Stock Option Agreement (36K)
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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
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