Resideo(REZI) - 2025 Q2 - Quarterly Results

Introduction Parties to the Agreement This agreement, dated July 30, 2025, is between Honeywell and Resideo entities, including RIH and guarantors, to terminate a prior Indemnification and Reimbursement Agreement - The agreement is dated July 30, 2025[2] - Key parties include Honeywell International Inc., Resideo Technologies, Inc., Resideo Intermediate Holding Inc. (RIH), and various guarantors[2] Background and Purpose The agreement terminates an existing Indemnification and Reimbursement Agreement, obligating RIH to make periodic payments for environmental liabilities, in exchange for a one-time cash payment of $1.59 billion - Honeywell and RIH were parties to an Indemnification and Reimbursement Agreement (dated October 14, 2018, and subsequently amended five times) for certain Honeywell environmental remediation liabilities[3] - RIH was required to make periodic indemnification and reimbursement payments (Indemnification Payments Obligation) to Honeywell under the prior agreement, guaranteed by the Guarantors[3] - The parties desire to terminate the Indemnification and Reimbursement Agreement and Guarantees in consideration of a one-time cash payment[3] Termination Payment | Item | Value (USD) | | :--- | :---: | | One-time cash payment | $1,590,000,000.00 | | Purpose | In lieu of all future payments under the Indemnification and Reimbursement Agreement | Termination Payment and Agreement Details Termination Payment Terms The $1.59 billion Termination Payment is contingent on the Indemnification Agreement's termination and must be wired by RIH to Honeywell on the Closing Date, tied to debt financing by an initial Outside Date of August 29, 2025 - The Termination Payment is contingent upon the IRA Termination[4] - RIH shall pay the Termination Payment by wire transfer of immediately available U.S. dollars to Honeywell[4] - The 'Closing Date' is the date of funding (or the first business day following funding) of the Debt Financing or Alternative Financing[4] Key Dates | Date Type | Date | | :--- | :--- | | Initial Outside Date | August 29, 2025 | | Extended Outside Date (if Closing not occurred) | October 30, 2025 | Effect of Termination Upon Honeywell's receipt of the Termination Payment, the Indemnification and Reimbursement Agreement and all related Guarantees will automatically terminate, releasing all parties from future liabilities, except for specific surviving sections related to confidentiality, tax treatment, and general miscellaneous provisions - Effective upon receipt of the Termination Payment, the Indemnification and Reimbursement Agreement and all Guarantees shall automatically terminate[6] - No party or its affiliates shall have any further liability or obligation under the terminated agreements, except for specific 'Surviving Sections' (Confidentiality, Certain Tax Treatment, and Article IV Miscellaneous, excluding Section 4.7)[6] - The Indemnification and Reimbursement Agreement and Guarantees remain in full force until the Termination Payment is fully received or if this Agreement is terminated[6] Interim Payment Arrangements RIH has made a $35 million Q3 2025 payment, while other future payments are suspended until Closing, where they are satisfied by the Termination Payment, or until termination, where they become payable with 5% annual interest Quarterly Payment Made | Item | Amount (USD) | | :--- | :---: | | Quarterly Payment (Q3 2025) | $35,000,000 | | Status | Paid prior to the date of this Agreement | - From the date of this Agreement until Closing or termination, all other amounts payable by RIH or any Guarantor under the Indemnification and Reimbursement Agreement are suspended and tolled ('Tolled Amounts')[8] - If Closing occurs, no Tolled Amounts are payable; the Termination Payment satisfies all obligations[8] - If this Agreement terminates, RIH must pay all Tolled Amounts within two business days, plus interest at 5% per annum[8] Representations and Warranties General Representations The parties reaffirm representations and warranties from the original Indemnification Agreement, with Resideo Parent, RIH, and Guarantors warranting no existing defaults under key credit agreements - Sections 4.2(a), (b), and (c) of the Indemnification and Reimbursement Agreement are restated and incorporated by reference[10] - Resideo Parent, RIH, and each Guarantor represent that no default or event of default has occurred or is continuing under the Indemnification and Reimbursement Agreement, the Current Credit Agreement, or any other Indebtedness[11] Financing