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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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MEASUREX CORPORATION
(NAME OF SUBJECT COMPANY)
MEASUREX CORPORATION
(NAME OF PERSON FILING STATEMENT)
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
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583432 10 9
(CUSIP NUMBER OF CLASS OF SECURITIES)
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DAVID A. BOSSEN
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
MEASUREX CORPORATION
ONE RESULTS WAY
CUPERTINO, CALIFORNIA 95014
(408) 255-1500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING THIS STATEMENT)
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COPIES TO:
JOHN W. LARSON, ESQ.
THOMAS W. KELLERMAN, ESQ.
BROBECK, PHLEGER & HARRISON LLP
TWO EMBARCADERO PLACE
2200 GENG ROAD
PALO ALTO, CALIFORNIA 94303
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INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 (this
"Schedule 14D-9") relates to an offer by Honeywell Acquisition Corp., Delaware
corporation and a wholly owned subsidiary of Honeywell Inc., a Delaware
corporation, to purchase all of the Shares (as defined below) of Measurex
Corporation, a Delaware corporation. Capitalized terms used herein and not
otherwise defined herein shall have the meaning assigned to them in the Offer to
Purchase dated January 31, 1997, a copy of which is filed as Exhibit (a)(1) to
this Schedule 14D-9 (the "Offer to Purchase").
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Measurex Corporation, a Delaware
corporation (the "Company"). The address of the principal executive office of
the Company is One Results Way, Cupertino, California 95014. The title of the
class of equity securities to which this Statement relates is the common stock,
par value $.01 per share (the "Shares"), of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer (the "Offer") disclosed in the
Schedule 14D-1 dated January 31, 1997 (as amended or supplemented, the "Schedule
14D-1") filed with the Securities and Exchange Commission (the "Commission") by
Honeywell Inc., a Delaware corporation (the "Parent"), and its wholly owned
subsidiary, Honeywell Acquisition Corp., a Delaware corporation (the
"Purchaser"), relating to an offer by the Purchaser to purchase all outstanding
Shares at $35.00 per share, net to the seller in cash, without interest (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase and the related letter of transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer"). The
principal executive offices of each of the Purchaser and Parent are located at
Honeywell Plaza, 2701 4th Avenue South, Minneapolis, Minnesota 55408. Unless the
context otherwise requires, all references to Shares in this Schedule 14D-9
shall include the associated preferred share purchase rights (the "Rights"), and
all references to the Rights shall include all benefits that may inure to the
holders of the Rights pursuant to the Rights Agreement between the Company and
Bank of New York, as amended.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of January 26, 1997 (the "Merger Agreement"), by and among the Company, the
Parent and the Purchaser. A copy of the Merger Agreement is filed as Exhibit
(c)(1) to this Schedule 14D-9 and is incorporated herein by reference in its
entirety. Pursuant to the Merger Agreement, as soon as practicable following the
consummation of the Offer and the satisfaction or waiver of certain conditions,
the Purchaser will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation (the "Surviving Corporation").
In the Merger, each Share outstanding at the Effective Time (as defined below)
(other than Shares held in the treasury of the Company, Shares owned by the
Parent, the Purchaser or any other subsidiary of the Parent or the Company or
Shares held by stockholders who properly exercise their dissenters' rights under
the Delaware General Corporation Law (the "DGCL")) will, by virtue of the Merger
and without any action by the holder thereof, be converted into the right to
receive $35.00 per share, net to the Seller in cash, without interest thereon
(the "Merger Consideration"), upon the surrender of the certificate formerly
representing such Share (the "Certificate"). The Merger Agreement is summarized
in Item 3 of this Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND.
a. The name and business address of the Company, which is the person
filing this statement, are set forth in Item 1 above. Unless the context
otherwise requires, references to the Company in this Schedule 14D-9 are to the
Company and its subsidiaries, viewed as a single entity.
b. Certain contracts, agreements, arrangements or understandings between
the Company or its affiliates and its executive officers, directors or
affiliates are described in the Information Statement attached as Schedule I
under the headings "Executive Compensation;" "Option Grants in Last Fiscal
Year;" "Aggregate
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Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values;"
"Employment Contracts and Change of Control Arrangements;" and "Certain
Transactions."
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 8 of the 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 (as defined in the Offer), 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 Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (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.
CONDITIONS. The Purchaser's obligation to accept Shares for payment
pursuant to the Offer is subject to the satisfaction of certain conditions (the
"Conditions") set forth in Section 14 of the Offer to Purchase, which is
incorporated herein by reference.
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 of the Merger (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 Parent 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 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) Parent, 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 Parent'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 Parent, the Purchaser or any other wholly owned subsidiary of Parent,
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.
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THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that
promptly after the purchase by Parent of at least a majority of the outstanding
Shares (on a fully diluted basis), Parent 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's
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
Parent's designees to be elected to the Company's Board. In the event that
Parent'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 its 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 Parent, 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 Parent 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. Parent 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.
The Merger Agreement provides that in the event that Parent, the Purchaser
or any other subsidiary of Parent acquires at least 90% of the outstanding
Shares, pursuant to the Offer or otherwise, Parent, the Purchaser and the
Company will, at the request of Parent 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, as
defined below, 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 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"), the
Parent 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 "Parent Option") to
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purchase shares of the common stock, par value $1.50 per share, of Parent (the
"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 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. Parent 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 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. Except as may be otherwise agreed to by
Parent 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.
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 Parent, 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 Company 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,
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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 Parent, 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 United States 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 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 the Company and the Company Board are not
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
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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 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 Parent 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 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.
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 Parent 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 Parent may substitute therefor policies
of substantially equivalent coverage and amounts containing terms no less
favorable to such former directors or officers. Parent has also agreed that 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, 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 Parent or the Surviving Corporation is unable to obtain the amount
of D&O Insurance required for such aggregate premium, Parent 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.
REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent 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 Parent and
the Company, (b) by either 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, 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 Parent 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 Parent, the Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to five
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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 Parent 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 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 under the Merger Agreement,
which makes it impossible to satisfy any of the conditions to the Offer, 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 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
of the Offer to Purchase) 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 Parent 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 of the Offer to Purchase).
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) Parent terminates the Merger Agreement pursuant to clause
(d)(iii) of the immediately preceding paragraph, or (z) either the Company or
Parent 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 of the Offer to
Purchase) 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
Parent an amount equal to $20.0 million (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, the Merger Agreement and the consummation of the
Transactions; provided that no Termination Fee will be payable if the Purchaser
or Parent was in material breach of its representations, warranties or
obligations under the Merger Agreement at the time of its termination.
INDEMNIFICATION AGREEMENTS
The Company has previously entered into indemnification agreements with
each person who as of January 26, 1997 was either an executive officer or
director of the Company. The indemnification agreements generally provide (i)
for indemnification against all costs and expenses (including attorneys' fees)
actually and reasonably incurred in connection with the investigation, defense
or appeal of any threatened, pending or completed action, suit or proceeding
related to the fact that such Indemnitee is or was serving the Company as a
director, officer, employee, agent or fiduciary, or by reason of anything done
or not done by such indemnitee in any such capacity and any and all judgments,
fines, penalties and amounts paid in settlement of any claim, unless it is
determined that such indemnification is not permitted under applicable law or as
a result of certain culpable action by such indemnitee and (ii) for the prompt
advancement of expenses to an indemnitee as well as the reimbursement by such
indemnitee of any such advances to the Company if it is determined that the
indemnitee is not entitled to such indemnification. An indemnitee's rights under
the indemnification agreements are not exclusive of any other rights they may
have under the DGCL, the Company's Bylaws or otherwise. A copy of the form of
indemnification agreement has been filed as Exhibit (c)(3) to this Schedule
14D-9 and is incorporated herein by reference in its entirety. Article VII,
Section 6 of the Bylaws of the Company also provides for indemnification of
officers and directors of the Company. A copy of such
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Article VII, Section 6 has been filed as Exhibit (c)(5) to this Schedule 14D-9
and is incorporated herein by reference in its entirety.
Article Eleventh of the Certificate of Incorporation of the Company, as
amended to date, limits the personal liability of directors of the Company and
provides for indemnification of the officers and directors of the Company, in
each case to the fullest extent permitted by the DGCL and other applicable law.
A copy of such Article Eleventh has been filed as Exhibit (c)(4) to this
Schedule 14D-9 and is incorporated herein by reference in its entirety.
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 C.
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 (c)(8) and (c)(9) to this Schedule 14D-9. The Employment Agreements
may be examined and copies may be obtained at the places and in the manner set
forth in Section 8 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 Parent'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 Parent commences after the
start of the calendar year, will be based upon the results reflected in the 1997
Measurex operating plan previously delivered to Parent 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 Parent Stock Option program in February
1998, the Gingerich Agreement provides for Mr. Gingerich to receive 7,500
nonqualified stock options to purchase shares of Parent's common stock with a
ten year term (provided that if Mr. Gingerich's employment with Parent is
terminated, the exercisability of such options after the date of termination
will be subject to the terms of Parent'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
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closing price of Parent 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 Parent issued pursuant to the terms of the
Parent 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 Parent stock vesting on December 31, 1998, (iv) 5,000
shares of restricted Parent 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 Parent or the
Surviving Corporation with respect to (i) products which the lines of business
of Parent 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
Parent or the Surviving Corporation has produced or services which Parent 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
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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 Parent or the Surviving Corporation or employing any
employee of Parent 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 Parent or
the Surviving Corporation.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Recommendation of the Board of Directors
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.
As set forth in the Offer, the Purchaser will purchase shares tendered
prior to the close of the Offer if the Conditions to the Offer have been
satisfied. Stockholders considering not tendering their Shares in order to wait
for the Merger should note that if the Minimum Condition is not satisfied or any
of the other Conditions to the Offer are not satisfied, the Purchaser is not
obligated to purchase any Shares, and can terminate the Offer and the Merger
Agreement and not proceed with the Merger. Under the DGCL, the approval of the
Board and the affirmative vote of the holders of a majority of the outstanding
shares are required to approve the Merger. Accordingly, if the Conditions to the
Offer are satisfied, the Purchaser will have sufficient voting power to cause
the approval of the Merger without the affirmative vote of any other
stockholder.
The Offer is scheduled to expire at 12:00 midnight, New York City time, on
February 28, 1997, unless the Purchaser, in accordance with the terms of the
Merger Agreement, elects to extend the period of time for which the Offer is
open. If on the 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 has agreed to extend the
termination date from time to time until two business days after the expiration
of the waiting period under the HSR Act. A copy of the press release issued
jointly by the Company and Purchaser on January 27, 1997 announcing the Merger
and the Offer is filed as Exhibit (a)(3) to this Schedule 14D-9 and is
incorporated herein by reference in its entirety.
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 for 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 Parent. In addition, Mr. Bossen contacted one company regarding a
potential strategic relationship with the Company. Based on Parent's expression
of interest, Parent executed and delivered a Confidential Nondisclosure
Agreement to the Company, and in April 1996 Goldman Sachs provided a copy of the
Memorandum to Parent.
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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 Parent 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 met in Phoenix, Arizona
with Messrs. Bonsignore and Stranghoener, as well as Markos I. Tambakeras,
President of Parent's Industrial Automation and Control division, Gayle Pincus,
Vice President-Business Development for the Industrial Automation and Control
division of Parent, and William M. Hjerpe, Vice President and Chief Financial
Officer of Parent. 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 Parent
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 Parent, 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 Parent. 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, Parent'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 Parent 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 Parent with the information
necessary for Parent 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 Parent's Worldwide Pulp and Paper business, and
other Parent employees. At this meeting, Parent delivered a presentation
concerning their organization and the possible structure of a combination of the
Company with the relevant portions of Parent'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 Parent would like to move forward and he also
indicated a preliminary range of values placed on the Company by Parent. 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 Parent's
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current views concerning a possible acquisition of the Company. Parent 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 Parent and the information provided to
Parent, 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 Parent and the other party with which the 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 Parent 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 Parent, 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 Parent 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
Parent, together with Mr. Rimland of Bear Stearns and representatives of
Deloitte & Touche, Parent'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 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 Parent. 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 discussed with Mr.
McAdams.
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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 other 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 20, 1997, the Board of Directors of the Company held a
telephonic meeting. The directors reviewed the history of the discussions to
date with Parent and other parties and discussed in detail preliminary value
indications for the Company, including the indication received from Mr.
Bonsignore. The Company's Board of Directors authorized management to continue
discussions with Parent, subject to the further approval of the Board of
Directors.
On January 21, 1997, Mr. Bonsignore called Mr. Bossen and indicated that
Parent'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 Parent 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 Parent delivered to
counsel for the Company a draft of the Merger Agreement and on January 22, 1997
and January 23, 1997 counsel for Parent, 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 Parent 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. The Company's Board of Directors
reviewed the actions the Company had taken since March 1996 to contact
appropriate companies with which the Company might engage in a transaction and
Goldman Sachs gave its opinion described below. The Company's counsel described
the legal obligations of the Board, the terms of the Merger Agreement and the
procedures that would be followed if the Board approved the Offer and the
Merger.
Reasons for the Recommendation
At the meeting on January 26, 1997, the Board of Directors of the Company
unanimously (i) approved the Offer and the Merger (the "Transactions"), (ii)
determined that the Transactions are fair to, and in the best interests of, the
stockholders of the Company and (iii) resolved to recommend that stockholders
accept the Offer and tender their Shares.
