HONEYWELL ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HONEYWELL INC.
AT
$35.00 NET PER SHARE
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 28, 1997, UNLESS THE
OFFER IS EXTENDED.
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THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND THE
MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS, AND UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY
DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS CONTAINED
IN THIS OFFER TO PURCHASE. SEE SECTION 14.
------------------------
IMPORTANT
Any stockholder who desires to tender all or any portion of his Shares
should either (1) complete and sign the Letter of Transmittal or a facsimile
thereof in accordance with the instructions in the Letter of Transmittal, mail
or deliver it and any other required documents to the Depositary and either
deliver the certificates for such Shares to the Depositary along with the Letter
of Transmittal or tender such Shares pursuant to the procedures for book-entry
transfer set forth in Section 2 or (2) request his broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for him. Any
stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if he desires to tender
such Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, may tender such
Shares by following the procedures for guaranteed delivery set forth in Section
2.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to the Information Agent, the Dealer
Manager, the Depositary, or to brokers, dealers, commercial banks or trust
companies. A stockholder may also contact brokers, dealers, commercial banks or
trust companies for assistance concerning the Offer.
------------------------
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
January 31, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
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INTRODUCTION................................................ 1
THE OFFER................................................... 2
1. Terms of the Offer................................. 2
2. Procedure for Tendering Shares..................... 4
3. Withdrawal Rights.................................. 6
4. Acceptance for Payment and Payment................. 7
5. Certain Federal Income Tax Consequences............ 8
6. Price Range of the Shares; Dividends on the
Shares............................................. 8
7. Effect of the Offer on the Market for the Shares;
Stock Listing; Exchange Act Registration; Margin
Regulations........................................ 9
8. Certain Information Concerning the Company......... 10
9. Certain Information Concerning Honeywell and the
Purchaser.......................................... 12
10. Source and Amount of Funds......................... 13
11. Background of the Offer; the Merger Agreement and
Certain Other Agreements........................... 14
12. Purpose of the Offer and the Merger; Plans for the
Company; Other Matters............................. 22
13. Dividends and Distributions........................ 24
14. Conditions of the Offer............................ 24
15. Certain Legal Matters.............................. 26
16. Fees and Expenses.................................. 28
17. Miscellaneous...................................... 29
</TABLE>
Schedule I -- Directors and Executive Officers of Honeywell and the Purchaser
<PAGE> 3
To the Holders of Common Stock of
MEASUREX CORPORATION:
INTRODUCTION
Honeywell Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Honeywell Inc., a Delaware corporation ("Honeywell"),
hereby offers to purchase all outstanding shares of Common Stock, par value $.01
per share (the "Common Stock"), including the associated preferred share
purchase rights (the "Rights" and together with the Common Stock, the "Shares"),
issued pursuant to the Rights Agreement (as defined below), of Measurex
Corporation, a Delaware corporation (the "Company"), at $35.00 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which, together
with any amendments or supplements hereto or thereto, collectively constitute
the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses incurred in connection with the Offer
of Bear, Stearns & Co. Inc. ("Bear Stearns"), which is acting as the Dealer
Manager (the "Dealer Manager"), ChaseMellon Shareholder Services, L.L.C., which
is acting as the Depositary (the "Depositary"), and Georgeson & Company Inc.,
which is acting as the Information Agent (the "Information Agent").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER
OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY
DILUTED BASIS (THE "MINIMUM CONDITION"). SEE SECTION 14.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 26, 1997 (the "Merger Agreement"), by and among Honeywell, the
Purchaser and the Company pursuant to which, as soon as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions to the Merger (as defined below), the Purchaser will be merged with
and into the Company (the "Merger") and the Company will become a wholly owned
subsidiary of Honeywell. At the effective time of the Merger (the "Effective
Time"), each Share then outstanding (other than Shares held by Honeywell, the
Purchaser or any other wholly owned subsidiary of Honeywell and Shares held by
stockholders who perfect their dissenters' rights under Delaware law) will be
converted into the right to receive $35.00 in cash or any higher price per Share
paid in the Offer. The Merger Agreement is more fully described in Section 12.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS, AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES.
The Merger Agreement provides that, except as provided therein, following
satisfaction or waiver, if permissible, of the conditions to the Offer and
subject to the terms and conditions thereof, the Purchaser will accept for
payment, in accordance with the terms of the Offer, all Shares validly tendered
pursuant to the Offer and not withdrawn as soon as it is permitted to do so
pursuant to applicable law. The Offer will not remain open following the time
Shares are accepted for payment.
Under the General Corporation Law of the State of Delaware (the "DGCL"), if
the Purchaser acquires, pursuant to the Offer or otherwise, at least 90% of the
outstanding Shares, the Purchaser will be able to approve the Merger Agreement
and the transactions contemplated thereby without a vote of the stockholders. In
such event, Honeywell, the Purchaser and the Company have agreed in the Merger
Agreement to take, at the request of Honeywell and subject to the satisfaction
of the conditions set forth in the Merger Agreement, all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the stockholders, in
accordance with Section 253 of the DGCL. If, however, the Purchaser does not
acquire at least 90% of the outstanding Shares pursuant to the Offer or
otherwise and a vote of the Stockholders is required under the DGCL, a
significantly longer period of time would be required to effect the Merger. In
the Merger Agreement, Honeywell, Purchaser and the Company have agreed that if
immediately prior to the scheduled Expiration Date (as defined below) the Shares
<PAGE> 4
tendered pursuant to the Offer are less than 90% of the outstanding Shares,
Purchaser may extend the Offer for a period not to exceed 20 business days.
According to the Company, as of January 26, 1997, there were 16,150,375
Shares issued and outstanding, and there were outstanding options to purchase an
aggregate of 3,592,579 Shares, 1,516,140 of which were then exercisable. The
Merger Agreement provides, among other things, that the Company will not,
without the prior written consent of Honeywell, issue any additional Shares
(except on the exercise of outstanding options or pursuant to the Company's
Employee Stock Purchase Plan (as defined below). Based on the foregoing and
assuming that all outstanding options are exercised, the Minimum Condition will
be satisfied if 9,871,478 Shares are validly tendered and not withdrawn prior to
the expiration of the Offer. If the Purchaser acquires sufficient Shares in the
Offer to meet the Minimum Condition, it would be able to effect the Merger
without the affirmative vote of any other stockholder of the Company.
The Rights. The Company has distributed one Right for each outstanding
Share pursuant to the Rights Agreement, dated as of December 14, 1988, between
the Company and The Bank of New York, as Rights Agent, as amended (the "Rights
Agreement"). Based on the information disclosed by the Company in the Schedule
14D-9 dated January 31, 1997 with respect to the Offer, in connection with and
prior to the Company's entering the Merger Agreement, on January 26, 1997, the
Company amended the Rights Agreement to provide that (x) the execution of the
Merger Agreement and the consummation of the transactions contemplated thereby
will not cause (i) Honeywell and/or the Purchaser to become an Acquiring Person
(as defined in the Rights Agreement) or (ii) a Distribution Date, a Shares
Acquisition Date or a Trigger Event (as such terms are defined in the Rights
Agreement) to occur, irrespective of the number of Shares acquired pursuant to
the Offer, and (y) the Rights will expire upon the acceptance of Shares for
payment pursuant to the Offer.
THE OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3 of
this Offer to Purchase. The term "Expiration Date" shall mean 12:00 Midnight,
New York City time, on Friday, February 28, 1997, unless and until the
Purchaser, in accordance with the terms of the Merger Agreement, shall have
extended the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition and the expiration or termination of all waiting periods
imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the regulations thereunder (the "HSR Act"). See Section 14. If such
conditions are not satisfied prior to the Expiration Date, the Purchaser
reserves the right (but shall not be obligated) to (i) decline to purchase any
of the Shares tendered and terminate the Offer, subject to the terms of the
Merger Agreement, (ii) waive any of the conditions to the Offer, to the extent
permitted by applicable law and the provisions of the Merger Agreement, and,
subject to complying with applicable rules and regulations of the Securities and
Exchange Commission (the "Commission"), purchase all Shares validly tendered or
(iii) extend the Offer and, subject to the right of stockholders to withdraw
Shares until the Expiration Date, retain the Shares which will have been
tendered during the period or periods for which the Offer is extended. The
Merger Agreement provides that if the sole condition to the Offer remaining
unsatisfied as of the initial expiration date of the Offer is the failure of the
waiting period under the HSR Act to have expired or been terminated, then the
Purchaser will extend the Offer from time to time until two business days
following the expiration of such waiting period.
Subject to the terms of the Merger Agreement, the Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time,
(i) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, and the payment for, any Shares, by giving oral
or written notice
2
<PAGE> 5
of such extension to the Depositary and (ii) to amend the Offer in any respect
(including, without limitation, by decreasing or increasing the consideration
offered in the Offer (the "Offer Price") to holders of Shares and/or by
decreasing the number of Shares being sought in the Offer), by giving oral or
written notice of such amendment to the Depositary. The rights reserved by the
Purchaser in this paragraph are in addition to the Purchaser's rights to
terminate the Offer as described in Section 14. Any extension, amendment or
termination will be followed as promptly as practicable by public announcement
thereof, the announcement in the case of an extension to be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Without limiting the obligation of the Purchaser
under such Rule or the manner in which the Purchaser may choose to make any
public announcement, the Purchaser currently intends to make announcements by
issuing a release to the Dow Jones News Service.
The Merger Agreement provides that, without the written consent of the
Company, the Purchaser will not amend or waive the Minimum Condition, decrease
the price per Share to be paid or the number of Shares sought pursuant to the
Offer, or amend the conditions of the Offer in any manner adverse to the holders
of Shares.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 3. However, the ability of
the Purchaser to delay the payment for Shares which the Purchaser has accepted
for payment is limited by Rule 14e-l(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. In a public
release, the Commission has stated that in its view an offer must remain open
for a minimum period of time following a material change in the terms of the
Offer and that waiver of a material condition, such as the Minimum Condition, is
a material change in the terms of the Offer. The release states than an offer
should remain open for a minimum of five business days from the date a material
change is first published, sent or given to security holders and that, if
material changes are made with respect to information not materially less
significant than the offer price and the number of shares being sought, a
minimum of ten business days may be required to allow adequate dissemination and
investor response. The requirement to extend the Offer will not apply to the
extent that the number of business days remaining between the occurrence of the
change and the then-scheduled Expiration Date equals or exceeds the minimum
extension period that would be required because of such amendment. As used in
this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed by the Purchaser to record holders of Shares and will be
furnished by the Purchaser to brokers, dealers, banks and similar persons whose
names, or the names of whose nominees, appear on the stockholder lists or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
3
<PAGE> 6
2. PROCEDURE FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message (as defined below), and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received by
the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined below) received by the Depositary), in each
case prior to the Expiration Date, or (ii) the tendering stockholder must comply
with the guaranteed delivery procedures set forth below.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company and the Philadelphia Depository Trust Company (each, a
"Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer
Facilities") for purposes of the Offer within two business days after the date
of this Offer to Purchase. Any financial institution that is a participant in
any of the Book-Entry Transfer Facilities' systems may make book-entry delivery
of Shares by causing a Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account in accordance with that Book-Entry Transfer Facility's
procedure for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at a Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
any of the Book Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution" and, collectively, "Eligible Institutions"). In
all other cases, all signatures on Letters of Transmittal must be guaranteed by
an Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made or
certificates for Shares not tendered or not accepted for payment are to be
returned to
4
<PAGE> 7
a person other than the registered holder of the certificates surrendered, then
the tendered certificates for such Shares must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names of
the registered holders or owners appear on the certificates, with the signatures
on the certificates or stock powers guaranteed as aforesaid. See Instructions 1
and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all physically tendered Shares, in proper
form for transfer (or a Book-Entry Confirmation with respect to all such
Shares), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the New York Stock Exchange (the "NYSE")
is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser, and
each of them, as such stockholder's attorneys-in-fact and proxies in the manner
set forth in the Letter of Transmittal, each with full power of substitution, to
the full extent of such stockholder's rights with respect to the Shares tendered
by such stockholder and accepted for payment by the Purchaser and with respect
to any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after January 31, 1997. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such stockholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such stockholder (and, if
given, will not be deemed effective). The designees of the Purchaser will
thereby be empowered to exercise all voting and other rights with respect to
such Shares and other securities or rights, including, without limitation, in
respect of any annual, special or adjourned meeting of the Company's
stockholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance
5
<PAGE> 8
for payment of such Shares, the Purchaser must be able to exercise full voting,
consent and other rights with respect to such Shares and other related
securities or rights, including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders of any Shares determined by it not to be in proper form or
the acceptance for payment of, or payment for which may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right, subject to the provisions of the Merger Agreement, to waive any of the
conditions of the Offer or any defect or irregularity in the tender of any
Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects or irregularities
relating thereto have been cured or waived. None of the Purchaser, Honeywell,
the Depositary, the Information Agent, the Dealer Manager or any other person
will be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Backup Withholding. In order to avoid "backup withholding" of U.S. federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%. All
stockholders surrendering Shares pursuant to the Offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proved in
a manner satisfactory to the Purchaser and the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Foreign stockholders, if
exempt, should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after Monday, March 31, 1997.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedures
for book-entry transfer as set forth in Section 2, any notice of withdrawal must
also specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will thereafter
be deemed not validly tendered for purposes of the Offer. However, withdrawn
Shares may be retendered by again following one of the procedures described in
Section 2 any time on or prior to the Expiration Date.
6
<PAGE> 9
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Honeywell, the Depositary, the Information Agent, the Dealer Manager
or any other person will be under any duty to give notification of any defects
or irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay, promptly
after the Expiration Date, for all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 3. All
determinations concerning the satisfaction of such terms and conditions will be
within the Purchaser's discretion, which determinations will be final and
binding. See Sections 1 and 14. The Purchaser expressly reserves the right, in
its sole discretion, to delay acceptance for payment of or payment for Shares in
order to comply in whole or in part with any applicable law, including, without
limitation, the HSR Act. Any such delays will be effected in compliance with
Rule 14e-l(c) under the Exchange Act (relating to a bidder's obligation to pay
for or return tendered securities promptly after the termination or withdrawal
of such bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or a timely Book-Entry Confirmation with respect thereto), (ii) a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and (iii) any other documents required
by the Letter of Transmittal. The per Share consideration paid to any
stockholder pursuant to the Offer will be the highest per Share consideration
paid to any other stockholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares. Payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of, or payment
for, Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (including such rights as are set forth in Sections 1 and 14) (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to exercise, and duly exercise, withdrawal rights as described in
Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned, without expense to
the tendering stockholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 2, such Shares will be
credited to an account maintained at the appropriate Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of the
Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Honeywell, or to one or more direct or indirect wholly
owned subsidiaries of Honeywell, the right to purchase Shares tendered pursuant
to the Offer, but any such transfer or assignment will not relieve the Purchaser
of its obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
7
<PAGE> 10
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and also may be a
taxable transaction under state, local or foreign tax laws. Accordingly, a
stockholder who tenders Shares in the Offer or receives cash in exchange for
Shares in the Merger (including as a result of perfecting his dissenters' rights
under the DGCL) will recognize gain or loss for federal income tax purposes
equal to the difference, if any, between the amount of cash received and the
stockholder's tax basis in the Shares sold. Gain or loss will be determined
separately for each block of Shares (i.e., Shares acquired at the same time and
price) exchanged pursuant to the Offer or the Merger. Such gain or loss
generally will be capital gain or loss if the Shares disposed of were held as
capital assets by the stockholder, and will be long-term capital gain or loss if
the Shares disposed of were held for more than one year at the date of sale or
the Expiration Date, as the case may be.
Under present law, the maximum long-term capital gain tax rate for
individuals is 28%. The maximum marginal ordinary income tax rate for
individuals is 39.6%. Individuals may deduct capital losses against capital
gains and against up to $3,000 of ordinary income annually. Unused capital
losses may be carried forward indefinitely. Currently, the maximum long-term
capital gain tax rate for corporations is 35%. For corporations, capital losses
may be deducted only against capital gains. For corporations unused capital
losses may be carried back three years and carried forward for five years.
The foregoing summary constitutes a general description of certain U.S.
federal income tax consequences of the Offer and the Merger without regard to
the particular facts and circumstances of each stockholder of the Company and is
based on the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Department Regulations issued pursuant thereto and published
rulings and court decisions in effect as of the date hereof, all of which are
subject to change, possibly with retroactive effect. Special tax consequences
not described herein may be applicable to certain stockholders subject to
special tax treatment (including insurance companies, tax-exempt organizations,
financial institutions or broker dealers, foreign stockholders and stockholders
who have acquired their Shares pursuant to the exercise of employee stock
options or otherwise as compensation). ALL STOCKHOLDERS SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO SPECIFIC TAX EFFECTS APPLICABLE TO THEM OF THE OFFER
AND THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE
MINIMUM TAX AND ANY STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES.
The Shares are traded on the NYSE and the Pacific Stock Exchange (the
"PSE") under the symbol "MX". The following table sets forth, for each of the
periods indicated, the high and low reported sale price per Share as reported by
the NYSE and the Dow Jones News Retrieval Service.
<TABLE>
<CAPTION>
SALES PRICE
---------------------
FISCAL YEAR HIGH LOW
----------- ---- ---
<S> <C> <C> <C> <C>
1995
First Quarter.......................................... $24 1/4 $20 3/8
Second Quarter......................................... 27 3/4 22 3/8
Third Quarter.......................................... 33 1/8 25 1/2
Fourth Quarter......................................... 35 3/4 27 1/8
1996
First Quarter.......................................... $30 3/4 $25 5/8
Second Quarter......................................... 29 5/8 25 3/4
Third Quarter.......................................... 29 3/4 25 7/8
Fourth Quarter......................................... 27 5/8 23 3/8
1997
First Quarter (through January 30)..................... $34 7/8 $23 7/8
</TABLE>
On January 24, 1997, the last full trading day prior to the first public
announcement of the intention to commence the Offer, the last reported sale
price of the Shares on the NYSE was $24 1/4 per Share. On
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<PAGE> 11
January 27, 1997, prior to the commencement of trading, Honeywell announced the
intention to commence the Offer. On January 30, 1997, which was the last full
trading day prior to the commencement of the Offer, the last reported sale price
of the Shares on the NYSE was $34 1/2 per Share. STOCKHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company has advised the Purchaser that the Company paid dividends of
$.44 per Share in each of fiscal 1995 and 1996.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and, depending upon the number of Shares so purchased,
could adversely effect the liquidity and market value of the remaining Shares
held by the public.
Stock Listing. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the NYSE and the
PSE for continued listing. According to the NYSE's published guidelines, the
NYSE could consider delisting the Shares if, among other things, the number of
holders of at least 100 Shares were to fall below 1,200, the number of publicly
held Shares (exclusive of management or other concentrated holdings) were to
fall below 600,000 or the aggregate market value of publicly held Shares were to
not exceed $5.0 million. According to the PSE's published guidelines, the PSE
could consider delisting the Shares if, among other things, there were fewer
than 100,000 publicly held Shares exclusive of management and other concentrated
holdings, there were fewer than 500 record holders, there were fewer than 200
holders of record of at least 100 Shares or the aggregate market value of
publicly held Shares (exclusive of management and other concentrated holdings)
should fall below $500,000 for a six month period. According to the Company's
Annual Report on Form 10-K for the fiscal year ended December 3, 1995 (the
"Company 1995 10-K"), as of December 3, 1995, there were approximately 1,223
holders of record of Shares. As of January 26, 1997, there were 16,150,375
Shares outstanding. If, as a result of the purchase of Shares pursuant to the
Offer or otherwise, the Company does not meet the requirements for continued
listing on the NYSE or on the PSE and the Shares are no longer included on the
NYSE or the PSE, as the case may be, the market for Shares could be adversely
affected.
In the event that the Company at any time does not meet the requirements
for continued listing on the NYSE or the PSE, it is possible that the Shares
would continue to trade in the over-the-counter market and that price quotations
would be reported by other sources. The extent of the public market for the
Shares and the availability of such quotations would, however, depend upon the
number of holders of Shares remaining at such time, the interest in maintaining
a market in Shares on the part of securities firms, the possible termination of
registration of the Shares under the Exchange Act, as described below, and other
factors.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin regulations
of the Federal Reserve Board and therefore could no longer be used as collateral
for loans made by brokers.
Exchange Act Registration. The Shares currently are registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its stockholders and to the Commission and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement
pursuant to Section 14(a) in connection with stockholders' meetings and the
related requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the
9
<PAGE> 12
Company. Furthermore, the ability of "affiliates" of the Company and persons
holding "restricted securities" of the Company to dispose of such securities
pursuant to Rule 144 or Rule 144A promulgated under the Securities Act of 1933,
as amended (the "Securities Act"), may be impaired or eliminated. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be "margin securities" or be eligible for continued listing on
the NYSE or the PSE. The Purchaser intends to seek to cause the Company to apply
for termination of registration of the Shares under the Exchange Act as soon
after the completion of the Offer as the requirements for such termination are
met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Delaware corporation with its principal executive offices
at One Results Way, Cupertino, California 95014. The telephone number of the
Company at such offices is (408) 255-1500. According to the Company 1995 10-K,
the Company designs, manufactures and services computer-integrated measurement,
control and information systems.
SELECTED FINANCIAL INFORMATION
Set forth below is certain selected consolidated financial information with
respect to the Company, excerpted or derived from the Company's 1995 Annual
Report to Stockholders and its Quarterly Report on Form 10-Q for the quarter
ended September 1, 1996, both filed with the Commission pursuant to the Exchange
Act.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following summary
is qualified in its entirety by reference to such reports and other documents
and all of the financial information (including any related notes) contained
therein. Such reports and other documents may be inspected and copies may be
obtained from the Commission in the manner set forth below.
MEASUREX CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEARS ENDED
---------------------------- -------------------------------------------
SEPTEMBER 1, SEPTEMBER 3, DECEMBER 3, NOVEMBER 27, NOVEMBER 28,
1996 1995 1995 1994 1993
------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales..................... $295,745 $242,065 $335,216 $259,979 $253,997
Operating income.............. 39,483 23,160 36,687 4,800 7,500
Net income.................... 26,727 17,190 26,946 6,107 8,215
Net income per share.......... $ 1.63 $ 1.01 $ 1.60 $ .34 $ .46
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital............... $ 89,877 $ 82,971 $ 89,303 $123,536 $137,720
Total assets.................. 329,020 295,282 286,705 319,823 318,316
Total liabilities............. 135,409 139,755 120,660 102,640 106,452
Stockholders' equity.......... 193,611 155,527 166,045 217,183 211,864
</TABLE>
On December 18, 1996, the Company reported that for the fiscal year ended
December 1, 1996, revenues were $415,975,000, net income was $36,953,000 and net
income per share was $2.25.
10
<PAGE> 13
Certain Estimates Prepared by the Company. During the course of the
discussions between Honeywell and the Company that led to the execution of the
Merger Agreement, the Company provided Honeywell with certain information about
the Company which is not publicly available. The information provided included
financial forecasts which contain, among other things, the summary financial
information set forth below.
The Company does not, as a matter of course, publicly disclose
forward-looking information (such as the preliminary unaudited financial results
and financial forecasts referred to above) as to future revenues, earnings or
other financial information. Such forward-looking information was prepared by
the Company solely for internal use and not for publication or with a view to
complying with the published guidelines of the Commission regarding projections
or with the American Institute of Certified Public Accountants Guide for
Prospective Financial Statements and are included in this Offer to Purchase only
because they were furnished to Honeywell. The preliminary unaudited financial
results and financial forecasts necessarily make numerous assumptions with
respect to industry performance, general business and economic conditions,
access to markets and distribution channels, availability and pricing of raw
materials, foreign currency rates and other matters, all of which are inherently
subject to significant uncertainties and contingencies and many of which are
beyond the Company's control. One cannot predict whether the assumptions made in
preparing the preliminary unaudited financial results and financial forecasts
will be accurate, and actual results may be materially higher or lower than
those contained in the preliminary results or forecasts. THE INCLUSION OF THIS
FORWARD-LOOKING INFORMATION SHOULD NOT BE REGARDED AS FACT OR AN INDICATION THAT
HONEYWELL, THE PURCHASER, THE COMPANY OR ANYONE WHO RECEIVED THIS INFORMATION
CONSIDERED IT A RELIABLE PREDICTOR OF FUTURE RESULTS, AND THIS INFORMATION
SHOULD NOT BE RELIED ON AS SUCH. NONE OF HONEYWELL, THE PURCHASER OR THE COMPANY
ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR
COMPLETENESS OF THE FORECASTS AND THE COMPANY HAS MADE NO REPRESENTATION TO
HONEYWELL OR THE PURCHASER REGARDING THE FORECASTS.
MEASUREX CORPORATION
SELECTED ESTIMATED CONSOLIDATED FINANCIAL INFORMATION
(PREPARED BY MEASUREX CORPORATION)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1997 (ESTIMATED) 1998 (ESTIMATED) 1999 (ESTIMATED)
---------------- ---------------- ----------------
<S> <C> <C> <C>
Revenues.................................... $450.0 $505.0 $572.0
Operating profit............................ 61.2 80.3 100.6
</TABLE>
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is obligated to file reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Information as of particular dates
concerning the Company's directors and officers, their remuneration, options
granted to them, the principal holders of the Company's securities and any
material interests of such persons in transactions with the Company is required
to be disclosed in proxy statements distributed to the Company's stockholders
and filed with the Commission. Such reports, proxy statements and other
information should be available for inspection at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission located at Seven World Trade
Center, 13th Floor, New York, NY 10048 and Citicorp Center, 500 West Madison
Street (Suite 1400), Chicago, IL 60661. Copies of such information should be
obtainable by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material should also be available for inspection at
the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, NY
10005.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although neither the Purchaser nor Honeywell has any
knowledge that any information acquired from publicly available documents or
directly from the Company is untrue, neither the Purchaser nor Honeywell takes
any responsibility for the accuracy or completeness of such information or for
11
<PAGE> 14
any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information but which are
unknown to the Purchaser and Honeywell.
9. CERTAIN INFORMATION CONCERNING HONEYWELL AND THE PURCHASER.
The Purchaser, a Delaware corporation, which is a wholly owned subsidiary
of Honeywell, was organized to acquire the Company and has conducted no
activities unrelated to such purpose since its organization. All of the issued
and outstanding shares of capital stock of the Purchaser are beneficially owned
by Honeywell. The principal executive offices of the Purchaser are located at
the principal executive offices of Honeywell. The telephone number of the
Purchaser at such offices is (612) 951-1000.
Honeywell is a Delaware corporation organized in 1927. Honeywell is a
Minneapolis-based international controls corporation that supplies automation
and control systems, components, software, products and services for homes and
buildings, industry, and space and aviation. The purpose of the Company is to
develop and apply advanced-technology products, systems and services to conserve
energy, improve productivity, protect the environment, enhance comfort and
increase safety. Development and modification occur continuously in Honeywell's
business as new or improved products and services are introduced, new markets
are created or entered, distribution methods are revised, and products and
services are discontinued. The principal executive offices of Honeywell are
located at 2701 4th Avenue South, Minneapolis, Minnesota 55408. Its telephone
number at such address is (612) 951-1000.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to Honeywell for the nine month
periods ended September 29, 1996 and October 1, 1995 and the fiscal years ended
December 31, 1995, 1994, and 1993. Such financial information has been taken
from the periodic reports and other documents filed by Honeywell with the
Commission. More comprehensive information concerning Honeywell is included in
such reports and other documents and the financial information that follows is
qualified in its entirety by reference to such reports and other documents and
all of the financial information and notes contained therein. Such reports and
other documents may be inspected and copies may be obtained from the Commission
in the manner set forth below.
HONEYWELL INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEARS ENDED DECEMBER 31,
------------------------------------ ---------------------------------
SEPTEMBER 29, 1996 OCTOBER 1, 1995 1995 1994 1993
------------------ --------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
SUMMARY OF EARNINGS DATA:
Sales........................... $5,194.2 $4,814.6 $6,731.3 $6,057.0 $5,963.0
Income before income taxes...... 378.0 314.9 505.5 369.7 478.5
Net income...................... 249.5 207.8 333.6 278.9 322.2
Earnings per common share....... $ 1.97 $ 1.63 $ 2.62 $ 2.15 $ 2.40
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital................. $ 751.6 $ 739.1 $ 744.4 $ 577.6 $ 694.1
Total assets.................... 5,389.0 5,014.1 5,060.2 4,885.9 4,598.1
Total liabilities............... 3,304.0 2,997.5 3,020.1 3,031.2 2,825.1
Stockholders' equity............ 2,085.0 2,016.6 2,040.1 1,854.7 1,773.0
</TABLE>
On January 16, 1997, Honeywell reported that for the fiscal year ended
December 31, 1996, sales were $7.3 billion, income before income taxes was
$610.2 million and net income was $402.7 million, or $3.18 per common share.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser and Honeywell are set forth in Schedule I
hereto.
12
<PAGE> 15
Except as set forth in this Offer to Purchase, neither the Purchaser nor
any of its affiliates nor, to the best of their knowledge, any of the persons
listed on Schedule 1, nor any associate or majority owned subsidiary of any of
the foregoing, beneficially owns or has a right to acquire any Shares, and
neither the Purchaser nor any of its affiliates nor, to the best of their
knowledge, any of the persons or entities referred to above, nor any of the
respective executive officers, directors or subsidiaries of any of the
foregoing, has effected any transactions in Shares during the past 60 days.
Except as set forth in this Offer to Purchase, neither the Purchaser,
Honeywell, any of their respective affiliates nor, to the best of their
knowledge, any of the persons listed on Schedule 1, has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, neither
the Purchaser, Honeywell, any of their respective affiliates, nor, to the best
of their knowledge, any of the persons listed on Schedule 1, has had, since
November 29, 1993, any business relationships or transactions with the Company
or any of its executive officers, directors or affiliates that would require
reporting under the rules of the Commission. Except as set forth in this Offer
to Purchase, since November 29, 1993, there have been no contacts, negotiations
or transactions between the Purchaser, Honeywell, any of their respective
affiliates or, to the best of their knowledge, any of the persons listed on
Schedule 1, and the Company or its affiliates concerning a merger, consolidation
or acquisition, tender offer or other acquisition of securities, election of
directors or a sale or other transfer of a material amount of assets.
Honeywell is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is obligated to file reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Information as of particular dates
concerning Honeywell's directors and officers, their remuneration, options
granted to them, the principal holders of Honeywell's securities and any
material interests of such persons in transactions with Honeywell is required to
be disclosed in proxy statements distributed to Honeywell's stockholders and
filed with the Commission. Such reports, proxy statements and other information
should be available for inspection from the offices of the Commission in the
same manner as set forth with respect to information concerning the Company in
Section 8. Such material should also be available for inspection at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, NY 10005.
10. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required to purchase all of the Shares pursuant
to the Offer and to pay related fees and expenses is estimated to be
approximately $625.0 million. The Purchaser will obtain such funds from
Honeywell by means of capital contributions, loans or a combination thereof.
Honeywell will obtain all the funds required in connection with the Offer from
cash and investments on hand, borrowings under its various lines of credit
and/or the private placement of notes.
Honeywell has established lines of credit with The Chase Manhattan Bank and
Morgan Guaranty Trust Company of New York, under which it may borrow up to
$650.0 million in the aggregate to finance the Purchaser's acquisition of the
Shares, or for general corporate purposes. Such borrowings are available to
Honeywell pursuant to a Revolving Credit Agreement (the "Credit Agreement")
between Honeywell and each of the banks (each a "Bank" and collectively the
"Banks"). All capitalized terms which are used in this Section 10 and not
otherwise defined shall have the meanings ascribed to them in the Credit
Agreement.
Loans pursuant to the Credit Agreement bear interest during any particular
interest period, at the election of Honeywell, at either (i) a floating Base
Rate or (ii) such rate as may be mutually agreed upon by the Bank and Honeywell.
The Base Rate on a given day means the higher of (a) the Federal Funds Rate on
such day plus 0.5% or (b) the Prime Rate on such day. The Prime Rate means the
prime rate of interest announced publicly from time to time by the Banks'
principal offices as the "prime commercial lending rate" of such Banks.
Honeywell may also elect to draw Eurocurrency Loans under the Credit Agreements.
The rate of interest for such loans is based on the annual interest rate quoted
by the Banks' offices for offerings in the
13
<PAGE> 16
currency of such loan based on deposits with major banks in the London or other
relevant interbank market, plus from 0.145% to 0.3625%, depending upon the
then-current rating (the "Rating") of Honeywell's public debt securities by
Standard & Poor's Rating Services or Moody's Investors Service, Inc.
Honeywell is required to pay an annual facility fee of 0.04% per annum on
the average daily amount of the Commitment outstanding.
The Credit Agreement incorporates certain provisions of other existing,
substantially similar, Revolving Credit Agreements entered into between
Honeywell and each of the Banks (collectively the "Existing Agreements") and
restricts Honeywell from pledging or creating any mortgage upon certain
Restricted Assets (as defined therein) for the purpose of securing other
creditors, unless provision is made to secure all amounts owed under the Credit
Agreement equally and ratably with such pledge or mortgage.
The foregoing description is qualified in its entirety by reference to the
Credit Agreement and the form of Existing Agreements which are incorporated
herein by reference and copies of which have been filed with the Commission as
an exhibit to the Purchaser's Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1"). The Credit Agreement and the form of Existing Agreements may
be examined and copies may be obtained at the place and in the manner set forth
in Section 9 of this Offer to Purchase.
It is anticipated that borrowings incurred by Honeywell in connection with
the Offer will be repaid from internally generated funds of Honeywell and the
Company and/or refinanced in the private or public markets.
11. BACKGROUND OF THE OFFER; THE MERGER AGREEMENT AND CERTAIN OTHER AGREEMENTS
The following description was prepared by Honeywell and the Company.
Information about the Company was provided by the Company and neither the
Purchaser nor Honeywell takes any responsibility for the accuracy or
completeness of any information regarding meetings or discussions in which
Purchaser, Honeywell or their representatives did not participate.
Background of the Offer
Before and during February 1996, members of the Company's senior
management, including David A. Bossen, Chairman of the Board and Chief Executive
Officer, and Robert McAdams, Jr., Executive Vice President and Chief Financial
Officer, interviewed various investment banking firms with respect to an
engagement to provide financial advice to the Company concerning its long-term
strategic direction and to potentially assist the Company in identifying an
acquiror of all or a portion of the Company's business. One of the objectives in
seeking an affiliation with another Company was to acquire or otherwise gain
access to a next generation Distributed Control System ("DCS"). In February
1996, the Company engaged Goldman, Sachs & Co. ("Goldman Sachs") to serve in
this capacity and Goldman Sachs assisted the Company in the preparation of a
Confidential Memorandum (the "Memorandum") regarding the Company and its
business.
In March 1996, Goldman Sachs, on behalf of the Company, contacted several
companies regarding a potential strategic relationship with the Company,
including Honeywell. In addition, Mr. Bossen contacted one company regarding a
potential strategic relationship with the Company. Based on Honeywell's
expression of interest, Honeywell executed and delivered a Confidential
Nondisclosure Agreement to the Company, and in April 1996 Goldman Sachs provided
a copy of the Memorandum to Honeywell.
In March and April 1996, Goldman Sachs, on behalf of the Company, also
provided a copy of the Memorandum to selected other companies.
On April 22, 1996 Messrs. Bossen and McAdams met with Michael Bonsignore,
Chairman and Chief Executive Officer, and Lawrence Stranghoener, Vice
President-Business Development, of Honeywell in Minneapolis, Minnesota. The
Company representatives made a presentation regarding the Company, its
historical results of operations and current financial condition, its products
and services, the markets it addresses, and the outlook for these markets.
On May 1, 1996, Messrs. Bossen and McAdams, together with Glenn R.
Wienkoop, Executive Vice President and President, Industrial Systems Division,
of the Company and a representative of Goldman Sachs
14
<PAGE> 17
met in Phoenix, Arizona with Messrs. Bonsignore and Stranghoener, as well as
Markos I. Tambakeras, President of Honeywell's Industrial Automation and Control
division, Gayle Pincus, Vice President-Business Development for the Industrial
Automation and Control division of Honeywell, and William M. Hjerpe, Vice
President and Chief Financial Officer of Honeywell. The parties discussed the
possibility of combining the companies and developed a plan for investigating
the feasibility of such a transaction, conducting due diligence reviews of the
Company and, if appropriate, negotiating the terms of an agreement between the
parties.
From May 15, 1996 through May 22, 1996, several representatives of
Honeywell conducted a due diligence review of the Company in Cupertino,
California. These representatives included, among others, Mr. Stranghoener and
Ms. Pincus, as well as several other representatives of Honeywell, and, for a
portion of the meetings, Edward M. Rimland, Managing Director of Bear, Stearns &
Co. Inc. ("Bear Stearns"), an investment banking firm engaged by Honeywell.
These representatives received a tour of the Company's headquarters facility and
manufacturing plant in Cupertino, California and met at length with Mr. McAdams
and, to a lesser extent, with Messrs. Bossen and Wienkoop concerning the
Company's historical and projected financial data. Certain of these meetings
also included a representative of Goldman, Sachs. They also reviewed numerous
documents concerning the Company's business, financial results and financial
outlook, as well as the Company's standard operating policies and procedures,
worldwide organizational information, and related data.
On May 23, 1996, Honeywell's representatives visited the Company's offices
and manufacturing facility in Vancouver, British Columbia and met with Mr.
McAdams and Robert Bucher, then the Vice President and General Manager of the
Company's Measurex Devron subsidiary. They reviewed the nature and financial
performance of the Measurex Devron business.
The purposes of the meetings in May 1996 were to provide Honeywell with an
understanding of the Company's historical and projected financial results of
operations, develop an analysis of the profit and loss position of each of the
businesses operated by the Company, and provide Honeywell with the information
necessary for Honeywell to determine how the companies could most appropriately
be combined and what operating synergies would result from such a combination.
On June 19, 1996, Messrs. McAdams and Wienkoop, together with John C.
Gingerich, President and Chief Operating Officer of the Company, met in Phoenix,
Arizona with, among others, Ms. Pincus, Mr. Tambakeras, Claude Duss, Vice
President and General Manager of Honeywell's Worldwide Pulp and Paper business,
and other Honeywell employees. At this meeting, Honeywell delivered a
presentation concerning their organization and the possible structure of a
combination of the Company with the relevant portions of Honeywell's business.
The participants engaged in a detailed discussion of the marketing, sales and
other technical issues surrounding such a combination and exchanged ideas
concerning the operational issues involved in effecting a successful
transaction.
In late June, Mr. Bonsignore contacted Mr. Bossen and indicated that on the
basis of developments to date Honeywell would like to move forward and he also
indicated a preliminary range of values placed on the Company by Honeywell. Mr.
Bossen said this range was below his expectations, but the parties agreed to
meet again in July.
On July 10, 1996, Messrs. Stranghoener and Tambakeras, together with a Bear
Stearns representative, met with Messrs. Bossen and McAdams, together with a
representative of Goldman Sachs, to present Honeywell's current views concerning
a possible acquisition of the Company. Honeywell presented its reasons for its
preliminary valuation of the Company at that time, as discussed by Mr.
Bonsignore and Mr. Bossen in late June.
During this period the Company met with representatives of another party
that had expressed an interest in conducting a review of the Company's business.
The meetings with the other party and information provided to that party were
generally similar to the meetings with Honeywell and the information provided to
Honeywell, as described above.
Following the foregoing meetings, the Company's senior executive officers
met to review the status of the discussions with and preliminary valuation
ranges from Honeywell and the other party with which the
15
<PAGE> 18
Company had held discussions and concluded that, given the Company's prospects
at that time and the outlook for its financial performance as an independent
entity, the Company should not pursue further discussions with either Honeywell
or the other party at that time.
As indicated above, for a number of years management of the Company had
attempted to acquire a next generation DCS product line through either a product
or corporate acquisition. Over the balance of fiscal 1996 and specifically in
management meetings conducted in October and November 1996, the Company's senior
executive officers reviewed the Company's long-term prospects and business
strategies. Senior management considered the importance to the Company's
long-term prospects of having a next generation DCS product and the difficulties
encountered in identifying and acquiring such a product, and the outlook for the
Company's financial performance over the next several years. The Company
management also discussed the importance of having a DCS product with its Board
of Directors at a meeting in October 1996. Senior management and the Board
concluded that the foregoing issues represented significant challenges to be
addressed.
On December 6, 1996, Mr. Bonsignore contacted Mr. Bossen to propose that
the companies reconsider a possible combination. They discussed a possible
meeting in January 1997.
On January 6, 1997, an officer of the other party with which the Company
had prior discussions called Mr. McAdams to ask about circumstances regarding
the Company. Mr. McAdams indicated that another company had expressed interest
in the Company and that the Company was pursuing discussions with such company.
The officer of the other party indicated an interest in pursuing additional
discussions with the Company.
On January 7, 1997, Messrs. Bonsignore, Stranghoener, Tambakeras and Hjerpe
met with Messrs. Bossen, Gingerich, Wienkoop and McAdams to update each other on
their respective businesses since they last met. Messrs. Bossen and Bonsignore
also met privately. At their meeting, Mr. Bonsignore suggested that the parties
consider a transaction valuing the Company Common Stock at a range of up to
$35.00 per Share, subject to the completion of due diligence by Honeywell, which
he believed might be structured as a stock-for-stock, pooling-of-interests
transaction. Mr. Bossen indicated that he would call Mr. Bonsignore later in the
week.
On January 10, 1997, Mr. Bossen telephoned Mr. Bonsignore and advised him
that, if Honeywell was prepared to make a firm offer at $35.00 per Share, Mr.
Bossen would discuss such an offer with the Company's Board of Directors.
From January 14, 1997 through January 17, 1997, several representatives of
Honeywell, together with Mr. Rimland of Bear Stearns and representatives of
Deloitte & Touche, Honeywell's independent public accounting firm, met with
representatives of the Company's senior management to obtain an update on due
diligence matters, recent financial results and updated financial projections.
They also discussed possible business integration plans.
On January 17, Mr. Bonsignore called Mr. Bossen and said he was considering
the idea of structuring a potential transaction as a cash tender offer at a
range of up to $35.00 per Share.
During the period from January 13 through January 18, 1997, representatives
of the party conducting the discussions with the Company met with officers of
the Company and visited Company facilities for the purpose of updating such
party's previous investigations of the Company.
On January 15, 1997, Mr. McAdams spoke to a representative of the other
party who indicated possible interest at a price per Share slightly lower than
the high end of the range proposed by Honeywell. Thereafter, a representative of
Goldman Sachs spoke to a representative of the party who confirmed that the
party would not consider increasing the price previously issued with Mr.
McAdams.
On January 20, 1997, the Board of Directors of the Company held a telephone
meeting. The directors reviewed the history of the discussions to date with
Honeywell and other parties and discussed in detail preliminary value
indications for the Company, including the indication received from Mr.
Bonsignore. The
16
<PAGE> 19
Company's Board of Directors authorized management to continue discussions with
Honeywell, subject to the further approval of the Board of Directors.
On January 21, 1997, Mr. Bonsignore called Mr. Bossen and indicated that
Honeywell's Board had met earlier in the day and was interested in moving
forward on an all cash transaction at $35.00 per Share. Mr. Bonsignore suggested
that representatives of the parties meet to negotiate terms of a definitive
agreement, indicated that he had scheduled a Honeywell Board of Directors
meeting for January 26, 1997 and proposed that Mr. Bossen schedule a Board of
Directors meeting for the same day.
Later in the day on January 21, 1997, counsel for Honeywell delivered to
counsel for the Company a draft of the Merger Agreement and on January 22, 1997
and January 23, 1997 counsel for Honeywell, together with Mr. Rimland of Bear
Stearns, met with counsel for the Company to negotiate the terms of the Merger
Agreement and such negotiations continued through January 26, 1997.
On January 23, 1997, the Company's Board of Directors held a telephonic
meeting to discuss the status of negotiations with Honeywell and issues related
to the terms of a definitive agreement. In addition, representatives of Goldman
Sachs made a preliminary presentation to the directors regarding their analysis
of the proposed transaction.
On January 26, 1997, the Company's Board of Directors held a meeting at the
Company's headquarters in Cupertino, California to consider and approve the
Merger Agreement and the related transactions.
Also, on January 26, 1997, the Board of Directors of Honeywell held a
telephonic meeting to consider the proposed terms of the definitive agreement,
including the Offer and the Merger. At the meeting, the Board of Directors of
Honeywell approved the Merger Agreement and the transactions contemplated
thereby. Following the approval of the respective Boards of Directors,
Honeywell, the Purchaser and the Company executed the Merger Agreement.
MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement
which is incorporated herein by reference and a copy of which has been filed
with the Commission as an exhibit to the Schedule 14D-1. The Merger Agreement
may be examined and copies may be obtained at the places and in the manner set
forth in Section 9 of this Offer to Purchase.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to prior satisfaction or waiver
of the conditions of the Offer, the Purchaser will purchase all Shares validly
tendered pursuant to the Offer. The Merger Agreement provides that, without the
written consent of the Company, the Purchaser will not decrease the Offer Price,
decrease the number of Shares sought in the Offer, amend or waive the Minimum
Condition, or amend any condition of the Offer in a manner adverse to the
holders of Shares, except that if on the initial scheduled expiration date of
the Offer, the sole condition remaining unsatisfied is the failure of the
waiting period under the HSR Act to have expired or been terminated, the
Purchaser shall extend the termination date from time to time until two business
days after the expiration of the waiting period under the HSR Act. The Merger
Agreement provides that if, immediately prior to the expiration date of the
Offer, as it may be extended, the Shares tendered and not withdrawn pursuant to
the Offer equal less than 90% of the Shares outstanding, the Purchaser may
extend the Offer for a period not to exceed 20 business days.
The Merger. Following the consummation of the Offer, the Merger Agreement
provides that, subject to the terms and conditions thereof, and in accordance
with Delaware law, at the Effective Time, the Purchaser will be merged with and
into the Company. As a result of the Merger, the separate corporate existence of
the Purchaser will cease and the Company will continue as the surviving
corporation (the "Surviving Corporation").
