UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1 TO ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 28, 1996
Commission File No. 0-2648
HON INDUSTRIES Inc.
An Iowa Corporation IRS Employer No. 42-0617510
414 East Third Street
P.O. Box 1109
Muscatine, Iowa 52761-7109
319/264-7400
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, with Par Value of $1.00 Per Share.
Name of each exchange on which registered: The Nasdaq Stock
Market.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
---
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K/A or any amendment to this Form 10-K/A. X
---
The aggregate market value of the voting stock held by
nonaffiliates of the registrant, as of March 14, 1997, was:
$759,297,526, assuming all 5% holders are affiliates.
The numbers of shares outstanding of the registrant's common stock,
as of March 14, 1997, was 29,693,916.
Documents Incorporated by Reference
None.
Index of Exhibits is located on Page 9.
<PAGE>
HON INDUSTRIES Inc.
AMENDMENT NO. 1 TO ANNUAL REPORT
ON FORM 10-K/A
TABLE OF CONTENTS
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Page
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Part I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . 3
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K . .. . . . . . . . . . . . . . . . . . . . . . . . 4
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Index of Exhibits . . . . . . . . . . . . . . . . . . . . . . .9
<PAGE>
PART I
ITEM 1. BUSINESS
HON INDUSTRIES Inc., an Iowa corporation, was
incorporated in 1944.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND
REPORTS ON FORM 8-K
(a) (1) Financial Statements.
The following consolidated financial statements of HON
INDUSTRIES Inc. and Subsidiaries were previously filed
with the Company's Annual Report on Form 10-K for the
year ended December 28, 1996 pursuant to Item 8 and are
incorporated herein by reference:
Report of Independent Public Accountants
Consolidated Statements of Income for the Years Ended
December 28, 1996; December 30, 1995; and December 31, 1994
Consolidated Balance Sheets -- December 28, 1996;
December 30, 1995; and December 31, 1994
Consolidated Statements of Shareholders' Equity for the Years
Ended December 28, 1996; December 30,1995; and December 31, 1994
Consolidated Statements of Cash Flows for the Years Ended
December 28, 1996; December 30, 1995; and December 31, 1994
Notes to Consolidated Financial Statements
Investor Information (including Summary of Unaudited
Quarterly Results of Operations)
(2) Financial Statement Schedules.
The following consolidated financial statement schedule
of the Company and subsidiaries was previously filed with
the Company's Annual Report on Form 10-K for the year ended
December 28, 1996 pursuant to Item 14(d) and is
incorporated herein by reference:
Schedule II Valuation and Qualifying Accounts for the Years Ended
December 28, 1996; December 30, 1995; and December 31, 1994
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable and, therefore, have been
omitted.
(b) Reports on Form 8-K.
A Report on Form 8-K, dated October 16, 1996, was filed to
disclose the acquisition by Heatilator Inc., a wholly owned
subsidiary of HON INDUSTRIES Inc. of Heat-N-Glo Fireplace
Products, Inc. Simultaneous with the merger, the name of
Heatilator Inc. was changed to Hearth Technologies Inc. with
the former Heatilator and Heat-N-Glo businesses operating as
divisions of this subsidiary. Effective November 18, 1996,
the Securities and Exchange Commission revised the rules which
required registrants to provide financial statement and pro
forma financial information for acquisitions that do no meet
the "significant subsidiary" test, thus the Company determined
it was exempt from filing this information as a result of
complying with the new rule. Subsequently, on November 21,
1996, a Report on Form 8-K/A (an amendment) was filed to bring
closure to the missing financial statement and pro forma
financial information that was not available in when the
initial Report on Form 8-K was filed.
(c) Exhibits.
The following exhibits were previously filed with the
Company's Annual Report on Form 10-K for the year ended
December 28, 1996 pursuant to Item 601 of Regulation S-K and
are incorporated herein by reference:
Exhibits
(3ii) By-Laws of the Registrant
(21) Subsidiaries of the Registrant
(23A) Consent of Independent Public Accountants
(23B) Consent of Independent Auditors
(27) Financial Data Schedule
(99A) Executive Bonus Plan of the Registrant
(99B) Executive Deferred Compensation Plan of the
Registrant
The following exhibits are filed pursuant to Item 601 of
Regulation S-K:
Page in
Exhibit Form 10-K/A
(3i) Articles of Incorporation of the
Registrant,incorporated by reference
to Exhibit 3(a) to the Registrant's
Annual Report on Form 10-K for the year
ended December 31, 1988. 9
(4i) Rights Agreement dated as of July 7, 1988
between the Registrant and First Chicago
Trust Company of New York, incorporated by
reference to Exhibit 1 to Registration
Statement on Form 8-A filed July 12, 1988,
as amended by amendment dated May 1, 1990,
incorporated by reference to Exhibit 1 to
Amendment No. 1 to Registration Statement
on Form 8-A filed May 20, 1990. 9
(10i) 1995 Stock Based Compensation Plan, as
amended and restated effective May 13, 1997,
incorporated by reference to Exhibit A to the
Registrants' proxy statement dated March 28,
1997, related to the Registrant's annual
meeting of shareholders held on May 13, 1997. 9
(10ii) 1997 Equity Plan for Non-Employee Directors,
incorporated by reference to Exhibit B to the
Registrant's proxy statement dated March 28,
1997, related to the Registrant's annual
meeting of shareholders held on May 13, 1997. 9
(10iii) Form of Registrant's Change in Control Agreement,
incorporated by reference to Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994. 9
(10iv) Executive Long-Term Incentive Compensation
Plan of the Registrant, incorporated by
reference to Exhibit 99B to the Registrant's
Annual Report on Form 10-K for the year ended
December 30, 1995. 9
(10v) ERISA Supplemental Retirement Plan of the
Registrant, incorporated by reference to
Exhibit 99C to the Registrant's Annual
Report on Form 10-K for the year ended
December 30, 1995. 9
(10vi) 1994 Members' Stock Purchase Plan of the
Registrant, incorporated by reference to
Exhibit 4.3 to Registration Statement
No. 33-54163 on Form S-8 filed
June 16, 1994. 9
(10vii) Agreement as Consultant and Director, dated
November 15, 1995, between the Registrant and
Robert L. Katz. 11
(10viii) Form of Director and Officer Indemnification
Agreement of the Registrant. 13
(10ix) Form of Common Stock Grant Agreement of the
Registrant. 26
(10x) Form of HON INDUSTRIES Inc. Stock-Based
Compensation Plan Stock Option Award Agreement
of the Registrant. 27
(16) Letter of Former Accountant, incorporated by
reference to the Registrant's Report on Form 8-K
dated May 14, 1996. 9
(24) Power of Attorney, incorporated by reference
to the Company's Annual Report on Form 10-K
for the year ended December 28, 1996. 10
(d) Financial Statement Schedules.