In arriving at its decision to approve the Transactions and to recommend
acceptance of the Offer, the Board of Directors considered, among other things,
(i) the terms and conditions of the Merger Agreement, including the amount and
form of the consideration; (ii) the results of the intensive effort that the
Company's management and its financial advisors made to identify and select
potential strategic partners which management believed would have a high level
of interest in entering into a strategic combination with the Company; (iii) the
fact that the $35.00 per Share price represented a premium of approximately
44.3% over the closing sale price of $24.25 per Share as reported on the New
York Stock Exchange on January 24, 1997, the last trading date prior to the date
the Board of Directors authorized and approved the Transactions; (iv) the recent
historical market prices of the Shares; (v) the Board of Directors' knowledge of
the business, operations, prospects, properties, assets and earnings of the
Company, including an estimate of costs the Company could incur in developing a
DCS product; (vi) the effect of the Transactions on the Company's
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relationships with its employees and customers; (vii) the likelihood that the
proposed Merger would be consummated, including the conditions to the Offer;
(viii) the advantages in a competitive environment of strategically aligning
with a large, well-capitalized company which had a DCS product; (ix) the fact
that pursuant to the Merger Agreement, the Company is not prohibited from
responding to any unsolicited Acquisition Proposal (as defined in the Merger
Agreement) to acquire the Company, to the extent that the Board of Directors of
the Company determines in good faith, after receiving advice from outside
counsel, that the failure to so respond could reasonably be expected to cause
the Board to violate its fiduciary duties to the Company's stockholders under
applicable law, and that, under such circumstances, the Company may enter into
an agreement for a transaction representing a Superior Proposal (as defined in
the Merger Agreement), upon payment of the Termination Fee and the reimbursement
of Parent's expenses; and (x) the opinion of Goldman Sachs presented at the
meeting of the Board of Directors held on January 26, 1997, to the effect that,
as of such date, the $35.00 per Share in cash to be received by the holders of
Shares pursuant to the Merger Agreement is fair to such holders. The opinion of
Goldman Sachs contains a description of the factors considered, the assumptions
made and the scope of review undertaken by Goldman Sachs in rendering its
opinion. THE FULL TEXT OF THE OPINION RECEIVED BY THE COMPANY FROM GOLDMAN SACHS
IS FILED AS EXHIBIT (a)(4) TO THIS SCHEDULE 14D-9 AND IS ALSO ATTACHED HERETO.
STOCKHOLDERS ARE URGED TO READ SUCH OPINION IN ITS ENTIRETY.
The Board of Directors recognized that consummation of the Offer and the
Merger will deprive current stockholders of the Company of the opportunity to
participate in the future growth prospects of the Company and, therefore, in
reaching its conclusion to approve the Offer and the Merger, determined that the
historical results of operations and future prospects of the Company are
adequately reflected in the $35.00 price per Share. In addition, the Board of
Directors considered the possibility that, in the event the Offer but not the
Merger is consummated, the number of stockholders could be reduced, which could
adversely affect the liquidity and market value of the Shares.
In light of all the factors set forth above, the Board of Directors
approved the Offer and the Merger. In view of the variety of factors considered
in connection with its evaluation of the Offer and the Merger, the Board of
Directors did not assign relative weights to the specific factors considered in
reaching its decision.
It is expected that if Shares are not accepted for payment by the Purchaser
in the Offer and if the Merger is not consummated, the Company's current
management, under the general direction of the Board of Directors, will continue
to manage the Company as an on-going business. However, the Company may, under
these circumstances, continue to explore other possible methods of maximizing
stockholder value.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company retained Goldman Sachs to provide financial advice and
assistance in connection with the possible sale of all or a portion of the
Company. Pursuant to a letter agreement dated February 12, 1996 between the
Company and Goldman Sachs, the Company has agreed to pay Goldman Sachs a fee of
approximately $4,000,000 for acting as financial advisor in connection with the
Transactions in the event that 50% or more of the outstanding Shares are
acquired pursuant to the Offer. The Company has also agreed to reimburse Goldman
Sachs for its reasonable out-of-pocket expenses incurred in connection with
rendering financial advisory services, including fees and disbursements of its
legal counsel. The Company has agreed to indemnify Goldman Sachs and its
directors, officers, agents, employees and controlling persons for certain
costs, expenses and liabilities to which it may be subjected arising out of or
related to its engagement as financial advisor.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the stockholders of the Company on its
behalf with respect to the Offer.
14
<PAGE> 16
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
a. During the past 60 days, no transactions in Shares have been effected
by the Company or, to the best of the Company's knowledge, by any of its
executive officers, directors, affiliates or subsidiaries other than as set
forth below.
On December 19, 1996, the following two executive officers of the Company
exercised options to acquire Shares by delivering Shares of the Company's Common
Stock to the Company: Robert McAdams, Jr. delivered 1,289 Shares and acquired
1,992 Shares; and Lance M. Lissner delivered 3,559 Shares and acquired 5,500
Shares.
On December 20, 1996, Neil J. Laird sold 300 Shares of the Company's Common
Stock in an open market transaction.
During the past 60 days, David A. Bossen made gifts of 90, 410 and 100
Shares to various charities.
b. To the best of the Company's knowledge, all directors and executive
officers of the Company presently intend to tender, pursuant to the Offer, all
Shares beneficially owned by them, except for those Shares, if any, held by such
persons which, if tendered, could cause such persons to incur liability under
the provisions of Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and except for those Shares, if any, underlying
stock options held by such persons. The foregoing does not include any Shares
over which, or with respect to which, any such executive officer, director, or
affiliate acts in a fiduciary or representative capacity or is subject to the
instructions of a third party with respect to such tender.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
a. Except as set forth herein, no negotiation is being undertaken or is
underway by the Company in response to the Offer that relates to or would result
in (i) an extraordinary transaction, such as a merger or reorganization
involving the Company or any subsidiary thereof; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary
thereof; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
b. Except as set forth herein, there is no transaction, board resolution,
agreement in principle or signed contract in response to the Offer that relate
to or would result in one or more of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The information contained in all of the Exhibits referred to in Item 9
below is incorporated herein by reference.
15
<PAGE> 17
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase dated January 31, 1997.*
(a)(2) Letter of Transmittal.*
(a)(3) Press release issued by the Company and the Parent on
January 27, 1997.
(a)(4) Opinion of Goldman Sachs dated January 26, 1997.*
(a)(5) Letter to Stockholders dated January 31, 1997 from David A.
Bossen, Chairman of the Board and Chief Executive Officer of
the Company.*
(c)(1) Agreement and Plan of Merger dated as of January 26, 1997,
among Parent, Purchaser and the Company.
(c)(2) Confidential Nondisclosure Agreement dated as of March 29,
1996, between Parent and the Company.
(c)(3) Form of Indemnification Agreement.
(c)(4) Article Eleventh of the Company's Certificate of
Incorporation, as amended to date.
(c)(5) Article VII, Section 6 of the Bylaws of the Company.
(c)(6) Form of Severance Agreement with the Company's executive
officers.
(c)(7) Amendment Number 3 to Rights Agreement dated as of January
26, 1997 between the Company and Bank of New York, a New
York banking corporation.
(c)(8) Employment Agreement dated January 26, 1997 between
Purchaser and David A. Bossen.
(c)(9) Employment Agreement dated January 26, 1997 between
Purchaser and John C. Gingerich.
</TABLE>
- ---------------
* Included in documents mailed to stockholders.
16
<PAGE> 18
SIGNATURE
After reasonable 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.
MEASUREX CORPORATION
By: /s/ DAVID A. BOSSEN
------------------------------------
David A. Bossen
Chairman of the Board
and Chief Executive Officer
Dated: January 31, 1997
<PAGE> 19
SCHEDULE I
MEASUREX CORPORATION
ONE RESULTS WAY
CUPERTINO, CALIFORNIA 95014
(408) 255-1500
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------
This information is being mailed on or about January 31, 1997 as a part of
the Company's Schedule 14D-9 to the holders of record of the Shares at the close
of business on or about January 28, 1997. You are receiving this Information
Statement in connection with the possible election of persons designated by the
Purchaser to a majority of the seats on the Board. The Merger Agreement requires
the Company, at the request of the Purchaser, to take all action necessary to
cause Parent's designees to be elected to the Board under the circumstances
described therein. This Information Statement is required by Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder. See "Board of Directors and
Executive Officers -- Right to Designate Directors; Parent's Designees" below.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action in this regard. Capitalized terms used and
not otherwise defined herein shall have the meanings set forth in the Schedule
14D-9.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on
January 31, 1997. The Offer is scheduled to expire at 12:00 midnight, New York
City time, on Friday, February 28, 1997, unless the Offer is extended.
The information contained in this Information Statement concerning the
Purchaser and Parent has been furnished to the Company by Parent, and the
Company assumes no responsibility for the accuracy or completeness of such
information.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. As of January 24, 1997, there were
16,150,375 Shares issued and outstanding. The Board currently consists of nine
members, and there are currently no vacancies on the Board. Each director holds
office until such director's successor is elected and qualified or until such
director's earlier resignation, death or removal.
RIGHT TO DESIGNATE DIRECTORS; PARENT'S DESIGNEES
Board Representation. Pursuant to the Merger Agreement, the Company agreed
that, 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), Parent will be entitled to designate such
number of directors (the "Parent Designees"), 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 agreed that it
would, 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
the Parent Designees to be so elected to the Company's Board, and shall take all
actions available to the Company to cause the Parent Designees to be so elected.
The Merger
I-1
<PAGE> 20
Agreement further provides that at such time, the Company shall, if requested by
Parent, also cause such 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 of the Company
and (iii) each committee (or similar body) of each such board. It is expected
that the Parent Designees may assume office at any time following the purchase
by the Purchaser of a majority of the Shares outstanding on a fully diluted
basis pursuant to the Offer, which purchase cannot be earlier than midnight on
February 28, 1997 and that, upon assuming office, the Parent Designees will
thereafter constitute at least a majority of the Board. To the extent the
Company's Board of Directors will consist of persons who are not Parent
Designees, the Board is expected to consist of those persons who are currently
directors of the Company who have not resigned.
The Parent Designees will be selected by Parent from among the individuals
listed below. Each of the following individuals has consented to serve as a
director of the Company if appointed or elected. None of the following
individuals owns any Shares. In addition, none of the following individuals is a
director of, or holds any position with, the Company. The name, age, present
principal occupation or employment and five-year employment history of each of
the following individuals are set forth below. Each person is a citizen of the
United States and the business address of each such person is c/o Honeywell
Inc., Honeywell Plaza, Minneapolis, Minnesota 55408.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------ --------------------------------------------------
<S> <C>
D. Larry Moore (60).................... President and chief operating officer of the Parent since
April 1993. Mr. Moore was executive vice president and
chief operating officer for Space and Aviation Industrial
from 1990 to April 1993. Mr. Moore has been a director of
Parent since 1990. 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 (ALA) and the National Association of
Manufacturers (NAM).
Lawrence W. Stranghoener (42).......... Vice president and chief financial officer of Parent
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.
Sigurd Ueland (59)..................... Vice president and secretary of Parent since 1983.
Kathleen M. Gibson (41)................ Vice president and assistant secretary of Parent since
January 1997. Prior to January 1997, she was securities
counsel and assistant secretary for Bell Atlantic
Corporation.
Paul N. Saleh (40)..................... Vice president and treasurer of Parent since April 1994.
From August 1993 to March 1994, he was vice president,
investor relations and financial analysis of Parent. From
1991 to July 1993 he was director, investor relations of
Parent.
Edward D. Grayson (58)................. Vice president and general counsel of Parent since 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.
</TABLE>
I-2
<PAGE> 21
<TABLE>
<S> <C>
Philip M. Palazzari (49)............... Vice president and controller of Parent since October 1994. From May
1993 to October 1994, Mr. Palazzari was vice president, finance for
Parent's Home and Building Control division. From March 1992 to April
1993, he was vice president and assistant controller of operations for
Parent. From January 1990 to February 1992, he was vice president for
financial planning and reporting for Parent.
</TABLE>
DIRECTORS OF THE COMPANY
The members of the Board of Directors of the Company are classified into
three classes, one of which is elected at each Annual Meeting of Stockholders to
hold office for a three-year term and until successors of such class have been
elected and qualified. The following table sets forth, as of January 31, 1997,
as to each director, his age and principal occupation and business experience
and the period during which each has served as a director of the Company. See
"Board Meetings and Committees" below for information concerning the composition
of Board committees. See "Security Ownership of Management" below for the
aggregate number of Shares beneficially owned by each director as of December
31, 1996.
<TABLE>
<CAPTION>
CLASS AND
YEAR IN
DIRECTOR WHICH TERM
NAME PRINCIPAL OCCUPATION SINCE WILL EXPIRE AGE
---- -------------------- -------- ----------- ---
<S> <C> <C> <C> <C>
Paul Bancroft III Venture Capitalist 1968 Class I 67
1997
Dwight C. Baum Senior Vice President, PaineWebber 1968 Class I 84
Incorporated (investment banking) 1997
John C. Gingerich President and Chief Operating Officer, 1993 Class I 60
Measurex Corporation 1997
David A. Bossen Chairman of the Board of Directors and Chief 1968 Class II 69
Executive Officer, Measurex Corporation 1998
Orion L. Hoch Chairman Emeritus, Litton Industries, Inc. 1979 Class II 68
(multi-industry company) 1998
Jeffrey T. Grade Chairman of the Board of Directors and Chief 1993 Class II 53
Executive Officer, Harnischfeger Industries, 1998
Inc. (manufacturer of papermaking, mining and
material handling equipment)
John W. Larson Senior Partner, Brobeck, Phleger & Harrison 1970(1) Class III 61
LLP (law firm) 1999
J.W. McKittrick President, Tel-Research Corporation 1968 Class III 69
(consulting business) 1999
Graham Tyson Retired Chairman and Chief Executive Officer, 1979 Class III 73
Dataproducts Corporation (computer printer 1999
manufacturer)
</TABLE>
- ---------------
(1) Except for a period from July 1971 to September 1973 when Mr. Larson was in
government service.
Mr. Bancroft is a venture capitalist. He was a venture capitalist and
consultant to Bessemer Securities Corporation ("Bessemer") from 1988 to 1992. He
was President, Chief Executive Officer and a Director of Bessemer from 1976 to
1988, a Senior Vice President of Bessemer from 1974 to 1976 and Vice President
of Bessemer from 1967 to 1974. Mr. Bancroft is a director of Scudder Equity
Trust, Scudder New Europe Fund,
I-3
<PAGE> 22
Inc., Scudder New Asia Fund, Inc., Scudder Development Fund, Scudder
International Fund, Scudder Global Fund, Inc. and Western Atlas, Inc.
Mr. Baum is currently Senior Vice President of PaineWebber Incorporated, an
investment banking firm, and Chairman of the Board of Directors of United Cities
Gas Company. Until 1984, he had been Advisory Director of Blyth Eastman
PaineWebber Incorporated and a Senior Vice President and director of its
predecessor since 1956. Mr. Baum is also a director of Dominguez Services
Corporation and Westminster Capital, Inc.
Mr. Gingerich has served as President and Chief Operating Officer of
Measurex since December 1993. Prior to such date, Mr. Gingerich served in a
variety of positions at Measurex since joining the Company in 1970. Prior to his
appointment as President and Chief Operating Officer, he had served as Executive
Vice President since 1982.