The respective obligations of Honeywell and the Purchaser, on the one hand,
and the Company, on the other hand, to effect the Merger are subject to the
satisfaction on or prior to the Closing Date (as defined in
17
<PAGE> 20
the Merger Agreement) of each of the following conditions, any and all of which
may be waived in whole or in part, to the extent permitted by applicable law:
(i) the Merger Agreement shall have been approved and adopted by the requisite
vote of the holders of Shares, if required by applicable law, in order to
consummate the Merger; (ii) no law, statute, rule, order, decree or regulation
shall have been enacted or promulgated by any government or any governmental
agency or authority of competent jurisdiction which declares the Merger
Agreement invalid or unenforceable in any material respect or which prohibits
the consummation of the Merger, and all governmental consents, orders and
approvals required for the consummation of the Merger and the transactions
contemplated by the Merger Agreement shall have been obtained and shall be in
effect at the Effective Time; (iii) Honeywell, the Purchaser or their affiliates
shall have purchased Shares pursuant to the Offer, unless such failure to
purchase is as a result of a breach of Honeywell's and the Purchaser's
obligations under the Merger Agreement; and (iv) the applicable waiting period
under the HSR Act shall have expired or been terminated.
At the Effective Time of the Merger (i) each issued and outstanding Share
(other than Shares that are owned by the Company as treasury stock, any Shares
owned by Honeywell, the Purchaser or any other wholly owned subsidiary of
Honeywell, or any Shares which are held by stockholders exercising appraisal
rights under Delaware law) will be converted into the right to receive the price
per share paid pursuant to the Offer (the "Merger Consideration") and (ii) each
issued and outstanding share of the Purchaser will be converted into one share
of common stock of the Surviving Corporation.
The Company's Board of Directors. The Merger Agreement provides that
promptly after the purchase by Honeywell of at least a majority of the
outstanding Shares (on a fully diluted basis), Honeywell will be entitled to
designate such number of directors, rounded up to the next whole number, on the
Company's Board as is equal to the product of the total number of directors on
the Company Board multiplied by the percentage that the number of Shares so
accepted for payment bears to the total number of Shares then outstanding. The
Company will, upon request of the Purchaser, use its best reasonable efforts
promptly to either increase the size of the Company's Board or secure the
resignations of such number of its incumbent directors, or both, as is necessary
to enable Honeywell's designees to be elected to the Company's Board. In the
event that Honeywell's designees are elected to the Company's Board, until the
Effective Time, the Company's Board will have at least two directors who are
directors on the date of the Merger Agreement and who would constitute
Continuing Directors for purposes of Article Twelfth of the Company's
Certificate of Incorporation. The Company's obligation to appoint the
Purchaser's designees to the Board of Directors is subject to compliance with
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder.
Stockholders Meeting. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, duly call, give
notice of, convene and hold a special meeting of its stockholders (the "Special
Meeting") as promptly as practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the Merger and the adoption of the Merger
Agreement. The Merger Agreement provides that the Company will, if required by
applicable law in order to consummate the Merger, prepare and file with the
Commission a preliminary proxy or information statement (the "Proxy Statement")
relating to the Merger and the Merger Agreement and use its best efforts (i) to
obtain and furnish the information required to be included by the Commission in
the Proxy Statement and, after consultation with Honeywell, to respond promptly
to any comments made by the Commission with respect to the preliminary Proxy
Statement and cause a definitive Proxy Statement to be mailed to its
stockholders, provided that no amendment or supplement to the Proxy Statement
will be made by the Company without consultation with Honeywell and its counsel
and (ii) to obtain the necessary approvals of the Merger and the Merger
Agreement by its stockholders. If the Purchaser acquires at least a majority of
the outstanding Shares, the Purchaser will have sufficient voting power to
approve the Merger, even if no other stockholder votes in favor of the Merger.
The Company has agreed to include in the Proxy Statement the recommendation of
the Company Board that stockholders of the Company vote in favor of the approval
of the Merger and the adoption of the Merger Agreement. Honeywell has agreed
that it will vote, or cause to be voted, all of the Shares then owned by it, the
Purchaser or any of its other subsidiaries and affiliates in favor of the
approval of the Merger and the adoption of the Merger Agreement.
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The Merger Agreement provides that in the event that Honeywell, the
Purchaser or any other subsidiary of Honeywell acquires at least 90% of the
outstanding Shares, pursuant to the Offer or otherwise, Honeywell, the Purchaser
and the Company will, at the request of Honeywell and subject to the terms of
the Merger Agreement, take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company, in accordance with Delaware
law.
Options. Pursuant to the Merger Agreement, immediately prior to the
Effective Time, each holder of then outstanding options to purchase Shares
granted by the Company (the "Options") will be entitled to receive from the
Company, and will receive, in settlement of each Option a cash amount (the "Cash
Amount") with respect to the number of Shares for which the Option is
exercisable immediately prior to the Effective Time (the "Vested Portion"), and
Honeywell will assume the balance of the Option, if any (the "Unvested
Portion"). The Vested Portion of each Option will terminate as of the Effective
Time. The Cash Amount payable for the Vested Portion of each Option will equal
the product of (i) the Merger Consideration minus the exercise price per Share
of the Vested Portion of such Options and (ii) the number of Shares covered by
the Vested Portion of such Option. With respect to any Option held by
individuals who are parties to severance agreements and Options held by
directors of the Company, the entire Option will be treated as the Vested
Portion of the Option. In addition, with respect to any portion of the Option
(other than Options held by the individuals referred to in the preceding
sentence) if any, other than the Vested Portion (the "Unvested Portion"),
Honeywell will assume, as of the Effective Time such Unvested Portion of an
Option. Upon such assumption, the Unvested Portion of the Option will be
converted into an option (a "Honeywell Option") to purchase shares of Honeywell
Common Stock. With respect to any such Honeywell Option (i) the number of shares
of Honeywell Common Stock subject to such Honeywell Option will be determined by
multiplying the number of Shares subject to the Unvested Portion of the Option
by the Option Exchange Ratio (as hereinafter defined), rounding any fractional
share up to the nearest whole share, and (ii) the exercise price per share of
such Honeywell Option will be determined by dividing the exercise price per
share under the Unvested Portion of the Option by the Option Exchange Ratio, and
rounding the exercise price thus determined up to the nearest whole cent. Except
as provided above, the assumed Options will be subject to the same terms and
conditions (including, without limitation, expiration date, vesting and exercise
provisions) as were applicable to the Unvested Portion of the Option immediately
prior to the Effective Time. Honeywell has agreed to take all actions which may
be necessary so that, in the event that an optionee's employment by the Company
is terminated at any time during the eighteen-month period immediately following
the Effective Time, the Unvested Options held by such optionee shall vest as of
the date of termination and not expire until three months following the date of
termination. The "Option Exchange Ratio" will be (x) the Offer Price divided by
(y) the average of the closing prices of Honeywell Common Stock on the NYSE
during the ten trading days preceding the fifth trading day prior to the Closing
Date. If and to the extent required by the terms of the plans governing Options
or pursuant to the terms of any Option granted thereunder, each of Honeywell and
the Company shall use its best efforts to obtain the consent of each holder of
outstanding Options to the foregoing treatment of such Options. Each share of
Honeywell Common Stock underlying the Honeywell Options will be covered by an
effective registration statement under the Securities Act. Except as may be
otherwise agreed to by Honeywell or the Purchaser and the Company, the Option
Plan shall terminate as of the Effective Time and the provisions in any other
plan, program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any of its
subsidiaries shall be deleted as of the Effective Time. According to the Merger
Agreement, the Company has taken all actions so that following the Effective
Time no holder of employee stock options will have any rights to receive Shares
upon exercise of an employee stock option.
In addition, outstanding purchase rights under the Company's Employee Stock
Purchase Plan (the "Company ESPP") will be exercised upon the earlier of (i) the
next scheduled purchase date under the Company ESPP or (ii) immediately prior to
the Effective Time, and each participant in the Company ESPP shall accordingly
be issued Shares at the time which will be cancelled at the Effective Time and
converted into the right to the receive the Merger Consideration for those
Shares. The Company ESPP will terminate with such exercise date, and no purchase
rights shall be subsequently granted or exercised under the Company ESPP.
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<PAGE> 22
Interim Operations. Pursuant to the Merger Agreement, the Company has
agreed that, except as expressly contemplated or provided by the Merger
Agreement or agreed to in writing by Honeywell, prior to the time the directors
of the Purchaser constitute a majority of the Company Board (the "Board
Appointment Date"), the business of the Company and its subsidiaries will be
conducted only in the ordinary and usual course and to the extent consistent
therewith, each of the Company and its subsidiaries will use its best reasonable
efforts to preserve its business organization intact and maintain its existing
relations with customers, suppliers, employees, creditors and business partners,
and (a) the Company will not, directly or indirectly, (i) issue, sell, transfer
or pledge or agree to sell, transfer or pledge any treasury stock of the Company
or any capital stock of any of its subsidiaries beneficially owned by it, except
upon the exercise of employee stock options or other rights to purchase shares
of Common Stock pursuant to the ESPP outstanding on January 26, 1997; (ii) amend
its certificate of incorporation or by-laws or similar organizational documents;
or (iii) split, combine or reclassify the outstanding Shares or Preferred Stock
or any outstanding capital stock of any of the subsidiaries of the Company; and
(b) neither the Company nor any of its subsidiaries shall (i) declare, set aside
or pay any dividend or other distribution payable in cash, stock or property
with respect to its capital stock other than dividends paid by subsidiaries of
the Company to the Company or any of its subsidiaries in the ordinary course of
business; (ii) issue, sell, pledge, dispose of or encumber any additional 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 of the Company or its subsidiaries, other than shares reserved for
issuance on January 26, 1997 pursuant to the exercise of Company Options
outstanding on January 26, 1997; (iii) transfer, lease, license, sell, mortgage,
pledge, dispose of, or encumber any assets other than in the ordinary and usual
course of business and consistent with past practice, or incur or modify any
indebtedness or other liability, other than in the ordinary and usual course of
business and consistent with past practice; (iv) redeem, purchase or otherwise
acquire directly or indirectly any of its capital stock; (v) grant any increase
in the compensation payable or to become payable by the Company or any of its
subsidiaries to any of its executive officers or adopt any new or amend or
otherwise increase or accelerate the payment or vesting of the amounts payable
or to become payable under any existing bonus, incentive compensation, deferred
compensation, severance, profit sharing, stock option, stock purchase,
insurance, pension, retirement or other employee benefit plan, agreement or
arrangement; (vi) enter into any employment or severance agreement with or,
except in accordance with the existing written policies of the Company, grant
any severance or termination pay to any officer, director or employee of the
Company or any of its subsidiaries; (vii) permit any insurance policy naming it
as a beneficiary or a loss payable payee to be cancelled or terminated without
notice to Honeywell, except in the ordinary course of business and consistent
with past practice; (viii) enter into any contract or transaction relating to
the purchase of assets other than in the ordinary course of business consistent
with prior practices; (ix) change any of the accounting methods used by it
unless required by generally accepted accounting principles ("GAAP"), neither
the Company nor any of its subsidiaries shall make any material tax election
except in the ordinary course of business consistent with past practice, change
any material tax election already made, adopt any material tax accounting method
except in the ordinary course of business consistent with past practice, change
any material tax accounting method unless required by GAAP, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment; or (x) take any action with the intent of causing any of
the conditions to the Offer set forth in Annex A to the Merger Agreement to not
be satisfied.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that neither the Company nor any of its subsidiaries will (and the Company will
use its best efforts to cause its officers, directors, employees,
representatives and agents, including, but not limited to, investment bankers,
attorneys and accountants, not to), directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Honeywell, any of its affiliates or representatives) concerning any
proposal or offer to acquire all or a substantial part of the business and
properties of the Company or any of its subsidiaries or any capital stock of the
Company or any of its subsidiaries, whether by merger, tender offer, exchange
offer, sale of assets or similar transactions involving the Company or any
subsidiary, division or operating or principal business unit of the Company (an
"Acquisition Proposal"), except that the Company and the Company Board are not
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<PAGE> 23
prohibited from (i) taking and disclosing to the Company's stockholders a
position with respect to a tender or exchange offer by a third party pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such
disclosure to the Company's stockholders as, in the good faith judgment of the
Board, after receiving advice from outside counsel, is required under applicable
law, provided that the Company may not, except as described below, withdraw or
modify, or propose to withdraw or modify, its position with respect to the Offer
or the Merger or approve or recommend, or propose to approve or recommend, any
Acquisition Proposal, or enter into any agreement with respect to any
Acquisition Proposal. The Company also agreed to immediately cease any existing
activities, discussions or negotiations with any parties conducted prior to the
date of the Merger Agreement with respect to any of the foregoing. The Merger
Agreement provides that the Company, prior to the acceptance of Shares pursuant
to the Offer, may furnish information concerning the Company and its
subsidiaries to any corporation, partnership, person or other entity or group
pursuant to appropriate confidentiality agreements, and may negotiate and
participate in discussions and negotiations with such entity or group concerning
an Acquisition Proposal if (i) such entity or group has on an unsolicited basis
submitted a bona fide written proposal to the Company relating to any such
transaction which the Company Board determines in good faith, after consulting
with a nationally recognized investment banking firm, represents a superior
transaction to the Offer and the Merger and (ii) in the opinion of the Company
Board, only after receipt of advice from outside legal counsel, the failure to
provide such information or access or to engage in such discussions or
negotiations could reasonably be expected to cause the Company Board to violate
its fiduciary duties to the Company's stockholders under applicable law (an
Acquisition Proposal which satisfies clauses (i) and (ii) is referred to in the
Merger Agreement as a "Superior Proposal"). The Company will within two business
days following receipt of a Superior Proposal notify Honeywell of the receipt of
the same. The Company will promptly provide to Honeywell any material non-public
information regarding the Company provided to any other party which was not
previously provided to Honeywell. At any time after two business days following
notification to Honeywell of its intent to do so (which notification shall
include the identity of the bidder and the material terms and conditions of the
proposal) and if permitted to do so pursuant to the terms of the Merger
Agreement, the Company Board may withdraw or modify its approval or
recommendation of the Offer and may enter into an agreement with respect to a
Superior Proposal, provided it shall concurrently with entering into such
agreement pay or cause to be paid to Honeywell the Termination Fee (as defined
below) plus any amount payable at the time for reimbursement of expenses
pursuant to the Merger Agreement. If the Company has notified Honeywell of its
intent to enter into an agreement with respect to a Superior Proposal in
compliance with the preceding sentence and has otherwise complied with such
sentence, the Company may enter into an agreement with respect to such Superior
Proposal (with the bidder and on terms no less favorable than those specified in
such notification) after the expiration of the initial two business day period
without any further notification.
Indemnification and Insurance. Pursuant to the Merger Agreement, for six
years after the Effective Time, the Surviving Corporation (or any successor to
the Surviving Corporation) shall indemnify, defend and hold harmless the present
and former officers and directors of the Company and its subsidiaries and
persons who become any of the forgoing prior to the Effective Time with respect
to matters occurring at or prior to the Effective Time to the full extent
required under Delaware law, the terms of the Company's Certificate of
Incorporation or the By-laws, as in effect as of January 26, 1997 and, the terms
of any indemnification agreement entered into with the Company prior to January
26, 1997. The Merger Agreement also provides that Honeywell or the Surviving
Corporation will maintain the Company's existing officers' and directors'
liability insurance ("D&O Insurance") for a period of not less than six years
after the Effective Time, provided, that Honeywell may substitute therefor
policies of substantially equivalent coverage and amounts containing terms no
less favorable to such former directors or officers. Honeywell has also agreed
that if the existing D&O Insurance expires, is terminated or cancelled during
such period, Honeywell or the Surviving Corporation will use all reasonable
efforts to obtain substantially similar D&O Insurance, but in no event will it
be required to pay aggregate premiums for such insurance in excess of 150% of
the aggregate premiums paid in 1996 on an annualized basis for such purpose (the
"1996 Premium"). If Honeywell or the Surviving Corporation is unable to obtain
the amount of D&O Insurance required for such aggregate premium, Honeywell or
the Surviving Corporation has agreed to obtain as much insurance as can be
obtained for an annual premium not in excess of 150% of the 1996 Premium.
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Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Honeywell and the
Purchaser with respect to, among other things, its organization, capitalization,
financial statements, public filings, conduct of business, employee benefit
plans, intellectual property, employment matters, compliance with laws, tax
matters, litigation, environmental matters, vote required to approve the Merger
Agreement, undisclosed liabilities, its rights plan, information in the Proxy
Statement and the absence of any material adverse effect on the Company since
September 1, 1996.
Termination; Fees. The Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after
approval of the stockholders of the Company, (a) by mutual consent of Honeywell
and the Company, (b) by either the Company or Honeywell (i) if (x) the Offer
shall have expired without any Shares being purchased therein or (y) the
Purchaser shall not have accepted for payment all Shares tendered pursuant to
the Offer by April 30, 1997, provided, that such right to terminate will not be
available to any party whose failure to fulfill any obligation under the Merger
Agreement was the cause of, or resulted in, the failure of Honeywell or the
Purchaser to purchase the Shares on or before such date or after Purchaser has
purchased Shares pursuant to the Offer; or (ii) if any governmental entity shall
have issued an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties will use their best efforts to lift),
in each case permanently restraining, enjoining or otherwise prohibiting the
acceptance for payment of, or payment for, Shares pursuant to the Offer or the
Merger and such order, decree, ruling or other action shall have become final
and non-appealable, (c) by the Company (i) if Honeywell, the Purchaser or any of
their affiliates shall have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of the
Offer; provided, that the Company may not terminate the Merger Agreement
pursuant to this clause (i) if the Company is at such time in breach of its
obligations under the Merger Agreement such as to cause a material adverse
effect on the Company and its subsidiaries, taken as a whole; (ii) in connection
with entering into a definitive agreement with respect to an Acquisition
Proposal; provided it has complied with all of the provisions, including the
notice provisions described above under "No Solicitation," and that it makes
simultaneous payment of the Termination Fee, plus any amounts then due as a
reimbursement of expenses; or (iii) if Honeywell or the Purchaser shall have
breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in the Merger Agreement,
which breach cannot be or has not been cured, in all material respects, within
30 days after the giving of written notice to Honeywell or the Purchaser, as
applicable, (d) by Honeywell (i) if, due to an occurrence, not involving a
breach by Honeywell or the Purchaser of their obligations under the Merger
Agreement, which makes it impossible to satisfy any of the conditions to the
Offer, Honeywell, the Purchaser, or any of their affiliates shall have failed to
commence the Offer on or prior to five business days following the date of the
initial public announcement of the Offer; (ii) if prior to the purchase of
Shares pursuant to the Offer, the Company has breached any representation,
warranty, covenant or other agreement contained in the Merger Agreement which
(x) would give rise to the failure of a condition described in paragraph (f) or
(g) under Annex A to the Merger Agreement (which are set forth in clauses (f)
and (g) of Section 14) and (y) cannot be or has not been cured, in all material
respects, within 30 days after the giving of written notice to the Company; or
(iii) if either Honeywell or the Purchaser is entitled to terminate the Offer as
a result of the occurrence of any event set forth in paragraph (e) under Annex A
to the Merger Agreement (which is set forth in clause (e) of Section 14).
In accordance with the Merger Agreement, if (x) the Company terminates the
Merger Agreement pursuant to clause (c)(ii) of the immediately preceding
paragraph, (y) Honeywell terminates the Merger Agreement pursuant to clause
(d)(iii) of the immediately preceding paragraph, or (z) either the Company or
Honeywell terminates the Merger Agreement pursuant to paragraph (b)(i) above and
(u) prior thereto there shall have been publicly announced another Acquisition
Proposal or an event set forth in paragraph (h) of Annex A to the Merger
Agreement (which is set forth in clause (h) of Section 14) shall have occurred
and (v) an Acquisition Proposal shall be consummated on or prior to December 31,
1997, the Company has agreed to pay to Honeywell an amount equal to $20.0
million (the "Termination Fee") plus an amount, not to exceed $3.0 million,
equal to Honeywell's actual and reasonably documented out-of-pocket fees and
expenses incurred by Honeywell and Purchaser in connection with the Offer, the
Merger, the Merger Agreement and the consummation of the Transactions; provided
that no Termination Fee will be payable if the Purchaser or
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Honeywell was in material breach of its representations, warranties or
obligations under the Merger Agreement at the time of its termination.
EMPLOYMENT AGREEMENTS
The following is a summary of certain provisions of employment agreements
entered into by the Purchaser with David A. Bossen, Chairman of the Board and
Chief Executive Officer of the Company (the "Bossen Agreement"), and John
Gingerich, President and Chief Operating Officer of the Company (the "Gingerich
Agreement" and, together with the Bossen Agreement, the "Employment
Agreements"), which agreements will become effective at the Effective Time. The
summary is qualified in its entirety by reference to the Employment Agreements
which are incorporated herein by reference and copies of which have been filed
as exhibits to the Schedule 14D-1. The Employment Agreements may be examined and
copies may be obtained at the places and in the manner set forth in Section 9 of
the Offer to Purchase.
Pursuant to the Employment Agreements, Mr. Bossen and Mr. Gingerich (each,
an "Executive" and collectively, the "Executives") will be employed by the
Surviving Corporation until December 31, 2000 and December 31, 1998,
respectively, unless earlier terminated pursuant to the terms of the Employment
Agreements. The respective Employment Agreements provide that as long as such
Executive remains an employee of the Surviving Corporation and such Executive's
respective Employment Agreement remains in effect, Mr. Bossen's base salary for
1997 will be $475,000 and his base salary for each of 1998, 1999 and 2000 will
be $300,000 and Mr. Gingerich will be compensated in accordance with the terms
of Honeywell's Executive Compensation Program as a Level J executive with an
initial annual base salary of $250,000.
Mr. Bossen will be entitled to $395,000 as additional incentive
compensation upon continuation of his employment through the end of 1997 and
will receive a cash payment of approximately $3.1 million on or about the
Effective Time (representing the amount due under his Measurex Severance
Agreement if he were Involuntarily Terminated (as defined therein) within
eighteen months of the Effective Time). According to the Gingerich Agreement,
although Mr. Gingerich will receive the same 40% of base salary "on-plan"
incentive compensation specified for Level J executives, the plan upon which his
incentive compensation will be determined during the first calendar year of his
employment, even if Mr. Gingerich's employment with Honeywell commences after
the start of the calendar year, will be based upon the results reflected in the
1997 Measurex operating plan previously delivered to Honeywell and in the pulp
and paper segment of the 1997 Honeywell operating plan, with the objectives of
operating profit and economic value added weighted 60% and 40%, respectively; if
Mr. Gingerich's employment does commence after the start of the calendar year,
his incentive compensation for such first calendar year of employment will be
prorated. In addition, objectives and weightings for the subsequent calendar
years of Mr. Gingerich's employment, if his employment continues pursuant to the
Gingerich Agreement, will be determined by the President of Honeywell Industrial
Automation and Control, during the fourth quarter of the year preceding each
such subsequent year. If an Executive's Employment Agreement terminates before
the end of a calendar year, any incentive compensation due such Executive for
that calendar year will be determined on a prorated basis.
If Mr. Gingerich is continuously employed by the Surviving Corporation
through the scheduled issue date for the Honeywell Stock Option program in
February 1998, the Gingerich Agreement provides for Mr. Gingerich to receive
7,500 nonqualified stock options to purchase shares of Honeywell's common stock
with a ten-year term (provided that if Mr. Gingerich's employment with Honeywell
is terminated, the exercisability of such options after the date of termination
will be subject to the terms of Honeywell's Stock Option Program (the "Option
Plan") at an exercise price determined in accordance with the Option Plan. In
addition, the Gingerich Agreement provides that Mr. Gingerich will receive (i)
25,000 shares of non-qualified stock options with a ten-year term (with the same
post-termination exercisability provisions) at an exercise price equal to the
closing price of Honeywell common stock on the NYSE on the Effective Time,
vesting on December 31, 1998 (a) with respect to 10,000 shares contingent on the
attainment by the Surviving Corporation of 1997 financial performance goals to
be determined by the Surviving Corporation and Mr. Gingerich and (b) with
respect to 15,000 shares contingent on the attainment by the Surviving
Corporation of 1998 financial performance goals to be determined by the
Surviving Corporation and Mr. Gingerich, (ii) the number of shares of
performance restricted stock of Honeywell issued pursuant to the
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<PAGE> 26
terms of the Honeywell Performance Stock Program equal to up to the product of
4,333 multiplied by a fraction, the numerator of which is the number of calendar
months (including the month during which the Effective Time occurs) from the
Effective Time through December 31, 1997 and the denominator of which is 24,
(iii) 3,000 shares of restricted Honeywell stock vesting on December 31, 1998,
(iv) 5,000 shares of restricted Honeywell stock vesting on December 31, 1999,
contingent on the attainment by the Surviving Corporation of 1997 and 1998
financial performance goals to be determined by the Surviving Corporation and
Mr. Gingerich, (v) an aggregate cash payment of $100,000 payable in equal
installments on or about the first day of each calendar month during 1997
following the Effective Time and (vi) an aggregate cash payment of approximately
$2.0 million payable in six equal installments the first of which will be made
on the Effective Time and the remaining five of which will be made at the end of
each four-month period following the Effective Time if Mr. Gingerich has
remained continually employed by the Surviving Corporation through the end of
such period, provided that (a) if he is terminated by the Surviving Corporation
other than for Cause (as defined) prior to such date, Mr. Gingerich is entitled
to the full amount of the unpaid portion of such payment which shall be payable
in a lump sum upon termination and (b) if he voluntarily terminates his
employment he is entitled to only a pro rata portion of such payment to the date
of termination unless he resigns as a result of a material breach of the
Gingerich Agreement by the Surviving Corporation, in which case he is entitled
to the full amount of such payment which shall be payable in a lump sum upon
termination.
If an Executive's employment is terminated voluntarily by such Executive or
due to death, disability or for Cause, the Executive will receive his base
salary at the rate then in effect through the date of his termination or death,
as the case may be, and will be entitled to receive any incentive compensation
payable with respect to the year in which the termination or death occurred on a
prorated basis.
The Gingerich Agreement provides for a severance payment in the event of
termination of employment by the Surviving Corporation other than for Cause,
disability or death in an amount equal to 12 months' base salary, together with
incentive compensation, if any, with respect to the fiscal year of the Surviving
Corporation during which such termination occurred on a prorated basis. In
exchange for such severance payment, Mr. Gingerich will execute and deliver to
the Surviving Corporation a legally effective release and waiver of all claims,
complaints, and causes of action (other than claims or rights to compensation or
severance payments), whether known or unknown, which he has or may have against
the Surviving Corporation.
The Employment Agreements also contain non-competition provisions
prohibiting the Executive, for a period which ends either two years after his
separation from employment with the Surviving Corporation or three years after
the Effective Time, whichever is later, from (A) directly or indirectly entering
into the employ of, or rendering or engaging in any services to, any person,
firm, corporation or organization which is a competitor of Honeywell or the
Surviving Corporation with respect to (i) products which the lines of business
of Honeywell or the Surviving Corporation in which such Executive was actively
involved during the term of his employment with the Surviving Corporation (the
"Relevant Lines of Business") are producing, or services which the Relevant
Lines of Business are providing at that time, (ii) products or services which
such Executive has reason to know the Relevant Lines of Business has plans to
produce or provide within eighteen months of that time or (iii) products which
Honeywell or the Surviving Corporation has produced or services which Honeywell
or the Surviving Corporation has provided at any time subsequent to the
Effective Time (competitors with respect to (i) through (iii) above each being
hereinafter referred to as a "Competitor") where such Executive would be
performing services for the Competitor within the United States of America,
Asia, Europe, or any other country in which the Relevant Lines of Business do
business on the date of such Executive's separation from employment with the
Surviving Corporation; or (B) directly or indirectly serving as a partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant or advisor for or on behalf of any such Competitor (other than owning
5% or less of any class of outstanding securities of any corporation whose
shares are traded on a U.S. national securities exchange or quoted on The Nasdaq
Stock Market, even though such corporation may be a Competitor). The Employment
Agreements also prohibit each Executive, for a period which ends either two
years after his separation from employment with the Surviving Corporation or
three years after the Effective Time, whichever is later, from directly or
indirectly soliciting to employ any employee of Honeywell or the Surviving
Corporation or employing any
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<PAGE> 27
employee of Honeywell or the Surviving Corporation, provided, that the foregoing
restriction will not preclude such Executive from employing, either in response
to any general solicitation for employment or other similar method, any
individual whose total annual compensation, including salary and incentive
compensation, is less than $70,000, or where, notwithstanding such Executive's
reasonable inquiry, he is unaware of such individual's employment with Honeywell
or the Surviving Corporation.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; OTHER MATTERS
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer, the Merger and the Merger Agreement is for
Honeywell to acquire control of, and the entire equity interest in, the Company.
Upon consummation of the Merger, the Company will become a subsidiary of
Honeywell. The Offer is intended to increase the likelihood that the Merger will
be effected.
PLANS FOR THE COMPANY
Honeywell is conducting a detailed review of the Company and its assets,
corporate structure, dividend policy, capitalization, operations, properties,
policies, management and personnel and will consider, subject to the terms of
the Merger Agreement, what, if any, changes would be desirable in light of the
circumstances which exist upon completion of the Offer. Such changes could
include changes in the Company's business, corporate structure, charter,
by-laws, capitalization, Board of Directors, management or dividend policy,
although, except as noted in this Offer to Purchase, Honeywell has no current
plans with respect to any of such matters.
Except as noted in this Offer to Purchase, neither Honeywell nor the
Purchaser has any present plans or proposals that would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of operations, or sale or transfer of assets, involving
the Company or any of its subsidiaries, or any material changes in the Company's
corporate structure, business or composition of its management or personnel.
OTHER MATTERS
Stockholder Approval. Under the DGCL and the Company's Certificate of
Incorporation, the approval of the Board of Directors of the Company, and the
affirmative vote of the holders of a majority of the outstanding Shares are
required to approve and adopt the Merger Agreement and the transactions
contemplated thereby, including the Merger. Section 203 of the DGCL prevents
certain "business combinations" with an "interested stockholder" (generally, any
person who owns or has the right to acquire 15% or more of a corporation's
outstanding voting stock) for a period of three years following the time such
person became an interested stockholder unless, among other things, prior to the
time the interested stockholder became such the board of directors of the
corporation approved either the business combination or the transaction in which
the interested stockholder became such.
The Board of Directors of the Company has unanimously approved the Offer,
the Merger and the Merger Agreement and the transactions contemplated thereby
for the purposes of Section 203 of the DGCL. Unless the Merger is consummated
pursuant to the short-form merger provisions under the DGCL described below (in
which case no further corporate action by the stockholders of the Company will
be required to complete the Merger), the only remaining required corporate
action of the Company will be the approval and adoption of the Merger Agreement
and the transactions contemplated thereby by the affirmative vote of the holders
of a majority of the Shares.
Under Article Twelfth of the Company's Certificate of Incorporation, a
business combination transaction involving a beneficial owner of 10% or more of
the outstanding shares could require the affirmative vote of holders of 90% of
the outstanding Shares, unless the transaction was approved by two-thirds of the
Continuing Directors (as such term is defined in the Company's Certificate of
Incorporation). The Company has represented in the Merger Agreement that such
approval was obtained and that, accordingly, the provisions of Article Twelfth
shall not be applicable to the Merger.
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Short Form Merger. Under the DGCL, if the Purchaser acquires at least 90%
of the outstanding Shares, the Purchaser will be able to approve the Merger
without a vote of the Company's stockholders. In such event, the Purchaser
anticipates that it will take all necessary and appropriate action to cause the
Merger to become effective as soon as reasonably practicable after such
acquisition without a meeting of the Company's stockholders. If the Purchaser
does not otherwise acquire at least 90% of the outstanding Shares pursuant to
the Offer or otherwise, a significantly longer period of time may be required to
effect the Merger, because a vote or the consent of the Company's stockholders
would be required under the DGCL. Pursuant to the Merger Agreement, the Company
has agreed to take all action necessary under the DGCL and its Certificate of
Incorporation and Bylaws to convene a meeting of its stockholders promptly
following consummation of the Offer to consider and vote on the Merger, if a
stockholders' vote is required. If the Purchaser owns a majority of the
outstanding Shares, approval of the Merger can be obtained without the
affirmative vote of any other stockholder of the Company.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company at the
time of the Merger will have certain rights under the DGCL to dissent and demand
appraisal of, and to receive payment in cash of the fair value of, their Shares.
Such rights to dissent, if the statutory procedures are complied with, could
lead to a judicial determination of the fair value of the Shares (excluding any
element of value arising from the accomplishment or expectation of the Merger),
required to be paid in cash to such dissenting holders for their Shares. In
addition, such dissenting stockholders would be entitled to receive payment of a
fair rate of interest from the date of consummation of the Merger on the amount
determined to be the fair value of their Shares. In determining the fair value
of the Shares, a Delaware court would be required to take into account all
relevant factors. Accordingly, such determination could be based upon
considerations other than, or in addition to, the market value of the Shares,
including, among other things, asset values and earning capacity of the Company.
In Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among other
things, that "proof of value by any techniques or methods which are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered in an appraisal proceeding. Therefore, the value so
determined in any appraisal proceeding could be different from the price being
paid in the Offer. The Delaware Supreme Court stated in Weinberger and Rabkin v.
Philip A. Hunt Chemical Corp. that although the remedy ordinarily available to
minority stockholders in a cash-out merger is the right to appraisal described
above, a damages remedy or injunctive relief may be available if a merger is
found to be the product of procedural unfairness, including fraud,
misrepresentation or other misconduct.
Rule 13e-3. The Merger would have to comply with any applicable Federal
law operative at the time, Rule 13e-3 under the Exchange Act is applicable to
certain "going private" transactions. The Purchaser does not believe that Rule
13e-3 will be applicable to the Merger. Rule 13e-3 requires, among other things,
that certain financial information concerning the Company, and certain
information relating to the fairness of the proposed transaction and the
consideration offered to minority stockholders in such a transaction, be filed
with the Commission and disclosed to minority stockholders prior to consummation
of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Merger Agreement provides that, prior to the Board
Appointment Date, without the prior written consent of Honeywell, the Company
will not (i) declare or pay any dividend on its capital stock, (ii) except as
explicitly permitted by the Merger Agreement, issue, sell or pledge (or
authorize or propose the issuance, sale or pledge of) any additional shares of
its capital stock or securities convertible into or exercisable or exchangeable
for shares of its capital stock or (iii) purchase or otherwise acquire, or
propose to purchase or otherwise acquire, any outstanding Shares.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the terms of the Merger Agreement),
the Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-l(c)
under the Exchange Act (relating to the
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Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may terminate or amend the Offer as to any Shares
not then paid for, if (i) any applicable waiting period under the HSR Act shall
not have expired or been terminated, (ii) the Minimum Condition shall not have
been satisfied, or (iii) at any time on or after January 26, 1996 and prior to
the acceptance for payment of Shares any of the following events have occurred:
(a) there shall be threatened or pending any suit, action or proceeding by
any Governmental Entity (as defined in the Merger Agreement) against the
Purchaser, Honeywell, the Company or any Subsidiary of the Company (i) seeking
to prohibit or impose any material limitations on Honeywell's or the Purchaser's
ownership or operation (or that of any of their respective Subsidiaries or
affiliates) of all or a material portion of their or the Company's businesses or
assets, or to compel Honeywell or the Purchaser or their respective Subsidiaries
and affiliates to dispose of or hold separate any material portion of the
business or assets of the Company or Honeywell and their respective
Subsidiaries, in each case taken as a whole, (ii) challenging the acquisition by
Honeywell or the Purchaser of any Shares under the Offer, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by the Merger
Agreement, or seeking to obtain from the Company, Honeywell or the Purchaser any
damages that are material in relation to the Company and its Subsidiaries taken
as a whole, (iii) seeking to impose material limitations on the ability of the
Purchaser, or render the Purchaser unable, to accept for payment, pay for or
purchase some or all of the Shares pursuant to the Offer and the Merger, (iv)
seeking to impose material limitations on the ability of Purchaser or Honeywell
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's stockholders, or (v) which otherwise is
reasonably likely to have a Company Material Adverse Effect (as defined in the
Merger Agreement);
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer or the Merger, or any other action shall be taken by an
Governmental Entity, other than the application to the Offer or the Merger of
applicable waiting periods under HSR Act, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the NYSE for a period in excess of 24
hours (excluding suspensions or limitations resulting solely from physical
damage or interference with such exchanges not related to market conditions),
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) a
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iv) any limitation
(whether or not mandatory) by any United States governmental authority on the
extension of credit generally by banks or other financial institutions, or (v) a
change in general financial, bank or capital market conditions which materially
and adversely affects the ability of financial institutions in the United States
to extend credit or syndicate loans or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof;
(d) there shall have occurred any events after the date of the Merger
Agreement which, either individually or in the aggregate, would have a Company
Material Adverse Effect; provided, however, that no event, change or effect that
materially results from the transactions contemplated by the Merger Agreement
(the "Transactions") or the announcement thereof shall be deemed to cause,
either individually or in the aggregate, a Company Material Adverse Effect;
(e)(i) the Board of Directors of the Company or any committee thereof shall
have withdrawn or modified in a manner adverse to Honeywell or the Purchaser its
approval or recommendation of the Offer, the Merger or the Merger Agreement, or
approved or recommended any Acquisition Proposal or (ii) the Company shall have
entered into any agreement with respect to any Superior Proposal in accordance
with the Merger Agreement;
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(f) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct, in each case (i) as of the date
referred to in any representation or warranty which addresses matters as of a
particular date, or (ii) as to all other representations and warranties, as of
the date of the Merger Agreement and as of the scheduled expiration of the
Offer, unless the inaccuracies (without giving effect to any materiality or
material adverse effect qualifications or materiality exceptions contained
therein) under such representations and warranties, taking all the inaccuracies
under all such representations and warranties together in their entirety, do
not, individually or in the aggregate, result in a Company Material Adverse
Effect;
(g) the Company shall have failed to perform any obligation or to comply
with any agreement or covenant to be performed or complied with by it under the
Merger Agreement other than any failure which would not have, either
individually or in the aggregate, a Company Material Adverse Effect;
(h) any person acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act), of at least 20% of the outstanding Common
Stock of the Company (other than any person not required to file a Schedule 13D
under the rules promulgated under the Exchange Act);
(i) the Merger Agreement shall have been terminated in accordance with its
terms; or
(j) the diminution in the value of the Company and its subsidiaries to
Honeywell and the Purchaser as a result of breaches, if any, of the
representations and warranties set forth in Section 3.15 of the Merger Agreement
relating to environmental matters (without giving effect to any materiality or
material adverse effect qualifications or materiality exceptions contained
therein) in excess of environmental liabilities and costs which would reasonably
be expected to exist based on the reports and information regarding
environmental matters provided to Honeywell as listed on the disclosure schedule
provided to Honeywell by the Company pursuant to the Merger Agreement (the
"Company Disclosure Schedule") (assuming there has been no non-compliance with
Environmental Laws, Environmental Claims, releases of Hazardous Materials (as
such terms are defined in the Merger Agreement), contamination or other
environmental conditions described in Section 3.15 of the Merger Agreement other
than as specifically identified in such reports) as estimated by an
environmental consultant or consultants reasonably satisfactory to Honeywell and
the Company exceeds $16.0 million.
The foregoing conditions are for the sole benefit of Honeywell and the
Purchaser, may be asserted by Honeywell or the Purchaser regardless of the
circumstances giving rise to such condition (including any action or inaction by
Honeywell or the Purchaser not in violation of the Merger Agreement) or may be
waived by Honeywell or the Purchaser in whole or in part at any time and from
time to time in the sole discretion of Honeywell or the Purchaser, subject in
each case to the terms of the Merger Agreement. The failure by Honeywell or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right and may be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS.
Except as described in this Section 15, based on information provided by
the Company, none of the Company, Purchaser or Honeywell is aware of any license
or regulatory permit that appears to be material to the business of the Company
and its subsidiaries, taken as a whole, that might be adversely affected by the
Purchaser's acquisition of Shares (and the indirect acquisition of the stock of
the Company's subsidiaries) as contemplated herein or of any approval or other
action by a domestic or foreign governmental, administrative or regulatory
agency or authority that would be required or desirable for the acquisition and
ownership of the Shares (and the indirect acquisition of the stock of the
Company's subsidiaries) by the Purchaser as contemplated herein. Should any such
approval or other action be required or desirable, the Purchaser and Honeywell
presently contemplate that such approval or other action will be sought, except
as described below under "State Takeover Laws." While, except as otherwise
described in this Offer to Purchase, the Purchaser does not presently intend to
delay the acceptance for payment of or payment for Shares tendered pursuant to
the Offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to
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obtain any such approval or other action might not result in consequences
adverse to the Company's business or that certain parts of the Company's
business might not have to be disposed of or other substantial conditions
complied with in the event that such approvals were not obtained or such other
actions were not taken or in order to obtain any such approval or other action.
If certain types of adverse action are taken with respect to the matters
discussed below, the Purchaser could decline to accept for payment or pay for
any Shares tendered. See Section 14 for certain conditions to the Offer,
including conditions with respect to governmental actions.
(a) State Takeover Laws. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL prevents an "interested
stockholder" (e.g. a person who owns or has the right to acquire 15% or more of
a corporation's outstanding voting stock) from engaging in a "business
combination" (defined to include mergers and certain other transactions) with a
Delaware corporation for a period of three years following the time such person
became an interested stockholder unless, among other things, the corporation's
board of directors approves such business combination or the transaction in
which the interested stockholder becomes such prior to the time the interested
stockholder becomes such. The Board of Directors of the Company has approved the
Offer, the Merger, the Merger Agreement and the Stockholder Agreement for the
purposes of Section 203 of the DGCL. A number of other states have adopted laws
and regulations applicable to attempts to acquire securities of corporations
which are incorporated, or have substantial assets, stockholders, principal
executive offices or principal places of business, or whose business operations
otherwise have substantial economic effects in such states. In Edgar v. MITE
Corp., the Supreme Court of the United States invalidated on constitutional
grounds the Illinois Business Takeover statute, which, as a matter of state
securities law, made takeovers of corporations meeting certain requirements more
difficult. However in 1987, in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court held that the State of Indiana may, as a matter of corporate law
and, in particular, with respect to those aspects of corporate law concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without the prior approval of the
remaining presenting stockholders. The state law before the Supreme Court was by
its terms applicable only to corporations that had a substantial number of
stockholders in the state and were incorporated there.
Except as described above with respect to Section 203 of the DGCL, the
Purchaser has not attempted to comply with the takeover laws of any other state.
Should any person seek to apply any state takeover law, the Purchaser will take
such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer and the Merger. In such case,
the Purchaser may not be obligated to accept for payment any Shares tendered.
See Section 14.
The Company and certain of its subsidiaries conduct business in a number of
other states throughout the United States, some of which have enacted takeover
laws and regulations. Neither Honeywell nor the Purchaser knows whether any or
all of these takeover laws and regulations will by their terms apply to the
Offer, and, except as set forth above, neither Honeywell nor the Purchaser has
currently complied with any other state takeover statute or regulation. The
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer and nothing in this Offer to
Purchase or any action taken in connection with the Offer is intended as a
waiver of such right. If it is asserted that any state takeover statute is
applicable to the Offer and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, the Purchaser might be required
to file certain information with, or to receive approvals from, the relevant
state authorities, and the Purchaser might be unable to accept for payment or
pay for Shares tendered pursuant to the Offer, or may be delayed in consummating
the Offer. In such case, the Purchaser may not be obligated to accept for
payment or pay for any Shares tendered pursuant to the Offer. See Section 14.
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(b) Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the Federal Trade
Commission (the "FTC") and certain waiting period requirements have been
satisfied.
Honeywell and the Company expect to file soon their Notification and Report
Forms with respect to the Offer under the HSR Act. The waiting period under the
HSR Act with respect to the Offer will expire at 11:59 p.m., New York City time,
on the 15th day after the date Honeywell's form is filed unless early
termination of the waiting period is granted. However, the Antitrust Division or
the FTC may extend the waiting period by requesting additional information or
documentary material from Honeywell or the Company. If such a request is made,
such waiting period will expire at 11:59 p.m., New York City time, on the tenth
day after substantial compliance by Honeywell with such request. Only one
extension of the waiting period pursuant to a request for additional information
is authorized by the HSR Act. Thereafter, such waiting period may be extended
only by court order or with the consent of Honeywell. In practice, complying
with a request for additional information or material can take a significant
amount of time. In addition, if the Antitrust Division or the FTC raises
substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. The Purchaser
will not accept for payment Shares tendered pursuant to the Offer unless and
until the waiting period requirements imposed by the HSR Act with respect to the
Offer have been satisfied. See Section 14.
As discussed below, the HSR Act requirements with respect to the Merger
will not apply if certain conditions are met. In particular, the Merger may not
be consummated until 30 calendar days after receipt by the Antitrust Division
and the FTC of the Notification and Report Forms of both Honeywell and the
Company unless the Purchaser acquires 50% or more of the outstanding Shares
pursuant to the Offer (which would be the case if the Minimum Condition were
satisfied) or the 30-day period is earlier terminated by the Antitrust Division
and the FTC. Within such 30 day period, the Antitrust Division or the FTC may
request additional information or documentary materials from Honeywell and/or
the Company. The Merger may not be consummated until 20 days after such requests
are substantially complied with by both Honeywell and the Company. Thereafter,
the waiting periods may be extended only by court order or with the consent of
Honeywell and the Company.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger. At any time before or after the
Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares pursuant
to the Offer or otherwise or seeking divestiture of Shares acquired by the
Purchaser or divestiture of substantial assets of Honeywell or its subsidiaries.
Private parties, as well as state governments, may also bring legal action under
the antitrust laws under certain circumstances. Based upon an examination of
publicly available information relating to the businesses in which Honeywell and
the Company are engaged, Honeywell and the Purchaser believe that the
acquisition of Shares by the Purchaser will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer or other
acquisition of Shares by the Purchaser on antitrust grounds will not be made or,
if such a challenge is made, of the result. See Section 14 for certain
conditions to the Offer, including conditions with respect to litigation and
certain governmental actions.
(c) Federal Reserve Board Regulations. Regulations G, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or maintenance
of credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly by margin stock. Such
secured credit may not be extended or maintained in an amount that exceeds the
maximum loan value of all the direct and indirect collateral securing the
credit, including margin stock and other collateral.
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As described in Section 10 of this Offer to Purchase, the financing of the
Offer will not be directly or indirectly secured by the Shares or other
securities which constitute margin stock. Accordingly, all financing for the
Offer will be in full compliance with the Margin Regulations.