See Item 14(a)(2).
Long-term debt of the Registrant or various of its subsidiaries is
outstanding under numerous instruments. No such instrument authorizes
an amount of securities thereunder in excess of 10% of the total assets
of Registrant and its subsidiaries on a consolidated basis. The
Registrant agrees that it will furnish a copy of any such instrument to
the Securities and Exchange Commission upon its request.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
Amendment No. 1 to Annual Report on Form 10-K/A to be signed on its
behalf by the undersigned, thereunto duly authorized.
HON INDUSTRIES Inc.
Date: October 6, 1997 By /s/ Jack D. Michaels
-------------------------
Jack D. Michaels
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf
of the Registrant and in the capacities indicated on October 6, 1997.
Signature Title Date
- --------- ----- ----
/s/ Jack D. Michaels
- --------------------
Jack D. Michaels Chairman, President and
Chief Executive Oficer,
Principal Executive Officer,
and Director 10/06/97
*
- --------------------
Melvin L. McMains Controller and
Principal Accounting Officer 10/06/97
*
- --------------------
David C. Stuebe Vice President and
Chief Financial Officer 10/06/97
*
- --------------------
Robert W. Cox Director 10/06/97
*
- ---------------------
W. James Farrell Director 10/06/97
*
- ----------------------
Stanley M. Howe Director 10/06/97
*
- ----------------------
Lee Liu Director 10/06/97
*
- ----------------------
Celeste C. Michalski Director 10/06/97
*
- ----------------------
Michael S. Plunkett Director 10/06/97
*
- ----------------------
Herman J. Schmidt Director 10/06/97
*
- ----------------------
Richard H. Stanley Director 10/06/97
*
- ----------------------
Lorne R. Waxlax Director 10/06/97
* The undersigned by signing his name hereunto has hereby signed
this report on behalf of the undersigned in the capacities mentioned
and the above-named officers and directors, on October 6, 1997,
pursuant to a power of attorney executed on behalf of each such
director and officer and filed with the Securities and Exchange
Commission as Exhibit 24 to this report.
By: /s/ Jack D. Michaels
----------------------
Jack D. Michaels
Chairman, President and Chief Executive Officer
and Director
<PAGE>
INDEX OF EXHIBITS
Exhibit Page
Number Description of Document Number
------ ----------------------- ------
(3i) Articles of Incorporation of the Registrant,
incorporated by reference to Exhibit 3(a) to
the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1988. -
(3ii) By-Laws of the Registrant ** -
(4i) Rights Agreement dated as of July 7, 1988
between the Registrant and First Chicago Trust
Company of New York, incorporated by reference
to Exhibit 1 to Registration Statement on
Form 8-A filed July 12, 1988, as amended by
amendment dated May 1, 1990, incorporated by
reference to Exhibit 1 to Amendment No. 1 to
Registration Statement on Form 8 filed
May 20, 1990. -
(10i) 1995 Stock Based Compensation Plan, as
amended and restated effective May 13, 1997,
incorporated by reference to Exhibit A to the
Registrants' proxy statement dated March 28,
1997, related to the Registrant's annual meeting
of shareholders held on May 13, 1997. -
(10ii) 1997 Equity Plan for Non-Employee Directors,
incorporated by reference to Exhibit B to the
Registrant's proxy statement dated March 28,
1997, related to the Registrant's annual meeting
of shareholders held on May 13, 1997. -
(10iii) Form of Registrant's Change in Control Agreement,
incorporated by reference to Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994. -
(10iv) Executive Long-Term Incentive Compensation
Plan of the Registrant, incorporated by
reference to Exhibit 99B to the Registrant's
Annual Report on Form 10-K for the year ended
December 30, 1995. -
(10v) ERISA Supplemental Retirement Plan of the
Registrant, incorporated by reference to
Exhibit 99C to the Registrant's Annual
Report on Form 10-K for the year ended
December 30, 1995. -
(10vi) 1994 Members' Stock Purchase Plan of the
Registrant, incorporated by reference
to Exhibit 4.3 to Registration Statement
No. 33-54163 on Form S-8 filed June 16, 1994. -
(10vii) Agreement as Consultant and Director, dated
November 15, 1995, between the Registrant and
Robert L. Katz. 11
(10viii)Form of Director and Officer Indemnification
Agreement of the Registrant. 13
(10ix) Form of Common Stock Grant Agreement of the
Registrant. 26
(10x) Form of HON INDUSTRIES Inc. Stock-Based
Compensation Plan Stock Option Award Agreement
of the Registrant. 27
(16) Letter of Former Accountant, incorporated by
reference to the Registrant's Report on
Form 8-K dated May 14, 1996. -
(21) Subsidiaries of the Registrant ** -
(23A) Consent of Independent Public Accountants ** -
(23B) Consent of Independent Auditors ** -
(24) Power of Attorney, incorporated by reference
to the Company's Annual Report on Form 10-K
for the year ended December 28, 1996. -
(27) Financial Data Schedule ** -
(99A) Executive Bonus Plan of the Registrant ** -
(99B) Executive Deferred Compensation Plan of the
Registrant ** -
** Incorporated by reference to the same numbered exhibit
filed with the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 28, 1996 (Commission File No. 0-2648).
EXHIBIT 10vii
AGREEMENT AS CONSULTANT AND DIRECTOR
This agreement dated the 15th day of November, 1995
specifies the terms and conditions of engagement of Robert L.
Katz and Associates (hereinafter "Consultant") by HON INDUSTRIES,
Inc. (hereinafter "Client").
1. Client hereby agrees to engage Consultant for a period of
one year, commencing November 15, 1995. During that period
Consultant agrees to be personally available to Client for
consulting services for up to 30 working days.