Mr. Bossen is a founder of Measurex and has served as President and Chief
Executive Officer from the Company's incorporation in January 1968 until
December 1993 when he was made Chairman of the Board of Directors and Chief
Executive Officer.
Dr. Hoch is the Chairman Emeritus of Litton Industries, Inc. ("Litton"), a
multi-industry company. He served as Chairman of Litton from 1988 to 1994. Prior
to that he served as Chief Executive Officer of Litton from 1986 through 1992
and as a director since 1982. Dr. Hoch is also a trustee of Carnegie Mellon
University and is a director and Chairman of the Executive Committee of the
Board of Directors of Western Atlas, Inc.
Mr. Grade has been Chairman of the Board of Directors and Chief Executive
Officer at Harnischfeger Industries, Inc. ("Harnischfeger"), a manufacturer of
papermaking, mining and material handling equipment, since 1993. He was
President and Chief Executive Officer of Harnischfeger from 1992 until 1993, and
served as its President and Chief Operating Officer from 1986 until 1992. Mr.
Grade is also a director of Case Corporation, Crucible Materials Corporation and
Coeur d'Alene Mines Corporation.
Mr. Larson has been Senior Partner of the law firm of Brobeck, Phleger &
Harrison LLP since March 1996. Prior to that time he served as Chairman of the
firm from January 1, 1993 and as Managing Partner from 1988 through 1992. He has
been a partner with such firm since January 1969 except for the period from July
1971 to September 1973 when he was in government service as Assistant Secretary
of the United States Department of the Interior and Counselor to the Cost of
Living Council. Measurex has retained Brobeck, Phleger & Harrison LLP as its
counsel since 1968 and proposes to retain said firm during the current fiscal
year. Mr. Larson was Secretary of Measurex from 1968 to 1988, except during his
period of government service, and he has served as Assistant Secretary since
1988.
Mr. McKittrick has been President of Tel-Research Corporation ("TRC"), a
telecommunications consulting firm, since 1990. He also served as President of
TRC from 1980 to 1987. He was President and Chief Executive Officer of VMX,
Inc., a manufacturer of voice messaging systems, from 1987 to 1988 and its
Chairman and Chief Executive Officer from 1988 to 1990.
Mr. Tyson is the retired Chairman and Chief Executive Officer of
Dataproducts Corporation, a manufacturer of printers and other products
primarily for the computer and telecommunications industries. Mr. Tyson was one
of the founders of Dataproducts Corporation and served as its President and
Chief Executive Officer from 1971 to 1980. He served as its Chief Executive
Officer from 1980 to 1982, Chairman of the Board from 1980 to 1985, and
President and Chief Executive Officer from 1985 to 1986.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of five meetings during
fiscal 1996. During fiscal 1996, each director attended at least 75% of the
aggregate of (i) the total number of meetings of the Board and (ii) the total
number of meetings held by all committees of the Board on which he served.
The Company has an Audit Committee and a Compensation Committee of the
Board of Directors. There is no nominating committee or committee performing the
functions of such committee.
I-4
<PAGE> 23
The Audit Committee meets with the Company's financial management and its
independent accountants at various times during each year and reviews internal
control conditions, audit plans and results, and financial reporting procedures.
This Committee, which currently consists of Messrs. Baum, Tyson and Grade, held
two meetings during fiscal 1996.
The Compensation Committee reviews and approves the compensation
arrangements for the Company's executive officers and other key employees in
management positions. The Compensation Committee also administers the Company's
1993 Stock Option Plan and Employee Stock Purchase Plan. This Committee,
consisting of Messrs. Bancroft, Hoch and McKittrick, held five meetings during
fiscal 1996.
DIRECTOR REMUNERATION
Non-employee members of the Board are each paid an annual retainer fee of
$20,000, except for Mr. Tyson and Mr. Bancroft, who as chairmen of the Audit
Committee and the Compensation Committee, respectively, receive an annual
retainer fee of $21,000. In addition, each non-employee member is paid $1,500
per Board meeting and $1,000 per Committee meeting attended and are reimbursed
for all out-of-pocket costs incurred in connection with their attendance at such
meetings. Although the Compensation Committee usually meets on the dates of each
regularly scheduled Board meeting, its members are generally paid for only one
meeting per year.
Under the automatic option grant program in effect under the Company's 1993
Stock Option Plan, an individual who first becomes a non-employee member of the
Board will receive an automatic option grant for 16,000 shares of the Company's
Common Stock upon commencement of Board service, and each individual with six or
more months of Board service will receive an automatic option grant for an
additional 4,000 shares at each Annual Stockholders Meeting at which he
continues to serve as a non-employee Board member, whether or not he is standing
for reelection at that particular meeting. On April 12, 1996, the date of the
1996 Annual Stockholders Meeting, each non-employee Board member received an
automatic option grant under the 1993 Stock Option Plan for 4,000 shares of
Common Stock with an exercise price of $26.6250 per share, the fair market value
per share of Common Stock on the grant date. Each 16,000-share and 4,000-share
option has a maximum term of ten years and will become exercisable in four equal
and successive annual installments over the optionee's period of Board service,
beginning one year after the grant date. However, each outstanding automatic
option grant will immediately become exercisable for all the option shares
should the Company be acquired by merger or asset sale or should there occur a
hostile take-over of the Company through a tender offer for more than 50% of the
outstanding Common Stock or a change in the majority of the Board as a result of
one or more contested elections for Board membership. Upon the successful
completion of a hostile tender offer for more than 50% of the outstanding Common
Stock, each outstanding automatic option grant may be surrendered to the Company
in return for a cash payment in an amount per share of Common Stock subject to
the surrendered option equal to the greater of (i) the highest tender offer
price per share paid for the Common Stock or (ii) the fair market value per
share on the option surrender date, less the option exercise price payable per
share.
No other compensation is paid to the non-employee members of the Board with
respect to their service on the Board.
I-5
<PAGE> 24
EXECUTIVE OFFICERS OF THE COMPANY
The identity of the current executive officers of the Company (excluding
those executive officers who are directors, as discussed in the section above
entitled "Directors of the Company") and certain biographical information is set
forth below.
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
- ---------------------------- ---- ----------------------------------------------------------
<S> <C> <C>
Robert McAdams, Jr. 58 Executive Vice President and Chief Financial Officer
William J. Weyand 53 Executive Vice President, Worldwide Sales and Service
Glenn R. Wienkoop 50 Executive Vice President and President, Industrial Systems
Division
Lance M. Lissner 47 Vice President, Corporate Planning and Development
Robert H. Bucher 42 Senior Vice President, Paper Control Systems Division
Charles Van Orden 43 Vice President, General Counsel and Secretary
</TABLE>
Mr. McAdams has been Executive Vice President and Chief Financial Officer
since April 1995; Senior Vice President and Chief Financial Officer from
September 1994 to April 1995; Senior Vice President Operations and Information
Services from 1992 to September 1994; and Senior Vice President-Finance and
Administration and Chief Financial Officer from 1985 to 1992.
Mr. Weyand has been Executive Vice President, Worldwide Sales and Service
since April 1995; Senior Vice President of Worldwide Sales and Service from
December 1994 to April 1995; President, North and South America from February to
December 1994; Senior Vice President, U.S. and Canada Sales and Service from
1993 to February 1994; and Senior Vice President, U.S. Sales and Service from
1991 to 1993.
Mr. Wienkoop has been Executive Vice President, President Industrial
Systems Division since September 1994; and Executive Vice President, Engineering
and Marketing from 1991 to September 1994.
Mr. Lissner has been Vice President, Corporate Planning and Development
since 1991.
Mr. Bucher has been Vice President, Paper Industry Control Systems Division
since October 1995; Vice President, General Manager, Measurex Devron, Inc. from
December 1992 to October 1996; and Vice President, Marketing from 1991 to
December 1992.
Mr. Van Orden has been Vice President, General Counsel and Secretary since
April 1995; and General Counsel and Secretary from 1988 to April 1995.
Officers are elected annually by the Board of Directors of the Company but
may be removed at any time at the discretion of the Board of Directors. There
are no family relationships among any of the executive officers of the Company.
I-6
<PAGE> 25
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Common Stock
of the Company as of December 31, 1996 by each director, each executive officer
named in the Summary Compensation Table in the "Executive Compensation" section
below, and all directors and executive officers as a group. All shares are
subject to the named person's sole voting and investment power except where
otherwise indicated.
<TABLE>
<CAPTION>
APPROXIMATE
SHARES PERCENT
BENEFICIALLY BENEFICIALLY
NAME OWNED(1) OWNED
---- ------------ ------------
<S> <C> <C>
Paul Bancroft III........................................... 64,000(2) 0.4%
Dwight C. Baum.............................................. 56,000 0.3%
David A. Bossen............................................. 345,514 2.1%
John C. Gingerich........................................... 59,354 0.4%
Jeffrey T. Grade............................................ 6,000 *
Orion L. Hoch............................................... 40,000 0.2%
John W. Larson.............................................. 54,126 0.3%
Robert McAdams, Jr.......................................... 49,103 0.3%
J.W. McKittrick............................................. 38,803 0.2%
Graham Tyson................................................ 36,000 0.2%
William J. Weyand........................................... 84,094 0.5%
Glenn R. Wienkoop........................................... 75,075 0.5%
All current directors and executive officers
as a group (17 persons)................................... 1,005,743 6.2%
</TABLE>
- ---------------
* Less than 0.1%
(1) Includes shares of Common Stock purchasable under options which are
exercisable as of December 31, 1996 or which will become exercisable within
60 days thereafter.
(2) Does not include 1,100 shares owned by Mr. Bancroft's spouse, over which he
has no voting or investment power and as to which he disclaims any
beneficial interest.
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the only persons
who (to the Company's knowledge) beneficially owned more than 5% of the Common
Stock of the Company as of January 28, 1997.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------- ------------ ----------
<S> <C> <C>
Montgomery Asset Management, LP........................... 868,300 5.4%
600 Montgomery Street
San Francisco, California 94111
Lazard Freres & Co. LLC .................................. 945,000 5.9%
30 Rockefeller Plaza
New York, New York 10020
</TABLE>
- ---------------
(1) Based on telephonic advice from each of the listed stockholders.
I-7
<PAGE> 26
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than ten-percent beneficial
owners are required by SEC regulation to furnish the Company with copies of all
Section 16(a) reports they file.
Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that there was compliance for the fiscal year ended December 1,
1996 with all Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than ten-percent beneficial owners.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the compensation earned by the Company's
Chief Executive Officer and each of the Company's four other highest-paid
executive officers (as determined as of the end of the last fiscal year) for
services rendered in all capacities to the Company and its subsidiaries for the
fiscal years ended December 1, 1996, December 1, 1995 and November 27, 1994,
respectively.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
NUMBER OF
NAME AND ANNUAL COMPENSATION SECURITIES ALL OTHER
PRINCIPAL FISCAL --------------------------- UNDERLYING COMPENSA-
POSITION YEAR SALARY($)(1) BONUS($)(1) OPTIONS TION($)(2)
- -------------------------------------- ------ ------------ ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
David A. Bossen....................... 1996 449,424 392,900 50,000 7,815
Chief Executive Officer and 1995 435,866 386,300 79,975 7,646
Chairman of the Board of Directors 1994 405,000 282,400 60,000 7,446
John C. Gingerich..................... 1996 349,620 210,900 33,000 3,745
President, Chief Operating 1995 342,501 239,400 47,500 3,463
Officer and Director 1994 318,850 176,600 40,000 2,827
Robert McAdams, Jr.................... 1996 249,720 123,000 25,000 3,120
Executive Vice President and 1995 244,047 128,600 36,000 2,738
Chief Financial Officer 1994 235,008 96,200 20,000 2,363
William J. Weyand..................... 1996 249,817 147,700 27,000 2,258
Executive Vice President, 1995 247,693 176,298 45,000 2,064
Worldwide Sales and Service 1994 174,466 118,350 10,000 1,800
Glenn R. Wienkoop..................... 1996 250,000 147,700 27,000 1,795
Executive Vice President and 1995 264,808 242,735 35,000 1,789
President, Industrial Systems
Division 1994 255,000 135,300 20,000 1,595
</TABLE>
- ---------------
(1) Includes salary or bonus deferred under the Company's Savings and Deferred
Profit-Sharing Plan.
(2) Includes for fiscal 1996 (i) the contributions made by the Company to the
Savings and Deferred Profit-Sharing Plan on behalf of each named executive
officer and (ii) the insurance premiums paid by the Company on the special
term life insurance policies provided each named executive officer, as
follows:
I-8
<PAGE> 27
<TABLE>
<CAPTION>
NAME PLAN CONTRIBUTION INSURANCE PREMIUMS
- --------------------------------------------------------- ----------------- ------------------
<S> <C> <C>
David A. Bossen.......................................... $ 1,000 $6,815
John C. Gingerich........................................ $ 1,000 $2,745
Robert McAdams, Jr....................................... $ 1,000 $2,120
William J. Weyand........................................ $ 1,000 $1,258
Glenn R. Wienkoop........................................ $ 1,000 $ 795
</TABLE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options made under the Company's 1993 Stock Option Plan for the 1996 fiscal year
to the named executive officers. No stock appreciation rights ("SARs") were
granted during the fiscal year to such individuals.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 5%($)(2) 10%($)(2)
- -------------------------------------------- ------------ -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
David A. Bossen................... 50,000 5.6% 28.250 01/08/2006 888,314 2,251,161
John C. Gingerich................. 33,000 3.7% 28.250 01/08/2006 586,287 1,485,766
Robert McAdams, Jr................ 25,000 2.8% 28.250 01/08/2006 444,157 1,125,581
William J. Weyand................. 27,000 3.0% 28.250 01/08/2006 479,689 1,215,627
Glenn R. Wienkoop................. 27,000 3.0% 28.250 01/08/2006 479,689 1,215,627
</TABLE>
- ---------------
(1) All the options were granted on January 9, 1996. Each option will become
exercisable for all of the option shares in four equal and successive annual
installments over the optionee's period of service with the Company,
beginning one year after the grant date. Each option has a maximum term of
ten years, subject to earlier termination in the event of the optionee's
cessation of service with the Company. Should Mr. Bossen's employment
terminate by reason of retirement, his option will become exercisable for
all of the option shares. Each of the granted options will become
immediately exercisable for all of the option shares in the event the
Company is acquired by merger or asset sale, unless the option is assumed or
otherwise replaced by the acquiring entity. Upon the termination of the
optionee's employment within 18 months after (i) an acquisition of the
Company which does not otherwise result in the immediate acceleration of the
option or (ii) any hostile change in control of the Company effected by a
successful tender offer for 50% or more of the outstanding Common Stock or a
change in the majority of the Board as a result of one or more contested
elections for Board membership, the option will become immediately
exercisable for all of the option shares. Such option acceleration will,
however, be limited so as to avoid excess parachute payments under the
federal tax laws. For further information concerning these option
acceleration provisions, please see the section below entitled Employment
Contracts and Change of Control Arrangements.