Commitments and Availability Resideo Parent and RIH confirm a fully executed, binding Debt Commitment Letter is in effect, with no material breaches, ensuring financing availability for the Termination Payment by the Outside Date, and their payment obligation is not conditional on obtaining financing - Resideo Parent and RIH have delivered a true, complete, and correct copy of a fully executed Debt Commitment Letter and Fee Letter for the Debt Financing[12] - The Debt Financing Commitment is in full force and effect, legally binding, and enforceable[15] - No material breach or default exists under the Debt Financing Commitment, and no event has occurred that would prevent the Debt Financing from being available by the Outside Date[15] - Resideo Parent and RIH have no reason to believe they will be unable to satisfy conditions for funding or that the Debt Financing will not be available by the Outside Date, together with cash on hand, to pay the Termination Payment[15] - The obligations of Resideo Parent and RIH under this Agreement are not subject to any conditions regarding their ability to obtain financing for the Termination Payment[17] Compliance with Agreements Resideo Parent, RIH, and each Guarantor warrant that the execution and performance of this Agreement will not violate or breach any existing agreements or instruments, subject to obtaining required revolving and general consents as defined in the Debt Financing Commitment - Subject to receipt of 'Required Revolving Consent' and 'Required Consent' (as defined in the Debt Financing Commitment), the execution and performance of this Agreement will not result in a violation or breach of, or a default under, any agreement or instrument to which Resideo Parent, RIH, or any Guarantor is a party[18] Financing Obligations Efforts to Secure Debt Financing Resideo Parent and RIH are obligated to use reasonable best efforts to consummate the Debt Financing by the Outside Date, including complying with, maintaining, and enforcing the Debt Financing Commitment, negotiating Financing Agreements, obtaining necessary consents, and satisfying all conditions - Resideo Parent and RIH shall use reasonable best efforts to consummate the Debt Financing on or before the Outside Date[19] - Efforts include complying with and enforcing the Debt Financing Commitment, negotiating Financing Agreements, obtaining 'Required Consent' and 'Required Revolving Consent', and satisfying all applicable conditions[19] - Resideo Parent and RIH shall inform Honeywell of the status of their efforts to arrange financing upon reasonable request[19] Restrictions on Financing Modifications Resideo Parent and RIH cannot amend the Debt Financing Commitment without Honeywell's consent if it reduces available cash, imposes new conditions, or impacts enforcement rights, with exceptions for syndication - Resideo Parent and RIH shall not amend, supplement, modify, replace, terminate, or reduce the Debt Financing Commitment without Honeywell's prior written consent if it would[20] - Reduce net cash proceeds below the Termination Payment amount (together with cash on hand)[20] - Impose new or additional conditions that could delay or prevent payment or make timely funding less likely[20] - Adversely impact enforcement rights against other parties to the Debt Financing Commitment[21] - Exceptions allow for adding lenders or making assignments in connection with syndication[21] Alternative Financing Provisions If Debt Financing becomes unavailable, Resideo Parent and RIH must promptly notify Honeywell and secure Alternative Financing with comparable terms that do not adversely affect the ability to pay the Termination Payment - If Debt Financing becomes unavailable, Resideo Parent and RIH must promptly notify Honeywell and use reasonable best efforts to obtain Alternative Financing[22] - Alternative Financing terms must not impose new or expanded conditions that materially and adversely affect the ability to pay the Termination Payment[22] - Resideo Parent and RIH are not required to pay fees or interest rates in excess of those contemplated by the original Debt Commitment Letter (including flex provisions) or agree to materially less favorable terms[22] Financing Status Notifications Resideo Parent and RIH must promptly notify Honeywell of any material breach, default, or termination related to Debt Documents or financing availability, excluding legally privileged information - Resideo Parent and RIH must give Honeywell prompt written notice (within two business days) of[23] - Any material breach or default by any party to