(d) Foreign Laws. According to publicly available information, the Company
owns property and conducts business in a number of other foreign countries and
jurisdictions, including, without limitation, Canada, Ireland, Austria, Sweden
and the Federal Republic of Germany. In connection with the acquisition of the
Shares pursuant to the Offer or the Merger, the laws of certain of those foreign
countries and jurisdictions may require the filing of information with, or the
obtaining of the approval or consent of, governmental authorities in such
countries and jurisdictions. The governments in such countries and jurisdictions
might attempt to impose additional conditions on the Company's operations
conducted in such countries and jurisdictions as a result of the acquisition of
the Shares pursuant to the Offer or the Merger. If such approvals or consents
are found to be required the parties intend to make the appropriate filings and
applications. In the event such a filing or application is made for the
requisite foreign approvals or consents, there can be no assurance that such
approvals or consents will be granted and, if such approvals or consents are
received, there can be no assurance as to the date of such approvals or
consents. In addition, there can be no assurance that the Purchaser will be able
to cause the Company or its subsidiaries to satisfy or comply with such laws or
that compliance or noncompliance will not have adverse consequences for the
Company or any subsidiary after purchase of the Shares pursuant to the Offer or
the Merger. See Section 14.
16. FEES AND EXPENSES.
Honeywell has engaged Bear Stearns to act as financial advisor to Honeywell
in connection with the proposed acquisition of the Company and as Dealer Manager
in connection with the Offer. Honeywell has agreed to pay Bear Stearns a
retainer advisory fee of $100,000 and an additional fee of $1,500,000 for the
fairness opinion rendered to Honeywell in connection with the transactions
contemplated by the Merger Agreement. Furthermore, if Honeywell acquires,
through the Offer or otherwise, control of, or a material interest in, the
stock, business or assets of the Company as contemplated herein, Honeywell has
agreed to pay to Bear Stearns an additional transaction fee of $2,650,000.
Honeywell has also agreed to reimburse Bear Stearns for all reasonable
out-of-pocket expenses, including reasonable fees and expenses of accountants
and legal counsel, if any, and to indemnify Bear, Stearns & Co. Inc. and certain
related persons against certain liabilities and expenses in connection with the
Offer, including certain liabilities under the Federal securities laws.
The Purchaser has retained Georgeson & Company Inc. to act as the
Information Agent and ChaseMellon Shareholder Services, L.L.C. to act as the
Depositary in connection with the Offer. Such firms each will receive reasonable
and customary compensation for their services. The Purchaser has also agreed to
reimburse each such firm for certain reasonable out-of-pocket expenses and to
indemnify each such firm against certain liabilities and expenses in connection
with their services, including certain liabilities under the federal securities
laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Dealer Manager and the Information Agent) for
soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, banks and
trust companies will be reimbursed by the Purchaser for customary mailing and
handling expenses incurred by them in forwarding material to their customers.
17. MISCELLANEOUS.
The Offer is being made to all holders of Shares other than the Company.
The Purchaser is not aware of any jurisdiction in which the making of the Offer
or the tender of Shares in connection therewith would not be in compliance with
the laws of such jurisdiction. If the Purchaser becomes aware of any
jurisdiction in which the making of the Offer would not be in compliance with
applicable law, the Purchaser will make a good faith effort to comply with any
such law. If, after such good faith effort, the Purchaser cannot comply with any
such law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares residing in such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
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be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Purchaser by the Dealer Manager or one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of Honeywell or the Purchaser not contained herein or
in the Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
The Purchaser and Honeywell have filed with the Commission the Schedule
14D-1 pursuant to Rule 14d-3 under the Exchange Act furnishing certain
additional information with respect to the Offer. The Schedule 14D-1 and any
amendments thereto, including exhibits, may be examined and copies may be
obtained from the offices of the Commission and the NYSE in the manner set forth
in Section 9 of this Offer to Purchase (except that they will not be available
at the regional offices of the Commission).
HONEYWELL ACQUISITION CORP.
January 31, 1997
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF HONEYWELL AND THE PURCHASER
I. DIRECTORS AND EXECUTIVE OFFICERS OF HONEYWELL. The following table sets
forth the name, business address and present principal occupation or employment,
and material occupations, positions, offices or employments for the past five
years of each director and executive officer of Honeywell. Unless otherwise
indicated, each such person is a citizen of the United States of America and the
business address of each such person is c/o Honeywell Inc., Honeywell Plaza,
P.O. Box 524, Minneapolis, Minnesota 55440-0524. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to employment
with Honeywell. Unless otherwise indicated, each such person has held his or her
present occupation as set forth below, or has been an executive officer at
Honeywell, or the organization indicated, for the past five years.
<TABLE>
<CAPTION>
NAME AND PRESENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- --------------------------------------------------
<S> <C>
1. DIRECTORS OF HONEYWELL
Albert J. Baciocco, Jr. Vice Admiral Baciocco retired from the U.S. Navy in 1987
The Baciocco Group, Inc. after 34 years of distinguished service, principally
747 Pitt Street within the submarine force and directing the Department
Mt. Pleasant, SC 29464 of the Navy research and technology development
enterprise. Upon retirement from the Navy, Admiral
Baciocco formed The Baciocco Group, Inc., a technical
and management consulting practice providing services to
industry, primarily in areas of strategic planning,
technology investment and application, and business
planning and development. Admiral Baciocco is a director
of Golder Federal Services, Inc. He serves with several
boards and committees of government and academe. He is a
member of the Army Science Board and the Naval Studies
Board of the National Research Council. In addition, he
is a director of Oak Ridge Associated Universities and
the Foundation for Research Development, Medical
University of South Carolina, a member of the Board of
Trustees of the South Carolina Research Authority and a
member of the Board of Visitors to the Software
Engineering Institute, Carnegie Mellon University.
Elizabeth E. Bailey Dr. Bailey joined Bell Laboratories in 1960, where she
The University of Pennsylvania held various supervisory positions until 1977. From 1973
The Wharton School until 1977, she was also adjunct professor of economics
Department of Public at New York University. In 1977, she was appointed a
Policy and Management commissioner of the Civil Aeronautics Board and was vice
3100 Steinberg Hall-Deitrich Hall chairman of the Civil Aeronautics Board from 1981 to
Philadelphia, PA 1983. From 1983 to 1990, she served as dean of the
19104-6372 Graduate School of Industrial Administration of Carnegie
Mellon University. From 1990 to 1991, she was a visiting
scholar at Yale University, on leave from Carnegie
Mellon. Currently, Dr. Bailey is John C. Hower Professor
of Public Policy and Management at The Wharton School.
Dr. Bailey is also a director of Philip Morris Companies
Inc., CSX Corporation, Bancroft, Inc. and the College
Retirement Equities Fund. She is a past member of the
board of trustees of Princeton University, and she
serves on the board of the Brookings Institution and the
National Bureau of Economics Research.
</TABLE>
I-1
<PAGE> 36
<TABLE>
<CAPTION>
NAME AND PRESENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- --------------------------------------------------
<S> <C>
Michael R. Bonsignore Mr. Bonsignore began his business career at Honeywell in
1969. He has held various marketing and operations
management positions and was named the Company's vice
president for Marine Systems in 1981. In 1983, Mr.
Bonsignore was appointed president for Honeywell Europe,
headquartered in Brussels, Belgium. In 1987, Mr.
Bonsignore returned to Minneapolis as the Company's
executive vice president, International, and was elected
president of this business in May 1987. In 1990, Mr.
Bonsignore was elected executive vice president and
chief operating officer for International and Home and
Building Control, and a director of the Company. In
April 1993, Mr. Bonsignore was elected chairman of the
board and chief executive officer. Mr. Bonsignore is
also a director of Cargill, Inc., Donaldson Company,
Inc. and The St. Paul Companies, Inc. He serves as a
member on various advisory boards and committees
including: the U.S.-China Business Council, Investment
and Services Policy Advisory Committee (INSPAC),
U.S.-Russia Trade and Economic Council and the Alliance
to Save Energy Board.
Earnest Hubert Clark, Jr. In 1947, Mr. Clark joined Baker International
The Friendship Group Corporation (now known as Baker Hughes Incorporated
West Tower following the merger in 1987 of Baker International and
Suite 3000 Hughes Tool Co.), a provider of products and services to
5000 Birch Street the petroleum and mining industries. He became chief
Newport Beach, CA 92660-2140 research engineer in 1957 and vice president and
assistant general manager in 1958. Mr. Clark was elected
president in 1962, chief executive officer in 1965, and
chairman of the board in 1969. In January 1989, Mr.
Clark retired from Baker Hughes Inc. and assumed the
post of chairman of the board and chief executive
officer of the Friendship Group, an investment
partnership. Mr. Clark is also a director of Beckman
Instruments, Inc., Kerr McGee Corporation, Regenesis
Inc., and the American Mutual Fund, Inc. He is past
chairman and a current member of the board of the YMCA
of the United States of America, and is a trustee of
Harvey Mudd College, Claremont, California.
</TABLE>
I-2
<PAGE> 37
<TABLE>
<CAPTION>
NAME AND PRESENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- --------------------------------------------------
<S> <C>
William H. Donaldson In 1959, Mr. Donaldson co-founded Donaldson, Lufkin &
Donaldson Enterprises, Inc. Jenrette, Inc., an investment banking firm, and in 1961,
375 Park Ave., Suite 2802 Alliance Capital Management Corporation, an investment
New York, NY 10152 management firm, and served as chairman and chief
executive officer until 1973. Mr. Donaldson was
Undersecretary of State from 1973 to 1974. In 1975, he
served as special consultant and advisor to the Vice
President of the United States. During that year he
became founding dean of the Yale Graduate School of
Management and was named William S. Beinecke Professor
of Management Studies, serving until 1980. Mr. Donaldson
then founded Donaldson Enterprises, Inc., a private
investing firm, and served as its chairman and chief
executive officer until year-end 1990. From 1991 until
June 1995, Mr. Donaldson served as chairman of the board
and chief executive officer of The New York Stock
Exchange, Inc. In June 1995, Mr. Donaldson rejoined
Donaldson Enterprises, Inc., as its chairman and chief
executive officer. In September 1995, he was also
elected senior advisor to Donaldson, Lufkin & Jenrette,
Inc., the firm he co-founded in 1959. Mr. Donaldson is
also a director of Aetna Life & Casualty Company and
Philip Morris Companies Inc. He serves as a trustee and
director of a number of philanthropic and educational
institutions.
R. Donald Fullerton In 1953, Mr. Fullerton joined the Canadian Bank of
Canadian Imperial Bank of Commerce (now CIBC), a Canadian financial services
Commerce institution based in Toronto. In 1968, he was appointed
Commerce Court West deputy chief general manager. In 1971, Mr. Fullerton
Suite 3620 (36th Floor) became senior vice president and in 1973, he was
Toronto, Ontario promoted to executive vice president and chief general
Canada M5L IA2 manager. Mr. Fullerton was elected to CIBC's Board of
Directors in 1974 and elected president and chief
operating officer in 1976. In 1984, he was elected chief
executive officer, and in 1985, he was named chairman.
In June 1992, Mr. Fullerton retired as chairman and
chief executive officer of CIBC, and now holds the
position of chairman of its Executive Committee. Mr.
Fullerton is also a director of CIBC, Amoco Canada
Petroleum Co. Ltd., Ontario Hydro, Westcoast Energy
Inc., George Weston Ltd., Coca-Cola Beverages Ltd.,
Hollinger Inc., Asia Satellite Telecommunications
Company Limited, Orange plc, and a member of the
advisory board, IBM Canada Ltd and other cultural and
medical entities. Mr. Fullerton is a citizen of Canada.
</TABLE>
I-3
<PAGE> 38
<TABLE>
<CAPTION>
NAME AND PRESENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- --------------------------------------------------
<S> <C>
James J. Howard Mr. Howard was president and chief operating officer of
Northern States Power Company Ameritech, the Chicago-based parent of the Bell
414 Nicollet Mall, 5th Floor companies serving Illinois, Indiana, Michigan, Ohio and
Minneapolis, MN 55401-1993 Wisconsin, prior to joining Northern States Power
Company, an electric and gas utility company, as its
president and chief executive officer in 1987. Mr.
Howard has served as its chairman of the board and chief
executive officer since 1988, and in 1994 was also named
president. Mr. Howard is also a director of Walgreen
Company, Ecolab Inc., ReliaStar Financial and the
Federal Reserve Bank of Minneapolis. He also serves on
the board of overseers for the Carlson School of
Management, University of Minnesota, the Board of
Trustees for the University of St. Thomas, in St. Paul,
Minnesota, and the Board of Visitors for the University
of Pittsburgh, Joseph M. Katz School of Business. Mr.
Howard serves as chairman of the Nuclear Energy
Institute, located in Washington, D.C. and is former
chairman and a current member of the board of the Edison
Electric Institute. Mr. Howard serves the community as a
board member and is past chairman of (1994-1995) of the
United Way of Minneapolis Area; the Minnesota Business
Partnership the Jerimiah Program, the Greater
Minneapolis Convention & Visitors Association, Capitol
City Partnership, the Minneapolis Center for Corporate
Responsibility and the Danny Thompson Memorial Leukemia
Foundation.
Bruce Karatz In 1972, Mr. Karatz joined the predecessor of Kaufman
Kaufman and Broad Home Corp. and Broad Home Corporation, the largest home builder in
10990 Wilshire Boulevard the western United States and one of the largest
Los Angeles, CA 90024 residential builders in Paris, France, where he held a
number of corporate positions prior to being named
president of Kaufman and Broad-France in 1976. After
returning to the United States, in 1980, he was elected
president of all housing operations. In 1986, he was
elected president and chief executive officer of Kaufman
and Broad Home Corporation, and in 1993, was named
chairman of the board. Mr. Karatz also is a director of
Smith's Food & Drug Centers, Inc., and National Golf
Properties, Inc. Among his civic and cultural
activities, Mr. Karatz is a trustee of the RAND
Corporation, co-chairman of the Mayor's Alliance for a
Safer L.A., and a member of the Board of the National
Park Foundation, University of Southern California Law
CenterBoard of Councilors, and a member of the Council
on Foreign Relations. In 1992, he was inducted into the
California Building Industry Hall of Fame.
</TABLE>
I-4
<PAGE> 39
<TABLE>
<CAPTION>
NAME AND PRESENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- --------------------------------------------------
<S> <C>
D. Larry Moore Mr. Moore joined Sperry Corporation in 1962 where he
advanced with assignments in information systems,
operations and marketing. In 1978, he was named vice
president of the Sperry Avionics Division, and in 1985
he was chosen to lead Sperry's commercial aviation
business as vice president and general manager of
Commercial Flight Systems. Mr. Moore joined Honeywell in
December 1986, when the Sperry Aerospace Group was
acquired by Honeywell. In June 1987, Mr. Moore was
appointed vice president of Honeywell's Commercial
Flight Systems Group, and in April 1989 he was elected
president, Space and Aviation. In 1990, Mr. Moore was
elected executive vice president and chief operating
officer for Space and Aviation, and Industrial, and a
director of the Company. In April 1993, Mr. Moore was
elected president and chief operating officer. Mr. Moore
is also a director of Rohr Inc., Reynolds Metals Company
and Geon Company. He is also a member of the board of
the Aerospace Industries Association (AIA) and the
National Association of Manufacturers (NAM).
A. Barry Rand Mr. Rand joined Xerox Corporation, a document processing
Xerox Corporation office equipment company, in 1968. In May 1985, he was
800 Long Ridge Road elected a corporate officer and in 1987 he was elected
P.O. Box 1600 president of Xerox's United States Marketing Group. In
Stamford, CT 06904-1600 February 1992, Mr. Rand was promoted to executive vice
president and is responsible for world-wide operations.
Mr. Rand is also a director of Abbott Laboratories and
Ameritech Corporation. He serves on the board of
overseers of the Rochester Philharmonic Orchestra and is
a member of the Stanford University Graduate School of
Business advisory council. In 1993, Mr. Rand was
inducted into the National Sales Hall of Fame.
Steven G. Rothmeier In March 1993, Mr. Rothmeier formed Great Northern
Great Northern Capital Capital, a private asset management firm, and serves as
332 Minnesota Street its chairman of the board and chief executive officer.
Suite W-1099 Prior to March 1993, Mr. Rothmeier served as president
St. Paul, MN 55101 at IAI Capital Group, a venture capital and merchant
banking firm. From 1973 to November 1989, he held
various senior positions at Northwest Airlines, Inc.,
and from 1986 to 1989, he served as chairman of the
board and chief executive officer of NWA Inc. and
Northwest Airlines, Inc. Mr. Rothmeier is also a
director of Precision Castparts Corp., Department 56,
Inc., E.W. Blanch Holdings, Inc., and the Argonne
National Laboratory University of Chicago Development
Corporation (ARCH). He also serves as chairman of the
St. Agnes Foundation in St. Paul, Minnesota, and of
Catholic Views Broadcast, Inc. Channel 53 Television in
Minnesota. Mr. Rothmeier is a member of the Council on
the Graduate School of Business, University of Chicago,
a trustee of the University of Chicago, a director of
the American Council on Germany, a director of the
Center of the American Experiment, an advisor to the
Metropolitan Economic Development Association, and
former vice chairman of the U.S.-China Business Council.
</TABLE>
I-5
<PAGE> 40
<TABLE>
<CAPTION>
NAME AND PRESENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- --------------------------------------------------
<S> <C>
Michael W. Wright Mr. Wright was a member of the law firm of Dorsey and
SUPERVALU INC. Whitney from 1963 to 1977. In 1977, he joined SUPERVALU
11840 Valley View Road INC., a food distributor and retailer, as senior vice
P.O. Box 990 president of administration and as a member of the board
Minneapolis, MN 55440 of directors. He was elected president and chief
operating officer in 1978, chief executive officer in
1981, and chairman of the board in 1982. Mr. Wright is
also a director of Cargill, Inc., Musicland Stores
Corporation, Norwest Corporation and ShopKo Stores, Inc.
He is also a member of the board of directors of the
Food Marketing Institute, Food Distributors
International and the International Center for Companies
of the Food and Trade Industry (CIES).
2. EXECUTIVE OFFICERS OF HONEYWELL
Michael R. Bonsignore Chairman and chief executive officer. (For further
information see paragraph I.1 above.)
Donald E. Bogle President, Home and Building Control since January 1997.
From January 1996 to December 1996, Mr. Bogle was vice
president and general manager of Honeywell's worldwide
Home and Building Control strategic business unit. From
October 1994 to November 1996, he was vice president and
general manager of Home and Building Control. From May
1992 to September 1994, he was vice president and
general manager of Industrial Automation and Control.
From November 1990 to April 1992 he was president of
U.S. Process Automation Business for ASEA Brown Boveri.
Edward D. Grayson Vice president and general counsel since joining the
Company in April 1992. Prior to April 1992, Mr. Grayson
served as senior vice president, general counsel and
clerk and corporate officer of Wang Laboratories Inc.
Mr. Grayson is director of Passport Corporation and
Organizational Dynamics, Inc. and a member of the
advisory board of Bay Banks, Inc.
William M. Hjerpe President, Honeywell Europe, effective February 1, 1997.
Mr. Hjerpe has been vice president and chief financial
officer since October 1994. From February 1992 to
October 1994, he was vice president and controller of
Honeywell. From July 1990 to February 1992, he was vice
president and treasurer of Honeywell.
Brian M. McGourty Senior vice president since January 1997. From April
1994 to December 1996, Mr. McGourty was president, Home
and Building Control Business. From December 1991 to
April 1994, he was vice president, field operations for
Home and Building Control. Mr. McGourty is a citizen of
Canada.
D. Larry Moore President and chief operating officer. (For further
information see paragraph I. 1 above.)
Philip M. Palazzari Vice president and controller since October 1994. From
May 1993 to October 1994, Mr. Palazzari was vice
president, finance for Home and Building Control. From
March 1992 to April 1993, he was vice president and
assistant controller of operations for Honeywell. From
January 1990 to February 1992, he was vice president for
financial planning and reporting for Honeywell.
</TABLE>
I-6
<PAGE> 41
<TABLE>
<CAPTION>
NAME AND PRESENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- --------------------------------------------------
<S> <C>
James T. Porter Corporate vice president, human resources, since May
1993. From January 1992 to April 1993 he was director,
human resources, Home and Building Control.
Donald K. Schwanz President, Space and Aviation Control since January
1997. From September 1993 to December 1996 Mr. Schwanz
was vice president and general manager of Air Transport
Systems. From March 1992 to August 1993, he was vice
president of marketing for Air Transport Systems. From
February 1991 to February 1992 he was vice president of
marketing for Business and Commuter Aviation Systems.
Lawrence W. Stranghoener Vice president and chief financial officer, effective
February 1, 1997. Mr. Stranghoener has been vice
president, business development since March 1996. From
July 1993 to February 1996, he was vice president for
finance for Industrial Automation and Control. From
April 1992 to June 1993 he was director, corporate
financial planning and business analysis.
Markos I. Tambakeras President, Industrial Control, effective February 1,
1997. Mr. Tambakeras has been president, Industrial
Automation and Control since March 1995. From January
1992 to February 1995, Mr. Tambakeras was president of
Honeywell Asia Pacific.
</TABLE>
II. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name, business address and present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years of each director and executive officer of the Purchaser. Unless
otherwise indicated, each such person is a citizen of the United States of
America and the business address of each such person is c/o Honeywell Inc.,
Honeywell Plaza, P.O. Box 524, Minneapolis, Minnesota 55440-0524. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with the Purchaser.
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
---- -------------------------------------------
<S> <C>
D. Larry Moore Chairman and president of the Purchaser since January
1997. (For further information see paragraph I.1 above.)
William M. Hjerpe Vice president and treasurer of the Purchaser since
January 1997. (For further information see paragraph I.2
above.)
Lawrence W. Stranghoener Director and vice president of the Purchaser since
January 1997. (For further information see paragraph I.1
above.)
Markos I. Tambakeras Vice president of the Purchaser since January 1997. (For
further information see paragraph I.1 above.)
Sigurd Ueland Director and vice president and secretary of the
Purchaser since January 1997. Mr. Ueland is also vice
president and secretary of Honeywell, a position he has
held since 1983.
George Van Kula Vice president and assistant secretary of the Purchaser
since January 1997. Mr. Van Kula joined Honeywell as
assistant general counsel in December 1996. For more
than five years prior thereto he was employed as an
attorney for the law firm of Latham & Watkins.
</TABLE>
I-7
<PAGE> 42
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each stockholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<C> <C>
By Mail: By Hand/Overnight Delivery:
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Reorganization Department Reorganization Department
PO Box 798 120 Broadway
Midtown Station 13th Floor
New York, NY 10018 New York, NY 10271
</TABLE>
By Facsimile Transmission:
(201) 329-8936
Confirm Receipt of Facsimile by Telephone:
(201) 296-4209
or
(201) 296-4381
Questions or requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the Information Agent or the Dealer Manager at their respective
locations and telephone numbers set forth below. Stockholders may also contact
their broker, dealer, commercial bank or trust company for assistance concerning
the Offer.
The Information Agent for the Offer is:
(GEORGESON & COMPANY LOGO)
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
CALL TOLL FREE: (800) 223-2064
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
Call Toll Free: (888) 849-7041
I-8
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MEASUREX CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED JANUARY 31, 1997
BY
HONEYWELL ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HONEYWELL INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, FEBRUARY 28, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail:
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
PO Box 798
Midtown Station
New York, NY 10018
By Hand/Overnight Delivery:
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
120 Broadway
13th Floor
New York, NY 10271
By Facsimile Transmission:
(201) 329-8936
Confirm Receipt of Facsimile by Telephone:
(201) 296-4209
or
(201) 296-4381
----------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or if delivery of Shares (as defined below) is to be made by
book-entry transfer to an account maintained by the Depositary at The Depository
Trust Company or the Philadelphia Depository Trust Company (hereinafter
collectively referred to as the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth in Section 2 of the Offer to Purchase (as defined
below). Stockholders who deliver Shares by book-entry transfer are referred to
herein as "Book-Entry Stockholders" and other stockholders are referred to
herein as "Certificate Stockholders."
Stockholders whose certificates are not immediately available or who cannot
deliver their Shares and all other documents required hereby to the Depositary
or complete the procedures for book-entry transfer prior to the Expiration Date
(as defined in the Offer to Purchase) must tender their Shares according to the
guaranteed delivery procedure set forth in Section 2 of the Offer to Purchase.
See Instruction 2. Delivery of documents to a Book-Entry Transfer Facility does
not constitute delivery to the Depositary.
<PAGE> 2
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
-----------------------------------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
-----------------------------------------------------------------------------
Transaction Code Number
-----------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s)
-----------------------------------------------------------------------------
Window Ticket Number (if any)
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------------------------------------------------------
Name of Institution which Guaranteed Delivery
-------------------------------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility, if Delivered by
Book-Entry Transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
-----------------------------------------------------------------------------
Transaction Code Number
-----------------------------------------------------------------------------
BOXES ABOVE FOR USE BY ELIGIBLE INSTITUTIONS ONLY
<TABLE>
<S><C>
- ---------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) CERTIFICATE(S) TENDERED
ON THE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
TOTAL SHARES
- ---------------------------------------------------------------------------------------------------------------------
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by any certificates delivered to the
Depositary are being tendered. See Instruction 4.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF YOU CANNOT LOCATE YOUR CERTIFICATE(S) AND REQUIRE ASSISTANCE
IN REPLACING THEM. UPON RECEIPT OF NOTIFICATION BY THIS LETTER OF
TRANSMITTAL, THE COMPANY'S STOCK TRANSFER AGENT WILL CONTACT YOU DIRECTLY
WITH REPLACEMENT INSTRUCTIONS.
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Honeywell Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Honeywell Inc., a
Delaware corporation ("Honeywell"), the above-described shares of Common Stock,
par value $.01 per share the ("Common Stock"), including the associated
preferred share purchase rights, if any (the "Rights" and, together with the
Common Stock, the "Shares"), of Measurex Corporation, a Delaware corporation
(the "Company"), pursuant to the Purchaser's offer to purchase all outstanding
Shares at a price of $35.00 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated January
31, 1997 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which, together with the Offer to Purchase,
constitute the "Offer"). The undersigned understands that the Purchaser reserves
the right to transfer or assign, in whole or in part from time to time, to one
or more direct or indirect wholly owned subsidiaries of Honeywell, the right to
purchase Shares tendered pursuant to the Offer.
The Company has distributed one Right for each outstanding Share pursuant
to the Rights Agreement, dated as of December 14, 1988, as amended, between the
Company and Bank of New York, as Rights Agent. The Rights are currently
evidenced by and trade with certificates evidencing the Common Stock. The
Company has amended the Rights Agreement to provide that the Rights will expire
at the time that Shares have been accepted for payment pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), subject to, and effective upon, acceptance for payment of and
payment for the Shares tendered herewith, the undersigned hereby sells, assigns,
and transfers to, or upon the order of, the Purchaser all right, title and
interest in and to all the Shares that are being tendered hereby (and any and
all other Shares or other securities issued or issuable in respect thereof on or
after January 31, 1997 (collectively, "Distributions")) and irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares and all
Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares and all Distributions, or transfer ownership of
such Shares and all Distributions on the account books maintained by any of the
Book-Entry Transfer Facilities, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchaser, upon receipt by the Depositary, as the undersigned's agent, of the
purchase price (adjusted, if appropriate, as provided in the Offer to Purchase),
(b) present such Shares and all Distributions for cancellation and transfer on
the Company's books and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares and all Distributions and that, when the same are accepted for payment by
the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, claims, charges and
encumbrances, and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute any signature guarantees or additional
documents deemed by the Depositary of the Purchaser to be necessary or desirable
to complete the sale, assignment and transfer of the tendered Shares and all
Distributions. In addition, the undersigned shall promptly remit and transfer to
the Depositary for the account of the Purchaser any such Distributions issued to
the undersigned, in respect of the tendered Shares, accompanied by documentation
of transfer, and pending such remittance or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of any such
Distributions and, subject to the terms of the Merger Agreement (as defined in
the Offer to Purchase), may withhold the entire purchase price or deduct from
the purchase price the amount or value thereof, as determined by the Purchaser
in its sole discretion.
<PAGE> 4
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints Michael R. Bonsignore, Lawrence
W. Stranghoener or Edward D. Grayson, and each of them, and any other designees
of the Purchaser, the attorneys and proxies of the undersigned, each with full
power of substitution, to vote at any annual, special or adjourned meeting of
the Company's stockholders or otherwise act (including pursuant to written
consent) in such manner as each such attorney and proxy or his substitute shall
in his sole discretion deem proper, to execute any written consent concerning
any matter as each such attorney and proxy or his substitute shall in his sole
discretion deem proper with respect to, and to otherwise act with respect to,
all the Shares tendered hereby which have been accepted for payment by the
Purchaser prior to the time any such vote or action is taken (and any and all
Distributions issued or issuable in respect thereof) and with respect to which
the undersigned is entitled to vote. This appointment is effective when and only
to the extent that, the Purchaser accepts for payment such Shares as provided in
the Offer to Purchase. This power of attorney and proxy is coupled with an
interest in the tendered Shares, is irrevocable and is granted in consideration
of the acceptance for payment of such Shares in accordance with the terms of the
Offer. Such acceptance for payment shall revoke all prior powers of attorney and
proxies given by the undersigned at any time with respect to such Shares and no
subsequent powers of attorney or proxies may be given by the undersigned (and,
if given, will not be deemed effective). The Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Shares, the Purchaser must
be able to exercise full voting and other rights with respect to such Shares,
including voting at any meeting of stockholders then scheduled.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 2 of the Offer to Purchaser and in
the instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer. The undersigned recognizes that under certain circumstances set forth
in the Offer to Purchase, the Purchaser may not be required to accept for
payment any of the tendered Shares. The Purchaser's acceptance for payment of
Shares pursuant to the Offer will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer.
<PAGE> 5
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price of any Shares purchased, and/or
return any certificates for Shares not tendered or accepted for payment, in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price of any Shares
purchased, and/or any certificates for Shares not tendered or accepted for
payment (and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under "Description of Shares Tendered." In the
event that both the Special Delivery Instructions and the Special Payment
Instructions are completed, please issue the check for the purchase price of any
Shares purchased, and/or return any certificates for Shares not tendered or
accepted for payment in the name(s) of, and mail said check and/or any
certificates to, the person or persons so indicated. In the case of a book-entry
delivery of Shares, please credit the account maintained at the Book-Entry
Transfer Facility indicated above with any Shares not accepted for payment. The
undersigned recognizes that the Purchaser has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered holder(s) thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
- -------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares
not tendered or not purchased and/or the check for
the purchase price of Shares purchased are to be
issued in the name of someone other than the
undersigned.
Issue: [ ] Check [ ] Certificate(s) to:
Name
-------------------------------------------------
(Please Print)
Address
----------------------------------------------
-----------------------------------------------------
(Include Zip Code)
-----------------------------------------------------
(Tax Identification or Social Security Number)
(See Substitute Form W-9 Included Herein)
-----------------------------------------------------
(Account Number)
- -------------------------------------------------------
- -------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares
not tendered or not purchased and/or the check for
the purchase price of Shares purchased are to be
delivered to someone other than the undersigned or to
the undersigned at an address other than that
appearing under "Description of Shares Tendered."
Deliver: [ ] Check [ ] Certificate(s) to:
Name
------------------------------------------------
(Please Print)
Address
----------------------------------------------
(Include Zip Code)
-----------------------------------------------------
(Tax Identification or Social Security Number)
-----------------------------------------------------
(See Substitute Form W-9 Included Herein)
- -------------------------------------------------------
<PAGE> 6
& :
& :
- --------------------------------------------------------------------------------
STOCKHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Signature(s) of Owner(s))
(MUST BE SIGNED BY REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON STOCK
CERTIFICATE(S) OR ON A SECURITY POSITION LISTING OR BY PERSON(S) AUTHORIZED TO
BECOME REGISTERED HOLDER(S) BY CERTIFICATES AND DOCUMENTS TRANSMITTED
HEREWITH. IF SIGNATURE IS BY TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN,
ATTORNEY-IN-FACT, AGENT, OFFICER OF A CORPORATION OR ANY OTHER PERSON ACTING
IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE SET FORTH FULL TITLE BELOW.
SEE INSTRUCTION 5.)
Dated , 1997
Name(s)
(Please Print)
Capacity (full title)
Address
(Include Zip Code)
Daytime Area Code and Telephone Number
Taxpayer Identification or
Social Security Number
------------------------------------------------------------------------------
(See Substitute Form W-9 Below)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
Name
(Please Print)
Name of Firm
Address
(Include Zip Code)
Area Code and Telephone Number
Dated , 1997
- --------------------------------------------------------------------------------
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURE. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm which is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. ("NASD") or a commercial bank or trust
company having an office or correspondent in the United States which is a
participant in an approved Signature Guarantee Medallion Program (each an
"Eligible Institution," and collectively, "Eligible Institutions"). No signature
guarantee is required on this Letter of Transmittal (i) if this Letter of
Transmittal is signed by the registered holder(s) (which term, for purposes of
this document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares) of
Shares tendered herewith, unless such holder(s) has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the facing page hereto or (ii) if such Shares are tendered for
the account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders either
if certificates for Shares are to be forwarded herewith or if a tender of Shares
is to be made pursuant to the procedures for delivery by book-entry transfer set
forth in Section 2 of the Offer to Purchase. For Shares to be validly tendered
pursuant to the Offer, (i) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees, or
an Agent's Message (as defined in the Offer to Purchase) in the case of a
book-entry delivery, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of the Depositary's
addresses set forth herein and either certificates or a timely Book-Entry
Confirmation for tendered Shares must be received by the Depositary at one of
such addresses, in each case prior to the Expiration Date (as defined in the
Offer to Purchase), or (ii) the tendering stockholder must comply with the
guaranteed delivery procedure set forth below.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedure set forth in Section 2 of the Offer to Purchase. Pursuant to such
procedures, (i) such tender must be made by or through an Eligible Institution,
(ii) a properly completed and duly executed Notice of Guaranteed Delivery
provided by the Purchaser (or facsimile thereof) must be received by the
Depositary prior to the Expiration Date and (iii) the certificates for all
physically tendered Shares, or a Book-Entry Confirmation with respect to all
tendered Shares, together with this properly completed and duly executed Letter
of Transmittal (or facsimile thereof) with any required signature guarantees,
and any other documents required by this Letter of Transmittal, must be received
by the Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery, all as provided in Section 2 of the Offer to
Purchase. A "trading day" is any day on which the New York Stock Exchange is
open for business.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, CERTIFICATES FOR
SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY
BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING
STOCKHOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
<PAGE> 8
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such case, new certificate(s) for the remainder
of the Shares that were evidenced by the old certificate(s) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the expiration or
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment or certificates for Shares not
tendered or accepted for payment are to be issued to a person other than the
registered owner(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the shares tendered hereby, the certificates evidencing
the Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case, signed exactly as the name(s) of the registered owner(s)
appear(s) on the certificates for such Shares. Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution. See Instruction
1.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay, or cause to be paid, any stock transfer taxes with respect
to the transfer and sale of Shares to it or its assignee pursuant to the Offer.
If, however, payment of the purchase price is to be made to, or if certificates
for Shares not tendered or accepted for payment are to be registered in the name
of, any persons other than the registered holder(s), or if tendered certificates
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder or such person) payable on the account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of and/or certificates for Shares not accepted for payment are to be
returned to a person other than the signer of this Letter of Transmittal or if a
check is to be sent and/or such certificates are to be returned to a person
other than the signer of this Letter of Transmittal or to an address other than
that shown above, the appropriate boxes on this Letter of Transmittal should be
completed. Any stockholder tendering Shares by book-entry transfer will have any
Shares not accepted for payment returned by crediting the account maintained by
such stockholder at the Book-Entry Transfer Facility from which such transfer
was made.
<PAGE> 9
8. WAIVER OF CONDITIONS. Except as otherwise provided in the Offer to
Purchase, the Purchaser expressly reserves the absolute right in its sole
discretion to waive any of the specified conditions of the Offer or any defect
or irregularity in tender with regard to any Shares tendered.
9. SUBSTITUTE FORM W-9. The tendering stockholder (or other payee) is
required to provide the Depositary with a correct Taxpayer Identification Number
("TIN"), generally the stockholder's social security or federal employer
identification number, and with certain other information, on Substitute Form
W-9, which is provided under "Important Tax Information" below, and to certify
that the stockholder (or other payee) is not subject to backup withholding. If a
tendering stockholder is subject to backup withholding, he or she must cross out
item (2) of the Certification Box on Substitute Form W-9 before signing such
Form. Failure to provide the information on the Substitute Form W-9 may subject
the tendering stockholder (or other payee) to a $50 penalty imposed by the
Internal Revenue Service and to 31% federal income tax withholding on the
payment of the purchase price. If the tendering stockholder has not been issued
a TIN and has applied for a number or intends to apply for a number in the near
future, he or she should write "Applied For" in the space provided for the TIN
in Part I, sign and date the Substitute Form W-9 and sign and date the
Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN by the time of
payment, the Depositary will withhold 31% of all such payments for surrendered
Shares thereafter until a TIN is provided to the Depositary.
10. LOST OR DESTROYED CERTIFICATES. If any certificate(s) representing
Shares has been lost or destroyed, the stockholder should check the appropriate
box on the front of the Letter of Transmittal. The Company's stock transfer
agent will then instruct such stockholder as to the procedure to be followed in
order to replace the certificate(s). The stockholder will have to post a surety
bond of approximately 2% of the current market value of the stock. This Letter
of Transmittal and related documents cannot be processed until procedures for
replacing lost or destroyed certificates have been followed.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
locations set forth below.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF)
TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF
GUARANTEED DELIVERY (OR A FACSIMILE COPY THEREOF) MUST BE RECEIVED BY THE
DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder surrendering Shares must
provide the Depositary with his correct TIN on Substitute Form W-9 on this
Letter of Transmittal. If the stockholder is an individual, his TIN is his
social security number. If the correct TIN is not provided, the stockholder may
be subject to a $50 penalty imposed by the Internal Revenue Service and payments
made in exchange for the surrendered Shares may be subject to backup withholding
of 31%.
Certain persons (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding and
reporting requirements. In order for an exempt foreign stockholder to avoid
backup withholding, that person should complete, sign and submit a Form W-8,
Certificate of Foreign Status, signed under penalties of perjury, attesting to
his exempt status. A Form W-8 can be obtained from the Depositary. Exempt
stockholders, other than foreign stockholders, should furnish their TIN, write
"Exempt" on the face of the Substitute Form W-9 and sign, date and return the
Substitute Form W-9 to the Depositary. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
If federal income tax backup withholding applies, the Depositary is
required to withhold 31% of any payment made to payee. Backup withholding is not
an additional tax. Rather, the federal income tax liability
<PAGE> 10
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If backup withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent Federal income tax backup withholding on payments that are made
to a stockholder with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of his or her correct TIN (or
the TIN of any other payee) by completing the Substitute Form W-9 included in
this Letter of Transmittal certifying (1) that the TIN provided on the
Substitute Form W-9 is correct (or that such payee is awaiting a TIN) and that
(2) the stockholder is not subject to backup withholding because (i) the
stockholder has not been notified by the Internal Revenue Service that the
stockholder is subject to federal income tax backup withholding as a result of a
failure to report all interest and dividends or (ii) the Internal Revenue
Service has notified the stockholder that the stockholder is no longer subject
to federal income tax backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the TIN, generally the
social security number or employer identification number of the record owner of
the Shares. If the Shares are in more than one name or are not in the name of
the actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering stockholder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future, he or
she should write "Applied For" in the space provided for the TIN in Part I, sign
and date the Substitute Form W-9 and sign and date the Certificate of Awaiting
Taxpayer Identification Number, which appears in a separate box below the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% of all
payments of the purchase price until a TIN is provided to the Depositary.
<PAGE> 11
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
PAYOR'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- -----------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY
DEPARTMENT OF THE TREASURY BY SIGNING AND DATING BELOW: Social Security Number
INTERNAL REVENUE SERVICE
OR
Employer Identification No.
(If Awaiting TIN write "Applied
for")
--------------------------------------------------------------------------------
PART II--For Payees NOT subject to backup withholding, see the
en-
closed Guidelines for Certification of Taxpayer Identification
Payor's Request for Taxpayer
Identification Number (TIN) Number on
Substitute Form W-9 and complete as instructed therein.
- -----------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION--Under the penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because either (a) I am exempt from
backup withholding, (b) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.) THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR
CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATES REQUIRED
TO AVOID BACKUP WITHHOLDING.
- --------------------------------------------------------------------------------
SIGNATURE_______________________________________________ DATE ________________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND IN BACKUP WITHHOLDING OF 31%
OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
WROTE "APPLIED FOR" IN PART I OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under the penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Officer, or
(b) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number by the time of
payment, 31% of all reportable payments made to me thereafter will be withheld
until I provide a number.
SIGNATURES_________________________________________________ DATE _____________
<PAGE> 12
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be directed
to the Information Agent or the Dealer Manager as set forth below:
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
CALL TOLL FREE: (800) 223-2064
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
Call Toll Free: (888) 849-7041
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MEASUREX CORPORATION
BY
HONEYWELL ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HONEYWELL INC.
AT
$35.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, FEBRUARY 28, 1997, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Banks, Trust January 31, 1997
Companies and Other Nominees:
We have been engaged by Honeywell Acquisition Corp., a Delaware corporation
(the "Purchaser"), which is a wholly owned subsidiary of Honeywell Inc., a
Delaware corporation ("Honeywell"), to act as Dealer Manager in connection with
the Purchaser's offer to purchase all outstanding shares of Common Stock, par
value $.01 per share (the "Common Stock"), including the associated preferred
share purchase rights, if any (the "Rights," and together with the Common Stock,
the "Shares"), of Measurex Corporation, a Delaware corporation (the "Company"),
at $35.00 per Share, net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Purchaser's Offer to
Purchase dated January 31, 1997 (the "Offer to Purchase") and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer"). Please furnish copies of the
enclosed materials to those of your clients for whom you hold Shares registered
in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated January 31, 1997;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such clients' instructions with regard to
the Offer;
4. Notice of Guaranteed Delivery; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
The Offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn prior to the expiration of the Offer that
number of Shares that would constitute a majority of all outstanding Shares on a
fully diluted basis.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay promptly after
the Expiration Date (as defined in the Offer to Purchase) for all shares validly
tendered prior to the Expiration Date and not properly withdrawn as, if and when
the Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Shares. Payment for Shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares (or a timely Book-Entry Confirmation (as defined in
the Offer to Purchase) with respect
<PAGE> 2
thereto), (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase), and (iii) any other documents required by the Letter of Transmittal.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to deliver their certificates on or prior to the Expiration Date or to
comply with the book-entry transfer procedures on a timely basis, a tender may
be effected by following the guaranteed delivery procedures specified in Section
2 of the Offer to Purchase.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS
PROMPTLY. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 28, 1997, UNLESS EXTENDED.
Neither the Purchaser nor Honeywell will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and Information
Agent as described in the Offer to Purchase) in connection with the solicitation
of tenders of Shares pursuant to the Offer. The Purchaser will, however, upon
request, reimburse brokers, dealers, commercial banks and trust companies for
reasonable and necessary costs and expenses incurred by them in forwarding
materials to their customers. The Purchaser will pay all stock transfer taxes
applicable to its purchase of Shares pursuant to the Offer, subject to
Instruction 6 of the Letter of Transmittal.
Additional copies of the enclosed materials may be obtained by contacting
the Dealer Manager or the Information Agent at their respective addresses and
telephone numbers set forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
BEAR, STEARNS & CO. INC.
as Dealer Manager
245 Park Avenue
New York, New York 10167
Call Toll Free: (888) 849-7041
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, HONEYWELL, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER OR AUTHORIZE YOU OR ANY OTHER PERSON TO
GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH
RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF
TRANSMITTAL.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MEASUREX CORPORATION
BY
HONEYWELL ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
HONEYWELL INC.
AT
$35.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, FEBRUARY 28, 1997, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated January 31,
1997 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the Offer by Honeywell Acquisition Corp., a Delaware
corporation (the "Purchaser"), which is a wholly owned subsidiary of Honeywell
Inc., a Delaware corporation ("Honeywell"), to purchase for cash all outstanding
shares of Common Stock, par value $.01 per share (the "Common Stock"), including
the associated preferred share purchase rights, if any (the "Rights", and
together with the Common Stock, the "Shares"), of Measurex Corporation, a
Delaware corporation (the "Company"). We are the holder of record of Shares held
by us for your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE
HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES
HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request your instructions as to whether you wish to tender
any of or all of the Shares held by us for your account upon the terms and
subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The offer price is $35.00 per Share, net to the seller in cash, without
interest thereon.
2. The Offer is being made for all outstanding Shares.
3. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND DETERMINED THAT TERMS OF THE OFFER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
4. The Offer and withdrawal rights expire at 12:00 midnight, New York City
time, on Friday, February 28, 1997, unless extended.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in
the Offer to Purchase) that number of Shares that would represent a
majority of all outstanding Shares on a fully diluted basis on the date
of purchase.
6. Any stock transfer taxes applicable to a sale of Shares to the Purchaser
pursuant to the Offer will be borne by the Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the expiration of the Offer. If you wish to
have us tender any of or all of the Shares held by us for your account, please
so instruct us by completing, executing and returning to us the instruction form
set forth on the reverse side of this letter. An envelope to return your
instructions to us is enclosed. If you authorize the tender of your Shares, all
such Shares will be tendered unless otherwise specified on the reverse side of
this letter. Your instructions should be forwarded to us in ample time to permit
us to submit a tender on your behalf prior to the expiration of the Offer.
The Offer is not being made to, nor will tenders be accepted from, or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
<PAGE> 2
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MEASUREX CORPORATION
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase dated January 31, 1997 and the related Letter of Transmittal, in
connection with the offer by Honeywell Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Honeywell Inc., a Delaware corporation, to
purchase all outstanding shares of common stock, par value $.01 per share (the
"Common Stock"), including the associated preferred share purchase rights, if
any (the "Rights", and together with the Common Stock, the "Shares"), of
Measurex Corporation, a Delaware corporation.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in such Offer to Purchase and related Letter of
Transmittal.