(2) There is no assurance provided to any executive officer or any other holder
of the Company's securities that the actual stock price appreciation over
the 10-year option term will be at the assumed five percent (5%) and assumed
ten percent (10%) annual rates of compounded stock price appreciation or at
any other defined level. Unless the market price of the Common Stock does in
fact appreciate over the option term, no value will be realized from the
option grants.
OPTION EXERCISE AND HOLDINGS
The following table provides information with respect to the named
executive officers concerning the exercise of options during the 1996 fiscal
year and unexercised options held by the named executive officers as
I-9
<PAGE> 28
of the end of the 1996 fiscal year. No SARs were exercised during the 1996
fiscal year or outstanding as of the end of the 1996 fiscal year.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES YEAR-END (1996) YEAR-END($)**
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED($)* EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David A. Bossen.............. 25,000 214,062 92,103 151,870 570,818 465,788
John C. Gingerich............ 5,000 49,971 28,125 94,875 137,968 284,531
Robert McAdams, Jr........... 12,008 137,341 34,215 65,750 201,355 152,187
William J. Weynard........... 5,000 29,375 28,750 68,250 114,062 141,562
Glenn R. Wienkoop............ 6,250 64,453 32,874 70,313 171,525 196,549
</TABLE>
- ---------------
* Based on the fair market value of the shares on the exercise date less the
exercise price paid for the shares.
** Based on the fair market value of the shares on the last day of the fiscal
year ($24.625 per share) less the exercise price payable for such shares.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
The Company has entered into a severance agreement with each of the
executive officers named in the Summary Compensation Table above, pursuant to
which each such officer will become entitled to special severance benefits in
the event his employment is involuntarily terminated in connection with certain
changes in control of the Company.
A change in control is defined under each agreement to include: (i) an
acquisition of the Company by merger or consolidation, (ii) the sale, transfer
or other disposition of all or substantially all of the assets of the Company in
a complete liquidation or dissolution of the Company, (iii) any reverse merger
in which the Company is the surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to person or persons different
from the persons holding those securities immediately prior to such merger, (iv)
the acquisition of securities possessing fifty percent (50%) or more of the
total combined voting power of the Company's outstanding securities pursuant to
a transaction effected without the approval of the Company's Board or (v) a
change in the composition of the Company's Board over any period of 36 months or
less such that a majority of the Board ceases to be comprised of individuals who
either (A) have been Board members since the beginning of such period or (B)
have been elected or nominated for election as Board members during such period
by a majority of the continuing Board members described in clause (A). In
addition, the consummation of the Offer will be deemed to constitute a change in
control under each agreement.
If there should occur such a change in control and the officer's employment
is involuntarily terminated (other than for cause) within 18 months thereafter,
the officer will become entitled to the following severance benefits: (i) all
outstanding options at the time held by the officer will immediately accelerate
and become fully exercisable for all the option shares and (ii) the Company will
make a cash lump sum payment to the officer in an amount equal to the difference
between (A) 2.99 times the officer's average W-2 wages from the Company for the
five calendar years immediately preceding the calendar year in which the change
in control occurs and (B) the value of the officer's accelerated options, as
determined in accordance with the parachute payment regulations of the federal
tax laws. If the Offer is consummated, the severance payment referred to in
clause (ii) above will be made to certain officers at the time of the Merger and
to the remaining officers upon the involuntary termination of their employment
(other than for cause) before January 1, 1999, and a retention bonus in the
amount of such severance payment will be made to those remaining officers if
they continue in employment through December 31, 1998.
I-10
<PAGE> 29
The total severance benefit payable to the officer will in general not
exceed 2.99 times the officer's average W-2 wages from the Company for the five
calendar years immediately preceding the calendar year in which the change in
control occurs. However, any options outstanding under the Salary Investment
Option Grant Program under the 1993 Stock Option Plan will not be subject to
this limitation in the event those options are accelerated in connection with
the change in control.
Involuntary termination is defined in each severance agreement as the
termination of the officer's employment, whether voluntary or involuntary (other
than for cause), following a material reduction in the officer's level of
responsibilities, a reduction in his or her compensation or a change in job
location without his or her consent. Termination for cause includes any
involuntary termination attributable to the officer's fraudulent behavior or
other intentional misconduct adversely affecting the business reputation of the
Company in a material manner.
CERTAIN TRANSACTIONS
On May 30, 1990, the Company entered into an Affiliation Agreement (the
"Affiliation Agreement") with Harnischfeger Industries, Inc., a Delaware
corporation ("Harnischfeger"), pursuant to which Harnischfeger indicated its
intent to purchase outstanding shares of the Company's Common Stock in open
market transactions. Under the terms of the Affiliation Agreement, such stock
purchases may be made at any time and from time to time, subject to market
conditions and other factors. The Affiliation Agreement does not, however,
obligate Harnischfeger to purchase any Company Common Stock at any time. With
respect to any such purchases, Harnischfeger has agreed that neither it nor its
affiliates will acquire in the aggregate more than 20% of the total combined
voting power of outstanding Company voting stock (including for purposes of this
calculation outstanding stock options and other securities convertible into, or
entitling the holder thereof to acquire voting stock, hereafter "Voting Stock")
without the prior consent of the Company's Board of Directors, subject to
certain limited exceptions. The Affiliation Agreement also provides that, upon
the request of Harnischfeger, the Company will use its best efforts to cause its
Board of Directors to take all action necessary to elect a nominee selected by
Harnischfeger to the Board of Directors and thereafter, throughout the term of
the Affiliation Agreement and subject to certain exceptions, to nominate and
solicit proxies for election as director(s) at stockholder meetings a number of
Harnischfeger nominees proportionate to the amount of the Company's voting
securities then held by Harnischfeger and its affiliates. Under the Affiliation
Agreement, the Company has the option to purchase all shares of the Company's
voting securities owned by Harnischfeger and its affiliates (i) in the event
that sales of the Company's systems to be installed on machines manufactured by
Beloit Corporation, a Delaware corporation and a subsidiary of Harnischfeger
("Beloit"), fail to meet certain projections or (ii) in the event of a "change
in control" of Harnischfeger or if Harnischfeger ceases to own a majority of
Beloit's outstanding common stock. In addition, Harnischfeger and its affiliates
have certain rights to purchase additional shares of Common Stock in the event
their aggregate equity ownership interest in the Company is diluted to certain
levels. The Affiliation Agreement may be terminated by either party at the end
of seven years or as otherwise set forth therein.
On December 29, 1994, the Company bought back from HIHC, Inc. ("HIHC"), a
wholly-owned subsidiary of Harnischfeger, 2,026,900 shares of outstanding
Company Common Stock at a purchase price of $21.50 per share, reducing HIHC's
holdings to approximately 10% of the total outstanding Company capital stock.
On June 22, 1995, the Company bought back from HIHC 1,613,100 shares of
outstanding Company Common Stock at a purchase price of $32.50 per share,
representing all of HIHC's holdings of Company Common Stock.
I-11
<PAGE> 30
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
- -------
<S> <C>
(a)(1) Offer to Purchase dated January 31, 1997.*
(a)(2) Letter of Transmittal.*
(a)(3) Press release issued by the Company and the Parent on January 27, 1997.
(a)(4) Opinion of Goldman Sachs dated January 26, 1997.*
(a)(5) Letter to Stockholders dated January 31, 1997 from David A. Bassen,
Chairman of the Board and Chief Executive Officer of the Company.*
(c)(1) Agreement and Plan of Merger dated as of January 26, 1997, among Parent,
Purchaser and the Company.
(c)(2) Confidential Nondisclosure Agreement dated as of March 29, 1996, between
Parent and the Company.
(c)(3) Form of Indemnification Agreement.
(c)(4) Article Eleventh of the Company's Certificate of Incorporation, as amended
to date.
(c)(5) Article VII, Section 6 of the Bylaws of the Company.
(c)(6) Form of Severance Agreement with the Company's executive officers.
(c)(7) Amendment Number 3 to Rights Agreement dated as of January 26, 1997 between
the Company and Bank of New York, a New York banking corporation.
(c)(8) Employment Agreement dated January 26, 1997 between Parent and David A.
Bassen.
(c)(9) Employment Agreement dated January 26, 1997 between Parent and John C.
Gingerich.
</TABLE>
- ---------------
* Included in documents mailed to stockholders.
<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.
- --------------------------------------------------------------------------------
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>
<CAPTION>
PAGE
----
<S> <C>
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
8
<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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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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<PAGE> 29
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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<PAGE> 30
(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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<PAGE> 31
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
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
[GOLDMAN, SACHS & CO. LETTERHEAD]
PERSONAL AND CONFIDENTIAL
January 26, 1997
Board of Directors
Measurex Corporation
One Results Way
Cupertino, CA 95104
Gentlemen:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of
Measurex Corporation (the "Company") of the $35.00 per Share in cash to be
received by such holders pursuant to the Agreement and Plan of Merger dated as
of January 26, 1997 among Honeywell Inc. ("Honeywell"), Honeywell Acquisition
Corp., a wholly-owed subsidiary of Honeywell, and the Company (the "Agreement").
The Agreement provides for a tender offer for all of the Shares (the "Tender
Offer") pursuant to which Honeywell Acquisition Corp. will pay $35.00 in cash
for each Share accepted. The Agreement further provides that following
completion of the Tender Offer, Honeywell Acquisition Corp. will be merged with
and into the Company (the "Merger") and each outstanding Share (other than
Shares owned by the Company or any subsidiary thereof, Honeywell or Honeywell
Acquisition Corp. and Shares as to which stockholders exercise appraisal rights)
will be converted into the right to receive $35.00 in cash.
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Agreement.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company for the five fiscal years ended December 3, 1995; certain interim
reports to stockholders and Quarterly Reports on Form 10-Q; certain other
communications from the Company to its stockholders; and certain internal
financial analyses and forecasts for the Company prepared by its management. We
also have held discussions with members of the senior management of the Company
regarding its past and current business operations, financial condition and
future prospects. In addition, we have reviewed the reported price and trading
activity for the Shares, compared certain financial and stock market information
for the Company with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations and performed such other studies and analyses as we
considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. In addition, we have not made an independent
evaluation or appraisal of the assets and liabilities of the Company or any of
its subsidiaries and we have not been furnished with any such evaluation or
appraisal. Our advisory services and the opinion expressed herein are provided
for the information and assistance of the Board of Directors of the Company in
connection with its consideration of the transaction contemplated by the
Agreement.
<PAGE> 2
Measurex Corporation
January 26, 1997
Page Two
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof the $35.00
per Share in cash to be received by the holders of Shares pursuant to the
Agreement is fair to such holders.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
GOLDMAN, SACHS & CO.
<PAGE> 1
January 31, 1997
To Our Stockholders:
I am pleased to inform you that on January 26, 1997, Measurex Corporation
(the "Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Honeywell Inc. ("Honeywell") and Honeywell Acquisition Corp.
(the "Purchaser"), a wholly owned subsidiary of Honeywell, pursuant to which the
Purchaser has commenced a cash tender offer (the "Offer") to purchase all of the
outstanding shares of the Company's Common Stock (the "Shares") for $35.00 per
Share. Under the terms of the Merger Agreement, the consummation of the Offer
will be followed by a merger of the Purchaser with the Company (the "Merger") in
which any remaining shares of Company Common Stock will be converted into the
right to receive $35.00 per Share in cash (or any higher price that may be paid
in the Offer), without interest.
YOUR BOARD OF DIRECTORS UNANIMOUSLY HAS APPROVED THE MERGER AGREEMENT, THE
OFFER AND THE MERGER, HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, AND
UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES OF COMPANY COMMON STOCK PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the opinion of Goldman, Sachs & Co., the
Company's financial advisor, that the $35.00 per Share in cash to be received by
the holders of Shares pursuant to the Merger Agreement is fair to such holders.
The full text of the written opinion of Goldman, Sachs & Co. is attached hereto
and stockholders are urged to read such opinion in its entirety.
In addition to the attached Schedule 14D-9 relating to the Offer, enclosed
is the Offer to Purchase, dated January 31, 1997, of the Purchaser, together
with related materials, including a Letter of Transmittal to be used for
tendering your shares of Company Common Stock. These documents set forth the
terms and conditions of the Offer and the Merger and provide instructions as to
how to tender your shares. I urge you to read the enclosed material carefully.
Sincerely,
David A. Bossen
Chairman of the Board
and Chief Executive Officer
<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
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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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<PAGE> 20
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-
24
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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
40
<PAGE> 44
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
46
<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
47
<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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<PAGE> 52
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
[MEASUREX LOGO]
March 29, 1996
Mr. Edward Grayson
General Counsel
Honeywell Inc.
Honeywell Plaza
MN12-5279
Minneapolis, Minnesota 55408
Dear Mr. Grayson:
This letter agreement is entered into in connection with the consideration
of a possible financial transaction between Honeywell Inc. (collectively with
its subsidiaries and affiliates, the "Corporation") and Measurex Corporation
(collectively with its subsidiaries and affiliates, "Measurex"). The possible
transaction referred to in the preceding sentence is referred to herein as the
"Transaction". Measurex is prepared to make available to Corporation certain
information concerning its business operations and assets. As a condition to
such information being furnished to Corporation and its respective directors,
officers, employees, agents or advisors (including, without limitation,
attorneys, accountants, consultants, bankers and financial advisors) (herein
collectively referred to as "Representatives"), Corporation agrees to treat any
information concerning Measurex (whether prepared by Measurex, its advisors or
otherwise and irrespective of the form of communication) which is furnished to
Corporation or to its Representatives by or on behalf of Measurex (herein
collectively referred to as the "Evaluation Material") in accordance with the
provisions of this letter agreement and to take or abstain from taking certain
other actions hereinafter set forth.
