EXHIBIT 2.2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement"), dated as of
October 22, 2000, between GENERAL ELECTRIC COMPANY, a New York corporation
("Grantee"), and HONEYWELL INTERNATIONAL INC., a Delaware corporation
("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer are concurrently with the execution
and delivery of this Agreement entering into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which, among other things, a
wholly owned subsidiary of Grantee will merge with and into Issuer on the
terms and subject to the conditions stated therein; and
WHEREAS, in order to induce Grantee to enter into the Merger
Agreement and as a condition for Grantee's agreeing so to do, Issuer has
granted to Grantee the Stock Option (as hereinafter defined), on the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and in the Merger Agreement, and for other good
and valuable consideration, the adequacy of which is hereby acknowledged,
the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used and not defined
herein have the respective meanings assigned to them in the Merger
Agreement.
Section 2. Grant of Stock Option. Issuer hereby grants to
Grantee an irrevocable option (the "Stock Option") to purchase, on the
terms and subject to the conditions hereof, for $55.12375 per share (the
"Exercise Price") in cash, up to 158,746,379 fully paid and non-assessable
shares of Issuer's common stock, par value $1.00 per share (the "Common
Stock"), representing approximately 19.9% of Issuer's issued and
outstanding Common Stock or such greater number of shares as represent
19.9% of the number of shares of Common Stock issued and outstanding at the
time of first exercise (without giving effect to any shares subject to the
Stock Option) (the "Option Shares"). The Exercise Price and number of
Option Shares shall be subject to adjustment as provided in Section 5
below.
Section 3. Exercise of Stock Option.
(a) Grantee may, subject to the provisions of this Section 3,
exercise the Stock Option, in whole or in part, at any time or from time to
time, after the occurrence of a Company Trigger Event (defined below) and
prior to the Termination Date. "Termination Date" shall mean, subject to
Section 10(a), the earliest of (i) the Effective Time of the Merger, (ii)
120 days after the date full payment contemplated by Section 9.3(a) of the
Merger Agreement is made by Issuer to Grantee thereunder (or if, at the
expiration of such period, the Stock Option cannot be exercised by reason
of any applicable judgment, decree, order, law or regulation, 10 business
days after such impediment to exercise shall have been removed), (iii) the
date of the termination of the Merger Agreement in circumstances which do
not constitute a Company Trigger Event or (iv) the first anniversary of the
date of termination of the Merger Agreement. Notwithstanding the occurrence
of the Termination Date, Grantee shall be entitled to purchase Option
Shares pursuant to any exercise of the Stock Option, on the terms and
subject to the conditions hereof, to the extent Grantee exercised the Stock
Option prior to the occurrence of the Termination Date. A "Company Trigger
Event" shall mean an event the result of which is that the Fee required to
be paid by Issuer to Grantee pursuant to Section 9.3(a) of the Merger
Agreement is payable.
(b) Grantee may purchase Option Shares pursuant to the Stock
Option only if all of the following conditions are satisfied: (i) no
preliminary or permanent injunction or other order issued by any federal or
state court of competent jurisdiction in the United States shall be in
effect prohibiting delivery of the Option Shares, (ii) any waiting period
applicable to the purchase of the Option Shares under the HSR Act shall
have expired or been terminated, and (iii) any prior notification to or
approval of any other regulatory authority in the United States or
elsewhere required in connection with such purchase shall have been made or
obtained, other than those which if not made or obtained would not
reasonably be expected to result in a significant detriment to Issuer and
its Subsidiaries, taken as a whole.
(c) If Grantee shall be entitled to and wishes to exercise the
Stock Option, it shall do so by giving Issuer written notice (the "Stock
Exercise Notice") to such effect, specifying the number of Option Shares to
be purchased and a place and closing date not earlier than three business
days nor later than 10 business days from the date of such Stock Exercise
Notice. If the closing cannot be consummated on such date because any
condition to the purchase of Option Shares set forth in Section 3(b) has
not been satisfied or as a result of any restriction arising under any
applicable law or regulation, the closing shall occur five days (or such
earlier time as Grantee may specify) after satisfaction of all such
conditions and the cessation of all such restrictions.