Dated: , 1997
NUMBER OF SHARES TO BE TENDERED*
________________ SHARES
I (we) understand that if I (we) sign this instruction form without
indicating a lesser number of Shares in the space above, all Shares held by you
for my (our) account will be tendered.
---------------------------------------------------
Signature(s)
---------------------------------------------------
---------------------------------------------------
Print Name(s)
---------------------------------------------------
---------------------------------------------------
Print Address(es)
---------------------------------------------------
Area Code and Telephone Number
---------------------------------------------------
Tax ID or Social Security Number
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by your
firm for my (our) account are to be tendered.
2
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MEASUREX CORPORATION
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates for shares of Common Stock, par value $.01 per
share (the "Common Stock"), including the associated preferred share purchase
rights, if any (the "Rights", and together with the Common Stock, the "Shares"),
of Measurex Corporation, a Delaware corporation (the "Company"), are not
immediately available, or if the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary at the address set forth below prior to the Expiration Date
(as defined in the Offer to Purchase). This form may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution (as defined
in the Offer to Purchase). See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail:
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
PO Box 798
Midtown Station
New York, NY 10018
By Hand/Overnight Delivery:
ChaseMellon Shareholder Services, L.L.C.
Reorganization Department
120 Broadway
13th Floor
New York, NY 10271
By Facsimile Transmission:
(201) 329-8936
Confirm Receipt of Facsimile by Telephone:
(201) 296-4209
or
(201) 296-4381
----------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Honeywell Acquisition Corp., a Delaware
corporation (the "Purchaser"), which is a wholly owned subsidiary of Honeywell
Inc., a Delaware corporation, upon the terms and subject to the conditions set
forth in the Purchaser's Offer to Purchase dated January 31, 1997 (the "Offer to
Purchase"), and the related Letter of Transmittal, receipt of which is hereby
acknowledged, the number of Shares (as such term is defined in the Offer to
Purchase) set forth below, all pursuant to the guaranteed delivery procedures
set forth in Section 2 of the Offer to Purchase.
Number of Shares:
--------------------------------
Certificate Nos. (if available):
- -------------------------------------------------
- -------------------------------------------------
(Check one box if Shares will be
tendered by book-entry transfer)
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
---------------------------------
Dated: ,1997
-------------------------------------------
Name(s) of Record Holder(s):
- -------------------------------------------------
- -------------------------------------------------
Please Print
Address(es):
-------------------------------------
- -------------------------------------------------
Zip Code
Area Code and Tel. No.:
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
Signature(s)
Dated: ,1997
------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agent's Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation with respect to such
Shares, in any such case together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or an Agent's Message, and any other required documents within three
trading days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
All capitalized terms used herein have the meanings set forth in the Offer to
Purchase.
Name of Firm:
------------------------------------
Address:
-----------------------------------------
-----------------------------------------
Zip Code
Area Code and
Tel. No.:
-----------------------------------------
-----------------------------------------
Authorized Signature
Name:
--------------------------------------------
Please Print
Title:
-------------------------------------------
Dated: , 1997
-------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife The actual owner of the
(joint account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor The adult or, if the
(joint account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also
trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under state
law
8. Sole proprietorship The owner(4)
account
- --------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------
<S> <C>
9. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district, or prison) that
receives agricultural
program payments
- --------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your Social Security number or your Employer Identification
number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisers Act
of 1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under Section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852 of the Code).
- - Payments described in Section 6049(b)(5) of the Code to non-resident aliens.
- - Payments on tax-free covenant bonds under Section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6045, and 6050A and 6050N
of the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
FOR IMMEDIATE RELEASE
From: Frances B. Emerson Robert McAdams
Honeywell Inc. Measurex Corporation
Honeywell Plaza One Results Way
Minneapolis, MN 55440 Cupertino, Calif. 95014
(612) 951-0072 (408) 725-3140
HONEYWELL TO ACQUIRE MEASUREX FOR $35 PER SHARE
MINNEAPOLIS and CUPERTINO, Calif. Jan. 27, 1997 -- Honeywell Inc.
(NYSE:HON) and Measurex Corporation (NYSE:MX) have reached a definitive
agreement to merge in an all-cash transaction valued at approximately $600
million. The transaction is expected to greatly strengthen Honeywell's position
as a leading supplier of systems, services and products for the worldwide pulp
and paper manufacturing industry.
Under the terms of the merger agreement, which was approved by the boards
of directors of both companies, Honeywell this week will commence an all-cash
tender offer for all outstanding shares of Measurex stock at a price of $35 per
share.
"Today's announcement signals a major step that will broaden Honeywell's
base in the important pulp and paper industry," said Michael R. Bonsignore,
chairman and chief executive officer of Honeywell Inc.
David A. Bossen, chairman and chief executive officer of Measurex, added,
"We see this transaction as a way to unite the particular strengths of each of
our companies. In this way, we'll be able to deliver a complete suite of
automation solutions for pulp and paper manufacturers, extending from the
woodyard to the shipping dock."
Honeywell is a leader in industrial automation and control, including
distributed control systems, comprehensive advanced process control
applications for the pulping industry, and a broad range of instrumentation.
Measurex is a major provider of paper machine integrated control systems.
-more-
<PAGE> 2
HONEYWELL TO ACQUIRE MEASUREX.../2
Bonsignore added that the combined strong sales and services staff
throughout the world ensures that both companies' customers will receive the
ongoing support they need to manufacture consistently high-quality products
cost-effectively and profitably.
The merger should provide opportunities for stronger growth for Honeywell
in the pulp and paper industry as well as reductions in costs, Bonsignore said.
The business unit will be run within Honeywell Industrial Automation and
Control by John C. Gingerich, who has been president and COO of Measurex. He
will report to Markos I. Tambakeras, president of Honeywell Industrial Control.
Although the two companies' capabilities are complementary, Bossen and
Bonsignore both acknowledged that a rationalization of redundant functions will
occur.
Bonsignore also noted that the acquisition of Measurex significantly
broadens Honeywell's presence in the pulp and paper industry. The company
already is a leading supplier to the hydrocarbon processing and chemicals
industries and also serves oil and gas exploration and transportation, food,
pharmaceuticals and power generation. He said that the Measurex acquisition
provides Honeywell with further opportunities in paper, plastics, rubber,
non-wovens, steel and non-ferrous metals - all industries currently served by
Measurex.
Honeywell expects the transaction to be neutral to earnings per share in
1997 and increasingly accretive thereafter.
This offer is conditioned upon, among other things, the tendering of at
least a majority of the outstanding Measurex shares, the expiration of
governmental waiting periods relating to acquisitions, and satisfactory
completion of certain environmental tests.
Reference to Honeywell's outlook and statements that relate to future
performance are "forward-looking" statements and are subject to certain risks
and uncertainties which could cause the company's results to differ materially
from those discussed. These risks are set forth in Honeywell's 10K and 10Q.
-more-
<PAGE> 3
HONEYWELL TO ACQUIRE MEASUREX.../3
Bear, Stearns & Co. Inc. advised Honeywell and will act as dealer manager
in connection with the tender offer. Goldman, Sachs and Co. Inc. advised
Measurex in connection with the transaction.
Honeywell is a global controls company focused on creating value through
technology that enhances comfort, improves productivity, saves energy, protects
the environment and increases safety. The company services customers worldwide
in the homes and buildings, industrial, and aviation and space markets.
Honeywell employs 53,000 people in 95 countries, and had 1996 sales of $7.3
billion.
Measurex is a leading supplier of computer-integrated measurement, control
and information systems and services. The company's wide range of products
improves product quality, process efficiency and cost savings. Measurex's
customers are served by sales and service subsidiaries located in 50 offices
and 34 countries around the world.
-0-
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer is made solely by the Offer
to Purchase dated January 31, 1997 and the related Letter of Transmittal and is
being made to all holders of Shares. The Offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares in any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction or any administrative or judicial
action pursuant thereto. In any jurisdiction where securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Honeywell Acquisition Corp. by
Bear, Stearns & Co. Inc. or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Measurex Corporation
at
$35.00 Net Per Share
by
Honeywell Acquisition Corp.
a wholly owned subsidiary of
Honeywell Inc.
Honeywell Acquisition Corp., a Delaware corporation (the "Purchaser"), which is
a wholly owned subsidiary of Honeywell Inc., a Delaware corporation
("Honeywell"), is offering to purchase all outstanding shares of Common Stock,
par value $.01 per share (the "Common Stock"), including the associated
preferred share purchase rights, if any (the "Rights" and, together with the
Common Stock, the "Shares"), of Measurex Corporation, a Delaware corporation
(the "Company"), at a price of $35.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated January 31, 1997 (the "Offer to Purchase")
and in the related Letter of Transmittal (which, together with any amendments
or supplements thereto, collectivTHE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 28, 1997, UNLESS THE
OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as
of January 26, 1997 (the "Merger Agreement"), by and among Honeywell, the
Purchaser and the Company. The Merger Agreement provides that, following the
consummation of the Offer, the Purchaser will be merged with and into the
Company (the "Merger") and each outstanding Share (other than Shares held by
the Company, Honeywell, the Purchaser or any other wholly owned subsidiary of
Honeywell, and Shares held by stockholders who perfect dissenters' rights under
Delaware law) will be converted into the right to receive $35.00 in cash,
without interest thereon, or any higher price paid in the Offer. The Company
has amended the Rights Agreement dated as of
- 1 -
<PAGE> 2
December 14, 1988, between the Company and Bank of New York, as Rights Agent,
to provide that the Rights will expire upon the acceptance of Shares for
payment pursuant to the Offer.
The Board of Directors of the Company has unanimously approved the Offer and
the Merger and determined that the terms of the Offer and the Merger are
fair to, and in the best interests of, the stockholders of the Company and
unanimously recommends that stockholders of the Company accept the Offer and
tender their Shares.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH REPRESENTS A MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY DILUTED
BASIS.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to
ChaseMellon Shareholder Services, L.L.C. (the "Depositary"), of the Purchaser's
acceptance for payment of such Shares. Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from the Purchaser and transmitting payment to tendering
stockholders. In all cases, payment for Shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (i)
certificates for (or a timely Book-Entry Confirmation (as defined in the Offer
to Purchase) with respect to) such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase), and (iii) any other documents
required by the Letter of Transmittal. Under no circumstances will interest be
paid on the purchase price of the Shares to be paid by the Purchaser,
regardless of any extension of the Offer or any delay in making such payment.
Except as otherwise provided below, tenders of Shares are irrevocable. Shares
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by
the Purchaser pursuant to the Offer, may also be withdrawn at any time after
March 31, 1997. For a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses as set forth in the Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Shares have been tendered by an
Eligible
- 2 -
<PAGE> 3
Institution (as defined in Section 2 of the Offer to Purchase), the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been delivered pursuant to the procedure for
book-entry transfer as set forth in Section 2 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at
the appropriate Book-Entry Transfer Facility (as defined in the Offer to
Purchase) to be credited with the withdrawn Shares and otherwise comply with
such Book-Entry Transfer Facility's procedures. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will thereafter
be deemed not validly tendered for any purposes of the Offer. However,
withdrawn Shares may be retendered by again following one of the procedures
described in Section 2 of the Offer to Purchase at any time prior to the
Expiration Date. All questions as to the form and validity (including time of
receipt of notices of withdrawal will be determined by the Purchaser in its
sole discretion, which determination will be final and binding.
Subject to the terms of the Merger Agreement, the Purchaser expressly reserves
the right, in its sole discretion, at any time or from time to time, to extend
the period of time during which the Offer is open by giving oral or written
notice of such extension to the Depositary. The Merger Agreement provides that
if the sole condition to the Offer remaining unsatisfied prior to the then
Expiration Date is the failure of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, to have
expired or been terminated, then the Purchaser will extend the Offer from time
to time until two calendar days following the expiration of such waiting
period.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-6
under the Securities Exchange Act of 1934, as amended, is contained in the
Offer to Purchase and is incorporated herein by reference.
The Company has supplied to the Purchaser the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares, and will
be furnished to brokers, dealers, banks, trust companies and similar persons
whose names, or the names of whose nominees, appear on the stockholder lists,
or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
The Offer to Purchase and the Letter of Transmittal contain important
information that should be read before any decision is made with respect to the
Offer.
Questions and requests for assistance or for copies of the Offer to Purchase,
the Letter of Transmittal and other tender offer documents may be directed to
the Information Agent or the Dealer Manager, as set forth below, and copies
will be furnished at the Purchaser's expense. No fees or commissions will be
paid by Honeywell or the Purchaser to brokers, dealers or other persons other
than the Dealer Manager and the Information Agent for soliciting tenders of
Shares pursuant to the Offer.
- 3 -
<PAGE> 4
The Information Agent for the Offer is:
[Georgeson & Company Inc. Logo]
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: (800) 223-2064
The Dealer Manager for the Offer is:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Call Toll Free: (888) 849-7041
January 31, 1997
- 4 -
<PAGE> 1
$650,000,000
REVOLVING CREDIT AGREEMENT
dated as of January 30, 1997
AMONG
HONEYWELL INC.,
as the Borrower
THE BANKS PARTY HERETO,
THE CHASE MANHATTAN BANK, as Administrative Agent
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Documentation Agent
-----------------------------------
Arranged by:
Chase Securities, Inc.
and
J.P. Morgan Securities Inc.,
as Co-Arrangers
<PAGE> 2
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT (this "Agreement") dated as of January 30, 1997
among HONEYWELL INC., a Delaware corporation ("Honeywell"), THE CHASE MANHATTAN
BANK and MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "Banks"), THE CHASE
MANHATTAN BANK, as Administrative Agent and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Documentation Agent.
WHEREAS, Honeywell wishes to have a $650,000,000 revolving credit facility
to finance its acquisition of Measurex Corporation and for general corporate
purposes; and
WHEREAS, the Banks are willing to provide such a revolving credit facility
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions set forth
herein, the parties hereto, intending to be legally bound, agree as follows:
SECTION 1. DEFINITIONS
(a) The following definitions shall apply to this Agreement:
"Borrower" means Honeywell.
"Commencement Date" means January 30, 1997.
"Commitment Amount" means, with respect to each Bank, $325,000,000 (as
such amount may be reduced from time to time pursuant to Subsection 2.2).
"Eurocurrency" means Eurodollars.
"Eurocurrency Loan" means a Loan of Eurodollars.
"Existing Agreements" means (i) the Revolving Credit Agreement among
Honeywell Inc., Honeywell Finance Inc. and The Chase Manhattan Bank dated
as of October 1, 1995 and (ii) the Revolving Credit Agreement among
Honeywell Inc., Honeywell Finance Inc. and Morgan Guaranty Trust Company
of New York dated as of October 1, 1995.
"Expiration Date" means January 29, 1998.
"Facility Fee" means the amount to be calculated pursuant to
Subsection 2.2 and paid by Honeywell to each Bank, in consideration for its
Commitment.
1
<PAGE> 3
"Loan" means any advance of money by a Bank to Honeywell pursuant to
this Agreement and includes Eurocurrency Loans, Base Rate Loans and any
other type of loan agreed upon by the relevant Bank and Honeywell.
"Term" means, with respect to each Bank, the period of time commencing
on the Commencement Date and terminating on the earliest of: (i) the
Expiration Date; (ii) any date on which such Bank's Commitment Amount
shall have been reduced to zero as a result of written notice delivered by
Honeywell to such Bank pursuant to Subsection 2.2 hereof; or (iii) any date
on which such Bank's Commitment is terminated as a result of an Event of
Default pursuant to Section 9 of its Existing Agreement as incorporated by
reference herein.
(b) Unless otherwise defined above, terms defined in each Existing
Agreement have, for purposes hereof, the meanings specified therein.
SECTION 2. COMMITMENTS; FEES
2.1. Committed and Uncommitted Loans. Each Bank agrees, on the terms
hereinafter set forth, to make Loans to Honeywell during the Term in an
aggregate principal amount up to, but not exceeding, at any one time
outstanding such Bank's Commitment Amount. In addition, each Bank may offer to
make Loans to Honeywell during the Term, on the terms hereinafter set forth, in
an aggregate amount in excess of its Commitment Amount, and Honeywell may
accept such offers in whole or in part. However, immediately after each Loan
(whether committed or uncommitted) is made, the aggregate outstanding principal
amount of the Loans shall not exceed the sum of the Commitment Amounts.
2.2. Commitment Reduction. Honeywell shall have the right to reduce
each Bank's Commitment Amount (which may include a reduction to zero) at any
time or from time to time, but not to an amount less than the aggregate
principal balance of such Bank's Loans outstanding at the effective date of the
reduction. Any such reduction shall be made on at least three (3) Banking Days
irrevocable written notice to the relevant Bank and shall be in the amount of
One Million Dollars ($1,000,000) or a multiple thereof or the amount, if less,
by which such Bank's Commitment Amount exceeds the aggregate principal balance
of its Loans outstanding at the effective date of the reduction.
2.3. Facility Fee. Honeywell shall pay to each Bank a Facility Fee at
the rate of 0.04% per annum (calculated on the basis of actual days elapsed and
a year of three hundred sixty (360) days), from the Commencement Date until the
last day of the Term, on the daily average Commitment Amount of such Bank.
Such Facility Fee shall be payable quarterly in arrears on the tenth day of
April, July and October in 1997, in each case for the quarterly period ended on
the last day of the preceding month, and on the last day of the Term.
2
<PAGE> 4
2.4. Applicable Interest Rate. The Applicable Interest Rate for each
Loan shall not exceed:
(1) in the case of a Base Rate Loan, a floating rate equal to the
Base Rate,
(2) in the case of a Eurocurrency Loan, a fixed rate per annum
applicable throughout the term of the Loan, equal to the Interbank Offered
Rate plus 0.21%, and
(3) in the case of any other type of Loan, such rate as may be
mutually agreed upon by the relevant Bank and Honeywell.
SECTION 3. OTHER TERMS AND CONDITIONS
3.1. Incorporation of Provisions of Existing Agreements. To the extent
not inconsistent with Sections 1 and 2 hereof, the provisions of Sections 3 to
7, inclusive, 9, 10 and 13 of each Bank's Existing Agreement shall apply with
respect to it, its Commitment and its Loans and for all other purposes of this
Agreement (defined terms used in such provisions having, for purposes hereof,
the meanings specified herein), and such provisions are hereby incorporated
herein by reference (mutatis mutandis) as if set forth in full herein and
regardless of any termination of the Existing Agreements; provided that:
(a) Honeywell shall be the only Borrower hereunder;
(b) all Loans hereunder shall be denominated in Dollars;
(c) the date "December 31, 1994" in Section 6(c) of each Existing
Agreement shall be deemed to be "December 31, 1995" for purposes hereof;
(d) notwithstanding the provisions of Section 7.6 of each Existing
Agreement, the proceeds of Loans hereunder may be used to purchase shares
of common stock of Measurex Corporation;
(e) Honeywell Finance Inc. shall not be a party to this Agreement and
the specific references to it in the Existing Agreement, including (without
limitation) its representations, warranties and covenants, shall be of no
force or effect for purposes of this Agreement;
(f) the Term of this Agreement shall not be subject to automatic
extension; and
(g) the Note delivered to each Bank pursuant to this Agreement shall
be substantially in the form of Exhibit A to its Existing Agreement, except
that such Note shall refer to this Agreement instead of such Existing
Agreement.
3
<PAGE> 5
SECTION 4. MISCELLANEOUS
4.1 No Reliance on Margin Stock. Each Bank represents to the other
Bank that it in good faith is not relying upon any "margin stock" (as defined
in Regulation U) as collateral in the extension or maintenance of the credit
provided for in this Agreement.
4.2. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have cause this Agreement to be executed by
the proper corporate officers thereunto duly authorized as of the day and year
first above written.
HONEYWELL INC.
By: /s/ Paul N. Saleh
--------------------------
By: /s/ Alex Danzberger
--------------------------
THE CHASE MANHATTAN BANK
By: /s/ Carol A. Ulmer
--------------------------
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ Paticia Merritt
--------------------------
THE CHASE MANHATTAN BANK,
as Administrative Agent
By: /s/ Carol A. Ulmer
--------------------------
4
<PAGE> 6
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Documentation Agent
By: /s/ Patricia Merritt
--------------------------
5
<PAGE> 7
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT (this "Agreement") dated as of October 1, 1995
among HONEYWELL INC., a Delaware corporation ("Honeywell"), HONEYWELL FINANCE
INC., a Delaware corporation ("HFI"), and THE CHASE MANHATTAN BANK, N.A.(the
"Bank").
WHEREAS, Honeywell, HFI and the Bank are parties to that certain Revolving
Credit Agreement dated as of August 23, 1983 and that certain Revolving Credit
Agreement dated as of April 6, 1994(collectively, the "Credit Agreement")
which provides for the Bank to make loans to Honeywell or any subsidiary
thereof in accordance with the terms set forth therein; and
WHEREAS, Honeywell and the Bank desire to terminate the Credit Agreement
and, together with HFI, enter into a new revolving credit agreement in
substitution thereof;
NOW, THEREFORE, in consideration of the terms and conditions set forth
herein, the parties hereto, intending to be legally bound, agree as follows:
SECTION 1. DEFINITIONS
The following definitions shall apply to this Agreement and all accounting
terms not specifically defined herein shall be construed in accordance with
U.S. generally accepted accounting principles.
"Applicable Interest Rate" means, with respect to any Loan, the rate
of interest determined pursuant to Subsection 3.5 .
"Banking Day" means (a) in the case of Facility Fees or a Base Rate
Loan, a day on which the Bank is open for business at its principal
office in New York City, or (b) in the case of a Eurocurrency Loan or any
other type of Loan, a day on which the Bank's principal office in New
York City, as well as banks in the city where the Eurocurrency Loan or
other type of Loan is being made or repaid and, in the case of
advancement of a Eurocurrency Loan, banks in London, are open for
business.
"Base Rate" means, for any day, the higher of (a) the Federal Funds
Rate for such day, plus 0.5% or (b) the Prime Rate for such day.
<PAGE> 8
"Base Rate Loan" means any Loan when and to the extent the interest
rate therefore is determined in relation to the Base Rate.
"Borrower", at any time, means the party then requesting a Loan, or
with respect to which a Loan may be outstanding, which may be any of
Honeywell, HFI or any other corporation which is then a Subsidiary of
Honeywell.
"Commencement Date" means October 1, 1995.
"Commitment" means the commitment of the Bank to make Loans to any
Borrower(s) during the Term.
"Commitment Amount" shall have the meaning set forth in Subsection
2.1.
"Dollar(s)" and "$" means lawful currency of the United States of
America owned within the United States of America; and "Eurodollars"
means such currency owned outside the United States of America.
"Eurocurrency" means any currency which is freely transferable and
convertible into Dollars, provided that Eurocurrency shall include
Eurodollars, but shall not include Dollars. The equivalent in Dollars of
any Eurocurrency Loan (or portion thereof remaining outstanding) shall be
calculated on the basis of the rate at which the Eurocurrency in which
such Loan is stated could be converted into Dollars at the Bank's spot
buying rate for Dollars as announced by the Bank's principal office in
New York City at 11:00 a.m. New York City time on the date two (2)
Banking Days prior to the date of advancement or renewal of such Loan.
"Eurocurrency Loan" means a Loan of a Eurocurrency requested by a
Borrower.
"Event of Default" means the occurrence of any of the events
described in Section 9.
"Expiration Date" means September 30, 2000.
"Facility Fee" means the amount to be calculated pursuant to
Subsection 2.3 and paid by Honeywell and HFI to the Bank, in
consideration for the Commitment.
"Federal Funds Rate" means the interest rate charged on loans by
banks that have excess reserve funds (above the
2
<PAGE> 9
level required by the Federal Reserve Board) to those banks with
deficient reserves.
"In-Country Loan" shall have the meaning assigned to it in
Subsection 3.3 hereof.
"In-Country Loan Notice" shall have the meaning assigned to it in
Subsection 3.3 hereof.
"Interbank Offered Rate" means, for any Eurocurrency Loan, the
annual rate of interest quoted by the Bank (or by the Bank's principal
branch or subsidiary in the place of advancement of such Loan) at 11:00
a.m. London time (or as soon thereafter as practicable) on the date two
Banking Days prior to the date of advancement of such Loan for an
offering in the currency of the Loan for deposits with major banks in the
London or other relevant interbank market, having a maturity and amount
comparable to the maturity and amount of such Loan; provided, that if
such Loan is a "Eurocurrency liability", as defined in Regulation D of
the Board of Governors of the Federal Reserve System, as amended or
supplemented from time to time, such rate of interest shall be divided by
a percentage equal to one hundred percent (100%) minus the Reserve
Percentage for such Loan. As used in this definition, "Reserve
Percentage" means, for any Eurocurrency Loan, the average maximum rate at
which reserves (including any marginal, supplemental or emergency
reserves) are required to be maintained during the period during which
such Eurocurrency Loan is outstanding under said Regulation D by member
banks of the Federal Reserve System in New York City with deposits
exceeding One Billion Dollars against "Eurocurrency liabilities".
"Lending Office" means, for each type of Loan, the lending office of
the Bank (or of an affiliate of the Bank) designated as such for such
type of Loan on its signature page hereof or such other office of the
Bank (or of an affiliate of the Bank) as the Bank may from time to time
specify to Honeywell as the office by which its Loans of such type are to
be made and maintained.
"Level I", "Level II", "Level III", and "Level IV" respectively,
shall have the meanings assigned to such terms as set forth in the
definition of Status Level.
"Loan" means any advance of money by the Bank to any Borrower
pursuant to this Agreement and includes Eurocurrency Loans, Base Rate
Loans, In-Country Loans and any other type of loan agreed upon by the
Bank and a Borrower.
3
<PAGE> 10
"Prime Rate" means the rate of interest publicly announced from time
to time by the Bank's principal office in New York City as its "prime
commercial lending rate." It is a rate set by the Bank based upon
various factors, including the Bank's costs and desired return, general
economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such
announced rate. Any change in the Prime Rate announced by the Bank shall
take effect at the opening of business on the day specified in the public
announcement of such change.
"Restricted Asset" means any real property (excluding equipment and
fixtures installed thereon or affixed thereto) owned by Honeywell, HFI or
any of their consolidated domestic Subsidiaries, and any shares of
capital stock or indebtedness of any consolidated domestic Subsidiary
having assets with a book value in excess of Ten Million Dollars
($10,000,000.00).
"Status Level" means the classification determined based on the
higher rating of Honeywell's unsubordinated unsecured long-term public
debt obligations by Standard & Poor's Ratings Services, a division of the
McGraw Hill Companies, Inc. ("S&P") or Moody's Investors Service, Inc.
("Moody's"), and Honeywell's Status Level shall be classified as:
"Level I" if such debt is rated A+ or higher by S&P or A1 or
higher by Moody's;
"Level II" if such debt is rated A or higher by S&P or A3 or
higher by Moody's and Level I does not apply;
"Level III" if such debt is rated BBB or higher by S&P or
Baa2 or higher by Moody's and Levels I and II do not apply; or
"Level IV" if such debt is rated BBB- or below by S&P or Baa3
or below by Moody's;
with Level I being considered the highest Status Level. If the
respective ratings by S&P and Moody's would, if applied individually,
result in different Status Levels, then the higher rating of the two
agencies shall be applied to determine the applicable Status Level for
the purpose of determining interest rates or Facility Fees.
4
<PAGE> 11
"Subsidiary" means any corporation of which at least a majority of
the securities having ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening
of a contingency) are at the time owned by Honeywell and/or one or more
Subsidiaries.
"Term" means the period of time commencing on the Commencement Date
and terminating on the earliest of: (i) the Expiration Date, subject to
automatic extension as provided for below; (ii) any date on which the
Commitment Amount shall have been reduced to zero as a result of written
notice delivered by Honeywell to the Bank pursuant to Subsection 2.2
hereof; or (iii) any date on which the Commitment is terminated as a
result of an Event of Default pursuant to Section 9 hereof. The
foregoing not to the contrary, on each anniversary of the Commencement
Date, the Expiration Date shall be automatically extended for one (1)
year, unless the Bank shall have given Honeywell and HFI written notice,
at least ten (10) Banking Days prior to such anniversary date, that it
does not wish to extend the Expiration Date for an additional year.
SECTION 2. COMMITMENT; FEES
2.1 Commitment to Lend. The Bank agrees, on the terms hereinafter set
forth, to make Loans to any Borrower during the Term in an aggregate principal
amount up to, but not exceeding, at any one time outstanding to all Borrowers,
One Hundred Million Dollars ($ 100,000,000) (the "Commitment Amount"),
including each Eurocurrency Loan amount and In-Country Loan amount at its
Dollar equivalent.
2.2 Commitment Reduction. Honeywell shall have the right to reduce the
Commitment Amount (which may include a reduction to zero) at any time or from
time to time, but not to an amount less than the aggregate principal balance of
the Loans outstanding at the effective date of the reduction. Subject to
Subsection 3.1 hereof, any such reduction shall be made on at least thirty (30)
Banking Days' irrevocable written notice and shall be in the amount of One
Million Dollars ($1,000,000) or a multiple thereof or the amount, if less, by
which the Commitment Amount exceeds the aggregate principal balance of the
Loans outstanding at the effective date of the reduction.
2.3 Facility Fee. Honeywell and HFI shall be jointly and severally
obligated to pay to the Bank in Dollars a Facility Fee based on Honeywell's
Status Level, at an annual rate (calculated
5
<PAGE> 12
on the basis of actual days elapsed and a year of three hundred sixty (360)
days) as follows:
(a) .08% if Honeywell's Status Level is Level I;
(b) .09% if Honeywell's Status Level is Level II;
(c) .125% if Honeywell's Status Level is Level III; or
(d) .1875% if Honeywell's Status Level is Level IV;
from the Commencement Date until the Expiration Date, on the daily average
Commitment Amount. Such Facility Fee shall be payable quarterly in arrears,
commencing on January 10, 1996 (subject to pro-rata adjustment for that portion
of the quarter with respect to which the Facility Fee accrued), and on the
tenth day of each January, April, July and October thereafter, for the
quarterly period ended on the last day of the preceding month, and on the
Expiration Date for the period ending on the Expiration Date. The Facility Fee
shall be subject to adjustment upward or downward based on changes, if any, in
Honeywell's Status Level during the term of this Agreement. Any adjustment
shall be effective as of the date that is the earlier of (x) the date on which
the Bank receives written notice from Honeywell that its Status Level has
changed or (y) the date on which S&P or Moody's publicly announces a change in
its rating of Honeywell's unsubordinated unsecured long-term public debt that
results in a change to the Status Level, and shall be computed on a pro-rata
basis with respect to the quarter or other period in which such change occurs.
SECTION 3. LOANS
3.1 Amount; Type; Conversion. Each Loan shall be in the minimum amount
of One Million Dollars ($1,000,000) or the equivalent thereof. A Borrower
shall be entitled to borrow hereunder in the form of a Base Rate Loan,
Eurocurrency Loan, In-Country Loan or any other type of Loan agreed upon by the
Bank and such Borrower; provided, however, that the Bank shall not be
obligated to make a Eurocurrency Loan if the Bank shall, in good faith, make a
reasonable determination in its sole discretion that:
(a) the Eurocurrency requested is not then available to the Bank for
the maturity requested;
(b) it is unlawful for the Bank to make such Eurocurrency Loan; or
(c) under laws and regulations then in effect either (i) the funding
of such Loan would cause the Bank to exceed an applicable limitation on
the amount of a category of
6
<PAGE> 13
liabilities which includes each form of liability by which the Bank could
reasonably fund such Eurocurrency Loan or (ii) the advancement of such
Eurocurrency Loan would cause the Bank to exceed an applicable limitation
on a category of assets which would include such Eurocurrency Loan;
provided further that the Bank shall be obligated to make an In-Country Loan
only in accordance with Subsection 3.3 hereof.
Within the limits of the Commitment Amount, Borrowers may, subject to the terms
and conditions hereof, borrow, repay and reborrow Loans from the Bank under
this Section 3 at any time or from time to time during the Term. At its
maturity date, any Loan may, in whole or in part, be renewed or converted into
a different form of Loan, without any transfer of principal funds as to the
amount so renewed or converted, but otherwise subject to the same requirements
and limitations as those which apply to an original Loan. In the event of
conversion of a Loan into a new Loan in a different currency (for which purpose
Dollars and Eurodollars shall be considered the same currency), the rate of
exchange shall be the Bank's spot buying rate for the currency of the new Loan
with the currency of the old Loan as announced by the Bank's principal office
in New York City at 11:00 a.m. New York City time at the date of maturity of
the old Loan, unless a different rate of exchange is agreed upon by the Bank
and the relevant Borrower.
7
<PAGE> 14
3.2 Notice of Borrowing of Loans Other Than In-Country Loans. Each
Eurocurrency Loan shall be advanced upon not less than three (3) Banking Days'
notice, unless the Bank agrees to a shorter notice; and each Base Rate Loan,
upon notice not later than the same Banking Day. The notice period with
respect to any other type of Loan shall be as mutually agreed upon between
Honeywell, HFI and the Bank. All notices shall be given by Honeywell except in
the case of Loans to HFI, as to which HFI shall give notice. Each notice shall
specify the type, principal amount, date, currency and maturity of such Loan.
Notices under this Subsection 3.2 shall be deemed effective on a given day if
received by the Bank by 11:00 a.m. New York time on that day and shall be
irrevocable.
3.3 In-Country Loans
(a) If a Borrower requests that the Bank make a Loan denominated in
a currency other than Dollars to such Borrower in the jurisdiction which
is the original issuer of such currency (which jurisdiction must be
approved by the Bank in advance ) (an "In-Country Loan"), the Bank agrees
that it shall use its best efforts to make such Loan available to such
Borrower; provided that the Bank shall have no obligation to make an
In-Country Loan if it shall have determined in its reasonable judgment
that it would be illegal or disadvantageous to the Bank or that such Loan
may not be made on commercially reasonable terms.
(b) A Borrower shall give the Bank at least three (3) Banking Days'
notice (an "In-Country Loan Notice") of an In-Country Loan prior to the
date it desires such Loan, unless the Bank agrees to a shorter notice,
setting forth the desired date, amount, currency and term of such Loan.
As soon as practicable after receipt of an In-Country Loan Notice, the
Bank shall notify the relevant Borrower whether it shall make the
requested In-Country Loan and, if so, the terms on which such Loan may be
made, including the date, amount and term of, and Applicable Interest
Rate and the designated Lending Office for, such Loan. If the relevant
Borrower, in its discretion, shall accept the terms offered by the Bank
for the requested In-Country Loan, it shall give the Bank irrevocable
notice thereof, and thereafter, the Bank shall, through the designated
Lending Office, make such In-Country Loan on the date notified to such
Borrower by the Bank.
3.4 Maturity. The principal of each Loan shall mature as follows:
8
<PAGE> 15
(a) For a Base Rate Loan, on such date as may be selected by the
relevant Borrower, but not later than the Expiration Date.
(b) For a Eurocurrency Loan, one, two, three or six months after the
date of advancement of such Loan, as the relevant Borrower may select, or
on such other date as may be agreed upon by the Borrower and the Bank,
but not later than the Expiration Date.
(c) For an In-Country Loan, on such date as may be agreed upon by
the relevant Borrower and the Bank pursuant to Subsection 3.3, but not
later than the Expiration Date.
(d) For any other type of Loan, on such date as may be agreed upon
by the relevant Borrower and the Bank, but not later than the Expiration
Date.
3.5 Interest.
(a) Applicable Interest Rate. The Applicable Interest Rate for
each type of Loan shall be:
(1) in the case of a Base Rate Loan, a floating rate equal to
the Base Rate;
(2) in the case of a Eurocurrency Loan, a fixed rate
applicable throughout the term of such Loan, equal to the Interbank
Offered Rate for such Loan, plus the following marginal rate based
on the classification of Honeywell's Status Level:
(i) 0.1450% if Status Level I;
(ii) 0.1600% if Status Level II;
(iii) 0.2500% if Status Level III; or
(iv) 0.3625% if Status Level IV;
(3) in the case of an In-Country Loan, such rate as may be
mutually agreed upon by the Bank and the relevant Borrower pursuant
to Subsection 3.3 hereof; and
(4) in the case of any other type of Loan, such rate as may
be mutually agreed upon by the Bank and the relevant Borrower.
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(b) Calculated Payment. Each Loan shall bear interest at the
Applicable Interest Rate (calculated on the basis of actual days elapsed
and a year of 365 or 366 days, as appropriate, in the case of a Base Rate
Loan for such time as such Loan bears interest with reference to the
Prime Rate or a Eurocurrency Loan denominated in Pounds Sterling, and a
year of 360 days in the case of any other Loan) on the unpaid principal
amount thereof until the maturity date of such Loan, and thereafter until
such principal shall be paid in full, at the Applicable Interest Rate
plus 2%. Interest shall be payable (i) on Base Rate Loans, quarterly in
arrears on the tenth day of each January, April, July and October for the
quarterly period ending on the last day of the preceding month; and (ii)
on any Eurocurrency Loan, In-Country Loan or any other type of Loan with
a maturity of more than three months, in arrears on the last day of each
three-month period of such Eurocurrency Loan, In-Country Loan or other
type of Loan, as the case may be and (iii) on each Loan, at maturity.
3.6 Availability of Funds. On the date of advancement of each Loan, the
Bank shall make the proceeds of such Loan available to the relevant Borrower at
the applicable Lending Office designated by the Bank, and shall thereupon remit
the same to an account at a bank specified in writing by such Borrower in
immediately available funds.
3.7 Payments. All payments of principal of and interest on Loans shall
be made to the Bank at such bank or banking office as the Bank shall reasonably
specify in the currency of the Loan in immediately available funds. If any
payment under this Agreement falls due on a day which is not a Banking Day in
the place at which such payment is required to be made, the due date thereof
shall be extended to the next succeeding Banking Day in such place and interest
shall continue to accrue during any such extension; provided, with respect to
any Eurocurrency Loan, that if the next succeeding Banking Day shall fall in
the next calendar month, the due date thereof shall be the next preceding
Banking Day.
3.8 Prepayment. Each Borrower shall have the right at any time and from
time to time to prepay any Loan in whole or in part, provided, however, that
(i) in the case of a prepayment of any Eurocurrency Loan or any In-Country
Loan, but not in the case of a prepayment of a Base Rate Loan, such Borrower
shall give the Bank at least three (3) Banking Days' irrevocable notice of its
intention to prepay, which notice shall state the principal amount of the
prepayment, (ii) accrued interest to the date of such prepayment on the amount
prepaid shall be paid on the date of the prepayment and (iii) in the case of a
prepayment of any
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Eurocurrency Loan or any In-Country Loan, including (without limitation)
prepayment resulting pursuant to Section 4 hereof, but not in the case of a
prepayment of a Base Rate Loan, or if Borrower fails to borrow such Loan after
giving irrevocable notice thereof, as required pursuant to Subsections 3.2 and
3.3(b) hereof, such Borrower shall pay to the Bank upon request such amount as
will compensate the Bank for the amount by which the rate of interest on such
Loan during the remainder of its term to maturity exceeds the rate of return to
the Bank on relending or reinvesting until the maturity of such Loan.
3.9 Promissory Note and Loan Account. On or before the date of
advancement of the first Loan to any Borrower, such Borrower shall provide to
the Bank a promissory note in the form of Exhibit A executed on behalf of such
Borrower by two authorized persons and, in the case of a Loan made to a
Borrower other than Honeywell or HFI, with the "Affirmation of Guaranty"
executed on behalf of Honeywell by two authorized persons. All payments on
account of principal of any Loan shall be appropriately noted by the Bank on
the promissory note evidencing such Loan before transfer of any such promissory
note. The Bank may open and maintain a loan account in the name of each
Borrower and each Loan to such Borrower shall be debited, and all payments on
account of principal of each Loan to such Borrower shall be credited, to such
loan account by appropriate entries. In the absence of error, the balance from
time to time debited in such loan account shall evidence the outstanding
principal amount of such Loans and payments of principal and interest shall be
made in reliance thereupon.
SECTION 4. ILLEGALITY, CAPITAL ADEQUACY, INCREASED COSTS AND TAXES
4.1 Illegality. If, on or after the date of this Agreement, the adoption
of any applicable law, rule or regulation, or any change therein, or any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank (or its applicable lending
office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Bank (or its applicable lending office) to make, maintain
or fund its Eurocurrency Loans or any In-Country Loan to any Borrower, the Bank
shall forthwith give notice thereof to Honeywell and HFI, whereupon until the
Bank notifies Honeywell and HFI that the circumstances giving rise to such
suspension no longer exist, the obligation of the Bank to make Eurocurrency
Loans or any In-Country Loan to any Borrower
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shall be suspended. Before giving any notice to Honeywell and HFI pursuant to
this Subsection, the Bank shall designate a different lending office if such
designation will avoid the need for giving such notice and will not, in the
judgment of the Bank, be otherwise disadvantageous to the Bank. If such notice
is given, each Eurocurrency Loan or In-Country Loan then outstanding shall be
converted to a Base Rate Loan either (a) on the last day of the then current
Interest Period applicable to such Eurocurrency Loan or In-Country Loan if the
Bank may lawfully continue to maintain and fund such Loan to such day or (b)
immediately if such Bank shall determine that it may not lawfully continue to
maintain and fund such Loan to such day.
4.2 Capital Adequacy. If as a result of the adoption, after the date
hereof, of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, the rate of return on
capital of the Bank as a consequence of the Bank's obligations hereunder is, in
the Bank's reasonable opinion, reduced to a level below that which the Bank
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by the Bank to be material, then from time to time, within fifteen (15)
days after demand by the Bank, Honeywell shall pay to the Bank such additional
amount or amounts as will compensate the Bank for such reduction.
Notwithstanding the foregoing, the Facility Fee applicable to each Status Level
shall not be increased more than one hundred percent (100%) during the Term.
The Bank will promptly notify Honeywell of any event of which it has
knowledge, occurring after the date hereof, which will entitle the Bank to
compensation pursuant to this Subsection, and will designate a different
lending office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the judgment of the Bank, be
otherwise disadvantageous to the Bank. A certificate of the Bank claiming
compensation under this Subsection and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Bank may use any reasonable
averaging and attribution methods.
Upon receipt of the Bank's notice of demand hereunder, Honeywell shall
have the option of terminating this Agreement effective as of the date set
forth in Honeywell's written notice
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of termination to the Bank, in which case, any Loans which may be outstanding
shall become immediately due and payable.
Notwithstanding anything in the foregoing to the contrary, Honeywell shall
not be required to make any payment pursuant to this Subsection with respect to
(i) any demands arising from a period of time that is more than six (6) months
prior to the date of receipt by Honeywell of the Bank's demand or (ii) as a
result of the compliance by the Bank with any provisions of any Basle Accord
Regulation as in effect or interpreted on the date hereof, including, without
limitation, regulations effective as of a future date that are in existence on
the date hereof.
4.3 Increased Costs. The Borrower of any Loan other than a Base Rate
Loan shall indemnify the Bank against, and reimburse the Bank on demand for,
any net increase before tax in cost to the Bank (except as reflected in the
Reserve Percentage), resulting from imposition of a reserve requirement, or
increase in a reserve requirement, whether as a result of enactment or coming
into effect of any law or regulation or change in the generally accepted
interpretation thereof, imposed by a competent authority with respect to such
Loan after the date of this Agreement; provided that the relevant Borrower
shall not be liable for any cost attributable to a date or period of time more
than one hundred eighty (180) Banking Days prior to the date on which such
Borrower (and, in the case of a Borrower other than Honeywell or HFI,
Honeywell) was notified by the Bank of such imposition or increase. For
purposes of this paragraph, the term "reserve requirement" shall include,
without limitation, any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, the
Bank.
4.4 Increased Taxes. Each Borrower shall pay or reimburse the Bank on
demand for any tax or similar charge (other than income, profit or excess
profit taxes or similar charges imposed upon or measured by the income or
operation of the Bank) imposed on the making of any Loan hereunder, the
documentation thereof or any amount paid or payable by such Borrower hereunder
(hereinafter called "Taxes"), provided that Taxes payable by a Borrower with
respect to any such amounts paid or payable by the Bank shall be paid or
payable by such Borrower only to the extent that such Taxes are imposed with
respect to a period of time not completed more than three (3) years before such
Borrower was first notified by the Bank of the incidence of such Taxes and to
the extent that such Taxes were not in effect (or were not reasonably known by
the Bank to be in effect) at the date of this Agreement.
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4.5 Withholding Taxes. All payments in respect of principal of and
interest on the Loans and all other amounts payable hereunder and under the
guaranty contained in Section 8 shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, fees, assessments, compulsory
loans, withholdings or other charges of whatever nature, now or hereafter
imposed by any country or by any governmental agency thereof or therein, and
all interest, penalties or similar liabilities with respect thereto (herein
called "Applicable Taxes"). If any Applicable Taxes are levied or imposed on
any such payment, the relevant Borrower will pay such Applicable Taxes when
due, and will pay to the Bank such additional amounts as may be necessary to
ensure that the Bank actually receives a net amount, after deduction or
withholding for or in respect of Applicable Taxes, equal to the full amount of
such payment which it would have received had such payment not been subject to
Applicable Taxes. The relevant Borrower will furnish to the Bank, within
forty-five (45) days after the date any such payment is due pursuant to
applicable law, certified copies of tax receipts evidencing the payment of all
Applicable Taxes so levied or imposed. The relevant Borrower will indemnify
the Bank against, and reimburse the Bank on demand for, any Applicable Taxes
and any loss, liability, claim or expense, including interest, penalties and
legal fees, which the Bank may incur at any time arising out of or in
connection with the failure of such Borrower to make any payments in respect of
Applicable Taxes when due.
4.6 Minimizing Taxes. The Bank will use reasonable efforts to avoid or
minimize such taxes and Applicable Taxes, or to obtain refunds and/or credits
with respect thereto and reimburse the relevant Borrower in the amount of such
refunds and/or credits, unless such efforts would, in the Bank's sole
discretion, be disadvantageous to the Bank.
4.7 Bank's Determination. Solely for purposes of calculating any
additional amounts payable by a Borrower pursuant to Subsections 4.3 and 4.4,
each Loan with respect to which such additional amount is payable shall be
deemed to have been funded by a deposit of the type described in the definition
of "Interbank Offered Rate" having an amount and maturity comparable to the
amount and maturity of such Loan. Determinations by the Bank for purposes of
Subsections 4.3, 4.4 and 4.6 shall be conclusive if such determinations are
made reasonably and in good faith.