The term "Evaluation Material" shall be deemed to include all notes,
analyses, compilations, studies, interpretations or other documents prepared by
Corporation, or its respective Representatives, as the case may be, which
contain, reflect, or are based upon, in whole or in part, the information
furnished to Corporation or its respective Representatives pursuant hereto. The
term "Evaluation Material" does not include information which (i) is or becomes
generally available to the public other than as a result of a disclosure by
Corporation or its Representatives in violation of the terms of this agreement,
(ii) was within the possession of Corporation prior to its being furnished to
Corporation by Measurex, provided that the source of such information was not
known by Corporation to be bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to Measurex, or
any other party with respect to such information, or (iii) becomes available to
Corporation on a non-confidential basis from a source other than Measurex to
which the information relates or any of its Representatives, provided that such
a source is not known by the Corporation to be bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to Measurex, or any other party with respect to such
information.
Corporation hereby agrees that it and its Representatives shall use the
Evaluation Material for the purpose of evaluating the Transaction, that the
Evaluation Material will be kept confidential and that Corporation and its
Representatives will not disclose any of the Evaluation Material in any manner
whatsoever; provided, however, that (i) Corporation may make any disclosure of
such information to which Measurex gives its prior written consent and (ii) any
of such information may be disclosed to Representatives of Corporation who need
to know such information for the purpose of evaluating the Transaction and who
agree to keep such information confidential. Corporation shall be responsible
for any breach of this letter agreement by any of its Representatives and
agrees, at its sole expense, to take all reasonable measures (including but not
limited to court proceedings) to restrain its Representatives from prohibited or
unauthorized disclosure or use of the Evaluation Material.
In addition, Corporation agrees that, without the prior written consent of
Measurex, Corporation and its Representatives will not, and Measurex and its
Representatives agree that without the prior written consent they will not
disclose to any person the fact that the Evaluation Material has been made
available to Corporation, that discussions or negotiations are taking place
concerning the Transaction or any of the terms, conditions or other facts with
respect thereto (including the status thereof), unless in the opinion of counsel
<PAGE> 2
acceptable to Measurex or Corporation, as the case may be, such disclosure is
required by law and then only with as much prior written notice to Measurex or
Corporation, as the case may be, as is practical under the circumstances. The
term "person" as used in this letter agreement shall be broadly interpreted to
include the media and any corporation, partnership, group, individual or other
entity.
In the event that Corporation or any of its Representatives are requested
or required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process) to disclose any of the Evaluation Material, Corporation shall
provide Measurex with prompt written notice of any such request or requirement
so that Measurex may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this letter agreement. If, in the
absence of a protective order or other remedy or the receipt of a waiver by
Measurex, Corporation or any of its Representatives are nonetheless, in the
written opinion of counsel, legally compelled to disclose Evaluation Material to
any tribunal or else stand liable for contempt or suffer other censure or
significant penalty, Corporation or any of its Representatives may, without
liability hereunder, disclose to such tribunal only that portion of the
Evaluation Material which such counsel advises is legally required to be
disclosed, provided that Corporation or its Representative exercises its
reasonable efforts to preserve the confidentiality of the Evaluation Material,
including, without limitation, by cooperating with Measurex to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the Evaluation Material by such tribunal.
If Measurex and Corporation decide not to proceed with the Transaction,
Corporation will promptly deliver to Measurex all documents (and all copies
thereof) furnished to it or its Representatives by or on behalf of Measurex. In
addition, all notes, analyses, compilations, studies, interpretations and other
writings prepared by Corporation or its respective Representatives which reflect
or are based on the information in the Evaluation Material shall be destroyed,
and such destruction shall be certified to Measurex in writing by Corporation
through an officer supervising such destruction. Notwithstanding the return or
destruction of the Evaluation Material, Corporation and its Representatives will
continue to be bound by their obligations of confidentiality and other
obligations hereunder.
Although Measurex has endeavored and will endeavor to include in the
Evaluation Material information which it believes to be relevant for the purpose
of Corporation's evaluation of the Transaction, Corporation acknowledges that
neither Measurex nor its Representatives make any representation or warranty as
to the accuracy or completeness of the Evaluation Material. Corporation agrees
that neither Measurex nor its Representatives shall have any liability to it or
its Representatives relating to or resulting from the use of the Evaluation
Material in accordance with and as contemplated by this letter agreement.
Corporation agrees that, for a period of two years from the date hereof,
without the prior written consent of Measurex neither Corporation nor any of its
Representatives or subsidiaries will in any manner, directly or indirectly,
effect, propose (whether publicly, to Measurex or its affiliates) to effect, or
cause any other person to effect or propose (whether publicly, to Measurex or
its affiliates or otherwise) to effect (i) any acquisition of any securities
other than in connection with the Corporation's employee benefits plans not in
excess of 5% of Measurex outstanding securities or assets other than in the
ordinary course of business of Measurex or any of its subsidiaries, (ii) any
tender or exchange offer, merger or other business combination involving
Measurex or any of its subsidiaries, (iii) any recapitalization, restructuring,
liquidation, dissolution or other transaction with respect to Measurex or any of
its subsidiaries or (iv) any solicitation of proxies or consents to vote any
voting securities of Measurex. Further, for a period of one year from the date
hereof no employee of Corporation who has had access to any of the Evaluation
Material or any person who has received information regarding the Evaluation
Material from any such employee will solicit for employment or offer employment
to any non-clerical Measurex employee.
Measurex and Corporation each agrees that unless and until a definitive
agreement regarding the Transaction has been executed, neither party will be
under any legal obligation of any kind whatsoever with respect to such
Transaction by virtue of this letter agreement except for the matters
specifically agreed to herein. Measurex and Corporation each further
acknowledges and agrees that either party reserves the right, in
<PAGE> 3
its sole discretion, to reject any and all proposals made by the other party or
its Representatives with regard to the Transaction, and to terminate discussions
and negotiations covering the Transaction at any time.
It is further understood and agreed that money damages would not be
sufficient remedy for any breach of this letter agreement by Measurex or
Corporation, and that either party shall be entitled to equitable relief,
including injunction and specific performance, as a remedy for any such breach.
Such remedies shall not be deemed to be the exclusive remedies for a breach of
this letter agreement but shall be in addition to all other remedies available
at law or equity. In the event of litigation relating to this letter agreement,
if a court of competent jurisdiction determines in a final, nonappealable order
that a party has breached this letter agreement, then such party shall be liable
and pay to the non-breaching party the reasonable legal fees such non-breaching
party has incurred in connection with such litigation, including any appeal
therefrom.
This letter agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
Please confirm your agreement with the foregoing by signing and returning
one copy of this letter to the undersigned, whereupon this letter agreement
shall become a binding agreement between Measurex and Corporation.
Very truly yours,
Measurex Corporation
By /s/ JOHN W. LARSON
------------------------------------
Name: John W. Larson
Title: Assistant Secretary
Accepted and agreed:
Honeywell Inc.
By /s/ EDWARD D. GRAYSON
--------------------------------------------------------
Name: Edward D. Grayson
Title: Vice President and General Counsel
Dated: March 29, 1996
<PAGE> 1
INDEMNIFICATION AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into this _____between
Measurex Corporation, a Delaware corporation ("the Company") and
________("Indemnitee").
WITNESSETH THAT:
WHEREAS, Indemnitee has served as a Director of the Company
for a number of years; and
WHEREAS, the Company and Indemnitee entered into an
Indemnification Agreement on _______________ (the "Original Agreement") pursuant
to which Company agreed to indemnify Indemnitee against certain expenses he
might incur in connection with his service to the Company; and
WHEREAS, the Company and Indemnitee desire to amend and
restate the Indemnification Agreement; and
WHEREAS, in recognition of past services and in order to
induce Indemnitee to continue to serve as a Director of the Company, the Company
has determined and agreed to enter into this contract with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's continued
service as a director after the date hereof, the parties hereto agree that the
Original Agreement shall be amended and restated in its entirety as follows:
1. INDEMNITY OF INDEMNITEE. The Company hereby agrees to hold
harmless and indemnify Indemnitee to the full extent authorized or permitted by
the provisions of the Law, as such may be amended from time to time, and Article
VII, Section 6 of the Bylaws, as such may be amended. In furtherance of the
foregoing indemnification, and without limiting the generality thereof:
(a) Proceedings Other Than Proceedings by or in the
Right of the Company. Indemnitee shall be entitled to the rights of
indemnification provided in this Section 1(a) if, by reason of his Corporate
Status (as hereinafter defined), he is, or is threatened to be made, a party to
or participant in any Proceeding (as hereinafter defined) other than a
Proceeding by or in the right of the Company. Pursuant to this Section 1(a),
Indemnitee shall be indemnified against all Expenses (as hereinafter defined),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or on his behalf in connection with such Proceeding or any claim, issue
or matter therein, if he acted in good faith and in a manner he reasonably
believed to be
<PAGE> 2
in or not opposed to the best interests of the Company and, with respect to any
criminal Proceeding, had no reasonable cause to believe his conduct was
unlawful.
(b) Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this
Section 1(b) if, by reason of his Corporate Status, he is, or is threatened to
be made, a party to or participant in any Proceeding brought by or in the right
of the Company to procure a judgment in its favor. Pursuant to this Section
1(b), Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company; provided, however, that, if
applicable law so provides, no indemnification against such Expenses shall be
made in respect of any claim, issue or matter in such Proceeding as to which
Indemnitee shall have been adjudged to be liable to the Company unless and to
the extent that the Court of Chancery of the State of Delaware, or the court in
which such Proceeding shall have been brought or is pending, shall determine
that such indemnification may be made.
(c) Indemnification for Expenses of a Party Who is
Wholly or Partly Successful. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his Corporate Status,
a party to and is successful, on the merits or otherwise, in any Proceeding, he
shall be indemnified to the maximum extent permitted by law against all Expenses
actually and reasonably incurred by him or on his behalf in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf in connection with each successfully resolved claim, issue or matter.
For purposes of this Section and without limitation, the termination of any
claim, issue or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.
2. ADDITIONAL INDEMNITY.
(a) Subject only to the exclusions set forth in
Section 2(b) hereof, the Company hereby further agrees to hold harmless and
indemnify Indemnitee against any and all Expenses, judgments, fines and amounts
paid in settlement actually and reasonably incurred by Indemnitee in connection
with any Proceeding (including an action by or on behalf of the Company) to
which Indemnitee is, was or at any time becomes a party, or is threatened to be
made a party, by reason of his Corporate Status; provided, however, that with
respect to actions by or on behalf of the Company, indemnification of Indemnitee
against any judgments shall be made by the Company only
2.
<PAGE> 3
as authorized in the specific case upon a determination that Indemnitee acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company; and
(b) No indemnity pursuant to this Section 2 shall be
paid by the Company:
(i) In respect to remuneration paid to
Indemnitee if it shall be determined by a final judgment or other final
adjudication that such remuneration was in violation of law;
(ii) On account of any suit in which judgment is
rendered against Indemnitee for an accounting of profits made from the purchase
or sale by Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any federal, state or local statutory law;
(iii) On account of Indemnitee's conduct which
is finally adjudged to have been knowingly fraudulent or deliberately dishonest,
or to constitute willful misconduct; or
(iv) If a final decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful.
(c) No indemnity pursuant to Section 2 of this
Agreement shall be paid by the Company with respect to the first $10,000 of
Expenses, judgments, fines and amounts paid in settlement for which Indemnitee
is indemnified under Section 2, such $10,000 retention to be the responsibility
of Indemnitee or any insurance that may cover such $10,000 retention.
3. CONTRIBUTION. If the indemnification provided in Sections 1
and 2 is unavailable and may not be paid to Indemnitee for any reason other than
those set forth in paragraphs (i), (ii) and (iii) of Section 2(b), then in
respect to any Proceeding in which the Company is jointly liable with Indemnitee
(or would be if joined in such Proceeding), the Company shall contribute to the
amount of Expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred and paid or payable by Indemnitee in such proportion as is
appropriate to reflect (i) the relative benefits received by the Company on the
one hand and by the Indemnitee on the other hand from the transaction from which
such Proceeding arose, and (ii) the relative fault of the Company on the one
hand and of the Indemnitee on the other hand in connection with the events which
resulted in such Expenses, judgments, fines or settlement amounts, as well as
any other relevant equitable considerations. The relative fault of the Company
on the one hand and of the Indemnitee on the other hand shall be determined by
reference to, among other things, the parties' relative intent, knowledge,
access to
3.
<PAGE> 4
information and opportunity to correct or prevent the circumstances resulting in
such Expenses, judgments, fines or settlement amounts. The Company agrees that
it would not be just and equitable if contribution pursuant to this Section 3
were determined by pro rata allocation or any other method of allocation which
does not take account of the foregoing equitable considerations.
4. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding to which Indemnitee
is not a party, he shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith.
5. ADVANCEMENT OF EXPENSES. Notwithstanding any other
provision of this Agreement, the Company shall advance all reasonable Expenses
incurred by or on behalf of Indemnitee in connection with any Proceeding by
reason of Indemnitee's Corporate Status within ten days after the receipt by the
Company of a statement or statements from Indemnitee requesting such advance or
advances from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the Expenses
incurred by Indemnitee and shall include or be preceded or accompanied by an
undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
against such Expenses. Any advances and undertakings to repay pursuant to this
Section 5 shall be unsecured and interest free. Notwithstanding the foregoing,
the obligation of the Company to advance Expenses pursuant to this Section 5
shall be subject to the condition that, if, when and to the extent that the
Company determines that Indemnitee would not be permitted to be indemnified
under applicable law, the Company shall be entitled to be reimbursed, within
thirty (30) days of such determination, by Indemnitee (who hereby agrees to
reimburse the Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced or thereafter commences legal proceedings in a
court of competent jurisdiction to secure a determination that Indemnitee should
be indemnified under applicable law, any determination made by the Company that
Indemnitee would not be permitted to be indemnified under applicable law shall
not be binding and Indemnitee shall not be required to reimburse the Company for
any advance of Expenses until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been exhausted
or lapsed).
6. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO
INDEMNIFICATION.
(a) To obtain indemnification (including, but not
limited to, the advancement of Expenses and contribution by the Company) under
this Agreement, Indemnitee shall submit to the Company a written request,
including therein or therewith such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to
4.