(d) So long as the Stock Option is exercisable pursuant to the
terms of Section 3(a), Grantee may elect to send a written notice to Issuer
(the "Cash Exercise Notice") specifying a date not later than 20 business
days and not earlier than 5 business days following the date such notice is
given on which date Issuer shall pay to Grantee in exchange for the
cancellation of the relevant portion of the Stock Option an amount in cash
equal to the Spread (as hereinafter defined) multiplied by all or such
relevant portion of the Option Shares subject to the Stock Option as
Grantee shall specify. As used herein, "Spread" shall mean the excess, if
any, over the Exercise Price of the higher of (x) if applicable, the
highest price per share of Common Stock paid or proposed to be paid by any
Person pursuant to any Acquisition Proposal relating to Issuer (the
"Proposed Alternative Transaction Price") or (y) the average of the closing
prices of the shares of Common Stock on the principal securities exchange
or quotation system on which the Common Stock is then listed or traded as
reported in The Wall Street Journal (but subject to correction for
typographical or other manifest errors in such reporting) for the five
consecutive trading days immediately preceding the date on which the Cash
Exercise Notice is given (the "Average Market Price"). If the Proposed
Alternative Transaction Price includes any property other than cash, the
Proposed Alternative Transaction Price shall be the sum of (i) the fixed
cash amount, if any, included in the Proposed Alternative Transaction Price
plus (ii) the fair market value of such other property. If such other
property consists of securities with an existing public trading market, the
average of the closing prices (or the average of the closing bid and asked
prices if closing prices are unavailable) for such securities in their
principal public trading market on the five trading days ending five days
prior to the date on which the Cash Exercise Notice is given shall be
deemed to equal the fair market value of such property. If such other
property includes anything other than cash or securities with an existing
public trading market, the Proposed Alternative Transaction Price shall be
deemed to equal the Average Market Price. Upon exercise of its right
pursuant to this Section 3(d) and the receipt by Grantee of the applicable
cash amount with respect to the Option Shares or the applicable portion
thereof, the obligations of Issuer to deliver Option Shares pursuant to
Section 3(e) shall be terminated with respect to the number of Option
Shares specified in the Cash Exercise Notice. The Spread shall be
appropriately adjusted, if applicable, to give effect to Section 5.
(e) (i) At any closing pursuant to Section 3(c) hereof, Grantee
shall make payment to Issuer of the aggregate purchase price for the Option
Shares to be purchased and Issuer shall deliver to Grantee a certificate
representing the purchased Option Shares, registered in the name of Grantee
or its designee and (ii) at any closing pursuant to Section 3(d) hereof,
Issuer will deliver to Grantee cash in an amount determined pursuant to
Section 3(d) hereof. Any payment made by Grantee to Issuer, or by Issuer to
Grantee, pursuant to this Agreement shall be made by wire transfer of
immediately available funds to a bank designated by the party receiving
such funds, provided that the failure or refusal by Issuer to designate
such a bank account shall not preclude Grantee from exercising the Stock
Option. If at the time of the issuance of Option Shares pursuant to the
exercise of the Stock Option, rights pursuant to any shareholder rights
plan are outstanding, then the Option Shares issued pursuant to such
exercise shall be accompanied by corresponding shareholder rights.
(f) Certificates for Common Stock delivered at the closing
described in Section 3(c) hereof shall be endorsed with a restrictive
legend which shall read substantially as follows:
"The transfer of the shares represented by this
certificate is subject to resale restrictions arising
under the Securities Act of 1933, as amended."
It is understood and agreed that the above legend shall be
removed by delivery of substitute certificate(s) without this reference (i)
if Grantee shall have delivered to Issuer a copy of a no-action letter from
the staff of the Securities and Exchange Commission, or a written opinion
of counsel, in form and substance reasonably satisfactory to Issuer, to the
effect that such legend is not required for purposes of, or resale may be
effected pursuant to an exemption from registration under, the Securities
Act or (ii) in connection with any sale registered under the Securities
Act. In addition, these certificates shall bear any other legend as may be
required by applicable law.
Section 4. Representations of Grantee. Grantee hereby
represents and warrants to Issuer that any Option Shares acquired by
Grantee upon the exercise of the Stock Option will not be, and the Stock
Option is not being, acquired by Grantee with the intention of making a
public distribution thereof, other than pursuant to an effective
registration statement under the Securities Act or otherwise in compliance
with the Securities Act.
Section 5. Adjustment upon Changes in Capitalization or Merger.