4.8 Survival. The obligations of the Borrowers under this Section 4
shall survive repayment of the Loans.
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SECTION 5. CONDITIONS OF LENDING
The obligation of the Bank to make any Loan hereunder is subject to the
following conditions precedent:
(a) Each of Honeywell and HFI shall have delivered to the Bank, a
certificate of the Secretary or Assistant Secretary thereof,
certifying(i) the resolutions of the Boards of Directors of Honeywell and
HFI authorizing the execution, delivery and performance of this
Agreement, (ii)the incumbency and specimen signatures of the authorized
officers of Honeywell and HFI who have signed this Agreement, and,
including a certification of the Bank's right to continue to rely thereon
until it receives notice to the contrary, and the Bank shall not have
received any such notice;
(b) the Bank shall have received notice pursuant to Subsection 3.2
or 3.3 of the request for such Loan from a person authorized to give such
notice, as has been evidenced pursuant to Subsection 10.2;
(c) the Bank shall have received an opinion of the General Counsel
or Deputy General Counsel of Honeywell or if the Borrower is HFI, then
from the General Counsel or Deputy General Counsel of HFI, dated as of
the date of this Agreement as to the matters referred to in clauses (a),
(b), (d) and (g) of Section 6;
(d) the representations and warranties contained in clauses (a),
(b), (f) and (g) of Section 6 shall be true and correct as of the date of
advancement of such Loan with the same force and effect as if made on and
as of such date;
(e) no Event of Default, or event which, with notice and/or lapse of
time would become an Event of Default, shall have occurred and be
continuing or would exist immediately after the advancement of such Loan;
(f) The Bank shall have received the promissory note of the relevant
Borrower as required pursuant to Subsection 3.9 hereof, and
(g) if the Borrower of such Loan is a Subsidiary (other than HFI) of
Honeywell, such Borrower shall have executed and delivered to the Bank an
accession agreement in the form of Exhibit B hereto (the "Accession
Agreement") agreeing to be bound by the terms and conditions of this
Agreement as if it were an original signatory hereto, and
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<PAGE> 22
the Bank shall have received an opinion of counsel (who may be employed
counsel) for Honeywell or such Borrower (who may be an employee of
Honeywell or such Borrower) to the effect that such Borrower is (i) duly
incorporated and organized, and validly existing under the laws of the
jurisdiction of its incorporation, with full corporate power and legal
right to borrow the Loan and perform its obligations (as set forth herein
and in the promissory note evidencing such loan) in connection with such
Loan, and (ii) duly authorized to execute and deliver the Accession
Agreement and the promissory note evidencing such Loan.
Acceptance of any Loan by a Borrower shall constitute a representation and
warranty by such Borrower (and in the case of a Borrower other than Honeywell
or HFI, by Honeywell) that such conditions precedent have been met.
SECTION 6. REPRESENTATIONS AND WARRANTIES
Each of Honeywell and HFI hereby represents and warrants that:
(a) it is duly incorporated and organized and validly existing under
the laws of Delaware, with full corporate power and legal right to make
this Agreement and to incur and perform its obligations hereunder;
(b) its execution and delivery of this Agreement and any promissory
note(s) delivered pursuant hereto, performance of this Agreement, and in
the case of Honeywell, the execution, delivery and performance by
Honeywell of the guaranty contained in Section 8, is within its corporate
powers, has been duly authorized by all necessary corporate action and
will not violate any provisions of law or of its charter or by-laws or
result in the breach of, or constitute a default of or require any
consent under, any indenture or other agreement or instrument to which it
is a party or by which it or its respective property may be bound. This
Agreement, any promissory note(s) delivered pursuant hereto, and in the
case of Honeywell, the guaranty of Honeywell contained in Section 8
constitutes the legal, valid and binding obligation of such party,
enforceable against it in accordance with its terms;
(c) the audited consolidated financial statements of such company,
together with its consolidated Subsidiaries, for the fiscal year ended
December 31, 1994, certified by Deloitte & Touche, copies of which have
heretofore been furnished to the Bank, are complete and correct and
fairly
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present its respective consolidated financial condition as at December
31, 1994 and the consolidated results of its operations for the year then
ended. Since December 31, 1994, there has been no material adverse
change in its respective consolidated business, condition or prospects,
financial or otherwise;
(d) there are no suits, investigations or proceedings pending, or to
its knowledge threatened, against or affecting it or its Subsidiaries
which are likely to have a material adverse effect on its respective
consolidated financial condition or business;
(e) it has, and each of its Subsidiaries has, fulfilled its
obligations, if any, under the minimum funding standards of the Employee
Retirement Income Security Act of 1974, as amended from time to time,
including any rules and regulations promulgated thereunder ("ERISA"),
with respect to each employee benefit plan maintained for the benefit of
its employees and covered by Title IV of ERISA or to which Section 412 of
the Internal Revenue Code of 1954, as amended, applies; and neither it,
nor any of its Subsidiaries, has incurred any liability which has not
been satisfied to the Pension Benefit Guaranty Corporation established
under ERISA in connection with any such employee benefit plan;
(f) it is not, and no Borrower to whom a Loan is advanced hereunder
will at the time of such advancement be, engaged principally (or as one
of its important activities) in the business of purchasing or carrying
(or extending credit for the purpose of purchasing or carrying) margin
stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System); and
(g) no consent or approval from, or notice to or filing with, any
federal, state or other regulatory authority is required in connection
with its making or performance of this Agreement nor will such making or
performance violate any law or regulation applicable to it or, if any
such notice or filing is required, it has been duly completed.
SECTION 7. COVENANTS
7.1 Information.
(a) By Honeywell. So long as this Agreement is in effect and until
all of the Borrowers' obligations to the
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Bank hereunder or in connection with any Loan are paid in full, Honeywell
will furnish to the Bank:
(1) within ten (10) days after mailing to shareholders, each
annual and quarterly report of Honeywell to its shareholders;
(2) within ten (10) days after filing with the Securities and
Exchange Commission, each periodic report on Form 8-K (excluding
any portion thereof as to which confidential treatment is claimed)
and Proxy Statement of Honeywell;
(3) if not otherwise furnished pursuant to clause (1) or (2)
above, within one hundred (100) days after the end of each fiscal
year of Honeywell, a consolidated statement of financial position
of Honeywell and its consolidated Subsidiaries as of the end of
such fiscal year and the related consolidated income statement and
statement of cash flows for the fiscal year then ended, and within
fifty-five (55) days after the end of each of the first three (3)
quarters of each fiscal year of Honeywell, a consolidated statement
of financial position of Honeywell and its consolidated
Subsidiaries as of the end of such quarter and the related
consolidated income statement and statement of cash flows for such
quarter, all prepared in accordance with generally accepted
accounting principles consistently applied, except as noted
therein, and certified in the case of such annual financial
statements by its independent public accountants;
(4) within one hundred (100) days after the end of each
fiscal year of Honeywell, a certificate signed by its Chief
Executive Officer, President, Chief Financial Officer or any Vice
President stating that such officer has no knowledge, except as
specifically stated, of the existence of any Event of Default or
event which, with notice and/or lapse of time, would become an
Event of Default;
(5) from time to time such other financial information as to
the condition or operations of Honeywell and its Subsidiaries
(except plans, forecasts and privileged materials that have not
been made available by Honeywell to its creditors) as the Bank may
reasonably request; and
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(6) as soon as practicable and in any event within five (5)
days after any executive officer of Honeywell obtains knowledge of
any Event of Default or any event which with the giving of notice
and/or the passage of time may give rise to any Event of Default,
if such event is then continuing, a certificate of the Chief
Financial Officer, the Treasurer or the chief accounting officer of
Honeywell setting forth the details thereof and the action which
the "relevant" Borrower or "Honeywell" is taking or proposes to
take with respect thereto.
(b) By HFI. So long as this Agreement is in effect and HFI remains
a party hereto, and until all of HFI's obligations to the Bank hereunder
or in connection with any Loan are paid in full, HFI will furnish to the
Bank:
(1) within one hundred (100) days after the end of each fiscal
year of HFI, a consolidated statement of financial position of HFI
and its consolidated Subsidiaries as of the end of such fiscal year
and the related consolidated income statement and statement of cash
flows for the fiscal year then ended, and within fifty-five (55)
days after the end of each of the first three (3) quarters of each
fiscal year of HFI, a consolidated statement of financial position
of HFI and its consolidated Subsidiaries as of the end of such
quarter and the related consolidated income statement and statement
of cash flows for such quarter, all prepared in accordance with
generally accepted accounting principles consistently applied,
except as noted therein, and certified in the case of such annual
financial statements by its independent public accountants;
(2) within one hundred (100) days after the end of each fiscal
year of HFI, a certificate signed by its Chief Executive Officer,
President, Chief Financial Officer or any Vice President stating
that such officer has no knowledge, except as specifically stated,
of the existence of any Event of Default or event which, with
notice and/or lapse of time, would become an Event of Default; and
(3) from time to time such other financial information as to
the condition or operations of HFI and its Subsidiaries (except
plans, forecasts and privileged materials that have not been made
available by HFI to its creditors) as the Bank may reasonably
request.
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7.2 Negative Pledge. During the Term, and thereafter until all of the
Borrowers' obligations to the Bank hereunder or in connection with any Loan are
paid in full, neither Honeywell nor HFI nor any of their consolidated domestic
Subsidiaries will pledge or create any mortgage upon, any Restricted Asset now
or hereafter owned by such entity, for the purpose of securing any creditors
other than governmental entities, unless provision is made to secure equally
and ratably, (i) all Loans then outstanding or thereafter made to Honeywell or
HFI, as the case may be, (ii) all contingent obligations of Honeywell pursuant
to Section 8, and (iii) any other amounts then or thereafter owed by any
Borrower hereunder with such secured debt so long as same shall be so secured
except that any such company may:
(a) create any mortgage or pledge for the sole purpose of extending,
renewing or replacing, in whole or in part, the indebtedness or
obligations secured by any then existing mortgage or pledge which was not
created in violation of this Subsection 7.2 if the principal amount of
indebtedness secured thereby shall not exceed the principal amount of
indebtedness so secured at the time of such extension, renewal or
replacement, and if such mortgage or pledge shall be limited to all or a
part of the assets which secured the mortgage or pledge so extended,
renewed or replaced (plus improvements on or to any real property) and,
if Honeywell or HFI, as the case may be, shall so determine, any
additional assets, the mortgage or pledge of which is not restricted as
aforesaid;
(b) assume any existing mortgage or pledge on any property in
connection with the acquisition of such property; and
(c) mortgage or pledge any real property acquired, constructed or
improved after the date of this Agreement, including any improvements
thereon, which mortgage or pledge is created contemporaneously with such
acquisition, construction or improvement or within one hundred twenty
(120) days before the commencement thereof or after the completion
thereof, to secure or provide for the payment of an amount not exceeding
the cost of such acquisition, construction or improvement (including
related expenditures capitalized for federal income tax purposes in
connection therewith) incurred after the date hereof, but only if, in the
case of such construction or improvement, the mortgage or pledge shall
not apply to any property other than that on or connected to property on
which the construction or improvement is located.
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7.3 Restrictions Regarding HFI. So long as this Agreement is in effect
and HFI remains a party hereto, and until all of HFI's obligations to the Bank
hereunder or in connection with any Loan are paid in full:
(a) HFI will maintain its stockholder's equity at not less than One
Dollar ($1);
(b) The aggregate principal amount remaining unpaid on senior debt
of HFI shall not exceed five hundred percent (500%) of the sum of its
stockholders' equity plus the aggregate principal amount outstanding of
its debt which is subordinated to an extent reasonably acceptable to the
Bank;
(c) Honeywell and its other Subsidiaries will own all of the shares
of capital stock of HFI entitled to vote for the election of directors
(other than upon the happening of a contingency which has not occurred);
and
(d) Honeywell will pay, or cause one of its Subsidiaries to pay, to
HFI such amounts as may be required to cause HFI to have in each fiscal
year of HFI "earnings (before deducting any credit losses on customer
obligations or extraordinary items) available for fixed charges (interest
and amortization of funded debt expense)" (including the amounts so paid
to HFI) for such fiscal year at least equal to one hundred fifty percent
(150%) of HFI's "fixed charges (interest and amortization of funded debt
expense)" for such fiscal year; provided, however, that in the event of
the merger or liquidation of HFI into Honeywell, this Subsection 7.3
shall be of no further force or effect.
7.4 Borrower May Consolidate, etc., on Certain Terms. Each of the
Borrowers covenants that it will not merge or consolidate with any other
corporation or sell or convey all or substantially all of its assets to any
person or entity unless (i) either such Borrower shall be the continuing
corporation, or the successor corporation (if other than such Borrower) shall
be a corporation organized under the laws of the United States of America or
any State thereof and shall expressly assume the due and punctual payment of
the principal of and interest on all the Loans made to such Borrower, according
to their tenor, and the due and punctual performance and observance of all of
the covenants and conditions of this Agreement to be performed or observed by
such Borrower, and (ii) such Borrower or such successor corporation, as the
case may be, shall not, immediately after such merger or consolidation, or such
sale or conveyance, be in default in the performance of any such covenant or
condition.
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7.5 Maintenance of Insurance. Honeywell will, and will cause each of its
Subsidiaries to, maintain insurance, which may include self-insurance which is
reasonable and in accordance with sound industry practice taking into account
the nature of its business, on all of its properties in at least such amounts
and against at least such risks as are usually insured against in the same
geographic area by companies of established repute engaged in the same or a
similar business.
7.6 Use of Proceeds. So long as this Agreement is in effect, and until
all obligations of any Borrower to the Bank hereunder or in connection with any
Loan are paid in full, none of the proceeds of any Loan will be used, directly
or indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System.
7.7 Pari Passu. So long as this Agreement is in effect, no Borrower will
enter into any agreement which will subordinate the interests of the Bank in
any Loan made or to be made hereunder, to any other unsecured obligation of
such Borrower resulting from any borrowings or guarantees, except for
obligations accorded preference by mandatory provisions of law, and each
Borrower agrees that its obligations hereunder will rank pari passu with all
other present and future unsecured unsubordinated obligations of such Borrower
resulting from any borrowings or guarantees.
SECTION 8. GUARANTY
For valuable consideration, receipt whereof is hereby acknowledged, and to
induce the Bank to make Loans to Subsidiaries of Honeywell (other than HFI),
Honeywell hereby unconditionally guarantees the full and punctual repayment to
the Bank when due at maturity (by acceleration or otherwise) pursuant to the
terms and conditions of this Agreement, of the principal amount of any Loan
made pursuant to this Agreement to any such Subsidiary, together with interest
on such Loan and other amounts payable with respect thereto or hereunder as
provided by this Agreement, and, in the case of any extension of time of any
payment, that all such amounts shall be promptly paid when due (by acceleration
or otherwise) in accordance with the terms of such extension, and Honeywell
hereby unconditionally agrees that upon default in the payment when due (by
acceleration or otherwise) of any of such amounts payable by any such
Subsidiary, Honeywell will forthwith pay the same. If such Subsidiary is
obligated to pay such amounts in (i) currency other than U.S. Dollars and/or
(ii) at a place other than the United States, Honeywell will, upon the Bank's
request, either make payment in
22
<PAGE> 29
the currency and at the place as agreed by such Subsidiary or pay the Bank, at
its office in the United States designated for such purpose, the equivalent
amount in U.S. Dollars calculated at the rate of exchange at which, in
accordance with normal banking procedures, the Bank buys the specified currency
in New York, New York on the date Honeywell makes such payment.
Except as provided below, in the event Honeywell pays all sums due and
unpaid in respect of any Loan or any other amount due by a Borrower hereunder
pursuant to this Section 8, and all other sums in connection with any other
Loan to such Subsidiary or other amounts owing by such Subsidiary hereunder
shall have been paid, Honeywell shall be entitled to subrogation in the Bank's
rights in such Loan and, as reasonably requested, the Bank agrees to use
reasonable efforts to cooperate with Honeywell in enforcement of Honeywell's
subrogation rights, including the transfer and delivery by the Bank to
Honeywell of any and all evidences of indebtedness under such Loan within the
possession or control of the Bank.
The obligations of Honeywell under this Section 8 shall be unconditional,
irrespective of the genuineness, validity, regularity or enforceability of the
obligations of any such Subsidiary under this Agreement or its promissory note
or any other circumstance (including, without limitation, any circumstance
resulting from any law or regulation in the country in which such Subsidiary
maintains an office) which might otherwise constitute a legal or equitable
discharge of such Subsidiary or a surety or guarantor, with the exception of
payment in full. Without limiting the effect of the foregoing, the guaranty
contained in this Section 8 shall not be impaired by the existence of any
claims by the Bank on any such Subsidiary arising other than under this
Agreement.
HONEYWELL HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE AT ANY
TIME (WHETHER ARISING DIRECTLY OR INDIRECTLY, BY OPERATION OF LAW OR CONTRACT)
TO ASSERT ANY CLAIM AGAINST ANY BORROWER WHICH IS SUBJECT TO THE JURISDICTION
OF THE UNITED STATES BANKRUPTCY COURT, ON ACCOUNT OF PAYMENTS MADE UNDER THIS
GUARANTY, INCLUDING WITHOUT LIMITATION, ANY AND ALL RIGHTS OF SUBROGATION,
REIMBURSEMENT, EXONERATION, CONTRIBUTION OR INDEMNITY.
In the event Honeywell or any Borrower makes any payment to the Bank as a
result of this guaranty or otherwise and such payment is later set aside as a
preferential payment in the course of any bankruptcy proceedings relating to
the Subsidiary on whose behalf such payment was made, the guaranty of Honeywell
with respect to the amount so paid shall immediately be reinstated to the full
extent of the unpaid balance thereof
23
<PAGE> 30
together with interest thereon, expenses and all other amounts due hereunder,
and Honeywell's right to subrogation in the Bank's rights in such Loan, as
provided for above shall immediately cease.
Honeywell hereby expressly waives any diligence, presentment, protest and
any requirement that any right or power be exhausted or any action be taken
against any such Subsidiary.
24
<PAGE> 31
SECTION 9. EVENTS OF DEFAULT
9.1 Default with Notice. If any of the following events shall occur and
be continuing beyond any cure period, if any, applicable thereto:
(a) a Borrower shall fail to pay when due, whether by acceleration
or otherwise, any principal on any Loan or shall fail to pay when due any
interest on any Loan or Honeywell shall fail to pay when due any Facility
Fee, and such failure shall continue for a period of two (2) Banking Days
after receipt by Honeywell of notice from the Bank specifying such
failure; or
(b) Honeywell or HFI shall default in the due performance or
observance of any covenant or agreement undertaken by it hereunder and
such default shall continue uncured for a period of thirty (30) days
after receipt by Honeywell of notice from the Bank regarding same; or
(c) any representation made herein or pursuant hereto or any
statement or information furnished pursuant hereto shall have been, when
made or deemed made, false or misleading in any material respect and
Honeywell or HFI shall not have taken corrective measures satisfactory to
the Bank with respect thereto within thirty (30) days after receipt by
Honeywell of notice from the Bank specifying such default; or
(d) Honeywell or HFI shall default in any payment of principal or
interest due and owing under any indenture(s) or instrument(s) evidencing
or under which there shall at the time be outstanding at least Ten
Million Dollars ($10,000,000) aggregate principal amount of indebtedness
for borrowed money, and such default shall continue beyond any period of
grace or notice provided with respect thereto, or Honeywell or HFI shall
default in the performance or observance of any agreement, term or
condition contained in such indenture(s) or instrument(s), which default
gives the holders of such indebtedness the right to immediately
accelerate the maturity thereof, and either the maturity of such
indebtedness is accelerated or such right of acceleration is not
rescinded or annulled within ten (10) days; or
(e) one or more final judgments (including, without limitation, any
judgment enforcing the judgment of a foreign court) and/or orders for the
immediate payment of money which, in the aggregate, exceed the greater of
(i) Two Hundred Million Dollars ($200,000,000) or (ii) ten percent
25
<PAGE> 32
(10%) of the amount of Honeywell's consolidated stockholders' equity (as
reported in its then most recent annual report furnished to the Bank
pursuant to paragraph (a) of Subsection 7.1) shall be rendered against
Honeywell, HFI by a court or quasi-judicial body of competent
jurisdiction, and of or within the United States of America, and such
judgments or orders shall continue unsatisfied, in effect and unstayed
for a period of thirty (30) consecutive days after expiration of any
right of appeal, or for a re-hearing, with respect thereto; or
(f) the guaranty of Honeywell contained in Section 8 hereof shall at
any time and for any reason cease to be in full force and effect or shall
be declared null and void, or the validity or enforceability thereof
shall be contested by Honeywell or Honeywell shall deny it has any
further liability or obligation thereunder or shall fail to perform its
obligations thereunder;
such event shall constitute an Event of Default hereunder and the Bank may, by
notice to Honeywell and to each Borrower then indebted to it for which it has
been given an address for notices (1) declare all Loans to be forthwith due and
payable, whereupon all Loans, and all other amounts provided by this Agreement
with respect thereto and accrued Facility Fees, shall immediately become due
and payable and/or (2) declare the Commitment to be terminated.
9.2 Immediate Default. If any of the following events shall occur and be
continuing beyond any cure period, if any, applicable thereto:
(a) any proceeding shall be instituted against Honeywell or HFI in a
court of competent jurisdiction within the United States of America
seeking to adjudicate Honeywell or HFI a bankrupt or insolvent and such
proceedings shall continue undischarged and undismissed for a period of
one hundred twenty (120) days; or
(b) a court having proper jurisdiction shall enter a decree or order
for relief in respect of Honeywell or HFI in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of Honeywell or
HFI or for any substantial part of their property or ordering the winding
up or liquidation of their affairs, and such decree or order shall remain
unstayed and in effect for a period of sixty (60) days; or
26
<PAGE> 33
(c) Honeywell or HFI shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of Honeywell or HFI or for
any substantial part of its property, or make any assignment for the
benefit of creditors or fail generally to pay its debts as such debts
become due or take any corporate action in furtherance of any of the
foregoing;
such event shall constitute an Event of Default hereunder and immediately upon
the occurrence any of such Events of Default, the Commitment shall terminate
forthwith and all Loans, and all other amounts provided by this Agreement with
respect thereto and accrued Facility Fees, shall immediately become due and
payable, all without the necessity of any notice.
SECTION 10. NOTICES
10.1 Mechanics. Notices of borrowing under Subsection 3.2 or 3.3,
confirmations thereof by Honeywell and notices of prepayment under Subsection
3.8, may be given or made telephonically or by facsimile, telex, telegram or
cable, and in any case confirmed by letter mailed on the same day. All other
notices or demands under this Agreement may be given by facsimile, telex,
telegram or cable, confirmed by letter within two (2) Banking Days. Any notice
may alternatively be given by a writing delivered by any available means, but
no such notice shall be effective until it is received. Every notice or demand
shall be sent to the following addresses:
If to the Bank:
The Chase Manhattan Bank, N.A.
2 Chase Manhattan Plaza, Fifth Floor
New York, NY 10081
Attention: Rocky Chan
Facsimile: ________________
If to any Borrower:
Honeywell Inc.
Honeywell Plaza
Minneapolis, Minnesota 55408
Attention: Treasurer
Facsimile: 612/951-0697
27
<PAGE> 34
with a copy to:
Honeywell Inc.
Office of General Counsel
Honeywell Plaza MN12-8251
Minneapolis, Minnesota 55408
Attention: Senior Counsel
Facsimile: 612/951-0647
An additional copy of each notice, confirmation or demand to any Borrower
other then Honeywell or HFI shall be given to such Borrower at any different
address that may be notified to the Bank by such Borrower or by Honeywell.
Any such address may be changed by a notice in writing given by Honeywell
to the Bank or by the Bank to Honeywell, as the case may be.
10.2 Authorized Persons. All notices and demands hereunder from a
Borrower to the Bank shall be made by an authorized person, or by two
authorized persons where so specified (as set forth in the authority documents
provided to the Bank pursuant to Section 5). Authorized persons with respect
to Honeywell or any other Borrower shall be those named as having authority to
sign evidences of indebtedness to the Bank on behalf of Honeywell or such
Borrower, as the case may be, pursuant to any general banking resolution
provided to the Bank by Honeywell (as to any Borrower) or by any Borrower (as
to itself) from time to time, or as otherwise set forth in a written notice
provided to the Bank by Honeywell (as to any Borrower) or by any Borrower (as
to itself), signed on behalf of the notifying entity by its Chairman of the
Board of Directors, Vice Chairman of the Board of Directors, President or Chief
Financial Officer, and by any Vice President, the Treasurer or any Assistant
Treasurer. The Bank may rely and act upon (and shall be fully protected in so
doing) any notice or request which purports to be given by an authorized person
or persons and which Bank reasonably believes to have been so given. In the
event of any discrepancy between a telephonic notice given pursuant to
Subsection 10.1 and any written confirmation thereof, the telephonic notice
shall govern if the Bank has acted in reliance thereon.
SECTION 11. WITHDRAWAL OF HFI
HFI may, by prior written notice to the Bank at any time when no Loan to
HFI is outstanding hereunder and all amounts then known to be payable in
respect of any Loans made to HFI hereunder have been paid to the Bank, cease to
be a party to this Agreement. Thereupon, all specific references to HFI in
this
28
<PAGE> 35
Agreement, including (without limitation) its representations, warranties and
covenants hereunder, shall be of no further force or effect, HFI shall have no
further obligations as a party hereto except under Section 4, and any Event of
Default then existing relating to HFI shall be deemed to have been cured;
provided, that HFI may thereafter borrow hereunder on the same terms and with
the same effect (including, without limitation, the applicability of the
guaranty of Honeywell under Section 8) as apply to any other Subsidiary of
Honeywell.
SECTION 12. TERMINATION OF THE CREDIT AGREEMENT
Effective as of the Commencement Date, the Credit Agreement is hereby
terminated with respect to all parties thereto, and neither the Bank,
Honeywell, HFI nor any Subsidiary shall have any further obligations
thereunder, except for those relating to (i) the repayment of any Loans, if
any, outstanding as of the date hereof, (ii) any indemnities provided for
therein with respect to any party which by their terms survive the termination
of the Credit Agreement, or (iii) any fees due the Bank or any sums due the
Bank for costs incurred pursuant to the terms of the Credit Agreement.
SECTION 13. MISCELLANEOUS
13.1 Amendment. Any provision of this Agreement may be waived or
modified by an instrument in writing signed by Honeywell, HFI and the Bank.
13.2 No Waiver. No failure on the part of the Bank to exercise, and no
delay in exercising, any right hereunder shall preclude any other or further
exercise thereof or the exercise of any other right nor shall the single or
partial exercise of any right preclude any other further exercise thereof. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
13.3 Survival. All representations and warranties made herein shall
survive the making of the Loans hereunder.
13.4 Usury. Anything herein to the contrary notwithstanding, the
obligations of the Borrowers under this Agreement shall be subject to the
limitation that payments of interest to the Bank shall not be required to the
extent that receipt thereof would be contrary to provisions of law applicable
to the Bank limiting rates of interest which may be charged or collected by the
Bank.
29
<PAGE> 36
13.5 Payment of Expenses. Honeywell shall reimburse the Bank on demand
for all its reasonable out-of-pocket expenses (including attorneys' fees and
disbursements attributable to the use of legal counsel, including costs
allocated by the Bank's internal legal department) incurred by the Bank in
acting hereunder in the case of any Event of Default or enforcement of the
Guaranty provided for in Section 8 hereof.
13.6 Judgment Currency. The currency in which each Loan made hereunder
is denominated and the place of payment designated therefor are of the essence.
The payment obligation of any Borrower hereunder in any currency and at any
designated place of payment shall not be discharged by an amount paid in
another currency or in another place, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on prompt conversion to the
currency in which such Loan is denominated and transfer to the designated place
of payment under normal banking procedures does not yield the amount owing
hereunder at the designated place of payment. In the event that any payment,
whether pursuant to a judgment or otherwise, upon conversion and transfer, does
not result in payment of such amount in the currency in which such Loan is
denominated at the designated place of payment, the Bank shall be entitled to
demand immediate payment of, and shall have a separate cause of action against
the Borrower for, the additional amount necessary to yield the amount of such
currency owing hereunder.
13.7 Governing Law; Etc. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of
New York. Each Borrower hereby irrevocably submits to the jurisdiction of any
New York state or United States federal court sitting in New York County over
any action or proceeding arising out of or relating to this Agreement or any
promissory note evidencing any Loans made hereunder, and each Borrower hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York state or federal court. Each Borrower
irrevocably consents to the service of any and all process in any such action
or proceeding by the mailing of copies of such process to such Borrower at its
address specified in or pursuant to Subsection 10.1 and, in the case of any
Borrower other than Honeywell or HFI, such Borrower hereby irrevocably appoints
Honeywell to be its agent for service of process with respect to it and its
property in any action or proceeding relating to this Agreement and the Loans
made to it hereunder. Each Borrower agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each Borrower further waives any objection to venue in such state and any
objection to an action or proceeding in such state on the basis of forum non
conveniens.
30
<PAGE> 37
Each Borrower further agrees that any action or proceeding brought against the
Bank shall be brought only in New York state or United States federal court
sitting in New York County. Each Borrower waives any right it may have to jury
trial.
13.8 Binding Effect. This Agreement shall be binding upon, and shall
inure to the benefit of, Honeywell, HFI, each Borrower and the Bank and their
respective successors and assigns. Subject to Subsection 13.9, neither
Honeywell, HFI, any Borrower nor the Bank may assign or transfer its rights or
obligations hereunder without the express written consent of the other parties.
13.9 Assignments and Participations. The Bank may at any time assign to
one or more banks or other institutions (each an "Assignee"), whose
creditworthiness is in Honeywell's reasonable opinion, comparable to that of
the Bank, all, or a proportionate part of all, of its rights under this
Agreement and any promissory note evidencing Loans made hereunder, with and
subject to the consent of Honeywell, which consent shall not be unreasonably
withheld; provided, however, that if an Assignee is an affiliate of the Bank,
and such affiliate's creditworthiness is rated at least A by S&P or A2 by
Moody's, then no such consent shall be required. Notwithstanding the
foregoing, the Bank may at any time, without the consent of Honeywell, assign
all or any portion of its rights under this Agreement and any promissory note
evidencing Loans made hereunder, to a Federal Reserve Bank (provided, however,
that no such assignment to a Federal Reserve Bank shall release the Bank from
its obligations hereunder).
The Bank may at any time grant to one or more banks or other institutions
(each a "Participant") participating interests in its Commitment, or any or all
of its Loans, with and subject to the consent of Honeywell, which consent shall
not be unreasonably withheld; provided that if a Participant is an affiliate of
the Bank, and such affiliate's creditworthiness is rated at least A by S&P or
A2 by Moody's, then no such consent shall be required. In the event of any
such grant by the Bank of a participating interest to a Participant, whether or
not upon notice to Honeywell, the Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrowers shall continue to
deal solely and directly with the Bank in connection with the Bank's rights and
obligations under this Agreement. Any agreement pursuant to which the Bank may
grant such a participating interest shall provide that the Bank shall retain
the sole right and responsibility to enforce the obligations of the Borrowers
hereunder including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
participation agreement may provide that the Bank will not agree to any
modification,
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<PAGE> 38
amendment or waiver of this Agreement (i) which increases or decreases the
Commitment Amount or (ii) reduces the principal of or rate of interest on any
Loan or fees hereunder or (iii) postpones the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder without the consent
of the Participant.
13.10 Calculation of Interest and Facility Fees. Both interest and
Facility Fees will be calculated to include the first day and exclude the last
day of each relevant period.
13.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
13.12 Confidentiality of Information. Except as otherwise required by
law or regulation, the Bank shall make a reasonable effort to comply with any
request by a Borrower for confidential treatment of non-public information
provided to the Bank by such Borrower pursuant to this Agreement.
13.13 Other Borrowings from the Bank. Nothing in this Agreement shall
restrict any Borrower from borrowing from the Bank from time to time at such
rates and on such terms and conditions as may be agreed to by such Borrower
(and by Honeywell if such Borrower is a Subsidiary of Honeywell other than HFI)
and the Bank, either under this Agreement or otherwise.
IN WITNESS WHEREOF, The parties have caused this Agreement to be executed
by the proper corporate officers thereunto duly authorized as of the day and
year first above written.
THE CHASE MANHATTAN HONEYWELL INC.
BANK, N.A.
By By
---------------------- ---------------------------
Its Paul N. Saleh,
------------------- Vice President and Treasurer
By
---------------------------
William T. Gray
Member, Treasury Management Team
HONEYWELL FINANCE INC.
By
---------------------------
Paul N Saleh, Treasurer
32
<PAGE> 39
By
---------------------------
Warren E. Simpson, Vice President
33
<PAGE> 40
EXHIBIT A
PROMISSORY NOTE
New York, New York [Date]
, a corporation organized under the laws of (the "Borrower"), for value
received, hereby promises to pay to the order of The Chase Manhattan Bank
(National Association) (the "Bank") at the principal office of the Bank, at 1
Chase Manhattan Plaza, New York, New York, or such other office or affiliate of
the Bank as the Bank shall designate for the account of the appropriate Lending
Office of the Bank, the principal amount of each Loan (as defined in the Credit
Agreement referred to below) made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below, in the currency in which such Loan is
denominated and in immediately available funds, on the dates and in the manner
provided in said Credit Agreement. The Borrower also promises to pay interest
on the unpaid principal amount of each Loan from the date of such Loan until
such principal amount is paid in full at such rates of interest and payable at
such times and in the manner provided in said Credit Agreement.
The date, type, currency, amount and maturity date of each Loan made by
the Bank to the Borrower under the Credit Agreement referred to below, and each
payment of principal thereof, shall be recorded by the Bank on its books and,
prior to any transfer of this Note, endorsed by the Bank on the Schedule
attached hereto or any continuation thereof.
This is one of the notes referred to in that certain Revolving Credit
Agreement (as amended from time to time, the "Credit Agreement") dated as of
October 1, 1995 among Honeywell Inc., Honeywell Finance Inc. and the Bank and
evidences Loans made by the Bank to the Borrower thereunder. All terms not
defined herein shall have the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of this
Note upon the occurrence of certain Events of Default and for prepayments of
Loans on the terms and conditions specified therein.
34
<PAGE> 41
The Borrower waives presentment, notice of dishonor, protest and any other
notice or formalities with respect to this Note.
35
<PAGE> 42
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
[NAME OF BORROWER]
By
------------------------------
Name:
Title:
By
------------------------------
Name:
Title:
AFFIRMATION OF GUARANTY (in case of Subsidiary Borrowers)
Honeywell Inc. hereby affirms that the foregoing Note is guaranteed by
Honeywell Inc. as provided by Section 8 of the Credit Agreement.
By
------------------------------
Name:
Title:
By
------------------------------
Name:
Title:
36
<PAGE> 43
Schedule
Date Made Principal
Prepaid Loan Number Amount and Maturity Balance Notation
or Repaid and Type Currency Date Outstanding By
--------- ----------- ---------- -------- ----------- --------
37
<PAGE> 44
EXHIBIT B
[Form of] Accession Agreement
[Date]
The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
[Name of Subsidiary]
Ladies/Gentlemen:
Reference is made to the Revolving Credit Agreement dated as of October 1,
1995 among Honeywell Inc., Honeywell Finance Inc. and The Chase Manhattan Bank
(National Association) (the "Bank") (said Revolving Credit Agreement as it may
be amended from time to time being the "Credit Agreement"). Unless otherwise
defined herein, terms used herein shall have the meanings assigned to them in
the Credit Agreement.
The undersigned, in consideration of the Bank's agreement to extend credit
to it under and on the terms and conditions set forth in the Credit Agreement,
does hereby irrevocably agree to be bound by each of the provisions of the
Credit Agreement relating to it in its capacity as a Borrower. In furtherance
of the foregoing, the undersigned hereby represents and warrants to the Bank as
follows:
1. The undersigned is a corporation duly incorporated, validly
existing and in good standing (or the legal equivalent thereof, if
applicable) under the laws of, with full corporate power and legal right
to make this Accession Agreement and to incur and perform its obligations
hereunder, and under the Credit Agreement and each promissory note (a
"Note") executed and delivered by it pursuant to the terms of the Credit
Agreement.
2. The execution and delivery by the undersigned of this Accession
Agreement and each Note and the performance by the undersigned of its
obligations under the Credit Agreement and its Note(s) have been duly
authorized by all necessary corporate action and do not and will not
violate any provisions of law or of its charter or by-laws or result in
the breach of or constitute a default or require any consent under any
indenture or loan or other agreement or instrument to which the
undersigned is a party or by which
38
<PAGE> 45
it or its properties may be bound or affected. This Accession Agreement,
the Credit Agreement and the Note(s) of the undersigned are the legal,
valid and binding obligations of the undersigned enforceable against the
undersigned in accordance with their respective terms.
3. There are no suits or proceeding pending or, to the knowledge of
the undersigned, threatened, against or affecting the undersigned which
are likely to have a material adverse effect on its financial condition
or business.
4. No consent or approval from, or notice to or filing with, any
federal, state or other regulatory authority is required in connection
with its making or performance of this Agreement nor will such making or
performance violate any law or regulation applicable to it or, if any
such notice or filing is required, it has been duly completed.
This Accession Agreement shall not be effective unless Honeywell
Inc. shall have executed the consent below. This Accession Agreement
shall be governed by, and construed in accordance with, the laws of the
State of New York, United States of America.
Very truly yours,
[Name of Subsidiary]
By
------------------------
Name:
Title:
Consented to by Honeywell Inc. as of
the day first above written:
By:
--------------------
Name:
Title:
39
<PAGE> 46
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . 1
SECTION 2. COMMITMENT; FEES . . . . . . . . . . . . . .. 5
2.1 Commitment to Lend . . . . . . . . . . . . . . 5
2.2 Commitment Reduction . . . . . . . . . . . . . 5
2.3 Facility Fee . . . . . . . . . . . . . . . . . 5
SECTION 3. LOANS . . . . . . . . . . . . . . . . . . . . . 6
3.1 Amount; Type; Commission . . . . . . . . . . . 6
3.2 Notice of Borrowing . . . . . . . . . . . . . . 7
3.3 In-Country Loans . . . . . . . . . . . . . . . 7
3.4 Maturity . . . . . . . . . . . . . . . . . . . 7
3.5 Interest . . . . . . . . . . . . . . . . . . . 8
3.6 Availability of Funds . . . . . . . . . . . . . 9
3.7 Payments . . . . . . . . . . . . . . . . . . . 9
3.8 Prepayment . . . . . . . . . . . . . . . . . . 9
3.9 Promissory Note and Loan Account . . . . . . . 9
SECTION 4. ILLEGALITY, CAPITAL ADEQUACY, INCREASED COSTS
AND TAXES . . . . . . . . . . . . . . . . . . . 10
4.1 Illegality . . . . . . . . . . . . . . . . . . 10
4.2 Capital Adequacy . . . . . . . . . . . . . . . 10
4.3 Increased Costs . . . . . . . . . . . . . . . . 11
4.4 Increased Taxes . . . . . . . . . . . . . . . . 12
4.5 Withholding Taxes . . . . . . . . . . . . . . . 12
4.6 Minimizing Taxes . . . . . . . . . . . . . . . 13
4.7 Bank's Determination . . . . . . . . . . . . . 13
4.8 Survival . . . . . . . . . . . . . . . . . . . 13
SECTION 5. CONDITIONS OF LENDING . . . . . . . . . . . . . 13
SECTION 6. REPRESENTATIONS AND WARRANTIES . . . . . . . . 14
SECTION 7. COVENANTS . . . . . . . . . . . . . . . . . . . 16
7.1 Information . . . . . . . . . . . . . . . . . . 16
7.2 Negative Pledge . . . . . . . . . . . . . . . . 18
7.3 Restrictions Regarding HFI . . . . . . . . . . 19
7.4 Borrower May Consolidate, etc., on
Certain Terms . . . . . . . . . . . . . . . . . 19
7.5 Maintenance of Insurance . . . . . . . . . . . 19
7.6 Use of Proceeds . . . . . . . . . . . . . . . . 20
7.7 Pari Passu . . . . . . . . . . . . . . . . . . 20
<PAGE> 47
SECTION 8. GUARANTY . . . . . . . . . . . . . . . . . . . 20
<PAGE> 48
SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . 22
9.1 Default with Notice . . . . . . . . . . . . . . 22
9.2 Immediate Default . . . . . . . . . . . . . . . 23
SECTION 10. NOTICES . . . . . . . . . . . . . . . . . . . . 24
10.1 Mechanics . . . . . . . . . . . . . . . . . . . 24
10.2 Authorized Persons . . . . . . . . . . . . . . 25
SECTION 11. WITHDRAWAL OF HFI . . . . . . . . . . . . . . . 25
SECTION 12. TERMINATION OF THE CREDIT AGREEMENT . . . . . . 25
SECTION 13. MISCELLANEOUS . . . . . . . . . . . . . . . . . 26
13.1 Amendment . . . . . . . . . . . . . . . . . . . 26
13.2 No Waiver . . . . . . . . . . . . . . . . . . . 26
13.3 Survival . . . . . . . . . . . . . . . . . . . 26
13.4 Usury . . . . . . . . . . . . . . . . . . . . . 26
13.5 Payment of Expenses . . . . . . . . . . . . . . 26
13.6 Judgment Currency . . . . . . . . . . . . . . . 26
13.7 Governing Law . . . . . . . . . . . . . . . . . 27
13.8 Binding Effect . . . . . . . . . . . . . . . . 27
13.9 Assignments and Participants . . . . . . . . . 27
13.10 Calculation of Interest and Facility Fees . . . 28
13.11 Counterparts . . . . . . . . . . . . . . . . . 28
13.12 Confidentiality . . . . . . . . . . . . . . . . 28
13.13 Other Borrowings from the Bank . . . . . . . . 28
EXHIBITS
Exhibit A Promissory Note . . . . . . . . . . . . . . . .30
Exhibit B Accession Agreement . . . . . . . . . . . . . .33
<PAGE> 49
REVOLVING CREDIT AGREEMENT
AMONG
HONEYWELL INC.,
HONEYWELL FINANCE INC.,
and
THE CHASE MANHATTAN BANK, N.A.
dated as of October 1, 1995
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
by and among
HONEYWELL INC.,
HONEYWELL ACQUISITION CORP.
and
MEASUREX CORPORATION
dated as of
January 26, 1997
<PAGE> 2
Index of Defined Terms
<TABLE>
<CAPTION>
Defined Term Section No.
- ------------- -----------
<S> <C>
Agreement Recitals
Acquisition Proposal 5.4
Appointment Date 5.1
Balance Sheet 3.10(a)
By-laws 1.4
Certificate of Incorporation 1.2
Certificates 2.2(b)
Closing 1.6
Closing Date 1.6
Code 5.2(a)
Company Recitals
Company Agreements 3.4
Company Disclosure Schedule 3.0
Company ESPP 2.4(d)
Company Material Adverse Effect 3.1(a)
Company SEC Documents 3.5
Confidentiality Agreement 5.2
Copyrights 3.11(c)
Distribution Date 3.18
DGCL 1.2(a)
Dissenting Stockholders 2.1(c)
D&O Insurance 5.9(b)
Effective Time 1.5
Encumbrances 3.2(b)
Environmental Claim 3.15(g)
Environmental Laws 3.15(g)
ERISA 3.9(a)
ERISA Affiliate 3.9(a)
Exchange Act 1.1(a)
Financial Statements 3.5
fully diluted basis 1.1(a)
GAAP 3.5
Governmental Entity 3.4
Hazardous Materials 3.15(g)
HSR Act 3.4
Indemnified Party 5.9(a)
Independent Directors 1.3(c)
Intellectual Property 3.11(c)
Licenses 3.11(c)
Merger 1.4
Merger Consideration 2.1(c)
Minimum Condition 1.1(a)
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
NYSE 2.4(a)
Offer 1.1(a)
Offer Documents 1.1(b)
Offer Price 1.1(a)
Offer to Purchase 1.1(a)
Option Exchange Ratio 2.4(a)
Option Plan 2.4(b)
Options 2.4(a)
Parent Recitals
Parent Common Stock 2.4(a)
Parent Material Adverse Effect 4.1
Parent Option 2.4(a)
Participant 5.11(b)
Patents 3.11(c)
Paying Agent 2.2(a)
PCBs 3.15(e)
Plans 3.9(a)
Preferred Stock 3.2(a)
Proxy Statement 1.8(a)
Purchaser Recitals
Purchaser Common Stock 2.1
Retention Bonus 5.11(b)
Retention Bonus Plan 5.11(b)
Rights 3.18
Rights Agreement 3.18
Severance Agreements 5.11(a)
Schedule 14D-1 1.1(b)
Schedule 14D-9 1.2(b)
SEC 1.1(b)
Secretary of State 1.5
Securities Act 3.5
Shares 1.1(a)
Shares Acquisition Date 3.18
Special Meeting 1.8(a)
Subsidiary 3.1
Superior Proposal 5.4(b)
Surviving Corporation 1.4
Tax 3.10(i)
Taxes 3.10(i)
Tax Return 3.10(i)
Termination Fee 8.1(b)
Trademarks 3.11(c)
Transactions 1.2(a)
Trigger Event 3.18
Unvested Portion 2.4(a)
Vested Portion 2.4(a)
Voting Debt 3.2(a)
1996 Premium 5.9(b)
</TABLE>
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated as of January 26, 1997, by and among Honeywell Inc., a
Delaware corporation ("Parent"), Honeywell Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent (the "Purchaser"), and
Measurex Corporation, a Delaware corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the Purchaser and
the Company has approved, and deems it advisable and in the best interests of
its respective stockholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
(a) As promptly as practicable (but in no event later than five business
days after the public announcement of the execution hereof), the Purchaser shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) a tender offer (the "Offer") for all of
the outstanding shares of Common Stock, par value $.01 per share (the
"Shares"), of the Company (including the related Rights (as defined in Section
3.18 of this Agreement)) at a price of $35.00 per Share, net to the seller in
cash (such price, or any such higher price per Share as may be paid in the
Offer, being referred to herein as the "Offer Price"), subject to there being
validly tendered and not withdrawn prior to the expiration of the Offer, that
number of Shares which represents at least a majority of the Shares outstanding
on a fully diluted basis (the "Minimum Condition") and to the other conditions
set forth in Annex A hereto, and shall consummate the Offer in accordance with
its terms ("fully diluted basis" means issued and outstanding Shares and Shares
<PAGE> 5
subject to issuance under outstanding employee stock options). The obligations
of the Purchaser to accept for payment and to pay for any Shares validly
tendered on or prior to the expiration of the Offer and not withdrawn shall be
subject only to the Minimum Condition and the other conditions set forth in
Annex A hereto. The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") containing the terms set forth in this Agreement, the
Minimum Condition and the other conditions set forth in Annex A hereto. The
Purchaser shall not amend or waive the Minimum Condition and shall not decrease
the Offer Price or decrease the number of Shares sought, or amend any other
condition of the Offer in any manner adverse to the holders of the Shares
without the written consent of the Company; provided, however, that if on the
initial scheduled expiration date of the Offer which shall be 20 business days
after the date the Offer is commenced, the sole condition remaining unsatisfied
is the failure of the waiting period under the HSR Act (as defined below) to
have expired or been terminated, the Purchaser shall extend the expiration date
from time to time until two business days after the expiration of the waiting
period under the HSR Act. The Purchaser shall, on the terms and subject to the
prior satisfaction or waiver of the conditions of the Offer, accept for payment
and pay for Shares tendered as soon as it is legally permitted to do so under
applicable law; provided, however, that if, immediately prior to the initial
expiration date of the Offer (as it may be extended), the Shares tendered and
not withdrawn pursuant to the Offer equal less than 90% of the outstanding
Shares, the Purchaser may extend the Offer for a period not to exceed twenty
business days, notwithstanding that all conditions to the Offer are satisfied as
of such expiration date of the Offer.