2. Client agrees to pay Consultant the sum of $5,000.00 per
month, payable on the last day of each month, without regard to
the specific number of days Consultant actually serves Client
during that month. Client also agrees to pay Consultant's travel
expenses and other reasonable out-of-pocket costs incurred on
Client's behalf. Such expenses will be billed monthly by
Consultant. All payments shall be made to: Robert L. Katz and
Associates, 155 Mapache Drive, Portola Valley, CA 94028. First
payment will be made on November 30, 1995.
3. Consultant agrees to be available to Client on reasonable
request and to limit his practice so as to assure such
availability. Consultant also agrees not to accept employment
with any firm reasonably deemed by Client to be competitive with
it.
4. Mr. Katz agrees to serve as a Director of Client (as well as
any of its subsidiaries, if and when requested), at the same
compensation as other outside board members, so long as he
receives the same indemnifications as provided by Client to other
directors and to submit his resignation whenever this agreement
is canceled or otherwise terminates.
5. This agreement is subject to cancellation by either party on
ninety (90) days' written notice in which case Client shall be
responsible for fees through the end of the month in which
cancellation is effective. If not canceled previous to ninety
(90) days before expiration, it shall be automatically renewed
for an additional year.
6. Consultant shall have access to Company proprietary
information and shall keep such information confidential and
shall not disclose such information to third parties without the
Company's prior written approval.
7. In the event that Consultant's consulting services to Client
during the year exceed the anticipated days covered by this
agreement, Client agrees to compensate Consultant for such
additional services at the rate of $2500 per day.
AGREED:______________________
DATE: November 16, 1995
CLIENT: HON INDUSTRIES Inc.
/s/ Stanley M. Howe
- ---------------------------
By Stanley M. Howe
CONSULTANT: Robert L. Katz and Associates
/s/ Robert L. Katz
- ---------------------------
By Robert L. Katz
EXHIBIT 10viii
HON INDUSTRIES Inc.
INDEMNITY AGREEMENT
This Indemnity Agreement, effective as of ____________,
19__ (this "Agreement"), between HON INDUSTRIES Inc., an Iowa
corporation ("Corporation"), and _____________________
("Indemnitee").
WITNESSETH:
WHEREAS, Indemnitee is or will become a director or an
officer of the Corporation and, as such, is or will be performing
valuable services for or on behalf of the Corporation; and
WHEREAS, Indemnitee is willing to perform or continue
to perform such services, and may from time to time perform
additional services, for or on behalf of the Corporation on the
condition that Indemnitee is indemnified as provided in this
Agreement; and
WHEREAS, it is intended that Indemnitee shall be paid
promptly by the Corporation all amounts necessary to fully
effectuate the indemnity provided in this Agreement; and
WHEREAS, all capitalized terms used in this Agreement
are used herein as defined in Section 15 hereof;
NOW THEREFORE, in order to induce Indemnitee to serve
or continue to serve the Corporation as a director or an officer
and in consideration of the mutual promises set forth herein and
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Corporation and
the Indemnitee hereby agree as follows:
1. Services by Indemnitee. Indemnitee agrees to
serve as a director or an officer of the Corporation for so long
as Indemnitee is duly appointed or elected and qualified in
accordance with the applicable provisions of the Articles of
Incorporation, as amended ("Articles of Incorporation"), and By-
laws, as amended ("By-laws"), of the Corporation or until such
time as Indemnitee resigns or otherwise ceases to be a director
or an officer. Indemnitee may from time to time also perform
other services at the request or for the convenience of the
Corporation. Following the termination of Indemnitee's service
as a director or an officer of the Corporation by reason of
resignation or otherwise, the Corporation shall continue to be
obligated to indemnify Indemnitee under this Agreement for acts
occurring while Indemnitee was serving as a director or an
officer of the Corporation.
2. Indemnification. Subject to the limitations set
forth in this Section 2 and in Section 6 of this Agreement, the
Corporation hereby agrees to indemnify Indemnitee to the fullest
extent permitted by applicable law from and against any and all
Expenses and Liabilities with respect to any Proceeding relating
to or arising out of Indemnitee's being or having been a director
or an officer of the Corporation. The right to indemnification
conferred in this Agreement shall be presumed to have been relied
upon by Indemnitee in Indemnitee's agreeing to serve, or serving,
or continuing to serve, or having served, as a director or an
officer of the Corporation and shall be enforceable as a contract
right. Without in any way limiting the scope of the
indemnification otherwise provided by this Section 2, if and
whenever Indemnitee is or was a party or is threatened to be made
a party to any Proceeding (including without limitation any
Proceeding brought by or in the right of the Corporation) because
Indemnitee is or was a director or an officer of the Corporation
or because of any act or omission by Indemnitee in any such
capacity, the Corporation shall indemnify Indemnitee to the
fullest extent permitted by applicable law against all Expenses
and Liabilities actually and reasonably incurred by or on behalf
of Indemnitee in connection with the investigation, defense,
settlement or appeal of the Proceeding. In addition to the
foregoing, the rights of Indemnitee to indemnification provided
in this Agreement shall include those rights set forth in
Sections 3 and 8 hereof.
3. Advancement of Expenses; Establishment of Trust;
Letter of Credit.
a. Advancement of Expenses. All reasonable Expenses
incurred by or on behalf of Indemnitee shall be advanced to
Indemnitee from time to time by the Corporation to the fullest
extent permitted by applicable law within 20 days after the
receipt by the Corporation of a written request for the
advancement of any such Expenses, whether before or after final
disposition of a Proceeding (except to the extent that there has
been a Final Adverse Determination that Indemnitee is not
entitled to be indemnified for any such Expenses), including
without limitation any Proceeding brought by or in the right of
the Corporation. The written request for an advancement of
Expenses under this Section 3(a) shall contain reasonable details
of the Expenses incurred by or on behalf of Indemnitee for which
advancement is thereby requested. By executing such a request,
Indemnitee shall be deemed to have made such written affirmation
of Indemnitee's good faith belief that Indemnitee has met the
standard of conduct required by law to be met to entitle
Indemnitee to such advancement of Expenses (including, without
limiting the generality of the foregoing, Indemnitee's written
affirmation of Indemnitee's good faith belief that Indemnitee has
met the standard of conduct described in Section 490.851 of the
Iowa Business Corporation Act). If the Iowa Business Corporation
Act so requires, advancement of Expenses by the Corporation in
connection with any Proceeding shall be made only upon delivery
to the Corporation of a written undertaking, executed personally
on Indemnitee's behalf, to repay the advance if it is ultimately
determined that Indemnitee did not meet the standard of conduct
required for indemnification under the Iowa Business Corporation
Act. Such undertaking must be an unlimited general obligation of
Indemnitee that need not be secured and may be accepted without
reference to financial ability to make repayment; provided,
however, that under no circumstances shall Indemnitee be deemed
to have undertaken to repay to the Corporation Expenses for which
Indemnitee has the right to be indemnified under this Agreement
or otherwise.
