[Letterhead of Fried, Frank, Harris, Shriver & Jacobson]
July 22, 1999
AlliedSignal Inc.
101 Columbia Road
P.O. Box 4000
Morris Township, New Jersey 07962
Ladies and Gentlemen:
We are acting as your counsel in connection with the acquisition by
AlliedSignal Inc. ("AlliedSignal") of Honeywell Inc. ("Honeywell") pursuant to
the proposed merger (the "Merger") of Blossom Acquisition Corp., a wholly-owned
subsidiary of AlliedSignal ("Merger Sub"), into Honeywell, with Honeywell
surviving the Merger. The Merger will be consummated pursuant to the Agreement
and Plan of Merger dated as of June 4, 1999 by and among AlliedSignal, Merger
Sub and Honeywell (the "Merger Agreement"). For purposes of this opinion,
capitalized terms used and not otherwise defined herein shall have the meaning
ascribed thereto in the Merger Agreement.
AlliedSignal has filed with the Securities and Exchange Commission under
the Securities Act of 1933, as amended (the "1933 Act"), a registration
statement on Form S-4 (the "Registration Statement"), with respect to the common
shares of AlliedSignal to be issued to holders of shares of common stock of
Honeywell in connection with the Merger. In addition, AlliedSignal has prepared,
and we have reviewed, a Joint Proxy Statement/Prospectus which is contained in
and made a part of the Registration Statement (the "Joint Proxy Statement"), and
the Appendices thereto, including the Merger Agreement. In rendering the opinion
set forth below, we have relied upon the facts stated in the Joint Proxy
Statement and upon such other documents, information and materials as we have
deemed necessary or appropriate, including the representations of AlliedSignal
and Honeywell referred to in the Joint Proxy Statement and set forth in certain
tax representation letters signed by officers of AlliedSignal and Honeywell. In
reviewing these documents, we have assumed the authenticity of original
documents, the accuracy of copies, the genuineness of signatures, and the legal
capacity of signatories.
We have assumed that (i) all parties to the Merger Agreement, and to any
other documents reviewed by us, have acted, and will act, in accordance with the
terms of the Merger Agreement and such other documents, (ii) the Merger will be
consummated at the
effective time as described in the Joint Proxy Statement, (iii) the Merger
will be consummated at the effective time pursuant to the terms and conditions
set forth in the Merger Agreement without the waiver or modification of any
such terms and conditions, (iv) the Merger is authorized by and will be effected
pursuant to applicable state law, and (v) all Honeywell shareholders hold their
shares of Honeywell common stock as capital assets. Furthermore, we have not
attempted to verify independently such representations and have assumed that
all representations contained in the Merger Agreement, as well as those
representations contained in the attachments hereto, are, and at the Effective
Time will be, true, accurate and complete in all respects. The opinion expressed
herein cannot be relied upon if any of these factual assumptions or
representations is, or later becomes, inaccurate.
The opinion expressed herein is based upon the Internal Revenue Code of
1986, as amended (the "Code"), Treasury Regulations, case law and rulings and
other pronouncements of the Internal Revenue Service as in effect on the date
hereof. No assurances can be given that such authorities will not be amended or
otherwise changed prior to the Effective Time, or at any other time, possibly
with retroactive effect. We assume no obligation to advise you of any such
subsequent change. If there is any change in the applicable law or regulations,
or if there is any new administrative or judicial interpretation of the
applicable law or regulations, any or all of the federal income tax consequences
described herein may become inapplicable.
This letter addresses only the specific United States federal income tax
consequences of the Merger and does not address any other federal, state, local,
or foreign income, estate, gift, transfer, sales, use or other tax consequences
that may result from the Merger. This letter does not address the tax
consequences that may be relevant to a particular shareholder receiving special
treatment under some United States federal income tax laws, including, among
others: banks, tax-exempt organizations, insurance companies, dealers in
securities or foreign currencies, Honeywell shareholders who received their
Honeywell common stock through the exercise of employee stock options or
otherwise as compensation, Honeywell shareholders who are not U.S. persons, and
Honeywell shareholders who hold shares of Honeywell common stock as part of a
hedge, straddle or conversion transaction.
Based upon and subject to the foregoing, and to the qualifications and
limitations set forth herein and in reliance upon the representations and
assumptions described above, we are of the opinion that:
(1) the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code;
(2) each of AlliedSignal, Honeywell and Blossom Acquisition Corp. will be a
party to the reorganization within the meaning of Section 368(b) of the
Internal Revenue Code;
(3) no gain or loss will be recognized by AlliedSignal, Honeywell or Blossom
Acquisition Corp. as a result of the Merger;
(4) no gain or loss will be recognized by a shareholder of Honeywell who
exchanges shares of Honeywell common stock solely for shares of common
stock of AlliedSignal; except gain will be recognized with respect to
cash received instead of a fractional share of AlliedSignal's common
stock;
(5) the aggregate tax basis of the shares of AlliedSignal's common stock
received by a Honeywell shareholder who exchanges all of the
shareholder's shares of Honeywell common stock for shares of common
stock of AlliedSignal in the Merger will be the same as the aggregate
tax basis of the shares of Honeywell common stock surrendered in
exchange (reduced by any amount allocable to a fractional share of
AlliedSignal's common stock for which cash is received);
(6) the holding period of the shares of AlliedSignal's common stock received
by a Honeywell shareholder will include the holding period of shares of
Honeywell common stock surrendered in exchange; and
(7) a Honeywell shareholder who receives cash instead of a fractional share
of AlliedSignal's common stock will, in general, recognize capital gain
or loss equal to the difference between the cash amount received and the
portion of the shareholder's tax basis in shares of Honeywell common
stock allocable to the fractional share. This gain or loss will be
long-term capital gain or loss for United States federal income tax
purposes if the shareholder's holding period in the shares of Honeywell
common stock exchanged for the fractional share of AlliedSignal's common
stock is more than one year.
No opinion is expressed on any matters other than those specifically
referred to herein. The foregoing opinion reflects our legal judgment solely on
the issues expressly presented and discussed herein. Our opinion is limited to
legal rather than factual matters. This opinion has no official status or
binding effect of any kind. Accordingly, we cannot assure you that the Internal
Revenue Service or a court having jurisdiction over the issue will agree with
this opinion.
This opinion is furnished to you for use in connection with the
Registration Statement and may not be used for any other purpose without our
prior express written consent. We hereby consent to the filing of this opinion
as an exhibit to the Registration Statement and to the use of our name in that
portion of the Joint Proxy Statement captioned "Material Federal Income Tax
Consequences." In giving such consent, we do not thereby admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
FRIED, FRANK, HARRIS,
SHRIVER & JACOBSON
/s/ FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
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