<PAGE> 5
indemnification. The Secretary of the Company shall, promptly upon receipt of
such a request for indemnification, advise the Board of Directors in writing
that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for
indemnification pursuant to the first sentence of Section 6(a) hereof, a
determination, if required by applicable law, with respect to Indemnitee's
entitlement thereto shall be made in the specific case: (i) if a Change in
Control (as hereinafter defined) shall have occurred, by Independent Counsel (as
hereinafter defined) in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee (unless Indemnitee shall request that
such determination be made by the Board of Directors or the stockholders, in
which case the determination shall be made in the manner provided in Clause (ii)
below), or (ii) if a Change in Control shall not have occurred, (A) by the Board
of Directors by a majority vote of a quorum consisting of Disinterested
Directors (as hereinafter defined), or (B) if a quorum of the Board of Directors
consisting of Disinterested Directors is not obtainable or, even if obtainable,
said Disinterested Directors so direct, by Independent Counsel in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee, or (C) if so directed by said Disinterested Directors, by the
stockholders of the Company; and, if it is determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten (10)
days after such determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
Independent Counsel, member of the Board of Directors, or stockholder of the
Company shall act reasonably and in good faith in making a determination under
the Agreement of the Indemnitee's entitlement to indemnification. Any costs or
expenses (including attorneys' fees and disbursements) incurred by Indemnitee in
so cooperating with the person, persons or entity making such determination
shall be borne by the Company (irrespective of the determination as to
Indemnitee's entitlement to indemnification) and the Company hereby indemnifies
and agrees to hold Indemnitee harmless therefrom.
(c) If the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 6(b)
hereof, the Independent Counsel shall be selected as provided in this Section
6(c). If a Change in Control shall not have occurred, the Independent Counsel
shall be selected by the Board of Directors, and the Company shall give written
notice to Indemnitee advising him of the identity of the Independent Counsel so
selected. If a Change in Control shall have occurred, the Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request that such
selection be made by the Board of Directors, in which event the preceding
sentence shall apply), and Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected. In either
event, Indemnitee or
5.
<PAGE> 6
the Company, as the case may be, may, within 10 days after such written notice
of selection shall have been given, deliver to the Company or to Indemnitee, as
the case may be, a written objection to such selection; provided, however, that
such objection may be asserted only on the ground that the Independent Counsel
so selected does not meet the requirements of "Independent Counsel" as defined
in Section 14 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. Absent a proper and timely
objection, the person so selected shall act as Independent Counsel. If a written
objection is made and substantiated, the Independent Counsel selected may not
serve as Independent Counsel unless and until such objection is withdrawn or a
court has determined that such objection is without merit. If, within 20 days
after submission by Indemnitee of a written request for indemnification pursuant
to Section 6(a) hereof, no Independent Counsel shall have been selected and not
objected to, either the Company or Indemnitee may petition the Court of Chancery
of the State of Delaware or other court of competent jurisdiction for resolution
of any objection which shall have been made by the Company or Indemnitee to the
other's selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the court or by such other person as
the court shall designate, and the person with respect to whom all objections
are so resolved or the person so appointed shall act as Independent Counsel
under Section 6(b) hereof. The Company shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 6(b) hereof, and the Company shall
pay all reasonable fees and expenses incident to the procedures of this Section
6(c), regardless of the manner in which such Independent Counsel was selected or
appointed. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 8(a)(iii) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).
(d) The Company shall not be required to obtain the
consent of the Indemnitee to the settlement of any Proceeding which the Company
has undertaken to defend if the Company assumes full and sole responsibility for
such settlement and the settlement grants the Indemnitee a complete and
unqualified release in respect of the potential liability.
7. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) In making a determination with respect to
entitlement to indemnification hereunder, the person or persons or entity making
such determination shall presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 6(a) of this Agreement, and the Company shall have
the burden of proof to overcome that presumption in connection with the making
by any person, persons or entity of any determination contrary to that
presumption.
6.
<PAGE> 7
(b) If the person, persons or entity empowered or
selected under Section 6 of this Agreement to determine whether Indemnitee is
entitled to indemnification shall not have made a determination within thirty
(30) days after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law; provided, however, that such 30-day period
may be extended for a reasonable time, not to exceed an additional fifteen (15)
days, if the person, persons or entity making the determination with respect to
entitlement to indemnification in good faith requires such additional time for
the obtaining or evaluating documentation and/or information relating thereto;
and provided, further, that the foregoing provisions of this Section 7(b) shall
not apply (i) if the determination of entitlement to indemnification is to be
made by the stockholders pursuant to Section 6(b) of this Agreement and if (A)
within fifteen (15) days after receipt by the Company of the request for such
determination the Board of Directors or the Disinterested Directors, if
appropriate, resolve to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within seventy five (75)
days after such receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within fifteen (15) days after such receipt
for the purpose of making such determination, such meeting is held for such
purpose within sixty (60) days after having been so called and such
determination is made thereat, or (ii) if the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 6(b) of
this Agreement.
(c) The termination of any Proceeding or of any
claim, issue or matter therein, by judgment, order, settlement (with or without
court approval), conviction, or upon a plea of nolo contendere or its
equivalent, shall not (except as otherwise expressly provided in this Agreement)
of itself adversely affect the right of Indemnitee to indemnification or create
a presumption that Indemnitee did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Company
or, with respect to any criminal Proceeding, that Indemnitee had reasonable
cause to believe that his conduct was unlawful.
(d) For purposes of any determination of good faith,
Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is
based on the records or books of account of the Enterprise, including financial
statements, or on information supplied to Indemnitee by the officers of the
Enterprise in the course of their duties, or on the advice of legal counsel for
the Enterprise or on information or records given or reports made to the
Enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the
7.
<PAGE> 8
Enterprise. In addition, the knowledge and/or actions, or failure to act, of any
director, officer, agent or employee of the Enterprise shall not be imputed to
Indemnitee for purposes of determining the right to indemnification under this
Agreement. The provisions of this Section 7(d) shall not be deemed to be
exclusive or to limit in any way the other circumstances in which the Indemnitee
may be deemed to have met the applicable standard of conduct set forth in this
Agreement.
8. REMEDIES OF INDEMNITEE.
(a) In the event that (i) a determination is made
pursuant to Section 6 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not timely
made pursuant to Section 5 of this Agreement, (iii) no determination of
entitlement to indemnification shall have been made pursuant to Section 6(b) of
this Agreement within 90 days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made pursuant to Section
3 or 4 of this Agreement within ten (10) days after receipt by the Company of a
written request therefor, or (v) payment of indemnification is not made within
ten (10) days after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 6 or 7 of this Agreement, Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Delaware, or in any other
court of competent jurisdiction, of his entitlement to such indemnification.
Alternatively, Indemnitee, at his option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
the American Arbitration Association. Indemnitee shall commence such proceeding
seeking an adjudication or an award in arbitration within 180 days following the
date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 8(a). The Company shall not oppose Indemnitee's right
to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been
made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled
to indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 8 shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination.
(c) If a determination shall have been made pursuant
to Section 6(b) of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 8, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
8.
<PAGE> 9
(d) In the event that Indemnitee, pursuant to this
Section 8, seeks a judicial adjudication of or an award in arbitration to
enforce his rights under, or to recover damages for breach of, this Agreement,
Indemnitee shall be entitled to recover from the Company, and shall be
indemnified by the Company against, any and all expenses (of the types described
in the definition of Expenses in Section 16 of this Agreement) actually and
reasonably incurred by him in such judicial adjudication or arbitration, but
only if he prevails therein. If it shall be determined in said judicial
adjudication or arbitration that Indemnitee is entitled to receive part but not
all of the indemnification sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be appropriately
prorated. The Company shall indemnify Indemnitee against any and all expenses
and, if requested by Indemnitee, shall (within ten (10) days after receipt by
the Company of a written request therefor) advance such expenses to Indemnitee,
which are incurred by Indemnitee in connection with any action brought by
Indemnitee to recover under any directors' and officers' liability insurance
policies maintained by the Company, regardless of whether Indemnitee ultimately
is determined to be entitled to such indemnification, advancement of expenses or
insurance recovery, as the case may be.
(e) The Company shall be precluded from asserting in
any judicial proceeding or arbitration commenced pursuant to this Section 8 that
the procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
9. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE;
SUBROGATION.
(a) The rights of indemnification as provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee
may at any time be entitled under applicable law, the certificate of
incorporation of the Company, the Bylaws, any agreement, a vote of stockholders
or a resolution of directors, or otherwise. No amendment, alteration or repeal
of this Agreement or of any provision hereof shall limit or restrict any right
of Indemnitee under this Agreement in respect of any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
repeal. To the extent that a change in the Law, whether by statute or judicial
decision, permits greater indemnification than would be afforded currently under
the Bylaws and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change. No right or remedy herein conferred is intended to be exclusive of
any other right or remedy, and every other right and remedy shall be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other right or remedy.
9.
<PAGE> 10
(b) To the extent that the Company maintains an insurance
policy or policies providing liability insurance for directors, officers,
employees, or agents or fiduciaries of the Company or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
which such person serves at the request of the Company, Indemnitee shall be
covered by such policy or policies in accordance with its or their terms to the
maximum extent of the coverage available for any such director, officer,
employee or agent under such policy or policies.
(c) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to
make any payment of amounts otherwise indemnifiable hereunder if and to the
extent that Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.
10. EXCEPTION TO RIGHT OF INDEMNIFICATION. Notwithstanding any
other provision of this Agreement, Indemnitee shall not be entitled to
indemnification under this Agreement with respect to any Proceeding brought by
Indemnitee, or any claim therein, unless (a) the bringing of such Proceeding or
making of such claim shall have been approved by the Board of Directors or (b)
such Proceeding is being brought by the Indemnitee to assert his rights under
this Agreement.
11. DURATION OF AGREEMENT. All agreements and obligations of
the Company contained herein shall continue during the period Indemnitee is a
director of the Company (or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise) and shall continue thereafter so long as
Indemnitee shall be subject to any Proceeding (or any proceeding commenced under
Section 8 hereof) by reason of his Corporate Status, whether or not he is acting
or serving in any such capacity at the time any liability or expense is incurred
for which indemnification can be provided under this Agreement. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), assigns, spouses,
heirs, executors and personal and legal representatives. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as a
director of the Company or any other enterprise at the Company's request.
12. SECURITY. To the extent requested by the Indemnitee and
approved by the Board of Directors, the Company may at any time and from time to
time provide
10.
<PAGE> 11
security to the Indemnitee for the Company's obligations hereunder through an
irrevocable bank line of credit, funded trust or other collateral. Any such
security, once provided to the Indemnitee, may not be revoked or released
without the prior written consent of the Indemnitee.
13. ENFORCEMENT.
(a) The Company expressly confirms and agrees that it
has entered into this Agreement and assumed the obligations imposed on it hereby
in order to induce Indemnitee to serve as a director of the Company, and the
Company acknowledges that Indemnitee is relying upon this Agreement in serving
as a director of the Company.
(b) This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral, written and implied,
(including the Original Agreement) between the parties hereto with respect to
the subject matter hereof.
14. DEFINITIONS. For purposes of this Agreement:
(a) "Change in Control" means a change in control of
the Company occurring after the date of this Agreement of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A (or in response to any similar item on any similar schedule or form)
promulgated under the Securities Exchange Act of 1934 (the "Act"), whether or
not the Company is then subject to such reporting requirement; provided,
however, that, without limitation, such a Change in Control shall be deemed to
have occurred if after the date of this Agreement (i) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Act, as amended) other than a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or a corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Company representing 15%
or more of the combined voting power of the Company's then outstanding
securities (other than any such person or any affiliate thereof that is such a
15% beneficial owner as of the date hereof) without the prior approval of at
least two-thirds of the members of the Board of Directors in office immediately
prior to such person attaining such percentage interest; (ii) there occurs a
proxy contest, or the Company is a party to a merger, consolidation, sale of
assets, plan of liquidation or other reorganization, as a consequence of which
members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors
thereafter; or (iii) during any period of two consecutive years, other than as a
result of an event described in clause (a)(ii) of this Section 16, individuals
who at the beginning of such period constituted the Board of Directors
(including for this purpose any new director
11.
<PAGE> 12
whose election or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period) cease for any reason to
constitute at least a majority of the Board of Directors. A Change in Control
shall not be deemed to have occurred under item (i) above if the "person"
described under item (i) is entitled to report its ownership on Schedule 13G
promulgated under the Act and such person is able to represent that it acquired
such securities in the ordinary course of its business and not with the purpose
nor with the effect of changing or influencing the control of the Company, nor
in connection with or as a participant in any transaction having such purpose or
effect. If the "person" referred to in the previous sentence would at any time
not be entitled to continue to report such ownership on Schedule 13G pursuant to
Rule 13d-1(b)(3)(i)(B) of the Act, then a Change in Control shall be deemed to
have occurred at such time.
(b) "Corporate Status" describes the status of a
person who is or was a director, officer, employee or agent or fiduciary of the
Company or of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such person is or was serving at the
express written request of the Company.
(c) "Disinterested Director" means a director of the
Company who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(d) "Enterprise" shall mean the Company and any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the express written request
of the Company as a director, officer, employee, agent or fiduciary.
(e) "Expenses" shall include all reasonable
attorneys' fees, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other disbursements
or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, participating, or
being or preparing to be a witness in a Proceeding.
(f) "Independent Counsel" means a law firm, or a
member of a law firm, that is experienced in matters of corporation law and
neither presently is, nor in the past five years has been, retained to
represent: (i) the Company or Indemnitee in any matter material to either such
party (other than with respect to matters concerning the Indemnitee under this
Agreement, or of other indemnitees under similar indemnification agreements), or
(ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee's rights under
12.
<PAGE> 13
this Agreement. The Company agrees to pay the reasonable fees of the Independent
Counsel referred to above and to fully indemnify such counsel against any and
all Expenses, claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
(g) "Proceeding" includes any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought by or in the right of the Company or
otherwise and whether civil, criminal, administrative or investigative, in which
Indemnitee was, is or will be involved as a party or otherwise, by reason of the
fact that Indemnitee is or was a director of the Company, by reason of any
action taken by him or of any inaction on his part while acting as a director of
the Company, or by reason of the fact that he is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; in each case whether or
not he is acting or serving in any such capacity at the time any liability or
expense is incurred for which indemnification can be provided under this
Agreement; including one pending on or before the date of this Agreement; and
excluding one initiated by an Indemnitee pursuant to Section 8 of this Agreement
to enforce his rights under this Agreement.