(a) In the event of any change in the outstanding shares of
Common Stock by reason of a stock dividend, stock split, reverse stock
split, split-up, merger, consolidation, recapitalization, combination,
conversion, exchange of shares, extraordinary or liquidating dividend or
similar transaction which would affect Grantee's rights hereunder, the type
and number of shares or securities purchasable upon the exercise of the
Stock Option and the Exercise Price shall be adjusted appropriately, and
proper provision will be made in the agreements governing such transaction,
so that Grantee will receive upon exercise of the Stock Option a number and
class of shares or amount of other securities or property that Grantee
would have received in respect of the Option Shares had the Stock Option
been exercised immediately prior to such event or the record date therefor,
as applicable. In no event shall the number of shares of Common Stock
subject to the Stock Option exceed 19.9% of the number of shares of Common
Stock issued and outstanding at the time of first exercise (without giving
effect to any shares subject or issued pursuant to the Stock Option).
(b) Without limiting the foregoing, whenever the number of
Option Shares purchasable upon exercise of the Stock Option is adjusted as
provided in this Section 5, the Exercise Price shall be adjusted by
multiplying the Exercise Price by a fraction, the numerator of which is
equal to the number of Option Shares purchasable prior to the adjustment
and the denominator of which is equal to the number of Option Shares
purchasable after the adjustment.
(c) Without limiting or altering the parties' rights and
obligations under the Merger Agreement, in the event that Issuer enters
into an agreement (i) to consolidate with or merge into any Person, other
than Grantee or one of its Subsidiaries, and Issuer will not be the
continuing or surviving corporation in such consolidation or merger, (ii)
to permit any Person, other than Grantee or one of its Subsidiaries, to
merge into Issuer and Issuer will be the continuing or surviving
corporation, but in connection with this merger, the shares of Common Stock
outstanding immediately prior to the consummation of this merger will be
changed into or exchanged for stock or other securities of Issuer or any
other Person or cash or any other property, or the shares of Common Stock
outstanding immediately prior to the consummation of such merger will,
after such merger, represent less than 50% of the outstanding voting
securities of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets to any Person, other than Grantee or
one of its Subsidiaries, then, and in each such case, the agreement
governing this transaction shall make proper provision so that the Stock
Option will, upon the consummation of any such transaction and upon the
terms and conditions set forth herein, be converted into, or exchanged for,
an option with identical terms appropriately adjusted to acquire the number
and class of shares or other securities or property that Grantee would have
received in respect of Option Shares had the Stock Option been exercised
immediately prior to such consolidation, merger, sale or transfer or the
record date therefor, as applicable, and will make any other necessary
adjustments. Issuer shall take such steps in connection with such
consolidation, merger, liquidation or other transaction as may be
reasonably necessary to assure that the provisions hereof shall thereafter
apply as nearly as possible to any securities or property thereafter
deliverable upon exercise of the Stock Option.
Section 6. Further Assurances; Remedies.
(a) Issuer agrees to maintain, free from preemptive rights,
sufficient authorized but unissued or treasury shares of Common Stock so
that the Stock Option may be fully exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights of third parties to
purchase shares of Common Stock from Issuer, and to issue the appropriate
number of shares of Common Stock pursuant to the terms of this Agreement.
All of the Option Shares to be issued pursuant to the Stock Option, upon
issuance and delivery thereof pursuant to this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable, and will be
delivered free and clear of all claims, liens, charges, encumbrances and
security interests (other than those created by this Agreement).
(b) Issuer agrees not to avoid or seek to avoid (whether by
charter amendment or through reorganization, consolidation, merger,
issuance of rights, dissolution or sale of assets, or by any other
voluntary act) the observance or performance of any of the covenants,
agreements or conditions to be observed or performed hereunder by Issuer.
(c) Issuer agrees that promptly after the occurrence of a
Company Trigger Event it shall take all actions as may from time to time be
required (including (i) complying with all applicable premerger
notification, reporting and waiting period requirements under the HSR Act
and (ii) in the event that prior notification to or approval of any other
regulatory authority in the United States or elsewhere is necessary before
the Stock Option may be exercised, complying with its obligations
thereunder and cooperating with Grantee in Grantee's preparing and
processing the required notices or applications) in order to permit Grantee
to exercise the Stock Option and purchase Option Shares pursuant to such
exercise.