b. Establishment of Trust. Upon receipt of a
written request from Indemnitee for advancement of Expenses or
indemnification pursuant to this Agreement, the Corporation shall
create a grantor trust (the "Trust"), the trustee of which shall
be chosen by Indemnitee. Upon receipt of any such written
request from Indemnitee, the Corporation shall from time to time
fund the Trust in amounts sufficient to satisfy any and all
Expenses and Liabilities that are reasonably anticipated at the
time of such request and for which the Corporation may indemnify
Indemnitee under this Agreement. The amount or amounts to be
deposited in the Trust pursuant to this funding obligation shall
be determined by mutual agreement of Indemnitee and the
Corporation or, if Indemnitee and the Corporation are unable to
reach such agreement, by Independent Legal Counsel selected by
Indemnitee and shall be used exclusively for the uses and
purposes set forth in the Trust. The terms of the Trust shall
provide that:
(1) the Trust shall not be revoked or the
principal thereof invaded without the consent of Indemnitee and
the Corporation;
(2) Indemnitee shall not have any preferred claim
to, or any beneficial ownership in, any assets of the Trust prior
to the time that such assets are paid to Indemnitee as provided
in the Trust;
(3) within ten days of a request by Indemnitee,
the trustee of the Trust shall advance to Indemnitee amounts
sufficient to satisfy any and all Expenses, provided that
Indemnitee shall have executed and delivered to the Corporation
the written affirmation and the written undertaking required by
Section 3(a) of this Agreement;
(4) the Trust shall continue to be funded by the
Corporation in accordance with the funding obligations set forth
in this Section 3(b);
(5) the trustee of the Trust shall promptly pay
to Indemnitee any amounts to which Indemnitee shall be entitled
pursuant to this Agreement; and
(6) all unexpended funds in the Trust shall
revert to the Corporation on a final determination either by
Independent Legal Counsel selected by Indemnitee or by a court of
competent jurisdiction that Indemnitee has been fully indemnified
with respect to the Proceeding giving rise to the establishment
of the Trust under the terms of this Agreement.
c. Letter of Credit. In order to secure the
obligations of the Corporation to indemnify and advance Expenses
to Indemnitee pursuant to this Agreement, the Corporation shall
obtain at its expense at the time of any Change in Control an
irrevocable standby letter of credit naming Indemnitee as the
sole beneficiary ("Letter of Credit"). The Letter of Credit
shall be in an appropriate amount not less than $1,000,000, shall
be issued by a financial institution having assets in excess of
$100,000,000 and shall contain terms and conditions reasonably
acceptable to Indemnitee. The Letter of Credit shall provide
that Indemnitee may from time to time draw certain amounts
thereunder, upon written certification by Indemnitee to the
issuer of the Letter of Credit that Indemnitee has made written
request to the Corporation for an amount not less than the amount
Indemnitee is drawing under the Letter of Credit, that the
Corporation has failed or refused to provide Indemnitee with such
amount in full within 20 days after receipt of such request, and
that Indemnitee believes that Indemnitee is entitled under the
terms of this Agreement to the amount that Indemnitee is drawing
under the Letter of Credit. The issuance of the Letter of Credit
shall not in any way diminish the obligation of the Corporation
to indemnify Indemnitee against Expenses and Liabilities to the
full extent required by this Agreement or otherwise. Once the
Corporation has obtained the Letter of Credit, the Corporation
shall at its expense maintain and renew the Letter of Credit or a
substitute letter of credit meeting the criteria of this Section
3(c) during the term of this Agreement, so that the Letter of
Credit shall have an initial term of five years, shall be renewed
for successive five-year terms, and shall always have at least
one year of its term remaining after the termination of this
Agreement.
4. Presumptions and Effect of Certain Proceedings.
a. Upon making a request for indemnification,
Indemnitee shall be presumed to be entitled to indemnification
under this Agreement and the Corporation shall have the burden of
proof to overcome such presumption in reaching any contrary
determination. The partial or complete disposition of any
Proceeding by judgment, order, settlement, arbitration award,
conviction, dismissal, or acceptance of a plea of nolo contendere
or its equivalent, shall not affect such presumption and, except
as may be provided in Section 6 of this Agreement, shall not be
determinative that the Indemnitee failed to meet any requisite
standard of conduct and shall not establish a presumption with
regard to any other factual matter relevant to determining the
right of Indemnitee to indemnification under this Agreement or
otherwise.
b. If the person or persons empowered to make a
determination pursuant to Section 5 of this Agreement shall have
failed to make the requested determination within 30 days after
any judgment, order, settlement, arbitration award, conviction,
dismissal, acceptance of a plea of nolo contendere or its
equivalent, or other partial or complete disposition of any
Proceeding or any other event that could enable the Corporation
to determine the right of Indemnitee to be indemnified under this
Agreement or otherwise, the requisite determination that
Indemnitee has the right to such indemnification shall be deemed
to have been made, provided that such thirty-day period may be
extended for a reasonable time (not to exceed an additional 30
days), if the person or persons so empowered to make such a
determination in good faith require such additional time to
obtain or evaluate documentation or information relating thereto,
and provided further that the foregoing provisions of this
Section 4(b) shall not apply if the determination of entitlement
to indemnification is to be made by the shareholders of the
Corporation pursuant to Section 5(b) of this Agreement and (i)
within 15 days after receipt by the Corporation of the request
for such determination, the Board of Directors resolves to submit
such determination to the shareholders for their consideration at
an annual meeting to be held within 75 days after such receipt,
and such determination is made thereat, or (ii) a special meeting
of shareholders is called within 15 days after such receipt for
the purpose of making such determination and is held for such
purpose within 60 days after having been so called, and such
determination is made thereat.