15. SEVERABILITY. If any provision or provisions of this
Agreement shall be held by a court of competent jurisdiction to be invalid,
void, illegal or otherwise unenforceable for any reason whatsoever: (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law; and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested thereby.
16. MODIFICATION AND WAIVER. No supplement, modification,
termination or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
17. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification covered hereunder. The failure
to so notify the Company shall not relieve the Company of any obligation which
it may have to the Indemnitee under this Agreement or otherwise.
13.
<PAGE> 14
18. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, to:
(b) If to the Company, to:
Measurex Corporation
One Results Way
Cupertino, CA 95014
Attention: General Counsel
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
19. IDENTICAL COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.
20. HEADINGS. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
21. GOVERNING LAW. The parties agree that this Agreement shall
be governed by, and construed and enforced in accordance with, the laws of the
State of Delaware without application of the conflict of laws principles
thereof.
14.
<PAGE> 15
22. GENDER. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
MEASUREX CORPORATION
By ______________________________________
______________________________________
__________________________, Indemnitee
15.
<PAGE> 1
ELEVENTH: A director or member of the Executive Committee of
this corporation shall not be personally liable to this corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director or member of the Executive Committee, except for liability (i)
for any breach of the director's or such committee member's duty of
loyalty to this corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which the
director or member of the Executive Committee derived any improper
personal benefit. If the Delaware General Corporation Law is hereafter
amended to authorize, with the approval of a corporation's stockholders,
further reductions in the liability of this corporation's directors or
officers for breach of fiduciary duty, then a director or member of the
Executive Committee of this corporation shall not be liable for any such
breach to the fullest extent permitted by the Delaware General
Corporation Law as so amended. Any repeal or modification of the
foregoing provisions of this Article ELEVENTH by the stockholders of
this corporation shall not adversely affect any right or protection of a
director or member of the Executive Committee of this corporation
existing at the time of such repeal or modification.
<PAGE> 1
INDEMNIFICATION
Section 6. The corporation shall indemnify its officers,
directors, employees and agents to the full extent permitted by the General
Corporation Law of Delaware. Expenses incurred by a director or member of the
Executive Committee of the corporation in defending a civil or criminal action,
suit or proceeding by reason of the fact that he is or was a director or member
of the Executive Committee of the corporation (or was serving at the
corporation's request as a director or officer of another corporation) shall be
paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or member of the Executive Committee to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized by relevant sections of the General Corporation Law
of Delaware.
<PAGE> 1
May 15, 1995
Dear :
We are pleased to inform you that the Board of Directors (the
"Board") of Measurex Corporation ("Measurex" or the "Company") has recently
authorized and approved a special severance benefit program for you and other
key executives. The purpose of this letter agreement is to set forth the terms
and conditions of your benefit package and to explain the limitations which will
govern the overall value of your benefits.
Your severance benefits will become payable in the event your
employment terminates within a specified time period following certain changes
in ownership or control of the Company. To understand the full scope of your
severance benefits, you should familiarize yourself with the definitional
provisions of Paragraph 1 of this letter. The benefits comprising your severance
package are detailed in Paragraph 2, and the dollar limitations on the overall
value of your benefit package are specified in Paragraph 3. The remaining
paragraphs deal with ancillary matters affecting your severance arrangement.
1. DEFINITIONS. For purposes of your severance benefits under
this letter agreement, the following definitions will be in effect:
"Actual Average Compensation" means your average W-2 wages and
other compensation received from Measurex for the five (5) calendar years (or
such fewer number of actual calendar years of employment with Measurex)
completed immediately prior to the calendar year in which the Change in Control
is effected. Any W-2 wages or other compensation for a partial year of
employment with Measurex will be annualized, in accordance with the frequency
with which such wages are paid during such partial year, before inclusion within
your Actual Average Compensation. Should your employment with Measurex commence
in the calendar year in which the Change in Control is effected, then your
Actual Average Compensation will be equal in amount to your rate of base salary
in effect for that year plus all other items of compensation received from
Measurex for such year. If any of your compensation from Measurex during such
five (5)-year or shorter period was not included in your W-2 wages for U.S.
income tax purposes, either because you were not a U.S. citizen or resident or
because such compensation was excludible from income as foreign earned income
under Code Section 911 or as pre-tax income under Code Section 125 or 402(g),
then such compensation will nevertheless be included in your Actual Average
Compensation to the same extent as if it were part of your W-2 wages.
<PAGE> 2
"Change in Control" means:
(i) the successful acquisition by a person or a group of
related persons, other than the Company or a person controlling, controlled by
or under common control with the Company, of beneficial ownership (as determined
pursuant to the provisions of Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of fifty percent (50%) or more of the Company's outstanding
voting securities pursuant to a transaction or series of related transactions
which the Board does not at any time recommend the Company's shareholders to
accept or approve,
(ii) the first date within any period of thirty-six (36)
consecutive months or less on which there is effected a change in the
composition of the Measurex Board such that a majority of the Board ceases, by
reason of one or more contested elections for Board membership, to be comprised
of individuals who either (I) have been members of the Measurex Board
continuously since the beginning of such period or (II) have been elected or
nominated for election as Board members during such period by at least a
majority of the Board members described in clause (I) who were still in office
at the time such election or nomination was approved by the Board,
(iii) a merger or consolidation in which the Company is
not the surviving entity, except for a transaction the principal purpose of
which is to change the State in which the Company is incorporated,
(iv) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in complete liquidation or
dissolution of the Company,
(v) any reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
are transferred to person or persons different from the persons holding those
securities immediately prior to such merger, or
(vi) the issuance by the Company of securities possessing
more than fifty percent (50%) of the total combined voting power of the
Company's outstanding securities (determined after such issuance) in a single
transaction or a series of related transactions.
"Code" means the Internal Revenue Code of 1986, as periodicaly
amended.
"Common Stock" means the Company's common stock.
"Fair Market Value" means, with respect to any shares of Common
Stock subject to any Severance-Accelerated Option or Acquisition-Accelerated
Option, the value per share determined by averaging the lowest and highest
selling prices per share of Common Stock on the date in question on the
principal exchange on which the Common Stock is then listed or admitted to
trading, as such prices are officially quoted by the composite tape of
transactions on such exchange. If there are no reported sales of Common Stock on
the principal exchange on such date, then the average of the lowest and
2.
<PAGE> 3
highest selling prices on such exchange on the next preceding day for which
there do exist such quotations shall be determinative of Fair Market Value.
"Involuntary Termination" means the termination of your
employment with Measurex:
- involuntarily upon your discharge or dismissal, or
- voluntarily or involuntarily following (I) a change in your
position with the Company which materially reduces your level of
responsibility, (II) a reduction in your level of compensation
(including base salary, fringe benefits and participation in
non-discretionary bonus programs under which awards are payable
pursuant to objective financial or performance standards) or (III) a
change in your place of employment which is more than fifty (50) miles
from your place of employment prior to the Change in Control, provided
and only if such change or reduction is effected without your written
concurrence.
"Option" means any option granted to you under the Plan which
is outstanding at the time of either the Change in Control or your subsequent
Involuntary Termination. Your Options will be divided into two (2) separate
categories as follows:
Acquisition-Accelerated Options: any outstanding
Option (or installment thereof) which accelerates, pursuant to the
automatic acceleration provisions of the agreement evidencing that
Option, upon a change in control or ownership of the Company under
certain specified circumstances.
Severance-Accelerated Options: any outstanding Option
(or installment thereof) which accelerates upon your Involuntary
Termination pursuant to Paragraph 2(a) of this letter agreement.
"Option Parachute Payment" means, with respect to any
Acquisition-Accelerated Option or any Severance-Accelerated Option, the portion
of that Option deemed to be a parachute payment under Code Section 280G and the
Treasury Regulations issued thereunder. The portion of such Option which is
categorized as an Option Parachute Payment shall be calculated in accordance
with the valuation provisions established under Code Section 280G and the
applicable Treasury Regulations and shall include an appropriate dollar
adjustment to reflect the lapse of your obligation to remain in the employ of
Measurex as a condition to the vesting of the accelerated installment. In no
event, however, shall the Option Parachute Payment attributable to any
Acquisition-Accelerated Option or Severance-Accelerated Option (or accelerated
installment) exceed the spread (the excess of the Fair Market Value of the
accelerated option shares over the option exercise price payable for those
shares) existing at the time of acceleration.
"Other Parachute Payment" means any payment in the nature of
compensation (other than the benefits to which you become entitled under
Paragraph 2 of this letter agreement) which are made to you in connection with
the Change in Control and which accordingly qualify as parachute payments within
the meaning of Code Section 280G(b)(2) and the Treasury Regulations issued
3.
<PAGE> 4
thereunder. Your Other Parachute Payments shall include (without limitation) the
Present Value, measured as of the Change in Control, of the aggregate Option
Parachute Payment attributable to your Acquisition-Accelerated Options (if any).
"Present Value" means the value, determined as of the date of
the Change in Control, of any payment in the nature of compensation to which you
become entitled in connection with either the Change in Control or your
subsequent termination of employment, including (without limitation) the Option
Parachute Payment attributable to your Severance-Acceleration Options, your
Severance Payment under Paragraph 2 of this letter agreement and the Option
Parachute Payment attributable to your Acquisition-Accelerated Options. The
Present Value of each such payment shall be determined in accordance with the
provisions of Code Section 280G(d)(4), utilizing a discount rate equal to one
hundred twenty percent (120%) of the applicable Federal rate in effect at the
time of such determination, compounded semi-annually to the effective date of
the Change in Control.
"Plan" means either (i) the Measurex Corporation 1993 Stock
Option Plan, as amended from time to time, or (ii) the predecessor Measurex
Corporation 1981 Stock Option Plan, as previously amended from time to time.
"Termination for Cause" shall mean an Involuntary
Termination of your employment by reason of (i) your commission of any act of
fraud or embezzlement, (ii) your knowingly unauthorized disclosure of
confidential information or trade secrets of the Company, (iii) excessive
absenteeism or tardiness on your part with respect to your scheduled working
hours or your continual neglect of the duties and responsibilities assigned to
you, (iv) any intentional act of insubordination on your part or your habitual
failure to comply with Company policies establishing standards of conduct
applicable to all employees or (v) any intentional misconduct on your part
which adversely affects the business reputation of the Company in a material
manner.
2. SEVERANCE BENEFITS. Should there occur an Involuntary
Termination of your employment (other than a Termination for Cause) within
eighteen (18) months following a Change in Control, then you will become
entitled to the severance benefits specified below, subject, however, to the
dollar limitation of Paragraph 3 of this letter agreement.
(a) Option Acceleration. Each of your outstanding Options
under the Plan, other than your Acquisition-Accelerated Options, will (to the
extent not then otherwise exercisable) be automatically accelerated so that each
such Severance-Accelerated Option will become immediately exercisable for the
total number of shares purchasable thereunder. Each Severance-Accelerated Option
accelerated hereunder will remain exercisable for a period of ninety (90) days
following your Involuntary Termination and may be exercised for any or all of
the accelerated shares in accordance with the exercise provisions of the
agreement evidencing that Option. However, in no event may any
Severance-Accelerated Option be exercised after the specified expiration date of
the option term.
(b) Severance Payment. Measurex will make a lump sum cash
payment (the "Severance Payment") to you, within ninety (90) days after your
Involuntary Termination, in an amount equal in Present Value (measured as of the
Change in Control) to the excess (if any) of (I) 2.99
4.
<PAGE> 5
times your Actual Average Compensation over (II) the Present Value (also
measured as of the Change of Control) of the aggregate Option Parachute Payment
attributable to all your accelerated Options.
3. REDUCTION OF SEVERANCE BENEFITS. Except to the limited
extent (if any) otherwise provided under subparagraph (d) below, the aggregate
Present Value (measured as of the Change in Control) of the benefits to which
you become entitled under Paragraph 2 at the time of your Involuntary
Termination (namely the Severance Payment and the Option Parachute Payment
attributable to your Severance-Accelerated Options) shall not exceed in amount
the difference between (i) 2.99 times your Actual Average Compensation and (ii)
the Present Value, measured as of the Change in Control, of all Other Parachute
Payments to which you are entitled. Accordingly, except as otherwise provided
under subparagraph (d) below, your Options shall not be accelerated and no
Severance Payment shall be made to you pursuant to this letter agreement, to the
extent the Present Value as of the Change in Control of (I) the aggregate Option
Parachute Payment attributable to your Severance-Accelerated Options plus (II)
your Severance Payment would, when added to the Present Value of your Other
Parachute Payments, exceed 2.99 times your Actual Average Compensation (the
"Parachute Limit").
For purposes of the foregoing Parachute Limit, the following
provisions shall be in effect:
(a) In the event there is any disagreement between you and the
Company as to whether one or more payments to which you become entitled in
connection with either the Change in Control or your subsequent Involuntary
Termination constitute Option Parachute Payments or Other Parachute Payments or
as to the determination of the Present Value thereof, such dispute shall be
resolved as follows:
(i) In the event temporary, proposed or final Treasury
Regulations in effect at the time under Code Section 280G (or applicable
judicial decisions) specifically address the status of any such payment or the
method of valuation therefor, the characterization afforded to such payment by
the Regulations (or such decisions) shall, together with the applicable
valuation methodology, be controlling.
(ii) In the event Treasury Regulations (or applicable
judicial decisions) do not address the status of any payment in dispute, the
matter shall be submitted for resolution to independent counsel mutually
acceptable to you and the Company ("Independent Counsel"). The resolution
reached by Independent Counsel shall be final and controlling; provided,
however, that if in the judgment of Independent Counsel the status of the
payment in dispute can be resolved through the obtainment of a private letter
ruling from the Internal Revenue Service, a formal and proper request for such
ruling shall be prepared and submitted by Independent Counsel, and the
determination made by the Internal Revenue Service in the issued ruling shall be
controlling. All expenses incurred in connection with the retention of
Independent Counsel and (if applicable) the preparation and submission of the
ruling request shall be shared equally by you and the Company.
(iii) In the event Treasury Regulations (or applicable
judicial decisions) do not address the appropriate valuation methodology for any
payment in dispute, the Present Value
5.