(d) The parties agree that Grantee would be irreparably damaged
if for any reason Issuer failed, in breach of its obligations hereunder, to
issue any of the Option Shares (or other securities or property deliverable
pursuant to Section 5 hereof) upon exercise of the Stock Option or to
perform any of its other obligations under this Agreement, and that Grantee
would not have an adequate remedy at law for money damages in such event.
Accordingly, Grantee shall be entitled to specific performance and
injunctive and other equitable relief to enforce the performance of this
Agreement by Issuer. Accordingly, if Grantee should institute an action or
proceeding seeking specific enforcement of the provisions hereof, Issuer
hereby waives the claim or defense that Grantee has an adequate remedy at
law and hereby agrees not to assert in any such action or proceeding the
claim or defense that such a remedy at law exists. Issuer further agrees to
waive any requirements for the securing or posting of any bond in
connection with obtaining any such equitable relief. This provision is
without prejudice to any other rights that Grantee may have against Issuer
for any failure to perform its obligations under this Agreement.
Section 7. Listing of Option Shares. Promptly after the
occurrence of a Company Trigger Event and from time to time thereafter if
necessary, Issuer will apply to list all of the Option Shares subject to
the Stock Option on the NYSE and will use its reasonable best efforts to
obtain approval of such listing as soon as practicable.
Section 8. Registration of the Option Shares.
(a) If, within two years of the exercise of the Stock Option,
Grantee requests Issuer in writing to register under the Securities Act any
of the Option Shares received by Grantee hereunder, Issuer will use its
reasonable best efforts to cause the Option Shares so specified in such
request to be registered as soon as practicable so as to permit the sale or
other distribution by Grantee of the Option Shares specified in its request
(and to keep such registration in effect for a period of at least 90 days),
and in connection therewith Issuer shall prepare and file as promptly as
reasonably possible (but in no event later than 60 days from receipt of
Grantee's request) a registration statement under the Securities Act (which
complies with the requirements of applicable federal and state securities
laws) to effect such registration on an appropriate form, which would
permit the sale of the Option Shares by Grantee in accordance with the plan
of disposition specified by Grantee in its request. Issuer shall not be
obligated to make effective more than two registration statements pursuant
to the foregoing sentence; provided, however, that Issuer may postpone the
filing of a registration statement relating to a registration request by
Grantee under this Section 8 for a period of time (not in excess of 90
days) if in Issuer's reasonable, good faith judgment such filing would
require the disclosure of material information that Issuer has a bona fide
business purpose for preserving as confidential (but in no event shall
Issuer exercise such postponement right more than once in any twelve month
period).
(b) Issuer shall notify Grantee in writing not less than 10
days prior to filing a registration statement under the Securities Act
(other than a filing on Form S-4 or S-8 or any successor form) with respect
to any shares of Common Stock. If Grantee wishes to have any portion of its
Option Shares included in such registration statement, it shall advise
Issuer in writing to that effect within two business days following receipt
of such notice, and Issuer will thereupon include the number of Option
Shares indicated by Grantee under such Registration Statement; provided
that if the managing underwriter(s) of the offering pursuant to such
registration statement advise Issuer that in their opinion the number of
shares of Common Stock requested to be included in such registration
exceeds the number which can be sold in such offering on a commercially
reasonable basis, priority shall be given to securities intended to be
registered by Issuer for its own account and, thereafter, Issuer shall
include in such registration Option Shares requested by Grantee to be
included therein pro rata with the shares of Common Stock intended to be
included therein by other stockholders of Issuer.
(c) All expenses relating to or in connection with any
registration contemplated under this Section 8 and the transactions
contemplated thereby (including all filing, printing, reasonable
professional, roadshow and other fees and expenses relating thereto) will
be at Issuer's expense except for underwriting discounts or commissions and
brokers' fees. Issuer and Grantee agree to enter into a customary
underwriting agreement with underwriters upon such terms and conditions as
are customarily contained in underwriting agreements with respect to
secondary distributions. Issuer shall indemnify and hold harmless Grantee,
its officers, directors, agents, other controlling persons and any
underwriters retained by Grantee in connection with such sale of such
Option Shares in the customary way, and shall agree to customary
contribution provisions with such persons, with respect to claims, damages,
losses and liabilities (and any expenses relating thereto) arising (or to
which Grantee, its officers, directors, agents, other controlling persons
or underwriters may be subject) in connection with any such offer or sale
under the federal securities laws or otherwise, except for information
furnished in writing by Grantee or its underwriters to Issuer. Grantee and
its underwriters, respectively, shall indemnify and hold harmless Issuer to
the same extent with respect to information furnished in writing to Issuer
by Grantee and such underwriters, respectively.