5. Procedure for Determination of Right of Indemnitee
to be Indemnified.
a. Whenever Indemnitee believes that Indemnitee has
a right to indemnification pursuant to this Agreement, Indemnitee
shall submit a written request for indemnification to the
Corporation. Any request for indemnification shall include
sufficient documentation or information reasonably available to
Indemnitee for the determination of the right of Indemnitee to be
indemnified pursuant to this Agreement. In any event, Indemnitee
shall submit such request for indemnification within a reasonable
time, which shall not exceed five years after any judgment,
order, settlement, arbitration award, conviction, dismissal,
acceptance of a plea of nolo contendere or its equivalent, or
other final disposition of any Proceeding. Upon receipt of any
such request for indemnification, the General Counsel or other
appropriate officer of the Corporation shall promptly advise the
Board of Directors in writing that Indemnitee has made such
request. Determination of the right of Indemnitee to
indemnification shall be made not later than 30 days after the
receipt by the Corporation of such written request for
indemnification; provided, however, that any request for
indemnification for Liabilities (other than amounts paid in
settlement) with respect to a particular Proceeding shall be made
only after a determination thereof has been made in that
particular Proceeding. If it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made
within 10 days after such determination.
b. The Corporation shall be entitled to select the
forum in which the right of Indemnitee to indemnification will be
heard; provided, however, if such forum is selected after a
Change in Control of the Corporation, Independent Legal Counsel
shall determine whether Indemnitee has the right to
indemnification. The forum shall be any one of the following:
(1) the shareholders of the Corporation, other
than shareholders who are parties to the Proceeding with respect
to which the Indemnitee has claimed indemnification;
(2) a majority of a quorum of the Board of
Directors consisting of Disinterested Directors;
(3) Independent Legal Counsel, who shall make the
determination in a written opinion; or
(4) a panel of three arbitrators, one selected by
the Corporation, another by Indemnitee and the third by the first
two arbitrators selected or, if for any reason three arbitrators
are not selected within 30 days after the appointment of the
first arbitrator, then selection of additional arbitrators shall
be made by the American Arbitration Association. If any
arbitrator resigns or is unable to serve in such capacity for any
reason, the American Arbitration Association shall select a
replacement. The arbitration shall be conducted pursuant to the
commercial arbitration rules of the American Arbitration
Association then in effect.
6. Specific Limitations on Indemnification.
Notwithstanding anything in this Agreement to the contrary, the
Corporation shall not be obligated under this Agreement to make
any payment to Indemnitee for indemnification with respect to any
Proceeding:
a. to the extent that payment is actually made to
Indemnitee under any insurance policy, or is made to Indemnitee
by the Corporation or an affiliate of the Corporation otherwise
than pursuant to this Agreement; provided, however,
notwithstanding the availability of any such insurance,
Indemnitee also may claim indemnification from the Corporation
pursuant to this Agreement by assigning to the Corporation any
claims under any such insurance to the extent Indemnitee is paid
by the Corporation;
b. if a court in such Proceeding has entered a
judgment or other adjudication that is final and has become
nonappealable and establishes that the claim of Indemnitee for
indemnification arose from (1) a breach by Indemnitee of
Indemnitee's duty of loyalty to the Corporation or its
shareholders, (2) acts or omissions of Indemnitee that were not
in good faith or involved intentional misconduct or knowing
violations of the law, (3) a transaction in which Indemnitee
derived an improper personal benefit, or (4) liability of
Indemnitee to the Corporation pursuant to Section 490.833 of the
Iowa Business Corporation Act (or any successor provision
thereto);
c. prior to the occurrence of a Change in Control,
for Liabilities in connection with any Proceeding settled without
the consent of the Corporation, which shall not be unreasonably
withheld; or
d. for an accounting of profits made from the
purchase or sale by Indemnitee of securities of the Corporation
within the meaning of Section 16(b) of the Securities Exchange
Act of 1934, as amended.
7. Fees and Expenses of Independent Legal Counsel.
The Corporation shall pay the reasonable fees and expenses of
Independent Legal Counsel or a panel of three arbitrators, if
Independent Legal Counsel or a panel of arbitrators is retained
to make a determination of the right of Indemnitee to
indemnification pursuant to Section 5(b) of this Agreement, and
to fully indemnify such Independent Legal Counsel or panel of
arbitrators against any and all expenses and losses incurred by
any of them and arising out of or relating to this Agreement or
their engagement pursuant hereto.
8. Remedies of Indemnitee.
a. If a determination is made pursuant to Section 5
of this Agreement that Indemnitee is not entitled to
indemnification, or if advances of Expenses are not made to
Indemnitee pursuant to this Agreement, or if payment is not
timely made following a determination that Indemnitee has a right
to indemnification pursuant to this Agreement, or if Indemnitee
otherwise seeks enforcement of this Agreement, Indemnitee shall
be entitled to a final adjudication in an appropriate court of
the State of Iowa of the remedy sought. Alternatively, unless
the determination was made by a panel of arbitrators pursuant to
Section 5(b)(4) of this Agreement, Indemnitee may elect to seek
an award in arbitration to be conducted by a single arbitrator
pursuant to the commercial arbitration rules of the American
Arbitration Association then in effect, and the decision of such
arbitrator shall be rendered within 90 days following the filing
of the demand for arbitration. The Corporation shall not oppose
the right of Indemnitee to seek any such adjudication or
arbitration award. In any such proceeding or arbitration,
Indemnitee shall be presumed to be entitled to indemnification
under this Agreement and the Corporation shall have the burden of
proof to overcome such presumption.
b. If a determination that Indemnitee is not entitled
to indemnification, in whole or in part, has been made pursuant
to Section 5, the decision in the judicial proceeding or
arbitration provided in Section 8(a) shall be made de novo and
Indemnitee shall not be prejudiced by reason of a determination
that Indemnitee is not entitled to indemnification.
c. If a determination that Indemnitee is entitled to
indemnification has been made pursuant to Section 5 or is deemed
to have been made pursuant to Section 4 or otherwise pursuant to
this Agreement, the Corporation shall be bound by such
determination in the absence of a misrepresentation of a material
fact by Indemnitee.
d. The Corporation shall be precluded from asserting
that the procedures and presumptions of this Agreement are not
valid, binding and enforceable, and the Corporation shall
stipulate in any such court or before any such arbitrator that
the Corporation is bound by all the provisions of this Agreement
and is precluded from making any assertion to the contrary.
e. Expenses reasonably incurred by Indemnitee in
connection with the request of Indemnitee for indemnification
under, seeking enforcement of, or to recover damages for breach
of, this Agreement shall be borne by the Corporation when and as
incurred by Indemnitee irrespective of any Final Adverse
Determination that Indemnitee is not entitled to indemnification.