<PAGE> 6
thereof shall, at the Independent Counsel's election, be determined through an
independent third-party appraisal, and the expenses incurred in obtaining such
appraisal shall be shared equally by you and the Company.
(b) No Severance Payment shall be made to you under Paragraph
2(b) of this letter agreement until the Present Value of the Option Parachute
Payment attributable to both your Severance-Accelerated Options and your
Acquisition-Accelerated Options has been determined and the status of any
payments in dispute under Paragraph 3(a) above has been resolved in accordance
therewith. However, you will be permitted to exercise your Severance-Accelerated
Options at any time during the ninety (90) day (or shorter) period immediately
following your Involuntary Termination, provided any and all shares of Common
Stock purchased under your Severance-Accelerated Options shall, together with
the exercise price paid for those shares, be held in escrow by the Company. To
the extent your purchased shares are held in escrow, you will have the right to
(i) direct the sale of such shares, provided the sale proceeds are immediately
deposited in escrow, (ii) exercise all voting rights with respect to such shares
and (iii) receive dividends declared on such shares, provided such dividends are
immediately deposited in escrow.
(c) Once the requisite determinations under Paragraph 3(a)
have been made, then to the extent the aggregate Present Value, measured as of
the Change in Control, of (1) the Option Parachute Payment attributable to your
Severance-Accelerated Options (or installments thereof) plus (2) your Severance
Payment would, when added to the Present Value of all your Other Parachute
Payments (including the Option Parachute Payment attributable to your
Acquisition-Accelerated Options), exceed the Parachute Limit, the following
reductions to the benefits otherwise payable to you hereunder shall be made:
First, your Severance Payment shall be reduced.
Then, any outstanding Severance-Accelerated Options shall
immediately terminate and cease to be exercisable. If there is
more than one such Option outstanding, then the
Severance-Accelerated Options with the lowest option spread
shall be the first to terminate.
Finally, to the extent one or more of your outstanding
Severance-Accelerated Options (or installments thereof) shall
have been exercised following your Involuntary Termination,
such exercises shall be rescinded (with the
Severance-Accelerated Options with the lowest option spread to
be the first rescinded) by refunding to you the exercise price
paid for the purchased shares and returning those shares (plus
any cash dividends paid thereon) to the Company. To the extent
the shares purchased under such accelerated Options (or
accelerated installments thereof) shall have been sold while
held in escrow, the sale proceeds attributable to those shares
shall be allocated as follows: first an amount not to exceed
the exercise price you paid for such shares shall be refunded
to you, and then the balance of the proceeds (together with
any cash dividends paid on those shares) shall be returned to
the Company.
6.
<PAGE> 7
To the extent any shares or cash proceeds remain in the escrow
account under Paragraph 3(b) above after the reductions specified in this
subparagraph (c) have been made, those shares or proceeds shall be promptly
distributed to you.
(d) Notwithstanding any provision to the contrary set forth in
the preceding subparagraphs of this Paragraph 3, the aggregate Present Value of
your Severance Payment and the Option Parachute Payment attributable to your
Severance-Accelerated Options shall not be reduced below that amount (if any)
which, when added to the Present Value of all the Other Parachute Payments to
which you are entitled, would nevertheless qualify as reasonable compensation
within the standards established under Code Section 280G(b)(4).
(e) This Paragraph 3 shall in all events be interpreted in
such manner as shall avoid the imposition of excise taxes under Code Section
4999, and the disallowance of deductions under Code Section 280G(a) with respect
to any of the benefits paid pursuant to Paragraph 2 of this letter agreement.
4. DEATH. Should you die before the Severance Payment (if any)
to which you become entitled under Paragraph 2(b) of this letter agreement is
actually made, then such payment will be made, on the due date hereunder had you
survived, to the executors or administrators of your estate. Should you die
before you exercise your Severance-Accelerated Options (if any), then such
Options may (subject to applicable escrow requirements under Paragraph 3(b)) be
exercised, within twelve (12) months after your death, by the executors or
administrators of your estate or by persons to whom the Options are transferred
pursuant to your will or in accordance with the law of descent and distribution.
In no event, however, may any such Severance-Accelerated Option be exercised
after the specified expiration date of the option term.
5. GENERAL CREDITOR STATUS. The Severance Payment to which you
may become entitled under Paragraph 2(b) shall be paid, when due, from the
general assets of the Company, and no trust fund, escrow arrangement or other
segregated account shall be established as a funding vehicle for such payment.
Accordingly, your right (or the right of the executors or administrators of your
estate) to receive such Severance Payment shall at all times be that of a
general creditor of the Company and shall have no priority over the claims of
other general creditors.
6. INDEMNIFICATION. The indemnification provisions for
Officers and Directors under the Measurex Bylaws shall (to the maximum extent
permitted by law) be extended to you, during the period following your
Involuntary Termination, with respect to any and all matters, events or
transactions occurring or effected during your period of employment with the
Company.
7. TERMINATION. This letter agreement and the severance
benefits payable hereunder will automatically terminate and cease to be
effective at the close of business on December 31, 1999, unless a Change in
Control has in fact been consummated on or before that date.
8. MISCELLANEOUS. The provisions of this letter agreement
shall be binding upon the Company, its successors and assigns (including,
without limitation, the surviving entity or successor
7.
<PAGE> 8
party resulting from the Change in Control) and shall be construed and
interpreted under the laws of the State of California. This letter agreement
supersedes and terminates all other existing agreements between you and the
Company relating to the subject of severance benefits payable upon a change in
control or ownership of the Company, including (without limitation) your July
31, 1989 letter agreement with the Company on such subject. This letter
agreement may only be amended by written instrument signed by you and an
authorized officer of the Company.
9. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this
Agreement is intended to provide you with any right to continue in the employ of
Company (or any subsidiary) for any period of specific duration or interfere
with or otherwise restrict in any way your rights or the rights of the Company
(or any subsidiary), which rights are hereby expressly reserved by each, to
terminate your employment at any time for any reason whatsoever, with or without
cause.
10. AFFECT UPON POOLING ACCOUNTING. Should there occur a
Change in Control which is expressly conditioned upon the accounting treatment
of such transaction as a pooling of interests under Accounting Principles Board
Opinion No. 16 ("Business Combinations"), and to the extent one or more
severance benefits otherwise payable to you under Paragraph 2 of this letter
agreement would preclude such pooling accounting, then such severance benefit or
benefits shall not become due and payable to you and you hereby waive your
rights and entitlement to those benefits in such case.
11. ATTORNEY FEES. In the event legal proceedings should be
initiated by you or by the Company with respect to any controversy, claim or
dispute relating to the interpretation or application of the provisions of this
letter agreement or any benefits payable hereunder, the prevailing party in such
proceedings will be entitled to recover from the losing party reasonable
attorney fees and costs incurred in connection with such proceedings, including
any fees and costs which would otherwise be chargeable to the prevailing party
under subsection (a)(ii) of Paragraph 3 of this letter agreement in the absence
of such legal proceedings, or in the enforcement or collection of any judgment
or award rendered in such proceedings. For purposes of this Paragraph 11, the
prevailing party means the party determined by the court to have most nearly
prevailed in the proceedings, even if that party does not prevail in all
matters, and does not necessarily mean the party in whose favor the judgment is
actually rendered. If the Company materially breaches any of its obligations
under this letter agreement and fails to cure that breach within thirty (30)
days after written notice from you, you will then be entitled to reimbursement
from the Company for any reasonable expenses and attorney fees you incur in
having the Company subsequently cure that breach, whether or not legal
proceedings are actually commenced in connection with such breach.
Please indicate your acceptance of the foregoing by signing
the enclosed copy of this letter and returning it to the Company.
Very truly yours,
MEASUREX CORPORATION
8.
<PAGE> 9
By _______________________
Title: ___________________
ACCEPTANCE
I hereby agree to all the terms and provisions of the
foregoing letter agreement governing the severance benefits which may become
payable to me in connection with certain changes in control or ownership of
Measurex Corporation, such acceptance effective as of the date first above
written.
Signature: __________________________
Name: ___________________________
<PAGE> 1
AMENDMENT NO. 3
TO RIGHTS AGREEMENT
THIS AMENDMENT NO. 3 TO RIGHTS AGREEMENT (this "Amendment"),
dated as of January 26, 1997, is entered into by and between Measurex
Corporation, a Delaware corporation (the "Company"), and Bank of New York, a New
York banking corporation (the "Rights Agent").
WHEREAS, the Company and the Rights Agent are party to that
certain Rights Agreement dated as of December 14, 1988, as amended by Amendment
No. 1 dated as of May 30, 1990, and Amendment No. 2 dated as of September 16,
1991;
WHEREAS, the Board of Directors of the Company has determined
that it is in the best interests of the Company to enter into that certain
Agreement and Plan of Merger (the "Merger Agreement") dated as of January 26,
1997 with Honeywell Inc., a Delaware corporation ("Parent") and Honeywell
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent (the "Purchaser"), pursuant to which Parent has agreed to acquire the
Company upon the terms and subject to the conditions set forth therein; and
WHEREAS, in connection with entering into the Merger
Agreement, the Company wishes to ensure that neither Parent nor Purchaser will
be deemed an "Acquiring Person" under the Rights Agreement by virtue of the
execution and consummation of the transactions contemplated by the Merger
Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE> 2
SECTION 1. Amendments to Rights Plan.
(a) Section 1 (a) of the Rights Agreement is hereby amended to
read in its entirety as follows:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 20% or more of the Common
Shares of the Company then outstanding, but shall not include:
(i) the Company, any Subsidiary (as such term is hereinafter
defined) of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such
plan; or (ii) Honeywell Inc. or Honeywell Acquisition Corp.,
solely to the extent that such Persons acquire Beneficial
Ownership of Common Shares of the Company in accordance with
the provisions of the Agreement and Plan of Merger by and
among Honeywell Inc., Honeywell Acquisition Corp. and Measurex
Corporation dated as of January 26, 1997, or any amendment
thereto (the "Merger Agreement"). Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the
result of any recapitalization of the Company or any other
action taken by the Company or its Affiliates or Associates,
including, without limitation, any repurchase of voting
securities by the Company, which has the effect of increasing
the proportionate number of shares beneficially owned by such
Person to more than 20% of the Common Shares of the Company
then outstanding; provided, however, that if any Person shall
become the Beneficial Owner of 20% or more of the Common
Shares of the Company then outstanding by reason of the taking
of such action or series of actions by the Company or such
Affiliates or Associates and such Person shall, after such
action or series of actions, increase its beneficial ownership
of Common Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person."
(b) Section 1 (n) of the Rights Agreement is hereby amended to
read in its entirety as follows:
(n) A "Trigger Event" shall be deemed to have
occurred upon any Person (other than the Company, any
Subsidiary of the
2.
<PAGE> 3
Company, any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan), together with
all Affiliates and Associates of such Person, becoming the
Beneficial Owner of 20% or more of the Common Shares of the
Company then outstanding. Notwithstanding the foregoing, no
Trigger Event shall be deemed to have occurred as the result
of the acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such
Person to 20% or more of the Common Shares of the Company then
outstanding; provided, however, that in the event that a
Person shall become the Beneficial Owner of 20% or more of the
Common Shares of the Company then outstanding by reason of
share purchases by the Company, a Trigger Event shall be
deemed to have occurred upon such Person, after such share
purchases by the Company, becoming the Beneficial Owner of any
additional Common Shares of the Company. Notwithstanding the
foregoing, in no event shall any acquisition or ownership of
the Common Shares of the Company by Honeywell Inc. or
Honeywell Acquisition Corp. in accordance with the provisions
of the Merger Agreement constitute a Trigger Event for purpose
of this Agreement.
(c) Section 3 (a) of the Rights Agreement is hereby amended to
read in its entirety as follows:
(a) Until the earlier of (i) the tenth day after the
Shares Acquisition Date or (ii) the tenth business day (or
such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any
Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary
of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan, or any entity
specifically excluded from the definition of Acquiring Person
set forth in this Agreement, as amended) of, or of the first
public announcement of the intention of any Person (other than
the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Shares for or pursuant to
the terms of any such plan, or any entity specifically
excluded from the definition of Acquiring Person set forth in
this Agreement, as amended) to commence, a tender or exchange
offer
3.
<PAGE> 4
the consummation of which would result in any Person becoming
the Beneficial Owner of Common Shares aggregating 20% or more
of the then outstanding Common Shares (including any such date
which is after the date of this Agreement and prior to the
issuance of the Rights; the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Common Shares registered in
the names of the holders thereof (which certificates shall
also be deemed to be Right Certificates) and not by separate
Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the
transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the
Rights Agent will countersign, and the Company will send or
cause to be sent (and the Rights Agent will, if requested,
send) by first-class, insured, postage-prepaid mail, to each
record holder of Common Shares as of the close of business on
the Distribution Date, at the address of such holder shown on
the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so
held. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(d) Section 7 (a) of the Rights Agreement is hereby amended to
read in its entirety as follows:
(a) The registered holder of any Right Certificate
may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal
office of the Rights Agent, together with payment of the
Purchase Price for each one one-hundredth of a Preferred Share
as to which the Rights are exercised, at or prior to the
earliest of (i) the close of business on December 29, 1998
(the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"), (iii) the Shares have been accepted for
payment pursuant to the Offer, as such terms are defined in
the Merger Agreement, or (iv) the time at which such Rights
are exchanged as provided in Section 24 hereof.
4.
<PAGE> 5
SECTION 2. Miscellaneous.
(a) This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
(b) This Amendment shall be governed by and interpreted in
accordance with the internal laws of the State of Delaware.
IN WITNESS WHEREOF, the Company and the Rights Agent have
caused this Amendment to be executed as of the date and year first above
written.
COMPANY
MEASUREX CORPORATION
Attest:
By:_______________________________ By:_____________________________________
Title: Title:
RIGHTS AGENT
BANK OF NEW YORK,
a New York banking corporation
Attest:
By:_______________________________ By:_____________________________________
Title: Title:
5.
<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
2
<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)
3
<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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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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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
--------------------------------------
Its: Vice President and Assistant Secretary
--------------------------------------
Dated: January 26, 1997 /s/ David A. Bossen
--------------------------------------
David A. Bossen
11
<PAGE> 1
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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<PAGE> 3
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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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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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
------------------------
Dated: January 26, 1997 /s/ John Gingerich
------------------------
John Gingerich
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