the Debt Documents[23] - Belief that all or part of the Debt Financing will not be obtained[23] - Receipt of any written notice regarding breach, default, termination, or repudiation of Debt Documents[24] - Any expiration or termination of any Debt Commitment Letter[24] - Information subject to attorney-client or other legal privilege is not required to be shared[24] Financing Not a Condition Resideo Parent and RIH acknowledge and agree that their obligations under this Agreement, including the payment of the Termination Payment, are not conditional on obtaining financing, and compliance with financing-related sections does not relieve them of their payment obligations - The obligations of Resideo Parent and RIH under this Agreement are not subject to any conditions regarding obtaining financing[25] - Compliance or non-compliance with Section 5 (Financing) does not relieve Resideo Parent or RIH of their obligation to pay the Termination Payment when due, regardless of financing availability[25] Confidentiality and Public Disclosure Confidentiality of Agreement This Agreement and related discussions are confidential and cannot be used or referred to without prior written consent, except for disclosures required by law (with prior review opportunity for other parties) or to affiliates and Debt Financing Sources on a strictly confidential basis - This Agreement and related discussions are confidential and may not be used, circulated, quoted, or referred to without prior written consent of the other Parties[26] - Exceptions include disclosures required by applicable Law (with reasonable opportunity for review and comment) or to affiliates and Debt Financing Sources on a strictly confidential basis[26] Public Announcement Cooperation Parties will cooperate on public announcements regarding this Agreement, requiring mutual consent for statements unless legally mandated, and will review each other's press releases and Form 8-K filings - Parties shall cooperate in good faith regarding public announcements and disclosures concerning this Agreement, requiring prior written consent unless legally required[27] - Resideo Parent intends to issue a press release and investor presentation, and both Honeywell and Resideo Parent will file a Current Report on Form 8-K[28] - Each party will provide the other a reasonable opportunity to review and comment on such public disclosures[28] Termination of This Agreement Conditions for Termination This Agreement may terminate by mutual consent, by Honeywell if Closing is delayed beyond August 29, 2025, by Resideo Parent if delayed beyond October 30, 2025 (with Reinstatement Payment), or if a court order permanently restrains transactions, provided the terminating party is not in breach - This Agreement may be terminated prior to Closing by[30] - Mutual written agreement of Honeywell and Resideo Parent[30] - Honeywell, if Closing has not occurred by August 29, 2025 (or later, with two business days' notice)[30] - Resideo Parent, if Closing has not occurred by October 30, 2025 (with two business days' notice and Reinstatement Payment)[31] - Either party, if a final and non-appealable court order permanently restrains the transactions, provided the terminating party is not in breach[31] - Neither party can terminate if their own breach caused the failure to consummate transactions[30] Procedure and Effect of Termination Upon termination, this Agreement becomes void, releasing parties from liability except for specific continuing obligations, and the original Indemnification Agreement and Guarantees remain in force, making any Tolled Amounts plus interest payable - Upon termination of this Agreement, it becomes void, and there is no liability, except for 'Continuing Obligations' (e.g., Section 3, Section 6, Section 7(b), Section 7(c), and specific subsections of Section 8)[30] - Any liability for breach of this Agreement prior to termination (or for surviving provisions) is not impacted[32] - If this Agreement terminates for any reason, the Indemnification and Reimbursement Agreement and Guarantees remain in full force and effect[32] - RIH shall pay any Tolled Amounts plus interest if this Agreement terminates[32] Exclusive Remedy: Reinstatement Payment If this Agreement terminates due to delayed Closing and unavailable Debt Financing, Resideo Parent must pay Honeywell a $100 million Reinstatement Payment as liquidated damages, serving as the sole remedy for Honeywell, except for pre-termination breaches - If this Agreement is terminated due to failure of Closing by the specified dates (Section 7(a)(2)) and