9. Insurance.
a. Maintenance of Insurance. The Corporation
represents that it presently maintains certain policies of
directors' and officers' liability insurance. Subject only to
the provisions of this Section 9, the Corporation agrees that,
during the Indemnification Period, the Corporation shall use its
best efforts to purchase and maintain in effect for the benefit
of Indemnitee one or more valid, binding and enforceable policies
of directors' and officers' liability insurance providing
coverage that, in scope and amount and all other respects, is no
less favorable than that presently provided. Notwithstanding the
foregoing, prior to the occurrence of a Change in Control, the
Corporation shall not be required to maintain such policies of
directors' and officers' liability insurance if such insurance is
not reasonably available or if it is in good faith determined by
the Board of Directors that:
(1) the premium cost of maintaining such
insurance is substantially disproportionate to the amount of
coverage provided thereunder; or
(2) the protection provided by such insurance is
so limited by exclusions, deductions or otherwise that there is
insufficient benefit to warrant the cost of maintaining such
insurance.
Notwithstanding anything in this Agreement to the
contrary, to the extent that and for so long as the Corporation
shall choose to continue to maintain any policy of directors' and
officers' liability insurance during the Indemnification Period,
the Corporation shall maintain similar and equivalent insurance
for the benefit of Indemnitee during the Indemnification Period
(regardless of whether such similar or equivalent insurance is
more or less favorable to Indemnitee than the existing policy or
policies of such insurance maintained by the Corporation).
b. Additional Indemnification in Lieu of Insurance.
If the Corporation discontinues any policy or policies of
directors' and officers' liability insurance referred to in
Section 9(a) of this Agreement or limits in any way the scope or
amount of the coverages provided thereunder, or such policies or
coverages provided thereunder become unavailable in whole or in
part for any reason, the Corporation agrees to hold harmless and
indemnify Indemnitee for the remainder of the Indemnification
Period to the full extent of the coverage that would otherwise
have been provided for the benefit of Indemnitee if the insurance
specified in Section 9(a) hereof had been maintained.
10. Modification, Waiver, Termination and
Cancellation. No supplement, modification, termination,
cancellation or amendment of this Agreement shall be binding
unless executed in writing by both Indemnitee and the
Corporation. No waiver of any provision of this Agreement shall
constitute or be deemed to be (a) a waiver of any other provision
of this Agreement or (b) a continuing waiver.
11. Subrogation. In the event of payment under this
Agreement, the Corporation shall be subrogated to the extent of
such payment to all of the rights of recovery of Indemnitee, who
shall execute all such papers as may be reasonably required and
shall do all such other things as may be reasonably necessary to
secure such rights, including the execution of such documents as
may be reasonably necessary to enable the Corporation to
effectively bring suit to enforce such rights.
12. Notice by Indemnitee and Defense of Claim.
Indemnitee shall promptly notify the Corporation in writing upon
being served with any summons, citation, subpoena, complaint,
indictment, information or other document relating to any civil,
criminal, administrative or investigative matter, but the
omission to so notify the Corporation shall not relieve the
Corporation of any liability that it may have to Indemnitee if
such omission does not materially prejudice the rights of the
Corporation. If such omission does materially prejudice the
rights of the Corporation, the Corporation shall be relieved from
liability under this Agreement only to the extent of such
prejudice, and no such omission will relieve the Corporation from
any liability that it may have to Indemnitee otherwise than under
this Agreement. With respect to any Proceeding as to which
Indemnitee notifies the Corporation of the commencement thereof:
a. The Corporation will be entitled to participate
therein at its own expense; and
b. The Corporation, jointly with any other
indemnifying party similarly notified, will be entitled to assume
the defense of Indemnitee therein with counsel reasonably
satisfactory to Indemnitee; provided, however, that the
Corporation shall not be entitled to assume the defense of
Indemnitee in any Proceeding if there has been a Change in
Control or if Indemnitee has reasonably concluded that there may
be a conflict of interest between the Corporation and Indemnitee
with respect to the Proceeding. After notice to Indemnitee from
the Corporation of its election to assume the defense of
Indemnitee therein, the Corporation will not be liable to
Indemnitee under this Agreement for any Expenses subsequently
incurred by Indemnitee in connection with the defense thereof,
other than reasonable costs of investigation or as otherwise
provided below. Indemnitee shall have the right to employ his or
her own counsel in any such Proceeding, but the fees and expenses
of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of
Indemnitee unless:
(1) the employment of counsel by Indemnitee has
been authorized by the Corporation;
(2) indemnitee has reasonably concluded that
counsel employed by the Corporation may not adequately represent
Indemnitee; or
(3) the Corporation has not in fact employed
counsel to assume the defense of Indemnitee in the Proceeding or
has not in fact assumed such defense or is not acting with
reasonable diligence in connection therewith; in each of which
cases, the fees and expenses of such counsel shall be borne by
the Corporation.
c. The Corporation shall not settle any Proceeding in
any manner that would impose any liability, penalty or limitation
on Indemnitee without the written consent of Indemnitee;
provided, however, that Indemnitee will not unreasonably withhold
consent to any proposed settlement.
13. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed
to have been duly given if (a) delivered by hand and receipted
for by the party to whom such notice or other communication shall
have been directed or (b) mailed by registered mail with postage
prepaid.
a. If to Indemnitee, to:
b. If to the Corporation, to:
HON INDUSTRIES Inc.