Section 9. Repurchase Election.
(a) Grantee shall have the option, at any time and from time to
time commencing upon the first occurrence of a Company Trigger Event in
which the consideration to be received by Issuer or its stockholders, as
the case may be, upon consummation of an Acquisition Proposal consists in
whole or in part of shares of capital stock of a third party and ending on
the tenth business day after the first mailing to Issuer's stockholders of
a proxy statement, tender offer statement or other disclosure or offering
document relating to such Acquisition Proposal, to send a written notice to
Issuer (a "Repurchase Notice") that it will require Issuer (or any
successor entity thereof) to pay to Grantee the Repurchase Fee (as defined
below) as provided in Section 9(b) below, upon delivery by Grantee of the
shares of Common Stock acquired hereunder with respect to which Grantee
then has beneficial ownership. The date on which Grantee delivers the
Repurchase Notice under this Section 9 is referred to as the "Repurchase
Request Date". The "Repurchase Fee" shall be equal to the sum of the
following:
(i) the aggregate Exercise Price paid by Grantee for any
shares of Common Stock acquired pursuant to the Stock Option with
respect to which Grantee then has beneficial ownership; and
(ii) subject to the maximum amounts specified in Section
11, the Spread, multiplied by the number of shares of Common Stock
with respect to which the Stock Option has been exercised and with
respect to which Grantee then has beneficial ownership.
(b) If Grantee exercises its rights under this Section 9,
within five business days after the Repurchase Request Date, (i) Issuer
shall pay by wire transfer to Grantee the Repurchase Fee in immediately
available funds to an account designated in writing by Grantee to Issuer,
and (ii) Grantee shall surrender to Issuer certificates evidencing the
shares of Common Stock acquired hereunder with respect to which Grantee
then has beneficial ownership, and Grantee shall warrant that it has sole
record and beneficial ownership of such shares and that the same are then
free and clear of all liens, claims, charges and encumbrances of any kind
whatsoever.
(c) Issuer shall use its reasonable best efforts to ensure that
it can fully perform all of its obligations under this Section 9 under
applicable law.
Section 10. Miscellaneous.
(a) Extension of Exercise Periods. The periods during which
Grantee may exercise its rights under Sections 2 and 3 hereof shall be
extended in each such case at the request of Grantee to the extent
necessary to avoid liability by Grantee under Section 16(b) of the Exchange
Act by reason of such exercise and to the extent necessary to obtain all
regulatory approvals required for the exercise of such rights.
(b) Amendments; Entire Agreement. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. This
Agreement, together with the Merger Agreement (including any exhibits and
schedules thereto), contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
and contemporaneous agreements and understandings, oral or written, with
respect to such transactions.
(c) Notices. All notices, requests and other communications to
either party hereunder shall be in writing (including facsimile or similar
writing) and shall be given, if to Grantee, to:
General Electric Company
3135 Easton Turnpike, W3
Fairfield, Connecticut 06431
Attention: Senior Counsel - Transactions
Facsimile No.: (203) 373-3008
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022-6069
Attention: John A. Marzulli Jr., Esq.
Facsimile No.: (212) 848-7179
if to Issuer, to:
Honeywell International Inc.
101 Columbia Road
P.O. Box 4000
Morristown, New Jersey
Attention: Peter M. Kreindler, Esq.,
Senior Vice President and General Counsel
Facsimile No.: (973) 455-4217
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Attention: Peter Allan Atkins, Esq.
David J. Friedman, Esq.
Facsimile No.: (212) 735-2000
or to such other address or facsimile number as either party may hereafter
specify for the purpose by notice to the other party hereto. Each such
notice, request or other communication shall be effective (i) if given by
facsimile, when such facsimile is transmitted to the facsimile number
specified in this Section 10 and the appropriate facsimile confirmation is
received or (ii) if given by any other means, when delivered at the address
specified in this Section 10.
(d) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as otherwise specifically
provided herein and without limiting anything contained in the Merger
Agreement.
(e) Severability. If any term, provision, covenant or restriction of
this Agreement is held to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to
principles of conflicts of law.