(b) As soon as practicable on the date the Offer is commenced, Parent
and the Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-l"). The Schedule 14D-1 will include,
as exhibits, the Offer to Purchase and a form of letter of transmittal and
summary advertisement (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). The Offer Documents will comply in
all material respects with the provisions of applicable federal securities laws
and, on the date
2
<PAGE> 6
filed with the SEC and on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation
is made by Parent or the Purchaser with respect to information furnished by the
Company to Parent or the Purchaser, in writing, expressly for inclusion in the
Offer Documents. The information supplied by the Company to Parent or the
Purchaser, in writing, expressly for inclusion in the Offer Documents and by
Parent or the Purchaser to the Company, in writing, expressly for inclusion in
the Schedule 14D-9 (as hereinafter defined) will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) Each of Parent and the Purchaser will take all steps necessary to
cause the Offer Documents to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. Each of Parent and the Purchaser, on the one hand, and
the Company, on the other hand, will promptly correct any information provided
by it for use in the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect and the Purchaser will take
all steps necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent required by applicable federal securities laws. The Company
and its counsel shall be given the opportunity to review the Schedule 14D-1
before it is filed with the SEC. In addition, Parent and the Purchaser will
provide the Company and its counsel in writing with any comments, whether
written or oral, Parent, the Purchaser or their counsel may receive from time to
time from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
3
<PAGE> 7
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that its Board of Directors, at a meeting duly called and held, has
(i) unanimously determined that each of the Agreement, the Offer and the Merger
(as defined in Section 1.4) are fair to and in the best interests of the
stockholders of the Company, (ii) approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (collectively, the
"Transactions"), and such approval constitutes approval of the Offer, this
Agreement and the Transactions, including the Merger, for purposes of Section
203 of the Delaware General Corporation Law, as amended (the "DGCL")and Article
Twelfth of the Company's Certificate of Incorporation ("Certificate of
Incorporation"), such that Section 203 of the DGCL and Article Twelfth of the
Company's Certificate of Incorporation will not apply to the transactions
contemplated by this Agreement, and (iii) resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares thereunder to
the Purchaser and approve and adopt this Agreement and the Merger; provided,
that such recommendation may be withdrawn, modified or amended if, in the
opinion of the Board of Directors, only after receipt of advice from outside
legal counsel, failure to withdraw, modify or amend such recommendation could
reasonably be expected to result in the Board of Directors violating its
fiduciary duties to the Company's stockholders under applicable law. The
Company represents that the actions set forth in this Section 1.2(a) and all
other actions it has taken in connection therewith are sufficient to render the
relevant provisions of such Section 203 of the DGCL and Article Twelfth of the
Company's Certificate of Incorporation inapplicable to the Offer and the Merger.
(b) Concurrently with the commencement of the Offer, the Company shall
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto and including the exhibits
thereto, the "Schedule 14D-9") which shall, subject to the provisions of Section
5.4(b), contain the recommendation referred to in clause (iii) of Section 1.2(a)
hereof. The Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue
4
<PAGE> 8
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information furnished by
Parent or the Purchaser for inclusion in the Schedule 14D-9. The Company
further agrees to take all steps necessary to cause the Schedule 14D-9 to be
filed with the SEC and to be disseminated to holders of the Shares, in each case
as and to the extent required by applicable federal securities laws. Each of
the Company, on the one hand, and Parent and the Purchaser, on the other hand,
agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false and
misleading in any material respect and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given the opportunity to review the Schedule 14D-9 before it is filed
with the SEC. In addition, the Company agrees to provide Parent, the Purchaser
and their counsel with any comments, whether written or oral, that the Company
or its counsel may receive from time to time from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments or
other communications.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing, or computer file containing the names and
addresses of all recordholders of the Shares as of a recent date, and shall
furnish the Purchaser with such additional information (including, but not
limited to, updated lists of holders of the Shares and their addresses, mailing
labels and lists of security positions) and assistance as the Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares. Except for such steps as are necessary to
disseminate the Offer Documents, Parent and the Purchaser shall hold in
confidence the information contained in any of such labels and lists and the
additional information referred to in the preceding sentence, will use such
information only in connection with the Offer, and, if this Agreement is
terminated, will upon request of the Company deliver or
5
<PAGE> 9
cause to be delivered to the Company all copies of such information then in its
possession or the possession of its agents or representatives.
Section 1.3 Directors.
(a) Promptly upon the purchase of and payment for any Shares by
Parent or any of its subsidiaries which represents at least a majority of the
outstanding Shares (on a fully diluted basis, as defined in Section 1.1(a)),
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as is equal to
the product of the total number of directors on such Board (giving effect to the
directors designated by Parent pursuant to this sentence) multiplied by the
percentage that the number of Shares so accepted for payment bears to the total
number of Shares then outstanding. In furtherance thereof, the Company shall,
upon request of the Purchaser, use its best reasonable efforts promptly either
to increase the size of its Board of Directors or secure the resignations of
such number of its incumbent directors, or both, as is necessary to enable
Parent's designees to be so elected to the Company's Board, and shall take all
actions available to the Company to cause Parent's designees to be so elected.
At such time, the Company shall, if requested by Parent, also cause persons
designated by Parent to constitute at least the same percentage (rounded up to
the next whole number) as is on the Company's Board of Directors of (i) each
committee of the Company's Board of Directors, (ii) each board of directors (or
similar body) of each Subsidiary (as defined in Section 3.1) of the Company and
(iii) each committee (or similar body) of each such board.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder in order
to fulfill its obligations under Section 1.3(a), including mailing to
stockholders the information required by such Section 14(f) and Rule 14f-1 as is
necessary to enable Parent's designees to be elected to the Company's Board of
Directors. Parent or the Purchaser will supply the Company and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1. The provisions of this Section 1.3 are in addition to and shall not
limit any rights which the Purchaser, Parent or any of their affiliates may have
6
<PAGE> 10
as a holder or beneficial owner of Shares as a matter of law with respect to
the election of directors or otherwise.
(c) In the event that Parent's designees are elected to the Company's
Board of Directors, until the Effective Time (as defined below), the Company's
Board shall have at least two directors who are directors on the date hereof and
who would constitute Continuing Directors for purposes of Article Twelfth of the
Company's Certificate of Incorporation (the "Independent Directors"), provided
that, in such event, if the number of Independent Directors shall be reduced
below two for any reason whatsoever, any remaining Independent Directors (or
Independent Director, if there be only one remaining) shall be entitled to
designate persons to fill such vacancies who shall be deemed to be Independent
Directors for purposes of this Agreement or, if no Independent Director then
remains, the other directors shall designate two persons to fill such vacancies
who shall not be stockholders, affiliates or associates of Parent or the
Purchaser and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees are elected to the Company's
Board, after the acceptance for payment of Shares pursuant to the Offer and
prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (a) amend or terminate this Agreement
by the Company, (b) exercise or waive any of the Company's rights, benefits or
remedies hereunder, or (c) take any other action by the Company's Board under or
in connection with this Agreement.
Section 1.4 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Company and the Purchaser shall consummate
a merger (the "Merger") pursuant to which (a) the Purchaser shall be merged with
and into the Company and the separate corporate existence of the Purchaser shall
thereupon cease, (b) the Company shall be the successor or surviving corporation
in the Merger (sometimes hereinafter referred to as the "Surviving Corporation")
and shall continue to be governed by the laws of the State of Delaware, and (c)
the separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in this Section 1.4. Pursuant to the Merger, (x) the
Certificate of Incorporation
7
<PAGE> 11
shall be amended in its entirety to read as the Certificate of Incorporation of
the Purchaser, in effect immediately prior to the Effective Time, except that
Article FIRST thereof shall read as follows: "FIRST: The name of the
corporation is HONEYWELL-MEASUREX CORPORATION." and, as so amended, shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation, except that if
Purchaser shall acquire less than seventy-five percent of the outstanding Shares
pursuant to the Offer, the Certificate of Incorporation of the Company, as in
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation, and (y) the By-Laws of the
Purchaser (the "By-laws"), as in effect immediately prior to the Effective Time,
shall be the By-laws of the Surviving Corporation until thereafter amended as
provided by law, by such Certificate of Incorporation or by such By-laws. The
Merger shall have the effects specified in the DGCL.
Section 1.5 Effective Time. Parent, the Purchaser and the Company
will cause a Certificate of Merger to be executed and filed on the Closing Date
(as defined in Section 1.6) (or on such other date as Parent and the Company may
agree) with the Secretary of State of Delaware (the "Secretary of State") as
provided in the DGCL. The Merger shall become effective on the date on which
the Certificate of Merger is duly filed with the Secretary of State or such time
as is agreed upon by the parties and specified in the Certificate of Merger, and
such time is hereinafter referred to as the "Effective Time."
Section 1.6 Closing. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m. on a date to be specified by the parties, which shall
be no later than the second business day after satisfaction or waiver of all of
the conditions set forth in Article VI hereof (the "Closing Date"), at the
corporate offices of Parent, unless another date or place is agreed to in
writing by the parties hereto.
Section 1.7 Directors and Officers of the Surviving Corporation. The
directors of the Purchaser and the officers of the Company at the Effective Time
shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation
8
<PAGE> 12
until their successors shall have been duly elected or appointed or qualified or
until their earlier death, resignation or removal in accordance with the
Certificate of Incorporation and the By-laws.
Section 1.8 Stockholders' Meeting.
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law.
(i) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "Special Meeting") as promptly as practicable
following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon the approval of the Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and use its
best efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined) and,
after consultation with Parent, to respond promptly to any comments made by
the SEC with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement, including any amendment
or supplement thereto (the "Proxy Statement") to be mailed to its
stockholders, provided that no amendment or supplement to the Proxy
Statement will be made by the Company without consultation with Parent and
its counsel and (y) to obtain the necessary approvals of the Merger and
this Agreement by its stockholders; and
(iii) include in the Proxy Statement the recommendation of the
Board that stockholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares then
owned by it, the Purchaser or any of its other subsidiaries and affiliates in
favor of the approval of the Merger and the approval and adoption of this
Agreement.
9
<PAGE> 13
Section 1.9 Merger Without Meeting of Stockholders. Notwithstanding
Section 1.8 hereof, in the event that Parent, the Purchaser and any other
Subsidiaries of Parent shall acquire in the aggregate at least 90% of the
outstanding shares of each class of capital stock of the Company, pursuant to
the Offer or otherwise, the parties hereto shall, at the request of Parent and
subject to Article VI hereof, take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holders of any
Shares or holders of common stock, par value $1.00 per share, of the Purchaser
(the "Purchaser Common Stock"):
(a) The Purchaser Common Stock. Each issued and outstanding share of
the Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All Shares
that are owned by the Company as treasury stock and any Shares owned by Parent,
the Purchaser or any other wholly owned Subsidiary of Parent shall be cancelled
and retired and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(c) Exchange of Shares. Each issued and outstanding Share (other
than Shares to be cancelled in accordance with Section 2.1(b) and any Shares
which are held by stockholders exercising appraisal rights pursuant to Section
262 of the DGCL ("Dissenting Stockholders")) shall be converted into the right
to receive the Offer Price, payable to the holder thereof, without interest (the
"Merger Consideration"), upon surrender of the certificate formerly representing
such Share in the manner provided in Section 2.2. All such Shares, when so
converted, shall no longer be outstanding and shall automat-
10
<PAGE> 14
ically be cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration therefor
upon the surrender of such certificate in accordance with Section 2.2, without
interest, or the right, if any, to receive payment from the Surviving
Corporation of the "fair value" of such Shares as determined in accordance with
Section 262 of the DGCL.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as agent for the holders of the
Shares in connection with the Merger (the "Paying Agent") to receive in trust
the funds to which holders of the Shares shall become entitled pursuant to
Section 2.1(c). Such funds shall be invested by the Paying Agent as directed by
Parent or the Surviving Corporation.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"), whose Shares were converted
pursuant to Section 2.1 into the right to receive the Merger Consideration (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each Share formerly represented by such Certificate
and the Certificate so surrendered shall forthwith be cancelled. If payment of
the Merger Consideration is to be made to a person other than the person in
whose name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that
11
<PAGE> 15
the person requesting such payment shall have paid any transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the Certificate surrendered or shall have
established to the satisfaction of the Surviving Corporation that such tax
either has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger Consideration
in cash as contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in the Shares. At
the Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following six
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying Agent
and which have not been disbursed to holders of Certificates, and thereafter
such holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 2.3 Dissenters' Rights. If any Dissenting Stockholder shall
be entitled to be paid the fair value of such holder's Shares, as provided in
Section 262 of the DGCL, the Company shall give Parent notice thereof and Parent
shall have the right to participate in all
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negotiations and proceedings with respect to any such demands. Neither the
Company nor the Surviving Corporation shall, except with the prior written
consent of Parent, voluntarily make any payment with respect to, or settle or
offer to settle, any such demand for payment. If any Dissenting Stockholder
shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent, the Shares held by such Dissenting Stockholder shall thereupon be
treated as though such Shares had been converted into the Merger Consideration
pursuant to Section 2.1.
Section 2.4 Company Plans.
(a) Immediately prior to the Effective Time, each holder of then
outstanding options to purchase Shares granted by the Company (the "Options")
will be entitled to receive from the Company, and shall receive, in settlement
of each Option a Cash Amount with respect to the number of Shares for which the
Option is exercisable immediately prior to the Effective Time (the "Vested
Portion"), and the Parent shall assume the balance of the Option, if any (the
"Unvested Portion"). The Vested Portion of each Option shall terminate as of
the Effective Time. The Cash Amount payable for the Vested Portion of each
Option shall equal the product of (i) the Merger Consideration minus the
exercise price per Share of the Vested Portion of such Option and (ii) the
number of Shares covered by the Vested Portion of such Option. With respect to
any Option held by individuals who are parties to severance agreements
identified on Schedule 5.11 to the Company Disclosure Schedule (as defined
below) and Options held by directors of the Company, the entire Option shall be
treated as the Vested Portion of the Option for purposes of this Section 2.4. In
addition, with respect to the Unvested Portion, the Parent shall assume, as of
the Effective Time such Unvested Portion of an Option. Upon such assumption,
the Unvested Portion of the Option shall be converted into an option (a "Parent
Option") to purchase shares of common stock, par value $1.50 per share, of
Parent ("Parent Common Stock"). With respect to any such Parent Option (i) the
number of shares of Parent Common Stock subject to such Parent Option will be
determined by multiplying the number of Shares subject to the Unvested Portion
of the Option by the Option Exchange Ratio (as hereinafter defined), rounding
any fractional share up to the nearest whole share, and (ii) the exercise price
per share of such Parent Option will be determined by dividing the
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<PAGE> 17
exercise price per share under the Unvested Portion of the Option by the Option
Exchange Ratio, and rounding the exercise price thus determined up to the
nearest whole cent. Except as provided above, the assumed Options shall be
subject to the same terms and conditions (including, without limitation,
expiration date, vesting and exercise provisions) as were applicable to the
Unvested Portion of the Option immediately prior to the Effective Time. Parent
agrees to take all actions which may be necessary so that, in the event that an
optionee's employment by the Company is terminated at any time during the
eighteen-month period immediately following the Effective Time, the Unvested
Options held by such optionee shall vest as of the date of termination and not
expire until three months following the date of termination. The "Option
Exchange Ratio" shall be (x) the Offer Price divided by (y) the average of the
closing prices of the Parent Common Stock on the New York Stock Exchange
("NYSE") during the ten trading days preceding the fifth trading day prior to
the Closing Date. If and to the extent required by the terms of the plans
governing Options or pursuant to the terms of any Option granted thereunder,
each of Parent and the Company shall use its best efforts to obtain the consent
of each holder of outstanding Options to the foregoing treatment of such
Options. Each share of Parent Common Stock underlying the Parent Options will
be covered by an effective registration statement under the Securities Act (as
defined below).
(b) Except as may be otherwise agreed to by Parent or the Purchaser
and the Company, the Company's 1993 Stock Option Plan (the "Option Plan") shall
terminate as of the Effective Time and the provisions in any other plan, program
or arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any of its Subsidiaries shall be
deleted as of the Effective Time.
(c) The Company has taken all actions so that following the Effective
Time no holder of employee stock options will have any right to receive Shares
upon exercise of an employee stock option.
(d) Outstanding purchase rights under the Company's Employee Stock
Purchase Plan (the "Company ESPP") shall be exercised upon the earlier of (i)
the next scheduled purchase date under the Company ESPP or (ii) immediately
prior to the Effective Time, and each
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participant in the Company ESPP shall accordingly be issued Shares at that time
which shall be cancelled at the Effective Time and converted into the right to
receive the Merger Consideration for those Shares. The Company ESPP shall
terminate with such exercise date, and no purchase rights shall be subsequently
granted or exercised under the Company ESPP.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as set forth in the schedule attached to this Agreement setting
forth exceptions to the Company's representations and warranties set forth
herein (the "Company Disclosure Schedule"), the Company represents and warrants
to Parent and the Purchaser as set forth below. The Company Disclosure Schedule
will be arranged in sections corresponding to sections of this Agreement to be
modified by such disclosure schedule.
Section 3.1 Organization. (a) Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority, and
governmental approvals would not, individually or in the aggregate, have a
Company Material Adverse Effect (as defined below). As used in this Agreement,
the term "Subsidiary" shall mean all corporations or other entities in which the
Company or the Parent, as the case say be, owns a majority of the issued and
outstanding capital stock or similar interests. As used in this Agreement,
"Company Material Adverse Effect" with reference to any events, changes or
effects, shall mean such events, changes or effects that are materially adverse
to the Company and its Subsidiaries, taken as a whole. No breach of any
representation or warranty contained in Article III of this Agreement shall be
deemed to be a breach by the Company of this Agreement pursuant to Article VII
or otherwise unless the Company shall have failed to meet the condition set
forth in paragraph (f) of Annex A. As used in this Agreement, "to
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<PAGE> 19
the knowledge of the Company" means the knowledge of the executive officers of
the Company, without having made any independent investigation in connection
with the execution of this Agreement.
(b) The Company and each of its Subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not individually
or in the aggregate have a Company Material Adverse Effect. Except as set forth
in Section 3.1 of the Company Disclosure Schedule, the Company does not own (i)
any equity interest in any corporation or other entity or (ii) marketable
securities where the Company's equity interest in any entity exceeds five
percent of the outstanding equity of such entity on the date hereof.
Section 3.2 Capitalization. (a) The authorized capital stock of the
Company consists of 50,000,000 Shares and 10,000,000 shares of preferred stock,
par value $.01 per share (the "Preferred Stock"). As of the date hereof, (i)
16,150,375 Shares are issued and outstanding, (ii) 2,747,074 Shares are issued
and held in the treasury of the Company, (iii) 250,000 shares of Preferred Stock
are designated as Series A Junior Participating Preferred Stock and none of
which are issued and outstanding, and (iv) 7,110,240 Shares are reserved for
issuance to employees and consultants pursuant to the Option Plan, of which
2,064,957 Shares have been issued pursuant to option exercises and 3,592,579
Shares are subject to outstanding, unexercised options; and (v) 1,225,000 Shares
are reserved for issuance to employees pursuant to the Company ESPP, of which
1,114,362 Shares have been issued. Since January 26, 1997, the Company has not
(i) issued or granted additional options under the Option Plan or (ii) accepted
new enrollments in the Company ESPP. All the outstanding shares of the
Company's capital stock are, and all Shares which may be issued pursuant to the
exercise of outstanding Company Options will be, when issued in accordance with
the respective terms thereof, duly authorized, validly issued, fully paid and
non-assessable. There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company or any of its Subsidiaries issued and
outstanding. Except as set forth
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above and except for the transactions contemplated by this Agreement, as of the
date hereof, (i) there are no shares of capital stock of the Company authorized,
issued or outstanding (ii) there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment and
(iii) except as set forth in Section 3.2(a) of the Company Disclosure Schedule,
there are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or the
capital stock of the Company, or any Subsidiary or affiliate of the Company or
to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary or any other entity other than
loans to Subsidiaries in the ordinary course of business. The current "Purchase
Period" (as defined in the Company ESPP) commenced under the Company ESPP on or
about December 2, 1996 and will end prior to the Effective Time as provided in
this Agreement, and except for the purchase rights granted on such commencement
date to participants in the current Purchase Period, there are no other purchase
rights or options outstanding under the Company ESPP.
(b) Except for director's qualifying shares which may be required in
certain jurisdictions, all of the outstanding shares of capital stock of each of
the Subsidiaries are beneficially owned by the Company, directly or indirectly,
and all such shares have been validly issued and are fully paid and
nonassessable and are owned by either the Company or one of its Subsidiaries
free and clear of all liens, charges, claims or encumbrances ("Encumbrances").
(c) There are no voting trusts or other agreements or understandings
to which the Company or any of its Subsidiaries is a party with respect to the
voting of
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the capital stock of the Company or any of the Subsidiaries.
Section 3.3 Authorization; Validity of Agreement; Company Action.
The Company has full corporate power and authority to execute and deliver this
Agreement and to consummate the Transactions. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of the
Transactions, have been duly authorized by its Board of Directors and, except
for obtaining the approval of its stockholders as contemplated by Section 1.8
hereof, no other corporate action on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the Transactions. This Agreement has been duly executed
and delivered by the Company and, assuming due and valid authorization,
execution and delivery hereof by Parent and the Purchaser, is a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.
Section 3.4 Consents and Approvals; No Violations. Except for the
filings set forth in Section 3.4 of the Company Disclosure Schedule and the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the laws of any foreign jurisdictions, state securities or blue sky laws,
and the DGCL, none of the execution, delivery or performance of this Agreement
by the Company, the consummation by the Company of the Transactions or
compliance by the Company with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the Certificate of
Incorporation, the By-laws or similar organizational documents of the Company or
any of its Subsidiaries, (ii) require any filing with, or permit, authorization,
consent or approval of, any court, arbitral tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency (a
"Governmental Entity"), (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Company or any of its Subsidiar-
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ies is a party or by which any of them or any of their properties or assets may
be bound (the "Company Agreements") or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (ii), (iii) and (iv) such violations, breaches or defaults which would
not, individually or in the aggregate, have a Company Material Adverse Effect or
have a material adverse effect on the ability of the Company to consummate the
Transactions. Section 3.4 of the Company Disclosure Schedule sets forth a list
of all third party consents and approvals required to be obtained in connection
with this Agreement under the Company Agreements prior to the consummation of
the transactions contemplated by this Agreement.
Section 3.5 SEC Reports and Financial Statements. The Company has
filed with the SEC, and has heretofore made available to Parent, true and
complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it since January 1, 1995 under the Exchange
Act or the Securities Act of 1933, as amended (the "Securities Act") (as such
documents have been amended since the time of their filing, collectively, the
"Company SEC Documents"). As of their respective dates or, if amended, as of
the date of the last such amendment, the Company SEC Documents, including,
without limitation, any financial statements or schedules included therein (a)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. None of the
Company's Subsidiaries is required to file any forms, reports or other documents
with the SEC. The financial statements of the Company included in the Company
SEC Documents (the "Financial Statements") have been prepared from, and are in
accordance with, the books and records of the Company and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
period
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involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position and the consolidated results of operations
and cash flows (and changes in financial position, if any) of the Company and
its consolidated Subsidiaries as of the times and for the periods referred to
therein.
Section 3.6 Absence of Certain Changes. Except as disclosed in
Section 3.6 of the Company Disclosure Schedule or in the Company SEC Documents
filed prior to the date hereof, since September 1, 1996, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary and
usual course and (i) there has not occurred any events or changes (including the
incurrence of any liabilities of any nature, whether or not accrued, contingent
or otherwise) having, individually or in the aggregate, a Company Material
Adverse Effect (provided, however, that no event, change or effect that
materially results from the Transactions or the announcement thereof shall be
deemed to cause, either individually or in the aggregate, a Company Material
Adverse Effect for purposes of this Section 3.6) and the Company has not taken
any action which would have been prohibited under Section 5.1 hereof.
Section 3.7 No Undisclosed Liabilities. Except (a) as disclosed in
the Financial Statements and (b) for liabilities and obligations (i) incurred in
the ordinary course of business and consistent with past practice since
September 1, 1996, (ii) pursuant to the terms of this Agreement, (iii) as set
forth in Section 3.7 of the Company Disclosure Schedule, or (iv) as required to
be disclosed in Section 3.8 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries has any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be required
by GAAP to be reflected in, reserved against or otherwise described in the
consolidated balance sheet of the Company (including the notes thereto) and
which would have a Company Material Adverse Effect.
Section 3.8 Litigation. Except as set forth in Section 3.8 of the
Company Disclosure Schedule, as of the date hereof, there are no suits, claims,
actions, proceedings, including, without limitation, arbitration proceedings or
alternative dispute resolution proceedings, or investigations pending or, to the
knowledge of the Company, threatened against the Company or any of its
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Subsidiaries before any Governmental Entity that, either individually or in the
aggregate, would be reasonably likely to have a Company Material Adverse Effect.
Section 3.9 Employee Benefit Plans.
(a) For purposes of this Agreement, the term "Plans" shall include:
each deferred compensation and each incentive compensation, stock purchase,
stock option and other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance and other "welfare" plan, fund or program
(within the meaning of section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or other
"pension" plan, fund or program (within the meaning of section 3(2) of ERISA);
each employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed a "single employer"
within the meaning of section 4001(b) of ERISA, or to which the Company or an
ERISA Affiliate is party, whether written or oral, for the benefit of any
employee or former employee of the Company or any Subsidiary (the "Plans").
Each of the Plans that is subject to section 302 or Title IV of ERISA or section
412 of the Code (as defined below) is hereinafter referred to in this Section
3.9 as a "Title IV Plan." Neither the Company, any Subsidiary nor any ERISA
Affiliate has any commitment or formal plan, whether legally binding or not, to
create any additional employee benefit plan or modify or change any existing
Plan that would affect any employee or former employee of the Company or any
Subsidiary.
(b) No liability under Title IV or section 302 of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring any such liability. No Plan is a Title IV
Plan.
(c) Neither the Company or any Subsidiary, any Plan, any trust created
thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which the Company or any Subsidiary, any
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Plan, any such trust, or any trustee or administrator (as defined in Section
3(16)(A) of ERISA) thereof, or any party in interest (as defined in ERISA
Section 3(14)) or fiduciary with respect to any Plan or any such trust could be
subject to either a civil penalty assessed pursuant to section 409 or 502(i) of
ERISA or a tax imposed pursuant to section 4975 or 4976 of the Code.
(d) Each Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including but not
limited to ERISA and the Code.
(e) Each Plan intended to be "qualified" within the meaning of section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service with respect to the qualified status of such Plan under
the Code, including all amendments to the Code effected by the Tax Reform Act of
1986 and subsequent legislation, and nothing has occurred since the issuance of
such letter which could reasonably be expected to cause the loss of the
tax-qualified status of such Plan and the related trust maintained thereunder.
The Company has no Plans intended to satisfy the requirements of Section
501(c)(9).
(f) No Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for employees or former employees of
the Company or any Subsidiary for periods extending beyond their retirement or
other termination of service, other than (i) coverage mandated by applicable
law, (ii) death benefits under any "pension plan," or (iii) benefits the full
cost of which is borne by the current or former employee (or his beneficiary) or
(iv) post-death exercise periods in effect under outstanding Options.
(g) Except as disclosed in Schedule 3.9(g), or as set forth in Section
5.11 of this Agreement, the consummation of the transactions contemplated by
this Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee or officer of the Company or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement, or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such employee
or officer.
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(h) There are no pending, or to the knowledge of the Company,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits) which would have a material adverse
effect upon the Plans or a Company Material Adverse Effect.
(i) Notwithstanding anything in this Section 3.9 to the contrary, the
representations and warranties set forth in Sections 3.9(b), (c), (d), (e), (f),
(g) and (h) shall not be deemed to be breached unless such breaches, either
individually or in the aggregate, would have a Company Material Adverse Effect.
Section 3.10 Tax Matters; Government Benefits.
(a) The Company and each of its Subsidiaries have duly filed all Tax
Returns (as hereinafter defined) that are required to be filed excluding only
such Tax Returns as to which any failure to file does not have a Company
Material Adverse Effect and have duly paid or caused to be duly paid in full or
made provision in accordance with GAAP (or there has been paid or provision has
been made on their behalf) for the payment of all Taxes (as hereinafter defined)
shown due on such Tax Returns. All such Tax Returns are correct and complete in
all material respects and accurately reflect all liability for Taxes for the
periods covered thereby. All Taxes owed and due by the Company and each of its
Subsidiaries for results of operations through September 1, 1996 (whether or not
shown on any Tax Return) have been paid or have been adequately reflected on the
Company's balance sheet as of September 1, 1996 included in the Financial
Statements (the "Balance Sheet") other than those Taxes the failure of which to
pay or provide reserves for will not have a Company Material Adverse Effect.
Since September 1, 1996, the Company has not incurred liability for any Taxes
other than in the ordinary course of business. Neither the Company nor any of
its Subsidiaries has received written notice of any claim made by an authority
in a jurisdiction where neither the Company nor any of its Subsidiaries file Tax
Returns, that the Company is or may be subject to taxation by that jurisdiction.
(b) The federal income Tax Returns of the Company and its Subsidiaries
have been examined by the Internal Revenue Service (or the applicable statutes
of
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limitation for the assessment of federal income Taxes for such periods have
expired) for all periods through and including November 28, 1993, and no
material deficiencies were asserted as a result of such examinations that have
not been resolved or fully paid. Neither the Company nor any of its
Subsidiaries has waived any statute of limitations in any jurisdiction in
respect of Taxes or Tax Returns or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(c) No federal, state, local or foreign audits, examinations or other
administrative proceedings have been commenced or, to the Company's knowledge,
are pending with regard to any Taxes or Tax Returns of the Company or of any of
its Subsidiaries. No written notification has been received by the Company or
by any of its Subsidiaries that such an audit, examination or other proceeding
is pending or threatened with respect to any Taxes due from or with respect to
or attributable to the Company or any of its Subsidiaries or any Tax Return
filed by or with respect to the Company or any of its Subsidiaries. To the
Company's knowledge, there is no dispute or claim concerning any Tax liability
of the Company, or any of its Subsidiaries either claimed or raised by any
taxing authority in writing.
(d) Neither the Company nor any of its Subsidiaries is a party to any
agreement, plan, contract or arrangement that could result, separately or in the
aggregate, in a payment of any "excess parachute payments" within the meaning of
Section 280G of the Code.
(e) Neither the Company nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
Subsidiaries.
(f) No taxing authority is asserting or, to the knowledge of the
Company, threatening to assert a claim against the Company or any of its
Subsidiaries under or as a result of Section 482 of the Code or any similar
provision of state, local or foreign law.
(g) Neither the Company nor any of its Subsidiaries is a party to any
material tax sharing, tax indem-
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nity or other agreement or arrangement with any entity not included in the
Company's consolidated financial statements most recently filed by the Company
with the SEC.
(h) None of the Company or any of its Subsidiaries has been a member
of any affiliated group within the meaning of Section 1504(a) of the Code, or
any similar affiliated or consolidated group for tax purposes under state, local
or foreign law (other than a group the common parent of which is the Company),
or has any liability for Taxes of any person (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 or any similar
provision of state, local or foreign law as a transferee or successor, by
contract or otherwise.
(i) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges, fees,
duties, levies, penalties or other assessments imposed by any federal,
state, local or foreign governmental authority, including, but not limited
to, income, gross receipts, excise, property, sales, gain, use, license,
custom duty, unemployment, capital stock, transfer, franchise, payroll,
withholding, social security, minimum estimated, and other taxes, and shall
include interest, penalties or additions attributable thereto; and
(ii) "Tax Return" shall mean any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
Section 3.11 Intellectual Property.
(a) The Company and its Subsidiaries own or have adequate rights
to use all items of Intellectual Property (as defined below) necessary to
conduct the business of the Company and its Subsidiaries as presently conducted
or as currently proposed to be conducted, free and clear of all Encumbrances
(other than Encumbrances which, individually or in the aggregate, are not
expected to have a Company Material Adverse Effect).
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(b) To the knowledge of the Company, the conduct of the Company's and
its Subsidiaries' business and the Intellectual Property owned or used by the
Company and its Subsidiaries, do not infringe any Intellectual Property rights
or any other proprietary right of any person other than infringements which,
individually or in the aggregate, are not expected to have a Company Material
Adverse Effect. The Company and its Subsidiaries have received no notice of any
allegations or threats that the Company's and its Subsidiaries' use of any of
the Intellectual Property infringes upon or is in conflict with any Intellectual
Property or proprietary rights of any third party other than infringements or
conflicts which individually or in the aggregate are not expected to have a
Company Material Adverse Effect.
(c) As used in this Agreement, "Intellectual Property" means all of
the following: (i) U.S. and foreign registered and unregistered trademarks,
trade dress, service marks, logos, trade names, corporate names and all
registrations and applications to register the same (the "Trademarks"); (ii)
issued U.S. and foreign patents and pending patent applications, patent
disclosures, and any and all divisions, continuations, continuations-in-part,
reissues, reexaminations, and extension thereof, any counterparts claiming
priority therefrom, utility models, patents of importation/confirmation,
certificates of invention and like statutory rights (the "Patents"); (iii) U.S.
and foreign registered and unregistered copyrights (including, but not limited
to, those in computer software and databases) rights of publicity and all
registrations and applications to register the same (the "Copyrights"); (iv) all
categories of trade secrets as defined in the Uniform Trade Secrets Act
including, but not limited to, business information; (v) all licenses and
agreements pursuant to which the Company has acquired rights in or to any
Trademarks, Patents, or Copyrights, or licenses and agreements pursuant to which
the Company has licensed or transferred the right to use any of the foregoing
("Licenses").
Section 3.12 Employment Matters. Neither the Company nor any of its
Subsidiaries has experienced any strikes, collective labor grievances, other
collective bargaining disputes or Claims of unfair labor practices in the last
five years. To the Company's knowledge, there is no organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company and its Subsidiaries.
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Section 3.13 Compliance with Laws. To the knowledge of the Company,
the Company and its Subsidiaries are in compliance with, and have not violated
any applicable law, rule or regulation of any United States federal, state,
local, or foreign government or agency thereof which affects the business,
properties or assets of the Company and its Subsidiaries, and no notice, charge,
claim, action or assertion has been received by the Company or any of its
Subsidiaries or has been filed, commenced or, to the Company's knowledge,
threatened against the Company or any of its Subsidiaries alleging any such
violation, except for any matter otherwise covered by this sentence which does
not have, individually or in the aggregate, a Company Material Adverse Effect.
To the knowledge of the Company, all licenses, permits and approvals required
under such laws, rules and regulations are in full force and effect except where
the failure to be in full force and effect would not have a Company Material
Adverse Effect.
Section 3.14 Vote Required. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any class
or series of the Company's capital stock which may be necessary to approve this
Agreement or any of and the Transactions.
Section 3.15 Environmental Laws.
(a) Except as set forth in Section 3.15(a) of the Company Disclosure
Schedule, to the knowledge of the Company, the Company and its Subsidiaries are
in compliance with all applicable Environmental Laws (as defined below) (which
compliance includes, without limitation, the possession by the Company and its
Subsidiaries of all permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof), except where failure to be in compliance, either individually or in
the aggregate, would not have a Company Material Adverse Effect.
(b) Except as set forth in Section 3.15(b) of the Company Disclosure
Schedule, to the knowledge of the Company, there is no Environmental Claim (as
defined below) pending or, to the Company's knowledge, threatened against the
Company or any of the Subsidiaries or, to the Company's knowledge, against any
person or entity whose liability for any Environmental Claim the
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Company or any of its Subsidiaries has or may have retained or assumed either
contractually or by operation of law which Environmental Claim would have,
either individually or in the aggregate, a Company Material Adverse Effect.
(c) Except as set forth in Section 3.15(c) of the Company Disclosure
Schedule, to the knowledge of the Company, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release or presence of any Hazardous Material, which could form
the basis of any Environmental Claim against the Company or any of its
Subsidiaries, or to the Company's knowledge, against any person or entity whose
liability for any Environmental Claim the Company or any of its Subsidiaries has
or may have retained or assumed either contractually or by operation of law,
which Environmental Claim would have, either individually or in the aggregate, a
Company Material Adverse Effect.
(d) Except as set forth in Section 3.15(d) of the Company Disclosure
Schedule, to the knowledge of the Company, the Company and its Subsidiaries have
not, and to the Company's knowledge, no other person has, placed, stored,
deposited, discharged, buried, dumped or disposed of Hazardous Materials or any
other wastes produced by, or resulting from, any business, commercial or
industrial activities, operations or processes, on, beneath or adjacent to any
property currently or formerly owned, operated or leased by the Company or any
of its Subsidiaries, except (x) for inventories of such substances to be used,
and wastes generated therefrom, in the ordinary course of business of the
Company and its Subsidiaries, or (y) which would not, either individually or in
the aggregate, have a Company Material Adverse Effect.
(e) Without in any way limiting the generality of the foregoing,
except as set forth in Section 3.15(e) of the Company Disclosure Schedule, to
the knowledge of the Company, none of the properties owned, operated or leased
by the Company or any of its Subsidiaries contain any: underground storage
tanks; asbestos; polychlorinated biphenyls ("PCBs"); underground injection
wells; radioactive materials; or septic tanks or waste disposal pits in which
process wastewater or any Hazardous Materials have been discharged or disposed
the existence of which, individually or in the aggregate,
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could reasonably be expected to have a Company Material Adverse Effect.
(f) The Company has made available to Parent for review copies of all
environmental reports or studies in its possession prepared since January 1,
1994.
(g) For purposes of this Agreement, (i) "Environmental Laws" means all
federal, state, local and foreign laws and regulations relating to pollution or
protection of human health or the environment, including, without limitation,
laws relating to releases or threatened releases of Hazardous Materials or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, release, disposal, transport or handling of Hazardous Materials and all
laws and regulations with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Materials; (ii) "Environmental
Claim" means any claim, action, cause of action, investigation or notice
(written or oral) by any person or entity alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (a) the presence, or release, of any Hazardous Materials at any location,
whether or not owned, leased or operated by the Company or any of its
Subsidiaries, or (b) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law; (iii) "Hazardous Materials" means
all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants
in the National Oil and Hazardous Substances Pollution Contingency Plan, 40
C.F.R. Section 300.5, or defined as such by, or regulated as such under, any
Environmental Law.
Section 3.16 Information in Proxy Statement. The Proxy Statement, if
any (or any amendment thereof or supplement thereto), will, at the date mailed
to Company stockholders and at the time of the meeting of Company stockholders
to be held in connection with the Merger, not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied by Parent or the
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Purchaser for inclusion in the Proxy Statement. The Proxy Statement will comply
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder.
Section 3.17 Opinion of Financial Advisor. The Company has received
the opinion of Goldman, Sachs & Co., dated the date hereof, to the effect that,
as of such date, the $35 per Share to be received by the holders of Shares
pursuant to this Agreement is fair to such holders, a copy of which opinion has
been delivered to Parent and the Purchaser; it being understood and acknowledged
by Parent and Purchaser, however, that such opinion is not for the benefit of
Parent, Purchaser or their respective affiliates or stockholders and may not be
referred to in the Offer Documents.
Section 3.18 Rights Agreement. The Company has taken all action which
may be necessary under the Rights Agreement dated as of December 14, 1988
between the Company and Bank of America NT&SA, as Rights Agent (the "Rights
Agreement"), so that (x) the execution of this Agreement and any amendments
thereto by the parties hereto and the consummation of the transactions
contemplated thereby shall not cause (i) the Parent and/or the Purchaser to
become an Acquiring Person (as defined in the Rights Agreement) or (ii) a
Distribution Date, a Shares Acquisition Date or a Trigger Event (as such terms
are defined in the Rights Agreement) to occur, irrespective of the number of
Shares acquired pursuant to the Offer, and (y) the Rights (as defined in the
Rights Agreement) shall expire upon the acceptance of Shares for payment
pursuant to the Offer.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Except as set forth in the schedule attached to this Agreement setting
forth exceptions to the Parent's and Purchaser's representations and warranties
set forth herein (the "Parent Disclosure Schedule"), the Parent and Purchaser
represent and warrant to the Company as set forth below. The Parent Disclosure
Schedule will be arranged in sections corresponding to sections of this
Agreement to be modified by such disclosure schedule.
Section 4.1 Organization. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has all requisite corporate or other power and authority and all
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority, and
governmental approvals would not have, individually or in the aggregate, a
Parent Material Adverse Effect. As used in this Agreement, "Parent Material
Adverse Effect," with reference to any events, changes or effects, shall mean
such events, changes or effects that are materially adverse to the Parent and
its Subsidiaries, taken as a whole.
Section 4.2 Authorization; Validity of Agreement; Necessary Action.
Each of Parent and the Purchaser has full corporate power and authority to
execute and deliver this Agreement and to consummate the Transactions. The
execution, delivery and performance by Parent and the Purchaser of this
Agreement and the consummation of the Merger and of the Transactions have been
duly authorized by the Board of Directors of Parent and the Purchaser and by
Parent as the sole stockholder of the Purchaser and no other corporate action on
the part of Parent and the Purchaser is necessary to authorize the execution and
delivery by Parent and the Purchaser of this Agreement and the consummation of
the Transactions. This Agreement has been duly executed and delivered by Parent
and the Purchaser, as the case any be, and, assuming due and valid
authorization, execution and delivery hereof by the Company, is a valid and
binding obligation of each of Parent and the Purchaser, as the case may be,
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enforceable against each of them in accordance with its respective terms.
Section 4.3 Consents and Approvals; No Violations. Except for the
filings as set forth in Section 4.3 of the Parent Disclosure Schedule and except
for the filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the Exchange Act, the HSR
Act, the laws of any foreign jurisdiction, state securities or blue sky laws and
the DGCL, none of the execution, delivery or performance of this Agreement by
Parent or the Purchaser, the consummation by Parent or the Purchaser of the
Transactions or compliance by Parent or the Purchaser with any of the provisions
hereof will (i) conflict with or result in any breach of any provision of the
respective certificate of incorporation or by-laws of Parent or the Purchaser,
(ii) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Parent, or any of
its Subsidiaries or the Purchaser is a party or by which any of them or any of
their respective properties or assets may be bound, or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to Parent, any
of its Subsidiaries or any of their properties or assets, excluding from the
foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults
which would not, individually or in the aggregate, have a Parent Material
Adverse Effect or have a material adverse effect on the ability of Parent and
Purchaser to consummate the Transactions.
Section 4.4 Information in Proxy Statement. None of the information
supplied by Parent or the Purchaser specifically for inclusion or incorporation
by reference in the Proxy Statement will, at the date mailed to stockholders and
at the time of the meeting of stockholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
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Section 4.5 Financing. At the closing of the Offer, and at the
Effective Time, Parent and Purchaser will have sufficient cash resources
available to finance the transactions contemplated herein.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants
and agrees that, except (i) as expressly contemplated by this Agreement, or (ii)
as agreed in writing by Parent, after the date hereof, and prior to the time the
directors of the Purchaser have been elected to, and shall constitute a majority
of, the Board of Directors of the Company pursuant to Section 1.3 (the
"Appointment Date"):
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent consistent
therewith, each of the Company and its Subsidiaries shall use its best
reasonable efforts to preserve its business organization intact and maintain its
existing relations with customers, suppliers, employees, creditors and business
partners;
(b) the Company will not, directly or indirectly, (i) except upon
exercise of employee stock options or other rights to purchase shares of Common
Stock pursuant to the ESPP outstanding on the date hereof, issue, sell, transfer
or pledge or agree to sell, transfer or pledge any treasury stock of the Company
or any capital stock of any of its Subsidiaries beneficially owned by it, (ii)
amend its Certificate of Incorporation or By-laws or similar organizational
documents; or (iii) split, combine or reclassify the outstanding Shares or
Preferred Stock or any outstanding capital stock of any of the Subsidiaries of
the Company;
(c) neither the Company nor any of its Subsidiaries shall: (i)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock other than dividends paid by
Subsidiaries of the Company to the Company or any of its Subsidiaries in the
ordinary course of business; (ii) issue, sell, pledge, dispose of or encumber
any additional shares of, or securities convertible into or
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exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than Shares reserved for issuance on the date hereof
pursuant to the exercise of Company Options outstanding on the date hereof;
(iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber
any assets other than in the ordinary and usual course of business and
consistent with past practice, or incur or modify any indebtedness or other
liability, other than in the ordinary and usual course of business and
consistent with past practice; or (iv) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock;
(d) neither the Company nor any of its Subsidiaries shall: (i) grant
any increase in the compensation payable or to become payable by the Company or
any of its Subsidiaries to any of its executive officers or (ii)(A) adopt any
new, or (B) amend or otherwise increase, or accelerate the payment or vesting of
the amounts payable or to become payable under any existing bonus, incentive
compensation, deferred compensation, severance, profit sharing, stock option,
stock purchase, insurance, pension, retirement or other employee benefit plan,
agreement or arrangement; or (iii) enter into any employment or severance
agreement with or, except in accordance with the existing written policies of
the Company, grant any severance or termination pay to any officer, director or
employee of the Company or any of its Subsidiaries;
(e) neither the Company nor any of its Subsidiaries shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent, except in the ordinary course
of business and consistent with past practice;
(f) neither the Company nor any of its Subsidiaries shall enter into
any contract or transaction relating to the purchase of assets other than in the
ordinary course of business consistent with prior practices;
(g) neither the Company nor any of its Subsidiaries shall change any
of the accounting methods used by it unless required by GAAP, neither the
Company nor any of its Subsidiaries shall make any material Tax election except
in the ordinary course of business consistent with past practice, change any
material Tax election already
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made, adopt any material Tax accounting method except in the ordinary course of
business consistent with past practice, change any material Tax accounting
method unless required by GAAP, enter into any closing agreement, settle any Tax
claim or assessment or consent to any Tax claim or assessment or any waiver of
the statute of limitations for any such claim or assessment; and
(h) neither the Company nor any of its Subsidiaries will take any
action with the intent of causing any of the conditions to the Offer set forth
in Annex A not to be satisfied.