Debt Financing has not been obtained, Resideo Parent shall pay Honeywell the 'Reinstatement Payment'[33] Reinstatement Payment Details | Item | Value (USD) | | :--- | :---: | | Reinstatement Payment Amount | $100,000,000 | | Payment Trigger | Termination under Section 7(a)(2) when Debt Financing not obtained | | Payment Timing (Honeywell termination) | Within 5 Business Days | | Payment Timing (Resideo Parent termination) | Upon or prior to termination | - The Reinstatement Payment is deemed liquidated damages and the sole and exclusive remedy for Honeywell against Resideo Related Parties, except for pre-termination breaches or Continuing Obligations[33] - Resideo Parent is not required to pay the Reinstatement Payment more than once[33] Miscellaneous Provisions Assignment and Amendments Neither this Agreement nor its rights or obligations can be assigned without prior written consent, and any waivers, amendments, or modifications require written agreement signed by all parties - Neither this Agreement nor any rights or obligations under it shall be assigned without the prior written consent of the other Parties[34] - No provisions shall be deemed waived, amended, supplemented, or modified unless in writing and signed by each Party[35] Specific Performance and Default Honeywell is entitled to specific performance for breaches, including payment of the Termination Payment with interest, but not to force Closing if financing is unavailable; termination under certain conditions constitutes an event of default under the original Indemnification Agreement - Honeywell is entitled to specific performance or other equitable relief to prevent breaches and enforce the terms of this Agreement, including payment of the Termination Payment with 10% annual interest from the date of breach notification[39] - Parties acknowledge that irreparable damage would occur from breaches and monetary damages are inadequate[39] - Honeywell is not entitled to specific performance to cause the Closing if this Agreement is terminable due to the Debt Financing not being obtained[39] - If this Agreement terminates under Section 7(a)(2) (other than due to Debt Financing unavailability or Honeywell's breach), an event of default under Section 2.12(a)(i) of the Indemnification and Reimbursement Agreement shall be deemed to have occurred[37] Tax Treatment The Termination Payment will be treated for U.S. federal income tax purposes as made prior to the Homes distribution, with Resideo Parent and its affiliates not claiming deductions (except interest), and Honeywell being the sole party entitled to related deductions - The Termination Payment shall be treated for U.S. federal income tax purposes as being made immediately prior to the distribution of Homes by Honeywell[38] - Resideo Parent, its Affiliates, and Guarantors shall not claim any deduction for U.S. federal income tax purposes in respect of the Termination Payment, other than any portion treated as interest[38] - Honeywell shall be the only person entitled to claim deductions for U.S. federal, state, or local income tax purposes in respect of any Losses relating to Claims or the Termination Payment[38] Dispute Resolution and Governing Law Provisions for dispute resolution, governing law, jurisdiction, waiver of jury trial, court-ordered interim relief, and interpretation from the Indemnification and Reimbursement Agreement are incorporated by reference into this Agreement - Sections 4.3 (Dispute Resolution), 4.4 (Governing Law; Jurisdiction), 4.5 (Waiver of Jury Trial), 4.6 (Court-Ordered Interim Relief), and 4.14 (Interpretation) of the Indemnification and Reimbursement Agreement are incorporated by reference[40] Impact of ADI Global Distribution Spin-off Resideo Parent's planned ADI Global Distribution spin-off will not impact the Trademark or Other License Agreements, subject to Closing, though non-wholly-owned subsidiaries will lose rights, and certain IPLA licenses will terminate - Resideo Parent plans to publicly announce its intention to spin-off its ADI Global Distribution business[41] - The ADI Global Distribution business does not utilize Licensed Trademarks or other intellectual property subject to the Other License Agreements (except for product distribution)[41] - Subject to the Closing, any spin-off or Change of Control of the ADI Global Distribution business will not impact the Trademark License Agreement or Other License Agreements[41] - Subsidiaries ceasing to be wholly-owned by Resideo Parent in connection with the spin-off will cease to have rights under the Trademark License