(g) Jurisdiction. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby or thereby may
be brought in any federal or state court located in the State of Delaware,
and each of the parties hereby consents to the jurisdiction of such courts
(and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such
court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum. Process in any such
suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 10(c) shall be deemed effective
service of process on such party.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same Agreement.
(i) Headings. The section headings herein are for convenience only
and shall not affect the construction hereof.
(j) Assignment. This Agreement shall be binding upon each party
hereto and such party's successors and assigns. This Agreement shall not be
assignable by Issuer, but may be assigned by Grantee in whole or in part to
any direct or indirect wholly-owned subsidiary of Grantee, provided that
Grantee shall remain liable for any obligations so assigned.
(k) Survival. All representations, warranties and covenants contained
herein shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(l) Time of the Essence. The parties agree that time shall be of the
essence in the performance of obligations hereunder.
(m) Public Announcement. Grantee and Issuer will consult with each
other before issuing any press release or making any public statement with
respect to this Agreement and the transactions contemplated hereby and
shall not issue any press release or make any public statement without the
prior consent of the other party, which shall not be unreasonably withheld.
Notwithstanding the foregoing, any such press release or public statement
as may be required by applicable law or any listing Agreement with any
national securities exchange, may be issued prior to such consultation, if
the party making the release or statement has used its reasonable efforts
to consult with the other party.
Section 11. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement or the
Merger Agreement, in no event shall Grantee's Total Profit (as defined
below) exceed $1.35 billion (the "Maximum Amount") and, if it otherwise
would exceed such Maximum Amount, Grantee at its sole election may (i) pay
cash to Issuer, (ii) deliver to Issuer for cancellation Option Shares
previously purchased by Grantee, (iii) waive payment of any portion of the
Fee payable pursuant to Section 9.3(a) of the Merger Agreement, or (iv) any
combination thereof, so that Grantee's actually realized Total Profit (as
defined below) shall not exceed the Maximum Amount after taking into
account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, the Stock
Option may not be exercised for a number of Option Shares as would, as of
the date of the Stock Exercise Notice or Cash Exercise Notice, as
applicable, result in a Notional Total Profit (as defined below) of more
than the Maximum Amount and, if exercise of the Stock Option otherwise
would result in the Notional Total Profit exceeding such amount, Grantee,
at its discretion, may (in addition to any of the actions specified in
Section 11(a) above) increase the Exercise Price for that number of Option
Shares set forth in the Stock Exercise Notice or Cash Exercise Notice, as
applicable, so that the Notional Total Profit shall not exceed the Maximum
Amount; provided, that nothing in this sentence shall restrict any exercise
of the Stock Option permitted hereby on any subsequent date at the Exercise
Price set forth in Section 2 hereof.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the cash amount actually
received by Grantee pursuant to Section 9.3(a) of the Merger Agreement less
any repayment by Grantee to Issuer pursuant to Section 11(a) hereof
(including the value of any Option Shares delivered pursuant to Section
11(a)(ii) or Section 11(a)(iv)), (ii) (x) the net cash amounts or the fair
market value of any property received by Grantee pursuant to the sale of
Option Shares (or of any other securities into or for which such Option
Shares are converted or exchanged), less (y) Grantee's purchase price for
such Option Shares (or other securities) plus (iii) the aggregate amounts
received by Grantee pursuant to Section 3(d) and Section 9 hereof.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of Option Shares as to which Grantee may propose to exercise the
Stock Option shall mean the Total Profit determined as of the date of the
Stock Exercise Notice or Cash Exercise Notice, as applicable, assuming that
the Stock Option was exercised on such date for such number of Option
Shares and assuming that such Option Shares, together with all other Option
Shares previously acquired upon exercise of the Stock Option and held by
Grantee and its affiliates as of such date, were sold for cash at the
closing price on the NYSE for the Common Stock as of the close of business
on the preceding trading day (less customary brokerage commissions).
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
ISSUER:
HONEYWELL INTERNATIONAL INC.,
a Delaware corporation
/s/ Michael E. Bonsignore
---------------------------------
By: Michael E. Bonsignore
Its: Chairman and CEO
GRANTEE:
GENERAL ELECTRIC COMPANY,
a New York corporation
/s/ John F. Welch, Jr.
---------------------------------
By: John F. Welch, Jr.
Its: Chairman and CEO