Section 5.2 Access; Confidentiality. (a) Upon reasonable notice,
the Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours during the
period prior to the Appointment Date, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to the Parent (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of federal
securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Access shall include
the right to conduct such environmental studies and tests as Parent, in its
reasonable discretion, shall deem appropriate, provided, however, that such
studies and tests must be performed prior to February 23, 1997 and must be
performed in such a way as to not materially disrupt the Company's business.
After the Appointment Date, the Company shall provide Parent and such persons as
Parent shall designate with all such information, at such time as Parent shall
request. Unless otherwise required by law and until the Appointment Date,
Parent will hold any such information which is nonpublic in confidence in
accordance with the provisions of a letter agreement dated March 29, 1996
between the Company and the Parent (the "Confidentiality Agreement"). The
Company shall promptly, and in any event within ten business days following the
date of this Agreement, deliver to Parent true and complete copies of all Plans
not previously delivered to Parent and any amendments thereto (or if the Plan is
not a written Plan, a description thereof), any related trust or other funding
vehicle, any summary plan description required under ERISA or
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the Code and the most recent determination letter received from the Internal
Revenue Service with respect to each Plan intended to qualify under section 401
of the Internal Revenue Code of 1986, as amended (the "Code").
(b) Following the execution of this Agreement, Parent and the Company
shall cooperate with each other and make all reasonable efforts to minimize any
disruption to the business which may result from the announcement of the
Transactions.
Section 5.3 Consents and Approvals. (a) Each of the Company, Parent
and the Purchaser will take all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed on it with respect to this
Agreement and the Transactions and will promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with this Agreement and
the Transactions. Each of the Company, Parent and the Purchaser will, and will
cause its Subsidiaries to, take all reasonable actions necessary to obtain (and
will cooperate with each other in obtaining) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by Parent, the Purchaser,
the Company or any of their Subsidiaries in connection with the Merger or the
taking of any action contemplated thereby or by this Agreement.
(b) The Company and Parent shall take all reasonable actions
necessary to file as soon as practicable notifications under the HSR Act and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
(c) The Company and Parent shall take all reasonable actions necessary
to file any other forms or notifications which may be required by any foreign
Governmental Entity and to obtain any approvals which may be required in
connection therewith.
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Section 5.4 No Solicitation. (a) Neither the Company nor any of its
Subsidiaries shall (and the Company shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any proposal or offer to acquire all or a
substantial part of the business and properties of the Company or any of its
Subsidiaries or any capital stock of the Company or any of its Subsidiaries,
whether by merger, tender offer, exchange offer, sale of assets or similar
transactions involving the Company or any Subsidiary, division or operating or
principal business unit of the Company (an "Acquisition Proposal"), except that
nothing contained in this Section 5.4 or any other provision hereof shall
prohibit the Company or the Company's Board from (i) taking and disclosing to
the Company's stockholders a position with respect to a tender or exchange offer
by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act, or (ii) making such disclosure to the Company's stockholders as,
in the good faith judgment of the Board, after receiving advice from outside
counsel, is required under applicable law, provided that the Company may not,
except as permitted by Section 5.4(b), withdraw or modify, or propose to
withdraw or modify, its position with respect to the Offer or the Merger or
approve or recommend, or propose to approve or recommend any Acquisition
Proposal, or enter into any agreement with respect to any Acquisition Proposal.
The Company will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, the Company may furnish information concerning the
Company and its Subsidiaries to any corporation, partnership, person or other
entity or group pursuant to appropriate confidentiality agreements, and may
negotiate and participate in discussions and negotiations with such entity or
group concerning an Acquisition Proposal if (x) such entity or group has on an
unsolicited basis submitted a bona fide written proposal to the Company relating
to any
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such transaction which the Board determines in good faith, after consulting with
a nationally recognized investment banking firm, represents a superior
transaction to the Offer and the Merger and (y) in the opinion of the Board of
Directors of the Company, only after receipt of advice from outside legal
counsel to the Company, the failure to provide such information or access or to
engage in such discussions or negotiations could reasonably be expected to cause
the Board of Directors to violate its fiduciary duties to the Company's
stockholders under applicable law (an Acquisition Proposal which satisfies
clauses (x) and (y) being referred to herein as a "Superior Proposal"). The
Company will within two business days following receipt of a Superior Proposal
notify Parent of the receipt of the same. The Company will promptly provide to
Parent any material non-public information regarding the Company provided to any
other party which was not previously provided to Parent. At any time after two
business days following notification to Parent of the Company's intent to do so
(which notification shall include the identity of the bidder and the material
terms and conditions of the proposal) and if the Company has otherwise complied
with the terms of this Section 5.4(b), the Board of Directors may withdraw or
modify its approval or recommendation of the Offer and may enter into an
agreement with respect to a Superior Proposal, provided it shall concurrently
with entering into such agreement pay or cause to be paid to Parent the
Termination Fee (as defined below) plus any amount payable at the time for
reimbursement of expenses pursuant to Section 8.1(b). If the Company shall have
notified Parent of its intent to enter into an agreement with respect to a
Superior Proposal in compliance with the preceding sentence and has otherwise
complied with such sentence, the Company may enter into an agreement with
respect to such Superior Proposal (with the bidder and on terms no less
favorable than those specified in such notification) after the expiration of the
initial two business day period without any further notification.
Section 5.5 Brokers or Finders. The Company represents, as to itself
and its Subsidiaries and affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any brokers'
or finder's fee or any other commission or similar fee from the Company or any
of its Subsidiaries in connection with any of the transactions contemplated
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by this Agreement except for Goldman, Sachs & Co., whose engagement letter has
been provided to Parent.
Section 5.6 Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to achieve the satisfaction of the Minimum Condition and all
conditions set forth in Annex A and Article VI, and to consummate and make
effective the Merger and the other transactions contemplated by this Agreement.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of the Company, Parent and the Purchaser shall use all reasonable
efforts to take, or cause to be taken, all such necessary actions. The Company
shall use its reasonable best efforts to effect the retention of the individuals
set forth in Section 5.6 of the Company Disclosure Schedule as employees of the
Company following consummation of the Transactions.
Section 5.7 Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to Parent
and the Company. Thereafter, so long as this Agreement is in effect, neither
the Company, Parent nor any of their respective affiliates shall issue or cause
the publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions without the prior consultation
of the other party, except as such party believes, after receiving the advice of
outside counsel, may be required by law or by any listing agreement with a
national securities exchange or trading market.
Section 5.8 Notification of Certain Matters. The Company shall give
prompt notice to Parent and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time and (ii) any material failure of the
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Company, Parent or the Purchaser, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.8 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
Section 5.9 Directors' and Officers' Insurance and Indemnification.
(a) For six years after the Effective Time, the Surviving Corporation (or any
successor to the Surviving Corporation) shall indemnify, defend and hold
harmless the present and former officers and directors of the Company and its
Subsidiaries, and persons who become any of the foregoing prior to the Effective
Time (each an "Indemnified Party") against all losses, claims, damages,
liabilities, costs, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the written consent of the Parent or the Surviving Corporation which consent
shall not unreasonably be withheld)) arising out of actions or omissions
occurring at or prior to the Effective Time to the full extent required under
applicable Delaware law, the terms of the Company's Certificate of Incorporation
or the By-laws, as in effect at the date hereof, and the terms of any
indemnification agreement entered into with the Company prior to the date
hereof; provided that, in the event any claim or claims are asserted or made
within such six-year period, all rights to indemnification in respect of any
such claim or claims shall continue until disposition of any and all such
claims.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance ("D&O Insurance") for a
period of not less than six years after the Effective Time; provided, that the
Parent may substitute therefor policies of substantially equivalent coverage and
amounts containing terms no less favorable to such former directors or officers;
provided, further, if the existing D&O Insurance expires, is terminated or
cancelled during such period, Parent or the Surviving Corporation will use all
reasonable efforts to obtain substantially similar D&O Insurance; provided,
further, however, that in no event shall the Company be required to pay
aggregate premiums for
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insurance under this Section 5.9(b) in excess of 150% of the aggregate premiums
paid by the Company in 1996 on an annualized basis for such purpose (the "1996
Premium"); and provided, further, that if the Parent or the Surviving
Corporation is unable to obtain the amount of insurance required by this Section
5.9(b) for such aggregate premium, Parent or the Surviving Corporation shall
obtain as much insurance as can be obtained for an annual premium not in excess
of 150% of the 1996 Premium.
Section 5.10 Purchaser Compliance. Parent shall cause the Purchaser
to comply with all of its obligations under or related to this Agreement.
Section 5.11 Severance Agreements.
(a) Parent shall cause the Surviving Corporation to honor the
severance agreements attached as Schedule 5.11 to the Company Disclosure
Schedule (the "Severance Agreements"), except to the extent modified or
superseded by a separate agreement entered into by the employee and the Company
or Parent or Purchaser. Upon any Involuntary Termination (as such term is
defined in Paragraph 1 of the Severance Agreement) other than a Termination for
Cause (as such term is defined in Paragraph 1 of the Severance Agreement) of the
employment of any individual covered by such Severance Agreement at any time
prior to December 31, 1998, such individual shall be immediately entitled to the
lump sum cash severance payment provided under Paragraph 2(b) of his Severance
Payment.
(b) In addition, the Parent shall establish or cause to be established
a retention bonus plan ("Retention Bonus Plan") which shall provide that each
individual ("Participant") who, as of the Effective Time is a party to a
Severance Agreement (and who is not a party to an employment agreement with the
Parent, Purchaser or the Surviving Corporation as of the Effective Time) shall
receive on or about December 31, 1998 (if such Participant has been continually
employed by the Parent or the Surviving Corporation through such date) a bonus
("Retention Bonus") equal to the Severance Payment (as defined in the applicable
Severance Agreement) that would have been payable to such Participant under the
applicable Severance Agreement if an Involuntary Termination (as defined in the
applicable Severance Agreement) of the Participant
41
<PAGE> 45
occurred immediately following the Effective Time; provided, however, that if a
Participant dies prior to December 31, 1998 and was continually employed by the
Parent or the Surviving Corporation through the date of his death, his estate or
beneficiary shall be entitled to a pro rata portion of such Participant's
Retention Bonus through the date of his death. Any payment of a Retention Bonus
under the Retention Bonus Plan shall be in lieu of any payment under the
Severance Agreement to which the Participant may otherwise be entitled. Except
as may otherwise be required by applicable law or interpretive guidance by a
regulatory agency then in effect, Parent and Company hereby agree that in
determining the amount of any cash lump sum cash severance payment payable
pursuant to Section 5.11(a) of this Agreement or any Retention Bonus, the offset
for the aggregate Option Parachute Payment (as such term is defined in the
Severance Agreement) attributable to the Options of the each covered individual
which vest on an accelerated basis in connection with the Merger shall be
determined (i) in accordance with the valuation procedures set forth in
Paragraphs (c)(1) and (c)(2) of Q&A 24 of proposed Treasury Regulation 1.280G-1
and Example 8 of such Q&A 24, (ii) the amount of the accelerated payment
attributable to each installment of Shares for which such Option is accelerated
in connection with the Merger shall, for purposes of applying the valuation
procedures of such Q&A 24, be limited solely to the spread between the Merger
Consideration payable per Share and the option exercise price times the number
of Shares for which the Option becomes exercisable on such an accelerated basis
and (iii) the amount to be taken into account under Paragraph (c)(2) of such Q&A
24 to reflect the lapse of the vesting requirements otherwise applicable to
those accelerated Shares shall be limited to 1% of the amount of the accelerated
payment (as determined in accordance with the foregoing) times the number of
months of acceleration.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of
42
<PAGE> 46
the following conditions, any and all of which may be waived in whole or in part
by the Company, Parent or the Purchaser, as the case may be, to the extent
permitted by applicable law:
(a) Shareholder Approval. This Agreement shall have been approved
and adopted by the requisite vote of the holders of the Shares, if required by
applicable law, in order to consummate the Merger;
(b) Statutes; Court Orders. No statute, rule or regulation shall
have been enacted or promulgated by any governmental authority which prohibits
the consummation of the Merger; and there shall be no order or injunction of a
court of competent jurisdiction in effect precluding consummation of the Merger.
(c) Purchase of Shares in Offer. Parent, the Purchaser or their
affiliates shall have purchased Shares pursuant to the Offer, except that this
condition shall not apply if Parent, the Purchaser or their affiliates shall
have failed to purchase Shares pursuant to the Offer in breach of their
obligations under this Agreement; and
(d) HSR Approval. The applicable waiting period under the HSR Act
shall have expired or been terminated.
Section 6.2 Condition to Parent's and the Purchaser's Obligations to
Effect the Merger. The obligations of Parent and the Purchaser to consummate
the Merger are further subject to the fulfillment of the condition that all
actions contemplated by Section 2.4 hereof shall have been taken, which may be
waived in whole or in part by Parent and the Purchaser.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and the
Transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after stockholder approval thereof:
43
<PAGE> 47
(a) By the mutual written consent of Parent and the Company.
(b) By either of the Company or Parent:
(i) if (x) the Offer shall have expired without any Shares being
purchased therein or (y) the Purchaser shall not have accepted for payment
all Shares tendered pursuant to the Offer by April 30, 1997; provided,
however, that the right to terminate this Agreement under this Section
7.1(b)(i) shall not be available (A) to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted in,
the failure of Parent or the Purchaser, as the case may be, to purchase the
Shares pursuant to the Offer on or prior to such date or (B) after
Purchaser shall have purchased Shares pursuant to the Offer; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or
other action the parties hereto shall use their reasonable efforts to
lift), which permanently restrains, enjoins or otherwise prohibits the
acceptance for payment of, or payment for, Shares pursuant to the Offer or
the Merger and such order, decree, ruling or other action shall have become
final and non- appealable.
(c) By the Company:
(i) if Parent, the Purchaser or any of their affiliates shall
have failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer;
provided, that the Company may not terminate this Agreement pursuant to
this Section 7.1(c)(i) if the Company is at such time in breach of its
obligations under this Agreement such as to cause a material adverse effect
on the Company and its Subsidiaries, taken as a whole;
(ii) in connection with entering into a definitive agreement in
accordance with Section 5.4(b), provided it has complied with all
provisions thereof, including the notice provisions therein,
44
<PAGE> 48
and that it makes simultaneous payment of the Termination Fee, plus any
amounts then due as a reimbursement of expenses; or
(iii) if Parent or the Purchaser shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which breach
cannot be or has not been cured, in all material respects, within 30 days
after the giving of written notice to Parent or the Purchaser, as
applicable.
(d) By Parent:
(i) if, due to an occurrence, not involving a breach by Parent
or the Purchaser of their obligations hereunder, which makes it impossible
to satisfy any of the conditions set forth in Annex A hereto, Parent, the
Purchaser, or any of their affiliates shall have failed to commence the
Offer on or prior to five business days following the date of the initial
public announcement of the Offer;
(ii) if prior to the purchase of Shares pursuant to the Offer,
the Company shall have breached any representation, warranty, covenant or
other agreement contained in this Agreement which (A) would give rise to
the failure of a condition set forth in paragraph (f) or (g) of Annex A
hereto and (B) cannot be or has not been cured, in all material respects,
within 30 days after the giving of written notice to the Company; or
(iii) if either Parent or the Purchaser is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph
(e) of Annex A hereto.
Section 7.2 Effect of Termination. In the event of the termination
of this Agreement pursuant to its terms, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement shall forthwith become
null and void, and there shall be no liability on the part of the Parent or the
Company except (A) for fraud or for breach of this
45
<PAGE> 49
Agreement prior to such termination and (B) as set forth in Sections 5.2(a) (the
penultimate sentence thereof), 7.2 and 8.1.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as contemplated by this
Agreement, including Section 8.1(b) hereof, all costs and expenses incurred in
connection with this Agreement and the consummation of the Transactions shall be
paid by the party incurring such expenses.
(b) If (w) the Company shall terminate this Agreement pursuant to
Section 7.1(c)(ii), (x) Parent shall terminate this Agreement pursuant to
Section 7.1(d)(iii) hereof, or (y) either the Company or Parent terminates this
Agreement pursuant to Section 7.1(b)(i) and (a) prior thereto there shall have
been publicly announced another Acquisition Proposal or an event set forth in
paragraph (h) of Annex A shall have occurred and (b) an Acquisition Proposal
shall be consummated on or prior to December 31, 1997, the Company shall pay to
Parent, an amount equal to $20,000,000 (the "Termination Fee"), plus an amount,
not to exceed $3.0 million, equal to Parent's actual and reasonably documented
out-of-pocket fees and expenses incurred by Parent and Purchaser in connection
with the Offer, the Merger, this Agreement and the consummation of the
Transactions, which shall be payable in same day funds; provided, however, that
no Termination Fee shall be payable if the Purchaser or Parent was in material
breach of its representations, warranties or obligations under this Agreement at
the time of its termination. The Termination Fee and Parent's good faith
estimate of its expenses shall be paid concurrently with any such termination,
together with delivery of a written acknowledgement by the Company of its
obligation to reimburse Parent for its actual expenses in excess of such
estimated expenses payment.
Section 8.2 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the
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<PAGE> 50
parties hereto, by action taken by their respective Boards of Directors (which
in the case of the Company shall include approvals as contemplated in Section
1.3(b)), at any time prior to the Closing Date with respect to any of the terms
contained herein; provided, however, that after the approval of this Agreement
by the stockholders of the Company, no such amendment, modification or
supplement shall reduce the amount or change the form of the Merger
Consideration.
Section 8.3 Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 8.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
Honeywell Inc.
16404 N. Black Canyon Highway
Phoenix, Arizona 85023-3033
Attention: President, Industrial
Automation and Control
Telephone No.:(602) 313-5000
Telecopy No.:(602) 313-5705
with a copy to:
Honeywell Inc.
Honeywell Plaza
Minneapolis, Minnesota 55408
Attention: Office of the General Counsel
Telephone No.:(612) 951-1000
Telecopy No.: (612) 951-0647
and
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
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<PAGE> 51
New York, New York 10022
Attention: David J. Friedman, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000
and
if to the Company, to:
Measurex Corporation
One Results Way
Cupertino, California 95014
Attention: Charles Van Orden, Vice-
President and General
Counsel
Telephone No.: (408) 725-3109
Telecopy No.: (408) 864-7580
with a copy to:
Brobeck, Phleger and Harrison, LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, California 94303
Attention: Thomas W. Kellerman, Esq.
Telephone No.: (415) 424-0160
Telecopy No.: (415) 496-2885
Section 8.5 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." As used in this Agreement, the term
"affiliates" shall have the meaning set forth in Rule 12b-2 of the Exchange Act.
Section 8.6 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 8.7 Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Confidentiality
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Agreement (including the documents and the instruments referred to herein and
therein): (a) constitute the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) except as provided in Sections 2.4
and 5.9 is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
Section 8.8 Severability. Any term or provision of this Agreement
that is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court asking such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 8.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 8.10 Assignment. Neither this Agreement not any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written content of the other parties, except that the Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned Subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
49
<PAGE> 53
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
HONEYWELL INC.
By /s/ Lawrence W. Stranghoener
---------------------------------
Name: Lawrence W. Stranghoener
Title: Vice President- Corporate
Business Development
HONEYWELL ACQUISITION CORP.
By /s/ Lawrence W. Stranghoener
---------------------------------
Name: Lawrence W. Stranghoener
Title: Vice President
MEASUREX CORPORATION
By /s/ David A. Bossen
---------------------------------
Name: David A. Bossen
Title: Chairman and Chief Executive
Officer
50
<PAGE> 54
ANNEX A
Certain Conditions of the Offer. Notwithstanding any other provisions
of the Offer, and in addition to (and not in limitation of) the Purchaser's
rights to extend and amend the Offer at any time in its sole discretion (subject
to the provisions of the Merger Agreement), the Purchaser shall not be required
to accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-l(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate or amend the Offer as to any Shares not then paid for,
if (i) any applicable waiting period under the HSR Act has not expired or
terminated, (ii) the Minimum Condition has not been satisfied, or (iii) at any
time on or after the date of the Merger Agreement and before the time of
acceptance for payment for any such Shares, any of the following events shall
have occurred:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity against the Purchaser, Parent, the Company
or any Subsidiary of the Company (i) seeking to prohibit or impose any material
limitations on Parent's or the Purchaser's ownership or operation (or that of
any of their respective Subsidiaries or affiliates) of all or a material portion
of their or the Company's businesses or assets, or to compel Parent or the
Purchaser or their respective Subsidiaries and affiliates to dispose of or hold
separate any material portion of the business or assets of the Company or Parent
and their respective Subsidiaries, in each case taken as a whole, (ii)
challenging the acquisition by Parent or the Purchaser of any Shares under the
Offer, seeking to restrain or prohibit the making or consummation of the Offer
or the Merger or the performance of any of the other transactions contemplated
by the Agreement, or seeking to obtain from the Company, Parent or the Purchaser
any damages that are material in relation to the Company and its Subsidiaries
taken as a whole, (iii) seeking to impose material limitations on the ability of
the Purchaser, or render the Purchaser
A-1
<PAGE> 55
unable, to accept for payment, pay for or purchase some or all of the Shares
pursuant to the Offer and the Merger, (iv) seeking to impose material
limitations on the ability of Purchaser or Parent effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to the
Company's stockholders, or (v) which otherwise is reasonably likely to have a
Company Material Adverse Effect;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, other than the application to the Offer or the Merger of
applicable waiting periods under HSR Act, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange for a
period in excess of 24 hours (excluding suspensions or limitations resulting
solely from physical damage or interference with such exchanges not related to
market conditions), (ii) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States (whether or not mandatory),
(iii) a commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States, (iv) any
limitation (whether or not mandatory) by any United States governmental
authority on the extension of credit generally by banks or other financial
institutions, or (v) a change in general financial, bank or capital market
conditions which materially and adversely affects the ability of financial
institutions in the United States to extend credit or syndicate loans or (vi) in
the case of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof;
(d) there shall have occurred any events after the date of the
Agreement which, either individually or in the aggregate, would have a Company
Material Adverse
A-2
<PAGE> 56
Effect; provided, however, that no event, change or effect that materially
results from the Transactions or the announcement thereof shall be deemed to
cause, either individually or in the aggregate, a Company Material Adverse
Effect;
(e)(i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the Purchaser
its approval or recommendation of the Offer, the Merger or the Agreement, or
approved or recommended any Acquisition Proposal or (ii) the Company shall have
entered into any agreement with respect to any Superior Proposal in accordance
with Section 5.4(b) of the Agreement;
(f) the representations and warranties of the Company set forth in
the Agreement shall not be true and correct, in each case (i) as of the date
referred to in any representation or warranty which addresses matters as of a
particular date, or (ii) as to all other representations and warranties, as of
the date of the Agreement and as of the scheduled expiration of the Offer,
unless the inaccuracies (without giving effect to any materiality or material
adverse effect qualifications or materiality exceptions contained therein) under
such representations and warranties, taking all the inaccuracies under all such
representations and warranties together in their entirety, do not, individually
or in the aggregate, result in a Company Material Adverse Effect;
(g) the Company shall have failed to perform any obligation or to
comply with any agreement or covenant to be performed or complied with by it
under the Agreement other than any failure which would not have, either
individually or in the aggregate, a Company Material Adverse Effect;
(h) any person acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act), of at least 20% of the outstanding Common
Stock of the Company (other than any person not required to file a Schedule 13D
under the rules promulgated under the Exchange Act);
(i) the Agreement shall have been terminated in accordance with its
terms; or
A-3
<PAGE> 57
(j) the diminution in the value of the Company and its Subsidiaries to
the Parent and the Purchaser as a result of breaches, if any, of the
representations and warranties set forth in Section 3.15 of the Agreement
(without giving effect to any materiality or material adverse effect
qualifications or materiality exceptions contained therein) in excess of
environmental liabilities and costs which would reasonably be expected to exist
based on the reports and information regarding environmental matters provided to
Parent as listed on the Company Disclosure Schedule (assuming there has been no
non-compliance with Environmental Laws, Environmental Claims, releases of
Hazardous Materials, contamination or other environmental conditions described
in Section 3.15 of the Agreement other than as specifically identified in such
reports) as estimated by an environmental consultant or consultants reasonably
satisfactory to Parent and the Company exceeds $16 million; provided, however,
that the foregoing amount shall not be used to define Company Material Adverse
Effect.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such condition (including any action or inaction by
Parent or the Purchaser not in violation of the Agreement) and may be waived by
Parent or the Purchaser in whole or in part at any time and from time to time in
the sole discretion of Parent or the Purchaser, subject in each case to the
terms of the Merger Agreement. The failure by Parent or the Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
A-4
<PAGE> 58
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I THE OFFER AND MERGER 1
Section 1.1 The Offer. 1
Section 1.2 Company Actions. 4
Section 1.3 Directors. 6
Section 1.4 The Merger 7
Section 1.5 Effective Time 8
Section 1.6 Closing 8
Section 1.7 Directors and Officers of the Surviving Corporation. 9
Section 1.8 Stockholders' Meeting. 9
Section 1.9 Merger Without Meeting of Stockholders. 10
ARTICLE II CONVERSION OF SECURITIES 10
Section 2.1 Conversion of Capital Stock 10
Section 2.2 Exchange of Certificates 11
Section 2.3 Dissenters' Rights. 13
Section 2.4 Company Plans. 13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 15
Section 3.1 Organization. 16
Section 3.2 Capitalization 17
Section 3.3 Authorization; Validity of Agreement; Company Action 18
Section 3.4 Consents and Approvals; No Violations 19
Section 3.5 SEC Reports and Financial Statements 20
Section 3.6 Absence of Certain Changes 20
Section 3.7 No Undisclosed Liabilities 21
Section 3.8 Litigation. 21
Section 3.9 Employee Benefit Plans 21
Section 3.10 Tax Matters; Government Benefits 24
Section 3.11 Intellectual Property. 26
Section 3.12 Employment Matters. 27
Section 3.13 Compliance with Laws. 28
Section 3.14 Vote Required. 28
Section 3.15 Environmental Laws 28
</TABLE>
1
<PAGE> 59
<TABLE>
<S> <C> <C>
Section 3.16 Information in Proxy Statement. 30
Section 3.17 Opinion of Financial Advisor. 31
Section 3.18 Rights Agreement 31
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER 32
Section 4.1 Organization. 32
Section 4.2 Authorization; Validity of Agreement; Necessary Action. 32
Section 4.3 Consents and Approvals; No Violations. 33
Section 4.4 Information in Proxy Statement. 33
Section 4.5 Financing 34
ARTICLE V COVENANTS 34
Section 5.1 Interim Operations of the Company. 34
Section 5.2 Access; Confidentiality. 36
Section 5.3 Consents and Approvals. 37
Section 5.4 No Solicitation. 38
Section 5.5 Brokers or Finders. 40
Section 5.6 Additional Agreements. 40
Section 5.7 Publicity. 40
Section 5.8 Notification of Certain Matters. 41
Section 5.9 Directors' and Officers' Insurance and Indemnification. 41
Section 5.10 Purchaser Compliance. 42
Section 5.11 Severance Agreements. 42
ARTICLE VI CONDITIONS 44
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger. 44
Section 6.2 Condition to Parent's and the Purchaser's Obligations to Effect the Merger. 45
ARTICLE VII TERMINATION 45
Section 7.1 Termination. 45
Section 7.2 Effect of Termination. 47
</TABLE>
2
<PAGE> 60
<TABLE>
<S> <C> <C>
ARTICLE VIII MISCELLANEOUS 47
Section 8.1 Fees and Expenses 47
Section 8.2 Amendment and Modification. 48
Section 8.3 Nonsurvival of Representations and Warranties. 48
Section 8.4 Notices. 48
Section 8.5 Interpretation 50
Section 8.6 Counterparts. 50
Section 8.7 Entire Agreement; No Third Party Beneficiaries. 50
Section 8.8 Severability. 50
Section 8.9 Governing Law. 51
Section 8.10 Assignment 51
</TABLE>
3
<PAGE> 1
EMPLOYMENT AGREEMENT
BETWEEN
MR. DAVID BOSSEN AND HONEYWELL ACQUISITION CORP.
This Employment Agreement ("Agreement") is entered into between Mr. David
Bossen ("Executive"), and Honeywell Acquisition Corp. (the "Company"), a
corporation incorporated under the laws of Delaware. In this Agreement,
Executive and the Company are collectively referred to as "the parties". The
term "the Company" as used in this Agreement includes all subsidiaries,
affiliates, and businesses of Honeywell Acquisition Corp. and following the
Effective Time (as defined in the Merger Agreement (as defined below)) means
Honeywell-Measurex Corporation as the surviving entity of the Merger (as defined
below) and all of its subsidiaries, affiliates and businesses. The effective
date of this Agreement is the Effective Time.
I. BACKGROUND.
A. Acquisition of Measurex. Under the terms of the Agreement and Plan of
Merger, dated as of January 26, 1997 ("Merger Agreement"), Honeywell
Acquisition Corp. (a wholly owned subsidiary of Honeywell Inc.
("Honeywell")) has agreed to purchase all of the issued and outstanding
shares of capital stock of Measurex Corporation ("Measurex"). After the
acceptance for purchase of shares of common stock of Measurex pursuant to
the Offer, Honeywell Acquisition Corp. will be merged with and into
Measurex at the Effective Time (the "Merger"), with Measurex being the
surviving company thereafter to be named Honeywell-Measurex Corporation.
B. Executive's Position with Measurex. Executive is the Chairman and
Chief Executive Officer of Measurex.
C. Measurex's Business. Measurex is engaged in the design, manufacture
and servicing of computer-integrated measurement, control and information
systems and will be operated as a unit of Honeywell's Industrial Automation
and Control business.
II. SUPERSEDES AND REPLACES ALL PRIOR AGREEMENTS. Executive and the Company
agree that as of the Effective Time this Agreement will supersede and replace
all agreements, contracts, or promises of any kind between Executive and
Measurex, and that all such agreements, contracts and promises will be revoked
and of no further force or effect including, without limitation, that certain
Severance Agreement dated as of May 15, 1995.
III. EMPLOYMENT POSITION WITH THE COMPANY. The Company wishes to employ
Executive, and Executive wishes to be employed by the Company, in the position
of Senior Advisor. This Agreement sets out the mutual considerations and
undertakings between the Company and Executive which are entered into for the
purpose of employing Executive in this position, or another position as
assigned by the Company and as may be agreed to by Executive.
A. Duties and Authority.
1. Executive will have all of the duties and responsibilities, and
will be subject to all terms and conditions of employment, which are
customary and reasonable for his position.
2. Executive will be subject to, and will abide by the requirements
of, all Honeywell and Company policies which are communicated to
Executive and which are from time to time in effect for management or
executive employees of Honeywell and the Company, including without
limitation, Honeywell's Code of Ethics and Business Conduct.
<PAGE> 2
3. Executive will perform the duties and exercise the powers of his
position in accordance with the direction of the Board of Directors of
the Company and in accordance with the direction of the President of
Honeywell Industrial and Automation Control.
B. Term of Agreement. Subject to the terms of this Agreement, Executive's
employment with the Company pursuant to this Agreement will commence at the
Effective Time. Unless terminated sooner and subject to the terms of Paragraph
IV.D. hereof, this Agreement expires on December 31, 2000.
C. Compensation. Until December 31, 1997, so long as Executive remains an
employee of the Company and this Agreement remains in effect, the Company will
continue Executive's coverage under all Measurex employee benefit programs in
which he currently participates or, in its discretion, will provide
substantially comparable plans and benefits of the Company and will also provide
him with substantially the same perquisites including, without limitation, car
allowance, tax and financial consulting services and the special term life
insurance policy in the amount of $500,000. After January 1, 1998, so long as
Executive remains an employee of the Company and this Agreement remains in
effect, the Company will continue Executive's coverage under the Measurex
medical/dental plans (including coverage for his spouse) and the special term
life insurance policy in the face amount of $500,000 or, in its discretion, will
provide substantially comparable plans and benefits of the Company. Executive's
base salary for 1997 shall be four hundred and seventy-five thousand dollars
($475,000.00) on an annualized basis, and his base salary for each of 1998, 1999
and 2000 shall be three hundred thousand dollars ($300,000.00), in each case,
less all standard legal deductions and all other deductions, contributions, and
payments authorized by Executive payable on a bi-weekly basis.
1. Incentive Compensation. Executive will be entitled to an
additional three hundred and ninety-five thousand dollars
($395,000.00) of incentive compensation upon continuation of
Executive's employment with the Company through the end of the 1997
calendar year, with such incentive compensation to be paid within 30
days after the close of such calendar year. If this Agreement
terminates before the end of the 1997 calendar year, the incentive
compensation due Executive for that calendar year shall be paid on a
prorated basis.
2. Special Additional Compensation. As an additional incentive for
Executive to remain employed by the Company for the entire term of
this Agreement, and as additional consideration for Executive's
covenants and promises in this Agreement, the Company will provide the
following incentive to Executive:
a. An aggregate cash payment of $3,101,283 (subject to
adjustment to avoid any excess parachute payment under Internal
Revenue Code Section 280G, as calculated in accordance with
Section 5.11 of the Merger Agreement) payable on or about the
Effective Time.
3. Vacation/Sick Leave. Executive shall for the 1997 calendar year
continue to accrue vacation pay and sick leave pay at the same rates
in effect for Executive prior to the Merger, and all accrued but
unused vacation and sick leave pay available to Executive prior to the
Merger will continue to remain available to Executive after the
Merger.
D. Termination. On termination of employment, for whatever reason, and
whether the termination is voluntary or involuntary, Executive shall immediately
resign all offices held with or on behalf of the Company. Other than as is
specifically provided in this paragraph III.D., Execu- tive shall not be
entitled to receive any payment or compensation for loss of office, or by reason
of his separation from employment with the Company. If Executive fails to
immediately resign all offices as set forth above, the Company is hereby
irrevocably authorized to appoint an individual of the Company's choice to, in
Executive's name and on
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<PAGE> 3
Executive's behalf, sign any documents or to do any thing necessary or requisite
to give effect to Executive's resignation from all such offices.
1. Disability.
a. If, as a result of the incapacity of Executive due to physical or
mental illness, he is unable to perform substantially and continuously
the duties assigned to him (such incapacity being referred to as a
"Disability") for a period of six (6) consecutive months during the
term of this Agreement, the Company may terminate his employment upon
thirty (30) days prior written notice to Executive.
b. During any period that Executive fails to perform his duties with
the Company as a result of a Disability (the "Disability Period"),
Executive shall be entitled to receive his base salary at the rate
then in effect minus any compensation payable to him under any
applicable disability insurance plan of the Company. In the event
Executive's employment shall thereafter be terminated pursuant to
paragraph III.D.1.a. or by reason of his death, Executive (or his
estate or beneficiary) shall receive his base salary at the rate then
in effect as set forth in paragraph III.C. through the date of his
termination or death, as the case may be, such base salary to be paid
not later than the date of termination, and shall be entitled to
receive any incentive compensation payable with respect to the year in
which the termination or death occurred on a prorated basis, such
incentive compensation, if any, to be paid on the date of the
Company's normal distribution of incentive compensation for the year
in question and shall, together with his eligible dependents, be
entitled to continued health coverage under the Company's medical
plans or substantially comparable plans through December 31, 2002.
Thereafter, the Company shall have no further obligation under this
Agreement to Executive, Executive's estate or beneficiary, or to any
other party.
2. Death.
a. Executive's employment shall terminate immediately upon his
death.
b. In the event of Executive's death during the term of this
Agreement, his estate or beneficiary shall be entitled to receive his
base salary at the rate then in effect as set forth in paragraph
III.C. of this Agreement through the date of his death, and shall be
entitled to receive the incentive compensation, if any, payable with
respect to the year in which death occurred on a prorated basis, such
incentive compensation, if any, to be paid on the date of the
Company's normal distribution of incentive compensation for the year
in question. Thereafter, the Company shall have no further obligation
under this Agreement to Executive, Executive's estate or beneficiary,
or to any other party.
3. Cause. The Company shall be entitled at any time during the term of
this Agreement to terminate Executive's employment and all of Executive's rights
under this Agreement for "Cause". For purposes of this Agreement, "Cause" for
termination by the Company of Executive's employment shall mean (i) the willful
and continued failure by Executive to substantially perform his duties with the
Company (other than any such failure caused by Executive's incapacity due to
physical or mental illness) after a written demand for substantial performance
is delivered to Executive by the President, Honeywell Industrial and Automation
Control, which demand identifies the manner in which the President believes that
Executive has not substantially performed his duties; (ii) the willful engaging
by Executive in conduct which is demonstrably and materially injurious to the
Company or its subsidiaries, monetarily or otherwise; (iii) a conviction, plea
of nolo conten- dere, guilty plea or confession by Executive to an act of fraud,
misappropriation, or embezzlement or to a felony. For purposes of clauses (i)
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<PAGE> 4
and (ii) of this definition, no act, or failure to act, on Executive's part
shall be deemed "willful" unless Executive's act, or failure to act, was not in
good faith, and Executive did not have a reasonable belief that his act, or
failure to act, was in, or not opposed to, the best interest of the Company. The
Company may not terminate Executive's employment under this Agreement for any
reason other than for Cause or Disability.
If, prior to the time this Agreement expires, Executive's employment shall be
terminated by the Company for Cause, the Company shall pay Executive's (i) base
salary at the rate then in effect as set forth in paragraph III.C. of this
Agreement through the date of such termina- tion, such base salary to be paid
not later than the date of termination and (ii) his incentive compensation, if
any, with respect to the year in which such termination occurred on a prorated
basis, such incentive compensation, if any, to be paid on the date of the
Company's normal distribution of incentive compensation for the year in
question. Thereafter, the Company shall have no further obligation under this
Agreement to Executive, Executive's estate or beneficiary, or to any other
party.
4. Voluntary Resignation by Executive. Executive may terminate his
employment at any time during the term of this Agreement upon thirty (30)
days prior written notice to the Company. If Executive voluntarily
terminates his employment with the Company pursuant to this paragraph
III.D.4., the Company shall pay him (i) his base salary at the rate then in
effect as set forth in paragraph III.C. of this Agreement through the date
of such termination, such base salary to be paid not later than the date of
termination and (ii) his incentive compensation, if any, with respect to
the fiscal year of the Company during which such termination occurred on a
prorated basis, such incentive compensation to be paid on the date of the
Company's normal distribution of incentive compensation for the year in
question. Thereafter, the Company shall have no further obligation under
this Agreement to Executive, Executive's estate or beneficiary, or to any
other party.
E. Service. Throughout the period from the Effective Time through
December 31, 1997, Executive will devote his full time and attention to the
business and affairs of the Company and its subsidiaries and affiliates,
and will not, without the express written consent of the President,
Honeywell Industrial and Automation Control, become a director or employee
of any other company or organization, although he may become an
uncompensated member of the Board of Directors of a not-for-profit
religious, educational or charitable organization. For the period
commencing January 1, 1998 and continuing through the remaining term of
this Agreement, Executive will make himself available for advice and
consultation with the senior management of Measurex with respect to matters
within his area of expertise, including customer visits, as requested;
provided, however, Executive shall not be required to render more than
forty (40) hours of service per month and may pursue other business
endeavors subject to his covenants under paragraph IV.C. Executive will
use his reasonable efforts to promote the interests of the Company and its
subsidiaries and affiliates.
IV. COVENANTS.
A. Reasonableness. Executive confirms that he has not signed any other
agreement, and has not accepted any obligation, which would interfere or
conflict with his ability to comply with this Agreement. He agrees that he
will be employed by the Company in a position of trust, and that in the
course of his employment he will have access to information which is
important to the success of the business, and that he is or will become
familiar with the Company's strategies, plans, secrets, customers and
vendors. He agrees that the Company has expended considerable time and
expense in developing its business reputation and good will, and that the
Company has a legitimate interest in protecting its business information,
its ties with customers and vendors, and its good will and business
reputation.
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<PAGE> 5
In addition, Executive acknowledges and agrees that in the course of his
employment with Measurex, he had access to, and created, information and
strategic plans which were integral to the success of Measurex's business;
Executive further acknowledges and agrees that, due to his unique history with
and knowledge of Measurex, he is in a position to significantly and irrevocably
damage the value of Measurex to Honeywell, should he in any manner compete with
the lines of business of the Company with which Executive was actively involved
after the Effective Time.
Executive acknowledges and agrees that the restrictions contained in this
Agreement are reasonable and will not prevent him from finding other employment
if his employment with the Company ends. He also acknowledges and agrees that
if he uses the Company's confidential information, or competes with the Company
in violation of the terms of this Agreement, that he will be causing the Company
irreparable harm.
B. Consideration. Executive agrees that the promises and agreements made by
the Company in this Agreement are full and complete consideration for all
promises and agreements made by him herein, including his agreement to all
covenants contained in this Agreement.
C. Covenants.
1. Nondisclosure of Trade Secrets and Confidential Information.
Executive realizes that during his employment with the Company, he will
acquire or become acquainted with the Company's and Honeywell's trade
secrets and confidential information. He agrees that while he works for
the Company, and after his employment with the Company ends (no matter what
causes his employment to end), he will not reveal or make accessible to
anyone any Company or Honeywell trade secrets or confidential information,
except when he does so in the ordinary course of the Company's business and
for the Company's benefit. He also agrees that he will not use Company or
Honeywell trade secrets or confidential information in any way other than
for the benefit of the Company. He understands and agrees that
"confidential information" includes any information or compilations of
information that derive independent economic value from not being generally
known or readily ascertainable by proper means by other persons and which
relate to any aspect of the Company's or Honeywell's business, including
but not limited to information relating to the Company's or Honeywell's
technology, processes, systems and products, research and development,
philosophies and strategies, product design and manufacturing information,
buying habits and preferences of present and prospective custom- ers,
pricing and sales policies, sales techniques and concepts, information
pertaining to current or pending bids and proposals, and vendor and
customer lists. Any information which he obtains at the Company while he
is employed there which he has reason to believe to be confidential
information, or which is treated by the Company or Honeywell as being
confidential information, will be considered to be confidential information
for purposes of this Agreement.
2. Conflicts of Interest. During Executive's employment with the
Company, he agrees to avoid relationships with individuals or businesses
which might impair or seem to impair the proper performance of his
responsibilities at the Company. He agrees not to become involved with any
activity if that activity:
a. Competes with the Company or Honeywell or provides services or
assistance to a competitor of the Company or Honeywell; or
b. Interferes in any way with his Company duties, such as requiring
Company time or facilities; or
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<PAGE> 6
c. Embarrasses the Company or Honeywell or interferes with the
Company's or Honeywell's ability to meet its objectives.
Executive understands that he may not use the Company's facilities or
identifications (such as telephone number or address) to operate another
business, profession, or to do any other work for another employer, either
during the term of his employment with the Company or thereafter. However,
during the period this Agreement is in effect, the Company shall, without
charge, provide Executive with suitable office space, secretarial support
and a computer to perform his duties hereunder and manage his own personal
affairs and investments.
3. Non-competition.
a. Period of Non-Competition. Executive agrees that for a period
which ends either two (2) years after his separation from employment
with the Company, or three (3) years after the Effective Time,
whichever occurs later, no matter why his employment ends and
regardless of whether the termination of his employment was voluntary
or involuntary, he will not
(1) directly or indirectly enter into the employ of, or render or
engage in any services to, any person, firm, corporation, or
organization which is a competitor of Honeywell or the Company
with respect to (i) products which the lines of business of
Honeywell or the Company with which Executive was actively
involved during the term of his employment with the Company (the
"Relevant Lines of Business") are producing, or services which
the Relevant Lines of Business are providing, at that time, or
(ii) products or services which Executive has reason to know the
Relevant Lines of Business has plans to produce or provide within
eighteen months of that time, or (iii) products which Honeywell
or the Company has produced or services which Honeywell or the
Company has provided at any time subsequent to the Effective Time
(competitors with respect to (i) through (iii), above, are
hereinafter referred to as "Competitor"), where Executive would
be performing services for the Competitor within the United
States of America, Asia, Europe, or any other country in which
the Relevant Lines of Business do business on the date of
Executive's separation from employment with the Company; or
(2) directly or indirectly serve as a partner, shareholder,
creditor, director, officer, principal, agent, employee, trustee,
consultant or advisor for or on behalf of any such Competitor.
The ownership of less than five percent (5%) of any class of the
outstanding securities of any corporation whose shares are traded
on a U.S. national securities exchange or quoted on The Nasdaq
Stock Market, even though such corporation may be a Competitor,
shall not be deemed to constitute an interest in such Competitor
which violates clause (2) of the immediately preceding sentence.
b. Solicitation of Other Employees. Executive agrees that for a period
which ends either two (2) years after his separation from employment with
the Company, or three (3) years after the Effective Time, whichever occurs
later, no matter why his employment ends and regardless of whether it was
voluntary or involuntary, he will not, directly or indirectly, solicit to
employ any employee of Honeywell or the Company or employ any employee of
Honeywell or the Company; provided, however, that the foregoing restriction
shall not apply where, notwithstanding Executive's reasonable inquiry, he
is unaware of such individual's employment with Honeywell or the Company.