414 East Third Street
Muscatine, Iowa 52761-7109
Attention: General Counsel
or to such other address as may be hereafter furnished to
Indemnitee by the Corporation or to the Corporation by
Indemnitee, as the case may be.
14. Nonexclusivity. The rights of Indemnitee under
this Agreement shall not be deemed exclusive of any other rights
to which Indemnitee may be entitled under the Business
Corporation Act of the State of Iowa, the Articles of
Incorporation or By-laws of the Corporation, or any Agreements,
vote of shareholders, resolution of the Board of Directors or
otherwise and, to the extent that during the Indemnification
Period the rights of the then existing directors and officers are
more favorable to such directors or officers than the rights
currently provided to Indemnitee thereunder or under this
Agreement, Indemnitee shall be entitled to the full benefits of
such more favorable rights.
15. Certain Definitions. For the purposes of this
Agreement, the following terms shall have the following meanings:
a. "Change in Control" means:
(1) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the
Corporation (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of the Corporation entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (1), the
following acquisitions shall not constitute a Change of Control:
(i) any acquisition directly from the Corporation, (ii) any
acquisition by the Corporation, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained
by the Corporation or any corporation controlled by the
Corporation or (iv) any acquisition by any corporation pursuant
to a transaction which complies with clauses (i), (ii) and (iii)
of subsection (3) of this Section 15(a); or
(2) individuals who, as of the date hereof, con
stitute the Board (the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(3) consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substan
tially all of the assets of the Corporation (a "Business Combina
tion"), in each case, unless, following such Business Combi
nation, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which
as a result of such transaction owns the Corporation or all or
substantially all of the Corporation's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii)
no person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of
the Corporation or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination
or the combined voting power of the then outstanding voting se
curities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (iii) at
least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for
such Business Combination; or
(4) approval by the shareholders of the
Corporation of a complete liquidation or dissolution of the
Corporation.
b. "Disinterested Director" means a director of the
Corporation who is not or was not a party to the Proceeding with
respect to which indemnification is being sought by Indemnitee.
c. "Expenses" shall include all direct and indirect
costs (including but not limited to attorneys' fees, retainers,
court costs, transcript fees, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage costs, delivery service fees, all
other disbursements or out-of-pocket expenses and reasonable
compensation for time spent by Indemnitee for which Indemnitee is
otherwise not compensated by the Corporation or any third party)
actually and reasonably incurred in connection with the
investigation, defense, settlement or appeal of a Proceeding or
establishing or enforcing a right to Indemnification under this
Agreement, applicable law or otherwise; provided, however, that
Expenses shall not include any Liabilities.
d. "Final Adverse Determination" means a
determination that Indemnitee is not entitled to indemnification
pursuant to Section 5 of this Agreement and either (i) a final,
nonappealable adjudication in an Iowa court or decision of an
arbitrator pursuant to Section 8(a) of this Agreement shall have
denied the right of Indemnitee to indemnification under this
Agreement or (ii) Indemnitee shall have failed to file a
complaint in an Iowa court or seek an arbitration award pursuant
to Section 8(a) hereof within 120 days after the determination
made pursuant to Section 5 hereof.
e. "Indemnification Period" means the period of time
during which Indemnitee shall serve as a director or officer of
the Corporation and for so long thereafter as Indemnitee may be
subject to any Proceeding.
f. "Independent Legal Counsel" means special legal
counsel who is selected by the Board of Directors by vote of a
majority of a quorum consisting of Disinterested Directors or, if
such quorum cannot be obtained, by vote of a majority of the full
Board of Directors, including directors who are not Disinterested
Directors, and is approved by Indemnitee (which approval shall
not be unreasonably withheld) or, if there has been a Change in
Control, selected by Indemnitee and approved by the Board of
Directors (which approval shall not be unreasonably withheld),
and who is not presently and has not in the five years preceding
such selection been retained to represent (i) the Corporation or
any of its subsidiaries or affiliates, or Indemnitee or any
corporation or entity as to which Indemnitee is or was a
director, officer, partner or employee, or any subsidiary or
affiliate of such a corporation or entity, in any material matter
or (ii) any other party to the Proceeding giving rise to the
claim for indemnification with respect to which such counsel is
being selected. Notwithstanding the foregoing, Independent Legal
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 Corporation or
Indemnitee in an action to determine the right of Indemnitee to
indemnification under this Agreement.
g. "Liabilities" means liabilities of any type
whatsoever, including but not limited to any judgments, fines,
ERISA excise taxes and penalties, penalties and amounts paid in
settlement (including all interest assessments and other charges
paid or payable in connection with or in respect of such
judgments, fines, penalties or amounts paid in settlement),
incurred with respect to any Proceeding.
h. "Proceeding" means any threatened, pending or
completed action, claim, suit, arbitration, alternative dispute
resolution mechanism, investigation, administrative hearing or
any other formal or informal civil, criminal, administrative or
investigative proceeding that is associated with Indemnitee being
or having been a director or officer of the Corporation.
16. Binding Effect; Duration and Scope of Agreement.
This Agreement shall be binding upon and inure to the benefit of
and be enforceable by Indemnitee and the Corporation and their
respective successors and assigns (including any direct or
indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business or assets
of the Corporation), spouses, heirs, executors, personal
representatives and administrators and other legal
representatives. This Agreement shall continue in effect during
the Indemnification Period, regardless of whether Indemnitee
continues to serve as a director or officer of the Corporation.
17. Severability. If any provision or provisions of
this Agreement shall be held to be illegal, invalid or otherwise
unenforceable for any reason whatsoever:
a. the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be
affected or impaired thereby; and
b. the provisions of this Agreement shall be
construed so as to give effect to the fullest extent legally
possible to the intent of any provisions held to be illegal,
invalid or otherwise unenforceable.
18. Governing Law. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the
State of Iowa.
19. Entire Agreement. This Agreement represents the
entire Agreement between the Corporation and Indemnitee, and
there are no other Agreements, contracts or understandings
between them with respect to the subject matter of this
Agreement, except as specifically referred to herein or as
provided in Section 14 hereof.
IN WITNESS WHEREOF, this Indemnity Agreement is
executed by the Corporation and the Indemnitee as of the date
first written above.