Agreement and Other License Agreements[41] - The license to Resideo Parent and its Affiliates under Honeywell Content (as defined in the IPLA) will automatically terminate upon consummation of such spin-off or Change of Control of the ADI Global Distribution business[41] Survival of Provisions Representations and warranties survive for three years post-Closing, while pre-Closing covenants generally do not, and post-Closing covenants survive until fulfilled - Representations and warranties will survive for three years following the Closing Date[42] - Covenants required to be performed prior to Closing generally do not survive the Closing, except as provided in Section 7(b)[42] - Covenants required to be performed after the Closing will survive until performed or satisfied[42] Notices and Execution All written notices are deemed delivered upon hand delivery, courier receipt, or email transmission, with specific contact details provided, and the Agreement may be executed in counterparts, forming the entire agreement - Notices must be in writing and are deemed delivered upon hand delivery, courier receipt, or email transmission (without delivery failure)[45] - Contact information for Honeywell and Resideo Parent (including RIH and Guarantors) is provided for notices[45][46] - This Agreement may be executed in counterparts, including by facsimile or PDF signature, and constitutes the entire agreement among the Parties[46] Other General Clauses This section includes standard contractual clauses such as further assurances, headings for reference only, definitions of capitalized terms, and severability provisions to ensure the agreement remains effective - Each Party shall execute further instruments and documents as reasonably requested to carry out the Termination Payment and other transactions[44] - Headings are for reference only and do not affect meaning[47] - Capitalized terms not defined herein have the definition set forth in the Indemnification and Reimbursement Agreement[47] - If any provision is held invalid, illegal, or unenforceable, other provisions remain in full force, and parties will negotiate in good faith to modify the agreement to effect original intent[48] Debt Financing Sources Liability Debt Financing Sources bear no liability to Honeywell or its subsidiaries for claims related to this Agreement or its transactions, without limiting Resideo Parent's or RIH's rights against them under the Debt Commitment Letter - Debt Financing Sources shall have no liability or obligation to Honeywell or its Subsidiaries with respect to any claim or cause of action relating to this Agreement or the transactions contemplated hereunder[41] - This provision does not limit Resideo Parent's or RIH's rights against the Debt Financing Sources under the Debt Commitment Letter[49] Termination Payment Reinstatement If the Termination Payment is avoided, rescinded, set aside, or must be returned by Honeywell (e.g., in bankruptcy), such portion shall be immediately reinstated and jointly and severally enforceable against Resideo Parent and its then-existing Subsidiaries - If the Termination Payment is avoided, rescinded, set aside, or must be returned by Honeywell (e.g., in bankruptcy), such portion shall be immediately reinstated[50] - The reinstated payment shall be jointly and severally enforceable against Resideo Parent and its then-existing Subsidiaries (or those that ceased to be subsidiaries to circumvent obligations)[50] Third-Party Beneficiaries The Debt Financing Sources are express third-party beneficiaries of specific sections of this Agreement, including limitations on their liability and certain dispute resolution provisions - The Debt Financing Sources are express third-party beneficiaries of Section 8(q), Section 8(f) (solely regarding Section 4.5 of the Indemnification and Reimbursement Agreement), and Section 8(o) of this Agreement[52] Signatures Execution of Agreement The Agreement is executed by authorized officers of Honeywell International Inc., Resideo Technologies, Inc., Resideo Intermediate Holding Inc., and various Guarantors, signifying their consent and commitment to the terms outlined - The Agreement is executed by authorized officers of Honeywell International Inc., Resideo Technologies, Inc., and Resideo Intermediate Holding Inc[54][55] - Additional Guarantors, including Resideo Funding Inc., Resideo LLC, Resideo Inc., Alarmnet, Inc., Electronic Custom Distributors, Inc., BRK Brands, LLC, SNAP ONE HOLDINGS CORP., SUNBRITE HOLDING CORPORATION, SUNBRITETV LLC, and SNAP ONE, LLC, also executed the Agreement[56][58]