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<PAGE> 7
c. Survives Expiration of Agreement. Executive agrees that the
covenants contained in this Agreement, including those in this
paragraph IV.C.3., will continue in effect after the termination of
his employment with the Company, and will continue in effect after the
termination of this Agreement for the period indicated herein.
4. Intellectual Property.
The Parties agree:
a. All right, title and interest in and to any invention, design, or
development, patentable or not, which Executive first conceives and
reduces to writing or first reduces to practice either individually or
jointly with others, and which either (i) arose out of his employment
with Measurex or (ii) which arises out of his employment with the
Company, will be the property of the Company. Executive will promptly
disclose all such inventions, designs or developments to the Company
and execute all papers necessary to assist the Company in obtaining
patents or any other form of protection in any and all countries on
such inventions, designs, or developments, patentable or not, and for
assigning same to the Company; and
b. All right, title and interest in all copyrightable material and
works of authorship which Executive conceives and reduces to writing
or originates either individually or jointly with others, and which
either (i) arose out of his employment with Measurex, or (ii) arises
out of his employment with the Company will be the property of the
Company. Executive will execute all papers and perform all other acts
necessary to assist the Company in obtaining copyrights on such
materials in any and all countries; and
c. All proprietary, legally protectable know-how, trade secrets
information, and related material or information conceived and reduced
to writing or originated by Executive, either individually or jointly
with others and which either (i) arose out of his employment with
Measurex, or (ii) arises out of his employment with the Company, shall
be the property of the Company; and
d. Executive further agrees to assign and hereby does assign to the
Company all rights, title, and interest in and to all inventions,
designs, and developments, patentable or not, copyrightable material,
legally protectable know-how, trade secrets and any works of
authorship which either (i) arose out of his employment with Measurex,
or (ii) arises out of his employment with the Company; and
e. Executive will disclose promptly to the Company all ideas,
discoveries, improvements and inventions (hereinafter collectively
called "Invention" or "Inventions") conceived and reduced to writing,
reduced to practice or made by him either individually or jointly with
others, and which (i) arose prior to the Effective Time out of his
employment with Measurex, or (ii) arises during the term of his
employment with the Company, which (A) relate to the Relevant Lines of
Business's products at the time of the Invention or applicable to or
useful therewith, or (B) relate to the Relevant Lines of Business's
manufacturing or other processes or procedures at the time of the
Invention or to machinery or apparatus useful in connection therewith,
or (C) relate to the Relevant Lines of Business's investigations or to
the nature of the business of the Relevant Lines of Business at the
time of the Invention, or (D) results in or relates in any material
respect to any work Executive may do on behalf or at the request of
the Company. All such Inventions which Executive is obligated to
disclose, whether patented or not, shall be and remain the property of
the Company or its nominees, successors or assigns; and
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<PAGE> 8
f. The provisions of paragraphs IV.C.4.a. through e. of this
Agreement shall not apply to any Invention for which no equipment,
supplies, facility or trade secret information of Measurex, Honeywell
or the Company was used and which was developed entirely on
Executive's own time, and (1) which does not relate (a) directly to
the business of the Company or the Relevant Lines of Business or (b)
to the Company's actual or anticipated research or development, and
(2) which does not in any material respect result from any work
performed by Executive for the Company.
g. Executive will assist the Company and its nominees, successors
and assigns, upon request, in every proper way during and following
the period of his employment by the Company, at no expense to
Executive, to obtain and maintain for the benefit of the Company and
its nominees, successors and assigns, patents in any and all countries
for Inventions which Executive is obligated to assign. Such
assistance shall include, but not be limited to, the execution and
delivery of specific assignments of any such Invention and all
domestic and foreign patent rights therein, and all other papers and
documents of every nature which relate to the securing and maintenance
of such patent rights, and the performance of all other lawful acts,
such as the giving of testimony in any interference proceedings,
infringement suits or other litigation, as may be deemed necessary or
advisable by the Company or its nominees, successors or assigns; in
providing such assistance, Executive shall be entitled to
reimbursement of all reasonable out-of-pocket expenses and, if
services are provided by Executive after the period of his employment
by the Company, to reasonable compensation for the time spent by
Executive in performing such services; and
h. This paragraph IV.C.4. of this Agreement shall be binding on
Executive, his heirs and successors, and may be transferred by the
Company.
5. Employer's Property. Executive acknowledges that all property of the
Company of any and every nature or kind created or used by Execu- tive
(including, but not limited to, equipment, automobiles, credit cards,
books, records, reports, files, manuals, literature, confidential
information or other materials or authorship of copyrightable materials)
pursuant to Executive's employment by the Company, or furnished by the
Company to Executive, shall remain and be the exclusive property of the
Company at all times and shall be surrendered to the Company, in good
condition, normal wear and tear excepted, promptly on the termination of
Executive's employment irrespective of the time, manner or cause of the
termination. Any information of a proprietary and/or confidential nature
which relates to Honeywell or the Company and which is stored in
Executive's own computer or computer memory medium or the like shall be
destroyed by Executive upon termination of his employment with the Company
unless otherwise directed by the Company.
D. Continuing Obligation. Notwithstanding the cessation of any payments
provided by Paragraph III.C. herein, upon the termination of this Agreement or
termination of Executive's employment pursuant to Paragraph III.D., Executive
shall not be relieved of his obligations to perform the covenants contained in
Paragraphs IV.C.1., 2., 3., 4., and 5. The requirements and obligations
imposed on Executive and the Company by Paragraphs IV.C.1., 2., 3., 4., and 5.
of this Agreement survive the expiration of Executive's employment with the
Company, and the termina- tion of all other provisions of this Agreement.
E. Remedies.
1. Injunctive Relief. Executive acknowledges and agrees that, without
prejudice to any other rights of the Company, in the event of his violation
or attempted violation of any
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of the covenants contained in Paragraphs IV.C.1., 2., 3., 4., and 5.
of this Agreement, an interim injunction may be granted immediately by
any court of competent jurisdiction. Executive agrees that, in
addition to injunctive relief, the Company shall be entitled to any
and all other legal and equitable relief, including money damages
caused by any breach of this Agreement.
2. Executive's Claims Can Not Preclude Enforcement of Covenants by
the Company. Executive understands and agrees that the Company has a
material interest in preserving the relationship it has developed with
its customers against impairment by his competitive activities.
Accordingly, Executive agrees that the restrictions and covenants
contained in Paragraphs IV.C.1., 2., 3., 4., and 5., and his
agreement to observe them by his execution of this Agreement, are of
the essence to this Agreement and constitute a material inducement to
the Company to enter into this Agreement and to employ Executive, and
that the Company would not enter into this Agreement absent his
agreement to abide by the restrictions and covenants contained in
Paragraphs IV.C.1., 2., 3., 4., and 5. of this Agreement.
Furthermore, any claim or cause of action by Executive against the
Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of the
covenants or restrictions contained herein.
F. Revisions by Court. If any provision in this Agreement, including,
but not limited to, the provisions and covenants contained in Paragraphs
IV.C.1., 2., 3., 4., and 5. of this Agreement, are found by a court of
competent jurisdiction to be unenforceable as written, Executive and the
Company hereby specifically and irrevocably authorize and request said
court to revise the unenforceable provisions in a manner which shall result
in the provisions being enforceable while remaining as similar as legally
possible to the purpose and intent of the original.
V. NOTICES. Any notice, demand, request, amendment, waiver or other
communication under this Agreement shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered to the address of
the party specified below (including delivery by courier), or (ii) on the fifth
day after mailing if mailed to the party to whom notice is to be given to the
address specified below, by first class mail, certified or registered, return
receipt requested, postage prepaid, or (iii) on the date of transmission if sent
by facsimile transmission to the facsimile number given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission,
as follows:
If to the Company: Honeywell Inc.
16404 N. Black Canyon Highway
Phoenix, Arizona 85023-3033
ATTN: President, Industrial Automation
and Control
Facsimile: (602) 313-5705
with a copy to: Honeywell Inc.
Honeywell Plaza
Minneapolis, Minnesota 55408
ATTN: General Counsel
Facsimile: (612) 951-0647
If to Executive: Mr. David Bossen
611 North California Avenue
Palo Alto, California 94301
Facsimile: (415) 321-2430
Any party may from time to time change its address or facsimile number for the
purpose of notices to that party by a similar notice specifying a new address
or facsimile number, but no such
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change shall be deemed to have been given until it is actually received by the
party sought to be charged with its contents.
VI. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the employment of Executive. Any and all
previous agreements, arrangements or understandings, written or oral, express
or implied, between the parties or on their behalf, relating to the employment
of Executive by the Company or Measurex are terminated and canceled, and each
of the parties releases and forever discharges the other of and from all manner
of actions, causes of action, claims and demands whatsoever, under or relating
to any such agreements, arrangements or understandings.
VII. AMENDMENTS; WAIVERS.
A. This Agreement may be amended or modified, and any of the terms,
covenants, or conditions hereof may be waived only by a written
instrument executed by the parties hereto, or in the case of a waiver, by
the party waiving compliance. Executive may not sign a waiver or
amendment on behalf of the Company.
B. Any waiver or amendment must be communicated in accordance with the
provisions of Paragraph V.
C. Any waiver by Executive or by the Company of a breach of this
Agreement shall not result in a waiver of any other breach by either
party to this Agreement. This means that if a party does not enforce a
particular provision of this Agreement at a particular time, that will
not waive such party's right to enforce that same provision at another
time, or to enforce any other provision at any time.
VIII. SUCCESSORS AND ASSIGNS. Executive understands and agrees that he cannot
assign or otherwise transfer any of his obligations under this Agreement. He
understands and agrees that the Company may, at its option, assign or transfer
its rights under this Agreement to another organization or individual if there
is a merger, consolidation, transfer, or sale of all or substantially all of
the assets or stock of the Company, subject to the assumption of the Company's
obligations hereunder by such assignee or transferee. Executive understands
and agrees that if there is an assignment or transfer of the Company's rights
under this Agreement, then, subject to the assumption of the Company's
obligations hereunder by such assignee or transferee, this Agreement will
continue to be effective, will continue to bind him, and will inure to the
benefit of the organization or individual to whom the transfer or assignment
is made.
IX. SEVERABILITY. If any part of this Agreement is found to be invalid or
unenforceable, the parties agree that the invalid or unenforceable part of the
Agreement shall be considered deleted from the Agreement and the rest of the
Agreement will be unaffected and shall continue in full force and effect. The
parties agree that any provision of this Agreement that is found unenforceable
because it is overbroad will be limited to the extent that it is necessary to
make that provision enforceable under the applicable law. The parties recognize
the uncertainty of the law and agree that this Agreement should be enforced as
fully as the law will allow.
X. DELAWARE LAW AND VENUE. This Agreement will be construed and enforced in
accordance with the laws of the State of Delaware without regard to principles
of conflicts of law. The parties hereby consent to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United States of
America located in the District of Delaware for any actions, suits, or
proceedings arising out of or relating to this Agreement, and the parties
further agree that service of any process, summons, notice or document by U.S.
registered mail to the last known address (or any mode of service recognized to
be effective by applicable law) shall be effective service of process for any
action, suit or proceeding brought in such court. The parties agree that any
dispute relating to or arising out of this Agreement shall be venued in the
State of Delaware. Notwithstanding the foregoing, the exclusive venue for any
cause of action brought by Executive with
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respect to a breach by the Company of its obligations under paragraph III.C. or
D. of this Agreement shall be the State of California and the federal courts of
California shall have jurisdiction over such cause of action.
XI. HEADINGS The headings used in this Agreement are for convenience only
and are not to be construed in any way as additions to or limitations of the
covenants and agreements contained in it.
XII. COUNTERPARTS This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
XIII. EXECUTIVE'S ACKNOWLEDGMENT OF VOLUNTARY AGREEMENT. Executive
acknowledges that he has carefully read this Agreement, that he understands its
terms and its legal effect, that all agreements between the Company and
Executive relating to the subjects covered by this Agreement are contained in
this Agreement, and that Executive has entered into this Agreement voluntarily
and not in reliance upon any promises or representations made by the Company
other than those made in this Agreement itself.
BY SIGNING BELOW, THE COMPANY AND EXECUTIVE AGREE TO THE TERMS OF THIS
AGREEMENT AS LISTED AND STATED ABOVE.
HONEYWELL ACQUISITION CORP.
Dated: January 26, 1997 By: /s/ George Van Kula
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Its: Vice President and Assistant Secretary
--------------------------------------
Dated: January 26, 1997 /s/ David A. Bossen
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David A. Bossen
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EMPLOYMENT AGREEMENT
BETWEEN
MR. JOHN GINGERICH AND HONEYWELL ACQUISITION CORP.
This Employment Agreement ("Agreement") is entered into between Mr. John
Gingerich ("Executive"), and Honeywell Acquisition Corp. (the "Company"), a
corporation incorporated under the laws of Delaware. In this Agreement,
Executive and the Company are collectively referred to as "the parties". The
term "the Company" as used in this Agreement includes all subsidiaries,
affiliates, and businesses of Honeywell Acquisition Corp. and following the
Effective Time (as defined in the Merger Agreement (as defined below)) means
Honeywell-Measurex Corporation as the surviving entity of the Merger (as defined
below) and all of its subsidiaries, affiliates and businesses. The effective
date of this Agreement is the Effective Time.
I. BACKGROUND.
A. Acquisition of Measurex. Under the terms of the Agreement and Plan of
Merger, dated as of January 26, 1997 ("Merger Agreement"), Honeywell
Acquisition Corp. (a wholly owned subsidiary of Honeywell Inc.
("Honeywell")) has agreed to purchase all of the issued and outstanding
shares of capital stock of Measurex Corporation ("Measurex"). After the
acceptance for purchase of shares of common stock of Measurex pursuant to
the Offer, Honeywell Acquisition Corp. will be merged with and into
Measurex at the Effective Time (the "Merger"), with Measurex being the
surviving company thereafter to be named Honeywell-Measurex Corporation.
B. Executive's Position with Measurex. Executive is the President and
Chief Operating Officer of Measurex.
C. Measurex's Business. Measurex is engaged in the design, manufacture
and servicing of computer-integrated measurement, control and information
systems and will be operated as a unit of Honeywell's Industrial Automation
and Control business.
II. SUPERSEDES AND REPLACES ALL PRIOR AGREEMENTS. Executive and the Company
agree that as of the Effective Time this Agreement will supersede and replace
all agreements, contracts, or promises of any kind between Executive and
Measurex, and that all such agreements, contracts and promises will be revoked
and of no further force or effect including, without limitation, that certain
Severance Agreement dated as of May 15, 1995.
III. EMPLOYMENT POSITION WITH THE COMPANY. The Company wishes to employ
Executive, and Executive wishes to be employed by the Company, in the position
of President of the Company. This Agreement sets out the mutual considerations
and undertakings between the Company and Executive which are entered into for
the purpose of employing Executive in this position, or another position as
assigned by the Company and as may be agreed to by Executive.
A. Duties and Authority.
1. Executive will have all of the duties and responsibilities, and
will be subject to all terms and conditions of employment, which are
customary and reasonable for his position.
2. Executive will be subject to, and will abide by the requirements
of, all Honeywell and Company policies which are communicated to
Executive and which are from time to time in effect for management or
executive employees of Honeywell and the Company, including without
limitation, Honeywell's Code of Ethics and Business Conduct.
<PAGE> 2
3. Executive will perform the duties and exercise the powers of his
position in accordance with the direction of the Board of Directors of
the Company and in accordance with the direction of the President of
Honeywell Industrial Automation and Control.
B. Term of Agreement. Subject to the terms of this Agreement, Executive's
employment with the Company pursuant to this Agreement will commence at the
Effective Time. Unless terminated sooner and subject to the terms of
Paragraph IV.D. hereof, this Agreement expires on December 31, 1998.
C. Compensation. As long as Executive remains an employee of the Company
and this Agreement remains in effect, Executive will be compensated in
accordance with the terms of Honeywell's Executive Compensation Program, as
a Level J executive. Executive shall have the base salary, incentive
compensation, benefits, expense reimbursement, stock options, performance
stock program participation and perquisites (including executive life
insurance, automobile, financial counseling and club membership) to the
extent provided to all other Honeywell Level J executives pursuant to the
Executive Compensation Program (a copy of which has been provided to
Executive). Executive shall be reimbursed for first-class business travel.
As a Level J executive, Executive's initial base salary shall be two
hundred and fifty thousand dollars ($250,000.00) on an annualized basis,
less all standard legal deductions and all other deductions, contributions,
and payments authorized by Executive payable on a bi-weekly basis.
1. Incentive Compensation. Although Executive will receive the same
forty percent (40%) of base salary on-plan incentive compensation
specified for Level J executives, the plan upon which Executive's
incentive compensation shall be based during the first calendar year
of his employment, even if Executive's employment with the Company
commences after the start of the calendar year, shall be based upon
the results reflected in the 1997 Measurex operating plan previously
delivered to Honeywell and in the pulp and paper segment of the 1997
Honeywell operating plan, with the objectives of operating profit and
economic value added weighted 60% and 40%, respectively; if his
employment does commence after the start of the calendar year, his
incentive compensation for such first calendar year of employment
shall be prorated. Objectives and weightings for the subsequent
calendar years of employment, should Executive's employment continue
pursuant to this Agreement, shall be determined by the President,
Honeywell Industrial Automation and Control, during the fourth quarter
of the year preceding each such subsequent year. If this Agreement
terminates before the end of a calendar year, any incentive
compensation due Executive for that calendar year shall be determined
on a prorated basis.
2. Special Additional Compensation. As an additional incentive for
Executive to remain employed by the Company for the entire term of
this Agreement, and as additional consideration for Executive's
covenants and promises in this Agreement, the Company will provide the
following incentives to Executive:
a. An aggregate cash payment of approximately $2,039,724 (with
the final amount to be determined by the Company and Executive at
the Effective Time) payable in six equal installments the first of
which shall be made on the Effective Time and the remaining five
of which shall be made at the end of each four-month period
following the Effective Time if Executive has remained continually
employed by the Company from the Effective Time through the end of
such period; provided, however, that if Executive is terminated by
the Company other than for Cause (as defined below) prior to such
date, Executive shall remain entitled to the full amount of the
unpaid portion of such payment which shall be payable in a lump
sum upon termination and; further, provided, that if Executive
voluntarily
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terminate his employment with the Company for any reason, he shall
be entitled to receive only a pro rata portion of such payment to
the date of termination; provided further, however, that if
Executive resigns as a result of a material breach of this
Agreement by the Company, Executive shall be entitled to the full
amount of such payment which shall be payable in a lump sum upon
termination;
b. On the scheduled issue date for the Honeywell Stock Option
Program in February 1998, if Executive has remained continually
employed by the Company through such date, seven thousand five
hundred (7,500) shares of nonqualified stock options with a ten
(10) year term (provided that if Executive's employment with the
Company is thereafter terminated, the exercisability of such
options after the date of termination shall be subject to the
terms of Honeywell's Stock Option Program, a copy of which has
been delivered to Executive (the "Option Plan"), at an exercise
price determined in accordance with the Option Plan.
c. Twenty five thousand (25,000) shares of nonqualified stock
options with a ten (10) year term (provided that if Executive's
employment with the Company is terminated, the exercisability of
such options after the date of termination shall be subject to the
terms of the Option Plan), at an exercise price equal to the
closing price of Honeywell common stock on the New York Stock
Exchange on the Effective Time, vesting on December 31, 1998 (i)
with respect to 10,000 shares contingent on the attainment by the
Company of 1997 financial performance goals to be determined by
the Company and Executive and (ii) with respect to 15,000 shares
contingent on the attainment by the Company of 1998 financial
performance goals to be determined by the Company and Executive;
d. That number of shares of performance restricted stock of
Honeywell issued pursuant to the terms of the Honeywell
Performance Stock Program equal to up to the product obtained by
multiplying 4,333 by a fraction, the numerator of which is the
number of calendar months (including the month during which the
Effective Time occurs) from the Effective Time through December
31, 1997 and the denominator of which is 24.
e. Three thousand (3,000) shares of restricted Honeywell stock
vesting on December 31, 1998. Five thousand (5,000) shares of
restricted Honeywell stock vesting on December 31, 1999,
contingent on the attainment by the Company of 1997 and 1998
financial performance goals to be determined by the Company and
Executive.
f. An aggregate cash payment of one hundred thousand dollars
($100,000) payable in equal installments on or about the first day
of each calendar month during 1997 following the Effective Time.
D. Termination. On termination of employment, for whatever reason, and
whether the termination is voluntary or involuntary, Executive shall
immediately resign all offices held with or on behalf of the Company. Other
than as is specifically provided in this paragraph III.D., Execu- tive
shall not be entitled to receive any payment or compensation for loss of
office, or by reason of his separation from employment with the Company. If
Executive fails to immediately resign all offices as set forth above, the
Company is hereby irrevocably authorized to appoint an individual of the
Company's choice to, in Executive's name and on Executive's behalf, sign
any documents or to do any thing necessary or requisite to give effect to
Executive's resignation from all such offices.
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<PAGE> 4
1. Disability.
a. If, as a result of the incapacity of Executive due to
physical or mental illness, he is unable to perform substantially
and continuously the duties assigned to him (such incapacity being
referred to as a "Disability") for a period of six (6) consecutive
months during the term of this Agreement, the Company may
terminate his employment upon thirty (30) days prior written
notice to Executive.
b. During any period that Executive fails to perform his duties
with the Company as a result of a Disability (the "Disability
Period"), Executive shall be entitled to receive his base salary
at the rate then in effect minus any compensation payable to him
under any applicable disability insurance plan of the Company. In
the event Executive's employment shall thereafter be terminated
pursuant to paragraph III.D.1.a. or by reason of his death,
Executive (or his estate or beneficiary) shall be entitled to
receive any incentive compensation payable with respect to the
year in which the termination or death occurred on a prorated
basis, such incentive compensation to be paid on the date of the
Company's normal distribution of incentive compensation for the
year in question and shall be entitled to receive any compensation
due and not yet paid pursuant to paragraph III.C.2.a. of this
Agreement. Thereafter, the Company shall have no further
obligation under this Agreement to Executive, Executive's estate
or beneficiary, or to any other party (as opposed to obligations,
if any, under any other agreement).
2. Death.
a. Executive's employment shall terminate immediately upon his
death.
b. In the event of Executive's death during the term of this
Agreement, his estate or beneficiary shall be entitled to receive
his base salary at the rate then in effect as set forth in
paragraph III.C. of this Agreement through the date of his death,
and shall be entitled to receive the incentive compensation
payable with respect to the year in which death occurred on a
prorated basis, such incentive compensation to be paid on the date
of the Company's normal distribution of incentive compensation for
the year in question and shall be entitled to receive any
compensation due and not yet paid pursuant to paragraph III.C.2.a.
of this Agreement. Thereafter, the Company shall have no further
obligation under this Agreement to Executive, Executive's estate
or beneficiary, or to any other party (as opposed to obligations,
if any, under any other agreement).
3. Cause. The Company shall be entitled at any time during the term
of this Agreement to terminate Executive's employment and all of
Executive's rights under this Agreement for "Cause". For purposes of
this Agreement, "Cause" for termination by the Company of Executive's
employment shall mean (i) the willful and continued failure by
Executive to substantially perform his duties with the Company (other
than any such failure caused by Executive's incapacity due to physical
or mental illness) after a written demand for substantial performance
is delivered to Executive by the President, Honeywell Industrial
Automation Control, which demand identifies the manner in which the
President believes that Executive has not substantially performed his
duties; (ii) the willful engaging by Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise; (iii) a conviction, plea of
nolo contendere, guilty plea or confession by Executive to an act of
fraud, misappropriation, or embezzlement or to a felony. For purposes
of clauses (i) and (ii) of this definition, no act, or failure to act,
on Executive's part shall be deemed "willful" unless Executive's act,
or failure to act, was not in good faith, and Executive
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<PAGE> 5
did not have a reasonable belief that his act, or failure to act, was
in, or not opposed to, the best interest of the Company.
If, prior to the time this Agreement expires, Executive's employment
shall be terminated by the Company for Cause, the Company shall pay
Executive's (i) base salary at the rate then in effect as set forth in
paragraph III.C. of this Agreement through the date of such termina-
tion, such base salary to be paid not later than the date of
termination and (ii) his incentive compensation with respect to the
year in which such termination occurred on a prorated basis, such
incentive compensation to be paid on the date of the Company's normal
distribution of incentive compensation for the year in question.
Thereafter, the Company shall have no further obligation under this
Agreement to Executive, Executive's estate or beneficiary, or to any
other party (as opposed to obligations, if any, under any other
agreement).
4. Voluntary Termination by the Company.
a. The Company may terminate Executive's employment at any time
during the term of this Agreement for any reason other than Cause,
Death or Disability upon thirty (30) days prior written notice to
Executive.
b. If the Company voluntarily terminates Executive's employment
pursuant to this paragraph III.D.4., changes his title or job
duties in any material respect or demands, as a condition of
continued employment, that Executive relocate, or regularly
perform duties (other than normal travel in the ordinary course of
the Company's business and other than to or in Phoenix, Arizona
provided that the Company reimburses Executive for the expenses
incurred during the term of this Agreement in connection with any
relocation thereto which expenses shall include the cost of
temporary furnished housing for executive and his spouse in
Phoenix for the duration of the assignment, but no longer than the
term of this Agreement, and the reasonable costs of maintaining
Executive's unoccupied home in Saratoga, California, plus an
amount equal to any income taxes owed by Executive as a result of
such reimbursements), outside a twenty-five mile radius of
Cupertino, California and Executive refuses to comply with such
condition of employment, promptly upon any of such events, the
Company shall provide Executive with (i) his base salary at the
applicable rate and otherwise in accordance with the provisions of
paragraph III.C. of this Agreement for twelve (12) months after
such termination, which base salary shall be paid in a lump-sum
payment, (ii) his incentive compensation, if any, with respect to
the fiscal year of the Company during which such termination
occurred on a prorated basis, such incentive compensation to be
paid on the date of the Company's normal distribution of incentive
compensation for the year in question and (iii) any compensation
due and not yet paid pursuant to paragraph III.C.2.a. of this
Agreement.
c. In exchange for the Company's payments to Executive pursuant
to paragraph III.D.4.b., Executive shall execute and deliver to
the Company, in a form acceptable to the Company, a legally
effective release and waiver of all claims, complaints, and causes
of action (other than claims or rights to compensation or
severance payments pursuant to paragraphs III.C. and III.D.
hereof), whether known or unknown, which he has or may have
against the Company. The Company shall deliver to Executive the
base salary lump sum payment set forth in paragraph III.D.4.b.(i)
and other compensation, if any, set forth in paragraph
III.D.4.b.(iii) within fourteen (14) days of the expiration of any
legally applicable rescission or revocation period for Executive's
release and waiver of claims, and shall deliver his incentive
com-
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pensation, if any, as soon as practicable but in no event before
delivery of his base salary lump sum payment; delivery of the
base salary lump sum payment and such additional compensation and
incentive compensation, if any, will not occur if Executive
revokes or rescinds his release and waiver, or if Executive does
not deliver the executed waiver and release to the Company before
the expiration of any applicable rescission or revocation period.
All deliveries under this paragraph shall be accomplished in
accordance with the provisions of paragraph V.
5. Voluntary Resignation by Executive. Executive may terminate his
employment at any time during the term of this Agreement upon thirty
(30) days prior written notice to the Company. If Executive
voluntarily terminates his employment with the Company pursuant to
this paragraph III.D.5., the Company shall pay him (i) his base salary
at the rate then in effect as set forth in paragraph III.C. of this
Agreement through the date of such termination, such base salary to be
paid not later than the date of termination, (ii) his incentive
compensation, if any, with respect to the fiscal year of the Company
during which such termination occurred on a prorated basis, such
incentive compensation to be paid on the date of the Company's normal
distribution of incentive compensation for the year in question and
(iii) that portion of any compensation due and not yet paid pursuant
to paragraph III.C.2.a. of this Agreement. Thereafter, the Company
shall have no further obligation under this Agreement to Executive,
Executive's estate or beneficiary, or to any other party (as opposed
to obligations, if any, under any other agreement).
E. Service. Throughout the term of his employment with the Company,
Executive will devote his full time and attention to the business and
affairs of the Company and its subsidiaries and affiliates, and will not,
without the express written consent of the President, Honeywell Industrial
Automation and Control, become a director or employee of any other company
or organization, although he may become an uncompensated member of the
Board of Directors of a not-for-profit religious, educational or charitable
organization or a paper industry trade organization. Executive will use
his reasonable efforts to promote the interests of the Company and its
subsidiaries and affiliates.
IV. COVENANTS.
A. Reasonableness. Executive confirms that he has not signed any other
agreement, and has not accepted any obligation, which would interfere or
conflict with his ability to comply with this Agreement. He agrees that he
will be employed by the Company in a position of trust, and that in the
course of his employment he will have access to information which is
important to the success of the business, and that he is or will become
familiar with the Company's strategies, plans, secrets, customers and
vendors. He agrees that the Company has expended considerable time and
expense in developing its business reputation and good will, and that the
Company has a legitimate interest in protecting its business information,
its ties with customers and vendors, and its good will and business
reputation.
In addition, Executive acknowledges and agrees that in the course of his
employment with Measurex, he had access to, and created, information and
strategic plans which were integral to the success of Measurex's business;
Executive further acknowledges and agrees that, due to his unique history
with and knowledge of Measurex, he is in a position to significantly and
irrevocably damage the value of Measurex to Honeywell, should he in any
manner compete with the lines of business of the Company with which
Executive was actively involved after the Effective Time.
Executive acknowledges and agrees that the restrictions contained in this
Agreement are reasonable and will not prevent him from finding other
employment if his employment with the Company ends. He also acknowledges
and agrees that if he uses the Company's confidential information, or
competes with the Company in violation of the terms of this Agreement, that
he will be causing the Company irreparable harm.
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B. Consideration. Executive agrees that the promises and agreements made
by the Company in this Agreement are full and complete consideration for
all promises and agreements made by him herein, including his agreement to
all covenants contained in this Agreement.
C. Covenants.
1. Nondisclosure of Trade Secrets and Confidential Information.
Executive realizes that during his employment with the Company, he
will acquire or become acquainted with the Company's and Honeywell's
trade secrets and confidential information. He agrees that while he
works for the Company, and after his employment with the Company ends
(no matter what causes his employment to end), he will not reveal or
make accessible to anyone any Company or Honeywell trade secrets or
confidential information, except when he does so in the ordinary
course of the Company's business and for the Company's benefit. He
also agrees that he will not use Company or Honeywell trade secrets or
confidential information in any way other than for the benefit of the
Company. He understands and agrees that "confidential information"
includes any information or compilations of information that derive
independent economic value from not being generally known or readily
ascertainable by proper means by other persons and which relate to any
aspect of the Company's or Honeywell's business, including but not
limited to information relating to the Company's or Honeywell's
technology, processes, systems and products, research and development,
philosophies and strategies, product design and manufacturing
information, buying habits and preferences of present and prospective
custom- ers, pricing and sales policies, sales techniques and
concepts, information pertaining to current or pending bids and
proposals, and vendor and customer lists. Any information which he
obtains at the Company while he is employed there which he has reason
to believe to be confidential information, or which is treated by the
Company or Honeywell as being confidential information, will be
considered to be confidential information for purposes of this
Agreement.
2. Conflicts of Interest. During Executive's employment with the
Company, he agrees to avoid relationships with individuals or
businesses which might impair or seem to impair the proper performance
of his responsibilities at the Company. He agrees not to become
involved with any activity if that activity:
a. Competes with the Company or Honeywell or provides services
or assistance to a competitor of the Company or Honeywell; or
b. Interferes in any way with his Company duties, such as
requiring Company time or facilities; or
c. Embarrasses the Company or Honeywell or interferes with the
Company's or Honeywell's ability to meet its objectives.
Executive understands that he may not use the Company's facilities or
identifications (such as telephone number or address) to operate
another business, profession, or to do any other work on his own
behalf or for another employer, either during the term of his
employment with the Company or thereafter.
3. Non-competition.
a. Period of Non-Competition. Executive agrees that for a
period which ends either two (2) years after his separation from
employment with the Company, or three (3) years after the
Effective Time, whichever occurs later, no matter why his
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employment ends and regardless of whether the termination of his
employment was voluntary or involuntary, he will not
(1) directly or indirectly enter into the employ of, or
render or engage in any services to, any person, firm,
corporation, or organization which is a competitor of
Honeywell or the Company with respect to (i) products which
the lines of business of Honeywell or the Company with which
Executive was actively involved during the term of his
employment with the Company (the "Relevant Lines of
Business") are producing, or services which the Relevant
Lines of Business are providing, at that time, or (ii)
products or services which Executive has reason to know the
Relevant Lines of Business has plans to produce or provide
within eighteen months of that time, or (iii) products which
Honeywell or the Company has produced or services which
Honeywell or the Company has provided at any time subsequent
to the Effective time (competitors with respect to (i)
through (iii), above, are hereinafter referred to as
"Competitor"), where Executive would be performing services
for the competitor within the United States of America,
Asia, Europe, or any other country in which the Relevant
Lines of Business do business on the date of Executive's
separation from employment with the Company; or
(2) directly or indirectly serve as a partner, shareholder,
creditor, director, officer, principal, agent, employee,
trustee, consultant or advisor for or on behalf of any such
Competitor. The ownership of less than five percent (5%) of
any class of the outstanding securities of any corporation
whose shares are traded on a U.S. national securities
exchange or quoted on The Nasdaq Stock Market, even though
such corporation may be a Competitor, shall not be deemed to
constitute an interest in such Competitor which violates
clause (2) of the immediately preceding sentence.
b. Solicitation of Other Employees. Executive agrees that for a
period which ends either two (2) years after his separation from
employment with the Company, or three (3) years after the
Effective Time, whichever occurs later, no matter why his
employment ends and regardless of whether it was voluntary or
involuntary, he will not, directly or indirectly, solicit to
employ any employee of Honeywell or the Company or employ any
employee of Honeywell or the Company; provided, however, that the
foregoing restriction shall not preclude Executive from employing,
either in response to any general solicitation for employment or
other similar method, any individual whose total annual
compensation, including salary and incentive compensation, is less
than seventy thousand ($70,000.00), or where, notwithstanding
Executive's reasonable inquiry, he is unaware of such individual's
employment with Honeywell or the Company.
c. Survives Expiration of Agreement. Executive agrees that the
covenants contained in this Agreement, including those in this
paragraph IV.C.3., will continue in effect after the termination
of his employment with the Company, and will continue in effect
after the termination of this Agreement.
4. Intellectual Property.
The Parties agree:
a. All right, title and interest in and to any invention, design, or
development, patentable or not, which Executive first conceives and
reduces to writing or first reduces to practice either individually or
jointly with others, and which either (i) arose out of his employment
with Measurex or (ii) which arises out of his employment with the
Company, will be the property of the Company. Executive will
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promptly disclose all such inventions, designs or developments to the
Company and execute all papers necessary to assist the Company in
obtaining patents or any other form of protection in any and all
countries on such inventions, designs, or developments, patentable or
not, and for assigning same to the Company; and
b. All right, title and interest in all copyrightable material and
works of authorship which Executive conceives and reduces to writing
or originates either individually or jointly with others, and which
either (i) arose out of his employment with Measurex, or (ii) arises
out of his employment with the Company will be the property of the
Company. Executive will execute all papers and perform all other acts
necessary to assist the Company in obtaining copyrights on such
materials in any and all countries; and
c. All proprietary, legally protectable know-how, trade secrets
information, and related material or information conceived and reduced
to writing or originated by Executive, either individually or jointly
with others and which either (i) arose out of his employment with the
Measurex, or (ii) arises out of his employment with the Company, shall
be the property of the Company; and
d. Executive further agrees to assign and hereby does assign to the
Company all rights, title, and interest in and to all inventions,
designs, and developments, patentable or not, copyrightable material,
legally protectable know-how, trade secrets and any works of
authorship which either (i) arose out of his employment with Measurex,
or (ii) arises out of his employment with the Company; and
e. Executive will disclose promptly to the Company all ideas,
discoveries, improvements and inventions (hereinafter collectively
called "Invention" or "Inventions") conceived and reduced to writing,
reduced to practice or made by him either individually or jointly with
others, and which (i) arose prior to the Effective TIme out of his
employment with Measurex, or (ii) arises during the term of his
employment with the Company, which (A) relate to the Relevant Lines of
Business's products at the time of the Invention or applicable to or
useful therewith, or (B) relate to the Relevant Lines of Business's
manufacturing or other processes or procedures at the time of the
Invention or to machinery or apparatus useful in connection therewith,
or (C) relate to the Relevant Lines of Business's investigations or to
the nature of the business of the Relevant Lines of Business at the
time of the Invention, or (D) results or relates to any work Executive
may do on behalf or at the request of the Company. All such Inventions
which Executive is obligated to disclose, whether patented or not,
shall be and remain the property of the Company or its nominees,
successors or assigns; and
f. The provisions of paragraphs IV.C.4.a. through e. of this
Agreement shall not apply to any Invention for which no equipment,
supplies, facility or trade secret information of Measurex, Honeywell
or the Company was used and which was developed entirely on
Executive's own time, and (1) which does not relate (a) directly to
the business of the Company or the Relevant Lines of Business or (b)
to the Company's actual or anticipated research or development, and
(2) which does not result from any work performed by Executive for the
Company.
g. Executive will assist the Company and its nominees, successors
and assigns, upon request, in every proper way during and following
the period of his employment by the Company, at no expense to
Executive, to obtain and maintain for the benefit of the Company and
its nominees, successors and assigns, patents in any and all countries
for Inventions which Executive is obligated to assign. Such
assistance shall include, but not be limited to, the execution and
delivery of specific assignments of any such Invention and all
domestic and foreign patent rights
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therein, and all other papers and documents of every nature which
relate to the securing and maintenance of such patent rights, and
the performance of all other lawful acts, such as the giving of
testimony in any interference proceedings, infringement suits or
other litigation, as may be deemed necessary or advisable by the
Company or its nominees, successors or assigns; in providing such
assistance, Executive shall be entitled to reimbursement of all
reasonable out-of-pocket expenses and, if services are provided
by Executive after the period of his employment by the Company,
to reasonable compensation for the time spent by Executive in
performing such services; and
h. This paragraph IV.C.4. of this Agreement shall be binding on
Executive, his heirs and successors, and may be transferred by
the Company.
5. Employer's Property. Executive acknowledges that all items of any
and every nature or kind created or used by Executive (including, but
not limited to, equipment, automobiles, credit cards, books, records,
reports, files, manuals, literature, confidential information or other
materials or authorship of copyrightable materials) pursuant to
Executive's employment by the Company, or furnished by the Company to
Executive, shall remain and be the exclusive property of the Company
at all times and shall be surrendered to the Company, in good condi-
tion, normal wear and tear excepted, promptly on the termination of
Executive's employment irrespective of the time, manner or cause of
the termination. Any information of a proprietary and/or confidential
nature which relates to Honeywell or the Company and which is stored
in Executive's own computer or computer memory medium or the like
shall be destroyed by Executive upon termination of his employment
with the Company unless otherwise directed by the Company.
D. Continuing Obligation. Notwithstanding the cessation of any payments
provided by Paragraph III.C. herein, upon the termination of this Agreement
or termination of Executive's employment pursuant to Paragraph III.D.,
Executive shall not be relieved of his obligations to perform the covenants
contained in Paragraphs IV.C.1., 2., 3., 4., and 5. The requirements and
obligations imposed on Executive and the Company by Paragraphs IV.C.1., 2.,
3., 4., and 5. of this Agreement survive the expiration of Executive's
employment with the Company, and the termina- tion of all other provisions
of this Agreement.
E. Remedies.
1. Injunctive Relief. Executive acknowledges and agrees that, without
prejudice to any other rights of the Company, in the event of his
violation or attempted violation of any of the covenants contained in
Paragraphs IV.C.1., 2., 3., 4., and 5. of this Agreement, an interim
injunction may be granted immediately by any court of competent
jurisdiction. Executive agrees that, in addition to injunctive relief,
the Company shall be entitled to any and all other legal and equitable
relief, including money damages caused by any breach of this
Agreement.
2. Executive's Claims Can Not Preclude Enforcement of Covenants by
the Company. Executive understands and agrees that the Company has a
material interest in preserving the relationship it has developed with
its customers against impairment by his competitive activities.
Accordingly, Executive agrees that the restrictions and covenants
contained in Paragraphs IV.C.1., 2., 3., 4., and 5., and his
agreement to observe them by his execution of this Agreement, are of
the essence to this Agreement and constitute a material inducement to
the Company to enter into this Agreement and to employ Executive, and
that the Company would not enter into this Agreement absent his
agreement to abide by the restrictions and covenants contained in
Paragraphs IV.C.1., 2., 3., 4., and 5. of this Agreement.
Furthermore, any claim or cause of
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action by Executive against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of the covenants or restrictions
contained herein.
F. Revisions by Court. If any provision in this Agreement,
including, but not limited to, the provisions and covenants contained
in Paragraphs IV.C.1., 2., 3., 4., and 5. of this Agreement, are
found by a court of competent jurisdiction to be unenforceable as
written, Executive and the Company hereby specifically and irrevocably
authorize and request said court to revise the unenforceable
provisions in a manner which shall result in the provisions being
enforceable while remaining as similar as legally possible to the
purpose and intent of the original.
V. NOTICES. Any notice, demand, request, amendment, waiver or other
communication under this Agreement shall be in writing and shall be deemed
to have been duly given (i) on the date of delivery if delivered to the
address of the party specified below (including delivery by courier), or
(ii) on the fifth day after mailing if mailed to the party to whom notice
is to be given to the address specified below, by first class mail,
certified or registered, return receipt requested, postage prepaid, or
(iii) on the date of transmission if sent by facsimile transmission to the
facsimile number given below, and telephonic confirmation of receipt is
obtained promptly after completion of transmission, as follows:
If to the Company: c/o Honeywell Inc.
16404 N. Black Canyon Highway
Phoenix, Arizona 85023-3033
ATTN: President, Industrial Automation and Control
Facsimile: (602) 313-5705
with a copy to: Honeywell Inc.
Honeywell Plaza
Minneapolis, Minnesota 55408
ATTN: General Counsel
Facsimile: (612) 951-0647
If to Executive: Mr. John Gingerich
19573 Douglass Lane
Saratoga, California 95070
Facsimile: (408) 867-2545
Any party may from time to time change its address or facsimile number for the
purpose of notices to that party by a similar notice specifying a new address
or facsimile number, but no such change shall be deemed to have been given
until it is actually received by the party sought to be charged with its
contents.
VI. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the employment of Executive. Any and all
previous agreements, arrangements or understandings, written or oral, express
or implied, between the parties or on their behalf, relating to the employment
of Executive by the Company or Measurex are terminated and canceled, and each
of the parties releases and forever discharges the other of and from all manner
of actions, causes of action, claims and demands whatsoever, under or relating
to any such agreements, arrangements or understandings.
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VII. AMENDMENTS; WAIVERS.
A. This Agreement may be amended or modified, and any of the terms,
covenants, or conditions hereof may be waived only by a written
instrument executed by the parties hereto, or in the case of a waiver, by
the party waiving compliance. Executive may not sign a waiver or
amendment on behalf of the Company.
B. Any waiver or amendment must be communicated in accordance with the
provisions of Paragraph V.
C. Any waiver by Executive or by the Company of a breach of this
Agreement shall not result in a waiver of any other breach by either
party to this Agreement. This means that if a party does not enforce a
particular provision of this Agreement at a particular time, that will
not waive such party's right to enforce that same provision at another
time, or to enforce any other provision at any time.
VIII. SUCCESSORS AND ASSIGNS. Executive understands and agrees that he cannot
assign or otherwise transfer any of his obligations under this Agreement. He
understands and agrees that the Company may, at its option, assign or transfer
its rights under this Agreement to another organization or individual if there
is a merger, consolidation, transfer, or sale of all or substantially all of
the assets or stock of the Company, subject to the assumption of the Company's
obligations hereunder by such assignee or transferee. Executive understands
and agrees that if there is an assignment or transfer of the Company's rights
under this Agreement, then, subject to the assumption of the Company's
obligations hereunder by such assignee or transferee, this Agreement will
continue to be effective, will continue to bind him, and will inure to the
benefit of the organization or individual to whom the transfer or assignment
is made.
IX. SEVERABILITY. If any part of this Agreement is found to be invalid or
unenforceable, the parties agree that the invalid or unenforceable part of the
Agreement shall be considered deleted from the Agreement and the rest of the
Agreement will be unaffected and shall continue in full force and effect. The
parties agree that any provision of this Agreement that is found unenforceable
because it is overbroad will be limited to the extent that it is necessary to
make that provision enforceable under the applicable law. The parties recognize
the uncertainty of the law and agree that this Agreement should be enforced as
fully as the law will allow.
X. DELAWARE LAW AND VENUE. This Agreement will be construed and enforced in
accordance with the laws of the State of Delaware without regard to principles
of conflicts of law. The parties hereby consent to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United States of
America located in the District of Delaware for any actions, suits, or
proceedings arising out of or relating to this Agreement, and the parties
further agree that service of any process, summons, notice or document by U.S.
registered mail to the last known address (or any mode of service recognized to
be effective by applicable law) shall be effective service of process for any
action, suit or proceeding brought in such court. The parties agree that any
dispute relating to or arising out of this Agreement shall be venued in the
State of Delaware.
XI. HEADINGS The headings used in this Agreement are for convenience only
and are not to be construed in any way as additions to or limitations of the
covenants and agreements contained in it.
XII. COUNTERPARTS This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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XIII. EXECUTIVE'S ACKNOWLEDGMENT OF VOLUNTARY AGREEMENT. Executive
acknowledges that he has carefully read this Agreement, that he understands its
terms and its legal effect, that all agreements between the Company and
Executive relating to the subjects covered by this Agreement are contained in
this Agreement, and that Executive has entered into this Agreement voluntarily
and not in reliance upon any promises or representations made by the Company
other than those made in this Agreement itself.
BY SIGNING BELOW, THE COMPANY AND EXECUTIVE AGREE TO THE TERMS OF THIS
AGREEMENT AS LISTED AND STATED ABOVE.
HONEYWELL ACQUISITION CORP.
Dated: January 26, 1997 By: /s/ Markos I. Tambakeras
------------------------
Its: Vice President
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Dated: January 26, 1997 /s/ John Gingerich
------------------------
John Gingerich
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