HON INDUSTRIES Inc.
By______________________
Name:
Title:
INDEMNITEE
______________________
Name:
EXHIBIT 10ix
COMMON STOCK GRANT AGREEMENT
WHEREAS,________________ (the "Grantee") is a Non-Employee
Director (as defined in the 1997 Equity Plan for Non-Employee
Directors (the "Plan"), of HON INDUSTRIES Inc., an Iowa
corporation (the "Company"); and
WHEREAS, the execution of a Common Stock Grant Agreement in
the form hereof and the Common Stock Grant effected hereby have
been duly authorized by a resolution of the Board of Directors of
the Company duly adopted on February 12, 1997; and
WHEREAS, the Company has determined that it would be in the
best interests of the Company to issue the shares of Common Stock
provided herein to the Grantee in consideration of services to be
performed for the Company.
NOW, THEREFORE, in consideration and as additional
compensation for services to be performed for the Company and for
other good and valuable consideration, on the date hereof the
Company issues to Grantee ____ shares of its Common Stock, par
value $1.00 per share ("Common Stock"), and agrees to cause
certificates for the shares granted hereunder to be delivered to
the Grantee, subject to the terms and conditions hereinafter set
forth.
This grant of Common Stock is made pursuant to the Plan, a
copy of which is attached hereto. This Agreement is subject to
all the terms and conditions of the Plan, which are incorporated
herein by reference. Capitalized terms used herein and not
defined are used as defined in the Plan.
EXECUTED at Muscatine, Iowa, this ___ day of _________, 199__.
HON INDUSTRIES Inc.
By_____________________
The undersigned Grantee hereby acknowledges receipt of an
executed original of the Common Stock Grant Agreement and the
1997 Equity Plan for Non-Employee Directors of HON INDUSTRIES
Inc., and accepts the grant made thereunder.
________________________
Grantee
EXHIBIT 10x
Date PERSONAL & CONFIDENTIAL
Name
Address
Re: HON INDUSTRIES Inc. Stock-Based Compensation Plan
Stock Option Award Agreement
Dear :
Congratulations on your selection as a Participant in the HON
INDUSTRIES Inc. Stock-Based Compensation Plan (the "Plan"). This
Agreement provides a brief summary of your rights under the Plan.
A copy of the Plan Document accompanies this Agreement.
The Plan provides a complete detail of all of your rights under
the Plan and this Agreement, as well as all of the conditions and
limitations affecting such rights. If there is any inconsistency
between the terms of this Agreement and the terms of the Plan,
the Plan's terms shall completely supersede and replace the
conflicting terms of this Agreement.
The option granted to you under this Agreement is a Non-Statutory
Stock Option, as defined in the Plan.
Overview of Your Stock Option
1. Number of Shares Granted under this Option:
The Human Resources and Compensation Committee will review
recommendations for additional grants in _______ and every
two years thereafter.
2. Date of Grant:
3. Exercise Price:
4. Vesting of Options: Subject to the terms of the Plan,
100% or any portion of the Shares covered by this option
may be purchased on or after ____________.
5. Method of Exercise and Payment:
Shares may be exercised by written notice to the Company
specifying the number of whole shares to be purchased.
The method of payment may be by any of the following
methods:
(a) Cash payment;
(b) Delivery of previously owned whole shares of common
stock, which had previously been held for six months;
(c) Authorization to the Company to withhold whole shares
of common stock equal to the aggregate purchase price
due at exercise;
(d) Cash payment by a broker-dealer acceptable to the
Company; or
(e) Combination of (a), (b), and (c).
<PAGE>
Name
Date
Page 2
6. Expiration Date of Option:
7. Non-Transferability of Options:
During your lifetime the options shall be exercised only
by you. No assignment or transfer of options, whether
voluntary or involuntary, by operation of law or
otherwise, can be made except by will or the laws of
descent and distribution or pursuant to beneficiary
designation procedures approved by the Company.
8. Termination of Employment:
(a) By Death or Disability: Shares which are vested as
of the date of Death or Disability may be purchased
until the earlier of: (i) the expiration date of this
option; or (ii) the first anniversary of the date of
Death or Disability. Shares which are not vested as
of the date of Death or Disability shall immediately
terminate, and shall be forfeited to the Company.
(b) By Retirement: Shares which are vested as of the
date of Retirement may be purchased until the earlier
of: (i) the expiration date of this option; or (ii)
the third anniversary date of Retirement. Shares
which are not vested as of the date of Retirement
shall immediately terminate, and shall be forfeited
to the Company.
(c) For other reasons: Shares which are vested as of the
date of termination of employment may be purchased
until the earlier of: (i) the expiration date of
this option; or (ii) the end of the thirtieth day
following the date of termination of employment
(except in the case of termination for "Cause," in
which case, no additional exercise period shall be
permitted beyond the date of termination). Shares
which are not vested as of the date of employment
termination shall immediately terminate, and shall be
forfeited to the Company.
9. Change in Control:
In the event of a Change in Control, all shares under this
option shall become immediately vested 100 percent, and
shall remain exercisable for their entire term.
Refer any questions you may have regarding your stock option to
Jeffrey D. Fick, Vice President, Member and Community Relations.
<PAGE>
Name
Date
Page 3
Please acknowledge your agreement to participate in the Plan and
this Agreement, and to abide by all of the governing terms and
provisions, by signing below, and return the original signed
letter to Jeffrey D. Fick, Vice President, Member and Community
Relations, in the enclosed self-addressed envelope; please make a
copy of the letter for your files.
Once again, congratulations on the receipt of your stock option
award.
Sincerely,
Jack D. Michaels
Chairman, President and CEO
Enc.
********************************************************************
HON INDUSTRIES Inc. Stock-Based Compensation Plan
Agreement to Participate
By signing a copy of this Agreement and returning it
to Jeffrey D. Fick, Vice President, Member and
Community Relations, I acknowledge that I have read
the Plan, and that I fully understand all of my
rights under the Plan, as well as all of the terms
and conditions which may limit my eligibility to
exercise this option. Without limiting the
generality of the preceding sentence, I understand
that my right to exercise this option is conditioned
upon my continued employment with the Company.
____________________________________ _________________
Name Date
